The Challenges of Quantifying ESG in Large Infrastructure Projects

This research project is aligned with Research Axis 1: SOCIETY, VALORIZATION AND GOVERNANCE

Research project description

Integration of ESG Criteria and Its Benefits

Infrastructure projects, as major investment vehicles, face a wide range of environmental, social, ethical, and financial challenges. Their scale and complexity lead to high resource consumption, significant waste production, lasting impacts on ecosystems and communities, and coordination and governance challenges. These factors increase financial risks, including backlash, disputes, interruptions, litigation, or sanctions, resulting in additional costs.

To better anticipate these sustainability risks, the ESG framework complements financial analysis by incorporating intangible dimensions that are absent from traditional evaluation models. ESG integration is sought after for its financial benefits because:

  • It is associated with a reduced risk profile and facilitates access to better financing conditions;
  • It is increasingly seen as a lever for value creation, notably through green innovation, the adoption of better social practices, and resource optimization.

Quantification Challenges

For ESG criteria to fulfill these roles, investors must rely on ESG data that is reliable, comparable, integrable into their analytical tools, and easily communicable. However, such data suffers from a lack of standardization, accessibility, and consistency. In large infrastructure projects—where sustainability indicators are already difficult to define and measure—ESG assessment becomes even more complex. These quantification challenges are not limited to this sector; they affect all investment spheres, including those where ESG integration is more advanced.

Research team

Researchers:

Nathalie Drouin, chairholder of the Research Chair INFRA-S

Marie-Andrée Caron, Researcher at the Chair iNFRA-S and Member of the Executive and Scientific Committees

Students:

Capucine Gagnon, Master’s student in Project Management (Research Profile) and recipient of the MITACS scholarship

Partner:

Gestion d’infrastructure Axium.

Research Purpose

The research focuses on institutional investors. By understanding the challenges faced across different asset classes—whether mature or emerging in terms of ESG—it becomes possible to identify common levers and areas for improvement that will also benefit infrastructure projects.

The project objectives:

  1. Identify and analyze ESG quantification mechanisms within the company.
  2. Identify and understand investor expectations regarding ESG data.
  3. Support the company in understanding the challenges of ESG quantification.

Research methodology

The study adopts a qualitative approach, based on semi-structured interviews with experts from various investment sectors, such as infrastructure, real estate, private equity, the stock market, and agriculture.

Institutional investors are a particularly relevant field of study, as they are both producers and users of ESG data. They respond to the expectations and pressures of their own investors and integrate this information into their investment decisions. This dual role makes them key actors in understanding the tensions, obstacles, and potential solutions related to ESG measurement.