ESG for transformational affordable housing
Environment, Social and Governance are the three facets that characterise sustainable responsible investing for any organisation.
The rise of ESG standards in construction industry is expected to create a resilient and successful marketplace with long-term benefits fo stakeholders through a coordinated attempt to reduce the negative impacts on the environment.
The ESG framework for construction projects is developed in similar lines to the green building certification requirements, making green buildings a subset of it. The following are the key ESG parameters considered for any construction project:
|Energy savings and carbon emissions offset||Labour health, safety and environment||Enforcement of labour laws|
|Waste and Water management||Gender inclusion||Awareness of staff welfare and benefits|
|Resource efficiency through reducing, reusing, and recycling||Community engagement and buyer satisfaction||Fair payment terms and company policies|
|Occupant well-being and indoor environment comfort|
ESG provides a holistic strategy to enable a builder to gain understanding on the negative environmental and social impacts of their housing projects. For example, construction waste generated on site must be segregated and disposed of in a responsible manner.
Additionally, safety signages should be displayed in the local language of the construction workforce and mandating usage of PPE for them
It also enables the typically first-generation developers in the affordable housing segment to strengthen their corporate governance policies. For example, maintaining regularised wages and working hours for construction workers on site. Provision of a creche facility at the construction site to educate the construction worker’s children along with enforcing relevant policies to strengthen the prohibition of child & forced labour practices.
Infusing the concepts of ESG to create best practices for the construction sector will further help in achieving India’s climate target to reduce Emissions Intensity of its GDP by 45 % by 2030. This will further be a small step towards achieving India’s long-term goal of reaching net zero by 2070.2
So far India’s climate mitigation actions have been mostly financed from domestic resources. However, to address the challenge of climate change and achieve the Nationally Determined Contributions (NDC), there is a need for new and tailor-made funding required. Such funding opportunities are now coming in form of green bonds and climate finance from Development Finance Institutions to Indian banks and NonBanking Financial Companies (NBFCs).
The role of ESG is crucial to achieve the targets under India’s Panchamrit plan. To achieve this, real estate investors and lending companies should ensure that financing is aligned with positive and measurable climate, social and environmental co-benefits