ESG programs have become incredibly popular in recent years. According to NAVEX Global, in 2020-22, 88% of public Companies have an ESG program. In fact, 79% of private-equity-backed companies and 67% of private companies also have ESG initiatives. ESG Metrics and sustainable water management are key components to these programs. 

Your business or the companies you consult for may be in these percentages indicated above. After all, there are various advantages to having an ESG program initiative, like maintaining customer relationships, since 76% of consumers will not purchase from a company that treats the environment, its community, or its employees poorly.

Additionally, investors care about ESG issues, so much so that major financial services companies like Wells Fargo and JP Morgan have included ESG investing criteria in their financial products.

If your company or those you consult want to keep consumers and investors happy, it’s crucial to have a successful ESG program. The hard part, though, is actually determining how to measure performance, which is where specific ESG metrics can come into play.

The Challenges of Measuring ESG Metrics & Performance

Expressing the full scope of a company’s impact on environmental, social, and governance concerns is not easy. In fact, a Financial Times article summed up the challenge well by expressing that “it can be really challenging to understand what measures are meaningful.”

With abundant tools and frameworks for measuring a company’s ESG performance, it’s hard to know which indicators point best to a brands effectiveness. Sometimes, even investors have trouble determining which measurements will be the most meaningful to them, especially since measurements can differ from company to company. The good news is that there are specific ESG metrics that every business can rely on, and they’re great at showcasing a company’s performance.

What are ESG Metrics?

A metric is a qualitative or quantitative indicator that showcases progress and success. Every business relies on metrics to determine its performance and usually looks at numbers like customer or client retention, website traffic, revenue, leads, and employee satisfaction.

When it comes to ESG metrics, the analytics specifically relate to a company’s impact on environmental, social, and governance concerns. The ESG metrics typically derive from regulations, frameworks, and standards—but like other types of metrics, they can be qualitative or quantitative. The most important thing is that the metrics offer specific information about a component of ESG.

In general, there are various metrics that relate to each part of an ESG program, including the following:

Environmental ESG Metrics

• Greenhouse gas emissions

• Water consumption and reuse

• Deforestation

• Waste management and recycling

• Water and air pollution

Social ESG Metrics

• Labor standards

• Diversity, equity, and inclusion

• Supply chain management

• Community engagement

• Data security

Governance ESG Metrics

• Board composition and diversity

• Investor relations

• Ethics

• Regulatory compliance

• Compensation

• Shareholder rights

• Conflict of interest policies

All of these metrics are meaningful, depending on the type of company, so some businesses will focus on more ESG metrics than others.

However, again, there are specific ESG metrics that every company should focus on, especially if they’re still trying to figure out what data to prioritize or simply need help making their ESG program initiatives more effective.

The Top ESG Metrics to Prioritize

If your company or the ones you consult want to showcase its ESG performance, there are five metrics to prioritize.

1. Water Consumption and Reuse

Water consumption indicates the total amount of water that a business is using. This number should include the water employees use in the workplace and operation and manufacturing process. On the other hand, water reuse indicates the total amount of water a company recycles so that it doesn’t continuously drain this natural resource.

With water being an incredibly important but scarce natural resource in many areas of the world, it’s important for companies to show how much water they’re using and reusing to help decrease water scarcity. With droughts affecting Southwest America, India, Africa, and Europe, consumers and investors will appreciate companies performing well in this area.

2. Greenhouse Gas Emissions

With the planet warming, every company should be measuring its greenhouse gas emissions. Businesses can do this by analyzing three different ESG metrics in this area:

• Direct emissions from sources owned by the company

• Indirect emissions associated with buying energy (like electricity from coal-fired power plants)

• Emissions released from a brand’s value chain

By tracking these metrics, companies can receive and provide a precise measurement of their greenhouse gas emissions to know whether they’re helping combat the climate crisis. If they’re performing well, they’ll get a thumbs up from consumers, as most of them prefer companies that are implementing sustainability initiatives.

3. Regulatory Compliance

This metric encompasses each part of ESG—it covers everything from water quality, water treatment, business integrity, transparency, and anti-corruption policies. The reason for the generality is simple: consumers and investors prefer companies that follow their government’s regulations in all areas.

Too many businesses have fallen from grace because they failed to comply with regulatory standards. For companies who want to prove they’re following the rules and have nothing to hide, regulatory compliance is the perfect ESG metric to prioritize.

4. Labor Standards

Using this ESG measurement means tracking employees’ well-being and satisfaction, the disbursement of fair and equitable pay, and whether a company has a safe work environment. Performing well in this area is imperative.

No one wants to invest in or buy from a company that doesn’t create and sustain a safe workplace, treat people fairly, and focus on employees’ well-being. If companies can track and prove they have high labor standards and fulfill them, it can benefit them for their long-term success.

5. Board Composition and Diversity

With this metric, companies can show the breadth, depth, and versatility of their board by highlighting their members’ qualifications and skills as well as their overall diversity in age, ethnicity, race, and gender.

If companies have a wide variety of people and talents on their board—and maintain that at the employee level—it will produce many benefits, including increased problem-solving and creativity, better decision–making, a boost in productivity, more profits, an improved reputation, and less employee turnover.

Those are things investors will take notice of and that consumers will appreciate.

Creating a High-Performing ESG Program

While knowing which ESG metrics to track is important, it means nothing if a company does not do anything in the areas it’s tracking. That’s why businesses must take steps to not only track the ESG metrics in this article but also ensure they’re taking steps to perform well in the areas the metrics focus on. That means your business or the ones you consult should take active steps to enhance their ESG initiatives.

In terms of the environmental aspects, ESG metrics and sustainable water management initiatives are important. These include water consumption and reuse, greenhouse gas emissions, and regulatory compliance regarding water quality and water treatment—our team at Genesis Water Technologies can assist. As water experts and wastewater experts with many years of experience in this industry, we have engineered and developed innovative and sustainable wastewater treatment, process water and water recycling solutions that meet regulatory standards. 

To learn how we help businesses become water-positive companies, you can go here to view our case studies.

If you’d prefer to speak first or after reviewing our work, you can contact our team at Genesis Water Technologies at +1 877-267-3699 or contact us via email at [email protected].