This part of the assessment focuses on exposure—how likely it is that the company will experience negative outcomes if ESG issues are not effectively addressed. This is particularly important in the pipeline sector, where risk incidents can have major environmental and regulatory consequences.

Each ESG issue is assessed on two dimensions:

a) Risk Impact

Definition: The severity of the consequences if the issue were to manifest.

Examples:

A significant pipeline leak could lead to environmental degradation, clean-up costs, litigation, and long-term reputational harm—representing high impact.
A localised regulatory compliance issue might result in a minor administrative fine—low to medium impact.

b) Risk Likelihood

Definition: The probability that the issue or risk will materialise, based on current operations, controls, and external conditions.

Examples:

If your infrastructure operates in an area with ageing pipelines and extreme weather conditions, the likelihood of integrity-related incidents may be rated high.
If robust monitoring systems are in place for emissions tracking, the likelihood of missing compliance targets may be low.

Use the following scale to rate both impact and likelihood:

High – Significant disruption or loss is likely.
Medium – Moderate likelihood or manageable outcomes.
Low – Unlikely to occur or minimal impact if it does.

Each ESG issue should receive two ratings under this framework: one for Risk Impact, and one for Risk Likelihood.

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