As investors, consumers and employees become more aware of environmental, social, and governance (ESG) metrics, business leaders in the construction industry need to shape business decisions in ways that help to improve ESG scores.

The primary goal behind ESG metrics is to produce superior reporting data that helps companies and policymakers measure the impact on the environment and their local community.

Political and social pressures also promote corporate responsibility in a range of other key areas including diversity and inclusion in the workplace, health, safety and wellbeing, fair pay, and a broad range of other governance factors.

Mckinsey report demonstrates that ESG reporting also delivers valuable insights construction companies can use to improve their business model and foster continuous growth.

Enhances Recruitment Drive

The construction industry is facing a skills shortage which is forecast to get worse unless contractors develop an effective recruitment drive.

With around 41% of the existing workforce due to retire by 2031, the construction industry should be looking to recruit the next wave of employees. By 2030, Millennials and Generation Z will account for more than 75% of the labor market.

Younger generations are more aware of social injustices than any other generation of workers. They are also more likely to fight for workers’ rights – or leave for better opportunities elsewhere as we have seen with the growing rate of resignations.

Three-quarters of Millennials are more likely to accept jobs with companies that match their social and environmental values. Contractors looking to recruit the next wave of top talent should prioritize ESG metrics.

Construction companies that do not promote diversity and inclusion, high safety standards, or health and well-being will struggle to fill job openings. In a highly competitive job market, workers have more options to choose the companies they want to work for.

Improves Safety Standards

ESG reporting has shown that social data has helped to improve PPE and safety standards within the construction industry. As we discussed in a previous article, today’s workers want to be reassured that construction companies follow strict safety policies and provide adequate training.

Safety standards in the construction industry today have been extended to include the health and well-being of employees. Strategies that help to improve ESG scores are installing technologies in PPE clothing that alert employees to dangerous situations or tell them when they need a break.

Attracts Investment

A company’s ESG score influences the decision-making of investors and consumers. Last year, it was reported that 98% of investors evaluate ESG performance as a key indicator for analyzing investment opportunities.

Companies that implement a sustainable model and demonstrate they care for their employees are attractive propositions for investors. A low carbon footprint, a low employee turnover a reduced risk of injury or absenteeism translate into higher revenues and more successful project bids.

Adopting an ESG mindset makes contractors more transparent, trustworthy, and attractive to both investors and employees. In a period where recruiting and retaining top talent has to be a priority for the construction industry, there is more emphasis for companies to improve ESG scores.