The Environmental Stewardship & Circularity (ESC) Impact Topic asks companies to assess their environmental impacts and take meaningful action to minimize them in their operations and value chain. It challenges companies to take responsibility for their environmental footprint by prioritizing
sustainable resource use, circular design, and responsible procurement practices.Why this Matters
The world today faces environmental crises on several fronts — from climate change, to water scarcity, to biodiversity loss. Companies need to act urgently to adopt circular business models and contribute to a nature-positive future.
1. Monitoring and Assessing
Companies monitor the environmental impacts of their operations, including waste generation, energy use, water consumption or withdrawal, and animal welfare. They assess whether their activities take place in water-stressed or ecologically sensitive areas. In addition, companies evaluate and identify both actual and potential environmental impacts across their operations and throughout their value chain.
ESC1 The company knows its actual and potential impacts on the environment. |
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ESC1.1 The company monitors waste production from its operations and where it ends up. | Micro, Small, Medium, Large, Extra Large, and Extra Extra Large companies | All sectors except Service with Minor Footprint | Year 0 Year 3 Year 5 |
ESC1.2 The company monitors its energy use. | Micro, Small, Medium, Large, Extra Large, and Extra Extra Large companies | All sectors except Service with Minor Footprint | Year 0 Year 3
Year 5 |
ESC1.3 The company monitors its water consumption or withdrawal. | Micro, Small, Medium, Large, Extra Large, and Extra Extra Large companies | All sectors except Service with Minor Footprint | Year 0 Year 3
Year 5 |
ESC1.4 The company identifies its facilities in areas at water risk and monitors their water consumption or withdrawal. | Medium, Large, Extra Large, and Extra Extra Large companies | All sectors except Service with Minor Footprint | Year 0
Year 3
Year 5 |
ESC1.5 The company identifies its facilities in or near ecologically sensitive areas, and whether they are negatively affecting these areas. | Medium, Large, Extra Large, and Extra Extra Large companies | Manufacturing, Agriculture/Growers | Year 0
Year 3
Year 5
|
ESC1.6 The company monitors the animal welfare conditions in its operations. | All Micro, Small, Medium, Large, Extra Large, and Extra Extra Large companies | All sectors | Year 0 Year 3
Year 5 |
ESC1.7 The company conducts an assessment to identify actual and potential environmental impacts connected to its operations and value chain. | Medium, Large, Extra Large, and Extra Extra Large companies | All sectors except Service with Minor Footprint | Year 0 Year 3
Year 5 |
ESC1.8 The company publicly shares its material environmental issues. | Medium, Large, Extra Large, and Extra Extra Large companies | All sectors except Service with Minor Footprint | Year 3
Year 5 |
2. Developing Strategies
Companies develop a structured approach to address their actual and potential environmental impacts through the formalization of strategies, processes, procedures, as well as transition plans tailored to the impacts. This ensures they have a clear roadmap and allocate sufficient resources to effectively manage the most significant environmental impacts across their operations and value chain.
ESC2 The company has a strategy to address its actual and potential negative environmental impacts, and to support staying within ecological thresholds. |
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ESC 2.1 The company has a strategy to address its actual and potential negative environmental impacts. | Medium, Large, Extra Large, and Extra Extra Large companies | All sectors except Service with Minor Footprint | Year 3
Year 5 |
ESC 2.2 The company has a biodiversity transition plan to halt and reverse biodiversity loss caused by its operations and value chain. | Extra Large, and Extra Extra Large companies | All sectors except Service with Minor Footprint | Year 3
Year 5 |
Medium and Large companies | Manufacturing Agriculture/Growers | Year 3
Year 5
|
ESC 2.3 The company has a water stewardship strategy that limits water use in its operations and value chain to within sustainable thresholds. | Large, Extra Large, and Extra Extra Large companies | All sectors except Service with Minor Footprint | Year 3
Year 5
|
Medium companies | Manufacturing Agriculture/Growers | Year 3
Year 5 |
ESC 2.4 The company’s policies and procedures address its material environmental impact areas. | Medium, Large, Extra Large, and Extra Extra Large companies | All sectors except Service with Minor Footprint | Year 3
Year 5 |
ESC 2.5 Workers in relevant roles receive the guidance they need to implement the environmental policies and procedures. | Medium, Large, Extra Large, and Extra Extra Large companies | All sectors except Service with Minor Footprint | Year 3
Year 5 |
ESC2.6 The company assesses the potential negative environmental impacts related to potential organizational clients and projects, and takes necessary mitigation actions. | Companies without workers, Micro, Small, Medium, Large, Extra Large, and Extra Extra Large companies | Service with Minor Footprint | Year 0 Year 3
Year 5 |
ESC2.7 The company assesses the potential negative environmental impacts of investments, and takes necessary mitigation actions. | Companies without workers, Micro, Small, Medium, Large, Extra Large, and Extra Extra Large companies | Service with Minor Footprint | Year 0 Year 3 Year 5 |
3. Circularity
Companies implement circular principles that focus on the use of renewable materials – developing lasting products and systems for recirculation (reuse or recycling) at product end-of-life. This ensures that companies reduce their consumption of natural resources and foster a circular economy.
ESC3 The company implements circularity principles to reduce waste and its impact on natural resources. |
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ESC3.1 The company monitors its material inflow. | Large, Extra Large, and Extra Extra Large companies | All sectors except Service with Minor Footprint | Year 0 Year 3
Year 5 |
ESC3.2 The company reduces its use of virgin non-renewable materials. | Large, Extra Large, and Extra Extra Large companies | All sectors except Service with Minor Footprint | Year 3
Year 5 |
ESC3.3 The company’s product development incorporates circularity principles. | Small, Medium, Large, Extra Large, and Extra Extra Large companies | All sectors except Service with Minor Footprint | Year 3
Year 5 |
ESC3.4 The company understands the recovery infrastructure available where it sells its products. | Extra Large, and Extra Extra Large companies | All sectors except Service with Minor Footprint | Year 0
Year 3
Year 5 |
ESC3.5 The company takes steps to increase the recovery of its products and packaging after their end-of-life. | Extra Large, and Extra Extra Large companies | All sectors except Service with Minor Footprint | Year 3
Year 5 |
For sub-requirement ESC 3.3, the circularity principles options are listed in 3.3a, b, c, d (see Appendix).
4. Taking Action
Companies act on their strategies to prevent and mitigate impacts and regularly re-evaluate their strategy for continuous improvement. This ensures that companies make progress on environmental stewardship as a whole.
ESC4 The company takes action to prevent and mitigate its actual and potential negative environmental impacts. |
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ESC4.1 The company implements actions to prevent or mitigate its actual and potential negative environmental impacts. | Large, Extra Large, and Extra Extra Large companies | Service with Minor Footprint | Year 3 Year 5 |
Small companies | All sectors except Service with Minor Footprint | Year 3 Year 5 |
ESC4.2 The company makes progress on its environmental strategy and evaluates its effectiveness. | Medium, Large, Extra Large, and Extra Extra Large companies | All sectors except Service with Minor Footprint | Year 5
|
ESC4.3 The company makes progress on its biodiversity transition plan and evaluates its effectiveness. | Extra Large, and Extra Extra Large companies | All sectors except Service with Minor Footprint | Year 5 |
Large, Medium companies | Manufacturing Agriculture/Growers | Year 5 |
ESC4.4 The company makes progress on its water stewardship strategy and evaluates its effectiveness. | Large, Extra Large, and Extra Extra Large companies | All sectors except Service with Minor Footprint | Year 5 |
Medium companies | Manufacturing Agriculture/Growers | Year 5 |
ESC4.5 The company publicly shares the effectiveness of its environmental strategy. | Extra Extra Large companies | All sectors except Service with Minor Footprint | Year 5 |
5. Supply Chain
Companies consider the environmental impacts of the procurement decisions to prevent and mitigate supplier impacts. Larger companies actively engage with their suppliers to attain environmental objectives and to foster supply chain traceability.
ESC5 The company works with suppliers to achieve its environmental objectives. |
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ESC5.1 The company considers actual and potential environmental impacts in its procurement decisions. | Medium companies | Service with Significant Footprint, Service with Minor Footprint | Year 0 Year 3 Year 5 |
ESC5.2 The company considers actual and potential environmental impacts in its procurement decisions | Large, Extra Large, and Extra Extra Large companies | Service with Minor Footprint | Year 0 Year 3 Year 5 |
Medium companies | Wholesale/Retail, Manufacturing, Agriculture/Growers | Year 0 Year 3
Year 5 |
ESC5.3 The company works with suppliers to prevent or mitigate their most material environmental impacts | Large, Extra Large, and Extra Extra Large companies | All sectors except Service with Minor Footprint | Year 0 Year 3 Year 5 |
ESC5.4 The company has a time-bound plan to trace the origin and potential environmental impacts of its high-risk raw materials. | Extra Large, and Extra Extra Large companies | Wholesale/Retail, Manufacturing Agriculture/Growers | Year 3 Year 5 |
ESC5.5 The company sources deforestation-free raw materials. | All Extra Large, and Extra Extra Large companies | Wholesale/Retail, Manufacturing, Agriculture/Growers | Year 3 Year 5
|
ESC5.6 The company traces more high-risk raw materials to their origin. | All Extra Large, and Extra Extra Large companies | Wholesale/Retail, Manufacturing, Agriculture/Growers | Year 5 |
ESC5.7 The company works with suppliers to address environmental impacts related to high-risk raw materials. | All Extra Large, and Extra Extra Large companies | Wholesale/Retail, Manufacturing, Agriculture/Growers | Year 5 |
Appendix
Circularity Principles Options
Under ESC3.3 sub-requirement, companies incorporate circularity principles in their product development. Companies choose one or more of the following options:
Circularity Principles |
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ESC3.3a The company avoids and reduces single-use products and packaging in its portfolio. |
ESC3.3b The company designs its products for long-term use. |
ESC3.3c The company’s products are able to recirculate after use. |
ESC3.3d The company’s products are able to recirculate at their end-of-life. |
Further resources
Topic | Resource |
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Circularity | |
Biodiversity | |
Nature | Nature Strategy Handbook - A practical guide for businesses, 2023 (Business for Nature) [EN] [ES] [FR] High Carbon Stock Approach [EN] [ES] [FR] [IN] [PT] Nature Benchmark Methodology, 2024 (World Benchmarking Alliance) [EN]
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Water | |
Standards | European Sustainability Reporting Standards - E3 Water and marine resources and E4 Biodiversity and Ecosystems, 2023 (EFRAG) [EN] [FR] GRI Sector Standards [EN]
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Release 1 - 11 July, 2025 - based on B Lab Standard v1.0 - © B Lab 2025