What is ESG analysis?
Environmental, social, and governance (ESG) analysis is the process of evaluating how a company discloses, manages, and performs in relation to sustainability issues. It goes beyond treating ESG as a compliance concern. Instead, sophisticated ESG analysis is about interpreting that information in a way that’s aligned with global reporting standards, investor expectations, and business strategy.
At Manifest Climate, we define ESG analysis as a systematic assessment of ESG data to determine how well an organization is responding to its sustainability risks and opportunities. Done well, ESG analysis offers:
- Disclosure alignment: Are you meeting expectations from frameworks like the Corporate Sustainability Reporting Directive (CSRD), Task Force on Climate-related Financial Disclosures (TCFD), and International Sustainability Standards Board (ISSB)?
- Data completeness: Are you covering the right topics with the right level of detail?
- Comparative performance: How do you stack up against peers and competitors?
- Strategic insight: What’s missing, and where are the opportunities to lead?
Manifest Climate’s AI tools automate this process, helping organizations quickly analyze ESG disclosures, identify gaps, and extract decision-useful insights at scale.
Why ESG analysis matters more than ever
New regulations like CSRD in the EU and SB 261 in California are raising the bar for climate disclosure. Meanwhile, investors are asking tougher questions about risk, resilience, and long-term value. ESG analysis has become critical for making sense of what’s required and for building trust with stakeholders.
Here’s what’s at stake:
For consulting firms, ESG analysis underpins high-value advisory services. Without reliable data, there’s a risk of giving clients incomplete or outdated guidance.
For financial institutions, ESG blind spots can lead to mispriced risk in portfolios. Poor analysis increases exposure to climate-related financial risks and can reduce long-term returns.
For public companies, weak ESG disclosures can erode investor confidence, reduce access to capital, and damage brand reputation, especially if they’re seen as greenwashing. Most investors say they don’t have the ESG data they need, which is a problem not just for the investors themselves, but also for the companies that need their capital.
Robust ESG analysis is just one part of broader business strategy and risk management. It helps businesses make better decisions, stay ahead of regulations, and build long-term resilience.
The core components of ESG analysis
ESG analysis covers a broad range of topics across environmental, social, and governance dimensions. But it also includes how that information is disclosed, how it compares to peers, and whether it reflects what truly matters to the business.
Environmental factors
Environmental analysis focuses on how a company manages its impact on the planet, and how environmental and climate considerations may affect the company’s supply chain, operations, and bottom line.
Key areas include greenhouse gas emissions, energy consumption, water use, waste generation, pollution controls, and biodiversity impacts. Increasingly, companies are also expected to assess physical climate risks, like exposure to extreme weather, as well as transition risks tied to evolving regulations, market shifts, and stakeholder demands.
What sets leading companies apart isn’t just what they measure, but how they act on it. Investors, regulators, and customers now expect organizations to publish detailed climate transition plans with short-, medium-, and long-term actions, not just distant net-zero targets. That means disclosing how capital is being allocated to low-carbon projects, how climate risks are integrated into business strategy, and how progress is being tracked. Transparent, consistent environmental reporting is now a prerequisite for credibility in any sector.
Social factors
Social analysis looks at how a company treats people, both internally and across its value chain. This includes labour practices, employee health and safety, human rights policies, diversity, equity, and inclusion (DEI) efforts, and relationships with local communities. Companies are also under growing pressure to monitor and address social risks in their supply chains, especially in sectors linked to resource extraction, manufacturing, or agriculture. Weaknesses in these areas can lead to legal, reputational, and operational risks.
As social expectations evolve, so does the level of scrutiny. Regulators are introducing mandatory reporting on workforce data. Investors are embedding DEI and human rights metrics into risk assessments. And customers are holding brands accountable for how they operate globally. Superficial claims or vague commitments no longer cut it. Companies must be ready to back up social performance with specific data, third-party standards, and evidence of tangible progress.
Governance factors
Governance is the backbone of effective ESG performance. It refers to how a company is structured and led, including core concepts like how decisions are made, how risks are managed, and how leaders are held accountable. This includes board composition and oversight, executive compensation, ethics policies, whistleblower protections, lobbying disclosures, and how stakeholder concerns are integrated into strategic planning. Strong governance ensures that ESG isn’t siloed (a doomed strategy) and instead is embedded in the organization’s core operations.
Governance is also the area where intent meets execution. Even the most ambitious environmental or social goals can fail without the right governance structures in place. Regulators and investors increasingly expect clear evidence that ESG issues are discussed at the board level, tied to executive incentives, and supported by appropriate internal controls. Effective governance builds confidence in a company’s disclosures and decisions. It also strengthens the ability to adapt to regulatory change, manage risk, and seize new opportunities in a fast-moving ESG landscape.
Additional components
- Disclosure and reporting alignment: Are your ESG disclosures consistent with relevant reporting standards like the CSRD, TCFD, ISSB, or the Global Reporting Initiative (GRI)?
- Materiality and impact analysis: Are you focusing on the ESG issues that matter most to your business and stakeholders?
- Benchmarking and peer comparison: How do your disclosures compare to your peers?
Common challenges to ESG analysis and how to overcome them
Many organizations struggle with ESG analysis because it’s manual and time-consuming, frameworks and standards are constantly evolving, internal ESG expertise and resources are stretched thin, and data is often fragmented across business units or buried in PDFs.
That’s where tools like Manifest Climate come in.
By combining AI with sustainability and climate expertise, Manifest Climate helps teams overcome these challenges by centralizing ESG data across reports, policies, and filings; automatically mapping disclosures to global frameworks; identifying missing or inconsistent data points; benchmarking against peers and surfacing actionable insights; and keeping track of regulatory changes in real time.
This turns ESG analysis from a reactive, resource-heavy task into a streamlined, scalable part of your sustainability strategy.
How to conduct an ESG analysis: a step-by-step guide
Conducting an ESG analysis that yields useful insights requires a structured approach—one that helps you focus on what matters, gather the right data, and turn findings into action. Whether you’re just getting started or looking to enhance your current process, these four steps can help you analyze ESG performance in a way that’s useful, credible, and aligned with evolving standards.
1. Define your scope and material topics
The first step is to get clear on what your analysis will cover. ESG issues are wide-ranging, but not all are equally relevant to every business. That’s where materiality comes in.
Start by identifying your primary stakeholders: investors, regulators, customers, employees, and others who rely on your ESG information to make decisions. What do they expect to see? What sustainability issues are most likely to impact your operations, value chain, or long-term performance?
Next, consider your regulatory obligations. Are you subject to the Corporate Sustainability Reporting Directive (CSRD)? Do you operate in jurisdictions with climate risk disclosure rules like SB 261 in California? These frameworks often come with specific data requirements that can shape the scope of your analysis.
By defining your scope early and zeroing in on material ESG topics, you can avoid wasting time on irrelevant data and focus your efforts where they’ll have the most impact.
2. Collect and structure your ESG data
Once your scope is defined, the next step is gathering the information you need. This includes both qualitative and quantitative data across the environmental, social, and governance pillars. Common examples include:
- Greenhouse gas emissions, energy use, and water consumption
- Workforce demographics, health and safety metrics, and human rights policies
- Board composition, executive compensation, and codes of conduct
In many organizations, this data lives in disconnected places, spread across sustainability reports, HR systems, procurement platforms, and financial disclosures. That fragmentation makes it hard to get a complete picture or meet the consistency and traceability standards required by emerging regulations.
This is where a platform like Manifest Climate can transform your workflow. Instead of hunting for data manually or relying on rigid templates, our AI tools ingest and organize ESG data from multiple sources (public disclosures, draft reports, internal documents, etc.) and structure it for analysis. The result is a more complete, coherent dataset that’s ready for review and aligned with reporting expectations.
3. Align with ESG standards and frameworks
After structuring your data, the next step is aligning it with recognized ESG frameworks. This is critical for ensuring your disclosures are not only complete but also comparable, credible, and decision-useful.
Most organizations now report under one or more of the following:
- CSRD (Corporate Sustainability Reporting Directive)
- TCFD (Task Force on Climate-related Financial Disclosures) — although many companies are now phasing out TCFD reports in favor of ISSB
- SASB (Sustainability Accounting Standards Board)
- ISSB (International Sustainability Standards Board)
- GRI (Global Reporting Initiative)
Once you know which standards you’ll be reporting against, conduct an ESG gap analysis to reveal important data gaps (which data are you not collecting yet, and how can you get it?) as well as performance gaps (where does your data reflect poorly on the company’s ESG progress, revealing opportunity for improvement?). Manifest Climate makes this step easy by instantly scanning disclosures against hundreds to thousands of datapoints aligned with frameworks like CSRD, ISSB, and TCFD, identifying missing or inconsistent information that would take teams much longer to find manually.
The more aligned your disclosures are with these frameworks, the easier it is to demonstrate credibility and meet regulatory requirements. Consistent and comparable disclosures also make it easier for investors to gauge your ESG performance in relation to your past and peers.
What makes ESG regulations challenging is their rapid evolution. A platform like Manifest Climate continuously monitors evolving ESG standards and alerts users to relevant changes that impact disclosure requirements, helping teams stay compliant without constant manual research.
4. Benchmark your performance
The final step is benchmarking: comparing your ESG performance against internal goals, industry standards, and peer companies. This helps you understand where you stand today and where you need to improve.
Start by identifying who your peers are. This could include competitors, regional leaders, or companies in your value chain. Next, compare disclosures, metrics, and commitments: How does your emissions reduction plan stack up? Are your DEI metrics in line with sector expectations? Are your board policies consistent with best practices?
Benchmarking is an incredibly helpful exercise for giving context to your ESG performance and strategy. It helps you spot risks others are already addressing, identify areas where you can lead, and prioritize actions that will make a tangible difference.
Using Manifest Climate, benchmarking is built in. Our tools surface industry-specific insights and side-by-side comparisons, giving you clarity on how your ESG disclosures measure up and where to focus next.
Turning ESG analysis into strategic decisions
Done right, ESG analysis becomes a foundation for smarter decision-making. It can support strategy by helping with tasks like:
- Investment decisions — identifying high-risk sectors or opportunities for sustainable innovation
- Corporate planning — informing net-zero transition strategies, supply chain oversight, and resource allocation
- Stakeholder alignment — building trust with investors, customers, and regulators through transparent and credible data
By revealing what matters most, as well as where performance falls short, ESG analysis helps organizations turn sustainability into a source of competitive advantage. Again, the right platform can be game-changing here. Manifest Climate surfaces prioritized insights, flags material topics, and helps prepare organizations for assurance or audits, making ESG reporting more accurate and strategic.
Strengthen and streamline ESG analysis with Manifest Climate
ESG analysis doesn’t need to be overwhelming. With the right tools, your team can move from fragmented spreadsheets and slow manual reviews to fast, consistent, and confident action.
Manifest Climate combines AI-powered analysis with sustainability expertise to map disclosures to global standards, identify compliance gaps and weak spots, benchmark performance against peers, surface insights that inform strategy, and keep you ahead of regulatory changes.
Whether you’re advising clients, managing risk, or leading sustainability at a public company, Manifest Climate helps you turn ESG analysis into progress.
Book a demo to see how.
