You are Company Secretary of Parshvan Potash Ltd., a Company engaged in producing pesticides. Draft a brief note to be circulated to the Board of Directors, about the importance of management of Environmental, Social and

To The Board of Directors Subject: Note on ESG Risk Management Environmental Social and Governance (ESG) risks represent a specific subset of general risks that a company must manage wherever required, by identifying and mitigating company-specific risks, such as environmental liabilities, labor standards, consumer and product safety and leadership succession, and contingency planning for macro-level risks, including by identifying supply chain and energy alternatives and developing backup recovery plans for climate change and other natural disaster scenarios. While boards have been overseeing management of such material risks for as long as they have existed, increasing scrutiny in 2017 to ESG issues by the public and some of the largest institutional investors in the world now call for special attention to be paid to ensuring that the board is satisfied as to how ESG-related risks specifically are being evaluated, disclosed and managed. In the 2017 proxy season, the most common shareholder proposal topics related to social and environmental issues, and in certain instances, these proposals were backed for the first time by major institutional investors, whose voting positions on such issues have evolved. A 2018 proxy season report by Ernst & Young revealed that, of the 79% of investors who believe climate change is a significant risk factor, 61% believe that enhanced reporting should be the biggest priority for companies (over changes in company strategy or business practices). Boards and management teams can therefore expect that major investors will continue to assess companies' posture toward climate change related matters and risks. It is also notable that, for the 2018 proxy season, Institutional Shareholder Services Inc (ISS) expanded the conditions under which it will recommend voting in favor of shareholder proposals requiring such disclosures. As the public conversation on the role of companies in addressing environmental and social issues continues to evolve, boards should consider how their risk oversight role specifically applies to ESG-related risk. In large part, the board's function in overseeing management of ESG-related risks, such as supply chain disruptions, energy sources and alternatives, labor practices and environmental impacts involves issue-specific application of the risk oversight practices discussed in this memo. However, due to the fact that the public and investors have increasingly begun to scrutinize how a company addresses ESG issues, the board should ensure that its risk oversight role is satisfied in regards to ESG risk management. ESG matters often have important public, investor and stakeholder relations dimensions. The board should work with management to identify ESG issues that are pertinent to the business and its customers and decide what policies and processes are appropriate for assessing, monitoring and managing ESG risks. The board should also be comfortable with the company's approach to external reporting of the company's overall approach, response and progress on ESG issues. It is also increasingly important for directors and management who engage with shareholders to educate themselves and become conversant on the key ESG issues facing the company. Thanking You Company Secretary