The importance of the Environmental, Social and Governance (ESG) approach

Environmental

The race to net zero has been discussed heavily over the last few years, with an emphasis on collaboration and how we can work together to deliver what’s needed. It is vital that every business contributes to the reduction of carbon emissions, as it’s something we cannot do alone.

Conferences such as Tomorrow’s Procurement in Birmingham, this week, also put sustainability in procurement in the spotlight. Panels such as ‘Procurement for a Net Zero World’, speak on the importance of the role responsible sourcing can play and the challenges facing the public and private sector.

With the built environment contributing significantly to CO2 outputs, our industry has a big role to play in mitigating these emissions. Innovation plays an important role in ensuring companies can select materials and construction methods that reduce their impact on the environment. For example, Modern Methods of Construction (MMC) have seen a significant rise in the last few years, which is part of the Government’s Construction 2025 plan to lower emissions. The Construction Playbook also suggests how MMC should be considered to create wider benefit across our industry, such as social value and the drive to net zero.

Social

How a company manages its relationships with its people, clients, supply chain, and key stakeholders is crucial. The pandemic has changed the way we work. Health and wellbeing, collaboration and engagement are at the forefront of decision making, and it’s great to see how the design of workplaces and offices are adapting to suit our changing needs. Integrating hybrid and agile working policies can bring many benefits for staff and employers, such as a better work-life balance, as well as improving employee retention and reducing business costs.

The social element in ESG also has an important role to play within our industry. We help shape the built environment, creating lasting social value which generates real value to communities where projects are delivered. We believe that by investing in communities we can have a wider impact, such as, reducing our environmental emissions, supporting SMEs through the supply chain and increasing skills and workforce development through sharing of expertise, STEM work and youth and unemployed support.

Governance

Having a good understanding and knowledge of governance risks and opportunities is essential. A company’s purpose, organisation structure and how performance is measured is at the heart of its operations. It facilitates benchmarking and best practice to ensure that policies and procedures are relevant and consistent. It is critical that staff comply with policies, rules and procedures and failure to do so can cause lasting damage to brand reputation and finances.

Summary

It is great to see that the ESG criteria is helping to embed sustainability within businesses strategy and decision making. It is measures such as these, that will help organisations to become more aware of their carbon footprint and look to ways in which they can lower their emissions.