ESG Metrics: More Than Measurement
Today executives are increasingly being held accountable for ensuring that environmental, social and governance (ESG) issues are effectively managed. As a result, there has been a considerable growth in the need to have meaningful information about their organization's ESG performance.
Many companies follow a philosophy of "what gets measured gets managed," and have used a suite of quantitative goals to motivate key staff across their organizations to take ownership for ESG management.
This growth in ESG ownership across the organization has in turn enabled executives to drive performance improvement, correct any shortfalls, and provide accurate assurance to executive management and boards of directors about how the company is doing.
Think Outside The "Compliance" Box
Previous studies examining metrics used by companies found that they focused heavily on compliance-related items such as:
Number of reportable incidents per 200,000 hours worked.
Lost time injuries per 200,000 hours worked.
Regulatory penalties and fines per year.
Notice of violations per year.
Number of reportable spills per site per year.
Today, many of these same companies are now supporting a range of metrics that provide them with a better understanding of their performance in non-regulated areas, including:
The percentage of business development projects for which environmental and social impact assessments have been completed.
The cost savings made through environmental improvements.
The reduction in waste (materials, emissions and energy).
Improvements in consumer and business partner satisfaction.
Moreover, companies are now saying the these types of metrics are effective at driving change, as they clearly link strong ESG performance to business value creation, and as they speak the language of their line management.
Use the Metrics to Leverage Your Corporate Branding
Companies also recognize that ESG metrics contribute to a broader perception the enterprise creates amongst its stakeholders. Listed below are illustrative categories of ESG metrics that can aid in demonstrating to their stakeholders how ESG activities clearly support overall brand positioning.
|Product Driven||Corporate Brand Driven||Compliance Driven|
|Product recyclability||Community activities||Penalties and fines|
|Packaging minimization||Emission reductions||Lost time injuries|
|Environmental footprint||Employee retention||Environmental releases|
|Lifecycle analysis||DEI activities||Product recalls|
|Material composition||Habitat protection||Employee allegations|
In order to successfully identify ESG metrics to support and reinforce the corporate brand, companies typically involve a cross section of their organization in the decision making process. This broad participation has enabled them to demonstrate a reduction in ESG impacts and risks, an increase in the levels of internal understanding and support for ESG, and improvement in the content and consistency of communications with key stakeholders.