5 impacts

5 Impacts of ESG on the UK Construction Sector

ESG reporting is creating shockwaves throughout the UK’s construction sector. Has your firm begun the process? ESG is the formalised measurement and declaration of how your firm states its position on matters of Environment, Social, andGovernance, and its impact affects construction today.

1. Procurement gives 10% weighting to ESG

In September 2021 the Procurement Policy Note PPN 06/21 came into force. This requires all suppliers who bid for government contracts of just £5m, to demonstrate that they are taking action to reduce their carbon emissions, in line with UK 2050 Net Zero targets. Within the regulation, there’s a mandatory 10% weighting for the bidder’s ESG reporting, more than enough to offset your commercial advantages. Firms are losing bids due to a lack of preparation, and yet it’s entirely avoidable.

2. The supply chain imperative

Driven from the top, the sudden and extreme pressure upon all tiers of subcontractors to conform has highlighted that reporting must start now. Even the simplest ESG report takes three months to produce, and when the supplier audit hits your desk it’s too late: this is not a ‘tick box’ exercise. You will be documenting – with supporting evidence – across topics as diverse as your energy and emissions, how your firm manages risk, employee health and safety, equal rights, and bribery, and much more. ESG reports centre on facts, much like an ISO audit but broader in scope.

5 Impacts of ESG on the UK Construction Sector

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3. Greenwashing: a 3-year suspension from tendering!

Whether you claim to be a considerate contractor, an equal opportunities employer, or you profess your community initiatives, you’re already open to scrutiny by the ASA, CMA, and the FCA. However, the forthcoming UK Sustainable Development Regulation (SDR) is going to up the ante. Already, PPN 09/16 and 06/21 both provide for firms to be barred from tenders for three years for overstating their ESG criteria. Exaggerations of any material topic, even your corporate governance, are enough to trigger the penalties. Your statements and assumptions must be auditable, verifiable, truths.

4. Reputation and the modern buyer

Whether you’re pitching to Tier One corporations, government, housing associations or directly to home buyers, be aware that buyer thinking has changed. Can you show how your firm’s values align with theirs? Every quantifiable initiative becomes a point in your favour and, especially with the ‘Social’ component of ESG, the impact your firm and its works have upon the community can make the difference between being selected or ostracised.

5. Transforms talent acquisition and retention

Far from being an expense, creating your ESG Scorecard adds value to the construction firms. Apart from bid competitiveness, it’s felt most acutely in Human Resources: the top talent is pivoting to the firms with ESG adherence. Think of ESG as the ‘people-facing’ version of ISO27001, an adjunct Investors in People, and as a report on your corporate governance. You’ll discover how a dynamic approach of ESG reporting transforms talent acquisition and retention. ESG reporting: what is your next step? We offer the most cost-effective ESG software reporting platform together with the light-touch guidance so you can get started and produce results quickly. Our combined service can save your firm as much as 90% vs. relying on hiring inhouse consultants or handing the process over to a ‘Big 5’ consultancy corporation. Our software is already used by Morgan Stanley, DOW, Facebook, Geobrugg AG, Geodiss, and many small and medium enterprises too. We’re perfectly positioned to help any UK SME in the construction sector. It’s time to talk!