Deciphering ESG is like trying to get the right frequency on a vintage radio — there’s a lot of static, and it takes patience to tune in. But amidst the noise, one signal is coming through clearly: ESG performance is becoming a business imperative, not just a sustainability aspiration.

In this article, we outline a 6-step plan to help your company move from ESG noise to meaningful action — whether you’re just starting out or looking to sharpen an existing program.

Step 1: Understand what ESG means for your business

ESG stands for Environmental, Social, and Governance — three dimensions of business performance that are increasingly material to investors, customers, regulators, and employees. The specific ESG topics that matter most vary significantly by industry, business model, and stakeholder base.

The EU’s European Sustainability Reporting Standards (ESRS) provide a structured framework for understanding which sustainability topics are material for your company — a useful starting point even for companies not yet in mandatory CSRD scope.

Step 2: Measure your baseline

You can’t manage what you don’t measure. Establishing a baseline requires collecting data across the three ESG dimensions:

• Environmental: GHG emissions (Scope 1, 2, 3), energy consumption, water use, waste generation
• Social: Workforce metrics, health and safety performance, diversity and inclusion data
• Governance: Board composition, anti-corruption policies, business conduct practices

For mid-market companies, starting with a spend-based carbon footprint measurement gives you the fastest path to a baseline that covers your most material emissions category.

Step 3: Identify what matters most (materiality)

Materiality assessment — identifying which ESG topics are most significant for your business and its stakeholders — is the foundation of credible ESG reporting. Under CSRD, this is formalized as the double materiality assessment, which evaluates both financial impacts on the company and impacts on people and the environment.

Even for companies not in mandatory CSRD scope, a materiality assessment helps focus effort and resources on the areas where your company can have the most impact.

Step 4: Set targets and build a roadmap

Turning a baseline measurement into action requires setting specific, time-bound targets. For carbon emissions, science-based targets aligned with the Paris Agreement provide the most credible framework. For social and governance dimensions, targets should be tied to your material topics and your stakeholder expectations.

A realistic roadmap identifies which actions will have the greatest impact, what resources they require, and who is responsible for delivering them. See our guide on CSRD compliance for how regulatory requirements connect to strategic target-setting.

Step 5: Engage your stakeholders and supply chain

ESG performance is not just an internal management challenge — it extends into your supply chain and your relationships with customers, investors, and employees. For Scope 3 emissions in particular, meaningful progress requires engaging suppliers to collect data and drive reductions upstream.

Supply chain engagement is also increasingly important for regulatory compliance under regulations like EUDR and for responding to customer questionnaires that require supplier sustainability data.

Step 6: Report and communicate

Sustainable businesses communicate their progress clearly and credibly. Reporting can take many forms: a VSME Basic Module disclosure for SMEs, a CSRD sustainability statement for large companies, or annual responses to customer questionnaires like EcoVadis or CDP.

Whatever format you use, the key principles are consistency (use the same methodology year-over-year), transparency (explain how metrics were calculated), and traceability (link every metric to its source data).

For companies managing business travel and fleet emissions, see our guide to creating a carbon reduction plan.