Though it has experienced fits and starts, political pushback, and financial scrutiny, ESG continues to grow. Recent COGNITION Smart Data offers insight into best practices, trends, and lessons learned.
Green Builder Media has been tracking ESG since it exploded onto the scene years ago. We watched as companies adopted ESG practices—rapidly at first then more slowly over time. We observed as oversight entities created measurement and reporting guidelines for a variety of highly polluting sectors.
Then, we took the initiative to put together a working group of 65 of the brightest minds in the building industry to craft a set of ESG For Building Defining Principles, a free playbook that companies in the building sector could use to develop and refine ESG strategies—created specifically for our industry by the experts in our industry.
We’ve seen ESG go through ups and downs, including strange political weaponization and legitimate queries about whether companies that pursue a triple bottom line are shirking their fiduciary responsibility to their shareholders (which, the data clearly shows, isn’t the case.)
We also recognize that while the value of companies that adopt ESG strategies increases in the eyes of investors, lenders, and other stakeholders due to reduced climate risk, streamlined operations, supply chain strengthening, and enhanced transparency, there are still real concerns about the consistency of ESG frameworks, measurement, reporting, and transparency.
Despite its erratic growth, ESG marches on, propelled by a variety of factors.
Consumers Lead the Charge
One of the main drivers of continued adoption of ESG is consumer demand. According to Green Builder Media’s COGNITION Smart Data:
Over 75% of consumers are somewhat or very likely to choose a product from a company with strong ESG practices over one without.
Nearly 60% believe that companies with a strong ESG focus are more likely to have long-term financial success than those without.
75% have stopped purchasing a product because of the company’s sustainability practices.
Almost 80% believe that a company’s ESG practices impact the quality of its products or services.
Additionally, consumers don’t want companies to be shy about their ESG practices—95% believe that it’s important for a company’s marketing and advertising messages align with their ESG practices.
Builders Follow Suit
Builders are heeding the call. They are adopting ESG practices in their businesses largely to access capital—nearly 65% of survey respondents tell us that their lenders are now requesting or requiring ESG reports when they apply for financing—and also to meet consumer, investor and employee expectations.
In terms of ESG priorities, builders are mostly focused on energy efficiency, use of sustainable materials, water conservation, health and safety of workers, and waste management.
Just under 70% of builders report that they’re seeing increased demand for ESG compliance from their customers in the last year.
Builders are also starting to require that their supply chain, including manufacturers and suppliers, provide ESG reporting so that they can have accurate data for their own reports.
40% of builders say that they have issued an ESG report, and another 35% claim that while they don’t have a specific report, they follow ESG principles or issue reports using different terminology (like corporate sustainability).
But it hasn’t been all smooth sailing for builders:
55% report that they lack resources or expertise to implement a full ESG strategy.
Nearly 50% cite cost as a prohibiting factor.
45% point to difficulty in measuring the impact of ESG initiatives on their businesses.
Builders are split when it comes to outsourcing ESG management: About half use third-party solutions and the other half keep the work in-house. Those that outsource largely rely outside individuals for auditing and assessments, sustainability consulting, and monitoring and compliance.
Perhaps most importantly, nearly 80% of builders believe that ESG will continue to grow in importance—either significantly or moderately—in the future, and 65% believe that implementing ESG practices provides their company with a competitive advantage (25% are unsure.)
Lessons Learned
One of the main takeaways from our journey: while ESG is an essential part of the solution, it’s not the complete panacea.
Given our urgent environmental, social, and financial needs, it’s imperative that we decarbonize our economy as quickly as possible. This is particularly true in the building sector given how conspicuously consumptive it is.
Reaching a net zero carbon built environment includes three main pillars:
Addressing performance through climate responsive design, building science, and green construction best practices.
Meticulously specifying low carbon products (for example, those with Environmental Product Declarations, or EPDs) from low carbon companies.
Purchasing carbon offsets to reach the ‘last mile’, since there simply aren’t enough low carbon products, construction and waste management practices, or transportation and packaging solutions.
Interested in learning more? Green Builder Media’s COGNITION Academy has robust courses on net zero carbon building, green building fundamentals, green product essentials and green building program like ENERGY STAR, Zero Energy Ready Homes, Indoor airPLUS, WaterSense, and HERS ratings. Visit the COGNITION Academy microsite to enroll today!
Check out the COGNITION Carbon Offsets Marketplace if you’re interested in purchasing carbon offsets to mitigate emissions from your products, projects, or lifestyle.
As cofounder and CEO of Green Builder Media, Sara is a visionary thought leader and passionate advocate for sustainability. A former venture capitalist, she has participated in the life cycle (from funding to exit) of over 20 companies, with an emphasis on combining sustainability and profitability. She lives in Lake City, Colo., with her husband, where she is an avid long-distance runner, snowboarder, and Crossfit trainer. She is also on the Board of Directors at Dvele, runs the Rural Segment for Energize Colorado, and is a former County Commissioner.
The State of ESG
Though it has experienced fits and starts, political pushback, and financial scrutiny, ESG continues to grow. Recent COGNITION Smart Data offers insight into best practices, trends, and lessons learned.
Green Builder Media has been tracking ESG since it exploded onto the scene years ago. We watched as companies adopted ESG practices—rapidly at first then more slowly over time. We observed as oversight entities created measurement and reporting guidelines for a variety of highly polluting sectors.
Then, we took the initiative to put together a working group of 65 of the brightest minds in the building industry to craft a set of ESG For Building Defining Principles, a free playbook that companies in the building sector could use to develop and refine ESG strategies—created specifically for our industry by the experts in our industry.
We’ve seen ESG go through ups and downs, including strange political weaponization and legitimate queries about whether companies that pursue a triple bottom line are shirking their fiduciary responsibility to their shareholders (which, the data clearly shows, isn’t the case.)
We also recognize that while the value of companies that adopt ESG strategies increases in the eyes of investors, lenders, and other stakeholders due to reduced climate risk, streamlined operations, supply chain strengthening, and enhanced transparency, there are still real concerns about the consistency of ESG frameworks, measurement, reporting, and transparency.
Despite its erratic growth, ESG marches on, propelled by a variety of factors.
Consumers Lead the Charge
One of the main drivers of continued adoption of ESG is consumer demand. According to Green Builder Media’s COGNITION Smart Data:
Additionally, consumers don’t want companies to be shy about their ESG practices—95% believe that it’s important for a company’s marketing and advertising messages align with their ESG practices.
Builders Follow Suit
Builders are heeding the call. They are adopting ESG practices in their businesses largely to access capital—nearly 65% of survey respondents tell us that their lenders are now requesting or requiring ESG reports when they apply for financing—and also to meet consumer, investor and employee expectations.
In terms of ESG priorities, builders are mostly focused on energy efficiency, use of sustainable materials, water conservation, health and safety of workers, and waste management.
Just under 70% of builders report that they’re seeing increased demand for ESG compliance from their customers in the last year.
Builders are also starting to require that their supply chain, including manufacturers and suppliers, provide ESG reporting so that they can have accurate data for their own reports.
40% of builders say that they have issued an ESG report, and another 35% claim that while they don’t have a specific report, they follow ESG principles or issue reports using different terminology (like corporate sustainability).
But it hasn’t been all smooth sailing for builders:
Builders are split when it comes to outsourcing ESG management: About half use third-party solutions and the other half keep the work in-house. Those that outsource largely rely outside individuals for auditing and assessments, sustainability consulting, and monitoring and compliance.
Perhaps most importantly, nearly 80% of builders believe that ESG will continue to grow in importance—either significantly or moderately—in the future, and 65% believe that implementing ESG practices provides their company with a competitive advantage (25% are unsure.)
Lessons Learned
One of the main takeaways from our journey: while ESG is an essential part of the solution, it’s not the complete panacea.
Given our urgent environmental, social, and financial needs, it’s imperative that we decarbonize our economy as quickly as possible. This is particularly true in the building sector given how conspicuously consumptive it is.
Reaching a net zero carbon built environment includes three main pillars:
Interested in learning more? Green Builder Media’s COGNITION Academy has robust courses on net zero carbon building, green building fundamentals, green product essentials and green building program like ENERGY STAR, Zero Energy Ready Homes, Indoor airPLUS, WaterSense, and HERS ratings. Visit the COGNITION Academy microsite to enroll today!
Check out the COGNITION Carbon Offsets Marketplace if you’re interested in purchasing carbon offsets to mitigate emissions from your products, projects, or lifestyle.
By Sara Gutterman
As cofounder and CEO of Green Builder Media, Sara is a visionary thought leader and passionate advocate for sustainability. A former venture capitalist, she has participated in the life cycle (from funding to exit) of over 20 companies, with an emphasis on combining sustainability and profitability. She lives in Lake City, Colo., with her husband, where she is an avid long-distance runner, snowboarder, and Crossfit trainer. She is also on the Board of Directors at Dvele, runs the Rural Segment for Energize Colorado, and is a former County Commissioner.Also Read