The ESG landscape is constantly evolving, pushing organizations to go beyond compliance and focus on how to improve ESG ratings through measurable impact and transparency.
The latest developments in ESG profoundly influence the world around us — from the urgency of addressing climate change to the growing demand for equitable, diverse, and accountable workplaces.
As a result, ESG has taken center stage in corporate strategy, shaping how companies build trust, attract investors, and drive sustainable growth.
Improving ESG ratings starts with perception. Strong ESG performance depends not only on data and disclosures but also on how stakeholders perceive those efforts. Measuring and managing ESG perceptions helps companies close the gap between what they do and what audiences believe.
ESG perception tracking strengthens ratings and reputation. By monitoring real-time stakeholder sentiment, companies can identify blind spots, benchmark progress, and communicate more effectively—leading to higher ESG scores, stronger investor confidence, and deeper stakeholder trust.
Transparency and consistency drive sustainable growth. Aligning internal ESG practices with external communication builds authenticity and long-term value. Regular reporting and transparent engagement demonstrate integrity, fostering the trust that underpins improved ESG performance.
"Companies we have seen that have not taken ESG strategy seriously face a risk in terms of branding, investors' preference, or in transforming at a time when business models need to be sustainable. Overall, we believe that doing 'business as usual' is no longer a valid option."
Proof of this growth is plainly evident in investments. Inflows into sustainable funds, for example, rose from $5 billion in 2018 to more than $50 billion in 2020—and then to nearly $70 billion in 2021. The environmental component of ESG and responses to climate change have driven a major part of ESG growth.
Reputation and ESG play a critical role in a company’s evaluation, especially now when 90% of the market value of a company is assigned to intangibles.
Also at Caliber, we have seen an increase in topics discussed and measured by our clients around the following criteria:
“In our work with multinational companies around the world, we have seen ESG becoming the key reputational battleground - to secure customer loyalty, talent attraction, and advocacy from opinion leaders. Those who do it well and do it differently, win.”
In today’s business landscape, strategic ESG considerations are crucial for companies. This is because sustainability and ethical practices — guided by ESG principles — are becoming increasingly important to investors and stakeholders.
Companies must integrate ESG into their strategies to thrive in this environment, align their efforts with ESG criteria, keep themselves updated with the latest developments, and evaluate their impact on the public and investors using reliable ESG data.
Failure to prioritize ESG can have serious consequences, including damage to the company’s reputation and risk profile, leading to financial failures and a loss of trust.
The prevalence of social media and digital platforms means that negative stories related to ESG issues can spread quickly, underscoring the need for proactive management of ESG perception tracking.
This article will examine the significance of strengthening ESG strategies and the critical distinction between ratings and perceptions, explaining why both are equally vital for assessing a company’s commitment to sustainability as well as building stakeholder trust.
The growing pressure from stakeholders is fueling ESG momentum all around the world. In 2021, 42% of investors said that their approach to ESG is mainly driven by client expectations and reputational concerns.
Today, a growing number of investors use ESG assessments and rankings to determine whether to invest in a company or not, and even governments worldwide have started using these scores to decide which companies will be allowed to operate within their borders – and which ones won’t.
It is no longer just a desire by the public for companies to behave ethically, sustainably, and responsibly — it’s an expectation.
Tracking an ESG score enables companies to detect problem areas, benchmark their success toward sustainable and ethical transition, and communicate progress to all stakeholders through transparent ESG reporting.
Organizations that integrate ESG into their core operations and uphold ESG principles are better positioned to strengthen trust and credibility among investors and consumers alike.
A recent study by MSCI found that companies with better ESG scores usually deliver a higher return to shareholders over the past decade.
Developing a strong ESG proposition can help your company gain access to new markets and further expand into existing ones. Governing authorities are more likely to offer access, approvals, and licenses if they trust the corporate actors and recognize the transparency of their ESG reporting.
“Evidence is emerging that a better ESG score translates to about a 10 percent lower cost of capital, as the risks that affect your business are reduced.”
Companies that perform well on ESG metrics are thought to be better at anticipating future risks and opportunities, tend to think long-term, and strive to create lasting value.
Additionally, the ESG initiatives of a company can make a significant difference in how consumers perceive the brand. Therefore, it’s imperative that these initiatives align with the purpose of the company and the image it wishes to portray.
By working on improving the organization’s ESG performance, companies can strengthen stakeholder relationships, attract investments, gain access to lower-cost capital, and build enduring trust.
Improving ESG scores requires a long-term approach and genuine commitment, but investor interest in ESG standards is here to stay. As Gen Z becomes a significant consumer segment, ESG considerations are expected to remain at the heart of mainstream investing.
Working toward higher ESG scores not only supports sustainable growth and corporate responsibility but also helps drive stronger financial outcomes and build long-term trust among stakeholders.
Before committing to developing an ESG strategy, ensure that the management team is willing to allocate sufficient resources to improve ESG scores and implement meaningful ESG practices.
Depending on the organization’s size, age, and culture, getting things right can be a complex, time-consuming, and costly process that requires collaboration across several departments.
Even with the best intentions, it’s impossible to address every ESG issue equally. Prioritize those that have the greatest potential impact on your business and brand. Consider two critical factors:
A detailed materiality assessment provides the foundation for a strong business strategy that aligns with ESG priorities. It also helps justify investments in initiatives that may have been overlooked due to cost or lack of immediate evidence. Focusing on material issues can help mitigate risks and lead to better ESG scores over time.
More investors and asset managers are increasingly focused on how companies manage environmental and social issues. They evaluate ESG scores when making investment decisions, emphasizing transparency and measurable outcomes.
Companies that effectively integrate ESG principles into their business strategy and demonstrate strong ESG performance are better positioned to attract long-term capital and build credibility in the market.
By committing to ethical and sustainable ESG practices, a company enhances its reputation as a responsible organization and strengthens relationships with stakeholders, including investors, regulators, and communities.
Identify specific initiatives to improve ESG scores, outline key implementation steps, and assign responsibilities clearly. Define what success looks like by setting measurable metrics and timelines to reinforce accountability.
Avoid stretching resources too thin — instead, focus on a manageable number of ESG practices at a time. Engage employees and other stakeholders early by starting with achievable initiatives that demonstrate quick wins.
This approach builds internal confidence and paves the way for strong ESG performance in the long run.
Consistent communication reinforces transparency and strengthens confidence in a company’s ESG scores and sustainability initiatives. It allows stakeholders to understand the organization’s progress, priorities, and values.
By regularly sharing updates about its ESG practices, a company can build trust, attract investors, and demonstrate accountability. Frequent communication also enables management to identify gaps early and mitigate risks before they escalate.
Transparent ESG communication positively impacts:
By openly reporting the company’s performance through strong ESG performance and transparent ESG communication, companies can inspire stakeholder confidence and long-term loyalty.
In the past, many companies have been called out for publicly sharing commitments that didn’t live up to internal business practices.
Simply being aware of a company’s consciousness or intentions doesn’t necessarily influence how people perceive that organization.
Ultimately, it’s the stakeholders’ familiarity with a company’s actions that shape its reputation – whether positively or negatively.
If a company communicates its positive actions effectively, this can enhance its reputation. Conversely, if stakeholders become aware of wrongdoing or a crisis within the company, this can harm its reputation.
Therefore, companies must establish a clear mission and ensure that their internal operations and company culture align with stakeholder expectations and that these are communicated transparently.
Additionally, companies can enhance their familiarity levels by demonstrating legitimacy and authenticity in their external communications, such as by sharing information on their progress in areas such as pay equality, diversity, inclusion, and other relevant issues.
Accurate and regular reporting is central to tracking and improving ESG scores. There are many frameworks available, but the goal is to select one that best represents the organization’s objectives and supports investment decisions.
Here are some examples:
The framework aims to enhance and consolidate existing reporting practices and move towards a framework that provides the information necessary to develop a global economic model that meets the challenges of the 21st century.
The GRI Standard is one of the world’s most widely used standards for sustainability reporting, which aims to help businesses, governments, and other organizations understand, develop and communicate sustainability metrics. The guidelines can be downloaded for free on the GRI website.
SASB is a great choice to communicate the value your ESG program creates in a language that investors understand best. With the SASB framework, you’ll be able to identify, manage and communicate financially-relevant sustainability information to investors. It is common for SASB standards to be used alongside other frameworks, for example, GRI.
By adopting globally recognized standards, companies can improve transparency, credibility, and ultimately their ESG scores — supporting better access to capital and stronger stakeholder relationships.
With growing interest in ESG criteria, investors need a way to assess a company’s ESG performance objectively. This has led to the flourishing of several ESG Rating Agencies, such as Sustainalytics, MSCI, and FTSE ESG, which assess companies globally on their ESG performance and make this data available to their clients.
ESG ratings matter because they are used by different stakeholders to evaluate a company’s performance on sustainability, social responsibility, and ethical practices, providing a standardized and objective measure of a company’s ESG performance.
On the other hand, the general public’s opinion about a company’s ESG actions matters because it reflects the views and beliefs of a broader group of people other than investors that impact an organization’s performance.
The level of familiarity towards these initiatives – not associated with an agency’s rating – can define reputation levels, ultimately influencing stakeholder behavior like consideration, recommendation, advocacy, etc.
ESG ratings and ESG perceptions are both critical for companies to consider because they can significantly impact a company’s reputation, the support it gets from stakeholders, and ultimately its financial performance.
High ESG ratings combined with positive perceptions are a sign the company’s efforts are being noticed and recognized by the right audiences. In today’s competitive environment, where every brand tries hard to win the trust of its stakeholders, the perception metrics are critical, when trying to measure the impact of the brand’s ESG activities.
ESG ratings can impact investor preferences and decisions. Investors may use ESG ratings to evaluate a company’s long-term sustainability and risk management practices, which can affect a company’s access to capital and cost of capital.
If not reflected in positive stakeholder perceptions, investors may worry that the company’s actions are not sufficient to secure external buy-in, which in turn may negatively impact the company’s evaluation.
ESG perceptions can influence customer preferences and buying decisions. Customers may prefer to do business with companies perceived as socially responsible and sustainable, which can impact a company’s market share and revenue.
Having an ESG perception level that is different from the company’s ESG ratings can indicate a reputation risk, impact investor relations, highlight the need for better stakeholder engagement, and put the company at a competitive disadvantage.
Therefore, companies should prioritize addressing gaps or discrepancies between ESG ratings and perceptions with the general public. In other words – bridge the gap between perception and reality.
Without an understanding of how stakeholders perceive ESG performance, companies may fail to address their concerns before it’s too late, resulting in a loss of trust from investors, customers, and employees, leading to financial losses and a tarnished brand image.
Despite the fact that CSR (Corporate Social Responsibility) has been one of the pillars of ethical social behavior for many years, ESG is what dominates the corporate agenda today. In the blink of an eye, it shifted from a marginal consideration to an integral indicator of business performance.
A CEO survey conducted by EY in 2022 found that 82% of respondents viewed ESG as a core value driver for their business.
It is likely that this trend will continue to accelerate given the importance governments are now placing on solving the climate crisis and ensuring equal treatment for all. In the near future, ESG reporting may be treated the same as financial reporting, with each company required to disclose its ESG results according to globally accepted standards.
The time is now for all businesses to get serious about sustainability as stakeholder pressure on companies and governments are only expected to increase.
Those who demonstrate leadership have the greatest chance of getting ahead of the curve in their industries. As ESG issues gain momentum day by day, there is no time to waste.
At Caliber, we believe that true ESG measurement should also consider stakeholder perceptions; therefore, the ESG Perception Tracker is becoming an indispensable function of our corporate reputation monitoring platform.
Our analysis has confirmed that ESG is heavily correlated with our model’s “purpose” attributes Integrity, Authenticity, and Relevance.
By measuring brand and reputation attributes, as well as the 3 attributes of ESG, Caliber helps companies identify areas where they can improve their ESG strategies and practices, communicate more effectively with stakeholders, and enhance their reputation as socially responsible and sustainable organizations.
With Caliber, companies can not only comprehensively understand stakeholder opinions and beliefs about their ESG performance through the standard measurement of E, S, and G, but also by incorporating and measuring their unique ESG drivers.
The perception data collected via Caliber’s platform show how much various stakeholder groups know about the company’s ESG activities and where the company leads or falls short compared to benchmarks, country, or sector indexes.
“What we’re finding most interesting about the ESG data Caliber collects and analyzes is how little stakeholders know about companies’ ESG performance, and how much reputational impact is gained by purely informing audiences and increasing knowledge levels.”
By incorporating media events and campaigns to correlate with fluctuations and trends of perceptions, combined with the proprietary measurements of purpose and ESG, brands can build better communication narratives and establish themselves as socially responsible and sustainable organizations.
Contact us today to learn more about how Caliber can help you enhance your ESG performance and start build trust with your stakeholders.
A former editor at the Associated Press, James drives Caliber's storytelling around the fast-emerging field of stakeholder intelligence — exploring how companies can harness real-time data about the people who matter most to their success to make smarter decisions about their brand, reputation, and business strategy.
