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ESG Peer Benchmarking & Gap Analysis

Investors, stakeholders, and ESG ratings agencies consider your performance on ESG KPIs in direct comparison to your industry peers. That makes ESG benchmarks fundamental to setting the right ESG goals, whether you are just getting started or looking to improve your scores.

The work must start with a diagnostic deep dive into ESG data and disclosures—yours, your competitors’, and your aspirational peers’. These findings are supplemented by knowledge of the most heavily weighted ESG benchmarks for your industry and amongst your top institutional shareholders, culminating in a list of the material topics most relevant to your unique organization. By applying industry-grade gap analytics, it’s possible to see if and where your company falls short, and where the greatest opportunities for improvement exist.

Ultimately, this insight becomes the North Star for developing the most effective ESG KPIs and ESG goals for your business. With metrics and a roadmap informed by the latest ESG data, you will be strategically and confidently positioned to close any gaps and move closer to best-in-class performance for each critical factor that matters to the shareholders you want to attract.

A Closer Look at What ESG Benchmarking Is

ESG benchmarking is the best way for companies to compare their disclosures of ESG factors to their competitors’ disclosures. This is important for establishing a baseline and building an ESG strategy with strong commitments and realistic, achievable goals. Typically, it involves looking at key ratings agencies, the ESG frameworks commonly used within your company’s industry, and the topics and frameworks used by your top shareholders. From there, you can identify the heaviest-weighted and most material topics you should consider reporting.

Additionally, the process includes selecting a list of peers to benchmark against. Oftentimes, the peer list may include a combination of competitive peers, proxy peers, aspirational peers, or companies of a similar size.

The goal of an ESG benchmarking exercise is to identify gaps within your ESG disclosures. By pinpointing the topics that you need to create policies and disclosures on, you can increase the chance of improving your ESG ratings and your standings in the eyes of investors.

Examples of ESG Benchmarks

Environmental, social, and governance benchmarking pays attention to various factors within each category. There are a number of topics that can and should be tracked in order to create the most comprehensive look at how your organization performs in these areas. The topics to benchmark will vary by company. Among the many ESG benchmarks, our services will customize the benchmarking most relevant to your company.

ESG Peer Benchmarking & Gap Analysis

For example, environmental benchmarking may involve peers’ environmental policies, scope 1, 2, and 3 greenhouse gas emissions, water usage, waste, and plastic use.

ESG Peer Benchmarking & Gap Analysis 2

When it comes to the social aspect, benchmarking may track metrics including the demographic makeup of the employee base, safety incidents, cybersecurity training, and employee health and safety policies.

ESG Peer Benchmarking & Gap Analysis 1

In terms of governance, the benchmarking process may include code of conduct, the demographics of the board of directors, and board-level ESG oversight.

How to Set ESG Goals That Add Value

It isn’t enough to establish goals for your company to meet when it comes to ESG — these also should be carefully crafted to ensure you can achieve them. Doing so will make it easier for you to succeed and add value for potential investors, employees, and your reputation. To begin, your goals should be clear and specific. Your goals also should be designed to challenge your organization, instead of being satisfied by negligible improvements. Setting the bar too low signals a lack of commitment and/or faith in your ability to accomplish your objectives. Finally, it’s extremely valuable to ensure that your goals match the values of your stakeholders. Align your goals with your company’s highest weighted ESG factors and most material topics according to investors, ratings agencies, frameworks, regulators, and other key stakeholders.

Examples of ESG KPIs

There are a number of KPIs your organization can use to measure your performance. These are critical for tracking how well your strategies are being implemented. For example, measuring greenhouse gas emissions can be one of the most important metrics for tracking your sustainability efforts. Making sure you have the initiatives in place to continue reducing your emissions will help you measure your progress annually. While you may announce medium- or long-term goals, it’s critical to set more frequent targets internally, such as quarterly or annually, to confirm you are on track to meet your company’s publicly stated goals.

How We Can Help

We offer comprehensive expertise when it comes to ESG benchmarking. Our team provides dashboards clearly displaying your ESG performance versus peers and highlighting areas of improvement. Then, we draft the policies and disclosures you need to close the gaps and boost your ESG performance. The solutions provided by our experts give you all the information you need to put your best foot forward. Get in touch with us today to learn more or to get started.

Our comprehensive peer benchmarking and gap analysis services include:

  • Company Assessment
  • Peer Benchmarking
  • Materiality Assessment
  • Ratings Remediation
  • ESG Target & ESG KPI Counsel

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