Going green can save green and ensure long-term success, say industry leaders.
For this reason, construction executives continue to highlight the need for environmental, social and governance initiatives and integration within construction, according to a recent panel session during the 2023 Greenbuild International Conference and Expo.
Many construction companies still lack ESG strategies, said Tommy Linstroth, founder and CEO of Green Badger, a Savannah, Georgia-based provider of ESG metrics software. But the number doing so is increasing, especially as companies such as Amazon and Microsoft are increasingly demanding ESG compliance from their suppliers, including those in the construction industry.
In addition to meeting the growing demands of clients, ESG strategies also offer numerous benefits, Linstroth added. These benefits are divided into three main categories:
- Business opportunities. Complying with ESG requirements opens doors to potential customers and partners, an advantage for gaining market share and securing future profitability.
- Talent attraction and retention. ESG companies attract more job seekers and retain employees at a higher rate, Linstroth said.
- Transparency and risk reduction. ESG reports promote transparency and help companies position themselves to anticipate future regulations.
“How many meetings will ask you ‘where is your sustainability supplier scorecard?’ or ‘what are you doing for an ESG program?'” Linstroth said. “How much of this business can you afford to lose before you start taking ESG seriously?”
But the ESG journey still has obstacles.
The lack of standardization of ESG scoring can overwhelm contractors with multiple, often divergent frameworks, Linstroth said. This can ultimately lead to analysis paralysis.
Leaders drive ESG-related initiatives
ESG strategies encompass not only environmental aspects, but also social and governance considerations. This requires collaboration between departments such as human resources, legal and information technology.
However, the construction industry’s track record with risk management lends itself naturally to addressing these issues, said Jennifer Taranto, vice president of sustainability at STO Building Group, a construction management and general contracting firm based in New York City.
To start, Taranto recommended creating a culture of inclusion in both the office and the workplace. This includes physical safety and general well-being, such as Mental health support resources.
Taranto then emphasized the need for transparency and data standardization in the industry. He said that “we really need to align around how we track data, how we report data, and what data is most important.”
Ryan Poole, global sustainability leader for Redwood City, California-based DPR Construction, also emphasized the importance of aligning with global frameworks. He suggested frameworks such as the United Nations Sustainable Development Goals and urged companies to consider partnerships with organizations such as the United Nations Global Compact.
Poole then highlighted the importance of integrating diversity, equity and inclusion initiatives into ESG strategies. He shared some of DRP’s various DEI programs and advocated for apprenticeship programs and enhanced benefits.
These initiatives also echo the focus around ESG for Fluor, a global contractor based in Irving, Texas, said Cheryl Beuning, the company’s global sustainability specialist.
Fluor has invested in more than 30 energy reduction initiatives around the world to make significant reductions, Beuning said. The contractor upgraded the lights to LED, which reduces energy consumption and lowers greenhouse gas emissions, replaced many gas and diesel vehicles with electric vehicles and developed its own software to capture emissions data.
In addition, Fluor hosts the Supply Chain Summit, an event that facilitates discussions between partners and subcontractors about the biggest challenges facing the supply chain, he added. The company also created the Fluor Cares program, an initiative that provides school supplies to underprivileged children.
These initiatives highlight the importance of not just improving buildings, but contributing positively to the communities in which they operate, or the S in ESG, Linstroth said.
“Our key [with ESG] it’s just the beginning It doesn’t matter where you are, take the first step,” said Linstroth. “Maybe it’s just an office, but it’s a starting point. After you benchmark it, you can move to workplaces. Then you can influence things such as subcontractors or vendors.”
