Environmental vs. ESG metrics: What companies should consider
05.04.2023 - Request Info
In today's business world, environmental and sustainability metrics, summarized in ESG ratings, are becoming increasingly important. Companies are aware that public opinion on these issues is changing and that more and more stakeholder groups are seeking a more sustainable future. For this reason, companies have begun to pay more attention to measuring and monitoring environmental metrics. But why is it easier for companies that specialize in collecting environmental metrics to take a holistic ESG approach?
What know-how is required for the collection of environmental indicators?
The collection of environmental indicators usually requires very specialized technical know-how and detailed knowledge of environmental processes. Companies must be able to understand complex processes such as the emission of greenhouse gases or the use of water resources in order to collect meaningful environmental indicators. This also includes understanding regulatory requirements to ensure that ESG metrics comply with legal requirements.
What are the differences between the requirements for collecting environmental and ESG metrics?
The collection of social and governance ESG metrics requires less technical expertise. However, some data for environmental metrics overlap with other ESG topics, particularly in assessing supply chain sustainability. Many ESG metrics relate to corporate culture, employee engagement, diversity and inclusion, ethics, and anti-corruption, which are at the employee and governance levels. While these aspects are complex, measuring and monitoring them does not require technical knowledge or specialized skills.
How can standardization and benchmarking tools help companies collect ESG metrics?
Another reason why companies that specialize in collecting environmental metrics can more easily collect social and governance ESG metrics is that standardization and benchmarking tools exist to help companies collect ESG metrics. For example, there are tools for measuring employee satisfaction and engagement, capturing attitudes toward diversity and inclusion, and reporting on the effectiveness of anti-corruption programs. These tools help companies collect meaningful ESG metrics and compare their performance with other companies in their industry.
Why is it important to measure and monitor environmental, social and governance metrics to strive for a sustainable future?
Overall, it is important for companies striving for a sustainable future to measure and monitor environmental metrics as well as social and governance metrics. While collecting environmental metrics can be more technically challenging, companies should not forget that benchmarks and standardization also exist in these areas to help them evaluate and improve their performance. It is important that companies understand that sustainability requires a holistic approach that includes environmental, social and governance aspects. Measuring and monitoring performance indicators in all three areas is critical to long-term success.