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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.
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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.
ESG means environmental, social and governance factors [of which the latter shall include, but is not limited to issues of, health and safety, safeguarding and gender] 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.
Environmental, social and governance (ESG) means factors and standards forming a [published] policy, framework, strategy or objective of a party, including, but not limited to, Climate Change and the achievement of a Net Zero Target, resource depletion, waste, pollution, deforestation, human rights, gender, 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 (sustainable finance)
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 control, the transition to a circular economy, the sustainable use and protection of water and marine resources, waste prevention and recycling, and the protection of healthy ecosystems. 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.
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. These include the environment, climate change, diversity, human rights, labour chain, modern slavery, philanthropy, accountability, sustainability, community, transparency, and fair trade.
Option 1 highlights health and safety, safeguarding and gender issues, which can often be overlooked.
Option 3 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. This option also 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.
ESG is used in the following TCLP clauses:
[Benjamin’s Licence] Climate Solutions IPR Licence; and
[Kaia’s Clause] Climate Purposed NDA Terms (Confidentiality Agreement).