ESG 101: What It Means for Companies and Workspaces
November 6, 2023
You’ve likely heard the term ESG lately as the next must-have initiative for your business. But what exactly is ESG and why is it suddenly gaining so much attention?
What is ESG?
ESG refers to the environmental, social, and governance standards that investors, shareholders, and other decision-makers use to evaluate a company’s overall impact.
The three letters each underline its own point of focus:
E, environmental, targets the company's impact on climate change and the efforts to reduce greenhouse gas emissions and manage well the resources.
S, social, evaluates the company's societal impact and relationships through labor practices, working conditions, diversity, inclusion, fair wages, and respect for human rights.
G, governance, explores the internal structures, ethical practices, transparency in corporate governance, procedures and management of legal and regulatory risks.
What’s driving the ESG movement?
With looming EU regulations and investors paying more attention to ESG factors, companies must take action to improve in these areas. For many, this will require rethinking their office spaces and ways of working to align with ESG ideals.
Several forces explain the amplified attention on ESG performance:
Climate change and pressing social issues make environmental and social impacts impossible for companies to ignore .
Consumers increasingly favor brands that benefit society and the planet  over purely profit-driven companies.
Investors have begun incorporating ESG metrics  into decision-making, realizing that strong performance often predicts future financial returns and mitigates risky behavior.
New regulations, like the EU’s Sustainable Finance Disclosure Regulation (SFDR) , require financial market participants to report on ESG factors.
Moreover, the EU Commission is also working on policies  to “stop companies from making misleading claims about environmental merits of their products and services” which will improve the quality of sustainability and ESG-related communication.
As society expects more accountability from corporations today, robust ESG practices demonstrate a socially conscious strategy aligned with the decision-makers’ values.
What must companies do to be ESG compliant?
Companies who want to be ahead of the curve need to integrate ESG throughout their operations strategically and not view it as a mere checklist. This requires setting emissions and efficiency goals according to climate science, introducing equitable policies based on factors like pay equity, using ethical sourcing, enhancing transparency within their teams, and proactively addressing ethics concerns.
ESG must become part of an organization's culture and decision-making. Robust policies that demonstrate environmental initiatives, social inclusion, and accountable governance are key to satisfying stakeholders.
ESG's impact on workspaces
As ESG concerns grow, offices become an obvious area for improvement.
As Allianz’s Expert Risk article “Building on change: ESG considerations for the construction industry”  highlights, the construction industry is “a sector with a heavy footprint” and has a substantial environmental impact. Key areas for improvement include energy efficiency, resilience, waste and water reduction, and ethical sourcing.
How companies build, operate, and maintain workspaces influences sustainability. New offices and their fit-outs should optimize energy and water use while avoiding unnecessary waste. Companies might want to prioritize using sustainable materials and suppliers that follow the principles of “Reduce, reuse and recycle” . Location and transportation factors like transit access and electric vehicle charging will reduce environmental impact. Optimizing building operations from temperature settings to cleaning practices could offer savings through efficiency. Workspace layouts should support diverse needs while fostering community and collaboration .
The growing expertise in ESG-aligned design
Within the design and build industry, firms specializing in sustainable and socially conscious workspaces are rising to meet demand in this area to:
Collaborate with suppliers and developers who possess LEED , BREEAM , WELL  and DGNB  certifications which provide third-party verification of ESG standards.
Advise clients on eco-friendly products and materials for reduced emissions during production and engage with local vendors for lower transport-related emissions thanks to shorter distances.
Build workspaces tailored to sustainability goals, promoting positive impacts on people, the planet, and performance - for example, in a nature-inspired biophilic design .
Engage stakeholders in transparent and collaborative processes of design and build.
Plan for building and space adaptability and resilience when designing offices to avoid future rebuilds as needs change.
The bottom line
ESG can and should be a way to rethink business practices for the better. While the path can seem daunting, experienced partners ease the transition through sustainable design tailored to each company’s priorities.
Mission and profitability can work together. As expectations grow, companies have much to gain by demonstrating their commitment to world-positive impact.