In the last decade, environmental, social, and governance (ESG) metrics have gone from "nice-to-have" to "must-have" for businesses worldwide. Investors, regulators, customers, and employees are increasingly demanding transparency, accountability, and measurable impact. Companies that fail to monitor ESG performance risk reputational damage, regulatory fines, and lost market opportunities, while those that act proactively can gain a competitive edge.
In 1987, the United Nations Brundtland Commission defined sustainability as "meeting the needs of the present without compromising the ability of future generations to meet their own needs." This definition not only refers to the environment, but people and social issues, too.
The Rising Importance of ESG
1. Investor Pressure
Institutional investors are increasingly integrating ESG metrics into their decision-making. According to Bloomberg, global ESG assets are projected to hit $53 trillion in 2025, reflecting a growing expectation that companies manage environmental and social risks alongside financial performance.
2. Regulatory Requirements
Governments are imposing stricter ESG reporting requirements. For example:
- The EU's Corporate Sustainability Reporting Directive (CSRD) requires large companies to disclose ESG data across their operations and supply chains.
- The UK's Streamlined Energy and Carbon Reporting (SECR) framework mandates transparency on energy use and carbon emissions.
Non-compliance can lead to penalties and limit access to certain markets.
3. Consumer Expectations
Modern consumers increasingly choose brands aligned with their values. Surveys by PwC show that 79% of consumers consider a company's ESG credentials when making purchasing decisions. Companies that fail to disclose or act on ESG risk losing customer loyalty.
4. Employee Attraction and Retention
Employees increasingly prioritise purpose-driven companies. According to Deloitte, 70% of professionals prefer working for companies with strong ESG commitments. Transparent ESG reporting signals a company's dedication to sustainability and social responsibility.
ESG Metrics: What to Track
Effective ESG measurement goes beyond carbon emissions. Key areas include:
Environmental:
- Carbon footprint (Scopes 1, 2, and 3)
- Energy and water usage
- Waste generation and circular economy initiatives
- Policies and certifications (like ISO14001, B Corp, etc.)
Social:
- Employee diversity, equity, and inclusion
- Labour practices and human rights
- Community engagement
Governance:
- Board diversity and oversight
- Ethical policies and compliance
- Risk management
Companies increasingly integrate ESG data into decision-making, linking it to incentives, risk management, and long-term strategy.
TrackZero tip: Automating ESG data collection and integrating it with carbon management platforms allows businesses to simplify reporting, uncover efficiencies, and demonstrate credibility to stakeholders.
ESG metrics should not be a box-ticking exercise. They are tools to drive measurable impact. Businesses can:
- Integrate ESG into strategy: link goals to operational KPIs and corporate strategy
- Automate data collection: use software solutions to track emissions, resource use, and social metrics
- Engage stakeholders: involve employees, suppliers, and customers in ESG initiatives
- Report transparently: communicate progress clearly and regularly to investors and the public
Take action today: Start measuring your ESG impact, engage your team, and explore tools like TrackZero to simplify reporting and uncover opportunities for improvement. Your next big ESG win could be just a metric away.
Companies that embed ESG into their core operations don't just comply with regulations. They create long-term value for the planet, people, and profit.
So, how is your business tracking ESG performance? Are you taking a proactive approach, or just checking the boxes?
