Meeting environmental, social, and governance challenges are good business and reputation-building. However, developing and improving an effective ESG strategy is a struggle because few people are experts in this relatively recent concept.
Simplify the issue with metrics for ESG reporting that can demonstrate your progress and display value to stakeholders.
Which Metrics Should You Track in Your ESG Strategy?
You can’t determine how to reach a destination without knowing where you are. Data from metrics offers a “map” that tells you where you sit with current efforts and the ideal road to success. Choose specific metrics for each of the three aspects of ESG.
Environmental metrics include numerous factors, such as your carbon footprint and greenhouse gas emissions. Regulatory requirements should always be a priority, and compliance is a first step to recording identifiable metrics for your ESG strategy.
Other measurements can demonstrate how much you lower bills and deliver savings. Record how you avoid water, waste, and energy loss. A running total of saved dollars is always a favorite among investors.
For example, you can report the percentage of diverted and reused water in comparison to the total volume of water consumption. Review waste management and calculate the total weight of waste you divert from disposal for reuse or recycling.
Tabulate the percentage of energy you receive from renewable sources. You can also calculate the money you save from energy-saving features in your buildings. Show your work to reduce carbon emissions by reporting the amount of your Scope 1, 2, and 3 GHG emissions.
Stakeholders might also wonder about material sourcing. Where you acquire your supplies and the track record of partners, vendors, and customers signals your values to outsiders. Keep tabs on your business associates to show real commitment to environmental endeavors.
Social factors will vary in an ESG strategy because the relevant issues are in the eye of the beholder. Your target demographic will shape your social goals, but these metrics can be easier to track than the more scientific area of environmental progress.
Provide reports and percentages on your hiring diversity and those of your business partners. Determine and demonstrate where you can collaborate with people from distinct communities. Track and display your hours and dollars for charitable giving and volunteering as well.
Supporting employee and consumer health and safety is vital in the social sphere. Track the number of work-related injuries per working hour and provide detailed numbers on product safety.
Like the social aspect of your ESG strategy, these numbers can be easier to monitor internally. Your goals will depend on your particular values and target demographics.
Popular metrics include:
- The ratio of executive compensation to the median for your employees
- The percentage of representation on the company’s board
- A breakdown of the number of ESG risk incidents by cost or type and steps toward resolution
- The number of ESG policies your company has implemented and the percentage of employees you’ve trained
- Cybersecurity issues, such as the number of data breaches and the percentage of breaches involving sensitive personal data
Setting metrics will guide your ESG strategy, but you may need assistance determining which metrics to focus on first.
Whose Input Should You Involve in Determining the Correct Metrics for ESG Reporting?
You won’t be able to track every ESG measurement, and the metrics you select depend on your overarching goals and feedback from the following key participants in the process.
You should probably work with customers and tenants first, as they are your primary revenue source. A GreenPrint survey discovered that 64% of American consumers would spend more money to support a brand promoting sustainable products.
Many brands and companies make empty claims about environmental responsibility. You can’t just say you are eco-friendly. You should address the issues that matter to your clientele. This effort also shows your investors that your sustainable decisions are ethical and fiscally responsible.
Investors and Employees
Gallup found that 48% of investors have an interest in ESG. Discover their primary concerns in the market. Savvy investors can help you balance your strategy for immediate and long-term benefits.
Involve your employees in this as well. Engagement and commitment from those who will implement these strategies are critical.
Study your peers to find insights into what you can do better. However, you can’t lift an ESG strategy whole cloth from a competitor and apply it to your program. ESG always requires a tailored approach.
What Help Is Available for Your ESG Strategy?
While the preceding stakeholders can help with your strategy, you need a perspective that objectively oversees it. Hiring an ESG consultant to merge all concerns can lead to a wise ESG strategy. Contact ESG Property Consultants, experts who can help ensure your ESG initiatives succeed.