Whether the focus is on addressing climate change and biodiversity emergencies, improving human rights and social justice or strengthening governance, ESG is no longer just a ‘nice to have’. By echoing and embedding principles and practices into their operations, policies and procurement, the public sector can drive the momentum forward to deliver sustainable outcomes that benefit not only their own performance and reputation, but also the long-term wellbeing and resilience of the communities they serve.
The changing landscape of ESG in the public sector
The public sector has a unique role and responsibility in addressing the global challenges through the lens of ESG. As the largest spender, employer and service provider in the UK, the public sector has the potential to influence and shape the behaviour and expectations of other sectors and stakeholders. It also faces increasing pressure and scrutiny from the public, the media, and the regulators to demonstrate its commitment and accountability to deepening environment and social issues.
In recent years, we have seen a significant shift in the public sector’s approach to ESG factors. What was once seen as a means of risk and reputational management, or a source of cost savings and efficiency gains, is now being used as a vehicle for creating true sustainable outcomes that align with the global and national agendas, such as the UN Sustainable Development Goals, the Paris Agreement and the UK net zero target.
The new Procurement Act demonstrates this, with a greater emphasis on procurement as an enabler to deliver wider public good. It’s moving the public sector from a siloed and fragmented view of ESG issues, to a more holistic and integrated one that recognises the interconnections and interdependencies between environmental, social and governance factors.
The case of the justice system
A good example of how the public sector can embed ESG across its activities to create sustainable outcomes is the justice system. It encompasses a range of organisations and functions, from courts and prisons to probation and rehabilitation, to legal aid and advice - and has a direct impact on the lives and rights of millions of people, as well as on the environment and society as a whole.
During this year’s Modernising Criminal Justice Conference, representatives from Amey, alongside wider industry experts, emphasised the need for a cohesive strategy between government and private sector contractors to embed ESG across the sector. They highlighted the challenges and opportunities of implementing ESG as a means of creating sustainable and resilient contracts that support the environment and the communities they operate in.
Some of the key points from the discussion were:
The justice system has an important role to play in contributing to the global and national sustainability goals, such as reducing carbon emissions, enhancing biodiversity, improving social mobility, inclusion and diversity, and promoting human rights and ethical standards.
The sector can also benefit from embedding ESG into its operations and procurement, such as improving its efficiency and effectiveness, reducing its costs and risks, enhancing its reputation and trust, and attracting and retaining talent and investment.
The opportunity rehabilitation programmes can have in supporting the UKs ambitions to net zero, through the development of ‘green’ skills. This builds on work such as the Amey’s Clean, Rehabilitative, Enabling and Decent (CRED) programme and its newly developed partnership with the Duke of Edinburgh’s Award, which sees serving prisoners engaged through meaningful work experiences and employment support.
The importance of procuring authorities to be targeted and specific in desired Social Value outcomes.
However, the justice system faces some specific challenges in embedding ESG, such as limited funding and resources, complex and rigid contract structures, short-term and reactive planning, and lack of data and transparency.
To drive meaningful change, the justice system should shift its focus from short-term inputs and outputs to long-term ESG outcomes and impacts, with a strong emphasis on measuring and reporting progress. As well as cultivate innovative partnerships with public, private, and third sector and civil societies.
There are emerging opportunities to support this transition. The new Labour government’s commitment to social value and transparency, along with growing interest from financial institutions and investors in ESG initiatives, creates a favourable environment.
Additionally, green skills training and employment for prisoners and ex-offenders present a promising avenue. Service providers like Amey can play a crucial role by facilitating community service programs for prisoners nearing release, offering green skills training that equips them with qualifications in emerging or high-demand markets, and building connections with academic institutions to support these efforts.
Conclusion
ESG is not a nice-to-have or an add-on for the public sector. It is a must-have and a core part of its mission and vision. By embedding collective ESG factors across its activities and functions, the public sector can create sustainable outcomes that benefit not only its own organisation and stakeholders, but also the wider society and the environment.
The justice system is a prime example of how the public sector can embrace and implement ESG and overcome the challenges and seize the opportunities that it presents. By working as a collective to drive change it can also serve as a model and a catalyst for other public sector organisations and sectors to follow and learn from.
Article first published on New Civil Engineer on 30 August 2024