ESG metrics are performance indicators that help companies evaluate whether their business operations are sufficiently sustainable or responsible. This insight is important because it indicates how well the company is performing on ESG goals, in addition to allowing the company to identify potential risks associated with ESG.

The ESG metrics are sourced from standards, frameworks or regulations that demand specific data. They can also come from internal processes in the company, which is often associated with defined KPIs. 

• Standards disclose specified performance metrics that are of public interest.
• Frameworks are followed alongside standards, but they do not specify which metrics to use to assess performance. 
• Regulations are guidelines mandated by authorities, for example the Corporate Sustainability Reporting Directive (CSRD). 

As a business, you use ESG metrics to track progress and performance on environmental, social and governance issues. This ensures transparency towards consumers and stakeholders, as well as clearing a path forward for achieving ESG goals. 

You use the metrics in ESG reporting to make sense of the environmental, social and governance data you have gathered. Consider the ESG metrics as guidelines for how to report on the data, as well as a structured way for you to provide well-structured compliance with ESG requirements. 

Use them commercially 

ESG scoring and ratings that rank your performance on various indicators, which you can use to your advantage (if performing well) to set you apart from the competition. 

Related to this, you can get certifications for your commitments to various ESG initiatives. Certification of compliance to standards such as ISO or Fairtrade can be hugely important for legitimacy. 

Engage with stakeholders

Customers, investors and community members can gain insight into your business model. By engaging them, they can share their expectations and concerns with you. Use surveys or focus groups to gain this information.

In our software you can easily streamline your ESG reporting process. The ESG Metrics module allows you to retrieve, analyze and visualize the ESG data in a flexible way, allowing you to put your own touch on it, while still complying with the major standards and regulatory requirements. 

For many businesses, ESG metrics have been proven important for ESG performance. If you know how to use them effectively, they can benefit environmental, social and governance initiatives, such as employee well-being, environmental degradation and various corporate concerns.  

ESG metrics are crucial for identifying areas where you want to improve ESG performance, but maybe more importantly where the risks are located. You can use this data to strategize risk-handling and plan for better risk management. 

Quantitative metrics 

They are based on numerical data and can be measured directly without interpretation. 

Example: Greenhouse gas emissions. 

Qualitative metrics  

Non-numercial data that is harder to measure, and should be analyzed together with an accompanying framework. 

For example, the commitment to diversity, equity and inclusion (DEI) should be considered with the broader culture in the company and the movements in society as backdrops. 

Environmental ESG metrics 

Environmental factors are such as pollution and waste, and ESG metrics evaluate the impact of the company on climate and environment.  

List of examples: 

• Greenhouse gas emissions: ESG metrics include levels of carbon dioxide, methane, nitrous oxide, and carbon monoxide
• Energy usage and consumption: ESG metrics are measured in kilowatts per hour
  
• Waste management, including solid waste (plastic, metals), hazardous waste and wastewater. ESG metrics are kilograms, tons or cubic meters of waste. 

Social ESG metrics 

Social factors like employee health and well-being are often qualitative metrics, and they should be assessed with interpretation. This is oftentimes subjective. 

List of examples:

• Gender pay gap: ESG metric is the ratio of what men earn compared to women. 
• The current status on diversity, equity and inclusion (DEI) in the company, where the ESG metric is the percentage of workplace diversity by group as compared to societal demographics. 
• Employee engagement in the workplace: ESG metrics are employee surveys, scores and engagement. 

Governance ESG metrics 

Governance includes various factors related to how the business is operated. This starts with how the executive structure is designed and how executives operate during decision making processes. This influences the stability of the company and how well the finances are handled and which strategies are put in place. The consideration of people and the individual safety, diversity and pay of them is also affected, as well as the planet’s health and prosperity. 

List of examples:

• Quality of governing body, meaning the executive diversity in management and any conflicts of interests. The ESG metrics are the diversity ratio and data insights on investments.
• Tax paid. The ESG metrics are the amount of tax paid and the tax paid in relation to revenue.

You use the ESG metrics to create ESG reports. These reports are documents that give a detailed description of how to execute on the ESG strategy. The reporting process is based on a framework, and these frameworks vary depending on which regulatory requirements your company must comply with. 

ESG metrics are a sure fire way of measuring your success in achieving ESG goals. Additionally, it is a great resource for identifying risks and opportunities that will boost your ESG performance. 

Make your commitments tangible 

The ESG metrics enables you to make decisions based on substantiated data, which is necessary to design a detailed roadmap for the ESG reporting. This lays out the groundwork for how you can strategize, promise results and be accountable in the progression.  

Optimize the reporting process

ESG metrics are clear-cut factors that you can report on and comply with, which makes it easier to explain your progression to stakeholders. This is important because you can evaluate your efforts and provide substantiated explanations to stakeholders should some go array. If you are accused of greenwashing, this data will be crucial in dispelling any notions of wrongdoing. 

Be transparent 

Stakeholders can see whether you are making progress or not, which is important for gaining trust from consumers and customers. It is also essential for investor relationships. This will increase your chances of getting investments, as many investors evaluate your ESG performance against global standards.

Streamline your sustainability reporting process with our software solution. Consider it a hub for sustainability data where you can retrieve, analyze and visualize your ESG adherence across sources. Explore the CEMAsys solution now and speed up your ESG compliance.