The Environmental, Social, and Governance (ESG) agenda in construction - the architect's role

The Environmental, Social, and Governance (ESG) agenda, is nothing new, says director Jonathan Harris – at Chapman Taylor, we call it Responsible design. In this paper, he talks about the increasing focus on this area within the construction industry, and how we, as architects, are particularly well-placed to influence positive environmental and social outcomes.

In recent years, the ESG agenda has gained increasing prominence, both in the corporate world and in society at large. For businesses, ESG principles mean that corporate strategy focuses on three pillars: environment (eg. energy efficiency, waste reduction), social (eg. diversity and inclusion) and governance (eg. board structure). Transparency about these strategies is essential for growth as consumers and investors are more favourable towards businesses with robust ESG frameworks. In a nutshell, ESG encourages responsible corporate policies.

However, the idea of ESG; investing your money to positively impact others - is nothing new. Over the last 100 years, it’s been referred to by different names including “moral capitalism” and “social responsibility”.

In the same way that ESG could be said to be a re-brand of Socially Responsible Investing, there is nothing new in designing responsibly. In fact, we would argue that it is what we, as architects, have always done. Simply put, responsible design is just “good design”.

Responsible design is of course about more than just the appearance of buildings – it has the potential to impact positively on the environment and on people’s lives through their interaction with, and experience of, buildings and the spaces between them. The architect’s role in this is fundamental.

ESG – A Step Change in The Industry

Whilst we have always been focused on designing responsibly, there has undoubtedly been a step change in recent years within the construction industry, and in particular amongst our clients, for whom ESG is now a key priority.

In public procurement, architects increasingly come across the need to demonstrate social value on their projects – although the focus until now has been very much on the process of development. For example, the jobs created during construction as opposed to the potential for design decisions to deliver lasting well-being benefits.

In the private sector, there are other drivers, and regulation is one of them. The Environment Act 2021 requires new development to put in place a plan that demonstrates a 10% net gain in biodiversity value. Progressive iterations of the Building Regulations are setting a pathway to lower carbon development. Planning policy too is a factor, with an expectation that both decision-making and the Local Plan address climate change as one of the core land use planning principles.

However, the main reason for the step change that we have seen is due to the investors and funders behind projects. They are driving ESG targets which are often higher than those required by current regulations. Most publicly listed companies now report their performance against ESG standards and as a result, these companies increasingly want to be able to invest in opportunities that promote their ESG credentials. Property funds are keen to improve their ESG credentials by investing in modern, environmentally friendly buildings, which, in turn, attract users who themselves want to demonstrate these credentials. This drives increased property values and an improved return on investment.

The Growth of ESG in Sectors Attracting Long-Term Investment

The sectors where we are seeing ESG take most prominence are those which attract long-term investment – for example, the Workplace sector and the managed residential sectors, including Build To Rent (BTR) and Purpose Built Student Accommodation (PBSA). Setting high ESG targets is simple risk management, protecting property assets against likely future changes in regulation and public perception.

In addition to the social and environmental benefits, ESG brings value to developers. Climate-ready, “healthy” buildings are more valuable, attract and retain users and are future-proofed to protect investments in the long term. Good environmental credentials can make a building more attractive in the market, generating better returns for the owner.

The Architect’s Scope of Influence

As architects, we play a key role in helping our clients define, and meet, their ESG targets for projects, driving better outcomes for the environment and for users, and better value and financial returns. It is worth noting, however, that of the three components of ESG, the first two, Environmental and Social, are the ones that we have the most opportunity to positively influence through our design work.

E for Environmental Design

The E in ESG is increasingly focused on carbon reduction. It is arguably the most pressing concern for the industry, and for society as a whole. Alongside, for example, net to gross targets, project briefs from our clients now include targets for operational and embodied carbon. Similarly, industry guidance is changing. For example, the proposed 2022 updates to the British Council for Offices Guide To Specification now include net zero embodied and operational carbon targets. Also included in the update is a NABERS target; an accreditation system based on actual, rather than predicted, energy performance. These focused building-performance targets take the design and specification of projects to the next level from standards like BREEAM which, until now, have been the industry benchmarks for environmental assessment.

At Chapman Taylor, we take a “lean” approach to design, aiming to build more with less by designing with high levels of efficiency to deliver more useful space from less built form. Adopting a fabric-first approach to reduce unwanted losses, we design to reduce energy demands, using environmental modelling software to help us understand and reduce operational carbon emissions from the earliest project stages.

As the grid decarbonises, the need to reduce the embodied carbon in our projects will become increasingly important on our net zero journey. Much of our work involves the refurbishing and repurposing of existing buildings, which is the lowest embodied carbon approach. In the design of new buildings, we aim to design lighter structures and we carefully review material choices to lower the carbon footprint. We promote the use of off-site construction which reduces waste and improves speed and quality on site. Designing for future adaptability and using circular economy principles helps us limit whole-life carbon emissions.

S for Social Value in Design

The S in ESG is the potential for a project to promote positive emotions amongst its users, for example by enabling connections with nature and with each other, offering opportunities for an active lifestyle and by fostering a sense of community.

At Chapman Taylor, the starting point is in optimising the potential of sites. We consider densification and efficient planning to ensure we create compact towns and cities that enable active travel and easy access to amenities while conserving green space to support biodiversity and access to nature. By incorporating a sustainable mix of uses and creating a strong sense of place, we add community value to our projects by designing for social and demographic diversity. We design for physical and mental wellbeing; optimising lighting, acoustics and air quality while integrating nature and biophilic design into our buildings. Creating spaces for activity and interaction supports community and inclusion and ensures accessibility for all.

Community in the form of placemaking has always been integral to good design. The rise of social value on the policy agenda is a real opportunity for architects to demonstrate the value of what they do.

ESG – We Call It Responsible Design

The rise in prominence in recent years of ESG in the construction industry is undoubtedly having a welcome and positive impact on the design, construction and use of our buildings, and the architect’s role in this is key. At Chapman Taylor, we take a Responsible Design approach to all our projects, extending our design considerations beyond environmental issues to include the social, economic and ethical dimensions, based on the principles of exemplary placemaking. For us, ESG, or Responsible Design is simply good design - it’s what we have always done.

Jonathan Harris leads Chapman Taylor's Responsible Design Group. To talk to him about this article, please get in touch with him using the contact details below.