ESG Awareness
Understanding ESG
Environmental, Social, and Governance — the framework reshaping how companies measure impact, manage risk, and build trust with stakeholders.
The Foundation
The Three Pillars of ESG
ESG provides a structured lens for evaluating how organizations interact with the environment, treat people, and govern themselves.
Environmental
How a company impacts and is impacted by the natural environment.
- Climate change & GHG emissions
- Energy use & efficiency
- Pollution & waste management
- Biodiversity & land use
- Water & marine resources
Social
How a company manages relationships with its workforce, communities, and consumers.
- Labor practices & working conditions
- Diversity, equity & inclusion
- Human rights in the value chain
- Community impact
- Consumer health & safety
Governance
How a company is led, controlled, and held accountable.
- Board composition & independence
- Business ethics & anti-corruption
- Executive compensation
- Risk management
- Transparency & disclosure
How ESGConnect Helps
ESGConnect maps all three pillars to 11 ESRS topical standards — E1 through E5 for Environment, S1 through S4 for Social, and G1 for Governance — ensuring comprehensive coverage tailored to your industry.
The Regulatory Landscape
What Is Expected of Companies
Sustainability reporting is no longer voluntary for many organizations. A wave of regulations now requires companies to disclose ESG data with the same rigor as financial reporting.
Paris Agreement
196 countries committed to limiting global warming to 1.5°C, creating the foundation for corporate climate action.
TCFD Recommendations
The Task Force on Climate-related Financial Disclosures published recommendations for climate risk reporting, now adopted by 4,000+ organizations.
ESRS Adopted
The EU adopted European Sustainability Reporting Standards — the most comprehensive mandatory ESG framework globally.
CSRD Phase 1
Large public-interest entities (500+ employees) must begin reporting under CSRD using ESRS standards.
CSRD Phase 2
All large companies (250+ employees, €50M+ revenue) fall under mandatory CSRD reporting.
CSRD Phase 3
Listed SMEs and certain non-EU companies begin phased reporting requirements.
How ESGConnect Helps
ESGConnect supports 7 reporting frameworks — ESRS, GRI, TCFD, ISSB, SASB, CDP, and SDG — so you can generate compliance-ready reports as regulations evolve across jurisdictions.
Key Concept
Double Materiality
Under ESRS, companies must assess sustainability topics from two perspectives simultaneously — a concept called double materiality.
Impact Materiality
Inside → OutHow your company's operations and value chain affect the environment and society.
A manufacturing company's factory emissions contribute to climate change and local air pollution.
Financial Materiality
Outside → InHow sustainability issues create financial risks or opportunities for your company.
Carbon pricing regulations could significantly increase operating costs for energy-intensive industries.
A topic is material if it meets either threshold — meaning companies cannot ignore issues just because they don't affect the bottom line, or just because they don't affect the planet.
How ESGConnect Helps
ESGConnect performs automatic materiality assessment based on your ISIC industry classification. Only high-relevance ESRS standards are surfaced for data collection, reducing your reporting burden by focusing on what truly matters.
GHG Protocol
Understanding Emission Scopes
The GHG Protocol divides a company's greenhouse gas emissions into three scopes based on where they occur — from direct operations to the full value chain.
Scope 1
Direct Emissions
GHG emissions from sources owned or controlled by your company.
- Company-owned vehicles
- On-site fuel combustion
- Manufacturing processes
- Refrigerant leaks
Scope 2
Purchased Energy
Indirect emissions from the generation of purchased electricity, steam, heating, or cooling.
- Electricity consumption
- District heating
- Purchased steam
- Cooling systems
Scope 3
Value Chain
All other indirect emissions across your upstream and downstream value chain. Typically the largest share — often 70-90% of total emissions.
- Business travel
- Employee commuting
- Purchased goods & services
- Product end-of-life
How ESGConnect Helps
ESGConnect tracks all GHG scopes including location-based and market-based Scope 2, plus all 15 Scope 3 categories. Built-in emission factors auto-calculate your footprint from activity data.
The Science
The Greenhouse Effect
Understanding why greenhouse gas emissions matter starts with the basic science of how our atmosphere works.
Solar Radiation
The sun emits energy that travels through space and reaches Earth's atmosphere.
Earth Absorbs & Re-radiates
Earth's surface absorbs sunlight and radiates energy back as infrared heat.
GHGs Trap Heat
Greenhouse gases (CO₂, methane, N₂O) in the atmosphere trap some of this heat, preventing it from escaping to space.
Natural Balance
This natural greenhouse effect keeps Earth at a livable average of ~15°C (59°F) — without it, Earth would be -18°C.
Human Enhancement
Since industrialization, human activities have increased atmospheric CO₂ by 50%, enhancing the greenhouse effect and driving global warming.
Reporting Standards
Navigating ESG Frameworks
Multiple reporting frameworks exist to guide sustainability disclosure. Each serves different audiences and regulatory contexts.
ESRS
European Sustainability Reporting Standards
EU MandatoryThe most comprehensive ESG framework globally, mandatory under CSRD for EU companies. Covers all ESG topics with 1,000+ datapoints.
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GRI
Global Reporting Initiative
Global VoluntaryThe world's most widely used sustainability reporting standard. Topic-specific modules covering environmental, social, and governance disclosures.
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TCFD
Task Force on Climate-related Financial Disclosures
Global RecommendedFocused on climate-related risks and opportunities across governance, strategy, risk management, and metrics/targets.
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ISSB
International Sustainability Standards Board
Global BaselineA global baseline for sustainability disclosure, focusing on enterprise value and investor decision-making. IFRS S1 and S2 standards.
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SASB
Sustainability Accounting Standards Board
Industry-SpecificIndustry-specific standards identifying financially material sustainability topics for 77 industries across 11 sectors.
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CDP
Carbon Disclosure Project
Investor-DrivenA global disclosure system for environmental reporting. Over 23,000 companies disclose through CDP questionnaires annually.
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SDG
UN Sustainable Development Goals
Global Goals17 interconnected goals addressing global challenges. Companies map their ESG efforts to relevant SDGs to demonstrate broader impact.
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Industry Mapping
How Your Sector Shapes Reporting
Your industry classification determines which ESG topics are material to your business. Different countries use different systems — but they all map to a universal backbone.
ISIC
International Standard Industrial Classification
170+ countriesNACE
Statistical Classification of Economic Activities in the European Community
EU / EEA / Switzerland
30+ countriesNAICS
North American Industry Classification System
United States / Canada / Mexico
3 countriesSIC UK
UK Standard Industrial Classification
United Kingdom
1 countryANZSIC
Australian & New Zealand Standard Industrial Classification
Australia / New Zealand
2 countriesHow ESGConnect Helps
ESGConnect uses ISIC as its universal backbone and automatically maps to your local classification system via concordance tables. Your materiality assessment, data collection scope, and reporting requirements all derive from your industry codes.
Your industry code is the key that unlocks your entire reporting scope.
Taking Action
Science-Based Targets
Setting reduction targets isn't just about ambition — targets must be grounded in climate science to be credible.
Absolute Target
Reduce total emissions by a fixed percentage.
Reduce Scope 1+2 emissions by 42% by 2030 from a 2020 baseline.
Intensity Target
Reduce emissions per unit of output (revenue, product, etc.).
Reduce emissions intensity by 55% per €1M revenue by 2030.
The Science Based Targets initiative (SBTi) validates that corporate targets align with limiting warming to 1.5°C. Over 4,000 companies have committed.
How ESGConnect Helps
ESGConnect lets you set absolute or intensity-based reduction targets aligned with SBTi pathways. Track milestones, monitor progress against baselines, and link action plans to drive accountability.