//What Does ESG & Social Value Mean in the Housebuilding Industry?

ESG and social value are central priorities in the housebuilding sector, particularly for housing associations and local councils. The Public Services (Social Value) Act requires public authorities to consider how their services might improve the environmental, social and economic welfare of their area.

With tighter climate targets, increased scrutiny on procurement and a growing focus on community outcomes, public sector organisations are rethinking how they evaluate construction partners.

This article explores what ESG and social value mean in the context of housing delivery and how Pinewood Structures can support these frameworks on your next development.

//Understanding ESG in the Housebuilding Sector

Environmental, Social and Governance (ESG) are three broad terms used to describe non-financial criteria, factors or standards relevant to businesses, according to UK Environmental Law Association. These factors can be measured to determine whether an investment has a wider social impact, rather than solely generating financial returns.

• Environmental: Impacts on air, land, water, ecosystems and human health
• Social: Impacts on the broader society including individuals, communities and employees
• Governance: Impacts on legislation and compliance

Environmental

The construction and housebuilding industry has a significant impact on the environment; at every single stage of the building lifecycle, environmental considerations must be made.

For example, measuring whole life carbon emissions and implementing methods to reduce them should be adopted during construction. The government demanding all social housing to achieve an EPC rating of ‘C’ by 2035 also drives energy efficiency post-construction. Preventing pollution, developing better waste management systems, and reducing water and resource usage are just another few ways in which the ‘E’ in ESG can be implemented.

Governance

Governance is required to ensure transparency, accountability and ethical conduct. This includes ethical leadership and a commitment to ethical business practices, transparent reporting for ESG strategies, and risk management for regulatory changes, reputational damage and supply chain disruptions.

Effective governance is critical for effective and demonstrable environmental and social initiatives. It helps solidify a company’s management and decision-making process regarding all aspects of ESG in the housebuilding sector.

Social

As well as the Government’s Net Zero targets, a housebuilding target has also been set where construction plays a central role in addressing the housing crisis. UK social housing plays a significant part in socially responsible investments as it provides affordable housing for those that cannot afford to buy on their own.

It’s more important than ever that affordable and sustainable housing becomes a reality in order to reduce the levels of homelessness. Other social factors that housebuilders must be aware of when making developmental decisions are biodiversity, community outreach, health and safety and employee wellbeing.

//Why is Social Value Important in Construction & Housebuilding?

Social value is important in construction and housebuilding because every single structure impacts daily lives and communities. This framework encourages organisations to think about the impact of every action in the building lifecycle beyond making a profit. Emphasising social value in housing projects increases engagement across the on-site and off-site teams, the public and investors.

With more public tenders demanding proof of social value, it’s important to monitor, measure and report this in every housebuilding project. These reports can be used to inform stakeholders of any impacts too. Investment decision making will therefore be improved as ROI ratios can be evaluated by assigning money values to social impact metrics in these reports.

Social value also reflects an organisation’s commitment to Corporate Social Responsibility (CSR), helping to inform broader impact strategies.

Integrating Social Value in Construction Projects

From start to finish, social value must be built into every housing development. At each stage, organisations should look for ways to increase it and encourage everyone involved on the project to invest in social value too.

• Work with clients, manufacturers and engage with local communities to define how projects can have the biggest lasting impact
• Communicate aims, achievements and the reasons behind goals to clients and communities
• Include green spaces in construction design to improve air quality, provide recreation spaces and support biodiversity
• Choose locations that factor in social spaces and sustainable infrastructure for housing projects to reduce reliance on driving and help build communities
• Employ members of the community and offer skills development opportunities
• Procure materials and services either locally or sustainably – or both – to minimise environmental impact
• Choose sustainable building techniques with renewable materials, minimal waste and reduced carbon emissions
• Measure social value and monitor progress using helpful frameworks and tools available

The “Social Value in Construction Benchmarking Report 2022” reveals that in the first half of 2022, the construction industry delivered £1.09 billion of social and local economic value which represents a 30.33% return on investment. This shows the industry’s potential for positive change.