Environmental, Social & Governance
Environmental, Social & Governance (ESG) is an umbrella term covering how a business manages its environmental impact, its responsibilities to people and communities, and the way it is governed and controlled. It includes issues such as climate change, sustainability, human rights, supply chains, diversity and inclusion, business ethics and decision-making standards.
ESG is increasingly a strategic priority for businesses. Failing to address ESG issues that are relevant to a business can lead to regulatory enforcement and litigation risk, as well as physical, commercial, financial and reputational harm that may undermine its long-term resilience. There is also a growing trend for ESG compliance to be a pre-requisite for contracting with customers, suppliers, funders and other stakeholders.
In this context, it is becoming more important for businesses to put in place appropriate ESG documentation. The precise documents required will depend on the size, sector and risk profile of the organisation, but may include internal policies, contractual protections and governance materials to support ESG oversight and reporting.
This group of templates is designed as a practical starting point for companies and other businesses considering how to address ESG matters in their contracts and internal governance.
Environmental, Social & Governance is part of Corporate. Just £38.50 + VAT provides unlimited downloads from Corporate for 1 year.
Frequently Asked Questions
Is ESG actually a legal requirement for a small company? +
Not as a single obligation: no statute says SMEs must have an ESG policy. What exists is a lattice: the laws underneath ESG, environmental regulation, employment law, anti-bribery, apply to everyone; directors must have regard to community and environmental impact when promoting the company's success; and large companies carry formal reporting duties. For most SMEs the binding force is commercial, customers and funders demanding ESG evidence before contracting. These templates answer that demand proportionately.
A big customer wants to see our ESG policy before renewing our contract. What do they actually need? +
Evidence that their supply chain does not embarrass them: typically a written ESG policy or strategy, confirmation you comply with their supplier code and sometimes contractual ESG commitments. Respond in kind: adopt a proportionate policy using the checklist and strategy templates here, review their supplier code before signing it and accept contract clauses you can actually honour. Overpromising in an ESG document creates liability; a modest, true document beats an impressive false one.
Where should a business with no ESG documents start? +
In this order: run the ESG policy checklist to identify which issues are actually relevant to your size and sector, adopt a strategy or policy covering those issues honestly, then add the commercial layer, supplier code or contract clause, where counterparties require it, and finally put board oversight in place with minutes or a committee. Documents follow relevance, not fashion: an office-based ten person firm and a manufacturer need very different ESG paperwork.
What is the board's legal responsibility for ESG? +
Directors must act to promote the company's success and, in doing so, have regard among other matters to the impact of operations on the community and the environment and the company's business reputation. That duty applies to every company, however small; what scales with size is the paperwork, with large companies also publishing how they discharged it. Minuting ESG consideration in board decisions is how smaller boards evidence the duty. The board documents sub-folder provides the tools.
