A Project Professional’s Guide to Sustainability and ESG26 Aug 2022
At their core, projects help organizations realize long-term, strategic objectives. But projects take place in an environment much larger than the project itself. Increasingly, an organization’s source of long-term value is affected by a rising tide of expectations about the social and environmental impact of business.
Organizations can no longer operate like islands, ignoring negative externalities while relentlessly pursuing shareholder value at the expense of stakeholder interests. As sustainability practices gain traction, true business value will increasingly be measured by assessing the impact of projects on customers, employees, shareholders, communities, and the environment. It will be necessary to evolve from doing things right to doing the right things.
Sustainability, however, isn’t just the responsibility of senior executives. Project professionals and other changemakers have a role to play in achieving strategic goals because they guide the path to execution.
Being familiar with the details of day-to-day operations, project leaders may be able to identify and assess socially relevant issues and situations that may not be obvious to senior leadership. These issues may include intensifying pressures and growing complexities of social and political forces, the speed with which change is occurring, and the ability to mobilize public opinion.
The pressure to address such concerns requires project professionals to be more aware of the broader context of a project. Project professionals can no longer focus solely on tactical execution and evaluate initiatives as if they had no life outside their defined beginning and end. As PMI's Code of Ethics and Professional Conduct states, at PMI “we make decisions and take actions based on the best interest of society, public safety, and environment.”
Environmental, social, and governance (ESG) frameworks provide a basis for project professionals to ensure organizations engage in projects that deliver strategic value while also producing deliverables that drive positive environmental action, improve social impact, and showcase ethical governance. In short, project professionals can help their organizations make an enormous difference by leading with a clearly defined ESG focus.
Organizations adopting an ESG focus stand to benefit in multiple ways:
- Shared value: When sustainability becomes integrated into an organization's business goals and objectives, it creates shared value, benefiting both the business and the community in which it operates.
- Increased innovation: The adoption of sustainability provides an opportunity to harness human creativity and discover innovative ways to protect and enhance our shared environment, empower project professionals to think outside the box, and build enduring wealth.
- Reduced Risk: An increased awareness of the environment and society allows teams to assess risks more effectively and become more proactive in how to manage this risk.
- Adaptability to government regulation: Organizations can gain a competitive advantage by acting in advance of mandates for change, such as government regulations or legislation.
- Enhanced Reputation: With a focus on ESG and sustainability, organizations can achieve an improved corporate reputation, higher brand equity, and an increased access to capital, which is vital to attracting and retaining top talent.
But adopting an ESG focus requires project professionals to balance traditional project constraints with a range of external factors. In addition to cost, schedule and scope, economic, social and environmental factors must also be accounted for. Here’s a simple way to think about these additional factors:
- Economically Viable: This means moving beyond the project’s ROI and ensuring that it fits into the overall strategy of the organization.
- Socially Responsible: Reflecting on organizational culture, structure, and processes, existing human resource skills and personnel practices must be socially responsible both inside the organization and throughout the value chain.
- Environmentally Sound: Organizations must require a mature evaluation of capital equipment and facilities requirements, use of resources, purchasing practices, contract management, and industry standards.
Businesses have never been insulated from social and political forces. The difference now is the intensifying pressure and growing complexity of the forces, the speed with which change occurs, and the ability to mobilize public opinion, mainly through social media. The business world is not just global but churning in a dynamic and turbulent environment.
As organizations and project professionals move forward with ESG, here are a few questions that must be considered:
- As a project professional, how can you encourage long-term sustainability outcomes with measurable ESG?
- How can you ensure greater management buy-in or support from more colleagues? Whose support do you need to enlist?
- Once greater buy-in is received, how can you further activate?
- What actions can you build into your own performance goals this year that aligns with your organization’s sustainability goals?
As project professionals, it’s important to align projects with organizational strategy and execute in a way that encompasses the interests of local and broader communities. And as more organizations focus on sustainability and driving their ESG efforts forward, project professionals will be invaluable in helping make the right decisions for their projects, the organization, and these communities.
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This blog post has been adapted from a conference paper by PMI Board of Directors Chair Jennifer Tharp. To read the entire paper, click here.
For more information on incorporating ESG into your projects, visit our ESG resource hub.