15 Key ESG Metrics to Track in 2023

With so many issues encompassing the ESG movement, investment practices consider a wide variety of metrics across the spectrum as necessary to track. With so many, it can be overwhelming for new and veteran investors as new issues become relevant and require new measures.

With that in mind, here are 15 key ESG metrics that are relevant to current issues.

1. Greenhouse Gas Emissions

With the current heat domes and historic wildfires spreading across the globe, measuring Greenhouse Gas (GHG) emissions is a requirement. This metric has changed over the years to now encompass both direct and indirect emissions from a company. The standard metrics include Scopes 1, 2, and 3, explained concisely here.

2. Energy Consumption

With renewable and sustainable energy ramping up, a key metric is to figure out how much energy a company uses. But more importantly, how much of that energy is from renewable sources. Here’s a handy Energy Footprint Tool to get you started.

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3. Water Usage

While not relevant to all industries, specific ones use considerably more. For example, the fashion industry requires a large amount of water to produce clothing. Knowing how much water a company, like Shein, uses is crucial for a variety of reasons.

4. Waste Generation

Particularly in comparison to the amount of recycled material or waste diverted from landfills. Landfills have become increasingly problematic for people as they create hotbeds for more carbon emissions. Managing company waste is an important metric, but so is whether those companies are using waste meaningfully.

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5. Employee Diversity

Getting into the social section now, a key metric for social issues is employee diversity. It’s a driving force in ESG, and studies continue to reinforce that the more diversity there is in a company, the better it’ll perform. Diversity, though, extends beyond diversity in gender and should cover ethnicities and other diversity factors too.

6. Employee Turnover

This metric is an excellent indicator of overall workplace satisfaction and employee engagement. That said, it’s important to also consider the turnover rate for the industry overall and compare it to individual companies’ employee turnover rates. The rate decreases when companies take time to ensure employees are engaged and enjoy working for the business.

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7. Accident Rates

Human error is inevitable and will result in people getting hurt. Despite that fact, companies should at the very least have safety measures in place where they are warranted. Knowing the general accident rate in an industry is key, but using it as a comparison to company accident rates can provide insight into whether the company is mitigating accidents or not.

8. Employee Training & Development

Instead of practising mass layoffs, companies need to learn to invest in their employees. A good metric to consider that addresses this part of a business is knowing how many employees are being trained to enhance their skills. When a company has robust professional programs to build up employees in various industries, they are conducting good business. All the while it builds up employees to enrich their careers and branch into other areas.

9. Executive Compensation Ratio

A serious point of contention today, executives have created several labour issues by prioritising their profits over employees. Knowing the ratio between the upper management's and executives' compensation relative to the entry employees is a good indicator. When the ratio is lower, it reveals a company is looking after those at the bottom.

10. Supply Chain Sustainability

Depending on the size of the company, supply chain management can be easier to manage or a nightmare. Regardless, it’s important to pay attention to this metric and how it’ll develop over the quarters and years

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11. Product Safety & Quality

While not a specific number, it’s generally a good idea to look at the safety and quality of the products and services that a company is providing. Particularly with respect to the regulatory standards that are placed on the industry.

12. Data Privacy & Security

How many breaches has a company experienced, and when they happened, is important to know. Beyond that, knowing how a company handles data and protects against cybersecurity threats is good to keep in mind.

13. Board Diversity

A company shouldn’t just have diversity in its staff. The same gender and general diversity are extended to the company’s board of directors too. 

14. Community Engagement

Big or small, a company makes an impact on communities in a variety of ways. Knowing a general idea of how engaged a company is with the community is crucial. Of course, it’ll be comparable to the size of the company.

15. Anti-Corruption Efforts

Knowing whether a company is lobbying a government body or not is another big indicator. Beyond government lobbying, knowing if the company had corruption issues in the past is good too. Also knowing the company’s specific strategy in combating corruption.

Metrics Change By Industry

Even though these are key metrics to keep in mind, not every metric is crucial to all industries. They will vary widely based on the industry’s particular problems. For example, the environmental impact of a large IT company isn’t as important as, say, their electrical usage or data privacy and security.

Regardless, these metrics will significantly help in revealing the inner workings of a company and its efforts to combat particular issues relevant to you. The best way to stay up to date with those is to look at company reports and published ESG ratings, and in this way you are assessing the metrics from unbiased, third-party verified institutions. 

A core feature of KnowESG’s platform is our Company ESG Profiles listing, where you can find the most recent ratings and reports, as published by a huge pool of global companies across multiple economic sectors.