Environmental Stewardship & Circularity (ESC) Standards, Simplified

What does it take to build a truly sustainable business? For B Corps, environmental stewardship is a core part of the answer: not just reducing harm, but reshaping systems to support a regenerative, circular future. 

That’s the aim of the Environmental Stewardship & Circularity (ESC) standards. Part of the B Impact Assessment, ESC helps companies move from good intentions to measurable action: tracking their environmental footprint, aligning with ecological thresholds, and partnering across the value chain to create lasting change.

These standards go beyond compliance. They unlock what we call the circular advantage: a business model that minimizes waste, maximizes reuse, and turns environmental responsibility into long-term resilience, cost savings, and brand trust. They challenge companies to operate within the planet’s limits, reduce their reliance on virgin resources, and contribute to a nature-positive economy in which people, ecosystems, and businesses can thrive together.

Note the that this overview is a simplified introduction; the specific requirements can differ depending on your company’s size, sector, and industry. For details on how these standards apply to your own business, visit B Lab’s Standards page.

If you’re looking for a practical entry point, this guide offers a clear and accessible breakdown of ESC’s five pillars:

• ESC1: Understand your environmental impact
• ESC2: Build a strategy to stay within ecological thresholds
• ESC3: Embed circularity into product and packaging design
• ESC4: Take action to mitigate environmental harm
• ESC5: Collaborate with suppliers to scale your impact

Together, these pillars form a blueprint for environmental resilience, helping companies reduce risk, unlock new sources of value, and lead with integrity in the face of climate, biodiversity, and resource challenges.

ESC1: Understand Your Environmental Impact

ESC1 focuses on environmental awareness: tracking the full scope of your company’s actual impacts (what you’re doing now) and potential impacts (what could happen across your operations and value chain) as it pertains to waste, water, energy, biodiversity, and beyond.

This standard encourages companies to monitor their resource use and outputs—from landfill waste to water withdrawals and GHG emissions—and to assess where those impacts occur across facilities, geographies, and the value chain. It also calls for deeper diagnostics: identifying facilities near ecologically sensitive areas, monitoring animal welfare where applicable, and mapping environmental risks by severity and likelihood.

Finally, ESC1 calls for transparency. Public disclosure of material environmental issues (along with your methodology) builds accountability, improves comparability, and strengthens trust with stakeholders.

Why it matters: Companies that track their environmental footprint gain clarity on operational risks, compliance gaps, and areas for improvement. Measurement enables smarter decisions, better resource use, and greater alignment with customer, investor, and regulatory expectations.

How to put ESC1 into practice

To meet ESC1, companies should build a full picture of their environmental impact across all operations and value chain segments. That includes:

• Tracking hazardous and non-hazardous waste, including how much is diverted vs. sent to landfill or incineration
• Measuring total energy use and renewable energy share, and calculating energy intensity (e.g., per unit of revenue or product)
• Recording water consumption or withdrawal, and identifying facilities in water-stressed regions
• Identifying biodiversity impacts and monitoring animal welfare where applicable (e.g., for companies involved in agriculture, food production, or textiles)
• Conducting a full environmental risk assessment, prioritizing the most significant impacts based on severity and likelihood
• Publishing a summary of your material environmental issues, including how you identified them
• These practices establish a strong baseline for action, whether you’re pursuing mitigation, setting targets, or communicating with stakeholders.

What to measure and monitor for ESC1

Quantitative indicators help companies benchmark performance, manage risk, and plan ahead. Examples include:

• % of operations with environmental risk assessments
• % of emissions and waste mapped across the full value chain (Scopes 1, 2, and 3: direct, indirect, and supply chain-related)
• % of product lines with lifecycle assessments (LCAs)
• Geographic or supplier-specific risk exposure, especially in water-stressed or biodiversity-sensitive regions

Tracking these metrics over time supports internal accountability and ensures your sustainability reporting reflects real, actionable data.

ESC2: Build a Strategy to Stay Within Ecological Thresholds

While ESC1 helps you measure, ESC2 asks: What will you do with what you’ve learned? This standard requires companies to build a proactive environmental strategy that aligns operations with science-based targets and planetary boundaries.

Rather than rely on fragmented initiatives, ESC2 promotes a cohesive approach: one that’s informed by data, grounded in governance, and built to evolve. That means developing comprehensive plans to address their most material environmental impacts, such as biodiversity transition plans, water stewardship strategies, and business model alignment roadmaps. These strategies must be approved by leadership, reviewed annually, and supported by clear policies, department-level ownership, staff training, and rigorous screening of clients, projects, and investments.

As with ESC1, the emphasis is on systems over slogans. ESC2 helps companies future-proof operations, meet rising regulatory and investor expectations, and contribute to global efforts like the Paris Agreement and the Kunming-Montreal Global Biodiversity Framework.

Why it matters: Even amid shifting U.S. federal priorities, global regulations are tightening, and resource pressures are accelerating. Companies without a clear environmental strategy face growing risk. ESC2 supports both regulatory readiness and long-term environmental leadership. A robust strategy can drive down resource use, strengthen stakeholder trust, and position your business as part of a regenerative, climate-stable economy.

How to put ESC2 into practice

To meet ESC2, companies should turn their ESC1 assessments into a forward-looking, leadership-backed strategy that’s specific, measurable, and grounded in the realities of their business. Key elements include:

• Creating a multi-year environmental strategy with clear goals, indicators, responsibilities, and a plan for engaging key stakeholders (e.g., suppliers, employees, and local communities)
• Developing biodiversity and water stewardship plans if your assessment showed those impacts are material (meaning significant in scale or severity for your operations or value chain)
• Ensuring that internal policies and procedures reflect the specific environmental risks you’ve identified (e.g., emissions, deforestation, water use, etc.)
• Training relevant staff on how to apply those policies in their day-to-day roles
• Evaluating the environmental impact of new clients, projects, or investments, and documenting mitigation plans where risks are identified
• Reviewing and updating all strategies annually, with sign-off from your executive team or board

Together, these practices help embed environmental leadership into your company’s structure while reinforcing alignment with ecological thresholds and stakeholder expectations.

What to measure and monitor for ESC2

Strong strategies are grounded in strong metrics. Tracking the right indicators helps companies benchmark progress, ensure internal accountability, and demonstrate impact to customers, investors, and regulators. Examples include:

• % of business activities aligned with science-based targets (such as those outlined by the Science Based Targets initiative, or SBTi)
• ESG reporting coverage across operations and the supply chain
• Progress against reduction targets for water, energy, greenhouse gas emissions, and land use
• Ratio of revenue from products or services aligned with ecological thresholds (e.g., low-carbon, water-efficient, circular by design)
• % of clients or investments evaluated for environmental risk, and how effective mitigation efforts have been
• % of relevant employees trained to implement environmental procedures and decision frameworks

These indicators help ensure your strategy isn’t just a plan on paper, but a system of ongoing accountability and measurable progress.

ESC3: Embed Circularity Into Product and Packaging Design

Circularity starts with a shift in perspective: designing for the full lifecycle of materials, not just their disposal. ESC3 challenges companies to move beyond single-use thinking and adopt systems that keep materials in motion.

This standard spans the full lifecycle: from sourcing renewable or recycled inputs to supporting recovery infrastructure at end-of-life. Companies are expected to reduce dependence on virgin, non-renewable materials; increase use of verified sustainable content; and design for durability, disassembly, reuse, or regenerative decomposition (especially in high-impact markets).

ESC3 isn’t one-size-fits-all. Companies can choose the circular design principles that best fit their portfolio, whether that means avoiding single-use packaging, designing for repair and reuse, or enabling biological recirculation at end-of-life.

Why it matters: Circular models don’t just reduce waste; they also unlock value. Replacing linear models with circular ones improves material efficiency, lowers costs, and sparks innovation across supply chains and product development. As resource pressures grow, circularity also strengthens resilience, deepens customer trust, and unlocks new revenue opportunities in a reuse-driven economy.

How to put ESC3 into practice

To meet ESC3, companies must integrate circularity principles into material sourcing, product design, packaging decisions, and end-of-life recovery. That includes:

• Tracking material inflows for both products and packaging, including total tonnage, percentage of recycled or renewable content, and third-party verification of sustainable sources
• Reducing reliance on virgin, non-renewable materials over time, measuring progress annually and increasing use of non-virgin or renewable alternatives
• Choosing circular design pathways that best fit your product mix, such as:
  • Avoiding or reducing single-use items
  • Designing for long-term durability, repair, and reuse
  • Enabling disassembly, refurbishment, or remanufacturing
  • Supporting biological recirculation or advanced recyclability
• Evaluating recovery infrastructure in key markets: understanding what happens to your products and packaging after use, and identifying recovery gaps across geographies
• Launching or expanding recovery initiatives in your highest-volume end-user markets, focusing efforts where impact is greatest

These practices reduce environmental burdens, mitigate material risk, and position your brand for long-term circular growth in a resource-constrained world.

What to measure and monitor for ESC3

Circularity demands measurement at every stage of the product lifecycle. Key indicators include:

• % of total materials reclaimed or reused across products and packaging
• % of packaging that is reusable, recyclable, or compostable
• Reduction in virgin material use over time (especially non-renewables)
• % of product portfolio designed for repair, reuse, remanufacturing, or biological recirculation
• % of end-user markets with active recovery programs or infrastructure improvements
• Reduction in material input costs due to circular sourcing or redesign
• % of revenue from circular product or service lines (e.g., take-back models, subscription-based reuse, refurbished goods)

These indicators validate your efforts and help demonstrate the business value of circularity to stakeholders and customers alike.

ESC4: Take Action to Mitigate Environmental Harm

ESC4 transforms strategy into results. It holds companies accountable for acting on their commitments in ways that can be tracked, evaluated, and improved. Whether it’s reducing emissions, restoring ecosystems, or redesigning packaging, companies are expected to act on identified environmental risks with urgency and intention.

Mitigation isn’t a one-off initiative; it’s an ongoing commitment. Companies must demonstrate progress on their environmental, biodiversity, and water stewardship strategies, share those results internally and externally, and document what’s working (and what isn’t).

Why it matters: Taking early, visible action helps companies avoid reputational risk, reduce long-term operating costs, and prevent environmental damage before it escalates. ESC4 reinforces the credibility of your sustainability strategy, signaling that environmental accountability is part of how you operate… not just how you report.

How to put ESC4 into practice

To meet ESC4, companies should translate environmental strategies into action, and establish clear systems to track execution, measure effectiveness, and adapt as conditions evolve. Key practices include:

• Executing measurable mitigation actions across your operations or value chain, based on the risks identified in ESC1 and strategies defined in ESC2
• Tracking progress against targets related to environmental impact, biodiversity, and water stewardship
• Evaluating the effectiveness of your strategies on a regular cadence (at least every 3 years), documenting lessons learned, and adjusting plans as needed
• Sharing evaluation results with leadership and publicly reporting on outcomes, including strategy updates and areas for improvement
• Closing the loop: using real-world results to refine future goals and strengthen environmental performance across teams and systems

These practices embed continuous improvement into your environmental efforts and keep your plans responsive to shifting conditions.

What to measure and monitor for ESC4

The most credible mitigation plans are backed by data. These indicators can help you track impact, improve strategy execution, and communicate outcomes to stakeholders:

• $ investment in environmental remediation or offset projects
• % reduction in negative environmental indicators (e.g., GHGs, land disturbance, water withdrawals) year over year 
• % of operations covered by an environmental management system (EMS)
• % of environmental incidents reported, including response time and remediation outcomes
• Evaluation outcomes for environmental, biodiversity, and water stewardship strategies (e.g., which targets were met and how strategies were updated)
• Frequency of updates and leadership engagement with evaluation findings
• Public reporting cadence, including updates to your strategy and mitigation documentation

These data points show that your company is building capacity: not just reacting to risk, but actively preventing harm and evolving your approach with each evaluation.

ESC5: Collaborate With Suppliers to Scale Impact

Most environmental impacts don’t happen inside company walls; they occur upstream. ESC5 addresses this reality by expanding environmental accountability into the supply chain. It challenges companies to integrate sustainability into procurement decisions, trace high-risk raw materials, and partner with suppliers to drive systemic change.

From cocoa and cattle to timber and palm oil, the environmental footprint of a product often begins long before it hits your loading dock. ESC5 helps companies identify and mitigate risks embedded in sourcing decisions, while aligning procurement with broader environmental goals.

Why it matters: You can’t reach sustainability goals in isolation. Supplier collaboration helps companies extend their impact, reduce both operational and reputational risk, and build more resilient value chains. ESC5 also equips companies to influence industry norms and create ripple effects across multiple tiers of suppliers.

How to put ESC5 into practice

To meet ESC5, companies must take a structured, transparent approach to supply chain engagement, starting with their most material procurement decisions. That includes:

• Factoring environmental impact into key procurement decisions, starting with the top 3–5 most material purchases
• Identifying priority suppliers based on environmental risk and working together to set goals, track progress, and document mitigation efforts
• Tracing the origin of high-risk raw materials (e.g., soy, timber, palm oil, rubber), and mapping your supply chain across tiers
• Implementing deforestation-free sourcing policies—particularly in high-risk geographies—and verifying compliance
• Expanding traceability over time, increasing the percentage of high-risk raw materials with known origin and impact profiles
• Co-creating sustainability programs with suppliers, including action plans, shared targets, and annual performance reviews

These practices help turn supplier relationships into vehicles for environmental progress, accountability, and shared innovation.

What to measure and monitor for ESC5

The effectiveness of supply chain stewardship depends on visibility and accountability. Key indicators include:

• % of suppliers evaluated for environmental performance
• % of Tier 1 suppliers with verified environmental goals
• % of procurement spend aligned with certified green vendors or sustainable sourcing programs
• % of high-risk raw materials traced to their point of origin
• % of raw materials verified as deforestation-free
• % of joint sustainability initiatives in place with key suppliers
• Progress metrics from supplier mitigation plans, such as emission reductions, water usage improvements, or land restoration

These metrics track both impact and influence, ensuring your procurement practices drive measurable change across the value chain and reflect your company’s environmental values at every decision point.

Environmental Stewardship Is a Strategic Imperative

The ESC standards offer a practical roadmap for embedding sustainability into the core of your business. They’re designed to help companies reduce environmental harm, improve accountability, and operate within the planet’s limits—without sacrificing performance or growth.

Whether you’re just beginning to assess your impact or refining a long-standing program, ESC1–ESC5 provide the structure to scale your efforts. Together, they form a modern framework for environmental leadership, grounded in data, driven by design, and built for resilience.

This is how forward-thinking companies lead: with transparency, partnership, and systems that regenerate rather than deplete.

To take the next step, visit the B Impact Assessment and evaluate how your business can contribute to a more circular, climate-stable economy—one product, supplier, and strategy at a time.

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Photo by Geranimo