13 ESG Metrics HR Teams Should Track for Increasing Transparency and Trust

ESG reporting—measuring and disclosing your environmental, social, and governance data—ensures transparency, increases the stakeholders’ trust, and proves you’re working towards your goals. ESG metrics show your commitment to your goals and progress during a given period. 

Here’s everything you need to know about them and their role.

What are ESG metrics?

ESG metrics evaluate and measure a company’s environmental, social, and governance performance. 

There are no universally valid ESG metrics. Which ones you use will depend on factors like your company’s activity sector, or goals. Examples include the carbon footprint, diversity and inclusion, human rights, the gender pay gap, and board diversity.

Why ESG metrics are important

Promising your commitment to ESG is one step. But to make real progress, you must track environmental, social, and governance metrics. Here’s how they can help you:

• Accountability. Seeing your progress through exact data helps you stay on track. Instead of making empty promises, you’ll commit to concrete results and see them unfold in real-time.

• Optimized processes. By tracking ESG metrics, you can immediately see if something isn’t going according to plan. You’ll also be able to use these cues to correct the issues.

• Transparency. When you measure and report on ESG metrics, there’s an increase in transparency. Stakeholders trust companies that are honest about their progress and can show real numbers. 

• Access to capital. More and more investors are considering ESG before making any investment decisions. Companies that can prove their ESG efforts are constant may find it easier to access capital and find investors.

• Risk management. Tracking your ESG efforts can help ensure compliance with regulations like the Corporate Sustainability Reporting Directive (CSRD), or the Sustainable Finance Disclosure Regulation (SFDR), improving people’s trust in your brand and preventing lawsuits.

Examples of the different types of ESG metrics

There are many ESG metrics you can choose from depending on your goals, industry, and department. One example would be focusing on ESG metrics as they relate to HR. Such examples include:

• Carbon footprint

• Waste generation and management

• Energy consumption

• Employee diversity and inclusion

• Health and safety

• Diversity in leadership

• Employee satisfaction

• Employee engagement

• Board diversity and composition.

Let’s take a closer look at each category.

Environmental metrics

Environmental metrics are a broader category and don’t include a lot of HR-related data. In the right context though, they can provide valuable insights into this department. Metrics you need to track here include:

• Carbon footprint. We can look at this metric from various angles. First, it measures the total greenhouse emissions and is associated with a company’s activities. In human resources, we can look at things like commuting and business travel, activities that contribute to the employees’ and the company’s carbon footprint.

• Remote work and energy efficiency. More remote employees often mean fewer office spaces and more energy saved. At the same time, each employee working from home will still consume energy. Your carbon footprint won’t be at zero, but remote work can come with more energy efficiency. For instance, they won’t have to commute each day, so they won’t be using their cars as much.

Social metrics

Social metrics are all about your employees, and by extension, HR. Here are some you must track.

• Diversity and inclusion. Usually calculated as a percentage, these metrics show your commitment to DE&I and lead to a better representation of minority groups across different sectors. When calculating this percentage, you should always calculate it in relation to local societal demographics.

• Employee engagement. Engaged employees perform better and are generally happier with their work. There’s no exact formula to measure this metric, but you have various options, such as employee surveys, employee net-promoter scores, and self-reported engagement. Unlike other metrics, this one has a degree of subjectivity, so use more than one option to get a better view.

• Health and safety. The workplace should be a safe space, with minimal injury risks. Some sectors come with more risks than others, which is why health and safety policies are critical. The number of incidents recorded over a period is a good example of a metric you can use here, but you can also look at the health and safety policies in place.

• Gender pay gap. In many sectors, women make, on average, less than men. Equal pay among genders is critical to ensure fair pay and inclusion, which is why this metric should be part of your ESG reports.

• Human rights. The right to work, freedom of speech, and the right to a fair trial are all human rights you must consider in the workplace. To measure this metric, you can look at incidents of human rights violations, but also at the human rights policies the company has in place.

• Training and development. A company that has no training and development programs will face disengaged employees, who lose interest in their work or have a limited set of skills. For ESG reporting, look at data on the amount invested in training and other related information.

• Employee turnover. Turnover, especially when it’s voluntary, can have a negative impact on your business. It can also show deeper issues within the company, such as poor engagement, discrimination, and more. To keep track of this metric, look at the number of people who left the company over a certain period. Don’t forget to separate those who left voluntarily from those who were let go. 

Governance metrics

Governance deals with aspects of how the business operates. Here are some metrics to keep track of.

• Board diversity. Similar to the DE&I metric we saw in the social aspect of ESG, board diversity focuses strictly on the company’s board of directors.

• Executive compensation. An important component in ESG reporting is knowing how much executives make in comparison to the average employee. Tracking this metric can help you avoid gross inequalities, where executives end up making over 1,000 times more than their average employees.

• Quality of governing body. This looks at potential conflicts of interest, but also executive diversity, and a person’s ESG track record. These are the people in charge of the business strategy, so ensuring their integrity and a lack of conflict of interest is crucial.

• Ethics policy. This type of policy helps a company fight corruption. Smaller businesses might be tempted to skip it, though it’s an area that’s best tackled right from the start. You don’t need complex calculations here. A simple yes or no to having an ethics policy is enough.

Using people analytics to report on ESG metrics

Tracking ESG metrics is a critical step in your ESG reporting journey. What you track and how you do it depends on your business, industry, and goals.

A key component of tracking and improving ESG metrics, especially the social aspect of it, is people analytics. With it, you can get a complete look at important ESG metrics like engagement, turnover, learning and development, and DE&I. People analytics gives you an overview of your workforce, helping you understand what’s working and what isn’t. 

Did you know an entire section of the CSRD is dedicated to the workforce? Things like diversity, health and safety, representation, and fair compensation should be central to your reports. 

Visier People® Workforce CSRD is a simple, yet powerful solution that makes CSRD reporting easy and intuitive. Its visualization options let you explore your company’s most important metrics so that you can focus on the results that matter the most. 

You’ll always stay on top of all the metrics you need to report on, ensuring compliance and transparency. Schedule a free demo today to learn more about what Visier People® Workforce CSRD can do for your organization.

On the Outsmart blog, we write about workforce-related topics like what makes a good manager, how to reduce employee turnover, and reskilling employees. We also report on trending topics like ESG and EU CSRD requirements and preparing for a recession, and advise on HR best practices like how to create a strategic compensation strategy, metrics every CHRO should track, and connecting people data to business data. But if you really want to know the bread and butter of Visier, read our post about the benefits of people analytics.