Understanding environmental, social, and governance (ESG) data

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

As ESG considerations become central to how organizations operate and succeed, it’s critical to manage your ESG data effectively so your organization can achieve its sustainability goals, comply with evolving regulations, and meet stakeholder expectations—including those around 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), safety of the environment 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 compensation and pay ratios, business ethics and anti-corruption policies, data privacy and cybersecurity policies, regulatory compliance violations, and sustainability-linked KPIs and ESG-linked incentives

What are some use cases for ESG data?

Organizations 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, green 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 programs 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 organizations—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 signals strong environmental stewardship, social responsibility, and ethical governance.
• A low ESG score suggests areas of risk or poor performance.

Reporting ESG data not only ensures regulatory adherence, 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 well is essential for translating sustainability ambitions into action. Effective ESG data management helps your organization:

• Enhance sustainability reporting and management: Ensure data is accurate, consistent, and aligned with regulatory frameworks.
• Improve 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 readiness.
• Generate and improve business value: Turn ESG efforts into cost savings, brand loyalty, and market and investment opportunities.
• Enhance brand and stakeholder trust: Build transparency and accountability among employees, customers, and regulators, and attract committed investors.

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

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

Integrated solutions take ESG data from compliance to opportunity because ERP-centric systems don’t just gather ESG data. They connect sustainability directly into core business processes like 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 links your business and sustainability priorities.
• Drive comprehensive decision-making by embedding 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 hard

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

• Data fragmentation: ESG data is spread across siloed systems and departments.
• Changing standards: Companies must navigate multiple evolving ESG frameworks.
• Non-financial nature: Many ESG metrics are qualitative or hard to quantify.
• Low automation: Manual data entry and spreadsheets are still common.
• 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 organization on how to respond to regulations—it prepares your organization to lead on sustainability and performance. An ERP-centric approach can drive both sustainability and financial outcomes, with compliance being only your first step toward realizing the benefits of ERP-centric sustainability data.

Keys to a strong ESG data strategy

1. Establish ESG as a strategic priority

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

• Treat ESG data as core business data, not just a reporting requirement.
• Tie ESG metrics to corporate goals, financial performance, and operational KPIs.

2. Build a unified, trusted data foundation

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

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

3. Align to global reporting frameworks

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

• 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 allows flexible mapping across multiple frameworks simultaneously.

4. Embed ESG into business processes

Operationalizing ESG transforms sustainability from a cost center 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 organization and data complexity.

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

6. Ensure governance, traceability, and auditability

Strong ESG governance safeguards against greenwashing—conveying false or misleading info about how environmentally sound a company’s products are—and enhances transparency.

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

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 over year.

The importance of ESG data analytics

Data alone doesn’t create value; analytics turns ESG data into insight and action, allowing your organization to track performance over time, compare progress against peers, and simulate the impact of potential sustainability actions. This empowers you to prioritize the right initiatives, measure real-world outcomes, and link ESG efforts to financial returns.

Strong ESG data analytics can:

• Reveal hidden risks and opportunities
• Enable data-driven decision making
• Enhance transparency and trust
• Improve 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 advantage

Consumers really do care about sustainability; it remains a key preference and critical factor in their buying decisions. In a recent EU report, 73 percent 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 analyzed correctly, it becomes a business asset, not just a reporting requirement. It can also open new growth opportunities, such as preferred access to ESG-linked financing, and increased attractiveness to sustainability-conscious investors, consumers, and prospective employees.

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

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

• Use ESG data for strategic decision-making
• Create transparent and audit-ready ESG reports
• Leverage 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 edge.

SAP sustainability customers in action