This article explains which ESG metrics to measure, how to report them, and which ones get assured. If you’re still working out whether your business has to report at all, start with our guide to ESG reporting.
Key Takeaways
- The ESG metrics you must report are narrower than most expect. ASRS covers climate only, so start with Scope 1 and Scope 2 emissions.
- Assurance goes wider than emissions. Governance and strategy get checked too, and the bar rises at year four.
- ESG metrics for SMEs usually come from a customer, lender or tenant rather than a regulator. If someone you rely on has asked, they’re coming either way.
What are ESG metrics?
ESG metrics fall into three groups, matching the three letters:
- Environmental metrics cover emissions, energy and water use.
- Social metrics cover your workforce, safety and supply chain.
- Governance metrics cover board oversight and how decisions get made.
For planning, what matters is the split between metrics you’re required to disclose and metrics you choose to track. Only the first carries a legal obligation, and that’s where your effort belongs.
Is this the same thing as an ESG score?
No. An ESG score is a rating a third party gives you, built on their own methodology and whatever public data they can find. Your ESG metrics are the figures you measure and disclose yourself.
Which ESG metrics does ASRS require Australian businesses to report?
ASRS is climate-focused, so the metrics you report are environmental. It also asks how your board oversees climate risk, so the E and the G both sit inside your report. The S sits outside it.
Under AASB S2 you report Scope 1 and Scope 2 emissions, any climate-related targets you’ve set, and (where applicable) industry-specific metrics such as financed emissions for financial institutions.
Start with Scope 1 and Scope 2. Scope 1 is the fuel you burn, Scope 2 is the power you buy, reported on a location-based basis using grid-average emission factors. Both have clear rules for working them out and data you can get hold of.
Scope 3 sits further out in your supply chain, and first reporters get transition relief on it. It’s worth knowing where your data would come from before you need it.
| Metric | What it captures | Assurance position |
|---|---|---|
| Scope 1 emissions | Fuel burned in assets and vehicles you control | Limited assurance from year one |
| Scope 2 emissions | Purchased electricity and energy | Limited assurance from year one |
| Scope 3 emissions | Value chain, including suppliers and tenants | Transition relief for first reporters |
| Industry-based metrics | Sector measures from SASB | Rising to reasonable assurance at year four |
What about the S and the G?
Social metrics sit outside your ASRS disclosure. Governance is split, with climate oversight inside it and broader governance reporting outside. Both still reach you through customer questionnaires, lender due diligence and tenant requests.
How do you measure and report ESG metrics defensibly?
A number holds up when you can show where it came from and how you worked it out. Three things get you there.
- Say how you worked it out. Start from the Greenhouse Gas Protocol, because that’s the method an assurance provider will recognise.
- Keep the paperwork behind it: the meter reading, the invoice, the fuel record.
- Write your assumptions down when you make them, not a year later when someone asks.
ESG performance metrics tell your board how you’re tracking. The ones that go in your report have to survive someone else checking your work.
But doesn’t our platform handle this?
Partly. An ESG platform stores your data and runs the calculations, which saves real time. It won’t create your source evidence or make your methodology decisions, and those are the parts an assurance provider tests.
Does year one have to be perfect?
No. A defensible baseline with documented assumptions is the year-one standard, and Australia’s first reporters confirmed it. Estimation is fine where you disclose the basis and apply it consistently. What causes problems is a figure with no visible working behind it.
Which ESG metrics get independently assured?
More than most people expect. Someone independent checks your report, starting with limited assurance and stepping up to reasonable assurance at year four.
That check goes wider than your emissions numbers. It covers your governance and strategy disclosures too, including pillars 9a, 10a and 10b. They’ll look at:
- How you worked each number out
- The paperwork behind it
- Whether your figures match across the report
- Whether anything’s missing
If your team already knows TCFD, the shape will look familiar, because it’s built into the ISSB standards ASRS follows.
Year four is the one to plan for, because the evidence trail you build for limited assurance is what reasonable assurance is built on. Our climate and nature assurance team works with finance teams on exactly that.
What if ESG metrics are requested but ASRS doesn’t apply to you yet?
You’ll still end up producing them. ESG obligations reach a business through two layers
The direct layer is ASRS, applied by group thresholds with phased dates. The second is commercial. A Group 1 or Group 2 customer asks for your carbon data for their own report. Your lender raises climate risk at renewal, following APRA guidance on factoring climate into lending. A tenant sends an ESG questionnaire. ESG metrics for SMEs usually arrive this way rather than through the thresholds.
Four questions tell you which layer applies:
- Do you meet the ASRS group thresholds?
- Has a major customer already been mandated?
- Has your lender or insurer asked about climate data?
- Has a tenant or supply partner sent you an ESG questionnaire?
A yes to the first puts you in the direct layer. A yes to any of the others means the numbers are coming anyway, which is where much of our professional services work sits.
Where to start with your ESG metrics
Work out which layer you’re in first. Then work in the order things get tested. Chase the numbers someone will check before the ones nobody will, and write down how you got them while it’s still fresh.
Don’t worry about how the report looks yet. That’s easy to fix later. Thin data underneath it is the problem.
The finance directors who find their first report manageable worked out early which ESG metrics they’d have to stand behind. Our on-demand modules walk your team through emissions data and the metrics on top of it. Then, our ASRS Readiness Workshop gives you a snapshot and a 90-day roadmap in half a day.
Frequently Asked Questions
A metric is a measurement. A KPI is a metric you’ve set a target against and hold someone accountable for. Your ASRS disclosure needs the metrics, while your board usually wants a smaller group turned into KPIs.
Climate metrics are mandatory for entities captured by ASRS group thresholds. Social and governance metrics are voluntary under Australian law, though customers, lenders and insurers request them often enough that many businesses report them anyway.
They need assurance, which is a defined engagement rather than a financial audit. Limited assurance applies in the early reporting years and covers governance and strategy disclosures alongside emissions data, with reasonable assurance from year four.
Usually Scope 1 and Scope 2 emissions, energy use, and evidence you’ve assessed physical climate risk across your assets. Insurers focus on asset-level exposure, while lenders look for a credible transition plan behind the figures.
References
Australian Accounting Standards Board: AASB S2 Climate-related Disclosures
Greenhouse Gas Protocol: Corporate Accounting and Reporting Standard
