OECD recently published a report Behind ESG ratings: Unpacking sustainability metrics, which identify serious issues with common reporting systems.

One of the most concerning findings in the report is the overwhelming reliance on input-based metrics—such as company policies, pledges, and commitments—rather than tangible outcomes. Approximately 68% of ESG metrics focus on input-based assessments, with only a small fraction measuring actual impact.

This reliance on inputs can lead to "tick-box" compliance, where companies appear sustainable on paper without necessarily improving their real-world impact. For example, a company may receive high ESG scores for having a climate policy but might still have high greenhouse gas emissions. An example of this is the common Ecovadis ESG scoring system.

To counter this ESG tracking tools should prioritize data-driven performance indicators, such as energy efficiency improvements, waste reduction, and supply chain carbon footprint analysis. Business leaders must advocate for outcome-based sustainability reporting to ensure that ESG scores reflect actual progress rather than just corporate intentions.

“ Scandic Sourcing has developed its Supplier Code of Conduct Audit Program using a system with stakeholder engagement, double materiality analysis and field audit of risk points which give outcome-based scores that can be tracked over time to prove actual progress and any gaps against an ideal situation. This not only drives improvement in the supply chain, but also gives auditable proof  of result from a third party which gives credibility to any sustainability report”, says Per Linden, founder and CEO of Scandic Sourcing.

Read more about the Scandic Sourcing Supplier Code of Conduct Audit Program.

OECD (2025), Behind ESG ratings: Unpacking sustainability metrics, OECD Publishing, Paris.