ESG In Sight – what it means for the construction industry

JULIEN HORNACEK: Hey, guys. Nice to be with you today. So indeed, I'm Julien Hornacek, and I'm leading the ERM capabilities in Europe, including climate. And I'm part of the French task force when it comes to ESG and is very happy to have this discussion on ESG and construction today with you guys.

BILL CREEDON: Well, thank you both. It is great to have you here. And this is a topic that is really in every boardroom, it's being discussed. It's being talked about around every project that's coming out. As different countries are investing in infrastructure and all these different aspects to bolster their economies, everybody starts talking about ESG.

And so, I want to start at the basics. And maybe Lisa, I'll come to you. What is ESG in general? And is there a way to even put it out as far as how it might apply to construction from your perspective?

LISA LIPUMA: Sure. Yeah. Thanks, Bill. I'd say that ESG fundamentally, it's a term used by investors and clients and regulators and credit rating agencies to evaluate corporate behavior and determine the current and future financial performance and sustainability of companies. So, this isn't entirely new.

A lot of the elements of ESG are things that the same audience would look at for a company for a long time, just sort of indicators of investability in short. But then it's taking a bit of a new turn now as well. So, I'd say that for construction, there are certain things that pop out for construction as key issues.

The key issues according to MSCI are health and safety, opportunities in clean tech, corporate behavior of bribery, corruption, business ethics and fraud, and shareholder rights, being that many construction companies are majority-owned and that ESG investor folks want to look out for the interests of minority shareholders. But that's it at the very top level.

BILL CREEDON: Lisa, you used a term there, a reference, a group, MSCI. What does that represent?

LISA LIPUMA: They're a rating agency, really. So, for a long time, we've actually used them in, for instance, our D&O model to provide corporate governance scores and accounting scores. So just looking at different business behaviors as indicators of risk, really.

BILL CREEDON: OK, good. We recently sponsored a survey of, I think, it was around 300 risk managers around ESG. Can you maybe share a few of the highlights that came out on that?

LISA LIPUMA: Sure. Yeah. To me, the biggest takeaway from this, and I think this sort of wraps up what my interactions with risk managers are on ESG quite a lot, is that about 2/3 of risk managers say that their organization has ESG goals and targets, but only 17% of those risk managers have documented targets themselves with clear milestones.

So, to me, this says risk managers are caught on the back foot a bit on this. They're in sort of a reactive position. And I think that. What needs to happen now is they need to get ahead of this and start thinking of it as a risk issue, and many risk issues, really, versus just a single issue.

BILL CREEDON: This might be a little bit of a tough question, but if I were to say in the life of a project, a contractor comes in at a certain point to build the project. And maybe they've done a little bit of design. But an owner who envisions the project and the finished project, where does the ESG aspect of it lie the most?

LISA LIPUMA: So, it might be worth taking a little bit of a step back and thinking of ESG as-- there are the three categories, E, S, and G. And then there are individual things under each of those. So, carbon emissions are part of it, but also resilience to climate change is part of it. Worker safety is part of it. General corporate governance is part of it. So, it's all these things.

And so, I think that it's just driving everyone in that value chain to have to be mindful of all these things in their own role in it but then also in their partners roles in it. And the downstream, whoever is the ultimate user, as well.

BILL CREEDON: Yeah, I think that's a perfect point, and I think we'll expand on it in a bit here. But when you think of all the different aspects that you just mentioned, you could think of using materials that are friendlier to the environment or socially more acceptable but also cost more money. And owners may look at it and think, well, I don't want to go that route yet. I'm going to wait.

Or a market, a carrier, could look at what's being built and think, hey, we're not that comfortable with this product yet. I'll use the example of CLT, Cross-Laminated Timber, where some of the carriers are still not quite to a point where they want to accept that as a good building material, yet it's been recognized as probably better for us overall from an environmental standpoint and from a green factor.

You know, a lot of that, I think, from the construction side is yet to be developed, but I think we'll hit more on that. I just wanted to expand that a bit. It sort of leads me to the different pillars that you talked about. And Julian, you bring a little different perspective to this. What do you see really around these? Can you differentiate some of the pillars, as you see it?

JULIEN HORNACEK: Absolutely. I mean, you mentioned some of the things. And, of course, among all the pillars we see quite a few things. I mean, under the [E] those numbers aren't super well-known-- which we know that construction represents almost half of global energy consumption. I think it's around 40%. We have a quarter of global water usage. We have a third of greenhouse gas emissions. So, this is quite significant, right?

But also, given that I'm on the EU side, I wanted just to show an example of the growing regulatory pressure. We have this regulation in the EU, which is called the energy performance of building directive.

It's been there for quite some time because it belongs to the Fit for 55 EU package. And amongst the updates which are discussed, what do we have?

We have a whole life carbon legislation, and when we add a potential upgrade of the European building stock to zero-emission by 2050, does that only, just this one implies that 75% of the building stock will need to be renovated in the next 25 years-- 75%. That means renovation rates will have to double. So just to show you-- so we talk about pressure from all kinds of stakeholders, but the regulatory pressure is extremely big. And this is one which, if you don't pay enough attention, might very likely impact significantly some of the measures which are part of the construction sector nowadays.

BILL CREEDON: You bring up a point, Julien. You bring up the European Union and the different countries that are all looking at it. Do you think that hurts our progress? My question really is, do you think the individual nature of each government or each municipality that's looking at us, does it slow us down in our advancement of what we want to do around ESG?

JULIEN HORNACEK: Very good question, and this might merely be my opinion, but I do believe that the stakes are so high that you need at some point, some footprint, the action coming from, I would say- I wouldn't say "government" because I don't want people to be afraid, but a localized, centralized body. Without that, I'm afraid that, as you said, due to the individual nature of some stakeholders, we might struggle to get this extra mile.

And I mean, we have to. It's not an option. We have to get there. So, relying solely on those institutions would be a failure. But using that as a leverage and having those central institutions designing a core framework and a binding one, I think it's absolutely key to then allow the whole sector to go further and be able to take the right actions which are needed.

LISA LIPUMA: ESG is so broad, but every agency that rates it, almost every person that looks at it, has their own take on it. So maybe we can agree generally what underlies it, but the weightings are different for every agency. If you have an ESG score, it's different for everyone who scores you, and they think that different things are more or less important than others. So, it is so challenging that you're not going to have this one opinion.

And so partly, it's going to be market-driven. And that is what's happening now, at least in the US. It's more market-driven for some of this disclosure and things like that.

The Net Zero 2050, I mean, you're right. That requires an Industrial Revolution on the scale of any other Industrial Revolution that we've gone through economically in the last several hundred years. It's huge changes that have to happen.

JULIEN HORNACEK: I wanted to just add something, about maybe the macro side of how ESG is crucial to construction. I mean, and maybe that's the case for luxury or retailer, but we have an expanding population, you know? And urbanization is going to increase, I don't know, maybe twofold, threefold? I don't know, but, of course, it's going to increase.

So, if we let it go, if it's being left unaddressed, then the construction ecosystem carbon output is going to blow over because, I mean, due to the sheer fact that now the population is going to be multiplied, that cities are bigger and bigger. So that's why, to come back to your initial question, do we need to have this kind of help or maybe this role from institutions, I guess that the dynamic of the urbanization is so big that just any help is welcome. So, either it comes from individual actions, or from government, or supranational. But I think we're not in a position to refuse any help, irrespective of where that help is coming from.

BILL CREEDON: Do you feel we're at a tipping point as a society that will force us to work together to address the ESG aspects? Do you feel like in the last year, maybe, we've even hit that tipping point? Lisa, what do you think?

LISA LIPUMA: I think definitely, on climate, yes. And I think that a lot of the work that Julien and I are both doing now is looking at climate as a financial risk and putting a number on it. So, part of the difference between what has been happening historically and what is happening going forward is companies had to disclose-- at least public companies-- had to disclose material risks in their 10-K.

But how do you define materiality? There wasn't a set timeline in how far in the future you had to look. So that is a big change that-- I mean, as far part of all the COVID disruptions, all the supply chain disruptions, people are looking at risk differently. And so, they're taking a longer-term look at climate risk as it's an amplifier of all risks-- the transition and the physical risk. So, I think that has definitely-- we've hit a tipping point on that.

JULIEN HORNACEK: I'm completely with you on that one. I mean, we know that most of the building stock which will be there in 2050 has already been built. So somehow, we are already beyond the tipping point because the building stock is already there. So, we don't know what the climate change is going to look like, but we know that buildings have been built, and most-- maybe, I don't know, 70%, 80%-- of the future stock is there.

So how is it going to cope with, I don't know, with hailstorms, with rainfalls, with any climate impact? And so yeah, I mean, we need to work right now. We need to make sure that whatever we do, maybe we-- so we are liaising back to renovating, but we need to make sure that whatever ideas we come up with to facilitate that renovation is-- I mean, we give it in a thought because it's already there.

BILL CREEDON: Yeah, I'm going to come back to climate because everybody-- I think this is something that happens. Climate's the easiest for everyone to understand. And so, they naturally fall, to talk about ESG, they talk about climate. I want to talk about politics, and I want to talk about the impact of political environments.

Have you seen over the last few years that the almost extremist aspects of politics impacting ESG, around the world, do either of you have a thought on that?

LISA LIPUMA: It's so interesting that when you read the news on ESG, every time it's brought up, it is very political in how it's reported. And I imagine if you're very much in politics, it's, of course, political. Everything in politics is political. In my work, it really hasn't been-- I mean, and I think part of that is the approach that we take.

It's pretty dry, to be honest. To look at ESG, we say this is a framework to look at different risks and how different things can go wrong. I mean part of the reason people talk about climate is it's the one that's so different now than it has been.

JULIEN HORNACEK: Yes.

LISA LIPUMA: But a lot of these things are things that you're already looking at. Again, it's workplace safety. It's product safety. It's general governance. I mean, a lot of these aren't new, but just saying, if you break these down into their individual issues, these are mostly just good business.

JULIEN HORNACEK: Actually, you know, politics, paying attention-- maybe a bit too much, I don't know-- but ESG makes sense because, when talk about climate, the S is super crucial because the S is about workforce, is about well-being, is about diversity. So, it's crucial to finding a purpose.

G is governance, is business ethics, is human rights, is actually making sure that the world supply chain is actually useful. So we talk a lot about climate, you know, but the thing is, if you pay attention to the S, very often, when you think about the construction industry, and about health and safety within the construction industry, the focus has been on physical safety. However, over the last years, we talk about mental health, and we talk about well-being.

So these too are skyrocketing, and this is now one of the most prevalent causes of innocent injury. So that's something. And we talk about, we've seen majors on super large projects thinking about how to feed well people working on a project, about transportation. So that's why, to come back to your question about why politics, I mean, does it too much? Actually, no, because it's just ESG encompasses every element that is critical to making sure that a Society, with a capital S, functions well and takes care of the participants.

BILL CREEDON: You're making me think a different path here, too, because if we step back and look at what's happening, I think in the last few years, attention really has been brought more on to ESG, and everyone is hearing it, but we're also seeing a generational shift in a lot of the businesses. In construction in particular, you're seeing a generation that's-- I mean, I'll use the term. I don't like it, but "aging out." And a new group of younger people are moving in to be decision-makers. I see it in our own insurance industry as well.

Is it impacting carriers, how they evaluate ESG? Is it impacting claims that may be arising, or how people are setting the course for their businesses? And Lisa, maybe, again, start with you. Are you seeing much of that?

LISA LIPUMA: I think so, to some degree. And then, it varies by industry, too. Some tend to be more forward-looking, and some tend to be more set in their ways. And insurance is one of those industries that isn't quick to change.

So underwriting is inherently based on backward-looking data. And I think you brought up brought up some of the new technology for on that. What is it, CLTs?

BILL CREEDON: Yep, yep, Cross-Laminated Timber?

LISA LIPUMA: Yes, yes. Underwriters don't like new things. And it doesn't matter how good it is on paper and in theory. They need to see a claims history on it, and there isn't one for that, really, yet. And maybe that's a good sign, right? There aren't claims yet. [LAUGHS] But they don't know until they see it.

But yeah, insurance is slow to move, but it's moving. You are seeing new underwriting criteria coming out that's sort of to force, to get in line with transition, and because they have investors who are looking forward on this.

BILL CREEDON: Do you think the industry is going to move-- meaning the insurance industry-- is it going to move quickly enough to acknowledge and, I'll say, reward clients that are willing to take those initial steps, spend more money on a project, be more creative and more attentive to all aspects of ESG in their designs? Do you think we're going to be able to move quickly enough for that? Or do you think the carriers-- can we afford the carriers to stay like they have, and always looking backwards instead of ahead?

JULIEN HORNACEK: The thing is, our economy has always been characterized more specifically by the last year by disruptions. And that applies to any sector. So, for instance, if you look at the construction, ifmajors, they don't decide not to allocate enough resources with a budget, with a people, with a technology.

And of course, there are going to be new players coming in-- maybe the new players who are more agile and who came up with like being low-carbon players. And hence, they will be more agile, and hence, they will be securing these new projects-- the ones that the majors won't be able to get because due to the size, of course, of their operations, they were not reactive enough.

And I mean, that's been happening all over the place in the economy, where you've seen those traditional players being, maybe, a bit too sure of their competitive edge, not being agile enough, and not being disruptive enough, hence losing some market share. And if we add that regulation bit, if they start to-- if we see governments heavily penalizing those traditional corporates with the large carbon footprint or any other ESG impact, then we will just pave the way for new entrants.

I mean, it won't be just a small startup, you know, from around the block. It would be, of course, a significant company. But still, it paves the way for these new guys to get in and secure those contracts, and basically not replace, but just gain some extra market share.

BILL CREEDON: Lisa, I want to give you the opportunity to maybe, also expand on that. Did you have thoughts around that same question?

LISA LIPUMA: It's sort of a question of which domino is going to fall first, too, though. So, for instance, government contracts are pushing a lot of the construction dollars these days, and sometimes they specify materials. So just who has the choice on what is used? And so, is the government going to change what they say first? Are the insurance companies going to say, well, we won't write this anymore unless you're using low carbon materials, unless you are aligning with net zero goals? And it could-- it's almost a game of chicken at this point of who's going to move first.

BILL CREEDON: Right.

LISA LIPUMA: But I think that will, though. And I think we have to.

BILL CREEDON: It ties back to, though, let's go to all aspects of ESG. It does go back to people want to see everyone in business making the appropriate changes to help us all. And the biggest issue in construction-- or one of the biggest issues in construction-- attracting and retaining labor.

It's a very, very big issue. If you see the projects have increased in size substantially, when you look at some of the semiconductor manufacturing facilities that are being built, these are in the 10 to 20 to far more billions of US dollars that are being put on one project site. And when you look at the number of workers that's going to be required, can you see a time when someone's approach to ESG will actually be a strong indicator and attractor of bringing labor onto their projects?

LISA LIPUMA: I think it is already. I mean, it's hard to hire right now for anyone or anything. I think people have more choice over where and how they work, and people are being choosier, that they aren't going to agree to these harder conditions or unsafe conditions and things like that. I think it's happening already.

JULIEN HORNACEK: I did a project last year for one of the largest oil and gas companies, and, of course, one of the most critical risks was attracting new candidates. And the company, they were quite eager to try to attract the brightest engineers just graduating from the leading European schools. And actually, they could not because whenever they would go on campus and have a discussion, of course, there would be some. Don't get me wrong, there will still be people eager to go to oil and gas because it's a fantastic sector with a million things to be done.

But still, the trend is shifting. And like 30 years ago, that was one of the hot sectors, and every smart engineer would go there because, no, you could do a million things over the globe. But right now, it's changing, you know? And they're paying attention.

So of course, for oil and gas, it's going to be the E. But there could be some other companies where it would be the S that would be an issue, some others where it would be the G which would be an issue. But yeah, but globally, the ESG is getting an issue.

So, it's not a binary thing. Don't get me wrong. I can't tell you that tomorrow, you will see a massive drop and it will be over for some companies to hire.

Of course, now, it's a wave. It's a lengthy wave. It takes time. But if you just don't act swiftly enough, then you react, and you will wake up in 10 years from now--

BILL CREEDON: Right.

JULIEN HORNACEK: And you will have lost all your bright workforce, or all the workforce will have aged and not being replaced. So, it's very typical of HR risk. You have to monitor that on a daily basis.

BILL CREEDON: I think, Julian, you hit on something that-- the oil and gas industry. People think, oh, oil and gas, it's dirty. There's no way we want to work in that industry.

Actually, I think one of the ways I've seen it or read about it is that industry also has to get on the continuum to move from here over to where they are fitting in more, I guess I would say, on the ESG expectations. And they all want to.

So, it's not for us to desert them because, frankly, they're not-- the world's not ready to just go to 100% electric, or what's perceived as clean energy. It's got to be built. And you need to build it with contractors that are ready to do that.

I think at the same time, we need people to understand, though, that there isn't just a day that it all flips off. If you talked about the electrification of the world for all these EVs, electric vehicles, that are being done, you need a whole new infrastructure built. Just go drive around and look at all the gas stations. You need to have EV stations that are ready to do, set up to do your charging.

All that needs to happen. So, it's an exciting time. But I think things need to be looked at a little bit. JULIEN HORNACEK: You mentioned "exciting." And I mean, there are exciting solutions right now within construction--

BILL CREEDON: Oh, yeah.

JULIEN HORNACEK: --industry 4.0, digital twins.

BILL CREEDON: What's a digital twin?

JULIEN HORNACEK: It's basically creating-- as you're building your design, creating it online, and by having captures and using IoT on the current building, you actually replicate the actual building into a digital one. Hence, when you do your scenario testing, and when you just run a hypothesis on the digital twin, you can see the actual consequences that would happen had it been real.

BILL CREEDON: Interesting, yeah.

JULIEN HORNACEK: So basically, it allows you to simulate the reality. And so, you can run hundreds, thousands of different scenarios, whether it's E, S, G, or anything else. You can run hundreds of scenarios, and just model the impacts, and then capture, retain the most efficient solution to your problem.

So, it's all industry 4.0. It's data. It's creating a huge field where you're talking about you as a bright student, but where they can go there, develop new solutions, and help design something which works well for the oil sector.

BILL CREEDON: Lisa, maybe move on to what are you seeing from a technology standpoint?

LISA LIPUMA: Technology is a really interesting one, and it has a lot of the same labor issues that we're talking about as well. So, there are-- some of it is new technologies that are out there and are ready to be installed, but there's not always enough labor to do it. And then, there's also obsolescence risk, too. So, it's exciting. There are these huge possibilities. But then, there's always risk with doing anything new. And upside, as well. It's not all downsides. And that's sort of what's fun about looking at all this, is that it can go either direction-- that adopting the new technologies that are lower emissions or that reduce the human strain on things, automation of certain things. But again, it can go either way. And so again, people don't know if they want to be the first to invest in it, and they want, maybe, someone else to work out the kinks first.

JULIEN HORNACEK: Yeah, so that's typical.

BILL CREEDON: As I've been looking at some other aspects of this, it seems as if the sharing of knowledge, the sharing of experience, I think Julien mentioned supply chain aspects, suppliers not wanting to share, really, how they're doing because they're afraid that could impact their business. But for us to get a real handle on supply chain exposure for clients, you really need transparency into all these businesses. Do you see the lack of transparency between all the different parties in the ESG equation-- do you see that as a slowing factor in us really getting ahead of it? Lisa, any thoughts?

LISA LIPUMA: It's hard, right? It's easier for public companies. It's easier for household name companies because there is more information out there about them. Their suppliers may be things that-- often are things that no one's ever heard of and aren't public, don't disclose much, don't have to disclose much, and don't want to. And to some degree, the household names can put pressure on those suppliers to disclose things, but not on the tier 2 and the tier 3.

And I mean, supply chain data is difficult to get your arms around anyway. Even some of the world's biggest and most sophisticated organizations that we work with, you start to look under the hood on their supply chain data, and it's not there. They just don't have it.

So, it's a really hard thing to deal with, even just in the most traditional sense. But then, in the explosion of the additional data you have to look at to get your arms around ESG for it, it's so much more. And it's going to take time. It's difficult, and it's change of behavior, and it's change of how things work. So, it takes time.

JULIEN HORNACEK: When you mentioned your sharing and the supply chain, it makes me think, too, of something which I believe is fundamental if we want to get something done with regard to ESG. It's actually having this collaborative posture. You know that SMEs represent the vast bulk of the ESG footprint, irrespective of the sector? ESG footprint lies within SMEs. And construction is a highly fragmented sector with a lot of SMEs. So, unless we are able to get those SMEs on board on that ESG journey, then even if the major gets there, it could be a failure because you need to have everyone on the train to do that because those SMEs, they lack financial resources. They don't have the resources, basically, of the major-- whether it's technology, whether it's budget, whether it's people.

So, who can help the SMEs, improving there, identifying, and improving and finding mitigation actions to develop [INAUDIBLE]. So, you need that collaboration. We've seen that in other sectors in luxury, inretail. I mean, even in construction, I've seen a very famous consultancy company setting up a council, trying to facilitate the engagement of stakeholders in climate.

So, you need those in as part of a partnership-- those discussions, those exchanges-- to allow every-- on all of the supply chain, to progress together, and being able to actually roll out an efficient ESG roadmap and, most importantly, actions.

BILL CREEDON: Now, do you feel we could reach a point that, as a company owner, if I'm a contractor and I'm running my company, that I'll have an ESG score that I'll advertise? Do you see us getting a consistent-- like a rating that we might have for these companies?

LISA LIPUMA: They're out there today, and there are different independent agencies that provide them now. And some companies do advertise them. Today, I don't think any one of them is all that meaningful, though. Again, like I said, they all weight different things differently, and they're more intended for an investor audience today.

But there's criticism of that, of how they weight things. And I know-- I don't know if we should be calling out specific companies on this, but there's an article that-- it's not a construction company, but the article that someone called out that is in all the ESG funds and has a high ESG score. But the product that they make is there in food and beverage, and the food and beverages that they make are not healthy. They're full of sugar and in a world with a diabetes crisis. Then, why do they belong in there?

So, it's controversial. And it should be controversial. And that forces transparency.

BILL CREEDON: Keep going on this thought, though. What will it take? Because I'm imagining a future where the insurance market, in order to give capacity, is going to say, ugh, you actually have to have an ESG score of this before we're going to be willing to give you our super package. You won't get it. Is there a group that might be leading that charge that could get us to that rating-- that universal rating?

LISA LIPUMA: I don't think there's going to be one universal rating. But I think there will be various accepted universal ratings. And actually, we have our own coming out very soon, ESG Clarified that will pull from various data sources, so you don't have to fill out a new form for it. And it all relative to your industry, by the way.

So that's what all ESG scores are. So, it shows how you compare to your industry-- which is in line with how we help broke for our clients anyway, is we always help them put together that underwriting package and help them demonstrate why they are a better risk than their industry peers, or better than the underwriter thinks of them already.

BILL CREEDON: But you see that in the future, it will be prominently displayed? That we'll be showing that score, regardless of the group that's accrediting it?

LISA LIPUMA: I do. I think there will have to be a story around it because it's not simple, one thing. It's such a complex issue. But I think that will be one of many criteria that just becomes part of the insurance forms and underwriting criteria.

BILL CREEDON: So how do we know, then-- maybe it ties into one of our wrap-up questions here, but how do what "good" looks like from an ESG decision-making process? How do we know what good is? How do we tell our clients what "good" is?

LISA LIPUMA: I think it's old-fashioned risk management. It's clarity. It's thoroughness. It's having good governance around it. It's looking at it point by point.

I mean, Julien, I think you'd have, I'm sure, more to say about it. But I think that managing it is you manage it like the many risks that sit under it, as you would if you had good risk governance anyway.

JULIEN HORNACEK: We do risk, right? So, risk is, by definition, something which likelihood of occurrence is less than 1. So, we actually don't know what's going to happen. Your risk might unfold, might not-- we don't know. But to make sure that everything we do, we do it the right way, it all boils down to what you said-- governance.

So, if you have the right structure in place, you can't say that this risk would happen. Maybe it's something is going to happen, and it will have dire consequences for the company or the sector. But what you could do to prevent that from happening is having a [INAUDIBLE] is enough, the right governance. So, it means-- and governance not only about your company as one, but more about your supply chain, its governance, and with your stakeholders.

If you really pay attention to your accountability towards your company, towards your employees, and towards the whole value chain, then, most likely, you might succeed. But it might be even more complex in the coming years before, actually, even being more simple. We're trying to facilitate this.

So, we talk about ESG Clarified, but also, we have a few things. On climate, for instance, we have the Climate Transition Pathway, an accreditation framework which is designed to assess an organization's climate transition plan-- so making sure that such plan is sound and thorough, and any company could be-- it could be, actually, construction or any other sector, but by getting this accreditation, you will have an access to a specific pool of careers, of careers which have been pre-selected under this accreditation, and get a better package, a greater package, basically. Where it's capacity, or whether it's premium, or whatever.

BILL CREEDON: And Julien, it could drive more investment, which is what we need in that as well. I want to wrap us up. I want to-- first of all, I want to thank you both, but I want to give you both an opportunity to maybe give the listeners a picture from your perspective. As we look to close the insurance gap around ESG, what are one of the number one or two key areas that all of our listeners are going to start to see more and more of around ESG over the next couple of years? Lisa, why don't we start with you?

LISA LIPUMA: I think I said it once, and I'll say it again-- that I think that the secret to managing ESG is risk management. And I think not enough companies are taking that approach. But I think you need to look at it as a whole, and break it down to individual risks, and figure out what you're going to do about it. And if you make announcements about your ESG targets, then make sure you have a plan to back it up. I think that's the biggest thing to me, is that risk managers have a really big role to play here, and can add a lot of value here, and aren't necessarily at the table yet today. And I think the insurance piece will follow.

BILL CREEDON: That's excellent. Julien, what do you think? From your perspective, what are people going to see a lot of here, and right away, in the next year or two, what are they going to hear more and more about?

JULIEN HORNACEK: I remember working for a chemical organization years ago which, in their risk management process, considered that any risk whatsoever, irrespective of the likelihood, if it was critical enough, then they should not see the likelihood and that all of the risk should be dealt with the same way, because they consider that if it's critical, then it has to be managed. And why am I mentioning this? Because we hear every day, oh, is E more important? Is S more important? Is G more important? It's actually irrelevant, and to be fair, market conditions, every single one begins with S because it's social. Whether it's climate, whether it's governance, by the end, it's about the people. Whether your employees, the people you work for, your clients, your providers, it's all about the people.

If you want to get a growing business, and when you grow your market share, you want to be able to attract the right people, you don't want to be unable to be compliant with a specific regulation in China, France, or the US. It's like, pay attention equally to all these elements, and I'm sure you'll be good to go.

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BILL CREEDON: That's great. Julien and Lisa, thank you so much. Really good conversation.

LISA LIPUMA: Thanks, Bill. A pleasure to be here.

JULIEN HORNACEK: Thank you guys.

BILL CREEDON: Listeners, thanks for joining us on this one, and we'll look forward to talking to you on the next Construction Blueprints podcast.

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