Going green can save green and ensure long-term success, industry leaders say.

For that reason, construction executives continue to stress the need for environmental, social and governance initiatives and integration within construction, according to a recent panel session during the 2023 Greenbuild International Conference and Expo.

Many construction firms still lack ESG strategies, said Tommy Linstroth, founder and CEO of Green Badger, a Savannah, Georgia-based software provider for ESG metrics. But the number that do is on the rise, especially as companies like Amazon and Microsoft increasingly demand ESG compliance from their suppliers, including those in the construction industry.

Aside from addressing growing demands from clients, ESG strategies also provide numerous benefits, added Linstroth. Those benefits fall into three broad categories:

• Business opportunities. Meeting ESG requirements opens doors to potential clients and partners, a plus for gaining market share and assuring future profitability.
• Talent attraction and retention. ESG companies appeal more to job seekers and retain employees at a higher rate, said Linstroth.
• Transparency and risk reduction. ESG reporting promotes transparency and helps companies position themselves to anticipate future regulations.

“How many meetings are they going to ask you ‘where is your sustainability supplier scorecard?’ or ‘what are you doing for an ESG program?,’” said Linstroth. “How much of that business can you afford to lose before you start taking ESG seriously?”

But the ESG journey still has roadblocks.

The lack of standardization for ESG scoring can overwhelm contractors with multiple, often divergent, frameworks, said Linstroth. That ultimately can lead to analysis paralysis.

Leaders push ESG-related initiatives

ESG strategies encompass not only environmental aspects but also social and governance considerations. That requires collaboration across departments such as human resources, legal and information technology.

Nevertheless, the construction industry’s track record with risk management lends itself naturally to address these issues, said Jennifer Taranto, vice president of sustainability at STO Building Group, a New York City-based construction management and general contracting company.

To start, Taranto recommended creating a culture of inclusion in both the office and the jobsite. That includes physical safety and overall well-being, such as mental health support resources.

Next, Taranto emphasized the need for transparency and data standardization within the industry. She said “we really need to align around how we’re tracking data, how we’re reporting data and what data is most important.”

Ryan Poole, global sustainability leader at Redwood City, California-based DPR Construction, also highlighted the importance of aligning with global frameworks. He suggested frameworks like the UN Sustainable Development Goals and urged companies to consider partnerships with organizations like the UN Global Compact.

Poole then stressed the importance of integrating diversity, equity and inclusion initiatives into ESG strategies. He shared some of DPR’s various DEI programs, and advocated for apprenticeship programs and enhanced benefits.

Those initiatives also echo the focus around ESG for Fluor, an Irving, Texas-based global contractor, said Cheryl Beuning, global sustainability specialist at the firm.

Fluor has invested in more than 30 energy reduction initiatives around the world in order to make significant reductions, said Beuning. The contractor upgraded lights to LED, which reduces energy consumption and lowers greenhouse gas emissions, replaced many gas and diesel vehicles with EVs and developed its own software to capture emissions data.

Additionally, Fluor hosts the Supply Chain Summit, an event that facilitates discussions between partners and subcontractors about the biggest challenges facing the supply chain, she added. The company also created the Fluor Cares program, an initiative that provides school supplies to underprivileged children.

These initiatives highlight the importance of not only improving buildings, but positively contributing to the communities in which they operate, or the S in ESG, said Linstroth.

“Our key [with ESG] is to just start. No matter where you are, take that first step,” said Linstroth. “Maybe it’s just one office, but it’s a starting point. After you benchmark that, you can move into jobsites. Then, you can influence things like subcontractors or vendors.”

The Greenbuild conference is owned by Informa, parent company of Industry Dive.