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13 ESG Metrics HR Leaders Should Use To Track Performance

Environmental, Social, and Governance (ESG) isn’t just a buzzword anymore—it’s become a core business strategy that impacts everything from investor decisions to employee engagement. And if you’re in HR, you’re sitting in the driver’s seat.

Here’s the reality: 77.2% of S&P 500 companies now incorporate ESG performance into their executive compensation design, and 75% of HR leaders report that ESG strategies positively impact employee engagement. The message is clear—ESG metrics are no longer optional; they’re essential for tracking organizational health and driving sustainable growth.

But which ESG metrics should you actually be tracking? Let’s dive into the 13 most critical metrics that HR leaders need to monitor to demonstrate real impact.

Why ESG Metrics Matter for HR

Before we get into the specifics, let’s address the elephant in the room: why should HR care about ESG metrics?

86% of employees in organizations with strong ESG commitments say they feel proud to be part of their organization. That’s not just feel-good data—that’s retention gold. When employees see their organization actively contributing to environmental, social, and governance goals, they feel more connected to both the company and their role within it.

As Dr. Dieter Veldsman, Chief HR Scientist at AIHR, puts it: “For ESG to have an impact, it has to speak to the hearts and minds of employees while also gathering the right commitment from executive teams. That way, ESG becomes practical, aligned to business goals, and helps instill the desired culture of accountability that the organization aims for.”

The 13 Essential ESG Metrics for HR Leaders

Social Metrics (The “S” in ESG)

1. Workforce Diversity Representation

This is your baseline metric. Track the representation of different demographics across all levels of your organization—gender, ethnicity, age, disability status, and other relevant dimensions.

Companies at the top for gender diversity in the executive team are 25% more likely to have above-average profitability. Yet women of color account for only 4% of C-suite leaders, highlighting massive room for improvement.

How to measure it: Calculate the percentage of underrepresented groups at each organizational level (entry-level, mid-management, senior leadership, C-suite). Compare these figures against your industry benchmarks and local demographics.

Example: A tech company might discover they have 40% women in entry-level roles but only 15% in leadership positions. This gap signals potential barriers in advancement that need addressing.

2. Pay Equity Ratio

The pay gap isn’t just a social issue—it’s an ESG compliance issue. The executive’s pay ratio shows how much executives are paid in relation to the average employee, with some cases showing executives earning up to 5,000 times more.

How to measure it: Compare compensation across demographic groups doing similar work. Calculate both median and mean pay ratios between executives and average employees.

What good looks like: Leading companies publish transparent pay equity analyses and commit to closing gaps within specific timeframes.

3. Employee Turnover and Retention Rates by Demographics

General turnover rates only tell part of the story. You need to understand who is leaving and why.

How to measure it: Break down your voluntary turnover rate by gender, ethnicity, tenure, and department. Look for patterns that indicate potential bias or inclusion issues.

Red flag example: If women leave at twice the rate of men in the first two years, you likely have an inclusion or advancement problem, not just a retention issue.

4. Employee Engagement and Satisfaction Scores

75% of HR leaders believe that ESG initiatives increase employee engagement. But you need to measure this consistently to prove the connection.

How to measure it: Use pulse surveys and annual engagement surveys that specifically ask about ESG initiatives, inclusion, and belonging. Track eNPS (Employee Net Promoter Score) across different demographic groups.

Pro tip: Don’t just collect data—act on it. Employees can tell when surveys are performative versus when leadership genuinely uses feedback to drive change.

5. Training and Development Hours per Employee

ESG reporting increasingly focuses on how organizations invest in their people’s growth. 94% of workers surveyed said training existing employees on sustainability-related skills would build trust in a company’s ESG commitments.

How to measure it: Track total training hours per employee annually, including sustainability training, DEI education, leadership development, and technical skills advancement. Break this down by role and level.

6. Health and Safety Metrics

This includes injury rates, lost-time incidents, and near-miss reporting. While traditionally operational, these metrics are increasingly viewed through an ESG lens as indicators of how much an organization values employee wellbeing.

How to measure it: Calculate your Total Recordable Incident Rate (TRIR) and Lost Time Injury Frequency Rate (LTIFR). Benchmark against industry standards.

7. DEI Initiative Investment

41% of employees say they’re more likely to stay with companies that offer ESG-focused benefits. But genuine commitment requires financial investment.

How to measure it: Track total budget allocated to DEI programs, employee resource groups (ERGs), accessibility accommodations, and inclusion training. Calculate this as a percentage of total HR budget and revenue.

Reality check: If you’re talking about DEI constantly but spending less than 1% of your budget on it, employees will notice the disconnect.

Governance Metrics

8. Board and Leadership Diversity

Diversity at the top matters. It influences decision-making, strategy, and organizational culture in profound ways.

How to measure it: Track the demographic composition of your board of directors and executive leadership team. Monitor changes over time and set specific targets for improvement.

Current landscape: There’s currently an all-time high of 10.4% female CEOs of Fortune 500 companies, but this remains disappointingly low given that approximately 50% of the workforce is female.

9. Ethics and Compliance Training Completion Rates

Governance isn’t just about policies—it’s about ensuring everyone understands and follows them.

How to measure it: Track completion rates for mandatory ethics training, anti-harassment training, and compliance courses. Monitor time-to-completion and assessment scores.

10. Internal Mobility and Promotion Rates

Who’s getting promoted and why? This metric reveals whether your organization provides equitable advancement opportunities.

How to measure it: Calculate promotion rates by demographic group, department, and level. Track the average time to promotion for different groups. Measure internal hiring versus external hiring for leadership roles.

What to look for: Significant disparities in promotion rates between demographic groups often indicate systemic bias in performance evaluation or succession planning.

Environmental Metrics (Where HR Can Make an Impact)

11. Remote Work and Commuting Emissions

HR is key in providing employee-related data, and they can see how environmental factors impact human capital. One of the most direct ways HR influences environmental metrics is through workplace flexibility policies.

How to measure it: Track the percentage of employees working remotely versus on-site. Calculate estimated emissions reduction from reduced commuting. Monitor business travel miles per employee.

Example impact: If 500 employees shift from daily commutes to hybrid work (3 days remote), you could reduce annual carbon emissions by hundreds of metric tons.

12. Sustainable Benefits Programs

Are your employee benefits supporting or undermining your environmental commitments?

How to measure it: Track uptake of sustainable commuting stipends, electric vehicle benefits, green retirement fund options, and wellness programs that reduce healthcare resource consumption.

13. Sustainability Training and Awareness

94% of workers surveyed said training existing employees on sustainability-related skills would build trust in a company’s ESG commitments.

How to measure it: Track the percentage of employees who’ve completed sustainability training. Measure changes in employee awareness of company ESG goals through surveys. Monitor participation in environmental initiatives like volunteer days or green teams.

How to Start Measuring ESG Metrics

Starting from scratch can feel overwhelming. Here’s a practical roadmap:

Step 1: Audit your current data collection What are you already tracking? Most organizations have more ESG-relevant data than they realize—it’s just scattered across different systems.

Step 2: Prioritize based on materiality Not all metrics will be equally important for your organization. Human capital management remains the most widely used ESG metric category, but your specific industry and stakeholder expectations should guide your priorities.

Step 3: Establish baselines You can’t track progress without knowing your starting point. Collect at least one year of historical data before setting targets.

Step 4: Set SMART goals Vague commitments like “improve diversity” won’t cut it. Set specific, measurable targets: “Increase women in senior leadership from 15% to 25% by 2027.”

Step 5: Create regular reporting cadences Most companies choose to publish ESG reports annually, alongside their financial reports. But internal monitoring should happen more frequently—quarterly at minimum for key metrics.

Step 6: Connect metrics to outcomes The power of ESG metrics isn’t just in tracking them—it’s in demonstrating their impact on business outcomes. Connect your DEI metrics to innovation rates, your training investments to employee retention, and your sustainability initiatives to employer brand strength.

Common Pitfalls to Avoid

Measuring vanity metrics: Having 10,000 hours of DEI training means nothing if behaviors haven’t changed and representation hasn’t improved.

Ignoring intersectionality: Don’t just track gender or ethnicity separately. Women of color account for only 4% of C-suite leaders, showing that examining multiple dimensions of identity reveals deeper disparities.

Setting it and forgetting it: The use of diversity, equity & inclusion (DEI) metrics declined between 2023 and 2024, although a closer analysis suggests a shift in how DEI is being assessed. Stay adaptable as best practices evolve.

Lacking executive buy-in: Without C-suite commitment, ESG metrics become another HR checkbox rather than a strategic imperative.

The Future of ESG Metrics in HR

The ESG landscape is evolving rapidly. In 2025, ESG reporting is shifting from voluntary to mandatory in many regions, with new regulations in the EU, US, and UK requiring companies to publish environmental and social performance data alongside financial results.

For HR leaders, this means your role in ESG reporting will only grow. The organizations that start building robust ESG measurement systems now will be far ahead when regulations tighten further.

More importantly, the connection between ESG performance and business success is undeniable. Companies improving performance on ESG metrics while pursuing stronger growth and profitability deliver superior shareholder returns.

Taking Action

Here’s the bottom line: ESG metrics aren’t about checking compliance boxes or looking good in annual reports. They’re about fundamentally understanding whether your organization is creating value for all stakeholders—employees, communities, investors, and the planet.

As Tom Douglas, chef and talk show host, puts it: “Sustainability starts with your staff.” And for HR leaders, that means having the data to prove you’re not just talking about values—you’re living them.

Start with the metrics that matter most for your organization. Build your measurement capability over time. And most importantly, use the insights you gain to drive real change.

Because in the end, the best ESG metric is the one that leads to action.

How to Close Workplace Skills Gaps: A Complete Step-by-Step Guide

Introduction

Workplaces are evolving at lightning speed. Artificial intelligence, automation, and hybrid work models are rewriting the rules of how we operate. That pace of change makes workplace skills gaps not just possible, but inevitable. The capabilities your team had last year might not be the ones they need today—or tomorrow.

Think of it like navigation: relying on an outdated GPS will only get you lost. You need a real-time system that updates as conditions change. Similarly, your talent strategy needs live guidance to keep employees aligned with business priorities.

The good news? Closing skills gaps isn’t about scrambling in panic. With the right approach, you can proactively identify gaps, create learning opportunities, and prepare your workforce for whatever comes next. In this guide, we’ll walk you through eight practical steps to close workplace skills gaps—and build a future-ready organization.

1. Revisit Your Organizational Strategy

Before diving into surveys and training programs, start with the big picture. Ask yourself: Where is the organization headed? Because if you don’t know your destination, you can’t map the skills needed to get there.

Here are a few quick tactics to reconnect with strategy:

Even if you’ve worked in the company for years, remember—strategies evolve, markets shift, and new opportunities appear. No one’s psychic, so this simple refresh ensures you’re planning for the skills of tomorrow, not yesterday.

2. Define the Skills You REALLY Need

Once strategy is clear, it’s time to translate it into skills. A handy framework to use is KSA: Knowledge, Skills, and Abilities.

  • Knowledge = What employees know (theory, concepts, facts).
  • Skills = What employees can do (technical or soft skills in action).
  • Abilities = How employees apply knowledge and skills in real situations.

For example:

  • A junior designer might know what Kubernetes is (knowledge).
  • They might practice basic deployments in a sandbox (skill).
  • But the ability to troubleshoot live system issues under pressure? That’s a higher-level ability.

By breaking down future needs into KSA, you can pinpoint the exact capabilities that will move the needle. This step also prevents over-generalization—because “we need people who understand AI” is too broad, but “we need analysts who can apply AI models to financial forecasting” is precise.

3. Audit Existing Capabilities

Now that you know what skills the future requires, it’s time to map what you already have. Think of this as taking inventory—not to judge, but to get clarity.

Here’s how to run a friendly, non-threatening audit:

  • Skill inventory tools: Use digital platforms that let employees self-rate their skills.
  • Self-assessments: Quick surveys where employees score themselves on a 1–10 confidence scale.
  • Manager check-ins: Encourage managers to validate skills during regular conversations.

Pro tip: Frame this as an optional superpower reveal, not a performance review. Employees are much more likely to be honest if they know the purpose is growth, not grading.

4. Analyze the Gap—Quantify What’s Missing

Once you’ve collected the data, the next step is comparing current capabilities with what’s needed. This is where a skills matrix becomes your best friend.

A skills matrix is essentially a grid showing:

  • Required skills for each role or project
  • Current proficiency levels (based on your audit)
  • Desired proficiency levels

Example:

  • Data analytics: Team average = 6/10 → Desired = 8/10
  • Public speaking: Team average = 4/10 → Desired = 7/10
  • AI model building: Team average = 2/10 → Desired = 6/10

This helps you see where the biggest gaps are and prioritize. And remember—scoring a 6/10 doesn’t mean crisis. It just means opportunity for growth.

5. Build a Strategic Upskilling Plan

Here’s where most organizations stop at “let’s add some courses.” But closing workplace skills gaps requires a deliberate, structured plan.

Here’s a roadmap to make it strategic:

  • Prioritize by impact: Start with the skills most directly tied to business ROI.
  • Set SMART goals: (Specific, Measurable, Achievable, Relevant, Time-bound). For example: “Increase team’s data literacy from 6/10 to 8/10 in six months.”
  • Mix learning methods: Blend microlearning, peer coaching, stretch projects, and formal courses.
  • Leverage technology: Platforms like Engagedly allow you to build learning paths, deliver quizzes, track progress, and align learning with goals.

The goal is to make learning continuous and integrated—not just a checkbox exercise.

6. Roll Out the Plan (Smartly)

The best strategy fails if execution feels clunky. Rolling out an upskilling plan isn’t about sending a single email with a course link—it’s about building momentum.

Here’s how to make it land:

  • Launch with intention: Announce the initiative with a kickoff event or town hall.
  • Communicate clearly: Explain why the skills matter, not just what employees need to do.
  • Secure manager sponsorship: Employees engage more when they see leaders modeling the behavior.
  • Treat it like a mini-campaign: Use reminders, success stories, and recognition to keep it visible.

Think of it as a cultural movement, not just a training program.

7. Measure Progress (and Adjust)—Make It Iterative

Upskilling is not a “set it and forget it” process. You’ll need to track, measure, and tweak.

Ways to measure progress:

  • Completion rates (are employees finishing learning paths?)
  • Competency increases (are confidence ratings improving from 6/10 to 8/10?)
  • Performance improvements (are new skills showing up in work quality and results?)

If something isn’t landing, don’t panic. Pivot.
Maybe employees ignore long e-learning modules—try video shorts or quick chat-based quizzes instead. Think of it like adjusting recipes: the ingredients stay the same, but the preparation changes.

8. Institutionalize Continuous Learning

Closing skills gaps once is good. Creating a system where gaps rarely happen? That’s game-changing.

To build a continuous learning culture:

  • Run monthly micro-pulses to spot emerging needs.
  • Host “skill swaps” where employees teach each other.
  • Recognize and reward employees who proactively upskill.

When learning agility becomes part of your brand, employees don’t see training as a burden—they see it as a brag-worthy badge.

Quick Recap Table

Here’s your eight-step roadmap at a glance:

  1. Revisit your organizational strategy
  2. Define the skills you really need
  3. Audit existing capabilities
  4. Analyze the gap—quantify what’s missing
  5. Build a strategic upskilling plan
  6. Roll out the plan (smartly)
  7. Measure progress and adjust
  8. Institutionalize continuous learning

Why This Matters for Engagedly Users

Engagedly makes closing skills gaps not just possible—but practical and measurable. Instead of juggling multiple tools, you can bring everything into one integrated platform. Our skills assessments and pulse surveys help you capture real-time insights into employee capabilities. From there, managers can design customized learning paths that target the highest-priority gaps, track progress through manager dashboards, and connect learning outcomes directly to business goals.

And it doesn’t stop with learning. Our gamified recognition system ensures employees stay motivated and rewarded for upskilling efforts. Imagine employees not only completing training but also earning recognition badges, leaderboard points, and peer appreciation along the way. That’s how you turn learning into a culture, not a checkbox.

In short, Engagedly empowers you to move from simply identifying skills gaps to One of our global retail clients faced a significant digital skills gap as they scaled their e-commerce presence. Traditional training approaches weren’t cutting it—employees felt overwhelmed, managers couldn’t track progress, and adoption lagged.

By implementing Engagedly’s framework, the organization built role-specific learning paths tailored to digital tools and customer engagement strategies. Managers used real-time dashboards to track progress and coached employees through weekly check-ins. Within just six months, the company achieved a 30% increase in cross-skill coverage across critical roles.

The results spoke volumes:

  • Employees reported higher confidence in using new technology.
  • Managers observed measurable improvements in productivity and agility.
  • The business adapted more quickly to market changes, giving them a competitive edge.

This case shows that closing skills gaps isn’t theoretical—it delivers tangible business results when powered by the right platform.

Final Thoughts

Closing workplace skills gaps is no longer optional—it’s a strategic necessity. Organizations that wait until gaps become critical risk falling behind, while those that take proactive steps create workforces that are adaptable, confident, and future-ready.

With the right strategy, tools, and mindset, skills development becomes part of your company’s DNA. Engagedly gives you everything you need to transform this vision into action: data-driven insights, personalized learning, manager enablement, and motivation baked into every step.

So, where will you start today?

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Discover how Engagedly can help you identify, close, and prevent workplace skills gaps with ease.
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