ESG is no longer driven by intention statements or annual summaries. Today, organisations are expected to show evidence. Regulators want proof. Investors want consistency. Customers want transparency.
At the centre of this shift sits one critical enabler: IoT.
IoT transforms ESG reporting from a compliance obligation into an operational capability by capturing real-world data directly from assets, facilities, and environments. Without this layer of measurement, ESG metrics are often based on assumptions rather than facts.
ESG Needs Measured Reality, Not Estimates
Many organisations still depend on:
- Periodic meter readings
- Manual logs
- Spreadsheets are updated once a quarter or once a year
These methods struggle to survive audits and increasingly fall short of modern disclosure expectations. ESG today demands data that is:
- Continuous
- Verifiable
- Traceable to source
IoT fills this gap by collecting information automatically, consistently, and in real time.
How IoT Supports Each ESG Pillar
Environmental: Where IoT Plays the Largest Role
Environmental indicators are the most measurable and the most scrutinised. IoT enables direct monitoring of key environmental metrics such as:
- Energy usage
- Electricity consumption by machine, line, or facility
- Peak demand and load behaviour
- Renewable energy contribution
- Emissions and air quality
- CO₂ concentration
- Particulate matter
- Indoor air quality in controlled spaces
- Water consumption
- Inflow and discharge volumes
- Leak detection
- Process water usage
- Waste tracking
- Waste volumes
- Recycling rates
- Hazardous material handling
These measurements underpin carbon accounting, energy intensity reporting, and environmental risk management.
Social: Protecting People Through Data
IoT contributes to the Social pillar by improving visibility into workplace conditions, especially in operational environments.
Typical applications include:
- Monitoring temperature and humidity on production floors
- Detecting gas leaks or unsafe exposure levels
- Identifying equipment conditions that could lead to accidents
In sectors such as manufacturing, construction, and energy, these indicators are closely linked to legal and ethical responsibilities.
Governance: Building Trust Through Data Integrity
Governance is not measured by sensors, but it depends on the quality of the data behind decisions.
IoT strengthens governance by:
- Reducing manual intervention in data collection
- Creating time-stamped, tamper-resistant records
- Supporting audit readiness with clear data trails
When ESG figures are backed by operational data, governance moves from declarations to defensible accountability.
What ESG Monitoring Is Commonly Expected
While ESG rules vary by country and industry, several monitoring areas are widely treated as baseline requirements.
| Area | ESG Pillar | Why It Matters |
|---|---|---|
| Energy consumption | Environmental | Carbon and efficiency metrics |
| Emissions data | Environmental | Climate-related disclosures |
| Water usage | Environmental | Resource risk and compliance |
| Pollution indicators | Environmental | Regulatory and community impact |
| Worker safety metrics | Social | Duty of care |
| Data traceability | Governance | Audit credibility |
Organisations lacking reliable data in these areas often face delays, higher audit costs, and increased scrutiny.
Example: ESG Monitoring in a Manufacturing Factory
Consider a medium-sized factory operating multiple production lines.
Environmental Monitoring
- Smart meters track electricity usage at:
- Incoming power supply
- Individual production lines
- High-energy equipment such as compressors
- Water flow sensors monitor:
- Process water consumption
- Cooling systems
- Discharge points
- Air quality sensors measure:
- Indoor CO₂ levels
- Particulate concentration
- Ventilation effectiveness
This setup allows the factory to calculate energy intensity per unit produced, detect abnormal consumption early, and support environmental reporting with confidence.
Social Monitoring
- Temperature and humidity sensors ensure safe working conditions
- Gas detectors provide early alerts before exposure becomes dangerous
- Equipment monitoring helps reduce accidents caused by malfunctioning machinery
Threshold breaches trigger alerts, enabling prompt corrective action.
Governance Enablement
All collected data is:
- Logged automatically
- Stored securely
- Visualised through dashboards
- Exportable for audits and ESG disclosures
This gives management visibility not just into outcomes, but also into actions taken when issues arise.
Turning IoT Data into ESG Insight
Raw sensor data alone is not enough. It must be structured, contextualised, and aligned with ESG indicators.
This is where an IoT platform becomes essential. Platforms like Favoriot help organisations manage data from multiple sensors, locations, and systems while presenting ESG-relevant insights through dashboards, alerts, and historical views. This makes ESG monitoring scalable across factories, buildings, and regions without adding operational complexity.
Closing Thoughts
ESG expectations continue to rise, and tolerance for estimates is shrinking.
IoT provides the foundation for:
- Measurable environmental performance
- Safer workplaces
- Stronger governance backed by evidence
For organisations serious about ESG, monitoring is no longer optional. It is the starting point for trust, accountability, and long-term credibility.