When it comes to sustainable business transition, one of the first areas that companies need to analyse is their business model. Indeed, the sustainability of the business model is the foundation upon which not only the success of the organization's sustainability strategies depends, but also its competitiveness and, before that, its very viability over time. Regarding the business model, sustainability is analyzed and implemented on the basis of three pillars: the environmental and the social pillars focuses on the impact of the company and its operations, including those that occur upstream and downstream its supply chain, on the environment and the people and communities where the company is located, while the economic pillar refers to the economic sustainability of the model over time. This analysis, as well as the work to streamline and improve the critical issues detected, must consider all aspects that impact the company's business model, as well as all areas impacted by the company. In this journey, ESG plays a primary role, as it helps companies to identify those issues and areas where they need to focus to monitor current performance and develop strategies for improvement.
How ESG Criteria Shape Business Evaluation
Environmental, Social, and Governance (ESG) criteria have emerged as fundamental KPIs to assess company's sustainability whole spectrum.
These indicators go far beyond corporate social responsibility statements offering concrete, measurable standards, often based on evolving frameworks, that reflect a company's impact on the planet, on people, and on how it governs itself.
Whether used by investors to guide capital allocation, by public authorities to determine access to public funding and projects, or by procurement teams to select trustworthy suppliers, ESG standards are influencing key decision-making processes across sectors.
Businesses are expected not only to disclose their ESG performance but also to actively shape their strategies around these dimensions.
ESG’s Contribution to Long-Term Business Success
Evaluating ESG performance offers a deeper understanding of a company’s structural soundness and resilience.
For example, weak ESG performance by a supplier may signal potential disruptions in the value chain, increasing operational risk for the contracting company.
On a broader level, ESG indicators offer a comprehensive snapshot of how well a business is positioned to manage long-term challenges, be it resource scarcity, reputational risk, or employee retention.
Consider internal ESG-related metrics, such as employee turnover.
High turnover rates may reveal inadequate talent development or low employee satisfaction, factors that directly impair innovation and competitiveness, especially in markets characterized by rapid technological change and skill mismatches.
Conversely, strong ESG performance in this area implies effective human capital management, which is crucial for sustainable innovation and corporate resilience.
Implementing ESG Practices
Translating ESG from theory into practice requires structured evaluation mechanisms and continuous monitoring.
Companies must assess their internal operations as well as their entire supply chain to understand how their ESG profile aligns with long-term business sustainability.
To develop such assessments, organizations are increasingly turning to digital tools and software platforms capable of automating ESG assessments.
These tools help businesses collect, validate, and interpret data across ESG dimensions, enabling a systematic evaluation of their performance.
Key elements to consider when implementing such solutions include:
- Data availability and quality: The robustness of ESG insights depends on access to accurate, comprehensive data.
- Adherence to recognized standards: Frameworks like the Global Reporting Initiative (GRI) provide consistency and credibility in ESG assessments.
- Contextual sensitivity: Sector and country-specific variables must be factored into any evaluation model.
- Clarity and usability: ESG tools should offer both high-level overviews and granular analysis, enabling informed strategic decisions.
- Certification options: Verified ESG assessments can unlock access to public tenders and preferred supplier lists.
By integrating these components, companies can gain a dynamic understanding of their ESG positioning and develop targeted strategies for enhancement.
Challenges and Solutions in ESG Implementation
Despite growing consensus on the importance of ESG, companies still face several practical challenges when attempting to embed these criteria into their business models.
These challenges range from data fragmentation to uncertainty in interpreting standards or defining priorities across diverse ESG dimensions.
Overcoming Barriers in ESG Adoption
One of the most persistent obstacles to ESG integration is the lack of accessibility to high-quality, verifiable data, especially across extended supply chains and third-party partnerships.
Without reliable and comparable data inputs, companies struggle to accurately assess risk exposure, identify areas for improvement, or demonstrate progress to investors and regulators.
Another significant barrier is the absence of universally accepted, sector-specific guidelines, which leaves organizations uncertain about how to set meaningful targets or measure performance in ways that are both material and comparable.
Internally, resistance can arise when ESG initiatives are perceived as conflicting with near-term financial imperatives or operational efficiency goals resulting in tension which is often exacerbated by the dynamic and fragmented nature of ESG regulations that evolve rapidly and vary significantly across jurisdictions, thus placing a disproportionate burden on small and medium-sized enterprises (SMEs) that lack the internal expertise or resources to remain compliant and responsive.
Solutions for Effective ESG Integration
Addressing these challenges requires a deliberate, strategic approach that embeds ESG into the fabric of corporate governance, risk management, and operational planning.
Key actions include:
Investing in ESG data infrastructure
Companies should develop integrated data systems capable of capturing, processing, and analyzing ESG-related metrics across all relevant business units and value chain partners.
In this context, automation and digital tools can play a crucial role in improving data quality and timeliness.
Adopting standardized frameworks
Leveraging internationally recognized reporting standards, such as the Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB), or the Corporate Sustainability Reporting Directive (CSRD), helps enhance comparability, improve transparency, and streamline external disclosures.
Embedding ESG into governance structures
True integration requires accountability at the highest levels.
Assigning ESG oversight to board committees or dedicated executive roles ensures that sustainability considerations inform strategic decisions and risk assessments.
Customizing ESG strategies to the business context
Effective ESG implementation is not one-size-fits-all.
Organizations must identify and prioritize the ESG issues most relevant to their industry, operating geography, and stakeholder expectations.
For instance, a manufacturing firm may focus on resource efficiency and occupational safety, while a digital services company may prioritize data privacy, inclusivity, and digital ethics.
Fostering a culture of continuous improvement
ESG performance should not be treated as a static compliance exercise.
Instead, companies should embed ESG assessments into ongoing performance management processes, using insights to refine strategies, drive innovation, and adapt to stakeholder feedback.
