15 Key ESG Metrics to Monitor in 2023

Many boards choose to monitor the following metrics.

Environmental Metrics

1. Greenhouse gas (GHG) emissions: An organization should measure GHG emissions at three levels for accurate results: direct emissions from company-owned sources; indirect GHG emissions linked to purchased energy, like using electricity from coal-fired power plants; and GHG emissions along the company’s value chain. 
2. Air and water pollution: Measures the type and amount of pollutants a company releases in the atmosphere and water sources in a particular period. 
3. Deforestation: Refers to a company’s activities that contribute to the clearing of forests. 
4. Recycling and waste management: Measures the total waste a company generates against the total amount it recycles.
5. Water security: Shows the total amount of water a company uses, including the water used by employees in the workplace and the manufacturing process. 
6. Carbon footprint: A company’s total direct and indirect greenhouse emissions in energy usage, transportation, and waste production. 

Social Metrics

7. Diversity, equity, and inclusion (DEI): Measures the company’s composition, as well as diversity and inclusion initiatives.
8. Labor standards: Refers to fair and equitable wages, safe work environment, and other factors that affect employee well-being.
9. Data protection and security: Measures a company’s effectiveness in protecting its intellectual assets, private information, and stakeholders’ personal data. 
10. Supply chain management: Shows how effectively a company manages supply chain activities like product development, raw material sourcing, and logistics. 

Governance Metrics

11. Board composition: Shows the board’s constituents in terms of members’ skills and qualifications. The metric also measures the board’s diversity and independence ratio. A board should have an independent majority that’s more likely to better represent shareholders. 
12. Shareholder rights: Measures corporate takeover defenses and shows how well shareholders’ rights protect them from attempts to buy a controlling stake without management’s consent.
13. Investor relations: Measures a company’s communication flow between investors and stakeholders. 
14. Conflict of interest (COI) policy: Measures the effectiveness of pre-existing policies to manage a possible conflict between board members’ personal interests and the company’s interests. This metric helps an organization optimize COI policies to better manage ongoing, perceived, and potential conflicts of interest on the board.  
15. Compensation: Measures how effective a board’s compensation policies and practices are and reveals what it can do to improve them.