Validation of Challenges for Implementing ESG in the Construction Industry Considering the Context of an Emerging Economy Country

Abstract

In pursuit of profit maximization through practices that promote sustainable development, companies increasingly use environmental, social, and governance (ESG) criteria to guide investment. However, there are challenges in implementing these practices across diverse sectors, such as the construction industry, especially in emerging countries with limited related studies. This study validated the challenges of implementing ESG in the construction industry in an emerging country like Brazil, considering its relationship with the United Nations Sustainable Development Goals (SDGs). A literature review identified challenges associated with ESG implementation, followed by the development of a questionnaire based on these challenges. Subsequently, the questionnaire was administered to professionals in the construction industry and validated using the Lawshe method. Twenty-seven challenges were identified, of which twelve were validated, including the lack of standardized performance indicators, regulatory guidelines associated with ESG practices, organizational resistance, and insufficient transparency in non-financial indicators. This study provides guidance for overcoming challenges in the successful adoption of ESG in the construction industry. It also identifies the most-impacted SDGs and lays the foundation for future actions promoting sustainable development in the construction industry in emerging countries.

1. Introduction

With accelerated industrialization over time, there has been an increase in environmental pollution through waste generation and carbon emissions, resulting in global climate changes that impact world economies and human well-being [1,2]. In the post-COVID-19 era, there is growing pressure from stakeholders (buyers, consumers, environmental advocates, NGOs, and governments, among others) who have expressed opposition to the increasing and detrimental impact of productive activities on climate and society [3].

In light of this, according to [1], investors are becoming increasingly concerned about the impact of corporate social responsibility (CSR) on non-monetary factors. Faced with global challenges such as climate change, social inequality, and demands for business ethics, the adoption and effective implementation of environmental, social, and governance (ESG) practices become important for organizations seeking not only financial profitability but also the creation of long-term sustainable value. Considering this, corporate survival is based on the growing global concern for sustainable development [4]. This brings ESG issues to the forefront and has heightened the relevance of this approach in the business and investment sectors, introducing ESG practices to positively impact business activities by influencing sustainable resource management and promoting diversity and transparency in operations.

Reaffirming the importance of ESG, according to [5], there has been a notable expansion in the number of companies assessing and disclosing ESG information. As noted by the same author, until the 1990s, fewer than 20 companies had published such data; however, this number increased significantly, reaching nearly 9000 companies in 2016 that issued sustainability reports. In the same year, there was a rapid growth in investor interest in this ESG data. Supporters of the United Nations Principles for Responsible Investment committed to considering ESG issues in their investment analyses, and the number of signatories to these principles increased, managing total assets of around $60 billion. According to [6], ESG investments have grown exponentially in the United States and Europe over the past 10 years. Currently, it is estimated that ESG investments have reached 20% of assets under management, totaling approximately $11 trillion in the United States.

Thus, the relevance of adopting ESG strategies is evident as an essential aspect for both companies and investors, capable of playing an active role in maximizing organizational profits by fostering sustainable development. The effective integration of these ESG actions not only reflects corporate social responsibility (CSR) but also aligns organizations with global initiatives aimed at building a more equitable, healthy, and environmentally better future for the benefit of humanity and society, playing a crucial role in achieving the Sustainable Development Goals (SDGs) established by the UN, such as poverty eradication, gender equality promotion, and climate action [2].

In this scenario, the incorporation of sustainable practices emerges as an important necessity across various sectors, with the construction industry being one of them. Companies in this sector are among the main drivers of global growth, historically recognized for substantial environmental impacts ranging from intensive consumption of natural resources to waste generation [7]. In Brazil, according to the Annual Survey of Construction Industry [8], the sector employs 2,203,731 people, with a total gross revenue of R$ 397,166,925,000, in addition to an estimated total construction materials consumption of R$ 77,895,586,000 and expenditures on fuels and lubricants of R$ 9,711,825,000, among other costs, thus highlighting the significant relevance of this segment.

However, despite playing an important role in the dynamics of the Brazilian economy, there is a significant production of waste in construction, renovation, repair, and demolition activities, including those arising from site preparation and excavation for civil works. According to data from the National System of Information on Solid Waste Management [9], the amount of waste generated reaches 2,696,163,142.09 tons. The Water Thematic Committee of the Brazilian Council for Sustainable Construction (CBCS) reveals that, on average, 50% of the water supplied to urban areas is directed to the construction sector, and concerning energy consumption, estimates indicate that buildings account for about 40% of the total global energy consumption [10].

Despite the importance of the topic, there remains a scarcity of research conducted in nations with emerging economies, and [11] asserts that Latin American companies are rarely studied. According to [12], in India, an emerging economy, the quantity of research studies on socially responsible investment (SRI), ESG investments, and ESG indices is limited. As mentioned by [13], although many studies address aspects of ESG influence on firm financial performance, most focus on companies from already developed markets, with Latin American companies seldom studied. Recent research has sought to encompass companies from both developed and emerging markets. However, considering companies from developing countries, such as Brazil, together with companies from developed markets may be inefficient, as economic development, political stability, institutional conditions, and cultural values are different in such contexts. Therefore, according to [12], in a context where large companies globally have begun to incorporate ESG issues into their investments and decisions, there is a considerable gap in academic literature related to emerging economies.

Considering the relevance of ESG practices, the importance of the construction sector, and the scarcity of studies in emerging economies such as Brazil, it was found that there is a research gap that underpins the motivation for conducting this study. Upon examining the available literature, no work was identified that addressed the following research question for this study: “What are the challenges for implementing ESG practices in the construction industry in an emerging economy, validated by industry professionals?” Therefore, this study aims to validate the challenges for ESG implementation in the construction industry, considering the context of an emerging economy.

The remainder of the article is structured as follows: Section 2 presents a literature review. Section 3 provides a detailed description of the methodological procedures. Section 4 presents the results, with subsections covering associated discussions, implications for theory and practice, and the relationship with the Sustainable Development Goals (SDGs). Finally, the conclusions are presented in Section 5.

2. Literature Review

ESG refers to environmental, social, and governance criteria. In the environmental dimension, practices such as carbon management, waste management, sustainable use of natural resources, and energy efficiency are included. In the social aspect, diversity, human rights, working conditions, and corporate responsibility are highlighted. Governance encompasses ethics, transparency, risk management, and regulatory compliance. Companies and investors consider these indicators important for evaluating corporate performance and market reputation. Therefore, understanding and effectively applying ESG principles are necessary for sustainable growth and alignment with the expectations of contemporary society [3,14,15,16].

In this context, it is relevant to examine the challenges faced, such as the “lack of an educational system in the context of ESG”, which refers to the absence of media channels to develop a comprehensive understanding of global environmental issues. Environmental education through the media plays an important role in this context [17]. According to [6], barriers to education and communication (38%) are the primary obstacles to a sustainable local financial market in Poland. To address this difficulty, governments could invest in research and development to support sustainable technologies and solutions. Additionally, innovation centers could promote collaboration among researchers, industry, and policymakers [18].

The lack of standard indicators to measure ESG performance is a challenge due to the diversity and quantity of indicators used. Agencies apply internal weighting systems to the indicators, which can be influenced by characteristics such as sector and location [19]. According to [20], the use of indicators can facilitate access to relevant information and stimulate improvements in organizations by providing feedback. However, despite supporting the goals of the Paris Agreement and the Sustainable Development Goals (SDGs), companies have not yet standardized indicators in a comparable manner [21]. Further studies are needed to standardize indicators by sector.

The third challenge in this analysis pertains to “internal and external stakeholders with limited knowledge, skills, experience, know-how, talent, and awareness of ESG”, indicating a lack of familiarity among clients, professionals, and other stakeholders with the concept of ESG. Ref. [22] emphasizes the importance of adopting better sustainable practices to increase organizational awareness, recognizing knowledge gaps to be overcome. Therefore, investing in training programs is crucial. Ref. [12] found that 40% of respondents in India lacked knowledge about ESG, highlighting the need for government incentives to raise awareness. Ref. [23] observed in the wood product manufacturing sector in Malaysia that all large companies were familiar with ESG practices, while only 31% of small and medium-sized enterprises (SMEs) were aware of these requirements, and micro-enterprises showed complete unawareness. This underscores the need to improve awareness of ESG practices among consumers and industry professionals.

The “lack of guidelines, norms, regulations, policies, rules, laws, and certifications related to ESG practices” is an important challenge. The absence of a harmonized set of standards complicates ESG classifications, making the process complex, time-consuming, non-transparent, and reliant on analysts’ experience [24]. Ref. [25] identified inconsistencies in ESG performance metrics, highlighting the absence of agreed norms and guidelines, which can confuse investors. Several organizations, such as the Global Reporting Initiative (GRI), the Sustainability Accounting Standards Board (SASB), Integrated Reporting (IR), and others, develop guidelines for corporate sustainability disclosure and assessment. However, the variety of frameworks and standards results in a lack of continuity and the need for sector-specific standardization [26].

The lack of a standardized reporting model for ESG information is a significant challenge. Ref. [27] emphasized that the absence of standardization and data diminishes transparency and comparability among companies, especially regarding reporting requirements. According to [28], ESG reporting faces challenges such as greenwashing practices, a lack of auditing, the absence of standardization in disclosures, and the lack of a global body overseeing these issues. Additionally, ref. [29] highlights the need for regulatory standards, consistent metrics, and comparable mandatory reporting on ESG factors.

The lack of access to financing, credit, and green investment funds poses a challenge for SMEs in developing countries [30]. According to this author, many SMEs face difficulties obtaining bank credit due to a lack of tangible collateral. This is particularly evident in South Africa, where most credit applications from SMEs are rejected by banks. The research conducted highlights the scarcity of studies on ESG practices and their impact on financing access in these nations. Additionally, a survey of 600 SME owners and managers across three provinces in South Africa demonstrated a positive correlation between sustainability commitment and access to external financing, mediated by financial performance and effective corporate governance structures within the companies. Furthermore, ref. [22] highlighted green technology financing in Malaysia in 2010 targeted at SMEs, with ESG being cited as one of the indicators considered by investors to support green financing. In summary, ref. [18] suggests that governments should offer tax incentives and subsidies for green investments, in addition to establishing investment funds to support sustainable development.

Financial constraints due to the high costs associated with ESG practices are another challenge addressed in this work. Ref. [13] investigated the impact of investing in ESG projects on corporate financial performance and defaults resulting from the costs of these projects. They analyzed 1249 companies in North America, Latin America, Europe, the Middle East, Africa, and Asia between 2011 and 2019, finding that the company’s headquarters location influences the relationship between financial performance and ESG activities and that international companies, especially in Asia and North America, are more successful in ESG initiatives, while Latin American companies, whether local or multinational, face financial challenges. They recommended that successful ESG regions provide financial support and expertise to Latin American companies to implement ESG practices. Additionally, ref. [4] noted that achieving environmental performance incurs additional production costs and ESG reporting expenses due to a lack of clarity and disclosure costs, resulting in operational inefficiencies and thereby affecting company profits and evaluations. Therefore, stringent ESG standards may initially increase costs, but competition and scale can offset and thus drive innovation and improve recycling techniques [31].

The lack of interest or motivation from stakeholders is a challenge addressed by [6,32] in their work, and despite representing only 4.5% of respondents, this lack of motivation is a significant barrier. In a study conducted in Latvia, ref. [33] identified six challenges, with lack of motivation being the most mentioned at 46.3%. Emphasizing the need for regulations and incentives, such as tax benefits and lower interest rates on loans, for companies engaged in sustainability initiatives.

Organizational resistance is a challenge highlighted by [34], who emphasize the importance of overcoming this challenge through governance, with boards playing a key role in setting the tone and guiding corporate employees towards an ESG mindset, making the environmental and social impacts of activities visible to employees. Boards should appropriately prioritize stakeholder ESG issues, set realistic goals, and develop initiatives to address these impacts. According to [35], corporate culture is essential for ESG performance, adding value to ESG-related investments. Therefore, transforming corporate culture, management, and systems is crucial to increasing commitment to corporate social responsibility and promoting sustainable outcomes [36].

The tenth challenge addressed is the lack of support for scientific research in the context of ESG. A study by [37] identified 12 factors, including data quality, trust, and determination of the materiality of ESG risks, as key challenges in integrating these risks into investment decisions. Although inadequate support for academic research received only 2.5% of mentions, its significance should not be overlooked. Therefore, policymakers should engage the scientific community in defining sustainability strategies and implementing ESG [38].

Several researchers discuss investor uncertainty regarding investment returns when adopting ESG strategies, as highlighted by [39]. Some studies indicate a positive correlation between ESG performance and revenues, while others raise doubts about this relationship. A study by [40] investigated challenges related to ESG, including investors’ tendency to ignore ESG factors when there are no clear financial implications. Additionally, the high costs of ESG investments question the overall return on investment, limiting understanding among clients and potential investors [6].

The lack of alignment between long-term corporate strategies and planning is a challenge discussed by researchers. According to [41], managerial myopia involves managers’ short-term focus on immediate financial goals, neglecting long-term ESG considerations. This can impair the sustainability and future profitability of the company. In India, where ESG disclosure standards are not mandatory, changing business owners’ mindsets to promote environmental and social regulations is challenging, as noted by [4]. Despite initial costs, these efforts translate into long-term benefits. Ref. [42] argues that profits are accrued based on long-term production and investment strategies, not just immediate profit maximization. Thus, sustainable investments require a shift in mindset towards long-term risk and a broader view of opportunity, considering global trends such as climate change and its effects on ecological and human systems. This transition must be accompanied by improvements in ESG measurement, considering the reliability of the available data.

The lack of standardized definitions and metrics for ESG is a significant challenge. According to [14], it allows informed choices by investors and appropriate actions by companies to improve their ESG practices, increasing transparency and comparability of data. Ref. [43] emphasizes the importance of well-established ESG data standards to enhance the reliability of reporting and disclosure metrics, fostering trust among investors and stakeholders. Ref. [44] stresses that existing ESG metrics may not fully capture companies’ contributions to sustainability challenges, suggesting the development of specific indicators for each activity and sector-specific impact.

The lack of transparency, reliability, consistency, auditability, control, and internal assurance of non-financial indicators is a significant challenge, as highlighted by [45,46]. The proliferation of ESG “data providers” lacks transparency in their methodologies. The creation of rankings based on this data is performed without standard measurability, audit, or assurance, compromising the consistency and reliability of the indicators. These gaps in ESG disclosure enable greenwashing behaviors by companies [28].

The limitation of ESG data and information has been a challenge for assessing reports, while the importance of sustainability and ESG grows to ensure organizations’ compliance with the SDGs [47]. These authors present research indicating that 53% of respondents expressed concern about the limited availability of ESG data, which are essential for assessing organizations’ sustainability. Therefore, it is important to develop a standardized reporting framework that allows for scalability and comparability of information. The implementation of Industry 4.0 technologies can overcome this gap by providing real-time data, authentication, forecasting, transparency, and data structuring. According to [48], information disclosed by companies in Australia varies in content, scope, and complexity, making it difficult to assess environmental performance. Inconsistencies in ESG data across industrial sectors, regions, and countries impair investor assessments due to a lack of uniformity. Additionally, accessing data on companies in emerging economies is a challenge, as pointed out by [49]. Much ESG data are collected through corporate disclosures, which tend to favor larger, publicly listed companies subject to disclosure requirements that vary between countries.

The lack of innovation stimulus, incentives, investment, rewards, government support in ESG practices, or fiscal incentives or subsidies for investments is a challenge addressed by [50]. They propose regulatory interventions to facilitate ESG information disclosure, aiming for more efficient capital allocation and reduced corporate financing costs. It is crucial to encourage and regulate companies to disclose consistent ESG information. Ref. [51] highlighted that ESG reporting standards could be consolidated through government requirements, although a global standard is currently unlikely. The lack of government action has allowed private organizations to simplify ESG reporting. Additionally, ref. [52] suggests that incentivizing green technological innovation can enhance ESG performance in companies. However, high investment costs can be a barrier, especially for small and medium-sized enterprises. Therefore, governments should create an environment conducive to digital transformation and promote policies that encourage innovation to meet ESG requirements.

The lack of internal organizational integration, as mentioned by [1], involves internal pressures and demands from employees. It is important to ensure good working conditions and well-being to promote employee engagement. On the other hand, ref. [53] emphasizes the importance of integrating environmental performance within the broader context of ESG, allowing for a comprehensive understanding of the interrelationships between these dimensions. Addressing only environmental issues is insufficient because there is interdependence among ESG factors. Social issues, such as community engagement and human rights, impact environmental performance. Additionally, governance practices and transparency affect environmental risk management. This integrated approach allows for a balanced assessment of an organization’s sustainability performance, demonstrating commitment to responsible business conduct and aligning ESG objectives. Finally, ref. [54] highlights that integrating financial and non-financial reporting is a challenge, making it difficult for investors to understand the interdependence of financial and non-financial aspects in creating value for a company.

The lack of partnerships in the supply chain regarding ESG actions is a significant challenge. According to [23], a study in the wood products and furniture industry in Malaysia highlighted challenges with ESG practices, including a lack of awareness and non-compliance among partners in the supply chain. Many of these partners are small businesses without ESG awareness and financial resources to implement such practices, reflecting the difficulties faced by the global wood products and furniture industries in meeting increasing ESG requirements [55].

The challenge of objectively assessing ESG factors is highlighted by [56], who discusses the importance of ESG materiality for companies in Latin America, emphasizing the need to prioritize issues relevant to stakeholders. These companies encounter specific challenges, such as corruption and bribery in environmental licensing, which impact natural resource management. This complexity underscores the necessity for standardized metrics to measure environmental performance effectively and comparably. Despite stakeholder engagement and increased transparency, the absence of clear and objective criteria can lead to greenwashing [57]. Discrepancies in ESG ratings reveal conceptual and comparability issues [46]. Therefore, the implementation of more objective metrics and regulatory guidelines can enhance rating reliability and promote conceptual consistency.

The lack of relevant IT tools/systems to enhance the management of ESG practices is a challenge highlighted by [26]. The scarcity of comprehensive technological applications leads to manual processes and limited data sharing. Advanced technologies such as blockchain, big data, and artificial intelligence could enhance ESG reporting by increasing transparency, communication, and data traceability [31], thereby drastically reducing time and costs.

The lack of low-carbon technologies poses a challenge to global energy systems, given the dwindling fossil fuel resources and climate change. Insufficient investment and a scarcity of sustainable sources such as nuclear and solar energy hinder the transition to renewable sources, creating a deadlock between energy production and conservation [58,59,60].

The lack of organized waste management is a challenge for ESG principles. Inefficient handling can result in environmental, social, and governance impacts, undermining efforts toward sustainable practices. The absence of adequate systems for collection, recycling, and responsible disposal can lead to pollution, health risks, and regulatory violations. Therefore, it is essential for companies to adopt robust waste management strategies as part of their ESG initiatives, aiming to reduce their impact and promote sustainable development [61,62].

Another challenge is the difficulty with information management. Ref. [53] emphasized the need to increase transparency through robust communications and meaningful interaction with stakeholders. This involves developing clear and standardized reports, disclosing relevant environmental data, and comprehensively communicating performance. Active stakeholder engagement implies seeking their contribution, incorporating feedback, and involving them in environmental decisions. According to [18], studies have investigated how transparency and ESG disclosure impact investments, finding that more ESG disclosure enhances business value. However, the lack of clarity and information management complicates proper analysis of ESG implications, affecting sustainability and potentially causing conflicts between managers and stakeholders. To mitigate this asymmetry, companies use various disclosure instruments, such as integrated and sustainability reports. According to [33], ESG disclosure practices are evolving, but many companies still do not disclose their sustainability progress. About one in ten companies chooses recognized reporting, while most report informally due to global pressure, competition, and management preferences. However, without mandatory requirements, this can lead to selective reporting and difficulties in data comparison.

The lack of carbon offset strategies poses a challenge to the effective implementation of ESG principles. While actions such as transitioning to renewable energy, recycling, and reforestation aim to reduce emissions, carbon credits do not always result in real reductions. Carbon-neutral initiatives can have negative economic and environmental impacts, complicating ESG goals [63,64]. According to [58], carbon neutrality offers a compensatory mechanism, but inadequate compensation poses a barrier to implementing ESG principles.

Ref. [29] highlighted that among the barriers identified is the lack of options for ESG benchmarking. Without standardized metrics, it is challenging to consistently compare and evaluate companies’ ESG performance. This hinders the identification of areas for improvement and realistic goal-setting, impacting transparency and accountability. Developing robust benchmarking tools is essential for integrating ESG principles into business practices and investment decisions. For instance, ref. [26] demonstrated that a specific factor was reported in up to 20 different ways by companies in the same sector, complicating comparisons. A global framework with a standardized format will enable more accurate comparisons among companies within the same sector.

The challenges of considering and utilizing Industry 4.0 and 5.0 technologies represent a hurdle for ESG principles. While these technologies offer efficiency and optimization opportunities, including real-time reporting and insights, personalization, and consequently reduced disclosure costs, their implementation requires investments in infrastructure, training, and cybersecurity. Integrating these technologies with ESG considerations demands commitment from companies. However, the potential of I5.0 to enhance ESG authenticity depends on the adoption and utilization of these technologies. Interoperability between different entities and systems can be a challenge, particularly for smaller enterprises. Additionally, the environmental impact of I5.0, with components such as blockchain, digital mining, cloud applications, and AI stored in data center servers, raises concerns due to high energy consumption and carbon emissions [47,65,66,67,68].

Corruption, political uncertainty, and political instability represent significant obstacles to ESG principles. In areas with endemic corruption, transparency can be compromised, undermining ESG practices. Political instability creates a volatile environment, making long-term sustainability challenging. The lack of political stability negatively impacts the implementation of ESG regulations and partnerships with stakeholders. Addressing these challenges requires promoting transparency, integrity, and political stability. Ref. [13] concluded that Latin American companies face unique challenges in ESG projects and need support from more developed regions. North America and Asia are more successful in ESG, while Eastern Europe stands out for effectiveness. Regions with high levels of corruption and instability, such as Africa and Latin America, face challenges in implementing ESG projects due to a lack of resources and adverse institutional conditions. Internationalization can enhance the relationship between ESG and financial performance, with foreign investors supporting sustainable projects.

Table 1. Challenges in implementing ESG practices.

Code	Challenges	Description	References
C 01	Lack of an educational system within the context of ESG	Challenge linked to the absence of educational and awareness programs on ESG practices, impacting the understanding and widespread adoption of these principles.	[6,17,18,66,69,70]
C 02	Lack of standardized indicators to measure ESG performance	Challenge related to the absence of key performance indicators/universal criteria accepted to assess the environmental, social, and governance impacts of a company, making it difficult to compare and ensure transparency in sustainable practices.	[18,19,20,21,25,26,29,31,35,71,72,73,74,75,76,77]
C 03	Internal and external stakeholders with limited knowledge/skills/experience/know-how/talent/awareness about ESG	Difficulty stemming from a lack of understanding and expertise, both internally and externally, regarding environmental, social, and governance issues, hindering the effective implementation of sustainable practices.	[4,6,11,12,22,23,27,29,32,33,40,58,69,70,74,78,79,80,81]
C 04	Lack of guidelines/norms/regulations/policies/rules/laws/certifications related to ESG practices	Challenge associated with the absence of clear guidelines and established regulations to guide companies in adopting and complying with ESG practices making standardization and corporate accountability difficult.	[6,17,20,21,23,24,25,26,29,35,40,43,58,76,77,79,80,82,83,84,85,86,87,88,89,90]
C 05	Lack of a standardized reporting model for ESG information	Difficulty resulting from the absence of a common format for reporting ESG performance information, which hinders effective communication and understanding of environmental, social, and governance metrics.	[4,5,18,21,24,25,26,27,28,29,47,48,51,57,78,80,89,91,92]
C 06	Lack of access to financing/credit/green investment funds	Challenge related to limited sources of specific financial resources for sustainable initiatives, hindering the implementation of ESG practices due to a shortage of green financing options.	[6,18,22,30]
C 07	Financial constraints due to the high costs associated with ESG practices	Barrier related to financial constraints stemming from the high costs associated with implementing environmental, social, and governance practices.	[4,5,6,13,23,29,31,32,33,40,89,93,94,95]
C 08	Lack of interest/motivation from stakeholders	Challenge stemming from stakeholders’ lack of enthusiasm or motivation to adopt and promote ESG practices, compromising engagement and effective implementation.	[6,32,33]
C 09	Organizational resistance	Difficulty arising from the organizational culture to accept and incorporate necessary changes to adopt ESG practices, often due to fears or traditions.	[23,33,34,35,36,40,51,53,55,74,78,95,96]
C 10	Lack of support for scientific research in the context of ESG	Challenge related to the scarcity of support and investment in scientific research to develop and enhance ESG practices, limiting progress in knowledge and innovation.	[37,38]
C 11	Investor uncertainty about investment returns	Challenge associated with investor uncertainty about financial returns related to ESG investments, impacting the attractiveness of these initiatives.	[6,12,29,35,39,40,69,74,78,80,97]
C 12	Lack of alignment between long-term corporate strategies and planning	Challenge in aligning long-term corporate strategies and planning with ESG-related goals and objectives, compromising consistency and effectiveness.	[4,41,42,69,74]
C 13	Lack of standard definitions and metrics for ESG	Challenge related to the absence of clear definitions and standardized metrics to assess ESG performance, hindering communication and uniform understanding.	[4,6,14,16,19,20,21,24,25,26,27,28,29,32,33,35,38,39,40,43,44,45,47,49,50,53,54,57,69,70,71,72,74,76,91,92,98,99,100,101]
C 14	Lack of transparency, reliability, consistency, auditability, control, and internal assurance of non-financial indicators.	Challenge linked to the lack of transparency, reliability, and effective internal control over non-financial indicators, compromising the integrity of ESG practices.	[5,6,14,16,18,19,20,24,26,27,28,29,31,38,39,42,43,45,46,47,48,49,53,57,71,74,76,77,80,89,102,103,104]
C 15	Limited ESG data/information	Obstacle stemming from the limitation of available data and information on ESG practices, impeding informed decision-making and proper analysis.	[4,5,6,12,16,19,20,25,26,27,29,35,38,40,43,47,48,49,54,57,70,74,76,80,105]
C 16	Lack of encouragement for innovation/incentives/investment/reward/support/government investment in ESG practices/tax incentives or subsidies for investments	Challenge associated with the scarcity of stimuli, incentives, and governmental support to promote innovation and investment in ESG practices, hindering widespread adoption.	[4,6,12,13,18,22,31,33,35,40,46,50,51,52,57,69,76,83,84,89,95,106]
C 17	Lack of internal organizational integration	Obstacle related to the lack of effective integration of ESG practices across all areas of the organization, undermining cohesion and consistent implementation. ESG reports are not integrated with financial outcomes.	[20,44,51,53,54,55,69,78,80,82,94,102,107,108,109]
C 18	Lack of partnerships in the supply chain regarding ESG initiatives	Challenge related to the absence of collaborative partnerships in the supply chain to promote ESG practices, hindering comprehensive implementation.	[23,55]
C 19	Difficulties in objectively evaluating ESG factors	Challenge associated with the difficulty of objectively assessing ESG factors due to subjectivity and a lack of clear criteria for measurement. Lack of materiality, absence of a framework to analyze which issues are most important for companies to address.	[5,16,19,21,25,26,27,29,34,35,40,42,43,44,46,53,54,56,57,69,70,72,74,76,82,94,99]
C 20	Lack of suitable and relevant IT tools/systems for better management of ESG practices	Obstacle related to the shortage of suitable information technology tools and systems to efficiently manage ESG practices within the company.	[26,31]
C 21	Lack of low-carbon technologies	Challenge stemming from the absence of sustainable low-carbon technologies, hindering carbon emissions reduction and adherence to ESG practices.	[58,59,60,104,110]
C 22	Lack of organized waste management	Difficulty related to the absence of organized waste management, compromising efforts to minimize environmental impact and adhere to ESG practices.	[1,58,61,62]
C 23	Challenges with information management	Challenge related to difficulties in effectively managing information related to ESG practices, impacting informed decision-making. These difficulties involve disclosures, sharing, and strategic communication of information.	[18,33,53,97]
C 24	Lack of carbon offset strategies	Challenge related to the absence of effective strategies to offset carbon emissions, compromising sustainability efforts and ESG practices.	[58,63,64]
C 25	Lack of options for benchmarking ESG	Challenge associated with the lack of options and references to conduct effective comparisons (benchmarks) within the context of ESG practices making performance evaluation difficult.	[26,29]
C 26	Challenges in considering and utilizing Industry 4.0 and 5.0 technologies	Challenge in incorporating and utilizing Industry 4.0 and 5.0 technologies to drive ESG practices, limiting the utilization of technological innovations.	[25,26,39,47,52,65,66,67,68,111]
C 27	Corruption, political uncertainty, and political instability	Challenge stemming from the presence of corruption, political uncertainty, and political instability, impacting trust and the effective implementation of ESG practices.	[13]

Elaborated by researchers.

presents a summary of the aforementioned barriers.

The literature on ESG (environmental, social, and governance) criteria highlights the importance of such practices for sustainable corporate performance and market reputation. However, various challenges hinder the full adoption of these principles. Notable obstacles include the lack of an effective educational system for ESG, the absence of standardized indicators, and the limited familiarity of stakeholders with the ESG concept. The lack of harmonized guidelines and regulations complicates classification and comparison, while the scarcity of a standardized reporting model reduces transparency. Additionally, restricted access to green financing, especially for SMEs, and the high costs associated with ESG practices represent significant financial barriers.

Studies indicate that organizational resistance, a lack of support for scientific research, investor uncertainty about returns on ESG investments, and managerial shortsightedness are critical challenges. The absence of standard definitions and metrics for ESG compromises data comparability and transparency, exacerbating the proliferation of practices such as greenwashing. Additional problems include the lack of adequate technological tools, the need for tax incentives and subsidies, and the difficulty of integrating ESG aspects into corporate management. Government support is essential to encourage innovation and facilitate the digital transformation necessary for the effective implementation of ESG principles.

Stakeholder resistance and political corruption also present challenges to the adoption of ESG practices. In regions with high corruption and political instability, transparency is compromised, and long-term sustainability is hindered. Integrating Industry 4.0 and 5.0 technologies can enhance the authenticity and efficiency of ESG reporting, but this requires significant investment in infrastructure and training. In summary, the literature review reveals the need for greater standardization, government incentives, and technological integration to overcome the challenges of implementing ESG practices and promoting sustainable development.

3. Methodological Procedures

To conduct this study, four distinct and well-defined phases were delineated. Firstly, a literature review was conducted, focusing on previous research due to the exploratory nature of our study and the need to establish a strong foundation for our investigations into challenges related to ESG implementation. Next, a research instrument (a questionnaire) was developed based on the challenges identified in the literature. Subsequently, a survey was conducted with professionals in the construction industry using the Lawshe method to validate the challenges within the context of a developing economy and their relation to the UN Sustainable Development Goals (SDGs). The Lawshe method was chosen because it is used to determine the content validity of a measurement instrument, especially in research involving expert opinion. This method involves the evaluation of individual items by a panel of experts, who rate each item in terms of its essentiality to the concept being measured, thus making it fundamental for achieving the results in this research. Finally, discussions, conclusions, and proposals for future research were established.

For the literature review, the following scientific databases were consulted: Science Direct, Web of Science, and Scopus, aiming to identify articles addressing the challenges of implementing ESG practices. Specific queries were conducted using terms and combinations of keywords such as “environmental, social, and governance”, “barriers”, “difficulty”, “obstacles”, “impediments”, “resistances”, and “challenges”.

These queries were applied to titles, abstracts, and keywords of articles, covering both original studies and reviews. In the initial phase of the research, 535 documents were identified. After excluding articles not available in open access and removing duplicates, 270 articles remained for analysis. From this selection, the challenges associated with ESG implementation were cataloged and classified through full document readings, as presented in Table 1.

Next, a questionnaire was developed based on the identified challenges. The structure of the questionnaire included presenting the challenge, describing it, and providing response options. For instance, “Lack of an educational system within the context of ESG. (Description: Challenge related to the absence of educational and awareness programs on ESG practices, impacting understanding and widespread adherence to these principles)”. After reading the challenge and description, invited experts were evaluated using a three-point scale (options), which was based on the work of [112,113,114].

• Overcoming this challenge is essential for implementing ESG in the construction sector.
• Overcoming this challenge is important but not essential for implementing ESG in the construction sector.
• Overcoming this challenge is not important for implementing ESG in the construction sector.

The selection of experts to respond to the questionnaire was based on the following criteria: having experience in the sector, academic background (civil engineers or architects), and experience with ESG (environmental, social, and governance). The experts were contacted via emails and social media, while the form was made available through an online link created on the Google Forms platform, remaining open for responses for thirty days. A total of six hundred and fifteen professionals were invited, resulting in a response rate of 11.54%. Regarding the geographical distribution of participants, 62.5% were from the north region of Brazil, 20.83% from the southeast region, 8.33% from the northeast, 5.56% from the south, and 2.78% from the Midwest. In terms of participants’ experience, 41.67% had up to 5 years of experience, 22.22% had more than 5 years up to 10 years of experience, and 36.11% had over 10 years of experience in the sector. The research was carried out in March 2024 among professionals.

The data obtained from the survey with professionals were analyzed using the Lawshe method, following the guidelines of [112,113,114]. In this method, professionals responded to questionnaires, evaluating each criterion in three categories, i.e., “essential”, “important but not essential”, and “not important”. The methodology applies the Content Validity Ratio (CVR) to each questionnaire challenge, as demonstrated in

Table 2. Equations for calculating the critical CVR.

Index	Equation
(1)	$CVR=\frac{ne-\frac{N}{2}}{\frac{N}{2}}$
(2)	$\mathrm{\mu }=n.p$
(3)	${\sigma }^2=n.p.(1-p)$
(4)	$\sigma =\sqrt{n.p.(1-p)}$
(5)	${ne}_{cr\mathrm{í}tico}=\mathrm{\mu }+z.\sigma$
(6)	${\mathrm{C}\mathrm{V}\mathrm{R}}_{CR\mathrm{I}\mathrm{T}\mathrm{I}\mathrm{C}\mathrm{A}\mathrm{L}}=\frac{necr\mathrm{i}tical-\frac{N}{2}}{\frac{N}{2}}$

Elaborated by researchers.

and described by Equation (1). CVR values range from −1 to +1, where −1 represents total disagreement and +1 represents total agreement [115]. To interpret the results, if more than 50% of respondents consider the challenge as “essential”, the CVR is positive; if less than 50% consider it “not essential”, the CVR is negative. A CVR equal to zero indicates that half of the experts considered the criterion “essential” and the other half did not [116]. Next, ${\mathrm{C}\mathrm{V}\mathrm{R}}_{CR\mathrm{I}TICAL}$ is used to identify items that may be excluded from the final analysis based on CVR values below the critical threshold. The calculation of ${\mathrm{C}\mathrm{V}\mathrm{R}}_{CR\mathrm{I}TICAL}$ incorporates mean, variance, and standard deviation, as per Equations (2)–(4) presented in Table 2. The ${\mathrm{C}\mathrm{V}\mathrm{R}}_{CR\mathrm{I}TICAL}$ is obtained by Equation (6), following the calculation of ${ne}_{cr\mathrm{i}tical}$ as per Equation (5), detailed in Table 2.

Given that $ne$ is the number of experts who consider the criterion as “essential”, N is the total number of experts who participated in the survey, “n” is the number of respondents, and “p” is the probability of endorsing the item as essential, the value of Z is 1.96, considering a significance level of 5%.

After performing the necessary calculations, relevant discussions and debates were conducted, evaluating the results in line with the literature and developing considerations, contributions to the academic field, as well as suggestions for future research.

4. Results

According to the procedures and guidelines outlined by [112,113,114], the CVR values were calculated for each challenge in this study. Subsequently, the ${\mathrm{C}\mathrm{V}\mathrm{R}}_{CR\mathrm{I}TICAL}$ was computed. It is important to mention that the sample in this study consisted of 71 practicing civil engineers in Brazil. The ${\mathrm{C}\mathrm{V}\mathrm{R}}_{CR\mathrm{I}TICAL}$ resulted in a coefficient of 0.233, which was used to validate the challenges. Thus, criteria with coefficients higher than 0.233 were considered valid, while those with coefficients lower were considered not validated within the context of challenges related to ESG implementation in the construction sector in an emerging economy, as presented in

Table 3. Validation analysis of challenges using the Lawshe method.

Code	Number of “Essential” Responses	Content Validity Ratio (CVR)	$\mathbf{Reference} \mathbf{Validation} {\mathbf{C}\mathbf{V}\mathbf{R}}_{\mathit{C}\mathit{R}\mathit{I}\mathit{T}\mathit{I}\mathit{C}\mathit{A}\mathit{L}}=0.233$
C 01	50	0.408450704	✓
C 02	58	0.633802817	✓
C 03	59	0.661971831	✓
C 04	52	0.464788732	✓
C 05	30	−0.154929577	⮽
C 06	33	−0.070422535	⮽
C 07	39	0.098591549	⮽
C 08	58	0.633802817	✓
C 09	52	0.464788732	✓
C 10	40	0.126760563	⮽
C 11	36	0.014084507	⮽
C 12	49	0.38028169	✓
C 13	47	0.323943662	✓
C 14	46	0.295774648	✓
C 15	36	0.014084507	⮽
C 16	47	0.323943662	✓
C 17	43	0.211267606	⮽
C 18	38	0.070422535	⮽
C 19	43	0.211267606	⮽
C 20	34	−0.042253521	⮽
C 21	35	−0.014084507	⮽
C 22	48	0.352112676	✓
C 23	41	0.154929577	⮽
C 24	34	−0.042253521	⮽
C 25	24	−0.323943662	⮽
C 26	33	−0.070422535	⮽
C 27	46	0.295774648	✓

Elaborated by researchers.

.

Upon analyzing Table 3, the challenges in implementing ESG practices in the construction sector considered valid were identified based on the opinions of professionals operating in this specific context in Brazil. Out of the total 27 challenges identified, 12 were validated, as shown in Table 3.

4.1. Associated Debates

Analyzing the first validated challenge, “lack of an educational system in the context of ESG”, one can perceive that without proper education and training on ESG-related issues, professionals in the sector may face difficulties in understanding, adopting, and promoting the necessary initiatives to integrate ESG principles into their daily activities. Therefore, validating this challenge underscores the need for investments in education and awareness about ESG within the construction industry to enhance sustainability practices and social responsibility in this area. According to [66], to promote innovation and sustainability, it is crucial to address the skills deficit that may currently exist due to the lack of an effective educational system. Cooperation between government, science, and industry, combined with the use of technology, can provide the foundation for this development.

The “lack of standard indicators to measure ESG performance” is also a relevant challenge, as it hinders organizations’ ability to monitor and report their progress consistently. This gap prevents the establishment of clear goals and the comparison of efforts against established standards, highlighting the importance of developing and implementing ESG performance measures in the context of the construction industry. According to [25], the practical utility of sustainability reports is still limited due to the lack of systematic and objectively comparable indicators, emphasizing the need for more consistent metrics in this context.

“Internal and external stakeholders with limited knowledge, skills, experience, know-how, talent, and awareness of ESG” represent another significant challenge and are related to the need to enhance knowledge, skills, and awareness of ESG among internal and external stakeholders in the construction sector. Without an adequate understanding of ESG issues, stakeholders may face difficulties in adopting and promoting sustainable initiatives, compromising global efforts to integrate ESG principles. Therefore, the relevance of investments in educational programs and training to improve knowledge and awareness of ESG is emphasized. According to [6], understanding of ESG investment among clients and potential investors is still limited. This aligns with global trends, as an Invesco study revealed that 85% of respondents cited knowledge as the greatest barrier to engaging in sustainable investments.

The “lack of guidelines, standards, regulations, policies, rules, laws, or certifications associated with ESG practices” also represents a significant obstacle. The absence of specific regulations hinders the adoption and implementation of sustainable measures, limiting organizations’ ability to set goals and compare their performance against defined standards. Therefore, there is a need to develop and implement robust guidelines and policies related to ESG in the construction sector to promote a clear and consistent regulatory environment. Ref. [17] notes in their study that the lack of standards in the global market can raise concerns about transparency related to project financing, clear utilization of resources from sustainable projects, and benefits for potential investors. The absence of global or local standards was identified as a challenge in the Czech Republic, Hungary, Poland, Slovakia, Asia, and India in their study.

The validated challenge “lack of interest/motivation of stakeholders” underscores a significant concern regarding the lack of engagement and motivation of stakeholders towards ESG practices. Without adequate stakeholder interest, implementing and promoting sustainable and responsible initiatives in the construction sector becomes challenging. Therefore, there is a need to develop effective actions to motivate and engage stakeholders, aiming to strengthen commitment and support for ESG practices. According to [33], addressing the lack of motivation suggests adopting broader measures such as specific regulations and positive incentives (like tax benefits, lower interest rates, and discounts) for companies involved in sustainability initiatives. Furthermore, improving sustainability practices by public companies could serve as a positive incentive model. The results of a self-assessment showed that most corporate leaders in Latvia are aware of the ESG concept. However, the current degree of ESG implementation is rated at 5.45 out of 10, indicating a path towards sustainability but with room for improvement. Additionally, only 56% of respondents view ESG as a direct responsibility or oversight of management, suggesting that the topic is not sufficiently prioritized. The lack of motivation is also highlighted, indicating that many companies expect a decrease in sustainability focus in the future, which diverges from global trends pointing towards increased ESG focus. This underscores the need for stronger sustainability incentive policies, either national or international, to promote greater prioritization of sustainability by businesses and achieve a more significant contribution to the SDGs.

“Organizational resistance” has been validated and represents a substantial obstacle to the effective implementation of ESG practices in the construction sector. This resistance can arise due to concerns about cultural changes, additional costs associated with implementing sustainable practices, and a lack of understanding about the benefits of adopting ESG approaches. Therefore, plans should be made to overcome organizational resistance, such as awareness programs, involvement of senior management, and demonstrating the financial and reputational value of ESG practices. Ref. [53] emphasizes the importance of stakeholder engagement and transparency in measuring organizations’ environmental performance. Investors, regulators, employees, and local communities are identified as key stakeholders interested in ensuring organizations adopt sustainable practices. This engagement enables organizations to understand stakeholders’ concerns and expectations, aligning their sustainability efforts with stakeholders’ priorities. This approach highlights that organizational resistance to implementing ESG practices can arise when organizations do not adequately value stakeholder engagement and transparency in communicating environmental performance. Overcoming this resistance requires organizational effort to effectively integrate stakeholder concerns and expectations into environmental management and performance reporting.

The challenge of “lack of alignment between long-term corporate strategies and planning” can result in implementation gaps and inadequate resource allocation. Validating this challenge underscores the importance of integrating ESG considerations into corporate planning, aligning sustainability goals with the organization’s vision and mission, and promoting a comprehensive and integrated approach to social and environmental responsibility. Ref. [69] illustrates this with the case of China Minmetals Corporation, which invests in poverty reduction programs to improve local infrastructure and promote long-term sustainable economic development. On the environmental front, Martha Tilaar, a major Indonesian beauty product manufacturer, instructs and empowers local communities in sustainable agricultural practices, strengthening the supply chain and preserving regional biodiversity over the long term. The same authors also highlight that success in emerging markets will require innovative solutions to long-term trends, and most CEOs interviewed emphasized the challenges of reconciling the need for a long-term perspective on sustainability issues with a dynamic market environment that often compels them to make short-term pressured decisions.

Another validated challenge, i.e., “lack of standard definitions and metrics for ESG”, hinders the assessment and monitoring of ESG performance in the construction sector. The lack of uniformity in definitions and indicators can result in inconsistencies in reporting and difficulty in comparing between companies. Therefore, it is essential to develop and adopt consistent guidelines and metrics to measure ESG performance, facilitating the integration and effective communication of sustainable practices. According to [28], while subjectivity allows ESG funds to adopt an adaptable and personalized approach, it hinders accurate grounding and comparison. ESG performance is challenging to measure and compare, especially due to the large number of metrics to be collected from different sources, which can lead to calculation errors and incorrect reporting. Hence, many investors have sustainability concerns due to the lack of clear definitions of sustainable investment and standards for sustainability criteria.

The “lack of transparency/reliability/consistency/audit/internal control and assurance of non-financial indicators” can compromise the credibility of sustainability reports and hinder informed decision-making. Therefore, it is important to strengthen audit, control, and internal assurance procedures to ensure the reliability and integrity of non-financial indicators used in ESG practices, thus promoting transparency and accountability. Ref. [89] corroborates this issue by stating that challenges in disclosing ESG data include the absence of audits in ESG sustainability reports, a lack of uniformity in ESG data disclosure standards, and the absence of a global governmental entity to certify the accuracy of reported ESG information. It is crucial to align an organization’s ESG transparency with its ESG performance, as “greenwashing” can pose a barrier to investors seeking to integrate ESG data into their investment strategies.

The challenge of “lack of stimulation for innovation, incentives, investment, reward, support, and governmental investment in ESG practices, including tax incentives or subsidies for investments” reflects a concern among experts regarding the insufficient encouragement and financial support for ESG initiatives, which may discourage construction companies from investing in innovation and adopting environmental and social measures. Consequently, it is essential for government policies to be implemented to encourage and recognize companies committed to sustainable practices, thereby facilitating the transition to a greener and more responsible economy. Ref. [12] presents results from a study conducted in the U.S. on the impact of tax benefits on the investment behavior of individual investors, revealing that such incentives have a significant effect on the socially responsible investment behavior of individual investors, guiding their investment decisions, and underscoring the importance of this challenge.

The “lack of organized waste management” represents a challenge that can lead to resource waste and adverse environmental consequences. Therefore, it is essential to implement effective waste management strategies and policies that promote the reduction, reuse, and recycling of materials throughout the lifecycle of construction projects. Ref. [1] emphasizes that the ESG approach requires companies and investors to promote environmental preservation through measures such as waste reduction and recycling. They also highlight the importance of integrating waste management practices with broader environmental and social responsibility initiatives, aiming not only to meet regulatory requirements but also to contribute positively to the sustainability of the construction sector. The effective implementation of these strategies can result in significant economic, environmental, and social benefits, promoting a more holistic and responsible approach within the ESG framework.

Finally, the challenge of “corruption, political uncertainty, and political instability” was validated, reflecting experts’ concerns about the risks associated with dishonesty and political uncertainties within ESG practices in the construction industry. Corruption and political volatility can compromise the effectiveness and integrity of sustainable initiatives, undermining trust in institutions and discouraging responsible investments. Therefore, it is essential to promote transparent, ethical, and stable governance in the construction sector, thereby strengthening confidence and efficacy in ESG practices. [13] adds that corporate social responsibility actions contribute to environmental conservation and assist in addressing the issue of climate change. The governance component of ESG can be examined to assess how the company is managed, in particular the presence of bribery and corruption, diversity in board structure, and management compensation systems, which can hinder the implementation of ESG, especially in Latin American countries.

It is relevant to note that although 15 challenges were not specifically validated in the context of emerging countries like Brazil, it is important to highlight that, even though they were not validated by professionals in this specific study, these challenges remain significant and represent important obstacles to the implementation of ESG. While they were not considered essential by the sample of professionals involved, their relevance cannot be underestimated in the broader context of corporate sustainability.

In summary, the analysis of challenges validated by the Lawshe method reveals a complex landscape for the implementation of ESG practices in the Brazilian construction sector. One of the main obstacles is the absence of an effective educational system for ESG, highlighting the need for investments in education and training. Without proper knowledge and skills, professionals in the sector struggle to understand and implement sustainable practices. Cooperation between the government, academia, and industry is essential to overcome this skills deficit and promote innovation and sustainability in the sector. Ref. [66] emphasizes that reducing this deficit is necessary for the progress of ESG practices.

Another significant challenge is the lack of standardized indicators to measure ESG performance, which makes monitoring and comparing efforts among companies difficult. The absence of consistent metrics impedes the definition of clear goals and transparency in sustainability reports, as highlighted by [25]. Furthermore, the lack of interest and motivation among stakeholders, both internal and external, compromises the adoption of sustainable practices. Investments in educational programs and financial incentives, such as tax benefits, are necessary to engage and motivate stakeholders, as suggested by [33].

Organizational resistance is another obstacle, often caused by concerns about cultural changes and additional costs. Overcoming this resistance requires awareness programs and the involvement of top management to demonstrate the financial and reputational benefits of ESG practices. Ref. [53] highlights the importance of stakeholder engagement and transparency in communicating environmental performance. Additionally, the lack of specific regulations and guidelines hampers the adoption of sustainable practices. Developing robust and consistent policies is fundamental to creating a regulatory environment that favors the effective implementation of ESG principles, thereby promoting a greater contribution of the construction sector to the Sustainable Development Goals.

4.2. Implications for Theory and Practice

The validation work on challenges for implementing ESG in the construction sector of an emerging economy has important implications for both theory and practice. From a theoretical perspective, this research contributes to the literature by offering empirical validation, based on the experience of industry professionals, of specific challenges faced in the context of construction in emerging economies. The application of the Lawshe method provides a systematic and rigorous approach to validating these challenges, offering valuable insights that can theoretically enrich the field of ESG in construction. Additionally, by validating these challenges, the study may stimulate the development of new conceptual models and theories that explain the complexities of ESG implementation in emerging economies, contributing to the construction of a more robust and applicable body of knowledge.

In practical terms, the results of this research have significant implications for professionals and stakeholders in the construction sector in emerging economies. By identifying and validating specific challenges related to ESG implementation, the study provides practical guidance for managers, engineers, and other professionals involved in decision-making and strategic planning. These insights can inform the development of public policies, regulatory guidelines, and corporate strategies that promote more effective and sustainable adoption of ESG practices. Additionally, by better understanding the challenges faced, stakeholders can direct resources and efforts to address specific issues such as education, regulation, and waste management, thereby driving the transformation towards a more responsible and sustainable construction sector in emerging economies.

4.3. Relationship with the United Nations’ SDGs

Additionally, ref. [25] asserts that there is global consensus regarding the relevance and urgency of adopting sustainable business practices. Following the goal of SDG 12, which addresses responsible production and consumption, there is a need to encourage companies, especially large and transnational ones, to incorporate sustainable practices and integrate sustainability information into their reporting. Therefore, ESG is considered one of the most crucial drivers for achieving the SDGs [5].

And, given the importance of the construction sector, it plays a significant role in achieving SDG 9, focused on industry, innovation, and infrastructure (UN 2024). However, its contributions extend to complementary targets in other SDGs, such as SDG 6, concerning clean water and sanitation; SDG 11, aimed at sustainable cities and communities; and SDG 12, which addresses responsible consumption and production. By achieving the goals associated with the construction sector, companies in this industry not only contribute to the UN’s global SDGs but also meet the expectations of stakeholders and society at large. The integration of ESG practices in the sector is therefore extremely important for achieving these goals. Thus, this topic sought to link the SDGs with the challenges that would be addressed if resolved.

Resolution of the challenge “lack of an educational system in the context of ESG” directly contributes to SDG 4 (Quality Education) because successful implementation of ESG practices requires a thorough and comprehensive understanding by stakeholders. A robust and inclusive educational system can empower civil engineers and other stakeholders with knowledge about environmental, social, and governance issues, thereby promoting broader and more effective adoption of sustainable practices in construction.

The lack of standard indicators to measure ESG performance is a challenge closely linked to SDG 17 (Partnerships for the Goals). The existence of standardized indicators facilitates the comparison and evaluation of ESG performance across different projects and organizations, promoting transparency and encouraging effective partnerships for the implementation of sustainable practices.

Stakeholders with limited knowledge about ESG face a challenge that addresses both SDG 4 (Quality Education) and SDG 17 (Partnerships for the Goals). Empowering and raising awareness among stakeholders about ESG issues is crucial for promoting meaningful changes in the construction industry, facilitating collaboration, and ensuring the effective implementation of sustainable practices.

The lack of guidelines and standards associated with ESG practices can be linked to SDG 16 (Peace, Justice, and Strong Institutions) due to the role of guidelines and regulations in promoting effective governance and preventing unethical practices like greenwashing. Clear standards and well-defined policies related to ESG contribute to a more transparent and fairer regulatory environment.

The lack of interest/motivation among stakeholders is a challenge that can be related to SDG 12 (Responsible Consumption and Production) and SDG 17 (Partnerships for the Goals). Stimulating the interest and engagement of stakeholders is essential for promoting a culture of environmental and social responsibility in the construction industry, thereby driving the adoption of more sustainable practices.

Organizational resistance can be associated with SDG 12 (Responsible Consumption and Production) and reflects the need to overcome internal barriers to implementing effective ESG practices. Organizational resistance can hinder the adoption of sustainable changes, and overcoming it is crucial for promoting more responsible and sustainable production.

The challenge of aligning long-term corporate strategies and planning contributes to SDG 9 (Industry, Innovation, and Infrastructure), as integrating ESG strategies into long-term corporate planning drives innovation and promotes sustainable development of infrastructure and the construction industry.

The lack of standardized definitions and metrics for ESG is linked to SDG 12 (Responsible Consumption and Production), as resolving this challenge involves standardizing definitions and metrics to facilitate the assessment and monitoring of organizations’ environmental and social performance, thereby encouraging more responsible practices.

The lack of transparency, reliability, consistency, audit, control, and internal assurance of non-financial indicators is associated with SDG 16 (Peace, Justice, and Strong Institutions), emphasizing the importance of transparency and effective governance in assessing and disclosing non-financial indicators related to ESG. The reliability and consistency of these indicators promote a more ethical and responsible organizational culture.

The lack of encouragement for innovation, incentives, investment, rewards, support, and government investment in ESG practices is a challenge that, when addressed, contributes to SDG 9 (Industry, Innovation, and Infrastructure) and SDG 17 (Partnerships for the Goals), emphasizing the need for policies and incentives that promote investments and innovations in sustainable practices in construction.

The lack of organized waste management is associated with SDG 11 (Sustainable Cities and Communities) and SDG 12 (Responsible Consumption and Production), highlighting the importance of proper waste management in promoting more sustainable cities and reducing the environmental impact of the construction industry.

Corruption, political uncertainty, and political instability are related to SDG 16 (Peace, Justice, and Strong Institutions), emphasizing how mitigating corruption and ensuring political stability are essential for ensuring a fair and transparent regulatory environment for the implementation of ESG practices.

These associations highlight that addressing these challenges can improve the implementation of ESG in construction and positively impact multiple Sustainable Development Goals, promoting effective transformation towards more sustainable, ethical, and inclusive practices in the sector.

5. Conclusions

This study aimed to validate challenges related to the implementation of ESG in the construction sector in an emerging economy, using the Lawshe method as the basis for evaluation. The results highlighted 12 challenges faced by industry professionals, ranging from inadequate policies and incentives to waste management and institutional transparency issues, as presented in Table 3. Validating these challenges provides a solid foundation for understanding the complexities and obstacles involved in the adoption and effective implementation of sustainable practices in construction in emerging economies.

The validated challenges in this study encompass a wide range of issues that impact the successful implementation of ESG practices in the construction sector in emerging economies. Among these challenges, key issues include the lack of specific policies and regulations related to ESG, the absence of standardized indicators to measure sustainable performance, the need to educate and raise awareness among stakeholders on ESG issues, and the scarcity of financial incentives and government investments targeted towards sustainable practices. Additionally, organizational resistance, lack of transparency in non-financial reporting, absence of definitions and metrics, waste management issues, and concerns about corruption and political instability also emerged as significant challenges identified in this research.

The validation of these challenges highlights the complexity and multidimensionality of the obstacles faced by organizations and professionals in the construction sector when adopting ESG approaches. The lack of clear guidelines, coupled with the scarcity of incentives and investments and the absence of long-term strategies and planning, can impede progress toward more sustainable practices. Additionally, internal resistance within organizations, along with external issues such as corruption and political instability, creates a challenging environment for the effective implementation of ESG initiatives.

To effectively address these challenges, coordinated and integrated actions are required, including robust public policies, strategic partnerships between the public and private sectors, and efforts aimed at increasing awareness and capacity-building among stakeholders. The identification and validation of these challenges provide a solid foundation to guide future research and practical interventions aimed at promoting sustainability and social responsibility in the construction industry in emerging economies. Strategies to respond to these challenges should consider not only the immediate needs of organizations but also the broader political, economic, and social contexts in which they operate, aiming to foster positive and lasting changes toward more sustainable and ethical practices.

As suggestions for future studies, it is proposed to conduct in-depth research on the impact of government policies and financial incentives on the adoption of ESG practices in the context of construction in emerging economies. Additionally, comparative studies between different countries and regions can provide valuable insights into the most effective strategies for overcoming identified challenges and promoting a successful transition to a more sustainable construction model. Other potential research areas include assessing the return on investment in sustainability in construction, developing specific practices, metrics, and performance indicators to monitor and evaluate the progress of ESG initiatives in the sector, and creating a guideline manual for implementing ESG in the industry. These future investigations are critical for driving sustainability and social responsibility in the context of construction in emerging economies, thereby contributing to more equitable and environmentally conscious development.