ESG Measurements

ESG performance is measured using data and indicators that show how a company manages their environmental, social, and governance issues.  These metrics help investors, regulators, and the public evaluate a company’s sustainability and risk management practices.

Environmental

Environmental metrics assess a company’s impact on the natural environment, focusing on issues such as resource use, pollution, and climate-related impacts.

Examples include:

• Greenhouse Gas (GHG) Emissions: Total Scope 1, Scope 2, and Scope 3, emissions. The formula is activity data × emission factor.
• Energy Consumption: Total energy used by a company’s operations, often measured by fuel type or electricity use. Companies may also track energy intensity per unit of production and the percentage of energy derived from renewable sources, such as solar or wind.
• Water Management: Total water consumption, particularly in water-stressed areas, and the percentage of water recycled or reused.
• Waste Management: Total waste generated (often measured in tonnes), waste diversion rates from landfills, the amount of hazardous waste produced, and the methods used to manage waste (such as recycling, composting, anaerobic digestion, incineration, or landfilling).

Many of these environmental indicators relate to environmental laws and regulatory requirements discussed in the Environmental section.

Social

Social metrics evaluate how a company manages relationships with employees, suppliers, customers, and communities.

Examples include:

• Diversity, Equity, and Inclusion (DEI): Percentage of workforce and management broken down by gender, ethnicity, and other demographic indicators, often measured as the percentage of the workforce or management belonging to each group.
• Labour Practices and Human Rights: Indicators related to fair and lawful workplace conditions, including employee turnover rates, the percentage of workers covered by collective bargaining agreements, workplace health and safety measures, and compliance with labour and human rights laws.
• Health and Safety: Workplace safety indicators used to monitor occupational health and safety performance, including indicators such as total recordable incident rates (TRIR) and lost-time injury rates (LTIR), as well as indicators such as safety training participation, safety audits, and health and safety meetings.
• Employee Well-being and Engagement: Employee satisfaction scores, training hours per employee, and pay equity ratios (such as gender pay gap metrics).
• Community Impact: Corporate philanthropy, community investment, and employee volunteer hours.

Many of these indicators relate to labour, human rights, and supply chain laws discussed in the Social section.

Governance

Governance metrics measure how a company is directed, managed, and overseen, focusing on accountability, transparency, and ethical conduct.

Examples include:

• Board Composition and Diversity: Representation of designated groups—such as women, Indigenous Peoples, racialized people, and persons with disabilities—on boards of directors and senior management teams, often measured as the number and percentage of individuals from each group.
• Executive Compensation: Ratio of CEO pay to median employee compensation and whether executive compensation is linked to ESG targets.
• Business Ethics and Anti-Corruption: Number of confirmed corruption cases, whistleblower protections, and employee anti-corruption training.
• Data Privacy and Cybersecurity: Number of data breaches, individuals affected, and cybersecurity policies in place.

These governance indicators relate to corporate governance and securities regulations discussed in the Governance section.

ESG Reporting

Based on the measurements above, to make ESG disclosures more consistent and comparable, many companies follow recognized ESG reporting frameworks and standards.

Global Reporting Initiative (GRI)

Companies commonly use the Global Reporting Initiative (GRI) framework to measure and disclose sustainability performance. The GRI Standards specify the exact disclosures and indicators that organizations should report, such as greenhouse gas emissions, energy consumption, workplace injury rates, workforce diversity, and governance practices. Because companies report the same types of data using the same definitions, investors and other stakeholders can compare sustainability performance across companies and industries. This makes side-by side comparisons possible.

Sustainability Accounting Standards Board (SASB)

Sustainability Accounting Standards Board (SASB) identifies the sustainability risks most likely to affect a company’s financial performance within 77 specific industries. From there, there are different metrics that the company must disclose depending on the industry they are in. Because companies within the same industry disclose the same standardized metrics, investors can compare companies side by side and evaluate how sustainability risks may affect financial outcomes such as cash flow, financing, or cost of capital.

Task Force on Climate-related Financial Disclosures (TCFD)

The Task Force on Climate-related Financial Disclosures (TCFD) provides a framework for companies to report how climate change affects their financial performance and strategy. TCFD focuses on four key areas: governance, strategy, risk management, and metrics and targets. Companies disclose information such as board oversight of climate risks, how climate change may affect business operations, how climate risks are managed, and measurable indicators like greenhouse gas emissions (Scope 1, 2, and sometimes 3) or climate-related targets. Because companies report these standardized disclosures, investors can compare how different companies manage climate-related financial risks and opportunities.

Canadian Sustainability Standards Board (CSSB)

The Canadian Sustainability Standards Board (CSSB) were introduced by the Canadian Sustainability Standards Board (CSSB) in 2024 to improve the consistency and comparability of sustainability reporting in Canada. The first two standards, CSDS 1 and CSDS 2, require companies to disclose sustainability-related financial information and climate-related risks that may affect their financial performance. CSDS 1 establishes general reporting requirements for sustainability risks and opportunities, while CSDS 2 focuses specifically on climate-related disclosures such as greenhouse gas emissions, climate risks, and transition strategies. These standards are largely aligned with the IFRS Sustainability Disclosure Standards.

More information

For more information, visit The Canada Energy Regulator and ESG – Overview of Environmental, Social, and Governance (ESG).

								
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