Businesses do not exist in a vacuum. They form part of the community, and they also impact upon the environment. A business which is “out of step” with public opinion risks its future and risks not being able to attract investment or new work, even if the price is right.
In 2005, “Global Compact” produced a report called “Who Cares Wins”, in which measures for Environmental, Social and Governance (ESG) issues were tabled for the first time. Many businesses were already conscious of their impact on the community and had adopted Corporate Social Responsibility (CSR) policies. Meanwhile the UN issued 17 Sustainable Development Goals (SDGs) in 2016, providing a global framework of targets.
Where Should an SME Start on Their ESG Journey?
For an SME business operating in the UK, the legislative framework deals with a lot of issues. There is legislation around employment, bribery and corruption, modern slavery, health and safety, environmental matters, ecology and carbon reporting. A SME can therefore make a start on their ESG journey by documenting their policies on the relevant legislation.
Carbon Reporting
Next, SMEs can take their lead from large organisations which have been required to report their carbon emissions since 2019 in accordance with the Streamlined Energy and Carbon Reporting Framework (SECR), by calculating the emissions from their energy usage.
The carbon assessment is divided into three categories. Scope 1 are emissions that come directly from your organisation’s activities, including transport. Scope 2 are those produced by your electricity provider. Scope 3 are the most complex, coming from your supply chain. A free calculator from the Carbon Trust is a good starting point for SMEs.
Social Value
For those intending to bid for government-funded work, calculating their social value according to PPN 06/20 will give them a measurable social value figure for their business — and increasingly this is a scored element of public procurement bids.
Relevant SDGs for Construction SMEs
From the UN’s 17 Sustainable Development Goals, the following are particularly applicable to construction businesses: ensuring healthy lives and well-being (SDG 3), quality education and lifelong learning (SDG 4), gender equality (SDG 5), sustainable energy (SDG 7), decent work and economic growth (SDG 8), resilient infrastructure and innovation (SDG 9), sustainable cities (SDG 11), responsible consumption and production (SDG 12), climate action (SDG 13), and life on land including sustainable forestry (SDG 15).
Activities concerning staff welfare, training, digitisation, encouraging students into the industry and health and safety are particularly applicable. Selecting one or two SDGs to focus on as an area for improvement is a practical first step.
Getting Started
The key is to start somewhere. Document your existing policies, calculate your carbon footprint, consider social value measurement, and choose one or two SDG indicators to track. This gives you a credible, measurable ESG position to communicate to clients, investors, and your supply chain.
