ESG Policy Template: What To Include

Has a client, tender panel or larger supplier just asked you for your ESG policy?

First, don't panic. For most SMEs, an ESG policy doesn't need to be a glossy corporate report or a 40-page strategy. It needs to be a clear, honest document that explains what your business is doing on environmental, social and governance issues, what you're working towards, and who is responsible for keeping it on track.

The trick is making sure your ESG policy says enough to satisfy the request, without overpromising. That's where many small businesses get caught out. A vague claim like "we are carbon neutral" or "we only use ethical suppliers" can create legal and commercial risk if you can't prove it.

Here's how to put together an ESG policy that's practical, credible and useful for your business.

What Is An ESG Policy?

An ESG policy is a business document that sets out how your business manages environmental, social and governance risks and responsibilities.

In plain English, it's a written explanation of how your business tries to operate responsibly. It usually covers things like:

• Environmental: energy use, waste, emissions, packaging, water use, recycling and sustainable purchasing.
• Social: employees, health and safety, diversity and inclusion, modern slavery, community impact and customer fairness.
• Governance: decision-making, legal compliance, anti-bribery, data protection, whistleblowing, record keeping and supplier checks.

For SMEs, an ESG policy is often requested as part of a tender, supplier onboarding process, due diligence exercise or funding conversation. Larger organisations increasingly need to show that their supply chains meet certain standards, so they pass those questions down to you.

Your policy doesn't have to pretend you're a multinational. In fact, it's usually better if it doesn't. A strong small business ESG policy is specific to what you actually do.

For example, a design agency might focus on data protection, staff wellbeing, ethical subcontracting and low-waste office practices. A food manufacturer might need more detail on packaging, waste disposal, health and safety, product sourcing and supplier audits.

The aim is to show that you understand your key ESG risks and have sensible controls in place.

Do SMEs Legally Need An ESG Policy In The UK?

Usually, no. Most SMEs in the UK aren't legally required to have a standalone ESG policy, but you may still have legal obligations that sit underneath it.

For example, depending on your size and activities, your business may need to comply with:

• UK GDPR and the Data Protection Act 2018: if you handle personal data about customers, staff, suppliers or website users.
• Health and Safety at Work etc. Act 1974: if you have staff, contractors, visitors or workplace risks to manage.
• Equality Act 2010: if you employ people or provide goods and services to the public.
• Bribery Act 2010: relevant to anti-bribery procedures, especially if you work with agents, referrers or public sector clients.
• Environmental rules: such as waste duty of care requirements, packaging obligations or sector-specific permits.
• Consumer Rights Act 2015: if your ESG claims appear in consumer-facing terms, marketing or product information.

Some ESG-style reporting obligations only apply to larger businesses. For example, the Modern Slavery Act 2015 generally requires a modern slavery statement from organisations carrying on business in the UK with annual turnover of at least £36 million. Gender pay gap reporting generally applies if you have 250 or more employees.

Company reporting rules under the Companies Act 2006 can also require larger companies to report on environmental, employee and social matters. For financial years starting on or after 6 April 2025, the UK company size thresholds have increased, meaning fewer companies are classed as medium or large for some reporting purposes.

Even if these rules don't apply to you directly, a client may still ask for an ESG policy as a contract requirement. If you sign a supplier agreement saying you'll follow your ESG policy, that policy becomes much more than a nice internal document. It can affect whether you win the work, keep the contract and pass future audits.

What Should An ESG Policy Template Include?

A useful ESG policy template should include the areas your client expects to see, but it should be tailored before you use it.

Templates can be a good starting point, especially if you're responding to a deadline. The risk is that they often include broad promises that don't match your actual business. Before you send anything to a client, make sure it reflects what you can genuinely do and evidence.

Here's a practical outline you can use as a starting point.

1. Purpose And Scope: explain why the policy exists, which business activities it covers, and whether it applies to staff, contractors and suppliers.
2. About Your Business: briefly describe what you do, your size, your locations and the ESG issues most relevant to your operations.
3. Environmental Commitments: set out your approach to energy, waste, emissions, travel, packaging, purchasing and resource use.
4. Social Commitments: cover health and safety, fair work practices, equality, diversity, inclusion, staff training and community impact.
5. Modern Slavery And Human Rights: explain how you assess supplier risk, especially if you buy goods, use overseas suppliers or rely on labour hire.
6. Governance And Compliance: include anti-bribery, a conflict of interest policy, data protection, records, decision-making and who approves ESG actions.
7. Supplier Expectations: describe what you expect from suppliers and how you'll raise issues if something doesn't look right.
8. Targets And Actions: list realistic goals, timeframes and who is responsible for each action.
9. Monitoring And Review: explain how often you'll review the policy, what records you'll keep and who owns the process.
10. Approval Details: include the date, version number and name or role of the person who approved it.

This outline isn't a finished legal document. A lawyer should tailor it to your business, your industry and the reason you've been asked for it, especially if it will be attached to a tender or supplier contract.

How Specific Should Your ESG Commitments Be?

Your ESG commitments should be specific enough to be credible, but not so ambitious that you can't realistically meet them.

A good way to approach this is to separate what you're already doing from what you're planning to do. That helps avoid accidental overclaiming.

What You're Already Doing

This part should focus on current practices you can prove. For example:

• you use a licensed waste contractor and keep waste transfer notes where required
• you provide health and safety training to all new starters
• you review supplier terms before placing orders
• you have a privacy policy, data retention rules and internal data protection procedures
• you have an anti-bribery policy and clear rules about gifts and hospitality

If a client audits you later, these are the sorts of records they'll expect to see. Keep your evidence in one place, such as a compliance folder or shared drive.

What You're Working Towards

Future goals are fine, but they should be framed carefully. Instead of saying, "we'll eliminate all emissions", you might say:

• "We'll review our electricity usage every quarter and identify practical reduction measures."
• "We aim to reduce paper usage by 25% over the next 12 months, using the previous financial year as our baseline."
• "We'll ask our key suppliers to confirm their approach to modern slavery and environmental compliance by 30 September 2026."

Notice the difference. These commitments are clear, measurable and realistic. They don't require you to guarantee outcomes that may be outside your control.

If your client has given you a supplier ESG questionnaire, answer it consistently with your policy. If your questionnaire says one thing and your policy says another, that can cause problems during onboarding or contract negotiations.

What Are The Risks Of Overclaiming In An ESG Policy?

The main risk is that an ESG statement you can't back up may lead to commercial, contractual and regulatory consequences.

This matters because ESG policies don't sit in a vacuum. They're often used in tenders, supplier agreements, marketing materials and investor updates. If the claims are inaccurate, your business may face issues such as:

• a client rejecting your tender or removing you from an approved supplier list
• breach of contract claims if your ESG commitments are written into the agreement
• termination rights if a contract says false supplier information is a serious breach
• reputational damage if your public claims are challenged
• regulatory scrutiny if your environmental claims are misleading

In the UK, green claims are an area of active scrutiny. The Competition and Markets Authority's Green Claims Code sets expectations for environmental claims, including that they should be truthful, clear, accurate, substantiated and not omit important information.

The Advertising Standards Authority can also look at environmental claims in advertising under the CAP Code. From 2025, the Digital Markets, Competition and Consumers Act 2024 has strengthened consumer protection enforcement, including the CMA's ability to enforce against misleading commercial practices.

For SMEs, the practical message is simple: don't say more than you can prove.

Be careful with claims like:

• "carbon neutral"
• "net zero"
• "100% sustainable"
• "ethical supply chain"
• "zero waste"
• "environmentally friendly"

Those claims may be fine in some situations, but only if you have solid evidence, clear definitions and any limitations are explained. If you're relying on carbon offsets, supplier certificates or third-party standards, say so clearly and keep the documents.

How Do You Write A Supplier ESG Policy For A Tender?

You should write a supplier ESG policy for a tender by matching the client's request, keeping your claims evidence-based and making sure the policy works with the contract you may have to sign.

Start with the tender documents. Look for exact requirements, such as:

• whether the ESG policy needs board or director approval
• whether it must cover subcontractors
• whether specific standards, accreditations or reporting formats are required
• whether modern slavery, anti-bribery or data protection policies must be separate documents
• whether you need to provide evidence, not just a policy

Then check the draft contract. This is where many SMEs get caught. A tender response might feel like an informal sales document, but the final contract may say that everything you submitted is contractually binding.

Say Ava runs a packaging supplier in Manchester with 18 staff and annual turnover of about £1.2 million. A national food brand asks for an ESG policy before adding her business to its approved supplier list.

Ava's first draft says her business uses "fully sustainable packaging" and has a "zero-waste supply chain". That sounds impressive, but she can't prove it. Some packaging is FSC-certified, some is recycled content, and some is standard stock sourced through a distributor.

A better approach is for Ava to say:

• 60% of her paper-based packaging range is FSC-certified as at the policy date
• her business aims to increase this to 75% by 31 December 2026
• all warehouse cardboard waste is separated for recycling through a named licensed waste contractor
• new suppliers will be asked to complete a sustainability and modern slavery questionnaire before approval

That version is less flashy, but much safer. It gives the client useful information, sets a measurable target and avoids a claim Ava can't support.

What Records Should You Keep With Your ESG Policy?

You should keep records that show your ESG policy is real in practice, not just a document saved in a folder.

If a client asks for your ESG policy now, there's a good chance they'll ask for evidence later. That might happen during annual supplier reviews, contract renewal, due diligence or an audit.

Useful records can include:

• approved copies of your ESG policy and older versions
• board, director or management notes approving ESG actions
• energy bills, mileage records or travel logs used to measure targets
• waste transfer notes and recycling records
• supplier questionnaires, certificates and audit responses
• staff training records for health and safety, anti-bribery, privacy or equality matters
• incident reports and records of corrective action
• copies of related policies, such as privacy, data retention, anti-bribery, whistleblowing and modern slavery policies

You don't need an expensive system to start. A simple spreadsheet and a clearly labelled folder can work well for a small business.

Set a review date too. Many businesses review ESG policies annually, or sooner if something material changes, such as taking on a major supplier, moving premises, changing products or entering a regulated sector.

Also think about who owns the policy internally. If everyone is responsible, often no one is. For a small business, this might be a director, operations manager, office manager or founder. What matters is that someone has the authority and time to keep it updated.

Key Takeaways

• An ESG policy is often a client or tender requirement, even where your SME doesn't have a standalone legal duty to prepare one.
• Your policy should cover environmental, social and governance issues that are actually relevant to your business.
• A template can help you start, but it should be tailored before you send it to a client or attach it to a contract.
• Avoid broad ESG claims unless you can prove them with clear records and evidence.
• Check your tender documents and supplier contract carefully, because your ESG policy may become contractually binding.
• Keep simple records and review your policy regularly so it stays accurate as your business grows.

If you'd like help with tailoring your ESG policy, reviewing supplier contract requirements, checking environmental claims or preparing related business policies, you can reach us at 08081347754 or team@sprintlaw.co.uk for a free, no-obligations chat.