The report quoted a statistic from The World Green Building Council: 39% of global carbon emissions come from buildings and construction. Health, safety and labor, contracts/bidding and carbon emissions from construction sites are just a few of the leading ESG considerations driving change in the industry. In November 2021, EY reported that construction and engineering firms have a powerful role in influencing ESG reporting. Fink’s effective stakeholder capitalism illustrates this point, in his expression of just how vital it is for companies to have a voice, a strategy and a purpose that employees can connect with. A 2021 CNBC survey on workplace happiness reported that 80% of surveyed employees find it important to work somewhere that prioritizes DEI. Finally, employees are demanding more.
Investors are quickly adjusting their expectations and criteria for investment with regards to DEI.
The Kenan Institute reports on a survey performed by The Institutional Limited Partners Association, which found that 40% of investors are considering incorporating DEI metrics in their diligence efforts. This could include things like the reporting of gender-specific income gaps or the development of policies surrounding an equitable hiring process. In the U.S., The Securities and Exchange Commission (SEC), along with other regulators, have been taking steps towards a regulatory framework in DEI, including the requirement of diversity data disclosure. The stakeholders the Kenan Institute reports as most relevant to this progression are the following: regulators, investors, and employees. The Kenan Institute, a research facility committed to developing market-based solutions to economic issues, lists three main stakeholders as driving forces in the pursuit of diversity, equity, and inclusion (DEI) in company culture-values that were highlighted by the pandemic. shows that employees are not afraid to look elsewhere if a company does not share their values. Employees are asking more of their employers, and the historically high quitting rate in the U.S. Related: How Real Estate Companies Can Work Toward Net Zero Looking Inward and Making Decisions that Reflect Our ValuesĢ021 also illustrated the outcome of what Fink refers to as stakeholder capitalism. The year-over-year growth of ESG being an integral part of both federal attention and investor demands is evidence that companies will need comprehensive data management tools to keep up with stakeholder requirements. Companies that had better ESG risk assessments outperformed those with weaker scores, with 2021’s numbers acting as further proof that investing with sustainable strategies can deliver financially competitive returns.įink believes that the transition to net zero is inevitable. Sustainability Leaders Index returned 33.3% in 2021, more than 8% higher than the broader U.S. Morningstar reported that in 2021, the higher a company’s ESG score was, the higher returns they saw. All buildings face some degree of physical climate risks, and 2021 took steps towards community-based action within our government and beyond. has ever spent towards addressing climate change, and it received bipartisan support. This infrastructure bill contains the highest amount of money that the U.S. In late 2021, a $1 trillion infrastructure bill, including $47 billion intended for climate resilience efforts, hit President Biden’s desk. The interdisciplinary adoption of ESG data in strategic decision making and investing has proven necessary, especially in the context of our built and natural environment. Leveraging the power of actionable ESG data is crucial in this global transition towards a net-zero world. Fink highlights the idea that those who decarbonize will be those who lead. This question carries a warning call to every sector – all of which will inevitably be changed by sustainable technology. The question is, will you lead, or will you be led?” 
CEO Larry Fink is taking that commitment to a new level by asking one serious question in his 2022 letter to CEOs worldwide: “Every company and every industry will be transformed by the transition to a net-zero world. With record-high employee quit rates, environmental crises, and social justice reform happening around the world, being transparent and accountable with ESG data is more important than ever.īlackRock, a global investment manager, has used sustainability and green thinking as a benchmark of measuring company performance for years.
How the push for decarbonization is transforming ESG transparency and reportingĪs we kick off 2022, it’s important to reflect back on how transformative 2021 was for advancing the way ESG is perceived and demanded.
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