What does ESG mean for the construction industry?

The proposal of China’s carbon neutrality goal makes energy conservation and emission reduction not only for the purpose of enterprises to undertake environmental and social responsibilities, but also become a part of the development of enterprises’ macro strategy.

It is rapidly becoming the preferred method for investors to evaluate companies.

► Environment-related standards focus on the natural operation of organizations/enterprises.

What is the growth potential of business opportunities for enterprise ESG management? According to the research of the Global Alliance for Sustainable Investment, at the beginning of 2020, global sustainable investment (investment method considering ESG factors) reached $35.3 trillion in five major markets, with an increase of 15% in two years.

These indicators are affecting the development and operation of global enterprises.

It is the basis of socially responsible investment and an important part of the green financial system.

However, ESG compliance is not as simple as clicking the indicators on the list.

Of course, we need to do ESG compliance not only to deal with environmental issues, but in these three dimensions, the construction industry is required to improve performance.

Ernst&Young listed the core pillars of ESG in the construction industry as: ► Environment – reducing carbon emissions and introducing environmental initiatives.

We need to transfer employee voluntary service to the level of integrating ESG into business strategy.

► Relevant social standards focus on the relationship between organizations/enterprises and employees, customers, supply chain and its impact on local communities.

Although the construction industry is trying to improve the performance of all three categories, we still have a long way to go.

The carbon emissions and other energy conservation and emission reduction indicators included in the environmental indicator E are important ways to measure the “carbon neutrality” of enterprises.

Mobile Internet tools, such as tablets and smartphones, have had a huge impact on site safety in terms of improving social standards.

In these three categories, construction enterprises have many problems to solve.

Integrating the development concept of ESG into the enterprise planning and building the ESG organization management system can help enterprises to meet the expectations and requirements of all stakeholders, build and share the concept of sustainable development, deeply implement the ESG action goals and management practices related to climate change with a clearer implementation path and a more professional and standardized management process, and realize the long-term vision of carbon neutrality.

All information is stored in a central location so that all parties involved can access it.

Because in addition to introducing initiatives, the construction industry also needs to make an overall commitment and ensure that it must be able to monitor and track, and intelligent monitoring technology will play a more important role.

Through this Internet control, the risk probability and loss are reduced, and the accountability game has no chance to start.

Many interactions among stakeholders in construction projects – contracts, bids and electronic documents – can be conducted online to improve governance performance.

With the ability to log in to the site project management software, people can communicate and solve the current potential hazards of the project with just a few clicks of the mouse.

According to the World Finance, stakeholders are exerting great pressure on companies of all sizes and industries to identify, comply with, improve, measure and report performance according to ESG indicators.

ESG can effectively and comprehensively measure the sustainable development ability of enterprises in coping with climate change and achieving carbon neutral goals, and provide basic conditions for enterprises to achieve their own carbon neutral goals.

People in the construction engineering industry must consider how to have a lasting impact.

Industry and organizations are increasingly challenged by ESG regulations, required reports and broader social needs, and the construction industry is no exception.

What do architects want to know about ESG? ESG is a set of standards about how companies operate.

In fact, in some places, improvement work in these areas has begun, and construction technology is leading the trend.

At the same time, at the COP26 Summit, digital twin technology was put at the top of the agenda to alleviate the climate crisis.

► Governance related standards focus on the operation mode of the organization, such as the composition of its leadership team, code of conduct and shareholder rights.

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Lifting Clutches

What does ESG compliance mean for the construction industry? As one of the largest carbon emission fields in the world – the construction industry is responsible for 39% of the global carbon emissions and 32% of the natural resource consumption – it is clear that the construction industry has a lot of work to do in the ESG compliance environment.

According to the United States Geological Survey and the American Chamber of Commerce, 79% of construction contractors believe that advanced technology can improve safety.

What is the relationship between ESG and building carbon neutrality? ESG includes three aspects: information disclosure, evaluation rating and investment guidance.

A one-day health and safety course training or the introduction of waste recycling bins on site is a good demonstration, but it will not solve the problem alone.

According to Ernst&Young, a multinational professional service network consulting company, people are increasingly aware of the importance of ESG in enterprise growth and risk management.

As ESG compliance has become the leading factor in all walks of life, we need to understand its impact and significance on the construction industry more deeply.

► Governance – large and complex contracts, bidding processes and contact with all stakeholders to prevent bribery, corruption and anti-competitive behavior.

A global data survey on improving ESG compliance through digital twinning found that 61% of industry insiders said they had witnessed customers increasingly demanding sustainable building methods.

As the name implies, this standard is divided into three aspects – environment, society and governance.

► Society – the health and safety of the construction site and the high dependence on labor.


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