The Need for Socially-Responsible Infrastructure Investment

March 04, 2020

Building infrastructure often requires the investment of substantial amounts of money over long periods, which makes pursuing socially responsible and sustainable development more vital. From the point of view of firms involved in building infrastructure, focusing on socially responsible projects can reduce the risk of cancellations.

For governments, building socially responsible infrastructure balances the desire for economic growth with the need to protect the environment. As citizens become more aware of the trade-offs involved, the demand for socially responsible infrastructure continues to grow. Globally, between $5 trillion and $7 trillion will be needed each year to meet the UN’s sustainable development goals.

Incorporating ESG in Infrastructure Investments

Making socially responsible investments requires a substantial amount of due diligence. For any infrastructure project, there is a constant need to balance controlling costs against achieving the stated goals of the project. Adding environmental, social, and governance (ESG) considerations makes the equation that much more difficult.

According to a UN Principles for Responsible Investment report, 57% of investors surveyed stopped potential investments based on ESG factors, highlighting the need for thorough evaluations. However, project abandonment is not the most serious risk. Investing in a project that is harmful to the environment, society, or good governance can cause substantial damage to the reputations of governments, nonprofits, and even private businesses.

Positive Impacts

It is well-known that socially responsible infrastructure investment has a positive impact on the planet, but it can also have a positive impact on the bottom line. In the short run, there is often a cost associated with improving sustainability. However, many ESG considerations lead directly to lower long-term costs. For example, long-lasting roads generally cost more to build. However, such roads save money and reduce pollution over time because they need fewer repairs.

Improving Social Responsibility

Infrastructure projects involve long-term commitments, and ESG considerations continue to develop during that time. Nonprofit organizations cannot afford to be passive shareholders. New scientific discoveries are constantly changing our understanding of responsible stewardship.

Fifty years ago, simply considering the local environmental impact was considered progressive. Today, global concerns often dominate. Stakeholders have a duty to learn about new issues and advocate change. Our consultants at EHI provide practical ways to apply the latest research to implementing ESG solutions in the real world.

Measuring Social Impact is Vital

Social responsibility can never be achieved in isolation, so we must work together. Creating KPIs for internal use is only the first step. Initiatives within industries, rating tools, and unified reporting standards are crucial. Developing and promoting policies and regulations aimed at improving ESG are also important parts of the effort.

As a consulting firm, EHI Corp. has an impressive number of opportunities to work with a wide variety of organizations. That experience puts us in an ideal position to assist businesses, nonprofits, and governments in taking coordinated actions to build a better tomorrow with socially responsible infrastructure.

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