What is ESG for Building?

ESG is a new concept for many people. Here are some talking points that help explain what ESG for Building is all about.

What Is ESG for Building?

ESG stands for Environmental, Social, and Governance. ESG for Building is specifically written for the requirements of the building industry. It allows reporting organizations to share–based on certain protocols and metrics–the results of actions they have taken to improve the environment, society, their organization, and their stakeholders. 

what is esg

Why Is ESG for Building Important?

From a big-picture perspective, ESG for Building has the potential to change the current negative trajectory for the planet and with it the fate of humankind. It can unify actions globally, across countries, industries, businesses, governments, NGOs, and institutions. Collectively, it may be the only way to mobilize on an exponential level, given the magnitude of change required to reduce our carbon footprint, address social justice, and share the results of these efforts in a way that can be trusted.

ESG for Building creates the opportunity to establish best-in-class business standards to enhance profitability, improve long-term business resiliency, qualify for sustainably focused investments and grants, and establish a company as a responsible operator in the eyes of employees, business partners, and consumers. The ESG for Building Working Group is important because the current derivations of ESG are not designed specifically for builders and do not capture the substance or nuance required to enable builders and other stakeholders to have faith in what the results mean. 

Who Is In the ESG for Building Working Group

A group of more than 60 leading experts (builders, developers, architects, manufacturers, and other related stakeholders) has formed the ESG for Building Working Group, which will define benchmarks for ESG for Building strategies, accountability, and reporting for the housing sector. The group is led by Sara Gutterman, CEO of Green Builder Media; CR Herro, CEO AR Homes; Betsy Scott, Executive Director, Programs + Engagement, Housing Innovation Alliance. Visit the ESG for Building website

What is the “E” of ESG?

The Environmental impact of an organization–represented predominantly by the carbon footprint upstream (suppliers) and downstream (customers)–has received the lion's share of attention in ESG discussions. Other factors include pollution, material disposal, resource management, efficiency, sustainability, regeneration, and future environmental goals and practices.

What is the “S” of ESG?

The Social aspects of ESG ensure that companies are not just focused on products and services and profitability but also on equity, diversity in their workforce and supply chain, inclusionary, employee well-being, community, reputation, and other qualitative factors.

What is the “G” of ESG?

The Governance factors include how a company makes decisions at the ownership and leadership levels, executive compensation, corruption, conflicts of interest, transparency, and other areas including third party-verification and assurance.

Isn’t ESG for Building just another bureaucratic process? 

ESG for Building was created to avoid a bureaucratic process by taking the existing broad and complicated ESG process and focusing it into a direct strategy for the building industry. 

Isn’t ESG for Building just a feel-good pseudo metric? 

Did you ever consider the risks you take in your building business? ESG for Building offers the most developed system for understanding and quantifying risk, reporting, and compliance issues that companies are exposed to with respect to E, S, and G. 

What are the challenges of creating ESG for Building

There are legitimate concerns about ESG as it functions today. These concerns should be acknowledged, and the work of the ESG for Building Working Group should be portrayed as part of the fix. There are also less legitimate concerns that are based on the politics of outrage. We can speak directly to these concerns as well with nuanced and thoughtful responses that reveal the hollow nature of these efforts. While ESG was designed by and for risk managers to inform investors about the risks posed to companies, the public perception is the inverse. Part of the work for all of us is to correct this misconception and figure use the system to serve the needs of more than risk managers and investors.

How does the Working Group know it is getting ESG “right?”

ESG today is far from perfect and may even in the future be called something else, just like the “Information Highway" eventually became known as the “internet.” What’s important is it’s the best system that we have with the remaining time we have to prevent irreversible consequences of poor business practices in the building industry.

Special thanks to the following ESG for Building Working Group members for their contributions to this document: CR Herro, Peter Pfeiffer, Andrew Guido, Steve Byers