How can You Measure Your Organization’s ESG Performance?

Track your progress! When you integrate ESG criteria into your corporate strategy, you must include indicators for measuring the results.

What’s the first step in evaluating progress? Here’s how you can select and track sound performance indicators for your SME.

Focus on the most important indicators

What’s the most common mistake? Striving to measure all criteria from the outset. The Global Reporting Initiative (GRI Standards) recommends that you focus on three to five key indicators as soon as you begin the process of integrating environmental, social and governance (ESG) criteria. Why so few indicators? Your change management process should remain simple and relevant for your teams.

Your indicators must be SMART (specific, measurable, attainable, realistic and timely). As a result of this approach, you can benefit from an accurate dashboard and ensure timely adoption and a significant impact.

Your choice of indicators is based on three key factors:

• Your sector of activity. Workplace accidents on construction sites are more serious than those in an office, for example.
• Your company’s maturity. A start-up won’t have the same priorities as an organization founded 50 years ago.
• Your strategic priorities. Where do you want to have the most impact?

Select your indicators based on the three ESG pillars

Based on the three ESG pillars, the most relevant indicators you should consider are listed below.

1- Environment: reducing your footprint and anticipating transition

Greenhouse gas emissions

Begin by carrying out a carbon footprint analysis with a certified company. Calculate your carbon intensity (kg of CO₂ eq per dollar of sales) to measure your relative efficiency and automate monthly tracking using accounting and energy data.

Energy consumption

Install smart meters and draw up an energy savings plan for each site. This process will reduce your costs and exposure to energy risk.

Biodiversity and land use

Integrate a restored or protected surface area (hectares) indicator to report on your contribution to preserving ecosystems, as recommended during the UN Biodiversity Conference (COP15).

Waste recovery rate

Choose suppliers that recycle and reuse waste and ensure you can trace their waste management program. Negotiate contracts with ISO 14001 certified recycling suppliers and track the recovered waste. The objective is to reduce your environmental footprint while lowering costs.

2- Social: human resources, internal cohesion and external image

Diversity rate (gender, place of origin, age, disability)

Evaluate diversity at every level of your organization and set inclusive recruitment objectives. This approach spurs innovation and strengthens your employer brand.

Gender pay gap

Carry out an annual diagnosis and integrate equity goals into your human resources (HR) reviews. In accordance with Pay Equity Regulations, establish a Pay Equity Plan. This measure responds to both societal expectations and legal requirements.

Employee absenteeism and turnover rates

Regularly monitor these indicators with your HR team, carry out anonymous employee feedback surveys on a quarterly basis to measure wellbeing and introduce a workplace health and wellness plan. The survey results will reveal the wellbeing and stability levels of your teams.

ESG training for employees

Integrate ESG training into each department’s annual development plan. Tracking this indicator demonstrates your investment in skills development.

3- Governance: integrity, transparency, strategic focus

Independent Directors

In keeping with ESG best practices, adapt the structure of your Board of Directors. This new structure will guarantee balanced decision-making.

Draw up and respect a Code of Ethics

Train all employees and set up an anonymous reporting system for unethical behaviour. This policy will protect your reputation and boost employee confidence.

ESG objective completion by the Board of Directors

Link a portion of senior management’s bonus plan to ESG objectives. This method will increase accountability regarding ESG governance.

Percentage of suppliers assessed based on ESG criteria

Your external suppliers will often account for most of your Scope 3 carbon emissions. The process of assessing and selecting your partners based on ESG criteria will significantly improve your overall results.