With the rising awareness of sustainability, various organizations are looking for methods they can use to evaluate sustainability performance considering the growth of ESG (environmental, social, and governance) factors and sustainable investing as well as the increased focus on climate change. As a result, many businesses use benchmarking procedures to assess, contrast, and categorize sustainability indicators within their operations.

If ESG is all about the environmental, social and governance factors influencing the sustainability of an organization and ensuring that the world is a better place to live in case of physical health, then ESG benchmarking is the way of measuring how well the ESG factors are maintained.

In this article, we will come to know what ESG benchmarking is, the importance of such benchmarking, and the steps on how you can conduct it.


What is ESG benchmarking?

ESG benchmarking is the practice of systematically comparing a company’s ESG performance with voluntary standards, other organizations within the same industry, or entities that can influence the ecology of our planet. It is a comprehensive process that gives you an overall view of the company’s functioning, both inward and outward.

The objective of such evaluation is to gain a better understanding of the sustainability of your organization and implement ESG measures accordingly. To understand how your building performs in comparison to other buildings with comparable characteristics, such as size, location, and asset type, you must first establish a baseline and compare its performance.

Benchmarking for ESG primarily is based on ESG scores and ratings. The metrics derived from such evaluations are carefully created to assess the effectiveness of an organization’s ESG strategy and the level of ESG risk to which it is exposed.

It includes everything from strategies to ESG goals, demanded both by stakeholders and government regulations, and any successes and failures along the way.


Importance of ESG benchmarking

ESG benchmarking is important because through this process all stakeholders receive a context for ESG goals. It is a general idea that provides you with both internal and external perspectives. If done correctly, it demonstrates how your business compares to competitors in its sector and how its stakeholders perceive you.

Benchmarking for ESG offers a variety of advantages, such as a means to compare data with other benchmarked businesses, assess the sustainability performance of optional or required standards, predict prospective business risks and opportunities, and show the beneficial effects of your sustainability initiatives.

Competitive benchmarking may help you examine the efficacy of your sustainability efforts, offer suggestions for bridging any gaps that may exist, and evaluate the possible financial benefits of doing so.

The benchmarking procedure also acts as a benchmark, enabling stakeholders, investors, clients, and industry peers to make useful, uniform comparisons based on industry standards. Due to these important points of observation, you must constantly incorporate them into your business plan.

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Steps to conduct ESG benchmarking

When it comes to benchmarking corporate practices, several strategies can be used. For smaller organizations, establishing a dedicated team for the analysis of sustainability performance might work, but for larger organizations, hiring an ESG consultant is much more feasible to conduct ESG benchmarking.

That being said, let us understand the steps involved in the process of benchmarking.


1. Identification and highlighting the ESG objectives

The first and most essential step for conducting the benchmarking process is to identify the organization’s key concerns and climate-related risks. It also involves the identification of the opportunities that the company is willing to endeavor.

In this stage, consultation with the key stakeholders and a thorough explanation of the objectives of the organization has for ESG reporting.


2. Recognizing peers and competitor’s performance

To maintain accuracy and effectiveness, it is essential to mention the rivals whom the company plans to measure and also highlight their company performance. Evaluating competitors’ and other organizations’ performance ensures accuracy and directs the benchmarking process.


3. Identification of key metrics and themes

One must have access to an ESG database, to acquire an understanding and choose metrics for analysis. This creates a prominent framework and template for the benchmarking process to be executed. Further, it can help in better analysis of an organization’s performance.


4. Data collection and analysis

In this step, data collection involves information gathering based on themes, metrics, and trends. Execution is the next critical phase after data collection which involves analyzing data and information to conclude.

This might prove to be difficult while trying to collect competitor’s data as most of the data may be under certain levels of confidentiality. Secondary reports can also be generated through marketing mediums, websites, or news channels.


5. Documentation

The final step that is critical for your company is documenting your findings or other data and insights related to ESG benchmarking of your organization. This helps in clear communication with the stakeholders and gives a clear picture of the actionable steps and operations that must be executed or altered.

Moreover, Reliable documentation is a valuable resource for the company and is subject to evaluation.

Related Post: How to Develop and Implement ESG Strategy



The idea of benchmarking is simple and technology has made it even simpler through various ESG benchmarking tools. Yet, in order to fully utilize the technology for benchmarking, we think that professional help is absolutely necessary.

Ethos Sustainability Solutions is a unique and highly accomplished organization providing various solutions to develop a sustainable business. We at Ethos, have etched a significant role in designing a sustainable future for the next generation with our highly strategic solutions.

Our high-end products and services include sustainability management software, three-tiered methodology, sustainability management tools, corporate sustainability consulting, training and educational programming, and others.

Our adept consultants can assist you in choosing the appropriate sustainability management tools and in utilizing them to get the best out of your sustainability program.

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