Environmental, social, and governance (ESG) considerations are increasingly important to design firms for a variety of reasons. In this post, we will explore why ESG matters to design firms and how they can integrate these considerations into their projects and business practices.
First, it’s important to understand what ESG means. Environmental considerations relate to a company’s impact on the natural world (and vice versa) and efforts to reduce its carbon footprint. Social considerations refer to a company’s impact on its employees, customers, and the broader community (and vice versa). Governance refers to a company’s leadership, transparency, and ethical practices.
Why does ESG matter to design firms?
- Increased stakeholder demand: Many design firms are facing increased demand from industry stakeholders, including clients, employees, and investors, to incorporate ESG considerations into their work. A growing awareness of the impact of business on people and the planet is driving this demand.
- Improved brand reputation: By integrating ESG considerations, design firms can improve their brand reputation and differentiate themselves from competitors. This can lead to increased business and a stronger overall brand.
- Enhanced financial performance and reduced liability exposure: Research has shown that companies with strong ESG practices tend to have better financial performance in the long term because ESG practices can lead to cost savings, increased efficiency, and reduced risk. Organizations that manage environmental and social impacts responsibly are less likely to be targets of claims and litigation.
- Published legal and regulatory requirements: In some cases, design firms may be required to consider ESG as part of their projects due to legal and regulatory requirements. For example, firms working on public projects may be required to meet certain sustainability standards especially now that the federal government has taken a “whole of government” view on climate mitigation and adaptation strategies. Likewise, firms working on private projects will feel the pressure to help their clients meet their carbon emissions reduction targets. As of the end of 2022, more than 4,000 businesses and financial institutions are working with the Science Based Targets initiative to commit to carbon reductions.
How can design firms integrate ESG into their projects and business practices?
- Incorporate sustainable design principles and resiliency strategies: Design firms can consider the environmental impact of their designs and incorporate sustainable design principles, such as energy efficiency, clean energy sourcing, water conservation, modular construction, and use of low-carbon/no-carbon materials. In addition, design firms are in key positions to talk with clients early on about adaptive strategies to build resiliency into capital assets in order to withstand increasingly severe and frequent weather events.
- Engage with clients on ESG: Design firms can work with clients to understand their ESG priorities and integrate these considerations into the design process.
- Implement sustainable business practices: Design firms can also consider their own internal business practices and look for ways to reduce their carbon footprint and improve their social and governance practices. This could include reducing energy and water use, implementing recycling programs, and promoting diversity and inclusion within the firm, all of which will position the firm to align important values with its employees and stakeholders and retain talent.
- Disclose ESG information: Design firms can disclose information about their ESG practices to stakeholders, including clients, employees, and investors. Firms can do this by developing and mapping a sustainability strategy to sustainability standards, such as SASB or GRI. This can help to build trust and demonstrate the firm’s commitment to sustainability.
In conclusion, ESG considerations are increasingly important to design firms for a variety of reasons. By integrating these considerations, design firms can improve their brand reputation, enhance financial performance, and meet legal and regulatory requirements. There are many ways that design firms can integrate ESG, including incorporating sustainable design principles, engaging with clients on ESG, implementing sustainable business practices, and disclosing ESG information.