Our recent client roundtable provided insights into navigating ESG challenges, evaluating supply chain ESG risks and opportunities, and highlighting the ways organizations can align these efforts with overarching sustainability goals without overwhelming teams and operations.
Evaluating ESG Performance
Participants emphasized the importance of selecting the right standards to assess ESG performance. From an environmental perspective, the Science Based Targets initiative (SBTI) standards remain a valuable benchmark for many, a growing number of companies are voicing concerns about steep challenges ahead—particularly on the complexities of measuring scope 3 emissions. This in turn, means a difficult path towards achieving long-term net zero goals. In line with these challenges, SBTi recognizes areas where further work and exploration is needed, and participants look forward to these enhancements in the future.
Ecovadis certification is another critical benchmark for ESG overall, notable for its rigorous standards that keep companies vigilant year after year. However, participants noted that ESG ratings may sometimes appear to reward companies with strong governance, reporting, and transparency practices, even when those companies operate in higher emission sectors. This has fueled questions about whether ESG ratings truly measure what they are intended to assess. Participants agreed that ESG ratings remain valuable tools—after all, what cannot be measured cannot be reported—but emphasized that the focus must be on genuine sustainable practices.
The Evolving Role of ESG Rating Agencies
Looking towards the rest of 2025, there’s speculation about whether ESG rating agencies will become more standardized or decentralized. This uncertainty means there is a need for companies to develop robust internal standards. Some clients are already creating proprietary benchmarks, embedding ESG criteria within procurement teams to ensure alignment with strategic goals.
Key Performance Indicators in ESG Audits
Roundtable discussions identified essential KPIs for ESG audits that drive meaningful change. The consensus is that while ESG ratings provide structure and transparency, they often vary, at times significantly, on the weights assigned to critical ESG parameters. This, among other factors, would trigger the need to just take reported ESG performance at face value and conduct ESG audits to ensure that reported data aligns with on-the-ground sustainability performance.
While voluntary disclosures, ESG ratings and audits play a crucial role in driving accountability and transparency; companies must navigate these tools wisely. This way, they can ensure that their ESG initiatives are compliant while also being impactful, delivering on their commitments and driving meaningful progress toward achieving their goals.
Embracing Change and Driving Meaningful ESG Impact
In the roundtable, we also tackled the fact that companies are faced with ESG challenges such as navigating shifting sentiments, like fatigue and hushing. This section reflects on our clients’ experiences and insights, exploring how these sentiments influence corporate strategies and uncover new opportunities for impact.
- Staying focused on purposeful activities: Despite the shifts in ESG sentiment, our clients remain unwavering in their commitment to activities that truly make a difference. The global nature of their customer bases demands products and services that are sustainable and purposeful. This steadfast focus ensures that their ESG efforts continue to resonate and drive positive outcomes.
- Addressing greenwashing and enhancing responsibility: Recent trends highlight increased scrutiny on greenwashing, with companies relying more on data to substantiate their ESG claims. This scrutiny creates a context where businesses are more accountable for the messages they communicate. By embracing transparency and leveraging data, organizations can enhance credibility and foster trust among stakeholders.
- Balancing authenticity with popularity: One of the critical challenges our clients face is the risk of standing still. It’s important for companies to stay true to their ESG efforts, even when they’re not the hot topic of the moment. By focusing on real impact over passing fads, businesses can keep leading with integrity and purpose.
In the end, navigating ESG-related sentiments means staying ahead of the curve. This means leading with authenticity and making transparent and data-driven actions to create meaningful change. When businesses understand the impact of what they do, ESG fatigue is less likely to take root, and every initiative drives lasting value aligned with the business’s long-term vision.
ESG Challenges: Scope 3 Emissions
What Are Scope 3 Emissions?
Rather than resulting directly from the business itself, scope 3 emissions are instead the result of activities from assets that aren’t directly owned or managed by the business. These emissions indirectly affect the business’ value chain.
Insights from the Roundtable on Scope 3
In the last part of the discussion, we highlighted the collaborative approaches needed to address the challenges of scope 3 and the pivotal role technology plays in facilitating progress. Scope 3 emissions are notoriously difficult to measure, requiring significant resources that often deter companies from taking decisive action. However, transitioning from spend-based data to more precise product-specific data has been identified as a critical success factor. By initially focusing on a selective set of measurements, companies can make meaningful strides without overhauling their entire systems.
Strategic Approaches for Emission Reduction and Enhancing Procurement Practices
Several strategies emerged from the discussion as effective ways to overcome these obstacles. One approach involves transparently reporting emission reductions to customers, fostering trust and accountability, as developing a collaborative strategy with suppliers is essential.
Through collaboration, companies can target and achieve reductions in two to three key areas by creating initial successes that pave the way for broader initiatives. Participants emphasized the need for advancements in procurement processes to align closely with supplier efforts. Integrating sustainability criteria into procurement ensures that supply chain activities are in harmony with broader emission reduction goals.
Harnessing Sustainability-Focused Technology
Technology is a game-changer in the realm of emission tracking. With advanced tools and platforms, companies can improve data accuracy and make informed decisions, enhancing their ability to monitor and reduce emissions effectively. While tracking and reducing scope 3 emissions present significant challenges, they are not insurmountable. Strong collaborations with suppliers and the planned use of technology can result in companies making substantial progress in their sustainability journeys, aligning with broader environmental goals.
Thoughts from our Participants
The participants emphasized the value of real-life insights and the significance of focusing on the supply chain early in their processes. Clients found the discussion around scope 3 and the supply chain to be particularly enlightening and appreciated the varied perspectives from different industries. There was a strong interest in learning about best practices, especially in supply chain management.
Attendees also appreciated the shared experiences of challenges faced by others and acknowledged the importance of technology and AI in ESG discussions, highlighting a desire for further exploration in this area. We look forward to our next session in October where we will do a deep dive into the intersection between sustainability and technology as well as its impact on our efforts to build a better world.
Together, we will pave the path to a sustainable future as we commit to achieving sustainability for generations to come. Ready to explore how your organization can overcome ESG challenges? Learn more by reading our 2025 Sustainability Report here.
