Sustainability is no longer an optional topic – companies must systematically record and report their ESG performance. But which ESG indicators are really relevant? And how can companies ensure that their reporting complies with regulatory requirements?
The Corporate Sustainability Reporting Directive (CSRD) and the European Sustainability Reporting Standards (ESRS) increase the requirements for ESG reporting. Chapter 5 of ESRS 2 (MDR-M) in particular defines clear minimum requirements for ESG KPIs to ensure transparency, comparability, and traceability.
In this article, we show which ESG KPIs are relevant, how companies can calculate them correctly, and what they need to do to comply with the requirements of ESRS 2.
1. The methodical derivation of ESG KPIs
ESG indicators cannot be defined arbitrarily – they must be systematically derived from legal requirements, international standards, and scientific findings.
1.1 Legal frameworks and standards
Key regulations and standards for ESG indicators include
- EU Taxonomy & CSRD (Corporate Sustainability Reporting Directive) → Defines which (economic) activities are sustainable.
- ESRS (European Sustainability Reporting Standards) → Uniform EU-wide ESG reporting obligations for companies.
- GRI (Global Reporting Initiative) → Globally recognized framework for sustainability reports.
- SASB (Sustainability Accounting Standards Board) → Cross-industry and industry-specific ESG indicators.
Companies are guided by these guidelines to ensure that their key figures are comparable and comply with regulatory requirements.
1.2 The role of the materiality analysis
Not every ESG KPI is equally important for every company. A double materiality analysis helps to determine relevant KPIs:
- Financial materiality: Which ESG factors influence the company’s performance?
- Impact materiality: Which ESG factors have a significant environmental or social impact?
The most important key figures result from this analysis, often based on stakeholder expectations and industry requirements.
1.3 The ESRS minimum requirements for ESG indicators (MDR-M, Chapter 5 ESRS 2)
To ensure transparent and comprehensible reporting, companies must define and document their ESG KPIs in accordance with the requirements of ESRS 2. The five key requirements are:
1.3.1 Calculation methods & assumptions
Companies must disclose how their ESG indicators are calculated:
✔ What methods and formulas are used?
✔ What assumptions are the calculations based on?
✔ Are there industry-specific standards that have been taken into account?
Practical example:
A company reports its CO₂ emissions according to Scope 3. Here it must explain how the data was collected – does it come from direct measurements or from estimates based on industry benchmarks?
1.3.2 Aim & scope of application
Companies must state:
✔ Which ESG goals are being pursued (e.g. climate neutrality by 2030)
✔ Whether the KPIs apply to the entire company or only to certain business areas
✔ How ambitious the target set is in comparison to the industry
2. The most important ESG KPIs and their calculation
2.1 Environment (E – Environmental)
Aim: To measure how sustainably companies use resources.
CO₂ emissions (Scope 1, 2, 3)
- Scope 1: Direct emissions from own sources (e.g. production facilities, vehicle fleet).
- Scope 2: Indirect emissions from purchased energy.
- Scope 3: Indirect emissions from the entire value chain.
- Calculation: CO₂ footprint according to GHG Protocol or ISO 14064-1.
Energy consumption (renewable vs. fossil)
- Share of renewable energies in total consumption.
- Calculation: total kWh consumption and share from RE sources.
Water consumption & intensity
- Total water consumption vs. production units.
- Calculation: Water withdrawal per product or turnover.
Waste generation & recycling rate
- Proportion of recycled or reused materials.
- Calculation: Recycling rate (%) = (Recycled waste / total waste) × 100.
2.2 Social (S – Social)
Aim: To measure how companies deal with employees, suppliers, and communities.
Employee turnover & diversity
- Fluctuation rate = (number of departures / average number of employees) × 100.
- Proportion of women in management positions (%).
Occupational accidents & safety
- Accident rate = (accidents per 1,000 working hours).
- Lost Time Injury Rate (LTIR) measures serious accidents.
Minimum wage & equality
- Average salaries by gender & hierarchy level.
- Gender Pay Gap (% difference).
Supply chain sustainability
- Proportion of suppliers with ESG certifications.
- Audits on compliance with social standards.
2.3 Corporate governance (G – Governance)
Aim: To measure how transparently and ethically companies are managed.
Independence of the Management Board
- Proportion of independent members on the Supervisory Board.
Anti-corruption & compliance
- Number of compliance cases or violations.
Tax transparency
- Effective tax rate (tax rate).
Payment behavior (late payment ratio)
- Average payment period in days.
- Proportion of late payments to suppliers.
3. Companies must prioritize individually
Not every ESG KPI is equally relevant for every company. Through a materiality analysis, companies can find out specifically which KPIs they need to prioritize.
Why is this important?
- Regulatory requirements (ESRS, CSRD) make certain KPIs mandatory.
- Investors demand ESG transparency for their investment decisions.
- Customers and stakeholders demand sustainable corporate governance.
Companies should therefore pursue a data-based ESG approach that is aligned with regulatory requirements and industry standards. This is the only way to reduce risks, exploit opportunities, and create long-term value.
4. Our support: efficient and automated management of ESG KPIs
We support you in recording your ESG key figures in a standardized, automated, and future-proof manner. With our ESG data platforms, we enable automated KPI calculation in accordance with ESRS standards and rely on business intelligence and artificial intelligence to optimize your ESG performance in a targeted manner. Customized dashboards ensure transparent reporting and improve your ESG ratings.
Let’s drive your ESG strategy forward together – contact us for a no-obligation consultation!
