ESG KPIs are redefining the sustainability landscape in global corporates. This shift fundamentally influences corporate strategies, operational decisions, and investor choices worldwide. In this rapidly evolving environment, effectively tracking the right ESG KPIs has become critical. Driven by tightening regulations, rising stakeholder demands, and the recognized link between sustainability and business resilience, organizations are embarking on a transformation. ESG KPIs provide the clear roadmap, particularly within the dynamic Asia-Pacific (APAC) region.
ESG KPIs: A defining trend
As the quantifiable backbone of a company’s sustainability commitment, ESG KPIs measure and articulate its impact on environmental sustainability, social responsibility, and governance integrity. These measurable indicators are crucial for investor confidence, capital access, and competitiveness. Globally, ESG is becoming a definitively mandatory corporate KPI.
The widespread adoption highlights this trend:
- Over 90% of S&P 500 companies now publish comprehensive ESG reports.
- 79% of global investors actively prioritize ESG risks and opportunities, favoring companies with strong ESG performance, which can lower capital costs and increase funding access.
- Global ESG assets are projected to exceed $53 trillion by 2025, representing over one-third of total assets under management.
- ESG KPIs are also vital as regulatory frameworks rapidly evolve. India’s BRSR Core mandates audits by 2027, and the EU’s CSRD will require nearly 50,000 companies to disclose detailed ESG data by 2026.
- Consumer preferences further drive this shift; 63% of Gen Z consumers favor socially equitable brands, and 76% of consumers globally are more likely to buy from companies with a strong ESG track record.
This focus mitigates risks like regulatory fines and reputational damage, while enhancing corporate reputation and unlocking financial benefits.
Early adopters: leading the charge
Globally, finance, technology, consumer goods, and energy (especially renewables) are leading ESG KPI integration. Financial institutions embed ESG in lending, tech companies prioritize energy efficiency and ethical supply chains, consumer goods firms respond to sustainable product demand, and renewables inherently align with environmental goals.
“APAC is truly on the right track in terms of progression,” Jules Bottlaender, Head of Sustainable Finance in APAC, Securities Services at BNP Paribas, recently commented in a note. He noted that APAC countries adopt a ‘smart approach,’ learning from global sustainability regulations. Although Europe has been leading in sustainable finance, particularly in product innovation and regulations, APAC has been closely following.
The India story:
In India, IT/IT-enabled services, financial services, large manufacturing conglomerates, and the energy sector are at the forefront. Indian IT companies align with global standards due to international clients, while financial institutions launch green finance products. Manufacturing giants invest in resource efficiency, and the energy sector transitions to renewables.
- ESG assets under management in India grew from $330 million in 2019 to $1.3 billion by June 2023,
- Projections for ESG to constitute 34% of India’s domestic assets under management by 2051.
Prioritizing E, S, or G in KPIs
While KPIs are vital for all three components, the environmental (E) pillar often sees the most immediate and quantifiable application due to measurable impacts like carbon emissions and energy consumption.
India’s Environmental Impact
- Environmental impacts include carbon emissions, energy consumption, water usage, and waste generation.
- 51% of India’s top 100 companies disclosed Scope 3 emissions in FY23.
- India added 29.5 GW solar in 2024-25, 106 GW total, highlighting renewable energy usage.
Social Component Quantification
- Crucial but challenging.
- Metrics: employee diversity, engagement scores, community investment.
Indian SME Leaders’ ESG Priorities
- 92% prioritize ESG.
- 57% cite cost as barrier.
- Tech sector typically has 13% employee turnover.
Governance in KPIs
- Effectively aligns with qualitative or binary metrics.
- Measures independent board members and executive compensation.
- Women directors represented 18% of Nifty 500 boards in 2024.
Stakeholders, derivation, and data custodians
ESG KPIs are a company’s essential roadmap, driven by investors, consumers, employees, communities, and NGOs. Typically, a chief sustainability officer (CSO) or a dedicated ESG team leads the initiative, collaborating across departments to pinpoint KPIs aligning with business goals and regulations. These internal teams are vital data custodians, gathering and verifying raw ESG data to ensure transparency and build trust.
Challenges and solutions
Implementing ESG KPIs effectively presents challenges, including data accuracy, regulatory fragmentation, and measuring actual impact versus mere activity. Greenwashing and resource allocation are also key concerns. Addressing these complexities requires a focused approach:
Standardized Data & Tech: Push for standardized ESG KPI frameworks and robust data collection technologies, including interoperable platforms and clear reporting protocols.
Strategic Integration & Resources: Integrate ESG KPI tracking directly into core strategy, allocating adequate financial and human resources to dedicated ESG teams and fostering a culture of data ownership.
Regulatory Harmony: Governments and international bodies must collaborate on unified and consistent regulatory frameworks. SEBI’s 2025 regulations emphasize verified, standardized ESG data, including new requirements for value chain reporting and Green Credit disclosures. SEBI’s BRSR Core Framework mandates ESG disclosures on nine key KPIs, with phased implementation through 2027.
Impact-Driven Metrics: Move beyond simple activity reporting to define and track ESG KPIs that genuinely measure real-world impact, ensuring tangible contributions to sustainability goals and combating greenwashing.
Effective & Transparent Communication: Companies must clearly and authentically communicate ESG KPI performance to all stakeholders, using compelling narratives and accessible platforms to build trust.
Our take:
SMART KPIs are crucial for effective ESG management, providing clarity, accountability, and transparent communication. They help businesses mitigate risks, ensure compliance, boost reputation, unlock financial benefits, and build a resilient operation positively contributing to society and the planet.
WITHOUT ESG KPIs, ESG COMMITMENTS REMAIN VAGUE ASPIRATIONS, NOT ACTIONABLE STRATEGIES!
