Between 2018 and today, the median number of ESG indicators monitored by C-level executives at large companies has grown by 30%, reaching around 100 KPIs per company.
This data, raised by the McKinsey Global Institute, exposes an uncomfortable paradox: ESG has never been measured so much, and action based on these metrics has rarely been so little.
Most organizations treat ESG as a compliance exercise parallel to strategy, fueled by scattered spreadsheets and annual reports that nobody in operations reads.
In this article, you will understand what ESG means for companies in practice, the ESG concepts that underpin the decisions of investors and regulators, and how to implement ESG in the company as a management discipline, not as an appendix to the sustainability report.
What ESG Means in Companies and Why It Stopped Being Just Sustainability
ESG in companies means the incorporation of environmental, social, and governance criteria into the business's decision-making, measurement, and accountability processes, not only in institutional communication.
It is the extension of the management system for risks and intangible assets that the traditional financial balance sheet does not capture.
The Three Pillars in Corporate Practice
Each pillar of ESG answers a distinct question that the board needs to be able to answer with data, not intention:
| Pillar | Core question | Examples of indicators |
| Environmental (E) | How does the operation affect and how is it affected by the climate and natural resources? | GHG emissions (Scopes 1, 2, and 3), water consumption, waste management |
| Social (S) | How does the company treat people, both inside and outside its walls? | Diversity in leadership, health and safety, relationship with the supply chain |
| Governance (G) | Who decides, with what controls and with what transparency? | Board composition, ESG-linked compensation, risk management |
ESG Concepts Every Senior Manager Needs to Master
Before drafting any plan, it is worth aligning four ESG concepts that are often used interchangeably, but should not be:
- Materiality: Not every ESG topic is relevant to every business; materiality is the filter that prioritizes what impacts value and risk;
- Double materiality: assess the financial impact of the topic on the company and the company's impact on society and the environment;
- Greenwashing: communication of ESG commitments lacking backing in auditable data, the main reputational risk of the topic today;
- Greenhushing: the opposite, silencing real progress for fear of scrutiny, which also compromises the governance of the issue.
ESG in Companies: From Isolated Metric to Strategic Management Discipline
ESG in companies only generates value when it ceases to be an annual report and it becomes a system of goals, indicators, and owners, reviewed with the same cadence as the corporate strategy, rather than a compliance exercise isolated from operations.
The McKinsey Global Institute itself acknowledges that the checklist model is saturated: mentions of ESG in the media jumped from 5,000 in 2014 to more than 300,000 in 2024, but the practical result of this volume of attention is an overloaded and scarcely actionable C-suite agenda, which the consultancy calls “ESG fatigue.”.
This fatigue has a behavioral counterpart documented by MIT Sloan Management Review: According to a 2025 survey, 39% of U.S. companies reduced or stopped publicly reporting on their sustainability investments, even though they maintained or increased their budgets for sustainability.
Measuring more and communicating less is a symptom of the same problem: the absence of a management system that connects data, decision, and narrative.
Why Most Companies Fail When Trying to Implement ESG in the Company
Three failure patterns repeat themselves in medium and large organizations, regardless of sector:
- ESG disconnected from the strategic map. The topic lives in a separate committee, with no connection to the objectives that the CEO reports to the board;
- Excess of indicators, shortage of priority. Without well-defined materiality, the company measures everything and prioritizes nothing, exactly the scenario described by the McKinsey Global Institute research;
- Fragile data governance. Information comes from parallel spreadsheets, without an audit trail, which weakens any report in front of investors and regulators.
The common thread among all three is always the same: lack of execution. And execution, for those who have studied the subject for decades, has a name and a method.
How to Implement ESG in the Company in 6 Structured Steps
Implementing ESG in the company requires six sequential movementsmateriality assessment, dedicated governance structure, integration into the strategic map, definition of auditable indicators, centralized management technology, and consistent communication with investors, clients, and employees.
1. Materiality Assessment
Map, together with business areas and external stakeholders, which ESG themes actually affect cash flow, social license to operate, and access to capital.
This filter avoids the most common mistake: treating 100 indicators as if they all have the same strategic weight.
2. Dedicated Governance Structure
Define who is responsible for ESG at the executive level, not an advisory committee without a budget, but a body with the authority to prioritize resources.
Without a clear owner, the ESG agenda gets diluted among departments, and none of them are truly held accountable.
3. Integration into Strategic Planning
This is the point where most companies get it wrong: they treat ESG as a parallel track to Strategic organization planning, instead of incorporating it into the objectives that are already cascaded via BSC or OKRs.
4. Auditable Indicators, Not Just Declarative Ones
Every ESG goal needs an indicator with a traceable data source, the same rigor applied to strategic indicators in a Balanced Scorecard. Goals without auditable data do not survive an investor due diligence.
5. Technology to Centralize Data and Decisions
Parallel spreadsheets cannot withstand an external audit or a regulatory assurance requirement.
A ESG software Structuring data, compliance, and performance at scale is what turns an annual exercise into a management routine.
6. Consistent Stakeholder Communication
Neither greenwashing nor greenhushing: communicate goals with the same reporting discipline used for financial results, with verifiable data and regular cadence.
ESG for Brazilian Companies
ESG for companies listed in Brazil is no longer just a voluntary topic. Since 2023, CVM Resolution 59 has made the disclosure of ESG practices mandatory in the Reference Form, under the “comply or explain” model.
A survey of the submitted forms showed that 87% of the companies analyzed already publish greenhouse gas emissions inventories, the majority including scope 3, the most complex to measure as it involves the entire value chain.
The regulatory landscape, however, continues to shift. In May 2026, the CVM published Resolution 244, revoking the obligation of sustainability and climate financial report which was scheduled for companies with a fiscal year starting from 2026, shifting the regime from mandatory to voluntary.
In practice, this does not reduce pressure from investors and clients; it merely transfers the incentive from a “legal obligation” to a “competitive advantage and access to capital,” which demands even greater internal governance maturity, especially in the face of regulatory risks that evolve alongside the ESG agenda.
How to Connect ESG to Strategy Execution: The Lesson of Kaplan and Norton
Robert Kaplan, co-author of the Balanced Scorecard, is direct about the risk of treating ESG as an isolated metric: in an article published in the Harvard Business Review, he and David McMillan argue that expanding the Balanced Scorecard to include environmental and social dimensions is more effective than create a parallel measurement system.
This recommendation has empirical backing outside the financial universe. The Project Management Institute found, in its research on project maturity, that initiatives aligned with sustainability goals have a customer satisfaction rating of 55%, compared to 33% for the others.
In practice, this means that the right question is not “which ESG tool to buy,” but “how the company's strategic map, whether built on a Balanced Scorecard or in OKRs, absorbs environmental, social, and governance goals without creating a parallel management system.
Companies that are already debating which methodology to choose between BSC and OKR are, in fact, one step ahead: designing the right methodology facilitates the incorporation of ESG goals without rework.
The Role of Risk Governance and Technology in ESG Implementation
Organizations that have advanced in integrating ESG into their strategy share a structural characteristic: they have connected the risk management cycle to the corporate goals cycle, rather than treating them as separate functions.
Frameworks like ISO 31000 and COSO more effective than with the same methodological rigor used for financial and operational risks.
This also applies to more operational environmental issues and international regulatory schedule risks, such as those that intensify with each new global climate summit, which redefines deadlines and disclosure expectations for large companies.
The standard that separates those who merely report ESG from those who effectively execute it is the existence of a single technological layer, where strategic goals, ESG indicators, action plans, and risks coexist in the same system.
That is exactly the territory where the Actio's Strategic Management it was designed to act as a multi-methodology platform that supports BSC, OKR, PDCA, and ESG within a single management cycle, eliminating the fragmentation between the strategy approved by the board and the data supporting the ESG report.
ESG in the Company is Execution Discipline, Not an Annual Report
Implement ESG in the company It is not a project with a delivery date, it is a continuous cycle of materiality, governance, strategic integration, auditable indicators, technology, and communication.
Companies that treat this cycle as an extension of strategic planning, rather than a compliance annex, are the ones that effectively turn regulatory pressure and investor expectations into a competitive advantage.
The latest data from the McKinsey Global Institute summarizes the tipping point: the era of the ESG checklist is running out, and the next chapter belongs to organizations capable of transforming their 100 indicators into actionable decisions.
If your company still manages ESG outside of the system that supports strategy execution, that is the first gap to close.
Want to connect ESG goals to the same system that already governs your corporate strategy? Meet the Actio's Strategic Management and see how to unify BSC, OKR, PDCA, and ESG into a single management platform.
