Diverse data sources, including internal systems and third-party providers, are essential for gathering comprehensive ESG data and ensuring robust ESG reporting.

Unlike traditional financial data, ESG data is decentralised, heterogenous and often non-standardised. It comes from technical systems, HR records, procurement, survey instruments, facility meters and third-party assessments. ESG metrics are used to evaluate sustainability performance and support transparent reporting. Governance data is a key component of ESG reporting, providing insight into leadership accountability, regulatory compliance, and risk management. ESG information helps assess how companies manage their operations, comply with regulations, and address potential conflicts. Transparent disclosure of ESG data collected is crucial for attracting investment and demonstrating progress. Key drivers behind collecting and prioritizing ESG data include improving trust, sustainability, and competitiveness. It is important to collect ESG data across all of a company's operations, including supply chains and organizational processes, for comprehensive tracking. ESG data is used to evaluate a company's performance in managing environmental, social, and governance issues, which impacts its overall reputation and long-term success.

Internal reality: ESG teams do not “own” most ESG data. They curate, join and defend it.

Primary Sources of ESG Data Collection

ESG disclosures are rarely created from a single source. High-credibility reporting typically consolidates four streams:

Integrating data from third party data providers ensures comprehensive and accurate ESG reporting. ESG data partners play a crucial role in collecting and analyzing ESG data, helping companies benchmark and improve their practices. ESG ratings are essential for evaluating and comparing a company's sustainability performance, influencing investment decisions and regulatory compliance. The use of sustainability data in ESG reporting aligns environmental metrics with the company's mission and operations. Tracking and reporting the company's energy usage is a key metric for demonstrating environmental impact to stakeholders.

1) Internal operational data

Metered energy, waste manifests, incident logs, HR datasets, audit registers, ERP/EMS/BMS feeds.
Benefit: Closest to the business, most granular.
Risk: Inconsistent capture and weak controls undermine auditability.

Internal operational data is essential for accurately tracking the company's environmental impact, supporting transparent ESG reporting and effective sustainability management.

2) External benchmarks and public data

Industry benchmarks, regulatory filings, national inventories, ratings provider datasets.

Benefit: Enables comparability and peer positioning.

Risk: Methodologies differ, creating misalignment if adopted uncritically.

ESG ratings providers play a crucial role in supplying benchmark data that companies and investors use to assess sustainability performance. The Global Reporting Initiative is a key reporting standard that enhances accountability and transparency in ESG disclosures. ESG scores are derived from external benchmarks and methodologies provided by third-party organizations. The ESG score serves as an important quantitative measure of a company's sustainability and governance performance, supporting transparency and investor trust.

3) Supplier & stakeholder inputs

Surveys, attestations, due-diligence questionnaires, ESG clauses in contracts.
Benefit: Extends footprint beyond direct control (Scope 3, social impacts).
Risk: Self-reporting bias and low response quality are common failure points.

Supplier and stakeholder inputs can also be leveraged to educate ESG data stakeholders by providing insights into inclusion, employee engagement, and human rights impacts throughout the value chain. Additionally, considering ESG factors such as emissions, energy use, and resource consumption is essential for effective supply chain management.

4) Third-party ESG data providers

Specialist firms compiling and normalising ESG signals at scale.
Benefit: Adds independence and standardisation.
Risk: Ratings mismatch between providers can be material; must be interpreted not adopted at face value.

Weak ESG programmes fail not because data is missing, but because sources are unmanaged.

Many third-party ESG data providers now also integrate fixed income data, ensuring that ESG analysis covers a broad range of asset classes, including bonds and debt securities.

Metrics, Frameworks and Materiality

Data becomes decision-useful only once it is structured through:

• Metrics — specific quantitative indicators (e.g. Scope 2 emissions location-based, LTIFR, % independent board)

• Frameworks — rules for which metrics to disclose and how (GRI, SASB, TCFD, CSRD, ISSB, CDP)

• Materiality — filtering to the issues that are actually financially or operationally significant

To determine ESG scores, organizations use these metrics and frameworks to systematically assess and quantify their performance on environmental, social, and governance issues. The overall ESG score is crucial as it integrates factors such as social responsibility, diversity, and employee and customer satisfaction, providing a comprehensive evaluation of a company's ESG performance.

Organisations get into trouble when they collect “everything” but prioritise nothing. Mature programmes start with materiality → framework → metric → control — in that order.

Environmental and Social Factors

Environmental and social factors are at the heart of ESG, shaping how companies are evaluated on their sustainability and societal impact. Environmental factors focus on a company’s interaction with the natural world, including how it manages carbon emissions, energy usage, waste, water consumption, and its overall environmental impact. Collecting robust environmental data allows organizations to track their progress on reducing their carbon footprint, comply with international agreements, and align with global sustainability metrics.

Social factors, on the other hand, assess how a company manages relationships with employees, suppliers, customers, and the communities where it operates. Key social data points include workforce diversity, employee retention, health and safety records, community engagement initiatives, and supply chain labor practices. By collecting and reporting on these social metrics, companies can demonstrate their commitment to fair labor standards, inclusive workplaces, and positive community outcomes.

Both environmental and social data are critical for ESG data stakeholders, including investors, asset managers, and other partners, who rely on this information to evaluate ESG performance, manage esg issues, and make informed investment decisions. High-quality ESG data outputs in these areas not only help companies meet regulatory and industry benchmarks but also foster greater transparency and accountability across business activities.

Data Quality: The Real ESG Risk Surface

For internal stakeholders, ESG risk is not abstract — it is evidentiary. The credibility of a disclosure is determined by five qualities:

High-quality data is essential for accurately assessing and managing ESG risks, as it enables organizations to identify, evaluate, and address environmental, social, and governance-related threats. Effective risk management within ESG data frameworks relies on reliable data to proactively mitigate potential issues and strengthen a company's ESG risk profile.

In current markets, bad ESG data is a business risk — not a PR risk. It affects credit terms, insurance pricing, procurement selection, and investor confidence.

Why Investors Care, and What They Expect from You

Even when ESG teams are not courting investors, investors are evaluating them. External capital relies on ESG data to:

• Assess exposure to climate, conduc,t and operational risks

• Screen for regulatory and litigation vulnerability

• Testthe  credibility of net-zero and transition claims

• Differentiate leaders from laggards where fundamentals are similar

Strong ESG data can positively impact financial performance by supporting profitability, employee satisfaction, and stakeholder investment decisions. Additionally, ESG investing is increasingly shaping investor expectations, as integrating ESG risk insights and ratings into investment strategies influences portfolio performance and risk management.

Implication for internal teams: Investor expectations apply even when you are not “doing investor relations”. ESG credibility travels.

Reporting and Disclosure

High-quality ESG reporting balances transparency with defensibility. Strong disclosures typically:

• Align to recognised frameworks rather than invent bespoke approaches

• Distinguish data from narrative (evidence first, messaging second)

• Show progress with method continuity, not shifting baselines

• Acknowledge limitations instead of hiding them

• State governance (who owns the number, how it is controlled)

Weak ESG reporting fails because it is assembled, not governed.

Future Outlook

Emerging trends are shifting expectations quickly:

• AI & ML are raising the standard for anomaly detection and auditability

• Blockchain is entering ESG supply-chain assurance to reduce unverifiable claims

• Regulatory convergence (CSRD/ISSB) is shrinking tolerance for voluntary ambiguity

The direction of travel is one-way: less narrative, more evidence.

Practical Takeaways

1. Treat ESG data as a controlled dataset, not a communications asset

2. Fix sources and controls before worrying about storytelling

3. Prioritise materiality-aligned indicators, not universal wish-lists

4. Assume your data will be challenged — because it will be

5. Build disclosures to withstand due-diligence, not applause

Where OAK Helps

For organisations building credible ESG programmes, OAK provides:

• Data consolidation and validation across internal and external sources

• Alignment to recognised frameworks without reinventing structure

• Governance and audit-readiness for investor, board and regulatory scrutiny

• Decision-grade dashboards that convert ESG data into operational and financial signals

If you are already responsible for ESG data and want it to be defensible, comparable and investment-grade, a structured approach is the difference between reporting and being believed.

Book a discovery call with OAK to evaluate your current ESG data maturity and identify where controls, structure or validation are needed before your next disclosure cycle.

Conclusion

In today’s rapidly evolving business landscape, ESG data excellence is more than a compliance exercise; it is a driver of long-term value and resilience. By prioritizing the collection, validation, and reporting of ESG data, organizations can disclose ESG data that is credible, comparable, and decision-useful for all ESG data stakeholders. This commitment to transparency and continuous improvement helps companies manage risks, meet stakeholder expectations, and contribute to sustainable development goals.

As ESG standards and expectations continue to rise, those who invest in robust ESG data collection and reporting processes will be best positioned to lead in their industries. Whether you are just beginning your ESG journey or seeking to enhance your existing frameworks, focusing on the quality and governance of your underlying ESG data is essential for building trust, attracting investment, and achieving lasting impact.

ESG Data Explained: FAQs

Q: What is ESG data?
A: ESG data is information that measures a company’s Environmental, Social and Governance performance, such as emissions, energy use, diversity, labour practices, and board governance. It is used for sustainability reporting, regulatory compliance, and investor assessment.

Q: Why is ESG data important for organisations?
A: ESG data is important because it supports transparent reporting, demonstrates responsible business practices, reduces regulatory and financial risk, and influences access to investment, credit and procurement opportunities.

Q: Where does ESG data come from?
A: ESG data comes from internal systems (energy meters, HR records, audits), supplier and stakeholder surveys, external benchmarks and regulatory filings, and third-party ESG data providers.

Q: How is ESG data used in sustainability reporting?
A: ESG data is used to produce sustainability reports that show environmental and social performance, support compliance with frameworks like GRI and CSRD, and provide evidence for investors, regulators and stakeholders.

Q: What are ESG metrics and frameworks?
A: ESG metrics are measurable indicators such as Scope 1–3 emissions or injury rates. ESG frameworks like GRI, SASB, TCFD and CSRD provide the rules for what to disclose and how to structure ESG reports.

Q: How do investors use ESG data?
A: Investors use ESG data to assess climate and governance risk, test the credibility of sustainability claims, compare companies, and inform portfolio construction and capital allocation decisions.

Q: What makes ESG data “high quality”?
A: High-quality ESG data is accurate, complete, consistent, comparable and traceable. Poor-quality data can undermine credibility, increase regulatory risk and reduce investor confidence.

Q: What tools are used to collect and manage ESG data?
A: Companies use ESG data management platforms, energy and building systems, supplier questionnaires, third-party datasets, and reporting software to collect, integrate and validate ESG information.

Q: Is ESG data used outside public markets?
A: Yes — ESG data is widely used in private markets for due-diligence, credit risk, insurance pricing, procurement eligibility and sustainable finance decision-making.

Q: How can organisations improve ESG data accuracy and credibility?
A: Organisations can improve ESG data by standardising sources, aligning to recognised frameworks, validating inputs, governing ownership of metrics, and preparing disclosures for audit and investor scrutiny.