The importance of bringing environmental, social, and governance (ESG) issues into focus within your project management office (PMO) can’t be overstated. ESG is becoming a priority for businesses, and we’ve got five reasons it is important for your projects.
ESG can have positive effects on projects, your PMO, and the wider business. You need to ensure that all aspects of projects have these principles embedded into them, these are the reasons why.
1. A focus on ESG attracts better project management talent
It can be a struggle to recruit the best talent for your PMO and for your projects. In fact, the shortage of skilled and qualified project management workers could cost the global economy over US$300 billion by 2030.
You need to set your projects apart from the rest of the businesses in your sector by focusing on ESG. Up to 40% of Millennials choose their job based on the environmental credentials, and more than a quarter of British workers would take a pay cut to work for a more environmentally aware business.
The social element of ESG also directly relates to employee retention. By ensuring that you have fair working and pay conditions and other perks like giving volunteer opportunities to your team, you will have a more satisfied and committed team.
2. ESG considerations can help reduce project costs
It may feel counterintuitive, but working on ESG can actually reduce project costs. For example, changing packaging suppliers for a project to use more sustainable materials could have higher costs at first to change manufacturers, but in the long run, can be cheaper.
There can be a big reduction in regulatory costs and taxes for making better environmental choices for projects. A construction project may have cheaper permits when environmentally conscious building materials and recycling used products can reduce waste removal costs in all offices.
When your PMO’s main goal is to have projects delivered on budget, making sure ESG is built into decisions can help achieve that.
3. Reduce project risks with ESG
Better governance of projects can reduce risks – this is likely one of the reasons your PMO exists at all.
Your PMO will have a range of governance procedures to make sure projects get delivered within a proven framework, and that data can be tracked. These things include:
- Robust project processes
- Clear project documentation
- A framework for decision-making
- Accurate lines of reporting
These elements will reduce the risk of scope creep, poor time management, bad-value procurement, and more besides.
Good governance can mitigate wider risks such as falling foul of laws or rules. For example, Brexit was a big change for British businesses, but strong governance structures made it easier for some businesses than others to adapt to new rules.
4. ESG can win your PMO better contracts
From government contracts to venture capitalists, everyone is paying attention to ESG. Whether your projects are delivered to external clients or your change agenda is internal, whoever works with your business will care about ESG.
Your office should have accessible ESG reports that need to be part of the company’s sales pitch deck.
Between 1970 and 2014, 50% of businesses with an ESG slant outperformed the market, and only 11% underperformed in comparison. There is a clear case that businesses that focus on ESG do better; this will reflect in the contracts and projects your company wins.
5. ESG makes a PMO and the business more resilient
When ESG is embedded in projects through your PMO, your office is more ready for changing rules and business practices. By having processes and procedures documented and easy to follow with good governance, you can more easily make changes when needed, as an example.
Your project work becomes more scalable when you have a happy team, and good recruitment and businesses will want to do business with you if you have strong environmental credentials.
As we’ve seen, businesses that care about ESG have the potential to grow bigger than their competitors. This is because they are better positioned to do better – caring about the environment, for example, puts your PMO ahead of the curve, using the right suppliers and being more aware of business trends.
The importance of ESG to projects
These five reasons why ESG is important to projects demonstrate why you need to adapt your working and processes to embed these ideas. Your office and wider business will benefit from being ahead of the curve.