ESG Metrics Businesses Needs to Measure

Rohan Mathew

Updated on:

Companies in recent years have started concentrating on their businesses’ sustainability efforts than ever before to acquire a sustainability-linked loan and to adjust to consumer demands. The shift has caused a more socially responsible investing, a sustainable investing that considers the environmental, social, and governance (ESG) factors to assess the financial return and general impact of new investment in a company.

Investors are now giving more attention to ESG criteria to know which companies they should invest in. Investors look for ESG reports and recent statistics before committing. It can be difficult for some companies to know where to start or which areas require improvement.

Whether you’re a startup or an established company looking to improve your ESG efforts, these key metrics can help you:

Carbon Footprint Reduction

A top consideration for ESG metrics is a company’s carbon footprint, also known as the standard metric for measuring environmental impact. By reducing carbon emissions, companies can start reducing climate change while preserving the environment.

Employee Health & Safety

Top businesses know that healthy employees are critical for company success. Research shows that award-winning health and safety companies regularly outperform the market. By monitoring and enhancing your employees’ health and safety, you’ll benefit from lower turnover rates, fewer work-related accidents, and improved productivity and profits.

Safety management is a vital indication of an organization’s financial position for investors. Plus, safety management also shows that your company can develop a long-term value for its shareholders.

Energy Efficiency

Contrary to many companies ‘ beliefs, energy efficiency isn’t a complicated metric. It can even be one of the most specific ESG metrics to report and implement to achieve more results. Your company needs to complete the same tasks but with less energy to boost energy efficiency.

Through seemingly small changes, companies can make a significant impact. Turning off company lights, replacing lights with more efficient lightbulbs, monitoring office temperatures, and unplugging equipment after business hours are some of the best ways to lessen energy usage without disrupting business operations.

Product Safety

The product also plays a crucial role in getting the trust of sustainable investors. Tracking product recalls and the fines and litigations linked to product safety are vital considerations when creating or improving ESG materials. Investors will need to see that product-related risks are proactively being managed and minimized.

Safer products generally demonstrate that a company genuinely cares about the employee and customer safety, coupled with the company’s reputation. Monitoring product safety and creating updates can help influence investors. The importance of product safety does differ across industries. Still, if your business is in the consumer goods or manufacturing or sector, this must be a top ESG metric for your company.

Diversity & Inclusion

Investors equally care about a board’s diversity and the company’s diversity/inclusion efforts throughout the organization. Diversity and inclusion programs range from education and apprenticeship programs to encouraging multi-lingual work culture.

Diversity and inclusion are crucial to sustainable investors while positively impacting overall business performance. Research reveals that ethnic and culturally diverse executive teams outperform others and are linked directly with higher profitability.

Encouraging a more sustainable business doesn’t just allow you to benefit from tax cuts and grants. It is also a great way to improve overall business appeal to investors and, in the process, benefit your company as well. Get started by learning more about acquiring a sustainability-linked loan. If pre-determined targets are achieved, the loan’s interest will be reduced.

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