ESG Metrics: What, Why, and How to Use Them

Measuring sustainability performance has become a core requirement for organizations. Regulatory disclosures, supplier programs, and investor reports all rely on clear, consistent data to back up what organizations say they’re doing. But raw data alone isn’t enough. You need structured, decision-ready information: something you can track, compare, and report with confidence.

That’s where ESG metrics come in. They’re the foundation of sustainability reporting and performance management. This page breaks down what to measure, how to use ESG metrics effectively, and how to get the most value from them, whether you’re reporting for compliance, managing supplier risk, or driving internal improvement.

What are ESG Metrics?

ESG metrics are specific, measurable values that reflect an organization’s performance on environmental, social, and governance issues. They’re used to track progress, set targets, report to stakeholders, and make decisions. Unlike raw ESG data, ESG metrics are processed, focused, and often standardised, so they can be reported consistently across time and entities.

Think of metrics as the end product of ESG data. You start with raw inputs, like utility bills, audit reports, or training logs, and convert them into structured values. For example:

• Utility readings become tonnes of CO2 emitted per year
• HR training records become a percentage of employees completing ethics training

These values are what go into reports, dashboards, and scorecards. Some metrics are absolute, like total water used or the number of safety incidents. Others are intensity-based, like energy use per square metre, or emissions per revenue unit. Both types have a role, depending on what you need to measure and who you report to.

In short, ESG metrics take unstructured sustainability data and turn it into something trackable, comparable, and usable.

ESG Metrics vs ESG Data

ESG data and ESG metrics are closely linked, but they’re not the same thing. Data is the raw input, often unstructured, inconsistent, and hard to compare across time or locations. Metrics are what you get when that data is cleaned, processed, and shaped into something useful.

For example, if a facility emits 12,000 tonnes of CO2, that’s a data point. If you divide that by output or revenue to get emissions per unit of production, that’s a metric. Metrics help normalize and compare data across sites, suppliers, or reporting years.

Most ESG metrics come from aggregating and structuring data, often across different systems and formats. That could mean pulling energy use from bills and meters, standardizing it into kilowatt-hours, and expressing it as energy use per square metre. The process turns disconnected facts into something reportable.

Reporting frameworks and regulatory disclosures are driven by metrics, not raw data. But to verify a metric or audit a report, you still need the data behind it. That’s why traceability matters. You need to know where a number came from and how it was calculated.

Why ESG Metrics Matter

ESG metrics make sustainability performance visible. Without them, it’s hard to show progress, compare performance, or back up statements with evidence. Metrics give structure to ESG work; they let you move from intent to measurement.

Ultimately, ESG metrics make ESG reportable and comparable. ESG reporting depends on consistent metrics. They allow you to track changes year over year, compare sites or suppliers, and meet disclosure requirements with figures instead of statements. If you’re reporting to regulators, customers, or investors, metrics are the common language that makes that reporting meaningful.

Internally, metrics also help break down sustainability targets into something operational. If you’re aiming to reduce carbon emissions, for example, you need a baseline, a measurable goal, and a way to track progress. ESG metrics give you that structure.

ESG metrics also support risk management and accountability. Compliance teams use ESG metrics to monitor exposure and manage risk. Metrics help you spot trends early, like rising emissions, lower audit scores, or gaps in workforce training. With the right metrics in place, you can intervene before issues escalate. In terms of accountability, they help assign responsibility and follow up on performance. It becomes clear who is improving and where attention is needed. This level of visibility helps to manage ESG issues with the same discipline as any other operational risk.

Types of ESG Metrics

ESG metrics are typically grouped into the three constituent parts of ESG: environmental, social, and governance. Each focuses on a different aspect of how an organization operates and the impact it is having. The specific metrics you track depend on your sector, size, and stakeholder expectations, but some are widely used across industries.

Environmental Metrics

Environmental metrics measure how an organization affects the natural world. They focus on emissions, resource use, and waste. These metrics are often central to climate reporting and are increasingly required by regulators.

• CO2 emissions across scope 1, scope 2, and scope 3
• Energy usage per unit output, which links consumption to productivity
• Water withdrawal by source, showing how much water is taken and from where
• Waste generation and recycling rate
• Renewable energy as a percentage of total consumption

Social Metrics

Social metrics cover how an organization treats its people, such as employees, contractors, communities, and workers in the supply chain. They’re key for understanding risk in labour practices, workforce conditions, and social responsibility.

• The lost time injury rate (LTIR) for measuring workplace safety
• Percentage of workforce trained in health and safety
• Diversity ratios, broken down by gender, ethnicity, or other criteria
• Employee turnover rate, reflecting retention and workplace conditions
• Percentage of suppliers audited for labour conditions

Governance Metrics

Governance metrics reflect how decisions are made and how ethical risks are managed. They focus on oversight, transparency, and accountability, especially around leadership, compliance, and supplier controls.

• Percentage of independent board members linked to board objectivity
• Number of ethics training hours per employee, used to track awareness-building
• Executive pay ratio, showing pay equity between leadership and staff
• Confirmed corruption cases, as an indicator of governance risk
• Supplier code of conduct coverage, which shows how expectations are communicated and monitored in the supply chain

How to Decide Which ESG Metrics to Track

Not all ESG metrics are equally useful. The right ones give you a clear picture of performance, support compliance, and make reporting easier. The wrong ones waste time or send a misleading signal. Choosing the right metrics means focusing on what matters to your organization, your stakeholders, and the frameworks you report against.

Begin by Aligning with Materiality

Start with a materiality assessment. That means identifying the ESG topics that are most relevant to your operations and most important to your stakeholders. If you’re in manufacturing, emissions, energy use, and labor conditions may be material. For finance, governance and data privacy might matter more. Metrics should reflect actual risks and impacts of your organization, not just what’s trending.

Material topics should be matched with clear, measurable metrics. If workforce wellbeing is material, for example, don’t just reference your policies, but track actual turnover rates, engagement scores, or training hours. This makes your metrics meaningful and avoids reporting noise.

Follow Standards and Frameworks

Once you know what to measure, use existing standards to decide how. Frameworks like GRI, SASB, and the GHG Protocol help you define each metric clearly: what to include, how to calculate it, and what units to use.

• The Global Reporting Initiative (GRI) provides broad, globally applicable metrics for sustainability and impact reporting
• Sustainability Accounting Standards Board (SASB) offers sector-specific metrics, often used by investors
• Corporate Sustainability Reporting Directive (CSRD) and the underlying European Sustainability Reporting Standards (ESRS) outline mandatory metrics for companies reporting in the EU (if material as per a double materiality assessment)
• The Task Force on Climate-related Financial Disclosures (TCFD) focuses on climate risk and recommends metrics around emissions and financial exposure
• The Greenhouse Gas (GHG) Protocol is the main standard for calculating carbon emissions

Using these frameworks avoids guesswork. It helps ensure that your metrics are compatible with what others in your sector are reporting and what regulators expect to see.

Understand Regulatory and Market Requirements

In many regions, ESG metric reporting is no longer optional. Laws like the EU’s CSRD, Germany’s LkSG, and California’s SB 253 require organizations to report specific metrics in set formats. That includes emissions, supply chain risks, diversity data, and more.

Beyond regulation, large customers, investors, and rating agencies often have their reporting expectations. If you want to win contracts or access certain capital markets, you may need to disclose certain metrics, whether legally required or not.

In short: choose metrics that reflect your risks, follow accepted standards, and meet the demands of the people reading your reports.

Using ESG Metrics in Practice

Choosing the right metrics is only useful if you apply them. ESG metrics aren’t just for reporting, they help you manage suppliers, reduce risk, meet disclosure requirements, and make better decisions across the organization. When used well, they become part of how your teams work, not just what you publish.

For Compliance

Regulations increasingly require specific ESG metrics in company disclosures. For example, the EU’s sustainability reporting standards set out mandatory KPIs by topic, covering emissions, energy use, workforce structure, and governance practices.

Using standardized ESG metrics makes audit and assurance processes simpler. When metrics are clear, traceable, and aligned with frameworks, third-party reviewers can assess them more efficiently. That reduces risk and shortens timelines for compliance reviews.

For Supplier Oversight

ESG metrics are also core to supplier assessments. Procurement teams use them to track issues like emissions per shipment, audit pass rates, or completion of corrective actions. Scorecards built on ESG metrics make it easier to benchmark suppliers, monitor progress, and decide where to focus.

You can also use metrics to set expectations, such as defining minimum standards for emissions, labor practices, or ethical conduct. Tracking those metrics over time allows you to work with suppliers on improvements and flag areas of concern early.

For Investor Communication

Investors use ESG metrics to compare performance across sectors, regions, and portfolios. If your disclosures use inconsistent metrics – or none – you’re more likely to receive follow-up questions or be excluded from ESG-focused screens.

Clear, consistent ESG metrics reduce the reporting burden. When investors can find what they’re looking for, whether it’s emissions intensity, board diversity, or safety data, they’re more likely to consider your organization a lower risk. Metrics show you’re tracking what matters and managing it.

For Continuous Improvement

Internally, ESG metrics help identify issues and drive improvements. If emissions per unit are rising, if one site has a higher injury rate than the rest, or if a department is missing training targets, metrics make that visible. From there, you can investigate and act.

Teams can use ESG metrics to monitor progress on reduction goals, test the impact of process changes, or build the case for further investment. The numbers help justify decisions and measure what’s working.

Five Common Challenges in ESG Metrics Management

Even with the right metrics in place, collecting and using them can be difficult. Gaps in data, inconsistent definitions, and shifting reporting requirements often get in the way. These challenges can slow down reporting, create confusion, and make it harder to act on what the metrics are showing.

1. Data Gaps and Inconsistency

Reliable metrics start with reliable data. But suppliers and internal teams don’t always have the systems or processes needed to collect that data properly. Some still rely on spreadsheets, others use different formats or units, and not everyone measures the same things in the same way. Manual processes and inconsistent methodologies can introduce errors or make comparisons unreliable. This affects both internal reporting and how you assess suppliers.

2. Lack of Standard Definitions

ESG terms often mean different things to different people. One organization’s definition of “injury rate” might include minor incidents, while another only counts time off work. “Diversity” can vary depending on local laws, cultural context, and what’s being measured. Without agreed-upon definitions, you end up comparing incompatible metrics. That makes it harder to benchmark or spot trends across teams, regions, or suppliers.

3. Changing Regulations

ESG reporting is changing fast. New rules are introducing new metrics and raising expectations around detail, frequency, and assurance. Metrics that were acceptable last year may no longer meet the standard this year. Organizations need systems that can handle these changes without starting from scratch. That means being able to update definitions, add new metrics, and adapt reporting formats as regulations evolve. Without that flexibility, staying compliant becomes harder over time.

4. Limited Supply Chain Visibility

A large share of ESG exposure sits with suppliers, but collecting reliable metrics from them isn’t always straightforward. Smaller suppliers may lack the resources to track emissions or labor data, and others may be reluctant to share sensitive information. Without clear expectations and support, you’re likely to face gaps or low response rates, especially deeper into the supply chain. This lack of visibility makes it harder to assess risk or meet due diligence requirements. It also limits your ability to benchmark and compare supplier performance.

5. Disconnected Systems and Siloed Teams

ESG metrics often rely on inputs from multiple departments: compliance, procurement, HR, operations and sustainability. When those teams use different systems or work in silos, pulling the right data together becomes a manual and fragmented process. This slows down reporting, increases the risk of errors, and makes it harder to maintain consistency. Without coordination and shared ownership, ESG metrics can fall between the cracks or end up underused.

Overcoming Challenges with Best Practices

ESG metrics can be difficult to get right. But most of the common issues – gaps in data, inconsistent definitions, slow reporting – can be avoided with a few practical steps. That means being clear about what you’re measuring, collecting data the same way across the board, and making sure the right people are using the numbers, not just filing them away.

• Define each metric: Every ESG metric should have a clear definition. That includes what it measures, how it’s calculated, what units are used, how often it’s updated, and where the data comes from. Without this, different teams or different suppliers can interpret the same metric in completely different ways
• Automate where possible: Manual data entry is slow, error-prone, and hard to scale. Where you can, use systems that pull data directly from utility platforms, HR systems, or ERPs. Automation improves accuracy and saves time, especially if you’re collecting the same metrics across many sites or suppliers
• Integrate into performance management: ESG metrics shouldn’t just sit in reports; they should be part of how teams work. Link key metrics to business targets and team KPIs. If emissions, safety, or diversity matter to your strategy, track them like you would financial or operational metrics
• Audit key metrics: Metrics used in external disclosures or investor reporting should be reviewed with the same rigour as financial data. That includes internal checks, version control, and independent assurance where required. This is especially important for emissions, labor practices, and governance figures. Auditable metrics reduce compliance risk and build confidence with stakeholders

Get More Value from Your ESG Data and Metrics

ESG metrics aren’t just about reporting. Used well, they help you improve performance, reduce risk, and communicate more clearly with regulators, investors, and business partners. But that only works if the metrics are consistent, reliable, and tied to action.

EcoVadis helps organizations use ESG metrics in a way that’s practical and scalable, whether you’re managing internal goals, tracking supplier performance, or preparing for disclosure requirements. If you’re spending time collecting ESG data but not getting what you need from it, we can help.

Ready to get more from your ESG metrics? Talk to our team about how EcoVadis can help.