ESG Criteria and Indicators: A Complete Guide for Companies

The ESG criteria (Environmental, Social and Governance) are the three strategic pillars that define a company’s sustainability commitment: environmental (E), social (S) and governance (G). ESG indicators are the specific metrics that measure actual performance against each of those pillars. In other words: the criteria define the framework of what a company should address; the indicators measure how far it has come. In this guide you will find what they are, what types exist, how they are measured and how to implement a solid ESG strategy in your organisation.

What are ESG criteria?

ESG criteria (Environmental, Social and Governance) are the three strategic pillars that define a company’s sustainability commitment. Each pillar groups together principles and practices that go beyond traditional financial performance.

• E — Environmental: how the company manages its impact on the natural environment. Includes CO₂ emissions, energy consumption, water management and biodiversity.
• S — Social: the company’s impact on people: employees, customers, suppliers and communities. Includes working conditions, diversity, training and human rights.
• G — Governance: the quality of corporate governance. Includes transparency, business ethics, board structure and anti-corruption policies.

The key difference: criteria are the reference framework (what to measure); ESG indicators are the concrete metrics (how to measure it). For example, diversity and inclusion is a social (S) criterion; the percentage of women in leadership roles is the indicator that quantifies it.

ESG indicators: what they are and what they are for

ESG indicators are metrics that enable objective, comparable evaluation of a company’s sustainability performance. They analyse its environmental impact, its relationship with employees and communities, and the quality of its governance practices.

These indicators serve to:

• Measure non-financial risks that affect long-term company value.
• Demonstrate corporate responsibility to investors, customers and regulators.
• Comply with reporting regulations such as the European CSRD directive.
• Identify improvement opportunities in sustainability.
• Attract sustainable investment and improve access to financing.

ESG indicators at a glance

Types of ESG indicators

ESG indicators are grouped into three categories based on the pillar they belong to. Each type includes specific metrics with which companies can assess their real impact.

The importance of ESG indicators for companies

ESG indicators are essential for assessing the sustainable performance of a company in a comprehensive way. They are key to meeting the expectations of investors and consumers, and to demonstrating a genuine commitment to corporate responsibility. According to a McKinsey report, companies with strong ESG programmes can see an increase in earnings of up to 60%.

• Enhanced reputation and market trust.
• Reduced environmental, social and regulatory risks.
• Greater access to sustainable financing and ESG investment.
• Attraction and retention of talent committed to the company.
• Continuous improvement of long-term business performance.
• Real contribution to sustainable development and the SDGs.

Benefits and opportunities of ESG criteria for companies

Implementing ESG criteria is not just about meeting a regulatory obligation: it is a genuine source of business value. These are the main benefits:

1. Improved regulatory relationships

Companies aligned with ESG criteria manage their relationships with regulators and public authorities more effectively, obtaining approvals and permits more easily.

2. Cost reduction

By focusing on the responsible use of resources, ESG criteria help reduce operating costs related to raw materials, water or carbon emissions. According to McKinsey, the increase in earnings can reach 60%.

3. Improved productivity

Employee satisfaction correlates positively with shareholder returns. Companies with sound social (S) practices —such as training programmes, diversity and wellbeing— achieve better long-term performance.

4. Access to sustainable investment and financing

Institutional investors increasingly prioritise companies with strong ESG ratings. Good ESG indicator performance facilitates access to green bonds, sustainable funds and more favourable credit conditions.

5. Competitive advantage and reputation

Companies with solid ESG strategies enjoy greater trust from customers, employees and partners. In markets with increasingly conscious consumers, a sustainable reputation is a real differentiator.

ESG criteria and corporate responsibility

ESG criteria are today the reference standard for evaluating corporate responsibility. Their adoption means the company takes on measurable commitments across three dimensions: how it treats the planet, how it treats people, and how it governs itself.

This approach has a direct impact on business strategy. Companies with strong ESG scores gain regulatory advantages, greater stakeholder trust and better financing conditions. Furthermore, the European CSRD directive (Corporate Sustainability Reporting Directive) requires a growing number of companies to publish verified sustainability reports, turning ESG criteria into a legal requirement, not just a strategic option.

Corporate responsibility can no longer be separated from financial performance. ESG criteria are the bridge between the two.

Challenges and limitations of ESG indicators

Implementing ESG indicators is not without its challenges:

• Lack of standardisation: the various reporting frameworks (GRI, CSRD, TCFD) are not always comparable with each other.
• Difficulty collecting accurate data: especially in companies with complex supply chains or multinational presence.
• Complexity in defining useful KPIs: choosing the right KPIs requires specific expertise.
• Need for internal training: without teams trained in ESG, implementation loses rigour and credibility.
• Risk of greenwashing: publishing metrics without verifiable data can damage reputation if inconsistencies are detected.

ESG strategy: a complete guide for companies

A solid ESG strategy is not a document of intentions: it is a concrete action plan that affects the management, culture and results of the company.

1. Diagnosis, materiality and stakeholder identification

The starting point is understanding where the company stands today and who is affected by its activities. The materiality analysis identifies which ESG topics are relevant both to the business and to stakeholders: investors, employees, customers, suppliers, local communities and regulatory bodies. Understanding their needs and expectations is essential to align ESG actions with external and internal demands.

Not all indicators carry the same weight in every sector: an industrial company will prioritise CO₂ emissions; a services company may have greater impact through the social pillar.

• Inventory of current impacts across each pillar (E, S, G).
• Stakeholder mapping and consultation to identify expectations.
• Materiality matrix: relevance to the business vs. importance to stakeholders.
• Sector benchmarking.

2. Building the internal ESG team

Once stakeholders have been identified, it is essential to build a dedicated ESG team made up of professionals from strategic areas: sustainability, regulatory compliance, human resources, finance and operations. This team will oversee and implement ESG policies, ensuring the company not only adopts responsible practices but measures, reports and continuously improves them.

The training of this team is itself a social (S) indicator: the number of people with certified sustainability training is a KPI that appears in ESG reports.

3. Defining ESG objectives and KPIs

With the diagnosis in hand, the next step is to set measurable objectives aligned with the UN SDGs and frameworks such as GRI or CSRD. Each objective must have its corresponding ESG indicator, an internal owner, a deadline and a baseline for comparison.

Example of a well-defined objective: “Reduce Scope 1 emissions by 30% by 2027 relative to 2023 levels, with quarterly tracking”. For more context on how to align business objectives with sustainability, our guide on SDGs for businesses provides the complete framework.

4. Data collection and management

The credibility of an ESG strategy depends on data quality:

• Define what data is collected, how frequently and in what format.
• Assign data owners by source (operations, HR, finance, supply chain).
• Ensure traceability to facilitate internal and external audits.

One of the main challenges is the lack of verifiable data in Scope 3 (indirect supply chain emissions) or in suppliers’ social indicators.

5. Integration into business strategy and processes

ESG objectives only generate value when integrated into real company management: budgets, executive incentives, procurement processes and organisational culture. Connecting ESG objectives with corporate OKRs is an effective approach, so that each area has key results linked to sustainability. We recommend the article on how to integrate OKRs and ESG in your organisation.

6. ESG training and organisational culture

An ESG strategy that does not reach employees is not executed. Training hours per employee, participation rates in sustainability programmes and knowledge of the company’s SDGs are measurable social (S) indicators included in ESG reports.

Green training is the specific training discipline for developing sustainability competencies: environmental awareness, corporate ethics, regulatory compliance and systems thinking applied to business.

7. Transparent reporting and communication

ESG reports are the accountability instrument for stakeholders. A good report does not only collect successes: it also acknowledges challenges and shows the improvement plan. Reporting must align with the chosen frameworks (GRI, CSRD, TCFD) and be published annually. Discover how to build a strong sustainable reputation with real evidence.

8. Continuous improvement and sector benchmarking

The ESG strategy is a continuous improvement cycle. Each reporting cycle provides information to adjust objectives and identify new impact areas. To see what other companies are doing in sustainability, consult our comparison of leading ESG companies.

The link between ESG and business ROI

Well-managed ESG indicators have a measurable positive impact on business results: lower energy costs, reduced staff turnover, better access to financing and lower exposure to regulatory penalties. Our analysis of ROI in sustainability breaks down the performance standards and metrics you should track.

What are ESG reports and how are they assessed?

An ESG report (also called a sustainability report) is the document in which a company publishes its performance across the three ESG pillars: quantitative data (indicators and KPIs), qualitative information on policies and processes, and future commitments.

ESG ratings are assigned by specialist agencies such as MSCI, S&P Global and Sustainalytics, which analyse the company’s data, conduct audits and compare against sector standards. The higher the score, the stronger the company’s ESG performance.

Main ESG reporting frameworks

Amara NZero is a great example of how a company can transform its training and internal communication processes to strengthen its sustainability culture and improve ESG indicators in the social pillar. With isEazy, it integrated training, communication and monitoring into a single platform, aligning all its teams with its ESG strategy. Discover how they did it →

How to manage ESG criteria in your company with isEazy

You are probably wondering how to transform your own company into an organisation with a strategy centred on ESG criteria, right? To do so, you need to start by involving everyone in your workforce around the pillars you want to strengthen: whether environmental, social or governance.

Need help with that? isEazy Skills gives you everything you need to make sustainability a reality in your company. From measuring and analysing the level of knowledge your workforce has about your organisation’s SDGs, to training through courses based on the most prestigious standards and certifications, through which your employees can build knowledge through engaging and effective formats.

Remember that social (S) indicators —such as training hours per employee, participation rates in sustainability programmes or the level of ESG knowledge across the workforce— are KPIs included in ESG reports. Investing in your teams’ training not only improves organisational culture: it also improves your ESG metrics.

Request an isEazy Skills demo and discover how to turn sustainability into a real competency across your workforce.