The nature of investments is changing. The simple financial growth model is no longer the only dominant feature investors look for when choosing products. Industries such as real estate and renewable energy that rely on or want to expand their reach through investments should consider the increasing importance of environment, social, and governance scores in investors’ decision-making process.

Savvy investors and consumers won’t settle for past greenwashing practices. To boost your ESG rating, you must approach each project with ESG best practices in mind.

Why Is It Critical To Adhere to ESG Best Practices?

According to Dow Jones, sustainable investments are investors’ primary opportunity for growth, and 66% of surveyed financial leaders indicate that ESG is the main driver for long-term and sustained growth. A PWC report found that investment managers project that ESG assets will make up more than one-fifth of all assets under management globally by 2026.

The challenge is commuting your goals and framework into action on the ground. ESG is a holistic approach. As ESG Property Consultants’ Matt Snyder points out, without the right key performance indicators and measurements, you risk inadvertently greenwashing your practices and performance. Unfortunately, doing so lowers your ESG score and may even cancel other positive measures you’ve implemented, leading to real, adverse impacts on your bottom line and your brand’s reputation. You risk effectively wiping out your investments in your ESG initiative and may have to start the whole process over.

Elements of ESG Best Practices

ESG companies take a big-picture view, recognizing that the measures they implement within one pillar of the framework can impact outcomes in another pillar. The interactive and complex nature of this approach is the key factor that drives many to work with an ESG specialist when beginning a new project or improving existing business components.

Snyder provides an example of how an easily overlooked aspect of a construction project can have serious repercussions. Fasteners are a necessary but relatively minor building material. However, to save money, the builder purchases the cheapest fasteners on the market, not realizing that they are made in a sweatshop in China. The builder may be installing solar panels to increase their ESG score, but in buying those fasteners, the company negates steps they’ve taken in the social and governance pillars.

Approaching a project using the following elements of ESG best practices can help you ensure adherence across all pillars:

  • Design your project’s or business’s structure around the three ESG factors.
  • Determine which KPI metrics to measure, ensuring they capture holistic and unbiased information and are measurable and comparable.
  • Collect the data and verify the measurements are valid, accurate, and appropriate.
  • Develop a strategy for improving and establish a schedule for reporting your progress.
  • Generate reports, release them to stakeholders, evaluate progress, and make any necessary adjustments.

The E in ESG is often where most companies get hung up. Determining which KPIs to measure and how to capture the data without expertise in executing the sustainability portion of ESG can prove too challenging to overcome.

How Should You Approach an ESG Construction Project?

ESG best practices demand an in-depth, nuanced, and holistic approach. If you hire a general contracting company simply expecting it to implement your ESG framework without oversight, you will miss critical components and potentially derail your efforts. Matt Snyder of ESG Property Consultants likens it to hiring a general practitioner when you require a specialist. You still need a general contractor, but the ESG specialist ensures you meet your goals and boost your ESG ratings by providing the following:

  • Oversight of the environmental aspects of your project
  • Management of the job’s execution, ensuring it aligns with ESG goals
  • Expertise in the interrelated nature of the ESG pillars
  • Assists in developing appropriate KPIs
  • Assurance that the job is specified correctly
  • Material sourcing that aligns with ESG goals

A consultant works hand in hand with you and the general contractor to ensure that everyone involved is dialed into the goals and framework.

Investors are rapidly developing ESG and sustainability research frameworks, which will make it easier for them to discover greenwashing tactics. Growth and success will increasingly depend on conversion to transparent, measurable ESG practices.

How Do You Start Implementing ESG Best Practices?

Developing and implementing the E in ESG is usually the most difficult part of establishing ESG best practices for the real estate and construction industries. Even solar companies face challenges in developing a holistic approach. ESG Property Consultants have the experience and expertise to help you execute sustainability principles while saving money and boosting your ESG rating. Contact us to find out more about the solutions we offer.