The 7 Key ESG Metrics Every Company Should Track in 2025

Understanding and tracking ESG metrics has become essential for companies navigating today's sustainability landscape.These performance indicators help organizations measure their environmental social and governance impact while meeting increasingly stringent regulatory requirements. Since the introduction of the Corporate Sustainability Reporting Directive in 2024, approximately 14,600 German companies must systematically report on their ESG performance. This comprehensive overview will guide you through the most important esg metrics every organization should monitor.

The business case for tracking esg metrics extends beyond compliance. According to recent research, 81% of institutional investors across Europe now integrate ESG factors into their investment decisions. Companies with strong ESG performance metrics demonstrate better risk management, attract more capital, and build lasting competitive advantages. The key is identifying which metrics provide the most value for your specific business goals and industry context.

What Are ESG Metrics and Why Do They Matter?

ESG metrics are quantifiable performance indicators that measure a company's environmental, social, and governance practices. These metrics provide insight into non-financial risks and opportunities that traditional financial data alone cannot capture. They serve as accountability mechanisms, helping organizations track progress toward their esg commitments while demonstrating transparency to stakeholders.

The importance of these metrics becomes clear when examining market trends. Sustainable investments in Germany rose from €200.6 billion in 2020 to €336.6 billion in 2021. Analysis of more than 2,000 studies shows that ESG criteria have a positive impact on returns, with companies demonstrating strong esg performance often outperforming their peers. This makes tracking esg metrics not just a compliance exercise but a strategic imperative.

The Three Categories of ESG Metrics

Environmental social and governance metrics fall into three distinct categories, each addressing different aspects of sustainability performance:

What Are the 4 Pillars of ESG?

While ESG is commonly understood as three categories, many frameworks recognize four foundational pillars that support comprehensive ESG integration: Strategy (embedding sustainability into core business goals), Governance (establishing accountability mechanisms and oversight), Risk Management (identifying and mitigating ESG issues), and Performance Measurement (tracking key metrics and reporting progress). These four pillars ensure that esg initiatives translate into measurable business value and continuous improvement.

Understanding ESG Frameworks and Standards

Multiple frameworks exist to guide companies in their sustainability reporting journey. Understanding these standards is crucial for effective esg data collection and disclosure.

What Are the Big 4 ESG Standards?

The four major ESG frameworks that dominate global sustainability reporting are:

1. Global Reporting Initiative (GRI): The most widely adopted framework for comprehensive sustainability reporting, used by over 10,000 organizations worldwide
2. Sustainability Accounting Standards Board (SASB): Focuses on financially material esg issues specific to 77 industries
3. Task Force on Climate-Related Financial Disclosures (TCFD): Specifically addresses climate-related financial disclosures and risk management
4. European Sustainability Reporting Standards (ESRS): Mandatory for companies covered by the Corporate Sustainability Reporting Directive

Each framework serves different purposes, and many organizations now report using multiple frameworks to meet diverse stakeholder expectations. The double materiality approach embedded in ESRS represents a significant evolution in how companies assess material esg issues.

What Are the 5 Ps of ESG?

The 5 Ps framework provides a holistic approach to ESG integration: People (workforce well-being and human rights), Planet (environmental impact and climate action), Prosperity (economic value creation and social responsibility), Peace (ethical governance and stakeholder relationships), and Partnership (collaboration with business partners across the supply chain). This framework helps organizations ensure their esg metrics address all dimensions of sustainable development.

The 7 Most Important ESG Metrics to Track

Based on extensive analysis of common esg metrics across industries, these seven key metrics provide the foundation for robust esg performance measurement. Each represents a critical aspect of environmental, social, or governance performance that stakeholders increasingly demand.

1. Greenhouse Gas Emissions (Scope 1, 2, and 3)

Carbon footprint measurement stands as the most fundamental environmental metric. The Greenhouse Gas Protocol distinguishes three emission categories that companies must track:

Over 13,000 companies disclosed emissions data through CDP in 2023, demonstrating the increasingly important role of carbon emissions transparency. Companies should track not just absolute emissions but also emissions intensity (emissions per unit of revenue or production) to understand performance relative to business growth.

For practical implementation, our guide to CO2 accounting provides detailed strategies for measuring and reducing greenhouse gas emissions across all three scopes.

2. Energy Consumption and Energy Efficiency

Energy consumption metrics track total energy use and the percentage sourced from renewable energy. These esg metrics examples directly correlate with carbon footprint reduction and operational cost savings. Companies achieving ISO 50001 certification demonstrate systematic energy management, typically reducing consumption by 10-20% within the first implementation year.

Key metrics include:

• Total energy consumption (MWh)
• Renewable energy percentage
• Energy intensity per unit of production
• Year-over-year energy efficiency improvements

Organizations can accelerate their transition through Power Purchase Agreements, which provide access to renewable energy while stabilizing long-term costs.

3. Water Consumption and Waste Generation

Resource efficiency extends beyond energy to encompass water and waste management. These important esg metrics reflect a company's commitment to circular economy principles and environmental stewardship. Water-intensive industries like manufacturing, hospitality, and agriculture must pay particular attention to water consumption patterns and efficiency improvements.

Critical data points include:

• Total water withdrawal and consumption
• Waste generation by type (hazardous vs. non-hazardous)
• Waste diversion rate (recycling and reuse)
• Circular economy initiatives and material recovery

Smaller businesses can start with basic tracking and gradually implement more sophisticated measurement systems as their operations grow.

4. Employee Diversity and Board Diversity

Diversity metrics measure representation across gender, ethnicity, age, and other dimensions at all organizational levels. Board diversity specifically examines executive and supervisory board composition, as diverse leadership correlates with better decision-making and financial performance. These social component metrics also address executive diversity and equal pay considerations.

Essential diversity metrics include:

• Gender diversity ratios across all levels
• Pay equity analyses and equal pay initiatives
• Board diversity composition
• Representation of underrepresented groups
• Diversity in recruitment and promotion rates

5. Health and Safety Performance

Health and safety policies directly impact employee well-being and organizational productivity. Safety incidents, injury rates, and preventive measures form core social performance indicators. The average employee should work in an environment where risks are systematically identified and mitigated.

Key health and safety metrics encompass:

• Lost time injury frequency rate (LTIFR)
• Total recordable incident rate (TRIR)
• Near-miss reporting frequency
• Safety training hours per employee
• Investment in health and safety infrastructure

Employee surveys provide qualitative insights into safety culture that quantitative metrics alone cannot capture, helping organizations identify areas for continuous improvement.

6. Ethics, Compliance, and Supply Chain Standards

Governance metrics address ethical business conduct, transparency, and accountability. These include tracking instances of unethical behavior, compliance violations, human rights violations, and governance issues across operations and the supply chain. Strong governance frameworks protect against reputational damage while building stakeholder trust.

Critical governance metrics include:

• Code of conduct training completion rates
• Number and resolution of ethics hotline reports
• Supply chain audits and compliance assessments
• Data privacy incidents and response protocols
• Anti-corruption measures and monitoring

The social responsibility dimension extends to ensuring business partners meet equivalent standards, requiring systematic supplier assessment and engagement programs. Companies can leverage sustainable supply chain strategies to enhance transparency.

7. ESG-Linked Executive Compensation

Tying executive compensation to ESG performance demonstrates organizational commitment to sustainability goals. This governance metric ensures leadership accountability for environmental and social outcomes, not just financial results. Companies increasingly incorporate carbon reduction targets, diversity goals, and other esg commitments into compensation structures.

Effective ESG-linked compensation includes:

• Clear ESG performance targets in incentive plans
• Transparent disclosure of ESG compensation linkages
• Balance between short-term and long-term ESG goals
• Integration across executive and senior management levels

What is a KPI in ESG?

A KPI (Key Performance Indicator) in ESG context is a measurable value that tracks progress toward specific sustainability goals. ESG KPIs differ from general metrics by focusing on strategic objectives aligned with stakeholder expectations and regulatory requirements. While organizations may collect hundreds of data points, effective ESG KPIs are the subset of metrics that drive decision-making and demonstrate meaningful progress on material esg issues.

Strong ESG KPIs share common characteristics: they are specific and measurable, aligned with business goals and esg commitments, time-bound with clear targets, comparable across periods and peer companies, and material to stakeholders. For example, rather than simply tracking "carbon emissions," a robust KPI might target "20% reduction in Scope 1 and 2 emissions intensity by 2026 from 2023 baseline."

Implementing ESG Metrics: Practical Framework

Successfully implementing an esg metrics list requires systematic planning and execution. Organizations should follow a structured approach to ensure their measurement systems deliver actionable insights and support continuous improvement.

Step 1: Conduct Materiality Assessment

Not all esg metrics carry equal importance for every organization. A materiality assessment identifies which environmental, social, and governance topics are most relevant to your business and stakeholders. This process ensures resources focus on tracking esg metrics that provide the most value.

The assessment should engage diverse stakeholders including investors, employees, customers, and community representatives to understand their priorities and concerns regarding your ESG performance.

Step 2: Set Clear Targets

Effective esg goals require specific, measurable, achievable, relevant, and time-bound (SMART) targets. Rather than vague aspirations, set targets like "reduce water consumption per unit of production by 15% by 2027" or "achieve 40% women in management positions by 2026." These concrete objectives enable organizations to track progress and demonstrate accountability.

For companies pursuing science-based climate targets, frameworks like SBTi provide rigorous methodologies for setting emissions reduction goals aligned with climate science.

Step 3: Establish Data Collection Systems

Robust esg data management requires systematic collection processes and technological infrastructure. Many organizations struggle with the reporting burden of manually gathering information from disparate sources. Digital tools and ESG software platforms can automate data collection, improve accuracy, and reduce the time investment required.

Key considerations include:

• Centralizing data from multiple departments and locations
• Implementing automated data feeds where possible
• Establishing clear data quality standards and validation processes
• Training staff responsible for data collection and reporting
• Ensuring systems can accommodate multiple frameworks if needed

Step 4: Report and Communicate Performance

Transparency through esg reports builds stakeholder trust and demonstrates commitment to sustainability. Organizations must decide which frameworks to follow—whether GRI, SASB, TCFD, or the mandatory ESRS under the Corporate Sustainability Reporting Directive. Many companies now prepare esg disclosures aligned with multiple frameworks to satisfy different stakeholder needs.

Effective sustainability reporting goes beyond compliance, using storytelling and data visualization to make esg performance accessible to diverse audiences. Our sustainability reporting guide offers detailed best practices for creating compelling reports.

Step 5: Drive Continuous Improvement

The purpose of tracking esg metrics extends beyond reporting to driving meaningful change. Organizations should regularly review performance against targets, identify improvement opportunities, and adjust strategies based on results. This requires integrating ESG considerations into core business processes and decision-making frameworks.

Continuous improvement involves:

• Regular management review of esg performance metrics
• Benchmarking against industry peers and best practices
• Employee engagement through sustainability initiatives
• Innovation in products, services, and operations
• Responsive adjustments to stakeholder feedback

Technology and Tools for ESG Measurement

Modern ESG software solutions significantly reduce the reporting burden while improving data quality and analytical capabilities. These platforms integrate with existing enterprise systems to automate data collection, calculate complex metrics like emissions intensity, and generate reports aligned with various frameworks.

Key Features of ESG Management Platforms

For organizations covered by CSRD, technology becomes particularly valuable given the comprehensive nature of ESRS disclosure requirements. The right platform can transform what might otherwise be an overwhelming compliance exercise into a strategic management tool.

Common Challenges in ESG Metrics Implementation

Despite growing recognition of the importance of tracking esg metrics, organizations face significant obstacles in implementation. Understanding these challenges and their solutions helps companies develop more effective approaches.

Data Quality and Availability Issues

Many companies struggle with inconsistent or incomplete esg data across operations. Scope 3 emissions exemplify this challenge, as they require collecting information from external partners throughout the supply chain. The solution involves establishing clear data governance protocols, investing in training for data collectors, and leveraging technology to standardize processes.

Building internal capacity through dedicated ESG teams or roles ensures consistent attention to data quality. Starting with a focused set of common esg metrics allows organizations to develop robust processes before expanding measurement scope.

Navigating Multiple Frameworks

The proliferation of ESG frameworks creates confusion about which standards to follow. While harmonization efforts are underway, companies currently must report using multiple frameworks to satisfy different stakeholders. The Task Force on Climate-Related Financial Disclosures (TCFD), Global Reporting Initiative (GRI), and Sustainability Accounting Standards Board (SASB) each emphasize different aspects of ESG performance metrics.

Organizations should prioritize based on their specific regulatory requirements (such as CSRD compliance), investor expectations, and industry norms. Fortunately, significant overlap exists between frameworks, allowing companies to leverage common data points across multiple reports.

Resource Constraints

Smaller businesses often lack dedicated sustainability teams or budgets for sophisticated ESG software. However, meaningful progress doesn't require extensive resources. Starting with a focused esg metrics list aligned with the most material esg issues enables organizations to demonstrate commitment and build capability over time.

Free resources like the German Sustainability Code (DNK) provide guidance and templates. Additionally, industry associations often offer sector-specific frameworks and benchmarking opportunities that reduce the burden of developing approaches from scratch.

Stakeholder Engagement and Communication

Balancing diverse stakeholder expectations requires careful prioritization and transparent communication. Investors may prioritize financial materiality and risk management, while employees focus on labor practices and health and safety policies. Communities care about environmental impact and social responsibility, while customers increasingly demand product safety and ethical supply chains.

Regular stakeholder dialogue helps organizations understand evolving expectations and communicate progress authentically. Rather than attempting to satisfy every request, companies should focus on material topics where they can demonstrate genuine progress and impact.

The Business Case for ESG Metrics

Beyond compliance, tracking esg metrics delivers tangible business value. Research consistently demonstrates that companies with strong esg performance outperform peers across multiple dimensions.

Risk Management and Resilience

ESG metrics enable proactive identification and mitigation of risks ranging from climate-related physical hazards to supply chain disruptions to governance failures. Companies that systematically monitor these performance indicators can anticipate challenges and respond more effectively than competitors who lack such visibility.

For example, tracking water consumption and conducting water risk assessments help manufacturing companies prepare for scarcity scenarios. Similarly, monitoring supply chain labor practices and human rights violations reduces exposure to reputational crises and operational disruptions.

Access to Capital and Investor Relations

Investors increasingly demand comprehensive esg data as part of their due diligence processes. Companies that can demonstrate strong esg performance through credible metrics and third-party verification access larger pools of capital, often at more favorable terms. ESG-linked financing, including sustainability-linked loans and green bonds, explicitly ties financial terms to achieving specific esg goals.

The rise of Article 8 and Article 9 funds under the EU's Sustainable Finance Disclosure Regulation (SFDR) further amplifies investor focus on ESG. These funds must demonstrate portfolio companies' sustainability characteristics, creating demand for reliable esg performance metrics from investees.

Operational Efficiency and Cost Savings

Many esg initiatives generate direct cost savings. Energy efficiency improvements reduce utility expenses while lowering carbon footprint. Waste reduction and circular economy initiatives decrease disposal costs and create revenue from recovered materials. Employee engagement programs improve retention and productivity, reducing recruitment and training costs.

Companies pursuing Scope 2 emissions reduction often realize significant energy cost savings alongside their environmental benefits.

Competitive Differentiation and Brand Value

Strong ESG performance increasingly influences customer purchasing decisions, particularly in B2B contexts where procurement teams evaluate suppliers on sustainability criteria. Companies that track and communicate their esg metrics effectively differentiate themselves in competitive markets and command premium positioning.

Employee attraction and retention also benefit from authentic ESG commitment. Talent, especially younger professionals, increasingly seeks employers whose values align with their own. Transparent reporting on labor practices, diversity, and environmental stewardship helps organizations attract and retain high-performing teams.

Future Trends in ESG Metrics

The ESG landscape continues evolving rapidly, with several trends shaping how organizations approach sustainability performance measurement in the coming years.

Standardization and Regulatory Harmonization

Regulatory requirements are converging toward common standards, reducing the burden of reporting across multiple frameworks. The International Sustainability Standards Board (ISSB) is developing global baseline standards that align with the Task Force on Climate-Related Financial Disclosures (TCFD) and integrate aspects of SASB.

The Corporate Sustainability Reporting Directive in Europe sets the standard for comprehensive ESG disclosure, with similar regulations emerging in other jurisdictions. This regulatory clarity helps companies focus resources on meaningful measurement rather than navigating conflicting requirements.

Technology-Enabled Measurement

Artificial intelligence and IoT sensors enable more granular, real-time tracking of esg metrics. Rather than annual or quarterly reporting, organizations can monitor key indicators continuously, enabling faster response to emerging issues. Blockchain technology offers potential for enhanced supply chain transparency and verification of esg claims.

These technological advances also support more sophisticated analysis, such as scenario modeling of climate risks or predictive analytics for safety incidents. Organizations investing in digital infrastructure for ESG measurement gain competitive advantages in agility and insight quality.

Integration with Financial Reporting

The distinction between financial data and ESG data continues blurring as organizations recognize that environmental, social, and governance factors directly impact financial performance. Integrated reporting that combines traditional financial statements with sustainability metrics provides stakeholders with a more complete picture of organizational health and prospects.

This integration extends to management systems, with leading companies embedding ESG considerations into budgeting, capital allocation, and strategic planning processes. When esg goals carry the same weight as financial targets in decision-making frameworks, organizations achieve more rapid and meaningful progress.

Expansion of Social Metrics

While environmental metrics currently dominate ESG discourse, social performance indicators are gaining prominence. Topics like pay equity, employee well-being, community investment, and product safety receive increasing stakeholder attention. Companies that proactively develop robust social metrics demonstrate leadership and build stakeholder trust.

Air pollution and its health impacts represent an emerging area of focus, particularly for industrial operations. As scientific understanding of these connections grows, expect more comprehensive measurement of social and health outcomes associated with business operations.

Frequently Asked Questions

How many ESG metrics should a company track?

There's no single answer, as the appropriate number depends on company size, industry, and stakeholder expectations. However, most organizations benefit from focusing on 15-30 key metrics covering the most material esg issues rather than attempting to measure everything. This allows deep focus on driving improvement in priority areas rather than spreading resources too thin across many esg metrics that may not be material to the business.

How often should ESG metrics be reported?

External esg reports typically follow annual cycles, aligning with financial reporting periods. However, internal monitoring of esg performance metrics should occur more frequently—quarterly or even monthly for critical indicators. This enables timely course corrections and ensures organizations track progress toward their esg commitments throughout the year rather than discovering issues only during annual reporting preparation.

What's the difference between ESG metrics and ESG KPIs?

ESG metrics encompass all measurable data points related to environmental, social, and governance performance. ESG KPIs represent the subset of these metrics most critical to business strategy and stakeholder expectations. While a company might track dozens of esg metrics, it may designate only 5-10 as KPIs that receive executive-level attention and drive incentive compensation. The distinction helps organizations maintain comprehensive measurement while ensuring focus on the most important esg metrics.

How can smaller businesses approach ESG metrics with limited resources?

Smaller businesses should start with common esg metrics relevant to their industry and accessible through existing data systems. Rather than implementing comprehensive ESG software immediately, begin with spreadsheet-based tracking of priority metrics like energy consumption, greenhouse gas emissions (Scope 1 and 2), employee turnover, and safety incidents. As capability grows, gradually expand measurement scope and invest in technology to automate and scale. The key is making consistent progress rather than attempting everything at once.

How do ESG metrics relate to the EU Taxonomy?

The EU Taxonomy defines environmentally sustainable economic activities based on specific technical screening criteria. Companies covered by the taxonomy must disclose what portion of their revenues, capital expenditures, and operating expenditures derive from taxonomy-aligned activities. This requires tracking specific esg metrics that demonstrate substantial contribution to environmental objectives while meeting minimum safeguards. The taxonomy thus drives detailed measurement in certain environmental areas for covered companies.

Taking Action on ESG Metrics

Implementing an effective approach to tracking esg metrics requires commitment, systematic planning, and continuous refinement. Organizations should view this not as a compliance burden but as an opportunity to strengthen risk management, enhance stakeholder relationships, and identify new sources of value creation.

The seven key metrics outlined in this guide—greenhouse gas emissions, energy efficiency, water and waste management, employee diversity, health and safety, ethics and compliance, and ESG-linked compensation—provide a solid foundation. However, every organization must tailor its esg metrics list to reflect its specific material esg issues, stakeholder priorities, and strategic objectives.

Success requires leadership commitment, cross-functional collaboration, appropriate technology investment, and genuine cultural embrace of sustainability principles. Companies that embed esg performance metrics into core business processes and decision-making frameworks position themselves for long-term success in an increasingly sustainability-conscious global economy.

For organizations seeking expert guidance in developing and implementing ESG strategies, professional sustainability consulting can accelerate progress and help navigate the complex landscape of frameworks, regulations, and stakeholder expectations.

Key Takeaways

• ESG metrics provide quantifiable measures of environmental, social, and governance performance that increasingly drive investment decisions and regulatory compliance
• The seven most important esg metrics span carbon emissions, energy efficiency, resource management, workforce diversity, health and safety, ethics and governance, and executive accountability
• Multiple frameworks including GRI, SASB, TCFD, and ESRS guide sustainability reporting, with CSRD mandating comprehensive disclosure for many European companies
• Effective implementation requires materiality assessment, clear target-setting, robust data systems, transparent reporting, and continuous improvement processes
• Technology solutions significantly reduce reporting burden while improving data quality and analytical capabilities
• Beyond compliance, strong esg performance delivers business value through enhanced risk management, improved access to capital, operational efficiencies, and competitive differentiation
• Organizations should focus on tracking the most material esg issues rather than attempting to measure everything, building capability gradually over time