ESG in construction is moving beyond emissions, energy efficiency and waste, with Australian businesses increasingly looking at how they manage people, suppliers and their broader social impact.

New research from Kennards Hire shows that 38% of Australian construction decision-makers now prioritise social impact and workforce initiatives, putting it almost on par with environmental priorities. The 2026 Kennards Hire Construction Confidence Check, which surveyed more than 400 senior Australian construction leaders and decision-makers, found compliance and reporting remains the top ESG priority at 41%.

The findings point to a broader shift in what responsible business looks like across the sector, with ESG increasingly encompassing how businesses support their people, manage supply chains and contribute to the communities in which they operate.

Tom Kimber, General Manager of Sales at Kennards Hire, says, “For the construction industry, ESG is increasingly about more than environmental performance. It is about building businesses that can operate responsibly, attract and retain skilled people, and create sustainable value over the long term.”

The people behind the projects

The shift comes as the industry faces significant workforce pressures, with skilled labour shortages identified by 43% of Australian decision-makers as one of the biggest threats facing construction.

This puts workforce development firmly within the ESG conversation. Investing in training, upskilling, career pathways and flexibility can help businesses address skills shortages, retain existing talent and attract the next generation of workers.

Social impact also extends beyond employees, with businesses increasingly considering their role in the communities where they operate. Supporting local partnerships and initiatives can strengthen community connections while also helping businesses build a stronger reputation as a preferred employer. 

ESG extends down the supply chain

ESG expectations are also moving beyond a company’s own operations, with one in three ANZ construction decision-makers (34%) identifying supplier ESG performance as a priority.

For construction businesses, ESG is increasingly becoming a commercial consideration, influencing who they work with, where materials are sourced and how supplier practices affect costs, risk and ultimately the bottom line.

Environmental action remains an important part of the equation, but the opportunity is to embed environmental, social and governance priorities into everyday business practices, rather than treating ESG as something to simply tick off. 

Tom says, “ESG is no longer sitting in a separate box for construction businesses. We’re seeing it increasingly influence everyday decisions, from how businesses invest in their people and resources to the suppliers and partners they choose to work with.

“This holistic approach matters because responsible business practices should be part of how a company operates, rather than a standalone compliance exercise. As expectations evolve, businesses that embed ESG into everyday decision-making will be better equipped to manage change and help shape a more responsible and sustainable construction industry.”

As the construction industry navigates economic uncertainty, labour shortages and increasing project complexity, ESG is becoming a broader measure of responsible business. For an industry building Australia’s future, sustainability is no longer just about what gets built – it is about how it gets built, who it supports and the practices that underpin it.

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