Glossary entry


Disclaimer - please read

The definitions on this website (and published in our Climate Contract Playbook) have been prepared in good faith on a pro bono basis and are free to download and use. The definitions have been drafted and edited by a variety of lawyers and, as such, the approaches to drafting may not conform to any particular drafting norms. We acknowledge this as a consequence of the collaborative drafting process.

The definitions on this website (and published in our Climate Contract Playbook) are provided on an ‘as is’ basis and without any representation or warranty as to accuracy or that the definitions will achieve the relevant climate goal or any other outcome.

This website (and the Climate Contract Playbook) does not comprise, constitute or provide personal, specific or individual recommendations or advice of any kind, and does not contain legal or financial advice. The definitions are precedents for legal professionals to use, amend and negotiate using their professional skill and judgement and at their own risk.

While care has been taken in the drafting of these definitions, neither The Chancery Lane Project nor any of its contributors owe a duty of care to any party in relation to their preparation and do not accept any liability for any errors or omissions, nor for any loss incurred by any person relying on or using these definitions or any other person. Users should use their own professional judgement in the application of these definitions to any particular circumstance or jurisdiction or seek independent legal advice.

At present, all the definitions are based on the laws of England and Wales. We encourage the conversion of these precedent definitions for use in other jurisdictions.


Option 1

ESG means environmental, social and governance [of which the latter shall include, but is not limited to issues of, health and safety, safeguarding and gender].

Option 2

Environmental, social and governance (ESG) means factors which include, but are not limited to, Climate Change, resource depletion, waste, pollution, deforestation, human rights, modern slavery ,safeguarding, child labour, local and indigenous communities, conflict, work conditions, health and safety, employee relations, bribery and corruption, remuneration, board diversity and structure, political lobbying and donations, transparency, shareholder rights and tax strategies.

Option 3 (based on the definition in Kaia's Clause)

ESG means Environmental, Social and Governance factors and standards forming a [published] policy, framework, strategy or objective of a party.

Option 4 (sustainable finance context)

ESG means environmental, social and governance considerations. Environmental considerations may refer to Climate Change Mitigation and Climate Change Adaptation, as well as the environment more broadly, such as the preservation of Biodiversity, pollution prevention and the circular economy. Social considerations may refer to issues of inequality, inclusiveness, labour relations, investment in human capital and communities, as well as human rights issues; and the governance of public and private institutions, including management structures, employee relations and executive remuneration.

Option 5 (sustainable finance context)

ESG refers to environmentally sustainable objectives including Climate Change Mitigation; Climate Change Adaptation; the sustainable use and protection of water and marine resources; the transition to a circular economy, waste prevention and recycling; pollution prevention and control; and the protection of healthy ecosystems.

Option 6 (non-EU specific)

ESG means environmental, social and governance factors considered by companies, investors, public sector and other organisations in a wide range of decision-making processes and situations including strategy, purpose financing, company reporting and supply chain management.

Drafting notes

ESG is commonly referred to as “environmental, social and governance”. It is sometimes also referred to as corporate social responsibility (CSR) or corporate responsibility (CR).

ESG factors are considered by companies, investors, public sector and other organisations in a wide range of decision-making processes and situations including financing, company reporting and supply chain management.

ESG factors include the environment, climate change, diversity, human rights, labour chain, modern slavery, philanthropy, accountability, sustainability, community, transparency, and fair trade.

Option 1 includes drafting to highlight health and safety, safeguarding and gender issues, which can often be overlooked.

Option 4 is particularly relevant in a sustainable finance context (see EU Commission: What is sustainable finance? in References below). It references the social factors in the EU Disclosure Regulation ((EU) 2019/2088), which imposes transparency and disclosure requirements on certain firms in the financial services sector.

Also in this context, Option 5 provides drafters with a definition that is linked to the environmental objectives in Article 9 of the EU Taxonomy Regulation (Regulation (EU) 2020/852), which establishes an EU wide classification system or framework to facilitate sustainable investment.


All legal agreements where being socially conscious and a steward of nature is a key aspect of the transaction, e.g. Articles of Association, financing agreements, project financing agreements, shareholder agreements, supplier contracts and policy documents.