Why ESG is a strategic driver for the PPM community
Environmental, Social and Governance (ESG) principles are no longer just trendy buzzwords – they’re becoming essential to business strategy. Investors, regulators and customers increasingly expect organizations to demonstrate responsible practices – not just in their operations, but in how projects are delivered.
With projects being the engines of change, shaping how organizations operate, it means ESG must be embedded in both the choice of which initiatives organizations pursue, but also in how projects and programs are managed.
What does ESG really mean for projects?
Environment
How does an organization manage its environmental impact, including carbon emissions, energy consumption, resource use, pollution/waste management and biodiversity? From a project perspective, can negative impact on the environment be minimized? Can resource use be optimized and travel minimized? Make choices regarding sustainable materials and suppliers and incorporate energy-efficient technologies within deliverables.
Social
Encompasses how an organization interacts with employees, customers, suppliers and the broader community. This includes human rights, labor practices and community engagement. Projects must consider their effect on stakeholders. Does the project support diversity and inclusion? Is it ethically sound? Does it harm or contribute to local communities? Are we assessing the social impact for largescale initiatives? Let’s prioritize employee well-being during change implementation.
Governance
Deals with how an organization is run, incorporating transparency, executive compensation, broad diversity, and ethical decision-making. Does the project comply with regulations? Is leadership being transparent and accountable to stakeholders? Is the decision-making ethical and can we strengthen risk management and accountability structures?
How should we incorporate ESG into our project lifecycles?
Feasibility/Initiation
Analyze environmental, social and governance impacts early. Expand stakeholder analysis beyond shareholders and executive opinions, include local communities, environmental specialists and government bodies. Is there anything to incorporate into the business case? Select vendors with strong ESG credentials.
Planning
Set your measurable ESG-specific goals and define how to track them. Identify ESG-related risks – such as environmental protests, regulatory changes, supply-chain disruption and of course, plan your mitigation strategies be? Capture and map stakeholder expectations up front.
Execution, monitoring and control
Use ESG monitoring tools and dashboards. Report progress regularly and adjust as needed. Keep ESG risks updated in the risk register.
Project closure
Evaluate the project’s success beyond financials. Did we meet ESG objectives?
What resistance might you encounter?
Expect skepticism: ESG goals aren’t always popular or readily accepted.
The first step in any change is to raise awareness. Many project teams and sponsor don’t fully grasp what ESG means and why it matters. Another common issue is that ESG initiatives and targets are frequently viewed as adding cost, time, and bureaucracy. ESG often competes with short-term financial targets and if leadership isn’t strong, ESG will get deprioritised.
There is a danger that project teams regard ESG as “extra work” or irrelevant to their work, especially if ESG targets are too vague, such as “we will be more sustainable” and gathering ESG-related data (such as carbon footprint) can be a challenge.
Finally, your usual suppliers may not have sustainable ESG credentials or processes in place, so might push-back.
What should we do now?
- Get awareness training going for staff/project teams if that hasn’t been done already.
- Start to show ROI to combat cost & complexity resistance & ensure ESG is embedded within project business cases.
- Set clear ESG metrics/KPI’s – start small.
- Review your supplier contracts and vendor guidance.
- Include communications within your change management / stakeholder engagement strategies to combat ESG resistance.
With customers increasingly looking at whether their suppliers can demonstrate responsible, sustainable practices ESG isn’t just good ethics – its good business!
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