ESG (Environmental, Social, and Governance) gap analysis is the process of evaluating a company’s current ESG performance against a set of benchmark standards or goals. It is used to identify areas where a company can improve its ESG practices and reduce risks associated with ESG factors. Calculating ESG gap analysis involves the following steps:

• Define ESG benchmarks or standards: Choose a benchmark or set of standards against which to evaluate the company’s ESG performance, such as the Sustainability Accounting Standards Board (SASB) or the Task Force on Climate-related Financial Disclosures (TCFD).
• Assess current ESG performance: Collect and analyze data on the company’s ESG performance, including environmental impact, social responsibility, and governance practices.
• Compare current performance to ESG benchmarks: Compare the company’s ESG performance to the chosen benchmarks to identify areas where the company is exceeding expectations or where it needs to improve.
• Calculate ESG gap: The ESG gap is the difference between the company’s current ESG performance and the ESG benchmark. A positive gap indicates that the company is exceeding expectations, while a negative gap indicates that there is room for improvement.
• Identify areas for improvement: Based on the ESG gap analysis, identify areas where the company can improve its ESG performance and reduce risks associated with ESG factors.