Despite what certain global leaders may be saying at the moment, environmental, social, and governance (ESG) issues are central to understanding risk, resilience, and long-term value in business environments. Recently, at New York Climate Week, several of the world’s leading banks revealed the true extent of ESG integration into traditional risk assessments, explaining that they hired entire teams of climate scientists and ESG experts to evaluate risk and opportunity across multiple dimensions.
For lenders, investors, and consultants, ESG assessments have become an essential tool to uncover hidden risks, spot opportunities, and build strategies that hold up under scrutiny.
What is an ESG assessment?
An ESG assessment is the process of evaluating how an organization performs across environmental, social, and governance dimensions. It is a diagnostic exercise: you gather and analyze data to surface material issues, identify gaps, and highlight strengths.
It helps to draw distinctions:
- ESG reporting is outward-facing. It communicates performance and strategy to regulators, investors, and stakeholders via disclosures and sustainability reports.
- ESG research and analysis is interpretive. It uses data from assessments and reports to benchmark performance, compare peers, and inform investment or consulting decisions.
An ESG assessment is foundational due diligence. It provides the baseline data and insight that feed into reporting and analysis. While assessments often yield a score or rating, the value lies in context: trends, root causes, comparisons, and actionable insights.
The purpose matters. Are you doing the assessment to satisfy regulation, to avoid reputational risks, or to drive investment returns? That intention should guide what you measure and how you interpret results.
Why ESG assessments matter
Some may be tempted to treat ESG as a window dressing exercise. But assessments are fast becoming indispensable for two main audiences: investors and consultants.
Investor value
Global sustainable investment-aligned assets were estimated at USD $30.3 trillion in 2022. Sustainability-themed capital market products surpassed USD $7 trillion in 2023, up about 20% from 2022.
ESG assessments help detect material risks that do not show up in traditional financial metrics such as climate exposures, supply chain labour issues, and governance lapses. They also guide capital allocation. A company with weak governance or high carbon exposure may warrant a lower multiple or risk premium.
Last but not least, ESG assessments support resilience. As stakeholder expectations and regulations shift, companies with stronger ESG profiles tend to adapt better.
Consultant and advisory value
In EY’s 2024 Institutional Investor Survey, 88% of respondents said their institutions increased ESG use over the prior year. At the same time, 92% worried ESG initiatives undermine near-term performance. That tension between interest and concern drives demand for solid ESG assessments.
For consultants, ESG assessments are a great way to establish credibility. Clients increasingly expect recommendations backed by rigorous, evidence-based analysis, and ESG assessments can be a resourceful way of starting the conversation and getting everyone on the same page.
At the same time, these assessments also prepare clients for evolving regulation. With frameworks like ISSB and CSRD gaining traction, assessments help clients stay ahead and ensure new regulations don’t become liabilities or last-minute stresses for ESG and compliance teams.
ESG assessments open new service lines for consultants. From green transition planning to stakeholder engagement, assessments create opportunities for deeper relationships, better insights, and recurring revenue.
| Case study: How South Pole uses Manifest Climate to accelerate first-pass assessments with AI South Pole, a global climate consultancy, works with clients facing complex and overlapping disclosure rules across regions. Instead of starting from scratch, their team uses Manifest Climate to run a first-pass assessment that highlights disclosure gaps and peer benchmarks. This quick baseline gives consultants a clear entry point to client conversations. “Manifest Climate helps us as consultants easily demonstrate disclosure gaps and help our clients seize opportunities for climate action,” says Harman Gill, Senior Managing Consultant and Climate Risk Lead for South Pole in North America. With an initial scan in hand, South Pole can guide stakeholders through the details, clarifying which requirements apply, what data is missing, and what actions are most urgent. The platform speeds up the early stages of engagement, turning what might feel like a compliance burden into a springboard for deeper strategy discussions. By combining Manifest Climate’s rapid first-pass insights with their own expertise, South Pole accelerates client progress and builds momentum for long-term climate action. [READ THE CASE STUDY] |
Key components of an effective assessment
A strong ESG assessment must balance breadth with depth. Here are essential structures and principles.
Environmental
Look at:
- Greenhouse gas (GHG) emissions (Scope 1, 2, sometimes 3)
- Energy consumption and efficiency
- Waste, water use, pollution
- Climate risk (transition and physical)
- Biodiversity and natural capital exposure
Social
Look at:
- Labour standards, worker health & safety, staff turnover
- Diversity, equity, inclusion
- Community impact, human rights, local engagement
- Supply chain practices (forced labour, child labour, modern slavery)
- Product responsibility, customer data privacy
Governance
Evaluate:
- Board composition, independence, diversity
- Executive compensation and alignment with ESG metrics
- Compliance, ethics, anti-corruption
- Ownership structure, shareholder rights
- Risk oversight and internal controls
Materiality
Not every metric is equally relevant. What matters depends on your sector, geography, business model, and stakeholder expectations. Environmental pollution is more material for mining, while data privacy is more material for tech. A clear materiality lens helps teams focus assessments on what drives value and risk, and use limited resources in efficient, high-leverage ways to make the biggest impact.
Common assessment challenges and how to overcome them
Even experienced ESG professionals still find themselves facing roadblocks. Four challenges in particular are almost universal across organizations.
Disconnected data
Data often lives in silos across finance, operations, compliance, and supply chain systems. That fragmentation leads to inconsistencies or gaps. Integrated ESG data platforms or hubs that centralize inputs help reduce this risk.
Manual processes
Many assessments still use spreadsheets and manual aggregation. That slows things down and increases errors. Automation reduces errors, speeds up workflows, and frees up teams to focus on higher-value analysis.
Limited resources or expertise
Demand for ESG advisory is rising faster than expert supply. Many organizations cannot hire a full ESG team immediately. Technology and frameworks help bridge this gap by providing reliable insights without large in-house teams.
Evolving standards and measurement uncertainty
ESG regulation and reporting frameworks are changing quickly. What counts as good varies by standard. The solution is flexibility. Modular frameworks that align with multiple standards and regular benchmarking help maintain consistency.
A PwC survey found 94% of investors believe corporate sustainability reporting contains unsupported claims. Assessments that expose inconsistencies and strengthen credibility are critical.
How to conduct an ESG assessment
Here is a step-by-step blueprint for investors and consultants.
- Define purpose and scope: clarify objectives, determine boundaries, and set materiality criteria.
- Collect data: gather internal and external inputs including operations, reports, databases, and supplier disclosures.
- Validate and clean data: cross-check discrepancies, detect outliers, and document assumptions.
- Analyze and benchmark: score metrics, compare peers, and run scenario analysis.
- Interpret findings: identify strengths, risks, and opportunities.
- Develop action plans: recommend initiatives, sequence priorities, and assign ownership.
- Report and communicate: map findings to disclosure frameworks and provide dashboards.
- Review and iterate: monitor progress, refine processes, and integrate insights into business strategy.
Over time, this becomes a loop, not a one-time exercise.
Best practices for strong ESG assessments
The strongest ESG assessments share five key traits:
- Focus on materiality: Always filter out noise. Concentrate on topics that really drive value or risk for that company or investor.
- Comparability and consistency: Use standardized definitions and approaches so you can benchmark across companies, periods, or portfolios.
- Actionable insight: The goal is decisions. Translate findings into concrete business or investment recommendations.
- Transparency and traceability: Document data sources, assumptions, limitations. That builds trust with users.
- Scalability and modularity: Use frameworks or platforms that allow new modules or standards to be added without rebuilding from scratch.
Manifest Climate helps translate fragmented ESG inputs into structured comparisons and surfaces material drivers. Advisors generate focused, data driven recommendations more efficiently.
Strengthen your ESG assessments with Manifest Climate
Manifest Climate turns ESG assessments from manual and static exercises into dynamic and scalable evaluations. With AI and automation:
- Investors can assess portfolios and compare ESG performance across companies
- Consultants can accelerate assessments and deliver sharper insights to clients
- Users can benchmark by industry, region, or regulatory standard
By converting fragmented data into actionable intelligence, Manifest Climate helps stakeholders future-proof strategies and respond with agility to ESG regulation and stakeholder demand.
Ready to strengthen your ESG assessments? Book a demo to see how Manifest Climate can help.
