Prompt Pack Esg Policy Framework

ESG Policy Framework

When to use this

Use this skill when drafting or updating an ESG (Environmental, Social, and Governance) policy framework — the document that defines a company's commitments, governance structure, and reporting approach for ESG matters. ESG policy frameworks have moved from optional to near-mandatory for companies raising institutional capital, operating in regulated sectors, or listed on exchanges in the MENA region, EU, or UK.

Typical triggers:

• Institutional investor requires ESG policy before committing capital
• Company listing on ADX, DFM, Tadawul, or LSE where ESG disclosure is required
• PE or VC fund requires portfolio company to adopt ESG framework as a condition of investment
• Corporate governance audit identifies absence of formal ESG documentation
• Company wants to participate in sustainability indices (MSCI ESG, FTSE4Good) or tenders requiring ESG credentials

Required inputs

Optional inputs

• Carbon footprint / scope 1, 2, 3 emissions data (if available)
• Existing policies that will be integrated (EHS, community investment, anti-corruption)
• Sustainability commitments already made publicly
• Board-level ESG committee structure (or plan to establish one)
• Supply chain ESG requirements

Document structure

1. Introduction and Commitment Statement

• Board-level statement of commitment to ESG principles
• Why ESG matters for this company: link to business strategy, stakeholder relationships, long-term value creation
• Scope of the framework: which entities, geographies, operations are covered
• Effective date and review cycle (typically annual)

2. Governance Structure

Board oversight:

• Which board committee has ESG oversight (audit committee, dedicated sustainability committee, or full board)?
• Board members' ESG qualifications / diversity commitments
• ESG performance metrics linked to executive compensation?

Management responsibility:

• Chief Sustainability Officer / ESG Director (if any)
• Sustainability team structure
• ESG working group (cross-functional: legal, finance, operations, HR, communications)

Reporting and accountability:

• Internal ESG reporting to board: frequency, format
• External ESG disclosure: annual sustainability report, integrated report, or regulatory filing

3. Environmental Pillar

Climate and energy:

• Net-zero target: year and scope (UAE Net Zero 2050 Strategy aligns with national ambition; KSA Vision 2030 includes 50% renewables by 2030)
• Scope 1, 2, and 3 greenhouse gas emissions inventory (aligned with GHG Protocol)
• Carbon reduction pathway: absolute reduction targets or intensity targets by year
• Renewable energy transition: % of energy from renewable sources; timeline
• TCFD alignment: disclosure of climate-related financial risks and opportunities

Resource efficiency:

• Water usage reduction targets (particularly relevant in water-scarce MENA)
• Waste management: reduction, recycling, circular economy commitments
• Responsible procurement: sustainable sourcing standards for key inputs

Physical climate risk:

• Assessment of physical climate risks (extreme heat, sea-level rise, water stress) on operations
• Adaptation measures for MENA-based operations (heat stress management for outdoor workers; cooling efficiency)

4. Social Pillar

Workforce and human capital:

• Diversity, equity, and inclusion: targets for gender diversity, nationality diversity (Emiratization / Saudization performance), and disability inclusion
• Living wage commitment
• Health and safety: target zero-harm; TRIR (Total Recordable Incident Rate) targets
• Training and development: hours of training per employee per year; career development investment
• Worker wellbeing: mental health programs; flexible working; employee assistance

Supply chain and human rights:

• Supplier code of conduct: ESG requirements for key suppliers
• Forced labor and child labor prohibition: explicit statement; supply chain audit program
• Conflict minerals / responsible sourcing (if applicable to sector)

Community and stakeholder engagement:

• Local community investment: percentage of pre-tax profit or fixed amount; geographic focus
• Stakeholder engagement: methodology for identifying and engaging key stakeholders
• Grievance mechanisms: how affected communities can raise concerns

Customer and product responsibility:

• Product safety and quality standards
• Responsible marketing (no misleading claims; fair pricing)
• Data privacy and cybersecurity (link to privacy policy)

5. Governance Pillar

Board composition and independence:

• Board diversity targets (gender, expertise, independence ratios)
• Director independence standards
• Succession planning for key roles

Anti-corruption and business ethics:

• Zero-tolerance policy for bribery, corruption, and facilitation payments
• Alignment with FCPA (for US-nexus companies), UK Bribery Act, and applicable local laws (UAE Anti-Corruption Law, KSA Anti-Bribery and Corruption Law)
• Gifts and hospitality policy
• Whistleblowing: confidential reporting channel; protection from retaliation
• Anti-money laundering and sanctions compliance

Transparency and disclosure:

• Regular ESG reporting (GRI Standards, ISSB/IFRS S1 and S2)
• Third-party assurance of ESG data (reasonable vs. limited assurance)
• Executive compensation linked to ESG KPIs

Tax responsibility:

• Commitment to paying the right amount of tax in the right jurisdiction
• Country-by-country reporting (if applicable threshold exceeded)
• No use of aggressive or abusive tax structures

6. ESG Reporting Framework Alignment

State which external frameworks the policy is aligned with:

7. Materiality Assessment

Describe the process for identifying material ESG topics:

• Double materiality: impact on people/environment AND financial materiality to the company (EU CSRD standard)
• Stakeholder engagement: consultation with employees, investors, customers, community
• Peer benchmarking: comparison with industry ESG disclosures
• Output: materiality matrix identifying priority topics

8. Targets, KPIs, and Commitments

Provide specific, measurable commitments:

9. Caveats and Currency

ESG regulatory requirements are evolving rapidly. This policy framework should be reviewed annually against:

• MENA regulatory updates (UAE SCA guidance, Saudi Exchange guidance, Tadawul ESG requirements)
• ISSB standards updates
• EU CSRD phasing (applies to EU operations; supply chain requirements broaden over time)
• Applicable sanctions and conflict-minerals lists

Common mistakes

• Generic aspirational statements without targets: "We are committed to the environment" without measurable commitments is dismissed by sophisticated investors; include specific, time-bound targets.
• Forgetting Scope 3 emissions: Supply chain emissions (Scope 3) are typically the largest source of GHG emissions for trading and manufacturing companies; omitting them understates the company's climate footprint.
• No board-level ownership: An ESG policy endorsed only by a CSR manager rather than the board does not signal genuine governance integration.
• Misalignment with local regulatory requirements: UAE SCA requirements for listed companies and KSA Exchange requirements are specific; the framework must address them, not just TCFD or GRI.
• Claiming alignment with a framework without actual disclosure: Stating "we align with GRI" without actually publishing GRI-aligned disclosures is greenwashing and creates regulatory and reputational risk.

Related skills

• [[prompt-pack-insider-trading-policy]]
• [[prompt-pack-employee-handbook]]
• [[prompt-pack-due-diligence-report]]
• [[prompt-pack-investment-agreement-venture-capital]]