A $33.9 trillion investment opportunity. By Rob Norton
We often hear how Environmental, Social and Governance (ESG) is important for hitting net zero carbon goals, yet there’s more to the picture as it is also a critical business investment marker. Construction companies that can show they are ESG compliant often also demonstrate innovation and best-in-class quality. It’s a sign of resilient business for insurance providers, investors and financial institutions.
Recent data from PwC forecasts global ESG investments to surge to $33.9 trillion by 2026, with three in five institutional investors reporting superior performance from ESG-compliant investments. For construction companies, this translates into a growing market for projects meeting ESG standards, unlocking significant scope for sustainable growth.
Put plainly, strong sustainability metrics make a project more marketable, with contractors standing to make significant returns as compliance with ESG criteria now doubles up as an early quality indicator. That’s not all, early adopters proving their ESG compliance are also more likely to prioritise other critical factors, such as building safety, which has become non-negotiable in European construction.
What’s holding us back?
While there’s an opportunity for construction companies to gain from ESG, introducing practices requires significant upfront investments of time and money, a challenge in today’s climate, especially for smaller firms with limited resources. Some companies may also lack the knowledge to develop a strategy and implement protocol effectively, particularly where they don’t have enough guidance or standards to work from. This makes it difficult for businesses to know where to begin or how to measure performance. Resistance to change can be yet another challenge for those faced with uprooting established routines. It’s a lot to consider, so how can we simplify the process?
Keeping up with the times
Realising this ambition requires a mindset shift to ensure sustainability is placed at the fore of plans and operations. For those overwhelmed by the prospect of ESG compliance, technology can be a saving grace.
Many companies are already using digital technologies like ‘carbon tools’ in their Environmental Impact Assessments to measure emissions from project delivery. We’re also likely to see more use of digital twins and scenario modelling to figure out the best green solutions and understand their impact on ESG results.
However, the full potential of digital technology is still yet to be realised. We’ve found only a third of construction professionals see digital tools as useful for managing ESG certifications and that IT solutions contribute to reducing material waste. This presents an opportunity for digital platforms to help businesses make further inroads on their path to achieving a gold standard of ESG.
Simplifying ESG compliance
Contrary to some industry perceptions, digital platforms can significantly simplify ESG compliance. Well-designed software provides a user-friendly experience, empowering teams to log and record every stage of a build and show that ESG, and technical due diligence, have been given due care and attention, with no room for confusion.
Digital platforms streamline documentation, communication, and reporting, seamlessly integrating ESG practices into operations. Detailed data collection logs each build stage with geo-tagged photographic evidence, while automated reporting converts this data into comprehensive reports for audits, supplier management, client communication and documentation.
This efficient documentation and tracking also minimises rework, saving time and resources. Meanwhile, rapid risk and cost assessments facilitate informed decision-making for sustainable and energy-efficient practices. Ultimately, this much-improved quality control significantly appeals to investors.
The most successful management and reporting tools have been designed to fill the ESG reporting gap, making document management easier and more time-efficient than ever before.
In a digital world where interoperability is becoming increasingly important, they can also assimilate easily with existing tech stacks for swift adoption and increased efficiency.
Making ESG happen
Looking at the evidence, there’s no doubt that ESG is playing an important role in making the construction industry more sustainable, more ethical and more accountable.
Indeed, research we recently conducted amongst our global customer base found that the majority of those surveyed found digital tools crucial towards meeting ESG. This ranged from reducing paper use (90 percent) to keeping rework and waste to the bare minimum (60 percent). It’s clear proof that these systems are helping deliver better outcomes throughout the construction supply chain.
However, there’s more. Few also realise the role digital tools play in helping to secure funding for projects. ESG compliance is not just a regulatory checkbox; it’s a golden ticket to sustainable growth and robust investment opportunities.
Construction companies looking to future-proof their business should realise the potential of ESG to spur investment, helping to bring increasingly socially conscious investors to the table.
Here, the importance of digital tools to collate and manage the required information to make a strong business case should not be underestimated. Those able to clearly produce accurate evidence they’re ‘doing the right thing’ will have the competitive edge, with the latest information management platforms delivering that essential agility to capture market share before your rivals do.
For a list of the sources used in this article, please contact the editor.
Rob Norton is UK Director at PlanRadar. PlanRadar is an award-winning, digital SaaS field management platform for documentation, task management and communication in construction, facility management and real estate projects. The platform operates across the globe, currently in over 75 markets, digitising all daily processes and communication across real estate and construction.