The importance of ESG – the data behind the decisions: Part 1
What is Environmental, Social and Governance (ESG)?
The built environment is responsible for 40% of all carbon emissions in the UK, and it has a major impact on the quality of people’s lives from day to day. Due to this, an increasing focus has been placed on improving the sector and creating buildings that can play a positive role in our collective future.
More businesses than
More businesses than ever before are determined to make progress with regards to sustainability in all aspects, and Environment, Social and Governance (ESG) is the main way that this is expressed. For this reason, all building owners and developers should be aware of the term and what it means for them.
In particular, businesses are becoming increasingly aware of the importance of data with regards to making a success of ESG. Put simply, without embracing technology and data-led approaches, it will not be possible to achieve Net Zero Carbon buildings and meet other ESG responsibilities – and businesses who do not meet their responsibilities and take ESG seriously will find it is to their detriment in the long term.
In this series of articles, we will explore ESG and what it means for you – examining what makes a successful ESG strategy and how a technology- and data-led approach is the key to meeting your responsibilities in a way that is good for the environment and will save you money.
Other articles in this series will include:
So, what is ESG? It is at heart a framework for considering the environmental, social and governance aspects of a business alongside the financial ones – thereby altering the focus of a business and making it more sustainable in the long term.
This can make it tough to answer the question of how to create an effective ESG strategy. Different approaches are necessary – but the upside is that means there are many different pathways to creating and implementing an effective ESG strategy.
To give one example, The European Federation of Financial Analysts Societies (EFFAS) has defined topical areas for the reporting of ESG issues for use in financial analysis of corporate performance:
- Energy efficiency
- GHG emissions
- Staff turnover
- Training and qualification
- Maturity of workforce
- Absenteeism rate
- Litigation risks
- Revenues from new products
That is a huge number of potential angles a company can go down to improve its ESG standards – so many in fact, that it is likely a lot of companies will not be able to handle all of them. In this case, it may be worth focusing your strategy on a handful of them and make significant improvements there.
By way of illustration, take energy efficiency. This is an area where almost all companies, especially those who have built environment portfolios, can make substantial improvements – and this is in fact required to in order to meet Net Zero Carbon goals. The UK as a whole has committed to become Net Zero Carbon by 2050, and cities such as Manchester have brought their own goal forward to 2038.
Buildings use a huge amount of energy, much of which is wasted through inefficiency. It was estimated at a recent government event held in Manchester – Power to the People: Enabling a Smart Energy Transition – that even during Covid shutdowns when office buildings were largely empty, they were still using up to 80% of their normal electricity.
That is just one example of energy inefficiency in the built environment, but you don’t have to look very hard to find dozens more. The reason this happens is that very few building owners have any idea about the amount of energy their buildings use, how they use it and how the wastage could be reduced. This knowledge gap, that essentially turns buildings into a kind of black box, is due to a deficit in technology – and any ESG strategy that looks to reduce energy waste in buildings needs to incorporate technology to monitor usage, gather the data and act on it intelligently.
Developing an ESG strategy is important, but even more so is working out exactly how you are going to put that plan into action. By taking a technology-based approach, you can meet your ESG strategy goals and meet your environmental responsibilities.
To learn more about how IBG can help you, get in touch with our team today by clicking here.