ESG checklist for SMEs: 20 things to have in place

An ESG checklist for SMEs should cover three areas: how you measure and reduce your environmental impact, how you treat your people and community, and how the business is governed. The 20 items below are the ones UK customers, buyers, lenders and grant funders ask about most often. You do not need all 20 on day one. Most small firms already do half of them and simply have nothing in writing.

Work through the list, tick what you have, and note what is missing. That note becomes your action plan.

Environmental: what should you measure and have in writing?

1. A carbon footprint baseline. This is the most requested ESG figure by some distance. It should cover Scope 1 (gas, company vehicles), Scope 2 (electricity) and the main Scope 3 sources such as business travel, waste and water. Use the official UK government conversion factors so your figures are comparable.

2. Your energy data in one place. Twelve months of electricity and gas kWh from your bills or supplier portal. If you are in a co-working space or your landlord pays the bills, a reasonable estimate is fine.

3. A note of your electricity tariff. Whether it is a renewable tariff backed by REGOs changes your market-based Scope 2 figure, so record it.

4. Vehicle fuel or mileage records. If you have company vans or cars, keep fuel card statements or annual mileage per vehicle. This is often the biggest part of a trades or field services firm’s footprint.

5. A simple travel log. Trains and flights taken for work over the year, with rough distances and flight class. A shared spreadsheet is plenty.

6. Waste and recycling arrangements. Bin sizes, how often they are collected and what is recycled. Your waste contractor can usually tell you.

7. A written environmental policy. One or two pages saying what your main impacts are, what you are doing about them and who is responsible. See our environmental policy template.

8. A carbon target or commitment. For example, a percentage reduction against your baseline by a set year, or a commitment to net zero by 2050. Keep it realistic.

Social: how do you show you look after people?

9. A health and safety policy. If you have five or more employees, HSE says you must write it down and share it with staff. Below five, it is still good practice.

10. A way of recording accidents and incidents. If you normally employ 10 or more people on the same premises, keeping an accident record is a legal requirement. For smaller firms, a simple log still answers a very common questionnaire item.

11. Pay that you can stand behind. Note whether you pay the Real Living Wage, set annually by the Living Wage Foundation, and whether you are accredited. If not, record your lowest hourly rate so you know where you stand.

12. A list of staff benefits. Pension contributions above the minimum, flexible or hybrid working, extra holiday, health cover, cycle to work. Small firms often offer more than they realise.

13. Training records. What training staff received in the year and roughly how many hours. Include informal learning like conferences and online courses.

14. Diversity monitoring, if you have a team. Even a voluntary, anonymous annual survey of staff gives you something to report. Keep it proportionate and confidential.

15. Community involvement. Volunteering hours, charitable donations, pro bono work or local sponsorship. A rough total for the year is enough.

16. UK GDPR basics. A privacy notice, a sense of what personal data you hold and why, and registration with the ICO if required. The ICO data protection fee is £52 a year for most micro businesses.

Governance: how is the business run?

17. A code of conduct. A short document setting out how people in the business behave: honesty, conflicts of interest, anti-bribery, treating people fairly. Our code of conduct template guide has an outline.

18. A named person responsible for ESG. In a small business, this is usually a director or the owner. Buyers just want to know someone owns it.

19. A basic risk register. A one-page list of the main risks to the business, including climate-related ones such as flooding or energy price rises, and what you do about them.

20. Supplier checks. Some evidence that you think about who you buy from: a short supplier code, a question in your onboarding, or a preference for local or certified suppliers. A Modern Slavery statement is only legally required at turnover of £36 million or more, so most SMEs do not need one.

Which items matter most for your situation?

It depends who is asking.

• Supplier questionnaires lean heavily on items 1, 7, 8, 17 and 20. Large customers want figures for their Scope 3 and evidence of policies.
• Public sector tenders focus on the carbon footprint, targets and social value. For in-scope central government contracts, a PPN 006 Carbon Reduction Plan is mandatory.
• Investors look closely at governance and people, items 9 to 18.
• Grant funders for decarbonisation projects care most about items 1 to 4, because they want to see your current energy use and the savings a project would make.

If you are not sure who will ask first, start with the carbon footprint and the three policies (environmental, health and safety, code of conduct). Those cover the majority of requests.

How to work through the checklist quickly

The slow part is usually finding things, not doing them. A practical order:

1. Pull 12 months of energy bills and any fuel records. Half an hour, at most.
2. Ask whoever books travel for a rough list of trips.
3. Check what policies already exist in your staff handbook or shared drive.
4. Fill the gaps with short, honest documents.

If that still sounds like a job for next month, ESG Now covers all 20 items in one guided questionnaire. It offers estimates when you lack a figure, such as energy from floor area or waste from bin sizes, and labels each number as measured, estimated or a data gap. You get a shareable ESG report and a private action plan that shows which policies you already have in place and which are worth adding next.

Most small businesses finish in under 30 minutes. Your first report is free. Start your free report, or read our guide to ESG quick wins for low-cost ways to improve your score once you have a baseline. You will find more on why this matters for smaller firms on our small businesses page.