Environmental, Social & Governance (ESG)

A starting point for many companies considering environmental, social & governance (ESG) issues, is to put in place an ESG strategy.

ESG issues have recently assumed greater prominence and importance by regulators, employees, customers and other stakeholders. Failure to tackle ESG issues that are relevant to SME companies may lead to, amongst other things, regulatory enforcement as well as posing a litigation, physical, commercial, financial, and reputational risk to the company that might adversely affect its sustainability and resilience. In addition, there is a growing trend for ESG requirements and compliance to be a pre-requisite for contracting with other parties.

Considering this, and to minimise any potential risks, SMEs may wish to put in place an ESG strategy, commensurate with its size and sector focus, setting out the type of organisation that it aspires to be.

This template ESG strategy is, by its very nature, generic, but highlights the key areas that businesses may wish to focus on when determining their ESG strategy. It considers amongst other things:

• carrying out an ESG audit;
• putting in place an ESG framework and objectives;
• putting in place new ESG policies, practices and processes;
• updating the board’s terms of reference & establishing an ESG committee;
• updating existing policies; and
• measuring and reporting to stakeholders at suitable intervals on the Company’s progress in implementing its ESG strategy.

This template ESG strategy is suitable for SME private companies who are currently outside the scope of any specific ESG related disclosures in the UK.