ESG 101 for Workplace Design
What is ESG and how is it being used?
ESG is multifaceted approach that enables businesses to derive quantitative value from their impact on the environment, society, and their own workforce. The data collected from ESG surveys can be used to inform investment research and decision making. Conducting a thorough ESG survey of a company can help measure its impact beyond the balance sheet, evaluate for external risks, and assess its future growth prospects.
There is no standard ESG rating system at this time.
“Companies rely on sustainability reporting standards to determine how and what they report. Reporting is typically done by applying one or more frameworks. The 2 most commonly used reporting frameworks are the Global Reporting Initiative (GRI) and the Sustainable Accounting Standards Board’s standards (SASB).” - Deloitte
How is it different from Corporate Social Responsibility (CSR) and Sustainability?
ESG
Criteria use to asses a company's impact
Centers around risks and returns
Measurable efforts
Objective
Qualitative
CSR
Subjective ethical model
Reflects a company's internally defined efforts
Self regulated
Subjectively reported
Qualitative
Sustainability
" Sustainability is the practice of operating a business in a way that meets the economic, social and environmental needs of the present without compromising the ability of future generations to meet their own needs." - HSBC
Why should I, clients, or investors care about ESG?
In general, ESG efforts can help bring about positive change around issues like climate change, diversity, equity and inclusion, cybersecurity.
For companies, ESG efforts can improve operational efficiencies, attract and retain talent, improve brand reputation, and give companies a competitive edge. It can also mitigate risks by protecting companies against volatility during times of economic instability and supply chain failures caused by environmental or geopolitical issues.
“A recent report on the oil and gas industry by Goldman Sachs, concludes that companies with the best track record in terms of social responsibility and a long-term vision about a low-carbon future dominate the market share of strategic projects, which is seen as a key determinant of business success.” - The Global Compact
How can this be incorporated into my work?
In architecture and design, ESG refers to how businesses use their buildings and spaces to invest in environmental and social initiatives. Some industry relevant ESG considerations include:
Sustainable Supply Chain/Sourcing (ties to both environmental and social)
Locating responsibly - how does the development affect the existing ecosystem and the local communities
Creating spaces that benefit the community
Let’s dig deeper, letter by letter….
E = Environment
Evaluate what the impacts are on the planet and its inhabitants.
Strategies:
Energy efficient sourcing
Reducing emissions and pollution (air, land, and water)
Water conservation
Waste management
Responsible material selections
Mitigating Encroachment on Sensitive Terrestrial or Marine Ecosystems
Industry Relevant Examples:
Selecting energy efficient lighting fixtures and window treatments
Sourcing locally
Capturing and treating rainwater on-site
Diverting construction waste from landfills via re-use or recycling
Selecting low-emitting finishes
Landscaping with native plants
S = Social
Evaluate what the impacts are on employees, customers, suppliers, and the community.
Industry Relevant Examples:
Improving walkability in urban areas
Work with suppliers and services that guarantee fair pay and hours
Partnering with companies that have BIPOC or female leadership
Ensuring developments do not displace or compromise marginalized communities
Strategies:
Promoting Health and wellness
Ensuring fair labor standards, & safe working conditions
Investing in diversity, equity, and inclusion
Positive community relations and impact
G = Governance
Evaluate the fairness, responsibility, transparency and accountability of the company’s leadership.
Industry Relevant Examples:
N/A - As architects and designers, these topics are outside of our purview. The most we can do is advise on this and provide relevant resources.
Strategies:
Regulated internal controls and audits
Equitable shareholder rights
Diversifying boards and leadership
Fair executive compensation
Mitigating corruption
ESG and Evaluating Materials, Products, or Buildings
When choosing any product or material, you can evaluate its lifecycle against ESG criteria to inform your selection decisions.
For example:
Does material extraction contribute to deforestation?
What are the working conditions for factory employees?
What kind of emission result from transportation of the materials or products?
Are workers paid fairly?
What kind of waste does using the material, product, or building create?
Can the material, product, or building be recycled, reused, or refurbished?
Sources
https://builtin.com/corporate-innovation/what-is-esg
https://www.fastcompany.com/90835021/what-does-esg-stand-for
https://www.blackrock.com/ch/individual/en/themes/sustainable-investing
https://www.globalcitizen.org/en/content/environmental-social-governance-what-is-esg/
https://www.bdc.ca/en/articles-tools/sustainability/environment/what-esg-and-what-does-mean-business
https://www.cfainstitute.org/en/research/esg-investing
[https://www2.deloitte.com/us/en/pages/finance-transformation/articles/esg-in-finance-sustainability.html?id=us:2ps:3gl:fsfpov24:awa:cons:080223:esg in finance:e:c:kwd-893452867856&gclid=CjwKCAjw5_GmBhBIEiwA5QSMxIBDsqy-xQpCmfXuWGOHr3kfPtFd8e
VEfqNQ3gSn4qgGG_SeKyV7-hoCOWoQAvD_BwE](https://www2.deloitte.com/us/en/pages/finance-transformation/articles/esg-in-finance-sustainability.html?id=us:2ps:3gl:fsfpov24:awa:cons:080223:esg%20in%20finance:e:c:kwd-893452867856&gclid=CjwKCAjw5_
GmBhBIEiwA5QSMxIBDsqy-xQpCmfXuWGOHr3kfPtFd8eVEfqNQ3gSn4qgGG_SeKyV7-hoCOWoQAvD_BwE)
https://www2.deloitte.com/ce/en/pages/global-business-services/articles/esg-explained-1-what-is-esg.html
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https://www.kornferry.com/insights/briefings-for-the-boardroom/esg-by-another-name-sustainability
https://www.cnbc.com/2019/03/28/values-aligned-investing-has-many-names-lets-decode-the-lingo.html
[https://www.investopedia.com/financial-advisor/esg-sri-impact-investing-explaining-difference-clients/#:~:text=Environmental%2C social%2C and governance](https://www.investopedia.com/financial-advisor/esg-sri-impact-investing-explaining-differenceclients/#:~:
text=Environmental%2C%20social%2C%20and%20governance%20) (,all%20describe%20the%20same%20approach.
https://www.greenstoneplus.com/resources/esg-responsible-investing/esg-glossary
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https://www.businessgo.hsbc.com/en/article/demystifying-sustainability-and-esg