ESG due diligence has three components.
This involves checking that a company complies with national environmental and workforce-related legislation, and with European Union directives including the SEA (Strategic Environmental Assessment) and EIA (Environmental Impact Assessment) directives.
This involves analysing:
- direct environmental impacts (pollution of the atmosphere, soil, water etc.);
- issues relating to the use of resources (biomass, oil, water etc.);
- protected zones and critical habitats;
- biodiversity (presence of Emerald Network areas, endangered species etc.);
- impact on climate change (greenhouse gas emissions, increased vulnerability to climate change);
- water management (the project's impact on a lake, river, coast etc.);
- the developer's environmental capacity (creation of systems for managing environmental issues, existence of environmental standards).
- employment law;
- health and safety (potential impact on the health of neighbouring communities, health and safety rules);
- stakeholder commitments (the project's acceptability to local communities, public consultations);
- the developer's approach to its workforce (compliance with employment law, HR policy).