Environmental, Social & Governance (ESG)

What is Environmental, Social, and Governance (ESG)?

ESG refers to a set of criteria that investors, businesses, and other stakeholders use to evaluate a company's impact and behavior beyond financial performance.  

Who Established the Criteria?

ESG principles emerged as a response to environmental, social, and governance challenges businesses and investors face. Contributions from various entities, including the United Nations, financial institutions, NGOs, standard-setting bodies, and academia, shaped them. ESG frameworks promote sustainability, responsible business practices, and stakeholder value creation.

How is it Relevant to the AEC Industry?

ESG considerations shape the design, construction, and operation of buildings and infrastructure projects. This includes a heightened focus on minimizing environmental impact by integrating sustainable design principles such as energy efficiency, the utilization of renewable materials, water conservation measures, and strategies to reduce waste.

ESG has prompted firms to reconsider their workforce composition, striving for greater diversity, including leadership positions.

Both private and public firms have established targets to engage disadvantaged firms, including small and minority-owned businesses, on projects.

ESG has catalyzed Diversity, Equity, and Inclusion (DEI) Design, which involves creating universally accessible buildings and infrastructure, respectfully integrating cultural elements, engaging diverse stakeholders in the design process, addressing historical disparities in project planning for equitable development, and fostering diversity within the AEC profession to incorporate a broad range of perspectives into design decisions.

Creation of ESG Services

With the growing demand for ESG services, a diverse range of consulting firms now offer them, from traditional consultants like PC to engineering firms, specialized sustainability consultancies, and real estate asset managers.