ESG Due Diligence Checklist

Conduct a comprehensive ESG due diligence check with a digital checklist to navigate through the business’ environmental, social, and governance policies.

investors discussing about business performance through esg due diligence

What is an ESG Due Diligence Checklist?

An Environmental, Social, Governance (ESG) due diligence checklist is a tool used to evaluate a company’s ESG policies and risk factors. It helps uncover potential ESG issues, manage risks, and identify value-creation opportunities. By using this checklist, investors and organizations can make more informed and ethical investment decisions and assess the sustainability and ethical practices of the companies they work with.

Importance and Benefits

The benefits of a thorough ESG due diligence process include uncovering crucial data and insights into the success and value of a company’s ESG, identifying and managing risks, and meeting stakeholder expectations. By using this checklist, investors and organizations can make more informed and ethical investment decisions, as well as assess the sustainability and ethical practices of the companies they work with.

  • Risk Mitigation – By identifying and assessing ESG risks, organizations can mitigate potential negative impacts on the environment, society, and governance, thus safeguarding their reputation and financial performance.
  • Enhanced Corporate Reputation – By proactively addressing ESG concerns, companies can demonstrate their commitment to responsible business practices. This, in turn, can help them improve their public image and brand value.
  • Investor Confidence – By prioritizing the right ESG factors and demonstrating fulfillment of ESG commitments, companies can instill confidence in investors regarding their long-term sustainability and value-creation potential.


What Should be Included in Your ESG Due Diligence Checklist?

An ideal ESG due diligence checklist would cover the main three categories: environmental, social, and governmental. Apart from this, it should also incorporate other important categories in line with your business needs and goals.

When conducting due diligence assessments, it’s important to be as detailed as you can by engaging in conversations with the right point of contact. Here are the following key elements to include in your checklist:

Environmental Factors

Assess the company’s environmental impact, including the following:

This covers the consumption, usage, and efforts being done to control the environmental impact.

Social Factors

Evaluate the company’s impact on society, covering aspects such as:

This should also cover whether the organization is adhering to safety regulations, labor policies, and other quality management standards.

Governmental Factors

Examine the company’s governance structure, board composition, executive compensation, and business ethics. This should also assess the board of directors whether the members are qualified experts, diverse, and involved in ESG matters.

Geographical and Sector Information

Understand the company’s geographical location and the specific environmental, social, and governance challenges it faces.

Risk Assessment

Perform a risk assessment based on the information gathered to understand how the company is run and the risks it may pose. This may also cover stakeholder interviews involving company representatives and subject matter experts to gain insights into the company’s attitude towards ESG and its commitment to addressing ESG issues.

Frequently Asked Questions (FAQs)

ESG due diligence can be conducted by private equity investors, dealmakers, and other stakeholders involved in investment decisions. The process involves evaluating a company’s environmental, social, and governance performance to identify potential risks and opportunities.

ESG data can be collected from various sources, both internal and external, such as:
Company-reported data
Third-party collected data (e.g., MSCI, Refinitiv, Sustainalytics)
Alternative data (e.g., geospatial data, social media sentiment data)

The absence of standardized ESG data is a significant challenge for asset managers to properly evaluate a company’s performance on ESG criteria.

To address this issue, organizations like the World Economic Forum (WEF) have developed comprehensive ESG reporting systems with a set of metrics and disclosures. These metrics help companies report their ESG performance in a consistent and comparable manner.

Eligio Rempillo
Article by

Eligio Rempillo

SafetyCulture Content Specialist
Eligio Rempillo is a content writer and researcher for SafetyCulture. With experience in working with clients various industries including animal care products, food, technology, and personal protective equipment for industrial uses, he is committed to advocating workplace safety and keep your business with up-to-date technologies for a better way of working.

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Conduct a Thorough ESG Due Diligence by Using SafetyCulture 
Why Use SafetyCulture? Start your ESG due diligence checks by leveraging a digital solution such as SafetyCulture (formerly iAuditor). With this digital ESG platform, experts and businesses can attain an optimal equilibrium of efficiency, safety, and quality in their ESG due diligence processes, contributing to overall operational enhancement. Additionally, professionals such as ESG analysts, risk managers, compliance officers, sustainability coordinators, and auditors can perform and utilize these powerful tools: Perform ESG due diligence checks using a digital checklist. Explore a wide range of customization to tailor your checklist and cover everything you need. Give further context to your findings by providing supporting documents and supplementary notes. Quickly address non-compliant areas found during the due diligence process through corrective action items. Prepare professional reports after completing due diligence tasks and send them to your stakeholders conveniently in PDF, Excel, Web, and other formats. Safeguard your ESG due diligence reports from unauthorized access with the help of the platform’s secure cloud storage and access controls. Implement ESG due diligence checks consistently, no matter who performs the process, by training employees in-app.
ESG Checklist
Utilize this ESG checklist template to assess your company’s ESG compliance. The checklist is a guide to scrutinize and identify any potential issues in your company’s practices.
Environmental Audit Checklist
Utilize this checklist to evaluate your company’s initiatives aimed at safeguarding and enhancing the environment. This template complements the ESG checklist and includes sections for appraising your policies, environmental management plans, and associated risks.