Understanding environmental, social, and governance (ESG) data

Environmental, social, and governance (ESG) data has become central to business growth; it is how many consumers and investors decide where to invest their money.

As ESG considerations become central to how organisations operate and succeed, it is vital to manage your ESG data effectively so your organisation can achieve its sustainability goals, comply with evolving regulations, and meet stakeholder expectations—including those regarding business growth and opportunities.

What are some examples of ESG data?

• Environmental: Greenhouse gas emissions, energy consumption, water usage and discharge, air, water, and soil pollution metrics, climate risk exposure and mitigation efforts, and product lifecycle environmental footprint
• Social: Employee diversity, equity, and inclusion (DEI), environmental safety and the health and safety of people (for example, injury rates, lost time), training and development hours per employee, customer satisfaction and net promoter scores (NPS), and employee engagement and turnover rates
• Governance: Board diversity and structure, executive remuneration and pay ratios, business ethics and anti-corruption policies, data privacy and cyber security policies, regulatory compliance breaches, and sustainability-linked KPIs and ESG-linked incentives

What are some use cases for ESG data?

Organisations apply ESG data across a variety of scenarios to improve performance, transparency, and accountability.

• Environmental use cases include carbon footprint tracking to reduce emissions, sustainable sourcing initiatives, eco-friendly product design, and lifecycle assessments.
• Social use cases include workforce diversity analytics to track inclusion progress, community investment tracking for impact measurement, and customer data privacy programmes to meet ethical standards.
• Governance use cases include ethical AI governance to ensure fairness and transparency, anti-corruption compliance monitoring, and supply chain traceability to validate ethical sourcing.

What is an ESG rating and why is it important?

An ESG rating is an independent assessment—based on data from corporate disclosures, news sources, and watchdog organisations—that evaluates a company’s ESG performance and risk exposure. Think of an ESG rating as a credit score, but for sustainability: It helps investors and customers assess how responsible a company is.

• A high ESG score indicates strong environmental stewardship, social responsibility, and ethical governance.
• A low ESG score indicates areas of risk or poor performance.

Reporting ESG data not only ensures regulatory compliance, it also delivers sustainable business value in the form of strategic decision-making, growth and innovation, enhanced brand and stakeholder trust, risk management, and cost savings.

What good ESG data management looks like

Managing ESG data effectively is essential for turning sustainability ambitions into action. Effective ESG data management helps your organisation:

• Enhance sustainability reporting and management: Ensure data is accurate, consistent, and aligned with regulatory frameworks.
• Enhance decision-making processes: Use timely ESG insights to guide business strategy and resource allocation.
• Support risk management and compliance: Identify ESG-related risks early and ensure audit preparedness.
• Generate and enhance business value: Transform ESG initiatives into cost savings, brand loyalty, and market and investment opportunities.
• Enhance brand and stakeholder trust: Foster transparency and accountability among employees, customers, and regulators, and attract dedicated investors.

A mature ESG data management approach is ERP-centric, embedded in operations, and aligned with your business objectives. Technology can help you achieve a robust ESG data foundation in many ways.

• Automated data collection and integration: Connect ESG data from multiple sources in real time.
• Centralised data storage and access: Generate real-time insights and reporting from an ESG database.
• Standardised data across frameworks: Ensure consistent compliance and ESG data reporting metrics.
• Real-time visibility and analytics: Enable decision-making and KPI monitoring.
• Auditability and transparency: Maintain traceable, reliable data.

Integrated solutions take ESG data from compliance to opportunity because ERP-centric systems do not just gather ESG data. They integrate sustainability directly into core business processes such as finance, procurement, supply chain, and HR. This provides actionable insights in real time, across your value chain, enabling you to:

• Build integrated intelligence that seamlessly connects your business and sustainability priorities.
• Promote comprehensive decision-making by integrating sustainability metrics into every process, from procurement to supply chain operations.
• Accelerate your transformation with AI-driven automation, streamlining operations and making sustainability actionable at scale.

The ESG data challenge: Why collection and management are so difficult

Despite its importance, ESG data is notoriously difficult to manage due to several systemic issues:

• Data fragmentation: ESG data is dispersed across isolated systems and departments.
• Changing standards: Companies must navigate multiple evolving ESG frameworks.
• Non-financial nature: Many ESG metrics are qualitative or difficult to quantify.
• Low automation: Manual data entry and spreadsheets are still commonplace.
• Weak governance: Lack of ownership leads to inconsistencies and duplication.
• Audit readiness gaps: Poor traceability and documentation hinder assurance.

Seven keys to building a future-ready ESG data strategy

A forward-looking ESG strategy does more than guide your organisation on how to respond to regulations—it prepares your organisation to lead on sustainability and performance. An ERP-centric approach can drive both sustainability and financial outcomes, with compliance being only your first step towards realising the benefits of ERP-centric sustainability data.

Keys to a robust ESG data strategy

1. Establish ESG as a strategic priority

Integrating ESG into strategic planning ensures executive responsibility and long-term investment.

• Treat ESG data as core business data, not merely a reporting requirement.
• Link ESG metrics to corporate objectives, financial performance, and operational KPIs.

2. Build a unified, trusted data foundation

Fragmented data creates reporting gaps, risks, and reputational exposure.

• Centralise ESG data from finance, operations, HR, supply chain, and external sources.
• Ensure data is complete, accurate, and auditable throughout the entire value chain.

3. Align with global reporting frameworks

Future-proofing ESG data reporting helps to avoid duplication and improves regulatory preparedness.

• Structure your data to comply with evolving standards such as the Corporate Sustainability Reporting Directive (CSRD), the Task Force on Climate-Related Financial Disclosures (TCFD), the International Sustainability Standards Board (ISSB), Global Reporting Initiative (GRI), and the Sustainability Accounting Standards Board (SASB).
• Use technology that enables flexible mapping across multiple frameworks simultaneously.

4. Embed ESG into business processes

Putting ESG into practice transforms sustainability from a cost centre into a value driver.

• Link ESG data directly to procurement, product development, logistics, HR, and finance systems.
• Enable “accountable sustainability” by making ESG part of daily operations and decision-making.

5. Invest in scalable technology and automation

Scalability ensures the strategy can grow with your organisation and data complexity.

• Use ESG data platforms that automate data collection, validation, and reporting across the organisation.
• Leverage AI and ESG data analytics to detect trends, predict risks, drive actionable insights, and simulate sustainability outcomes.

6. Ensure governance, traceability, and auditability

Robust ESG governance protects against greenwashing—providing false or misleading information about how environmentally friendly a company’s products are—and improves transparency.

• Define clear roles for data ownership, validation, and stewardship.
• Maintain data lineage and documentation to support audits, assurance, and stakeholder confidence.

7. Drive continuous improvement through analytics

A future-ready strategy is iterative, not static. Analytics keeps ESG relevant and responsive.

• Use ESG dashboards and performance metrics to set goals, track progress, and inform actions.
• Benchmark against peers and apply insights to improve outcomes year on year.

The importance of ESG data analytics

Data alone does not create value; analytics transforms ESG data into insight and action, enabling your organisation to track performance over time, compare progress with peers, and simulate the impact of potential sustainability actions. This enables you to prioritise the right initiatives, measure real-world outcomes, and link ESG efforts to financial returns.

Robust ESG data analytics can:

• Uncover hidden risks and opportunities
• Enable data-driven decision-making
• Enhance transparency and trust
• Enhance performance and accountability
• Drive competitive advantage

Ultimately, ESG analytics is what transforms ESG data into strategic foresight, shaping smarter, faster, and more sustainable business decisions.

Turn ESG data into a competitive edge

Consumers really do care about sustainability; it remains a key preference and a critical factor in their purchasing decisions. In a recent EU report, 73 per cent of surveyed consumers said the impact of the product on the environment was [very] important when making a purchasing decision.

When ESG data is trusted, embedded, and analysed correctly, it becomes a business asset, not just a reporting requirement. It can also open up new growth opportunities, such as preferential access to ESG-linked financing, and increased appeal to sustainability-conscious investors, consumers, and prospective employees.

Companies with credible ESG data are better placed to participate in green procurement initiatives, stand out in competitive tendering processes, and enter new markets with stricter environmental or social regulations.

Adopting a proactive, integrated approach to ESG data enables you to:

• Use ESG data for strategic decision-making
• Create transparent and audit-ready ESG reports
• Utilise ESG metrics to drive sustainability performance

As sustainability continues to shape business landscapes, a robust ESG data strategy with SAP Sustainability solutions provides not only compliance but also a meaningful and lasting competitive advantage.

SAP sustainability customers in action