Morag Evans - CEO of Databuild

The growing importance of Environmental, Social, and Governance (ESG) criteria is having a significant impact on how building projects are planned, executed, and managed in South Africa. If anything, it is reshaping the construction landscape when it comes to promoting sustainable development and improving social outcomes.

Companies should think of ESG as the three main areas that they are expected to report in. According to Deloitte, the goal of ESG is to capture all the non-financial risks and opportunities inherent to a company's day to day activities.

In recent years, there has been a significant shift towards construction companies using green building materials. These sustainable materials reduce the environmental footprint of construction projects. An example of such a project can be found in the Sandbag Houses in Cape Town. These homes substitute brick-and-mortar with sandbags to contribute to eco-friendly construction and affordable housing in the region.

Furthermore, energy efficiency designs are also becoming standard practice. Using modern technologies like solar panels, energy-efficient HVAC systems, and LED lighting, construction companies can significantly reduce the operational costs of buildings as well as their environmental impact.

Of course, waste management strategies are also integral to reducing the environmental impact of construction. Recycling and reusing materials, along with proper disposal methods, help mitigate the impact of construction waste on the environment.

For a water-scarce country like South Africa, adopting advanced water conservation measures is essential in construction. Techniques such as rainwater harvesting, greywater recycling, and using low-flow fixtures have become common in construction projects to ensure sustainable water use.

Social considerations

There is little arguing about the significant impact large construction projects can have on local communities. This is why engagement with all relevant local stakeholders is essential. In this way, construction companies can account for the concerns of communities and foster positive relationships. As part of this, creating job opportunities is a massive positive benefit. This not only supports the economy but helps develop local skills and expertise.

Another benefit of working closely with communities is the potential to promote social equity. This helps ensure that all community members benefit from construction projects. For example, long-term projects can entail providing access to affordable housing, and essential services, and fostering inclusive development.

Worker safety is another critical consideration when it comes to an ESG strategy. Complying with stringent health and safety regulations and providing ongoing training ensures that construction sites are safe for workers, reducing the risk of accidents and injuries.

Governance framework

The construction industry in South Africa is also very tightly regulated. Adhering to legal requirements and maintaining transparency in operations is essential for good governance. Construction companies must comply with environmental regulations, labour laws, and ethical standards to build trust with stakeholders.

Implementing ethical practices across all operations ensures that construction companies maintain high standards of integrity. Examples of this include adopting fair labour practices, responsible sourcing of materials, and ethical business conduct.

Business benefits

Construction companies that prioritise ESG principles often enjoy an enhanced reputation. This can result in increased business opportunities as clients and investors are more likely to partner with organisations that demonstrate a commitment to sustainability and social responsibility.

Additionally, integrating ESG criteria into construction projects helps mitigate risks. By proactively addressing environmental and social issues, companies can avoid potential legal and regulatory challenges and ensure smoother project execution.

Employing ESG principles can also improve financial performance. Sustainable practices often lead to cost savings through energy efficiency and waste reduction. Additionally, projects that prioritise ESG criteria may attract investment from socially responsible investors, further boosting financial outcomes.

By embracing ESG principles, the construction industry in South Africa can achieve sustainable development, improve social outcomes, and ensure compliance with corporate governance requirements. These efforts not only benefit the environment and society but also enhance the reputation, risk management, and financial performance of construction companies.