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Exploring the ‘S’ in ESG

12 February 2024

In this Thought Leadership piece, Multiplex, one of World Green Building Council’s #BetterPlacesForPeople programme partners, outlines the importance of recognising wider social sustainability in the built environment, presented through three scopes: Internal, Community and Supply Chain. 

Breaking down the ‘S’ in ESG: 

Truly sustainable development cannot be achieved without prioritising positive social impact; and how that looks to individual companies can vary. It’s about defining what ‘S’ means to your business, and how best to incorporate those principles to benefit everyone you can impact. Understanding that each aspect of Environmental, social, and governance (ESG) interacts with the other is crucial, because in practice, the three are intrinsically linked.

So, what exactly is ‘S’? 

‘S’, the ‘social’ element of ESG, refers to the wider relationship a business has with its surrounding environment. For the purpose of this article, it will be split into scopes: Internal, Community, and Supply Chain, to correspond to WorldGBC’s paper on Social Impact across the Built Environment.  

Scope 0: Internal

Delivering social value starts from within. In practice, this means assessing internal processes, controls, and management systems to understand where inequities lie within a company, and acting upon it. This starts by creating a working environment which prioritises the health, safety and wellbeing of its employees. 

So, how can a company meet the needs of its people? 

One approach would be to facilitate both hybridised and flexible working. The pandemic taught us that hybrid working is feasible, within reason. We also know that working lives are going to be longer than ever before; a recent study from the Stanford Centre on Longevity found that sixty-year careers were more than likely to become the new normal. Therefore, facilitating longevity in the workplace is key. Altering roles to better fit the spectrum of employees’ lives, without neglecting their workplace responsibilities, is an example of social equity in action. 

Business as usual is in continued decline. 

Diversity, inclusion and respect should be central tenets of any modern business. This means making sure that cross sections of society are represented across all levels of operation, gender pay parity is respected, female leadership is encouraged and psychological wellbeing is safeguarded. Adhering to these principles is proven to enhance company performance. Some ways in which companies can enact these principles include: 

  • Implementing flexible working 73% of part time roles are currently occupied by women. This illustrates the need for our industry to adapt accordingly. Research shows that flexible working is one of the highest-ranked initiatives to attract and retain women. 
  • Developing a specific Anti-Racism Policy and escalation process for implementation at site level, including section on micro inequities/discrete racism examples and language expectations in the workplace. 
  • Advertising company graduate schemes in a broad range of universities, utilising the WhatUni university diversity rating index to help meet targets. 

Scope 2: Community

Community is at the heart of any development, and corporate social policy needs to reflect that. Businesses should provide long term value to the communities in which they work, improving local quality of life beyond the point of handover. There are several ways that this can be achieved, including: mitigating disruption during the construction process; creating outreach schemes within local schools, colleges, universities, charitable organisations and local community groups; and employing local people on projects, creating jobs and opportunities within the area. 

In an era of increasing gentrification, companies must consider the experience of existing communities. Engaging those communities in the decision-making and project development processes on any new scheme is critical. This means getting to the root of local concerns and cultural values, and making sure those are reflected in the development. By fostering collaborative relationships with local communities, businesses integrate human dignity into their projects. This is at the core of ESG principles. 

Example of S in action

The Broadway project: Multiplex promoted transparent governance reporting by working with third party software provider, Loop, which work with Social Value UK to accurately monitor, measure and evaluate the real time positive impact achieved on site. This is an effective way to gauge impact in monetary terms. The Broadway project created £17,489,661 in social value by supporting local & SME businesses, as well as supporting apprenticeships, new entrants, and work placements, to name just a few contributions.

Scope 3: Supply chain

Genuine, lasting social change can only happen when businesses involve their supply chain and subcontractors in the process. This means making a clearly defined emphasis on social equity a prerequisite to working with your company. 

In Europe, construction is the second highest industry most at risk of modern slavery. This is facilitated by fragmented supply chains, complex procurement processes and high demand for migrant labour. These risks can be mitigated by taking a firm approach to social equity during procurement. 

Routes to ensuring ethical labour management include:

  • Conducting subcontractor social audits to review employment practices, human rights, diversity and inclusion and equity in action.
  • Offering support and training to subcontractors to develop their understanding of socio-economic value and its importance within the industry and implement this into all their practices. 
  • Proposing specific ethical labour measures, in every client bid, to mitigate modern slavery risks inclusive of setting up Passport Authentication Check (PpAC) onsite to perform ID and Right to Work checks to identify fraudulent documents and potentially detect cases of human trafficking and modern slavery.

Call to action

The construction industry is undergoing our greatest transition yet, and it’s about time. As a sector, we provide employment for 7% of the world’s workforce. That represents a massive responsibility, and opportunity, to drive positive change. It’s time to step up. 

Now is the time to take stock, learn the lessons of the past and move forward with a renewed approach to decarbonisation with social equity at the core. This means committing to continual learning, where businesses prioritise the education of themselves and their supply chains through workshops, training sessions and frequent assessment of working practices. It also means encouraging transparency and sharing data on best practice so the sector can evolve in tandem.

It’s time to educate, engage and empower, making sure that businesses maximise their potential for creating positive socio-environmental impacts. This means advancing internal business practices as well as influencing peers, clients, and subcontractors. Together, we can do better.

It’s time to prioritise the ‘S’ in ESG.   

More information can be found in Multiplex’s Social Equity Strategy 2030. A ‘leave no one behind’ social equity strategy to tackle inequity and injustice in construction. The strategy identifies areas of improvement across all aspects of Multiplex’s operations and seeks to ensure the company takes a leading role in effecting change across construction.

See also WorldGBC’s position paper, Social Impact across the Built Environment, which lays out a framework to define, measure and action social impact throughout the building life cycle.

Photo caption: Multiplex employees volunteering their time for the Great British Spring Clean at Hyde Park, London, UK.