How to Improve Your ESG Rating: A Practical Guide for Real-World Impact

If you’ve ever looked at your company’s ESG score and thought, “We’re doing so much—why aren’t we rated better?”, you’re not alone. Across industries, companies are investing more into sustainability than ever before, yet many still find themselves stuck with average or even poor ESG ratings.

The truth is: ESG scores don’t just reward good intentions—they reflect how well you align performance, data, and disclosure with credible, material ESG strategies. And in 2025, this matters more than ever.

With over $41 trillion in assets under ESG management, sustainability performance is no longer a fringe concern. It affects your access to capital, how regulators see you, how customers trust you, and even how talent chooses your company. A strong ESG score is a proxy for credibility, accountability, and forward-looking leadership.

But how do you actually improve it—practically, strategically, and sustainably?

Let’s break it down.

Why ESG Ratings Matter More Than Ever

Before we get to the how, let’s revisit the why. ESG ratings are influencing:

Investor confidence: A better ESG rating can lower your cost of capital by up to 50 basis points.
Supply chain decisions: Over 70% of multinational corporations consider ESG scores in supplier selection.
Talent acquisition: 64% of millennials say they won’t work for a company that doesn’t have strong sustainability commitments.
Regulatory compliance: With frameworks like the EU’s CSRD, Singapore’s sustainability disclosure mandates, and emerging SEBI guidelines in India, mandatory ESG reporting is becoming the norm—not the exception.

As Larry Fink, CEO of BlackRock, famously said:

“Climate risk is investment risk. Companies that do not plan for a carbon-free world will be left behind.”

Your ESG rating, in short, has become a credibility score for doing business in a modern world.

What ESG Ratings Really Measure

Let’s demystify something. ESG rating agencies—MSCI, Sustainalytics, S&P Global, CDP, ISS—aren’t judging how “green” you are in absolute terms. They’re looking at:

Material ESG risks for your industry
How well you manage and disclose those risks
How transparent, consistent, and verifiable your data is
How you compare to your peers

This means a logistics company will be judged differently than a pharmaceutical firm, and a multinational will be held to a higher bar than a mid-sized domestic player. The focus is always on how you manage the ESG issues that matter most to your business model.

READ MORE: Top 15 ESG Focus Areas for SMEs: Building Sustainable Businesses

The 5 Strategic Levers That Actually Move Your ESG Score

After studying companies across sectors and geographies, five key actions stand out. These are not gimmicks or shortcuts—these are the real things that consistently lead to better ESG ratings and stronger sustainability positioning.

1. Make ESG Part of Core Business Strategy - Only 36% of companies globally have truly embedded ESG into their core strategy. That’s your opportunity.

Rating agencies—and investors—want to see ESG integrated with your growth plans, operational decisions, and capital allocation. Not in a standalone report, but in how you actually run your business.

Take the example of EnBW, a utility company in Germany. By shifting their business from coal and nuclear toward renewables and embedding those goals in board-level planning, they improved their ESG rating significantly.

As Paul Polman, former CEO of Unilever, said:

“Sustainability is not a cost. It's an investment—and it always pays off.”

What to do:

Link ESG priorities to financial KPIs
Make ESG a standing item in board and leadership meetings
Include ESG targets in business unit scorecards

2. Elevate ESG Governance - Companies with ESG oversight at the board level and linked executive compensation are far more likely to receive top ratings. Why? Because governance is the foundation of credibility.

It’s not enough to have a sustainability team. ESG must be owned at the top.

Checklist:

Appoint an ESG or sustainability committee at board level
Assign a C-suite sponsor or Chief Sustainability Officer with budget and authority
Tie part of executive compensation to measurable ESG targets
Conduct regular ESG risk assessments and integrate findings into enterprise risk management

Indra Nooyi, former CEO of PepsiCo, put it succinctly:

“The cost of being non-sustainable is much higher than the cost of doing the right thing.”

Good governance signals seriousness. It tells raters and stakeholders that sustainability isn’t a hobby—it’s accountability.

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3. Improve the Quality of ESG Data and Disclosure - Here’s the hard truth: If you don’t disclose it clearly and publicly, it might as well not exist.

Most ESG ratings are built entirely on public disclosures. That means your sustainability report, CDP response, website, annual report, and any regulatory filings must be clear, consistent, and aligned with recognized standards.

Start with these frameworks:

GRI (Global Reporting Initiative): Broad stakeholder reporting
SASB / ISSB: Sector-specific material disclosures
TCFD: Climate risk strategy and scenario analysis
CSRD / ESRS: Europe’s new gold standard for ESG reporting

Make your disclosures simple, data-backed, and repeatable. This isn’t about fluff—it’s about proof.

Mary Schapiro, former SEC Chair and TCFD Steering Committee Member, said:

“Disclosure drives performance. When companies are transparent, markets function better.”

4. Track and Improve Performance on Material Issues - It’s not just about policies. Rating agencies want to see performance—tangible improvements year over year.

That might mean:

Lower GHG emissions intensity
Reduced water use per product
More women in leadership
Better supply chain audits
Fewer safety incidents

What matters is:

Identifying material ESG issues for your industry
Setting targets
Measuring progress
Reporting it—even when it's not all good news

As Satya Nadella, CEO of Microsoft, noted:

“You cannot wait for the world to demand sustainability—you must lead the change and build trust through action.”

5. Use Technology to Strengthen Your ESG Operations - Managing ESG manually is a recipe for gaps, errors, and missed opportunities.

The ESG tech landscape is exploding, and for good reason. The market is projected to hit $4.3 billion by 2027. Why? Because software can now automate everything from carbon accounting to supplier risk assessments to report generation.

Explore tools like:

Workiva, Novata, and Enablon – for ESG data consolidation and reporting
Sweep or Persefoni – for real-time emissions tracking
EcoVadis or Sedex – for supplier ESG scoring
Datamaran – for dynamic materiality assessments and peer benchmarking

Think of these tools as your ESG engine room. They don’t just make your life easier—they help you scale your impact.

What High-Scoring Companies Do Differently

There’s a pattern across companies with strong ESG ratings:

They treat ESG like strategy—not like a compliance exercise. They build governance from the top, align with global frameworks, invest in data systems, and disclose clearly.

Take Workiva, for example. They created a cross-functional ESG Task Force, embedded sustainability in their product strategy, and aligned reporting to GRI and SASB. In less than two years, they climbed to an AAA ESG rating.

These companies don’t just share what’s working—they also share what’s not. And that transparency earns trust. This doesn’t happen overnight, but it doesn’t require perfection. It requires focus, structure, and leadership.

Now that you know what matters most in ESG ratings, here’s how companies can practically get started:

If you’re wondering how to begin, here’s a practical way forward: Start by assessing where you stand today. Gather your existing ESG data—even if it's messy. Understand which rating agencies already evaluate you, and review your past disclosures.

Next, identify what matters most to your business. Conduct a materiality assessment using standards like GRI, SASB, or the ISSB. Focus on 3–5 ESG issues that are most critical to your industry, operations, and stakeholders. Then, assign clear ownership. Whether it’s a sustainability lead or a cross-functional ESG team, there must be internal accountability—with C-suite or board oversight to back it up.

After that, align your disclosures with one or two global frameworks and commit to consistency. You don’t need to disclose everything on day one—but the sooner you start, the easier it gets. And finally, invest in the right tools to manage your data, track performance, and make reporting smoother.

Remember: You don’t have to get it all right immediately. But you do have to start. Because in 2025 and beyond, ESG isn’t a side initiative—it’s how businesses build trust, resilience, and long-term value.

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