Considering environment, social and governance (ESG) factors is imperative and sets the scene for a successful project. Project managers, therefore, should be aware of the specific ESG factors that will impact a project’s development, particularly in the implementation phase of a project, says tertiary institute University of Pretoria project management associate Professor Giel Bekker.

Given the growing emphasis on ESG globally, project managers require greater awareness and sensitivity towards the environments in which projects are developed and implemented.

Projects are an integral part of societal development and are directly exposed to the complexity of modern trends, beliefs, politics and even conspiracies, says Bekker.

“Experienced project managers will attest to the fact that the success of a project has much to do with good stakeholder and team relationships, and ESG sets out the basic conditions and framework within which a project will function.”

He adds that good communication about ESG factors builds trust, which goes beyond contractual clauses.

Impact of ESG
ESG factors have an impact on scope and, especially, stakeholder engagement, says Bekker.

During the development phase of projects, ESG expectations are created, which then need to be met during the implementation phase.

A significant challenge project managers encounter is projects being stopped or even sabotaged during implementation, often as a consequence of the respective project owners and teams not fulfilling the promises they made to the communities affected by the project.

Therefore, project managers are tasked with the responsibility of confirming realistic, achievable expectations during development. Unfortunately stakeholder demands can also unfairly increase during implementation but at least a record of agreement would have been filed, Bekker explains.  

Further, they need to be aware that while ESG factors are important as a whole, different regions tend to place more emphasis on specific factors particular to that region.

For example, in developed countries, the focus is heavily concentrated on the environmental aspects of ESG, with clear targets on decarbonisation, and to what extend the project performs as a steward of nature, explains Bekker.

Environmental considerations include allowing for recycling, emissions control, waste management, material selection, special work methods and effluent control.

However, in developing countries, such as South Africa, the focus shifts towards the social aspects and examines how projects manage and develop relationships with employees, suppliers, customers and the communities in which the project developer or owners operate, he elaborates.

Social considerations include the involvement of communities in projects, which can be very complex and requires active liaison, the involvement of leaders and transparency on what the project will contribute to the community.

Bekker says it can also include special initiatives, such as education opportunities, social facilities, and job reservation for members.

“Agreeing on all these could take time and can even halt project progress,” he adds.

Governance is the overarching function that deals with leadership, ethics, shareholder rights and interests, as well as controls and compliance to statutory requirements. It creates order, which is critical in a time-pressured environment such as project management.

Governance can differ between regions and businesses. Therefore, project managers have to be aware of governance factors that will impact on the project from the outset.
 
Navigating ESG
Bekker explains that modern capital expenditure projects go beyond securing the materials required to construct a project – it has become a societal endeavour with a much larger social and environmental scope.

“This requires special project leadership skills and awareness to guide the increasing complexity of project delivery.”

The involvement of community liaison officers is critical, and such officers should preferably be someone from the affected community. Engagement with community leaders should start early in the development process, with conditions confirmed prior to public announcement of the project, adds Bekker.

Project managers should also create realistic expectations, especially regarding job opportunities and their duration, as well as confirm the conditions of delivery.

Bekker emphasises that transparency is critical and should be maintained through regular, in-person updates and communication. Any disputes must be addressed prior to their being formally tabled, while the impact and realistic achievement of localisation must be mutually agreed upon.

Project managers also need to ensure that the project complies with all environmental legislation without delay or request for temporary access pending compliance.

Meanwhile, project managers can benefit from the availability of smart technologies that facilitate ESG data gathering, processing and reporting.

Real-time emissions monitoring and carbon fuel use, digitalisation to facilitate a paperless site, and real-time project data capturing and reporting can assist project managers in meeting a project’s ESG goals, adds Bekker.

Image-recognition cameras that identify waste, unauthorised access and materials movement can protect the project while ensuring that all aspects of the project are monitored at all times.