The Best Practices for Corporate ESG Policy Development

ESG reporting
Having an ESG policy for your company is central to making it more sustainable.
Written by
No items found.
Published on
June 15, 2023

Your business or organisation is deeply intertwined with the fast-growing environmental, social, and governance (ESG). More stakeholders, including customers and investors, want to be associated only with responsible businesses. Therefore, you cannot be left behind in adopting sustainability , and the best starting point is crafting an ESG policy for your company.

If you are new to sustainability matters, major questions that might cross your mind are, "what is an ESG policy?" and "What does it look like?" This guide is a deeper look into ESG policy use in companies to help you prepare and effectively execute it in your organisation. 

What is an ESG Policy?

This is a documented approach that a business uses on all sustainability matters. It demonstrates the company's commitment to ensuring every unit operates sustainably. As we are going to see shortly, the policy helps to inform the ESG plan used in a company, including reporting progress to stakeholders. Therefore, it is crucial to factor in the entire process of a company’s management or operations, from sourcing raw materials to marketing, when developing a corporate ESG policy

At this point, it is important to appreciate the difference between ESG policy and ESG frameworks. Although these two terms are often confused, they are entirely different. While ESG policy denotes a set of documented approaches, an ESG framework refers to standardised models used for guiding sustainability plans and reporting. Good examples of ESG frameworks include the Global Reporting Initiatives (GRI) and the Sustainable Development Goals (SDGs), which were developed by reputable international organisations. 

Benefits of a Having a Good ESG Policy for Your Company

The main benefit of having a good ESG policy is that it acts as a guide for sustainability-related operations in a company. When following professionally-drawn ESG policies, they help in making good sustainability-related actions and management easy, even for managers implementing it for the first time. Other benefits of having an environmental, social, and governance (ESG) policy are:

  • It is crucial for compliance with local laws and international standards related to sustainability. 
  • Helps to strengthen the corporate strategies of an organisation. 
  • Strengthens a company's brand and helps it to win a competitive advantage in the market. 
  • Very effective in attracting and retaining the best talents. 
  • A good ESG policy helps to set the stage for cutting down costs and optimising profits. 
  • Crucial for winning more investors for your company. 

What Should You Include in an ESG Policy?

Once you realise the importance of an ESG policy, the next thing is writing it down. Here are things that you should think about and include in your ESG policy:


  • How the company uses renewable resources and chemicals in its processes. 
  • The methods of handling and dealing with wastes. You might want to adopt a zero-waste approach in your policy to help cut down costs. 
  • Cutting down greenhouse gases from your company’s operations. 
  • Promoting sustainability in your organisation's supply chain. Consider broadening the concept of sustainability by working only with brands committed to ESG. This means checking them back and using the right ESG programs to note the businesses that use sustainable practices. 


  • The company’s approach to diversity and responsible management in the workplace. 
  • The relationship and impact on the neighbouring communities. 
  • Include methods for empowering communities where your company sources its raw materials. 
  • Structures for avoiding harmful practices such as child labor.


  • The diversity of your company’s board of directors and management team. 
  • Structures for mitigating supply chain risks. 
  • Transparency in reporting financial matters
  • Commitment to compliance with various policies and laws of the country the company operates. 

The Best Practices for ESG Policy Development

To draw a good ESG policy, you should start by comprehensively reviewing all areas of company operations. Then follow the best practices listed below: 

  • Involve all stakeholders in your company. This is crucial to ensure your ESG policy gets supported, especially at the implementation stage. 
  • Make the policy as clear as possible. A policy can be pretty challenging to implement if it is unclear to your staff. Where complex terms, factors or concepts are involved, ensure they are explained exhaustively to the subjects. 
  • Carry out training on sustainability and its benefits to your company’s staff. Because sustainability is likely to impact all areas of your company operations, it is prudent to carry out enough training, especially for those who will be involved. 
  • Consider bringing on board an ESG consultant to help with policy formulation and implementation in your company. Having helped other companies to craft ESG policies and become more sustainable, experts can help you draw strategies that work and those that do not. 
  • Review your ESG policy regularly to ensure it is being followed. If there are areas that need adjustment to make the company more sustainable, implement changes. You can even broaden the concept if an important area, such as health or impact of a specific parameter, was left out. 

Drawing an ESG policy for your company is central to making it more sustainable. As you follow the best practices to create a good ESG policy for your organisation, make sure to add the efforts to your sustainability reporting. The report tells your stakeholders about the ESG efforts through a sustainability report, and ensures the company gets the right ESG rating. To make your policy and ESG reporting work more effectively, make sure also to have appropriate sustainability management software, such as diginexESG. 

Contact now to learn more about the best sustainability apps and all the assistance you need on ESG policy formulation and ESG reporting. 

About the author:

No items found.