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BIM & ESG 2024

Let’s face it: it hasn’t even really entered the public consciousness yet, and we already see too much ESG. Yet it will be a constant theme at business events for a very long time to come, not to mention real estate and construction events, which have been dominated for a few years by another buzzword: BIM.

These two subjects, which have been chewed to pieces, are now brought together in a single article because they represent a very mutually supportive combination that is both rare in human history and could very well determine – in a positive (!) way – the direction of the years to come.

BIM

Building Information Modelling (BIM) is a digitisation-based approach to the design, construction and management of the built environment. This workflow integrates state-of-the-art technology and collaborative processes with data management and accompanies the life of the facility throughout the lifecycle of the building. BIM is a complete departure from traditional methods, and it is incredibly efficient across the entire construction and real estate vertical.

⮕ What is BIM?

BIM is a digital representation of the physical and functional characteristics of a building.

In BIM, unlike traditional 2D drawings, we create a three-dimensional model that includes not only the geometric dimensions, but also important information about each element of the building. This data-rich model acts as a repository of information that can be shared and easily accessed, updated and analysed by project stakeholders throughout the lifecycle of the building.

BIM’s operating mechanism and myriad benefits define the whole project, and can thus

What does it mean?

In the design phase, architects and professional design engineers work seamlessly together in a virtual environment at almost the same time, so they can quickly and transparently identify and correct potential clashes and problems before they occur on site. In a ‘live’, comprehensive model, all building elements can be accurately visualised and presented with a wealth of information, allowing much better decisions to be made throughout the project.

In the construction phase, the positive impact of BIM is very visible in project coordination and change management. Contractors use the model itself instead of printed plans for installation and construction, accurate scheduling, cost estimating and materials management. Construction documents are automatically generated from the model, reducing errors and discrepancies often found in traditional drawing methods.

However, the real potential of BIM lies in the operational phase of the building. Facility managers have access to detailed data on all building components, from mechanical systems to structural elements, facilitating maintenance and minimising loss-causing forced outages. This information is stored in the physical building’s “digital twin” and can be used to easily implement predictive maintenance to optimise energy use and create a safe environment for building occupants.

The advantages of the BIM methodology can be seen in many areas (time, cost, sustainability, etc.), which are discussed in the article “What are the BIM dimensions?”.

And what makes this happen?

It depends very much on interoperability and collaboration which are key features of BIM. The digital model allows all disciplines and all project actors to have access to the same information content at any time, facilitating effective collaboration and communication.

A huge advantage of digital data is that the information from it can be easily shared between different software and apps, resulting in a seamless exchange of data throughout the project, like this:

Project participants have controlled access to the virtual building model via CDE

Collaboration is so fundamental to BIM that the market specifically ranks on it. The BIM levels show the cooperation between the project actors, which shows how “mature” the BIM workflow is: as the cooperation between the different actors increases, the more efficiently and integrally the information content of the model is used.

But there is something else that is very important for BIM to really take off internationally: compatibility, which is made possible by standards.

⮕ BIM standards and implementation

Standards play an important role in the application of BIM at industry, national and international level. Today, many responsible countries have made the use of BIM mandatory in public investment, as the methodology has proven to be highly effective in reducing costs, increasing efficiency and improving transparency.

In order for BIM to be applied in real life, industry-wide compatibility and consistency is needed. The development and implementation of standards at world and European level is coordinated by the BIM Working Group of the European Committee for Standardisation (CEN), which brings together experts from 34 European countries, including the BIM National Technical Committee of the Hungarian Standards Body.

⮕ BIM in Hungary

Fortunately, the Hungarian state has also recognised the benefits of the methodology and has committed to its dissemination, enacting a new building law in 2023. The regulation covers the following areas:

Public procurement projects: for investments above or equal to the EU public procurement thresholds, technical implementation based on the digital building model has become mandatory throughout the lifecycle of the project. As part of this, a BIM-based execution concept should be prepared, which includes the definition of plans, cost planning, item order, spatial organisation and scheduling.

Standardisation and guidelines: see above, standards ensure that operators – including designers, builders and operators – use the same methods and tools. This facilitates cooperation and communication and allows for comparability in public works projects. One such system is ISO 19650, one of the first to be introduced at BuildEXT.

Training and education: the state intends to support education and training in BIM technology, including university courses, professional training and workshops. It is a very important area because Hungarian education is seriously lagging behind in practice, which makes BIM extremely difficult to apply, which is why BuildEXT started Revit training a few years ago.

Sustainability: the new regulation integrates sustainability considerations more and more deeply, reducing the negative environmental impacts of construction investments by an order of magnitude. These include requirements for energy saving and the use of renewable energy sources, the recycling of building materials, and the use of environmentally friendly technologies and practices.

Data provision: technical, financial and temporal data collected using BIM must be provided to the authorities in a regulated digital format. This ensures that public authorities can properly monitor and evaluate construction projects, which can help to reduce corruption in the construction industry.

Public regulation aims to support the widespread uptake of technology, thereby increasing the efficiency, transparency and sustainability of the construction industry.

Of course, like all change, the introduction of BIM comes with its challenges. While there are many benefits, the shift from traditional methods requires a very significant investment in technology, training and processes, and this needs to be coupled with a very strong leadership commitment. The methodology is therefore slow to spread: smaller firms are slower to change, mainly because of a lack of resources and expertise, while larger firms are slower to change because of rigid hierarchies and inflexible thinking.

We work in BIM, but it was not easy

If you’re interested in how the transition went, come to one of our meetups ⮕ if you haven’t already, sign up for our newsletter and we’ll let you know when the next one is!

BIM has a huge future ahead of it; the integration of newer and newer technologies arriving every day will continue to make it easier to use and exponentially increase its efficiency.

The Internet of Things (IoT) and sensor technology, which enables dynamic, real-time monitoring and analysis, stand out. But a disruptive technology that burst into our lives a year and a half ago was Artificial Intelligence (AI), which not only helps our colleagues to automate collision detection and optimise plans, but now also to generate plans.

ESG

What is ESG?

ESG is an acronym for Environmental, Social and Governance, which takes into account not only financial performance but also the wider impact of companies on the environment, society and corporate governance – 3 areas in which some companies are required to report publicly.

ESG aims to monitor and transparently communicate the non-financial risks and opportunities inherent in companies’ day-to-day activities. More than 50 000 European companies are directly affected by ESG reporting obligations from 2023.

Why ESG exists?

Because of climate change and the many social and other problems we face, the wider society, from investors to consumers, increasingly expects and demands a proportionate level of responsibility and positive contribution to our lives, in addition to the ability to generate profits.

Organizations are therefore under increasing pressure to adopt environmentally friendly practices, not only to mitigate climate change, but also to align with global sustainability goals such as the UN Sustainable Development Goals (SDGs).

The Sustainable Development Goals (SDGs) summarise the goals for future development, international cooperation and international development, based on the principles and ideals of sustainable development, i.e. international cooperation for sustainable development and international development cooperation (Wikipedia)
UN Sustainable Development Goals (Wikipedia)

So what areas and objectives are covered by ESG?

Environmental (E – Environment): relating to the company’s impact on the natural environment: reducing carbon emissions, carbon footprint, water use, waste generation, biodiversity conservation.

Social (S – Social): the social dimensions of the operation: management of employees, relations with local communities, diversity and inclusion policies, and the assessment of the protection of human rights in the supply chain. It covers work practices, taking into account the health and safety of employees and ensuring the well-being of those involved, both inside and outside the company.

Governance: this pillar focuses on corporate governance, the systems and structures that oversee the operation of the company. Strong governance ensures ethical behaviour, accountability and transparency in decision-making processes, covering executive compensation, board composition, risk management and anti-corruption measures. Effective governance mechanisms promote investor confidence, reduce the risk of corporate scandals and support long-term sustainability.

Integration of ESG

ESG is not a separate entity, but a framework to be integrated into a company’s core strategy. Aligned with financial performance and risk management, it can improve operational efficiency and reduce costs, while enhancing corporate brand reputation and providing better access to capital.

Speaking of capital, we need to talk about the investor impact. As money is usually the biggest driver in our world, investors are also the biggest supporters of ESG implementation.

Sustainable practices can lead to more resilient and profitable companies in the long run, and ESG factors that can be understood at the beginning of a project are therefore playing an increasingly important role in investment decisions. This approach has led to the growth of sustainable investment strategies such as Socially Responsible Investing (SRI) and impact investing, where financial returns are in the scope alongside positive social and environmental outcomes (renewable energy, electric cars, microfinance, sustainable agriculture, etc.).

In addition to the legal obligation and the business return, the spread of ESG is stimulated by reporting and the transparency that comes with it. Organisations publish accessible, accountable ESG reports on the company’s goals, progress and challenges in addressing ESG issues.

What an ESG report looks like?

The structure, look and feel, updating, etc. of each ESG report will depend on the strategy, resources and depth of information a company wants to share. ESG reports of some TOP companies:

Alphabet (Google) | APPLE | Astra Zeneca | BMW | CISCO | GSK | Intel | Microsoft | Salesforce | Toyota | Unilever

As with BIM, standardisation is important, and frameworks such as the Global Reporting Initiative (GRI), the Sustainability Accounting Standards Board (SASB), the Task Force on Climate-related Financial Disclosures (TCFD), the International Integrated Reporting Council (IIRC) and the European Sustainability Reporting Standards (ESRS) help to ensure consistent and comparable reporting.

It is also worth mentioning the acquisition of green building certifications: be it LEED, BREEAM or WELL, which focuses on people’s well-being, their existence proves that the property owner is committed to sustainable practices.

ESG has a bright future, although measurement, data quality and the lack of universal standards make it difficult to assess accurately. In addition, greenwashing, where companies mislead the public and exaggerate their sustainability efforts out of all proportion to reality, poses a credibility risk.

Regardless, ESG is here to stay, because our world is facing many challenges: climate change, the transition from a linear to a circular economy, growing inequality, finding the balance between economic and social needs. And investors, regulators, consumers and employees increasingly expect companies to be good stewards not only of financial capital but also of natural and social capital.

⮕ ESG in Hungary

The ESG reporting obligation also has a significant impact on businesses in Hungary. The new ESG law came into force on 1 January 2024 and requires large companies and public interest entities to report annually on their sustainability performance.

The obligation applies mainly to companies which are of public interest or which are classified as large companies. This includes companies that

  • employ more than 500 people,
  • or whose total assets exceed HUF 20 billion, or
  • their turnover exceeds HUF 40 billion.

The ESG law will directly affect 3-400 large companies in Hungary. However, many more smaller businesses will also have to adapt to the new rules through indirect effects, in particular due to stricter transparency requirements in supply chains.

The law requires companies to establish a risk management system, maintain a complaints procedure and develop an internal responsibility strategy. The annual ESG report must be audited by an accredited certifier and submitted electronically to the regulator.

And then let’s ask the big question:

How can BIM help achieve ESG goals?

BIM and ESG are a rare combination in recent human history: they serve environmental and social interests while delivering business returns. Moreover, both paradigm-shifting systems are moving in the same direction: towards sustainable and responsible outcomes

The BIM workflow natively supports the achievement of ESG goals by its very principle of operation.

Environmental (E):

  • Energy analysis and simulation: BIM integrates the various analytical and simulation target software tools that designers use to optimise the energy efficiency of buildings (6D BIM).
  • Material selection and life-cycle analysis: BIM is based on the use of data, and can integrate databases of sustainable materials and their life-cycle impacts. This facilitates environmentally responsible material choices and reduces the carbon footprint of the building throughout its life cycle.
  • Waste reduction and change management: with accurate material calculation, prefabrication, proper scheduling (4D BIM), model-based change management, material use can be optimised and over-ordering and on-site waste minimised.

The built environment is the largest emitter of CO2

Check out this infographic on how BIM cuts the emissions of construction projects by half and the energy consumption of buildings by a third.

Social (S):

  • Well-being: using BIM to create comfortable, healthy, well-functioning buildings that maximise well-being. By simulating natural light, indoor air quality, spatial layouts, etc., we can create spaces that create an experience.
  • Accessibility and inclusion: BIM models can be used to design accessible spaces that are accessible to all individuals, regardless of their physical abilities. This promotes inclusion and complies with the ESG principles of equal opportunities.
  • Community participation: virtual models that can be accessed using AR, VR, MR technologies involve stakeholders – and even local communities – in the planning process. They facilitate clear communication of project plans, help manage fears and foster a sense of social cooperation.

Governance (G):

  • Transparency and accountability: the BIM workflow uses a Common Data Environment (CDE), which ensures transparency and efficiency in both design and change management, promoting accountability in line with good governance practices.
  • Risk management and safety: we can simulate the construction, installation and use processes in virtual space, identifying potential safety risks (8D BIM). With safety features integrated into the model, a detailed, accessible and up-to-date database helps to manage risk and is able to provide complex information to both investors and project decision-makers.
  • Regulatory compliance: BIM models can be prepared to comply with local regulations and rules. This ensures that the design and construction processes also comply with standards and legal requirements.

⮕ Data and collaboration

BIM is perfectly in line with ESG: it enables transparent communication and involves all stakeholders in working together to achieve ESG goals. In BIM, data can be easily shared, supporting collaboration and integrated decision-making. By using it, we can greatly reduce environmental impact and optimise well-being to an unprecedented level of quality, while making the project itself extremely cost-effective.

It can greatly reduce the investment risk: the sustainability and ESG readiness of the property can be assessed at an early stage of the investment, and thus the viability of the investment.

Examples of BIM &amp; ESG symbiosis (Graphic: BuildEXT)
Symbiosis of BIM and ESG (Graphic: BuildEXT)

The symbiosis between ESG and BIM is particularly evident in building life cycle management. BIM provides a comprehensive digital representation of the building, covering its entire life cycle, from start-up to eventual demolition and recycling of materials. And this holistic approach is a huge advantage for ESG-oriented investors focused on the long-term sustainability of projects.

A building generates a lot of data throughout its lifecycle. This data can also be used for building operation, environmental performance, resource use and overall sustainability analysis, optimisation and ESG reporting.

BIM is therefore not only a tool in construction and design, but also a construction and real estate fundamental for ESG purposes. BIM makes it possible to create a built environment that is in line with the principles of environmental responsibility, social equity and corporate accountability.

This article is based on Dean Foster’s BIM & ESG Linkedin post.

Csaba Melovics

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