Do your infrastructure projects embed sustainability from the outset? Is it something you have struggled with in the past? What is your approach to sustainable design?

How can I evaluate my infrastructure projects for their sustainable impact?

Thinking about sustainable design is about asking the right questions at the right time. Professor Richard Fenner, expert in designing sustainable infrastructure, has put together a handy list of the ones you need to know below:

• How has the engineering process shown respect for people and the environment?

• Has an extended range of options been examined? Have these been documented and if so how?

• How is careful and informed material selection ensured, and over-specification avoided?

• How does the project create broader social wellbeing benefits, not just serving narrow economic goals?

• Given the long asset lives of the built environment, how does the project respond to delivering short-term needs fairly while not exacerbating risks linked to accepted long-term environmental trends?

• How can the project meet those short-term needs with low- or no-regret solutions, with net-zero CO 2 emissions, no biodiversity loss and minimum resource depletion?

Answers to such questions – asked at the right time – will allow more creative and sustainable solutions to emerge.

At the very least, even if they do not change the project scope, specifications, or procurement, they contribute to a more explicit set of answers to a stakeholder’s question: ‘How sustainable is this project?’

Quite often we find that project teams bypass some of these critical questions. It is also the case that different individuals have different ideas of what sustainable design truly means. Referring to these reliable questions can ensure projects are considered from a sustainability perspective from the very beginning. They also provide a structure against which to evaluate a projects sustainable progress.

We must develop a clear future vision as to what a sustainable solution could be. We can then use this to guide the decisions needed to reach that solution.

Katherine Bruce is a tutor on Delivering Sustainable Infrastructure: Theory and Practice for Construction, an online course from the University of Cambridge. Below she discusses the importance of the ESG framework and gives some top tips for project delivery teams to effectively evaluate this for their infrastructure projects.

What is ESG (Environmental, Social and Governance)?

Investors in the early 2000s first coined the term ESG (Environmental, Social & Governance) to describe the framework for assessing non-financial risks within their portfolios. Today, ESG strategies have become widely adopted by listed corporates as a means of meeting stakeholder expectations, complying with regulatory requirements, and mitigating increasing risks.

Given the impact of infrastructure projects on society, the environment, and the economy, mitigating ESG risks has become essential. Financial institutions are increasingly applying an ESG lens to such projects, and implementing a comprehensive ESG strategy is now a prerequisite for securing financing. For instance, several banks have set de-carbonization targets for hard-to-abate sectors such as power and utilities.

With the increasing expectations on financing, it’s essential for project delivery teams to understand the importance of evaluating infrastructure projects through an ESG lens. To achieve this, there are five key considerations that teams should keep in mind:

1. Prioritise action through financial materiality

Each infrastructure project is unique, with its own set of ESG risks depending on factors such as project type, location, and scale. To effectively manage these risks, it’s essential to conduct a materiality assessment for each project. This process helps prioritize attention and focus on specific ESG risks by identifying and evaluating the financial risks associated with both the project’s impact on society and the environment, as well as society and the environment’s impact on the project.

A key part of the materiality assessment is quantifying the financial impact of these risks. This allows for comparable metrics to be used by non-ESG specialists, helps to understand the magnitude of exposure, and supports more sustainable decision-making in the project’s design and construction.

2. Adopt a systems thinking approach

ESG risks should not be considered in isolation. Infrastructure projects are a complex system with multiple variables and interdependencies. Creating a visual representation of these relationships, such as a causal loop diagram, can help to identify leverage points and mitigate risks. Often, reinforcing loops can amplify the impact of a risk, while balancing loops can obscure the potential for negative outcomes. A systems thinking approach can help to plan for different scenarios and implement appropriate mitigation measures, leading to a more comprehensive and effective risk management strategy.

3. Engage with stakeholders

Reputational risk is a significant ESG risk in infrastructure projects. Negative ESG impacts can result in reputational damage, leading to negative public perception, loss of trust from stakeholders, and potential project failure. Engaging with impacted stakeholders and end-users is crucial for mitigating reputational risks and potential financial impacts. By engaging stakeholders in the project development process and considering their needs and expectations, organizations can build trust, enhance their reputation, and support the long-term success of the project.

4. Set KPIs and targets

Establishing key performance indicators (KPIs) and targets is critical for evaluating performance throughout the lifecycle of a project. Targets and KPIs not only help teams align against a shared goal but also communicate their intentions effectively. To obtain a comprehensive view of performance, it is recommended that KPIs comprise of both leading and lagging indicators. The Sustainability Accounting Standards Board (SASB) provides specific indicators for various infrastructure sectors that are connected to financial materiality, making it an excellent starting point for companies.

5. Monitor and report performance

Continuous evaluation of ESG performance is crucial for infrastructure projects throughout their lifecycle. If performance falls below a predefined threshold, such as carbon targets, it should be escalated through governance channels to take immediate action. While corporations often communicate their ESG performance through annual reports, infrastructure projects may benefit from software solutions with live tracking features that provide real-time updates to stakeholders, including financial institutions. This is especially important given the dynamic nature of infrastructure projects and their multi-stakeholder involvement.

Conclusion

To conclude, setting up a strong ESG framework at the beginning of a project can help project teams manage ESG risks, improve financial performance, and secure financing. For more actionable steps on how to integrate ESG considerations into infrastructure projects, we encourage you to enrol for the University of Cambridge online course: Delivering Sustainable Infrastructure: Theory and Practice for Construction. This 8-week online course offers extensive knowledge and practical resources to achieve sustainable development and create long-term value for all stakeholders involved in infrastructure.