# ESG Due Diligence Frameworks ESG due diligence evaluates a company's environmental, social, and governance performance — both as an investment filter and as a supply chain qualification criterion. For deep tech materials companies, ESG positioning affects fundraising, enterprise customer acquisition, and regulatory access simultaneously. ## The Three Dimensions **Environmental.** Carbon footprint (Scope 1, 2, and 3 emissions), water consumption, waste generation, land use, biodiversity impact, and circular economy alignment. For a natural antimicrobials company, the product itself is the environmental story — but the supply chain behind it must withstand scrutiny. **Social.** Labour practices across the supply chain, product safety and liability, community impact of operations, and access and affordability considerations. The agricultural sourcing chain for plant-derived bioactives frequently involves smallholder farmers in developing markets — labour practice documentation is not optional. **Governance.** Board composition and independence, IP ownership clarity, regulatory compliance history, audit trail quality, executive compensation structure, and related-party transaction disclosure. For early-stage deep tech: IP chain-of-title clarity (who owns what from university spin-out or A*STAR collaboration) is a frequent due diligence flag. ## Key Reporting Frameworks **GRI (Global Reporting Initiative).** The most widely used voluntary sustainability reporting standard. Sector-specific supplements exist for chemicals and materials. GRI reports disclose against indicators on energy use, water, emissions, and supply chain management. **TCFD (Task Force on Climate-related Financial Disclosures).** Focuses on climate risk disclosure — how climate change affects the business financially, and how the company plans to adapt. Mandatory or quasi-mandatory in the UK, New Zealand, Switzerland, and increasingly in Singapore (MAS guidelines for listed companies). **SASB (Sustainability Accounting Standards Board).** Industry-specific materiality standards — the chemicals sector SASB standard covers waste management, energy intensity, safety incidents, and supply chain assessment. Useful for industry benchmarking. **EU CSRD (Corporate Sustainability Reporting Directive).** Mandatory for large EU companies and their significant non-EU subsidiaries from 2024 onward. CSRD requires double materiality assessment — both how sustainability issues affect the business and how the business affects sustainability. Supply chain due diligence obligations under CSRD pull non-EU suppliers into the reporting scope. **ISSB Standards (IFRS S1 and S2).** The International Sustainability Standards Board has issued global baseline standards for sustainability disclosure. IFRS S2 covers climate-related disclosures aligned with TCFD. ## ESG as Commercial Infrastructure for Natural Antimicrobials The product is the ESG story — bio-derived, functional, reducing food waste, replacing synthetic biocides, reducing AMR pressure. This is a genuine differentiation in a market where most packaging and preservation inputs have no ESG narrative. But the ESG claim must be substantiated: 1. **LCA data** (see: [[Life Cycle Assessment (LCA) Methodology]]) provides the quantitative foundation — GWP per functional unit, water footprint, land use 2. **Supply chain traceability** documents the origin of agricultural feedstocks, confirms no deforestation or forced labour, and provides chain-of-custody for "upcycled" ingredient claims 3. **Regulatory compliance record** demonstrates the governance dimension — clean audit history with SFA, EFSA, FDA shows the company manages risk responsibly 4. **AMR narrative** (see: [[Antimicrobial Resistance (AMR)]]) links the product to one of the WHO's highest-priority global health challenges — this elevates the social dimension beyond product safety ## The ESG Due Diligence Process in Practice Enterprise customers and institutional investors conduct ESG due diligence through: - **Questionnaires:** EcoVadis, CDP (Carbon Disclosure Project), or custom procurement questionnaires. EcoVadis rates suppliers on a 0–100 scale across environment, labour, ethics, and sustainable procurement - **Document review:** LCA reports, safety data sheets, regulatory approval certificates, audit reports - **Site visits and audits:** for significant suppliers, physical verification of practices - **Third-party verification:** increasingly required for material ESG claims; standalone assurance of LCA results and carbon footprint calculations Companies that complete EcoVadis Gold (top 5% of rated companies) gain procurement preference with multinationals. This is achievable for a well-documented natural antimicrobials company — the product attributes are genuinely favourable, and the gap is documentation discipline. --- *Part of [[Natural Antimicrobials & Sustainable Materials MOC]]*