ESG criteria refers to an organization’s environmental, social and governance policies, practices and processes, some of which depend upon whether the organization is a public corporation or business, private corporation or business, nonprofit, not for profit or NGO, governmental organization or entity, or a hybrid or mixed organization or entity. ESG criteria will also vary depending on the size of the organization or entity, its industry, and whether it primarily provides a service, a product or manufacturing, or a combination of both.

The following criteria can be used for reference; indeed, however, whereas applicable criteria have been set in some circumstances or for some situations, applicable criteria otherwise often remain in a state of change, discretion, suggestion or proposal, and choice. The various services that evaluate and rate ESG also each individually decide which criteria they will use. Indeed, the below listed possible criteria are intended to be fairly encompassing so as to promote thought and consideration, but are not necessarily in the whole a list of required criteria. Each organization and entity must evaluate its own requirements and circumstances.

Environmental criteria broadly refer to some or all of the following:

Resource materials and energy evaluation, selection, use, and discharge, management and conservation;

Environmental risks and management;

Waste;

Emissions;

Pollution;

Hazardous and toxic wastes and emissions;

Ownership and management of contaminated materials and land;

Treatment of animals; and

Compliance with laws and regulations.

Depending on the processes that are being used sometimes the environmental component of ESG can be the more clear-cut or direct component to identify and measure.

Social criteria broadly refer to some or all of the following:

The organization’s or entity’s internal and external relationships, values and culture and its adherence to and enforcement of values with employees and independent contractors in the workplace and work environment;

Its working relationship employees, independent contractors and in the workplace, with customers, with suppliers, in the community, and with other stakeholders;

Human capital, as it has been called – I don’t particularly like the term “human capital” as to me it sounds a bit faceless or depersonalized – instead I prefer something such as simply the category “People”;

Health and safety;

Well-being;

Diversity;

Opportunities provided, inclusiveness and equality, training, mentorship, advancement and advancement opportunities;

Talent acquisition and retention;

Social engagement and active involvement;

Discrimination;

Organizational openness and communications;

Organizational trust, integrity and reputation; and

Compliance with laws and regulations.

I view the social criteria component of ESG as being the more currently challenging component because of the very large numbers of criteria that people can argue are or should be included, and its sometimes difficulty of measurement or more subjective nature.

Governance criteria broadly refer to some or all of the following:

The organization or entity overall, and to its leaders and their actions and leadership including such criteria as:

Board and management roles, makeup, structure, policies, processes and practices;

Decision making;

Accounting methods and related transparency;

Shareholder engagement and shareholder rights;

Avoidance of unlawful practices, and legally or ethically questionable business practices;

Strong, transparent and enforced governance policies and practices;

Codes of conduct and ethics, and enforcement;

Board, executive officer and senior management diversity;

Measurement of corporate and organization performance;

Corporate and organization values, trust, integrity, and reputation;

Board oversight;

Accountability for actions;

Oversight of internal controls;

Oversight of compliance with laws and regulations;

Compensation;

Avoidance of unlawful conflicts of interest;

Information disclosure;

Corporate and organization sustainability;

Oversight of environmental, social and governance criteria;

The organization’s use of information and private information, and information and cyber security;

Protection of the organization’s assets including intellectual property;

Officer, director, and management openness to appropriate challenges, disagreement, and criticism, and the manner and processes for learning about, addressing, evaluating and debating, decision making, and resolving those ongoing occurrences and situations; and

Board and director structure, agenda setting, demeanor, meeting processes, independence, and adherence to prudent business judgment and diligent, active and proactive business judgment rule practices.

Whereas the above list of possible governance criteria might suggest that the governance component of ESG is more well-defined, I view the governance criteria as currently being perhaps the more challenging component of ESG because a large number of possible criteria can be identified but in practice the criteria that are recognized as being accepted tend to be less numerous, and as a group governance criteria still tend to be more vague, undefined and less agreed upon, and identification, evaluation and measurement of governance criteria also tend to vary more from organization and entity to organization and entity.

Best to you. David Tate, Esq. (and inactive CPA)

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Remember, every case and situation is different. It is important to obtain and evaluate all of the evidence that is available, and to apply that evidence to the applicable standards and laws. You do need to consult with an attorney and other professionals about your particular situation. This post is not a solicitation for legal or other services inside of or outside of California, and, of course, this post only is a summary of information that changes from time to time, and does not apply to any particular situation or to your specific situation. So . . . you cannot rely on this post for your situation or as legal or other professional advice or representation.

Thank you for reading this post. I ask that you also pass it along to other people who would be interested as it is through collaboration that great things and success occur more quickly. And please also subscribe to this blog and my other blog (see below), and connect with me on LinkedIn and Twitter.

Best to you, David Tate, Esq. (and inactive California CPA) – practicing in California only

Litigation, Disputes, Mediator & Governance: Business, Trust/Probate, Real Property, Governance, Elder Abuse, Investigations, Other Areas

Blogs: Trust, estate/probate, power of attorney, conservatorship, elder and dependent adult abuse, nursing home and care, disability, discrimination, personal injury, responsibilities and rights, and other related litigation, and contentious administrations http://californiaestatetrust.com

Business, D&O, board, director, audit committee, shareholder, founder, owner, and investor litigation, governance and governance committee, responsibilities and rights, compliance, investigations, ESG + sustainability, and risk management  http://auditcommitteeupdate.com

My law practice primarily involves the following areas and issues:

Trust, Estate, Probate Court, Elder and Dependent Adult, and Disability Disputes and Litigation

• Trust and estate disputes and litigation, and contentious administrations representing fiduciaries, beneficiaries and families; elder abuse; power of attorney disputes; elder care and nursing home abuse; conservatorships; claims to real and personal property; and other related disputes and litigation.

Business, Business-Related, and Workplace Disputes and Litigation: Private, Closely Held, and Family Businesses; Public Companies; Nonprofit Entities; and Governmental Entities

• Business v. business disputes including breach of contract; unlawful, unfair and fraudulent business practices; fraud, deceit and misrepresentation; unfair competition; licensing agreements, breach of the covenant of good faith and fair dealing; etc.
• Misappropriation of trade secrets.
• M&A disputes.
• Founder, officer, director and board, investor, shareholder, creditor, VC, control, governance, decision making, fiduciary duty, conflict of interest, independence, voting, etc., disputes.
• Buy-sell disputes.
• Funding and share dilution disputes.
• Accounting, lost profits, and royalty disputes and damages.
• Insurance coverage and bad faith.
• Access to corporate and business records disputes.
• Employee, employer and workplace disputes and processes, discrimination, whistleblower and retaliation, harassment, defamation, etc.

Investigations, Governance, Boards and Committees, Officers, and Responsibilities and Rights

• Corporate, business, nonprofit and governmental internal investigations.
• Board, audit committee, governance committee, and special committee governance and processes, disputes, conflicts of interest, independence, culture, ethics, compliance, ESG, sustainability, etc.; and advising audit committees, governance committees, officers, directors, and boards.

Mediator Services and Dispute Resolution

• Trust, estate, elder and elder abuse, conservatorship, power of attorney, and other probate court cases.
• Business: breach of contract.
• Business: owner, founder, partner, shareholder, investor, board and committee, officer, and governance disputes.
• Employment and workplace, discrimination, wrongful termination, and harassment.
• Real estate.
• Personal injury.
• ADDITIONAL AREAS – ASK

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