ESG diagnostic: how to identify what your company already does

The first step in implementing an ESG strategy is understanding what already exists. Learn how to carry out a quick and effective diagnostic of your company's current initiatives.

Many companies start talking about ESG by asking the wrong question: "What do we need to do now?"

The right question

"What are we already doing, without calling it ESG?"

In practice, most companies already have established sustainability practices. They cut electricity use to reduce costs. They separate waste because the law requires it. They offer flexible hours or remote working to retain talent. The problem is rarely a lack of action. It is a lack of structure: this information is scattered across e-mails, Excel spreadsheets and the memory of the people who run day-to-day operations.

An ESG diagnostic exists precisely to solve this. It brings together what already exists, identifies real gaps and builds a solid foundation before any strategy. Without this step, the risk is duplicating effort, ignoring what already works well or building priorities on assumptions instead of facts.

Here is a practical guide to carrying out that diagnostic.

Why start with the diagnostic and not the strategy?

Going straight to strategy without a diagnostic is like plotting a route without knowing where you are.

Companies that skip this step typically make one of two mistakes. They either repeat existing efforts under a new name and with new owners, or they set priorities that are out of step with operational reality.

A well-run diagnostic brings three concrete advantages:

Avoids duplicated work

It recognises what is already working.

Identifies real gaps

Instead of vague perceptions about what is "missing".

Builds an organised database

Essential for any ESG tool or reporting software the company may use later on.

This starting point has become even more relevant with the recent changes to European regulation. The EU Omnibus reduced the number of companies required to comply with the CSRD (Corporate Sustainability Reporting Directive) by around 90%. Find out more in VS (formerly VSME) explained: a practical guide for SMEs.

≈ −90%

fewer companies required to comply with the CSRD under the EU Omnibus. But this does not remove the pressure on SMEs: many continue to receive requests for ESG data from larger clients that remain within the scope of the directive.

Having an organised diagnostic lets you respond to those requests quickly, instead of starting from scratch every time a client questionnaire arrives.

And there is one further benefit that many managers do not anticipate: the diagnostic is, in itself, already an argument in front of banks, clients and investors. It shows that the company is taking the subject seriously.

Which areas should the ESG diagnostic cover

An ESG diagnostic is structured around the three dimensions that make up the acronym:

Environment

The focus here is to understand the environmental impact of operations. The diagnostic should map:

Energy consumption and its source (electricity grid, renewables, fossil fuels)
Water consumption
The volume and type of waste produced and how it is treated
Direct and indirect CO₂ emissions
Any existing environmental certifications, such as ISO 14001 or the eco-label

Many companies already have this data in invoices, supplier reports or internal records; they just do not look at it through this lens.

Social

The social dimension assesses the company's relationship with its people and other stakeholders, such as the community. When the focus is on human capital, the diagnostic should cover:

Working conditions: contracts, pay, working hours
Occupational health and safety records
Training and development programmes
Diversity in the team and in leadership roles
Engagement practices with local suppliers, the community, clients and, increasingly, cybersecurity and artificial intelligence management

Most SMEs have solid labour policies that have never been systematised through an ESG lens. The diagnostic makes them visible.

Governance

The governance dimension looks at how the company is run. It includes:

The decision-making and accountability structure
The existence of ethics and conduct policies
Risk management mechanisms
Transparency with partners and stakeholders
Anti-corruption practices
Formalised innovation processes, which are increasingly relevant

Governance includes innovation because the ability to adapt and keep improving is now regarded as an indicator of resilience and good management.

And the value chain?

The ESG diagnostic looks not only at the company's internal world, but also at its value chain. It should analyse points such as supplier selection criteria, critical dependencies and exposure to reputational risk from third-party suppliers.

Watch out

Many SMEs focus the diagnostic almost entirely on the environmental dimension, because it is the most visible. But governance and social indicators carry more and more weight in assessments by investors, banks and business clients. It is worth reviewing the ESG indicators every company should know before moving forward, so you know exactly what to measure in each dimension.

How to gather the information that already exists: a 6-step guide

1. Define the scope and bring together the right team

An ESG diagnostic is not a one-person exercise. It involves information spread across several departments: HR holds the training and safety data, operations holds the energy consumption, accounting holds the suppliers, and management holds the policies.

Start by identifying who in the company holds which information. You do not need to set up a formal working group; one contact per area who can answer simple questions is enough.

Also define the scope of the diagnostic: does it cover only your own operations? Does it include the supply chain?

Tip: for a first analysis, stick to direct operations. It is quicker, easier to control and already generates enough information to act on.

2. Take stock of what already exists

This is the core of the diagnostic. For each ESG dimension, survey what is already documented, monitored or practised.

Use a simple structure with three columns:

COLUMN 1

What we do

The practice exists

COLUMN 2

We have data to prove it

There are records that support it

COLUMN 3

It is formalised

In a policy or procedure

This simple grid quickly reveals what exists, what still needs to be proven and what needs to be formalised.

60% to 70%

of practices already exist in most companies, in the diagnostics we have supported. What is missing is systematic record-keeping and the ESG language to communicate them.

3. Gather the available data

For the practices identified in the previous step, collect the supporting data. Specifically:

Environmental dimension

Energy and water invoices for the last 12 months, waste records, existing environmental certifications, any emissions report already produced

Social dimension

Records of accidents and incidents, training plan or record of training hours per employee, turnover data, collective agreements in force

Governance dimension

Organisation chart and decision-making structure, code of conduct or ethics policy (if one exists), standard supplier contracts, documentation of innovation or continuous improvement processes

The data does not need to be perfect. Approximate data is better than no data at all — and the diagnostic also helps to identify where data collection needs to improve.

4. Identify the priority gaps

With the inventory done, you can see clearly what is missing. But not all gaps are equally important — you need to prioritise.

Two criteria help with prioritisation:

Relevance to current stakeholders

A piece of data that a bank or client is already asking for takes priority over one that no stakeholder has yet questioned.

Ease of filling the gap

A gap that can be closed with a simple data collection process takes priority over one that requires deep operational change.

Outcome of this step: a short list of three to five priority gaps, with an owner and a deadline for each one.

5. Map your stakeholders

An ESG diagnostic also serves to identify the company's stakeholders and what they expect.

Stakeholders are all the parties that affect or are affected by the company's activity: employees, clients, suppliers, banks, investors, the local community and regulatory bodies.

For each group, the diagnostic should answer three questions:

What are their expectations regarding the company's ESG performance?

Have they made formal or informal requests for ESG information?

Is there a risk of losing the relationship if the company does not respond to those requests?

This mapping is the basis for deciding which ESG dimensions to prioritise — because the most effective ESG strategy is not the most ambitious one, but the one that responds to the company's real pressures.

6. Document and communicate the results

The diagnostic is only valuable if it is documented. A simple report — it can be a two- to three-page document — summarising what exists, what is missing and the priorities set achieves this goal.

This document has two functions:

Internally

It is the starting point for the ESG strategy and the argument for justifying investment in new processes or tools.

Externally

It is proof that the company is acting seriously — and it can be shared with banks, clients or partners who ask for information on ESG performance.

How long does an ESG diagnostic take?

How long the process takes can vary considerably depending on the company's maturity and organisation.

2 to 4 weeks

For SMEs with 50 to 250 employees, this survey rarely takes longer than this, depending on the team's availability and how scattered the information is.

Common mistakes to avoid in the ESG diagnostic

A few pitfalls repeat themselves in almost every SME that does this exercise for the first time.

Confusing intention with practice

Having a written policy does not mean it is applied. The diagnostic should check what happens in practice, not just what is on paper.

Confusing practice with evidence

Doing something well is not the same as being able to demonstrate it. Practices that exist only in the team's routine, with no record or formalised procedure, do not make the company robust when a bank or client asks for proof. The diagnostic should identify what is already done but not yet documented, so that it can be formalised.

Ignoring data that already exists outside the sustainability department

Financial, HR and operations information often contains valuable ESG data that is never cross-referenced.

Trying to measure everything at once

An exhaustive diagnostic on day one slows the process down unnecessarily. It is better to map the essentials first and then go deeper, area by area.

How to involve stakeholders in the diagnostic

Stakeholder mapping identifies who has an interest in, or influence over, the company's ESG performance: employees, clients, suppliers, the local community, banks, investors and regulators.

For each group, it is worth asking three things:

What do they expect from the company in terms of sustainability?

What information do they already share or request?

How much weight do they carry in the company's decision-making?

In the first year you do not need to contact every stakeholder. In our experience, the people on your team who deal with them have a thorough understanding of their expectations.

A simple way to organise this mapping is to cross two variables: each group's level of interest in the company's ESG performance and the level of influence it has over the business.

Priority in the diagnostic

A client that already demands sustainability reports has high interest and high influence.

Can wait for a second phase

A small supplier with no formal requirements.

This prioritisation stops the company from focusing on areas that are not relevant to the parties that matter, such as major clients, funders and authorities.

Quick wins: start this week

You do not need a months-long project to get going. These steps fit into a single working week:

This week's checklist

Ask for the last three energy and water invoices and record the consumption

Book a 30-minute conversation with the HR manager about existing policies

Review the contracts of your three largest suppliers for environmental or social clauses

List all the certifications and licences the company already holds

Ask the sales team whether any client has already requested sustainability data

By the end of this week, you will have a realistic snapshot of the company's starting point, without guesswork.

Where to organise it all: choose the right tool

Doing this survey manually is possible, but it takes time that most SMEs cannot spare.

The right choice is to centralise everything in an ESG tool or sustainability management platform, instead of keeping the diagnostic in several loose files.

The Sustanya platform was designed to simplify exactly this first phase: it organises the data the company already has, identifies gaps by ESG dimension and prepares the ground for the requests from clients, banks and regulators that will keep coming. And if you need help, our team is always there to support you!

Turn the ESG diagnostic into a structured process

Book a demo of the Sustanya platform and stop relying on a scattered exercise in Excel.

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