Introduction

Environmental, Social and Governance (ESG) is no longer simply a reporting concept.

For many businesses, ESG is becoming part of strategy, risk management, finance, operations, supply-chain management and corporate governance.

However, one of the biggest questions companies face is:

Where should we start?

A company may understand the importance of ESG but still struggle with practical questions:

• Which ESG issues matter most?
• What data should we collect?
• Who should be responsible?
• How should ESG targets be established?
• What should the board monitor?
• How can ESG be integrated with finance?
• How can the company prepare for assurance?

There is no universal ESG implementation model that fits every company.

The appropriate approach depends on the company’s size, industry, geography, business model, regulatory requirements and stakeholder expectations.

The ISSB framework provides a useful investor-focused structure around governance, strategy, risk management, and metrics and targets, while allowing companies to apply judgement based on their circumstances.

This article provides a practical roadmap that companies can use to begin their ESG journey.

1. What Is an ESG Journey?

An ESG journey is the process through which a company moves from understanding sustainability issues to:

Identifying → Measuring → Managing → Improving → Reporting

It is not a one-time project.

A mature ESG programme continuously evolves as:

• Regulations change
• Stakeholder expectations change
• Business risks change
• Technology improves
• New data becomes available
• Climate and sustainability risks develop

Therefore, ESG should be treated as an ongoing management process.

2. Why Should a Company Start Its ESG Journey?

Companies begin ESG programmes for different reasons.

Common drivers include:

Regulation

New sustainability reporting requirements are emerging across jurisdictions.

Customers

Large companies increasingly request ESG information from suppliers.

Investors

Investors may evaluate sustainability-related risks and opportunities.

Banks

Financial institutions may increasingly seek climate and ESG information.

Cost Reduction

Energy, water and material efficiency can reduce operating costs.

Reputation

Credible ESG performance can strengthen stakeholder confidence.

Resilience

ESG analysis can identify risks that could affect long-term business continuity.

3. Does Every Company Need the Same ESG Strategy?

No.

A manufacturing company may have significant:

• Energy consumption
• Emissions
• Water use
• Waste
• Occupational safety risks

A technology company may have greater exposure to:

• Data privacy
• Cybersecurity
• Human capital
• Digital ethics
• Talent retention

A financial institution may focus more heavily on:

• Climate-related financial risks
• Responsible lending
• Investment exposure
• Governance

Therefore:

ESG should be material to the business, not copied from another company.

4. Step 1 – Understand Your ESG Regulatory Requirements

Before collecting data, determine which rules apply.

A company should identify:

• Country of operation
• Listing status
• Industry
• Company size
• Revenue
• Number of employees
• Market capitalisation
• Financial-sector status
• Foreign subsidiaries
• Major customers
• Export markets

For example, an Indian listed company may need to consider SEBI’s BRSR framework and applicable BRSR Core requirements.

SEBI introduced BRSR Core with a phased assurance approach, with coverage extending to the top 1,000 listed entities by FY 2026-27.

An international company may additionally need to consider ISSB-aligned requirements, EU requirements or other jurisdiction-specific rules.

5. Step 2 – Identify Your Stakeholders

ESG should begin with understanding who matters to the business.

Important stakeholders can include:

• Shareholders
• Investors
• Employees
• Customers
• Suppliers
• Lenders
• Regulators
• Government
• Local communities
• Business partners

Each stakeholder may have different expectations.

For example:

Investors

May want information about material ESG risks.

Customers

May require supplier sustainability data.

Employees

May care about workplace safety and development.

Regulators

May require specific disclosures.

Stakeholder expectations can help identify ESG priorities.

6. Step 3 – Establish ESG Governance

ESG should have clear ownership.

A company should decide:

Who is responsible for ESG?

Possible governance structure:

Board

Provides oversight.

ESG/Sustainability Committee

Reviews strategy and performance.

CEO/Managing Director

Provides executive leadership.

CFO

Oversees financial implications, data controls and reporting.

Sustainability Team

Coordinates ESG implementation.

HR

Manages workforce-related information.

Operations

Manages environmental and operational data.

Procurement

Manages supplier ESG information.

Internal Audit

Reviews controls and data reliability.

Without clear ownership, ESG programmes often become fragmented.

7. Step 4 – Conduct an ESG Gap Assessment

A gap assessment compares:

Current State vs Required State

For example:

This helps management understand where resources are needed.

8. Step 5 – Conduct a Materiality Assessment

A company cannot manage everything equally.

It must identify the ESG issues that matter most.

For an investor-focused sustainability reporting approach such as ISSB, the focus is on sustainability-related risks and opportunities that could reasonably be expected to affect the company’s prospects. The IFRS Foundation notes that materiality requires judgement based on the company’s specific facts and circumstances.

Depending on the applicable framework, companies may also need to consider impact materiality, particularly under the EU’s double-materiality approach.

9. What Questions Should Be Asked During Materiality Assessment?

Management should ask:

Environmental

• Which environmental issues affect our operations?
• Which resources are critical?
• Where are our largest emissions?
• Are we exposed to water scarcity?
• Are waste or pollution significant?

Social

• Are employees exposed to safety risks?
• Do we depend on skilled workers?
• Are human-rights risks present?
• Are customers exposed to safety or privacy risks?

Governance

• Where could fraud occur?
• Are there corruption risks?
• Are internal controls strong?
• Are supplier risks significant?

10. Step 6 – Create an ESG Risk and Opportunity Register

Once material issues are identified, create a structured register.

Example:

This converts ESG from a reporting exercise into a management process.

11. Step 7 – Establish an ESG Baseline

Before setting targets, companies need to know their starting point.

A baseline may include:

• Electricity consumption
• Fuel consumption
• Scope 1 emissions
• Scope 2 emissions
• Scope 3 emissions
• Water consumption
• Waste
• Employee numbers
• Safety incidents
• Training
• Diversity
• Governance indicators

For example:

FY 2026 baseline

Electricity consumption: 10 million kWh

Scope 1 emissions: 5,000 tCO₂e

Scope 2 emissions: 8,000 tCO₂e

The company can then establish future targets.

12. Step 8 – Build an ESG Data Dictionary

One of the most useful tools is an ESG Data Dictionary.

For every KPI, define:

• KPI name
• Definition
• Unit
• Reporting period
• Data owner
• Source
• Calculation method
• Emission factor, if applicable
• Review process
• Evidence required

For example:

KPI: Electricity Consumption

Unit: kWh

Source: Electricity bills/meter data

Owner: Facilities Manager

Reviewer: Finance

Reporting period: Financial year

This prevents different departments from using different definitions.

13. Step 9 – Start With Reliable Data

Companies should not attempt to collect hundreds of ESG metrics immediately.

Start with the most important data.

Environmental

• Electricity
• Fuel
• Water
• Waste
• Emissions

Social

• Employees
• Safety
• Training
• Turnover

Governance

• Compliance
• Ethics
• Anti-corruption
• Complaints

Once these systems become reliable, additional metrics can be added.

14. Step 10 – Calculate Scope 1 and Scope 2 Emissions

For many companies, this is an important starting point.

The basic principle is:

Activity Data × Emission Factor = GHG Emissions

Examples of activity data:

• Litres of diesel
• Units of electricity
• Natural gas consumption
• Fuel used by company vehicles

The company should document:

• Data source
• Emission factor
• Calculation method
• Organisational boundary
• Reporting period

This creates a defensible emissions baseline.

15. Step 11 – Gradually Address Scope 3

Scope 3 can be significantly more complex.

It may include:

• Purchased goods
• Capital goods
• Transportation
• Business travel
• Employee commuting
• Waste
• Use of sold products
• End-of-life treatment
• Investments

Companies should prioritise material Scope 3 categories rather than attempting to collect perfect information immediately.

The first objective should be:

Understand → Estimate → Improve → Replace estimates with better data

16. Step 12 – Set ESG Targets

Targets convert ambition into measurable action.

A good target should include:

Baseline + Metric + Target + Deadline + Responsibility

Example:

Reduce Scope 1 and Scope 2 emissions intensity by 25% from the FY 2026 baseline by FY 2030.

Another example:

Increase renewable electricity from 10% to 50% by FY 2030.

Targets should be:

• Measurable
• Realistic
• Time-bound
• Assigned to responsible people
• Reviewed periodically

17. What Makes a Good ESG KPI?

A strong KPI should be:

Specific

Clearly defined.

Measurable

Supported by data.

Comparable

Can be compared over time.

Relevant

Connected to material ESG issues.

Reliable

Based on credible information.

Actionable

Management can influence the result.

For example:

“We support sustainability”

is not a useful KPI.

But:

“Energy consumption per unit of production reduced by 12%”

is measurable and actionable.

18. Step 13 – Develop an ESG Policy Framework

Companies should create policies relevant to their material issues.

Potential policies include:

Environmental

• Climate policy
• Energy policy
• Waste policy
• Water policy
• Biodiversity policy

Social

• Human-rights policy
• Health and safety policy
• Diversity policy
• Employee grievance policy

Governance

• Code of conduct
• Anti-bribery policy
• Whistleblower policy
• Conflict-of-interest policy
• Supplier code of conduct

Policies should be implemented—not merely uploaded to the website.

19. Step 14 – Integrate ESG Into Enterprise Risk Management

ESG should not operate separately from risk management.

For example:

Climate Risk

Could affect:

• Assets
• Supply chains
• Insurance
• Production

Social Risk

Could affect:

• Workforce
• Reputation
• Productivity
• Labour availability

Governance Risk

Could result in:

• Fraud
• Fines
• Litigation
• Financial losses

Therefore, ESG risks should be incorporated into the company’s enterprise risk register.

20. Step 15 – Integrate ESG Into Budgeting

ESG becomes more powerful when it enters the budgeting process.

For example:

Environmental investment

Solar plant: ₹5 crore

Expected annual energy savings: ₹1 crore

Expected life: 20 years

Management can evaluate:

• Payback
• NPV
• IRR
• Carbon reduction
• Energy-price risk

This turns ESG into a capital-allocation decision.

21. Step 16 – Integrate ESG Into Procurement

Procurement is often one of the most important ESG functions.

Companies can assess suppliers on:

• Environmental compliance
• Emissions
• Labour practices
• Health and safety
• Human rights
• Anti-bribery
• Data security

A supplier ESG questionnaire can be developed for material suppliers.

However, companies should avoid imposing excessive data requirements without considering supplier size and capability.

22. Step 17 – Engage Employees

ESG cannot be implemented only by senior management.

Employees should understand:

• Why ESG matters
• What their responsibilities are
• How data is collected
• How targets affect their department
• How waste and energy can be reduced
• How ethical concerns can be reported

Training can include:

• ESG awareness
• Safety
• Ethics
• Energy efficiency
• Data quality
• Human rights

23. Step 18 – Build ESG Internal Controls

As ESG information becomes more important, controls become essential.

Controls can include:

• Maker-checker processes
• Approval workflows
• Reconciliations
• Source-document verification
• Data validation
• Exception reporting
• Management review

For example, if fuel consumption is reported, the figure should reconcile with:

• Purchase records
• Fuel logs
• Inventory records
• Operational records

This improves reliability.

24. Step 19 – Prepare for ESG Assurance

Companies should not wait for the assurance provider to identify data problems.

Prepare in advance.

A useful approach is:

KPI → Data Source → Calculation → Evidence → Review → Approval

This creates an audit trail.

A global ESG-readiness approach commonly emphasises determining applicable standards, establishing governance, identifying disclosures, digitising ESG data and working with the value chain.

25. Step 20 – Develop an ESG Dashboard

Management should have a dashboard showing performance against targets.

Example:

The dashboard should be reviewed regularly by management.

26. Step 21 – Connect ESG With Financial Performance

The most mature ESG programmes connect sustainability KPIs with financial outcomes.

For example:

Energy reduction → Lower costs

Waste reduction → Higher material efficiency

Employee retention → Lower recruitment cost

Safety improvement → Lower disruption

Climate resilience → Lower business interruption risk

Better governance → Lower compliance and fraud risk

This helps management understand why ESG matters.

27. Step 22 – Establish an ESG Reporting Calendar

ESG reporting should follow a defined annual cycle.

April–June

• Data collection
• Materiality review
• Regulatory update

July–September

• KPI review
• Target progress
• Supplier data

October–December

• Gap assessment
• Internal controls
• Corrective action

January–March

• Final data
• Management review
• Assurance preparation
• Reporting

The exact timetable should be adapted to the company’s financial year and applicable reporting deadlines.

28. Step 23 – Use Technology Carefully

Technology can improve ESG reporting through:

• Automated data collection
• Carbon accounting
• Dashboards
• Supplier portals
• Data validation
• Document management
• Analytics

But technology should support—not replace—good governance.

A sophisticated ESG platform cannot fix:

• Wrong data
• Poor definitions
• Missing ownership
• Weak controls

Therefore:

Technology + Governance + Data Quality

are equally important.

29. Step 24 – Establish a Continuous Improvement Process

An ESG programme should improve every year.

After each reporting cycle, ask:

• Which data was difficult to obtain?
• Which KPIs were unreliable?
• Which targets were missed?
• Why were targets missed?
• Which controls failed?
• Which suppliers need improvement?
• Which regulations changed?
• Which new risks emerged?

The answers should feed into the next year’s ESG plan.

30. A Simple ESG Maturity Model

Companies can assess their maturity using five stages.

Level 1 – Awareness

The company understands ESG.

Level 2 – Compliance

The company responds to applicable requirements.

Level 3 – Measurement

The company collects ESG data and establishes KPIs.

Level 4 – Integration

ESG is integrated with strategy, risk and finance.

Level 5 – Leadership

ESG becomes a source of innovation, resilience and competitive advantage.

The objective should not necessarily be to reach Level 5 immediately.

The objective is to progress systematically.

31. A 12-Month ESG Roadmap

Months 1–2

• Identify regulatory requirements
• Establish governance
• Conduct stakeholder assessment

Months 3–4

• Conduct materiality assessment
• Identify ESG risks
• Complete gap assessment

Months 5–6

• Establish data dictionary
• Collect baseline data
• Calculate major emissions

Months 7–8

• Set ESG targets
• Develop policies
• Integrate ESG into risk management

Months 9–10

• Establish controls
• Engage suppliers
• Develop ESG dashboard

Months 11–12

• Review performance
• Prepare disclosures
• Conduct assurance readiness assessment
• Develop next-year action plan

32. What Should MSMEs Do Differently?

MSMEs should use a proportionate approach.

They can begin with:

Environmental

• Electricity
• Fuel
• Waste
• Water

Social

• Employees
• Safety
• Training

Governance

• Compliance
• Ethics
• Financial controls

They do not need to build an expensive ESG department on day one.

A simple spreadsheet-based system can be the starting point.

33. What Is the Role of the CFO?

The CFO can become the bridge between ESG and financial management.

Responsibilities may include:

• ESG budgeting
• KPI controls
• Data governance
• Climate-related financial analysis
• Capital investment
• Risk management
• Reporting
• Assurance coordination

This is why ESG is increasingly becoming relevant to finance leadership.

34. What Is the Role of CA Professionals?

CA professionals can support:

• ESG reporting
• Assurance
• Internal controls
• Risk management
• Governance
• Compliance
• Materiality assessment
• Financial impact analysis

The growing importance of sustainability information creates an opportunity to apply traditional financial-reporting discipline to ESG information.

35. What Is the Role of CMA Professionals?

CMA professionals can add value through:

• Environmental management accounting
• Carbon costing
• Energy-cost analysis
• Sustainability budgeting
• Cost reduction
• Resource efficiency
• ESG dashboards
• Internal carbon pricing
• Investment appraisal

This makes ESG highly relevant to management accounting.

36. What Are the Biggest ESG Implementation Mistakes?

1. Starting With the Report

A company should start with management systems and data, not simply the final report.

2. Collecting Too Much Data

More data does not automatically mean better ESG reporting.

3. Ignoring Materiality

Not every issue has equal importance.

4. No Data Ownership

Every KPI needs an accountable owner.

5. No Evidence

Reported figures should be traceable to source information.

6. Treating ESG as a Sustainability Department’s Job

ESG is cross-functional.

7. Ignoring Finance

Many ESG risks eventually have financial consequences.

8. Waiting for Regulation

Customer and investor requirements can arrive before legal requirements.

37. What Should Management Ask Every Quarter?

A quarterly ESG review can ask:

1. Are we meeting our ESG targets?
2. Which KPIs are off track?
3. What caused the variance?
4. Are ESG risks changing?
5. Are regulatory requirements changing?
6. Are customers requesting new data?
7. Are suppliers meeting expectations?
8. Are ESG investments delivering benefits?
9. Is data quality improving?
10. Are we ready for assurance?

This makes ESG part of normal management review.

38. The ESG Implementation Formula

A practical ESG implementation model is:

Governance

↓

Materiality

↓

Risk & Opportunity Assessment

↓

Data & Baseline

↓

Targets

↓

Action Plans

↓

Controls

↓

Measurement

↓

Reporting

↓

Assurance

↓

Continuous Improvement

This cycle should operate continuously.

39. ESG Journey Checklist

Before saying that an ESG programme is established, a company should ideally have:

☑ ESG governance

☑ Regulatory mapping

☑ Stakeholder assessment

☑ Materiality assessment

☑ ESG risk register

☑ ESG policies

☑ KPI definitions

☑ Data owners

☑ Baseline data

☑ ESG targets

☑ Internal controls

☑ Supplier engagement

☑ ESG dashboard

☑ Reporting process

☑ Assurance readiness

☑ Annual improvement plan

Conclusion

Starting an ESG journey does not require a company to become perfect overnight.

The most effective approach is to begin with the issues that matter most, establish reliable data, assign responsibility and progressively integrate ESG into business decisions.

The ISSB’s implementation guidance itself emphasises the importance of clear objectives, milestones, responsibilities, market readiness and phased implementation when jurisdictions develop sustainability reporting roadmaps.

For companies, the same principle applies:

Start with where you are.
Understand where you need to go.
Build a roadmap.
Measure progress.
Improve continuously.

ESG should ultimately move beyond a reporting exercise.

It should help management answer four fundamental business questions:

What risks are we facing?

What opportunities are available?

What should we measure?

How can we create long-term value?

For CFOs, Chartered Accountants and Cost and Management Accountants, this journey creates an important opportunity to bring financial discipline, measurement, controls and strategic thinking into sustainability management.

The future-ready company will not simply report ESG.

It will manage the business through ESG information.

The Worldonomics Times – ESG Knowledge Series