What does ESG mean to your business?

What does ESG mean to your business? 752 564 Greengage Environmental
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What does ESG mean to me?

ESG stands for Environmental, Social and Governance. In many cases ESG is interchangeable with ‘sustainability’ but tends to be used more in a business context, and around the company’s business operations and model i.e. how its products and services contribute to sustainable development.

However, in the real estate and built environment world any ESG framework or setting has to look at how buildings (and the spaces between the buildings) contribute or detract from three principle challenges that we face today. These are Climate Change, Biodiversity Loss and Social Inequity.

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In doing, so ESG recognises that we are inextricably linked to the natural world and the things it provides us – water, food, natural resources, climate balance, nutrient recycling etc. and that there are also boundaries to these.

This is the principle of Doughut Economics which sets out that there are minimum standards (enough food and clean water for everyone) and upper levels or ceilings around consumption or pollution levels, and that we must live within this band between the maximum ceiling and minimum floor for a balanced world.


Often an ESG framework uses the United Nations 17 Sustainable Development Goals (UN SDG’s goals) to indicate how that organisation is operating to meet the targets necessary to deliver progress against these SDG’s and operate within the Doughnut.

Not all of the SDG’s will be relevant to an organisation but through a process of review those that are material to the operations of that organisation can be identified. For anyone working on sustainability in the built environment the most obvious areas to focus are:

  • Good Health & Wellbeing
  • Affordable and Clean Energy
  • Sustainable Cities & Communities
  • Responsible Consumption and Production
  • Climate Action
  • Life on Land

In practical terms direct action to meet the SDG on Climate Action required those working in the real estate and built environment to set out Net Zero Carbon pathways, based on their carbon footprint as an organisation but also the buildings they buy, design, build and operate.

This needs an understanding of embodied carbon (how much energy is needed to make the materials that go into a new home / office / school / shop etc.), operational energy (how much energy is needed to heat, light and power equipment), and then how to reduce this through efficient systems, less waste, renewable energy etc.

For those that have existing buildings it’s about understanding how energy is being used (through the collection and analysis of energy) and then how they can improve fabric design, insulation and heat loss, efficient lighting and power generation. This is leading to assessments of how resilient existing and new buildings are to climate impact, what needs to be done to ensure that buildings can be used into the future, but also identifying where older buildings are at risk and if those risks will influence the ability of that building to be rented out in the future or if it becomes something that is a ‘stranded asset’

Looking at how the built environment can help address Biodiversity Loss and what we can do to help the industry when this is delivered at a corporate level and on a project by project level. Measures to ensure that design for nature for all developments is increasingly being required although poor installation and monitoring against targets have failed to deliver these results. The role of sustainable finance places a greater opportunity for these projects to deliver and for their performance to be important. Linking financing to ESG targets ensures transparency and sustainable target delivery and increasingly will act as one of the mechanisms to drive commitments against the ESG framework.

Increasingly developments are being asked to show how they are helping to deliver social value and whilst social value can mean different things to different people, it looks at how local people and communities benefit from projects in their area. This may be around job creation, skills and training (internship and apprenticeships for example), but also community project days, career talks and employment support (CV workshops, interview techniques) as well as direct donations (PC and computer equipment for example). However, designing projects so they help address loneliness, social isolation and intergenerational mixing, and promoting walking, local food production and connecting people with green space and biodiversity, will also deliver positive health and wellbeing outcomes.

How organisations deliver these objectives will vary but clear and comprehensive governance and policies will enable those working with them to understand both what is expected of them but also what they can expect from that company. Setting these out and communicating the governance is often overlooked or undervalued but does articulate the organisations values but also how it sees itself in delivering the SDG’s.

Traditionally, financing projects and the investor community have looked to planning policies and development control to determine what their ESG objectives and targets should be. However, increasingly the role of sustainable finance is setting out what their own expectations on climate action, biodiversity loss and social injustice are, and those of projects they invest in.

We are now seeing the influence of this and targets that go beyond planning policy and regulation, so they meet the investor communities requirements. This is driven in part through their own stakeholders choices on investing in companies that are addressing Climate Change, Biodiversity Loss and Social Injustice, but also through the financial institutions Paris Accord commitments and national commitments to help drive finance away from oil and gas, and to help companies and countries invest in new and clean technologies and projects.

We are seeing an incredible change in how ESG has historically been viewed – away from a niche and Nice to Have, to something organisations want to do either as a realisation that our impact is being seen increasingly across the globe in extreme weather events, or as an opportunity to move into new and developing services and markets. Whatever, the reason we are entering the Regenerative Age where the real estate industry has a huge role to play in the future and what this will be like in a climate impacted world.

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