Green construction, which happens to involve the planning, building, and upkeep of structures in an environmentally responsible and resource-efficient manner, is growing in popularity among investors, buyers, and builders.
As a general contractor, it is highly likely that one will soon be asked about your environmental, social, and governance metrics. This is indeed a positive aspect.
Although it may initially appear burdensome, carrying out an environmental, social, and governance approach is ultimately a strategic business decision that can yield many advantages. By adopting ESG practices, any organisation can increase profitability, attract and retain skilled staff, and improve long-term sustainability.
In simpler terms, making the investment now is worthwhile. It will provide the organisation with a strategic roadmap that can guide towards higher revenue, staff fulfilment, and overall enhancement.
Contractors should prioritise ESG
General contractors are increasingly receiving inquiries regarding ESG metrics, such as carbon emissions, waste recycling, participation of minority and women-owned businesses, and procurement. The demand for these metrics is no longer restricted to a specific market, and as regulations continue to increase, they will become obligatory.
Today, there happens to be a growing demand for greater transparency in several domains, which include:
Federal Projects: If a business handles a minimum of $7.5 million in federal work each year, it is highly probable that it will be required to report specific ESG metrics. The proposed legislation by the Biden administration suggests that federal contractors who have annual contracts that range from over $7.5 million to less than $50 million will have to report their Scope 1 as well as Scope 2 emissions.
Fortune 500 companies: These have already adopted ESG practices to attract investors, mitigate compliance risks, and foster customer loyalty. Many of these companies are expanding their focus on ESG to include construction activities.
Higher Education: Many institutions are now making a commitment to reduce their environmental impact. While they may not explicitly disclose their commitment to ESG practices, many companies prioritise key metrics commonly found in ESG reports. These metrics often include factors like carbon emissions, inclusion and diversity, and efforts to combat corruption.Â
How to begin
Unlike other construction standards, such as LEED certification, ESG does not adhere to a fixed checklist and instead includes a wide range of data points, totalling in the hundreds. This situation often leads to paralysis by analysis, as businesses find it challenging to figure out where to begin.
Implementing an ESG programme can feel overwhelming for many individuals. However, the flexibility of ESG presents both challenges and opportunities.
A three-step approach can be helpful for most general contractors when getting started.
1. Determine the scope of the project
Consider the influence of the company on various aspects, such as the environment, the staff, the local community, and the economy. What are the objectives of your company in tracking ESG?
First, it is important to determine the extent of ESGÂ efforts. Identify the key areas of focus that will be the most important.
Determining the scope of a project is crucial, as it will guide the benchmarking, tracking, and execution of your ESG initiatives.Â
2. Begin benchmarking
To prioritise carbon emissions reduction, the initial step for your company would involve understanding the origins of carbon emissions within the company’s operations and quantifying the current annual production. Once there is a thorough understanding of the sources of emissions, one can be able to implement effective strategies for their reduction.
Data collection is essential for making informed and effective decisions.
It is worth noting that many companies often feel inclined to begin with tactics, implementing solutions without fully understanding the problem at hand. It is important to avoid making hasty decisions or taking action prematurely.
When it comes to benchmarking your ESG impact, it is advisable to begin with a small scale and gradually expand the benchmarking efforts.
Tiers can serve as a means to indicate the initial starting point and the intended areas of growth. Tier 1 is the initial level where one can begin with aspects that the company has direct control over.
3. Establish Goals and Execute Strategies
After gathering a minimum of 12 months’ worth of benchmarking data, one can proceed to establish objectives for enhancing ESG performance. One effective tool that can assist the organisation in staying focused on what is important is S.M.A.R.T. goals. These goals are designed to be specific, quantifiable, realisable, pertinent, and time-bound.
– Specific: Clearly outline the tasks that need to be accomplished and provide a detailed plan of action to achieve them.
– Measurable: Goals should be measurable in order to effectively track progress.
– Achievable: Goals should strike a balance between being demanding enough to require effort but not so difficult that they become unattainable.
– Relevant: Goals should be in line with the mission, vision, and ESG of the organization.
Navigating the transition to a greener future
The construction industry will experience significant changes due to the growing focus on ESG principles. This presents an important chance for general contractors to align their methods with sustainability goals, attract clients who emphasize ESG considerations, and foster the growth of more competitive and sustainable companies.
Contractors can begin their ESG initiatives by initially identifying the scope of their impact. Following this, they should benchmark their current state and subsequently establish S.M.A.R.T goals. Finally, they can implement tactics to effectively achieve these goals.
