Sustainable Project Management: ESG Implications

Sustainable Project Management: ESG Implications

Sustainable Project Management: ESG Implications

One of the most frequent questions among executives today is: how can ESG (Environmental, Social, and Governance) criteria improve my financial results? We have shifted from viewing sustainability as a cost that negatively impacts the bottom line to seeing it as a crucial tool for business survival and growth.

Investment funds lead in many sectors. For example, they account for over 61% of hotel investment in Spain. Both international investors and European funds require the use of best governance practices, notably project management based on international standards such as those from the Project Management Institute (PMI©) or more recently, PM2© from the European Union.

A fundamental tool for organizational governance is the Strategic Project Management Office (PMO). This PMO is capable of selecting the optimal project portfolio according to the organization’s defined criteria and transparently monitoring the progress of various efforts over time.

Last year, in various forums, we warned about the high risk that Spain might not be able to execute the ambitious investment plan associated with the Recovery, Transformation, and Resilience Plan linked to the management of Next Generation funds. Unfortunately, this risk has materialized according to the latest report "Monitoring of Next Generation Funds in Spain" by CEOE. One of the public sector's pending issues is the lack of aggregated information regarding the level of fund execution, with a general consensus that the pace is insufficient and the impact on the real economy is limited. Additionally, 10% of public contract tenders funded by European funds have been deserted, primarily due to inflation.

Regarding the environmental component of projects, managing building projects according to sustainability standards such as BREEAM©, the world's first sustainability assessment and certification system, and LEED©, offers significant advantages for owners. In the hospitality sector, financial results improve with higher occupancy rates, as 70% of travelers worldwide are more willing to book accommodations with environmental practices, and 47% are even willing to pay more for sustainable accommodations. Moreover, these projects have access to lower interest rate financing since "green" funds are financed at lower rates.

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