What is ESG?

ESG stands for Environmental, Social, and Governance. It is a set of criteria used to evaluate a company's performance in areas such as environmental sustainability, social responsibility, and ethical business practices. ESG has become increasingly important in recent years as investors and stakeholders demand more transparency and accountability from companies. You could think of it as a social credit score for businesses.

The environmental component of ESG focuses on a company's impact on the environment, including its carbon footprint, waste management practices, and use of natural resources. The governance component evaluates a company's leadership, board structure, and internal controls. The social component looks at a company's relationships with its employees, customers, suppliers, and, importantly for us as the designers and custodians of built environment design, the communities in which a company operates.

What is so important about the Social component in the built environment?

At Studio X Hong Kong, we are committed to environmentally sustainable practices and to guiding and educating our clients to do the same. But an oft neglected component of ESG in Hong Kong, is the ‘S’, the Social value.

This component of ESG is particularly important in the built environment because it encompasses a wide range of issues that affect people's lives on a day-to-day basis and directly influences the well-being of the people who use the spaces we design. This normally starts with the customer in the case of retail design or the employee in the case of workplace design, but as designers, we should also consider other end users such as those tasked with maintaining the property, visitors such as clients along with specialist groups such as the disabled and those with young children.

Incorporating elements such as comfortable seating areas, communal spaces, accessible facilities, and diverse amenities can contribute to a positive social atmosphere, encouraging people to connect, engage, and dwell for longer in these environments, which can drive revenues and enhance a business’s reputation. For example, as a father who lives in Hong Kong with young children, I am amazed at how unfriendly washrooms can be. It is not uncommon for me to have to hold my son in mid air so he can reach the taps, whilst simultaneously dodging him away from a wet countertop edge. A basic lack of care on the part of the designer and landlord like this can lead to customers actively choosing to go elsewhere - and, invariably in a hyper competitive market like Hong Kong, into the arms of the competition.

Designing spaces with a high social value is crucial when designing the interior of a shopping mall for example. A shopping mall when reduced down to its fundamental components is a big building that conveniently connects you to shops and, perhaps, somewhere to eat. However, incorporating elements such as comfortable seating areas, communal spaces, accessible facilities, and a diverse and exciting array of activities, events and amenities can contribute to a positive social atmosphere and, moreover, give people a reason to spend not just a few hours but a whole day in the center.

It is crucial for businesses to give back to their customer base by offering something for free. Providing complimentary services or amenities not only showcases corporate social responsibility but also fosters goodwill and strengthens the relationship between the business and its customers. By offering something for free, whether it's a service, a product, or access to certain resources, businesses demonstrate their commitment to the well-being and satisfaction of their community. This act of giving back establishes a sense of reciprocity, where customers feel valued. It is a way for businesses to establish a deeper connection and trust with their customers. Ultimately, giving something back for free not only benefits the recipients but also strengthens the long-term success and sustainability of the business itself and is a key tenet of healthy ESG practices.

Leveraging ESG and incorporating a ‘public realm’ component within the interior design of a shopping mall or office space adds value to the business by offering additional services and amenities. This can often lead to a reduction in the leasable efficiency of a mall. But, if the correct balance is stuck, then this loss of leasable space can be translated into more customers, better dwell times and, ultimately higher and more sustained revenues.