The following diagram illustrates the types of factors that are commonly included in the concept of ESG. However, the ESG factors that are relevant to a particular business will differ depending on the sector and the countries in which the business operates and its supply chain. The later sections of this toolkit note list key Practical Law materials on the legal aspects of these factors.

Climate change can affect a wide range of organisations. The risks include direct physical risk from flooding or other extreme weather events, impacts on international supply chains, distribution networks and global markets, increased regulatory requirements, litigation and reputational risk. For resources on key EU regimes, see Practice notes:

See also Emissions trading schemes toolkit and Legislation Tracker, Environment draft legislation tracker (EU): Climate change.

For information on the principal EU regimes regulating emissions to air and water, land contamination and waste management, see Practice notes:

See also Regulation to reduce methane emissions in energy sector: legislation tracker and Legislation Tracker, Environment draft legislation tracker (EU): Air pollution, Waste and Water and marine pollution.

For information on the key EU regimes regulating the impact of projects or business operations on the environment, habitats, biodiversity and wildlife, see Practice notes:

See also Legislation Tracker, Environment draft legislation tracker (EU): Habitats, wildlife and biodiversity.

Environmental management systems can help a business identify and manage key environmental risks. For more information, see Practice note, EMAS, ISO 14001 and other environmental management systems.

An environmental policy sets out the organisation's objectives in managing its environmental impacts. For information, see Practice note, Environmental policies.

For information about environmental disclosure and reporting requirements, see ESG reporting.

Manufacturers and others involved in the life cycle of products are subject to a range of obligations. Products must comply with requirements on chemicals for the product to be placed on the market. Some chemicals are subject to restrictions, are being phased out or are prohibited. For information on the key EU regimes, see Practice notes:

See also Legislation Tracker, Environment draft legislation tracker (EU): Sustainable products.

More efficient use of resources, such as energy, materials and water, can improve businesses' resilience and enable sustainable growth. For information on the key EU regimes, see Practice notes:

See also Legislation Tracker, Environment draft legislation tracker (EU): Energy efficiency.

Climate change is a rapidly expanding area of litigation, with claimants issuing proceedings against:

For more on climate change litigation, see Practice note, Climate change litigation.

Greenwashing (the act of misleading third parties about the environmental impact of a product, service, process, brand or business) is also an increasingly significant concern for corporates, giving rise to litigation, regulatory enforcement and reputational risk. For access to information and further resources on greenwashing, see Greenwashing toolkit.

Complicity in the violation of human rights is a significant issue that has been gaining more attention in recent years. Businesses that are associated with an adverse human rights impact could be open to civil and criminal liability in some jurisdictions, and risk a significant impact to their reputation. Businesses are increasingly required to identify and manage their involvement in adverse social impacts throughout their organisations and supply chains. For more information, see:

Areas that are affected by wars and conflicts can suffer from a break-down of the rule of law, weak or non-existing governance and violations of international law, including human rights abuses. In politically unstable areas, the minerals trade can be used to finance armed groups, fuel forced labour and other human rights abuses, and support corruption and money laundering. Businesses operating in these areas, whether directly or through their supply chains, will need to navigate their legal obligations and ethical position carefully, and consider their reputation.

For a toolkit to help counsel working in the US, UK, EU, Canada, Australia, and New Zealand guide their clients through the business interruptions caused by the Ukraine crisis, including key sanctions imposed on Russia and other countries, persons, and entities, see Russia Sanctions and Related Considerations Toolkit. This covers a wide range of resources, including on business operations, crisis management and disaster preparedness, cybersecurity, employment matters, financial services, fundraising, insurance, oil and gas, sanctions compliance, supply chain disruptions, and social governance.

For a summary of how the Conflict Minerals Regulation ((EU) 2017/821) sets up an EU system for importers of certain minerals and metals that originate in conflict-affected and high-risk areas to carry out mandatory supply chain due diligence, see Practice note, EU Conflict Minerals Regulation 2017.

A safe work environment is considered essential to the wellbeing of employees and to the sustainability of a business's operations. For more information, see Health and safety toolkit.

Businesses may be required to comply with legal requirements relating to equal pay, inclusion and non-discrimination. Managing these issues is considered to support talent attraction, retention and development. For information, see:

How a company engages with its stakeholders and the wider community within which it operates is an important part of ESG. For information on relevant regimes, see:

To track key corporate governance developments at EU level that impact on UK listed companies, see Practice note, Corporate governance: key developments tracker: Key EU developments.

For information on provisions on shareholder rights and long-term shareholder engagement to ensure that decisions are made for the long-term stability of a company (including consideration of social and environmental issues), see Practice note, Shareholder Rights Directive: overview.

For an explanation of the requirements for issuers to ensure appropriate transparency for investors by disclosing periodic and ongoing regulated information, see Practice note, Transparency Directive: overview.

Bribery is illegal under international law. However, the risk of corruption, money laundering and bribery is higher in some countries and sectors than others. For more information on anti-money laundering in the EU, see Anti-money laundering toolkit: EU AML resources.

It is generally considered that an independent, diverse board can provide objectivity, mitigate conflicts of interest, and better protect shareholders' interests.

For information on developments relating to the proposal for a Directive on improving the gender balance among non-executive directors of companies listed on stock exchanges, see Gender balance on company boards: legislation tracker.

Economic sanctions can be imposed by national governments or by international bodies (for example, the UN). They are a tool for exerting political and economic pressure on states through restrictions on trade relationships or travel.

For a toolkit to help counsel working in the US, UK, EU, Canada, Australia, and New Zealand guide their clients through the business interruptions caused by the Ukraine crisis, including key sanctions imposed on Russia and other countries, persons, and entities, see Russia Sanctions and Related Considerations Toolkit. This covers a wide range of resources, including on business operations, crisis management and disaster preparedness, cybersecurity, employment matters, financial services, fundraising, insurance, oil and gas, sanctions compliance, supply chain disruptions, and social governance.

For information about, and access to the EU Sanctions Map, see Legal update, Did you know? EU Sanctions Map for up to date information on restrictive measures.