As the UK emerges from the COVID-19 crisis and continues to ease lockdown rules, the slogan for recovery has become ‘build back better’. A large-scale response from the UK built environment sector will play a critical role in achieving a sustainable recovery, as well as numerous other government commitments, particularly the net-zero emissions target by 2050.
The second webinar in an environmental and social governance series run by leading law firm Ashurst, sustainability consultancy Sancroft, environmental consultancy RSK and leading construction, services and property group Kier was particularly timely as the panellists explored the key sustainability issues facing the construction and infrastructure sector and proposed practical steps businesses can take to help deliver a sustainable recovery. Three key themes emerged from this discussion.
The post-COVID ‘new normal’
The COVID-19 pandemic has brought to light the severe vulnerabilities that exist within the construction industry in the face of external shocks. Although the challenge is currently COVID-19, businesses across all sectors will be susceptible to a range of shocks in the future, such as climate change or human rights issues. A prime example of this in recent weeks is Boohoo, which saw more than £1 billion wiped from its share value only two days after allegations of modern slavery in its supply chain were made public.
It is no longer acceptable for companies to put their heads in the sand and continue business as usual. Stakeholder demands in the built environment sector are changing, particularly from the government, which is trying to reach climate change goals, and consumers. The lockdown rules over the past four months led many people to re-evaluate what they truly value, both in terms of their how they expect businesses to respond during crises but also with regard to their personal lives, with changing norms in where people work and socialise, and more individuals wanting more green spaces and positive community environments.
With environmental and social sustainability at their hearts, businesses are reflecting on the changes accelerated by the COVID-19 pandemic, what the new normal will look like and how this will affect their operations.
For many businesses and investors, resilience has become central to their strategies for the future. The panellists explored what resilience means for the built environment sector and highlighted five key areas to be addressed.
The first is knowing the company supply chain. Many of the businesses that have remained successful during the pandemic have good relationships with suppliers and a strong understanding of where their materials come from. As businesses try new materials and new regulations, such as the plastics tax, affecting the construction industry approach, ensuring supply chain stability will be imperative.
The second area of resilience that the built environment sector must consider is investing in its people. The development and implementation of more-sustainable and advanced building methods will require a more highly skilled workforce. This will likely require up-skilling or retraining of employees to help move towards a green economy and build long-term resilience in the face of shocks.
Third, the use of more-sustainable materials and eliminating waste will be critical parts of building resilience. As has been shown with the upcoming plastics regulation, some materials will become harder to obtain or prohibitively expensive, so businesses are starting to prepare for these changes. Ensuring attention is given to sustainable, recyclable materials will be increasingly important.
Fourth, the webinar highlighted the need for greater transparency in reporting when thinking about building resilience. There has been growing scrutiny from the public and investors of the targets businesses are setting and what they are accomplishing. For example, stakeholders are now questioning what companies mean when they claim to be or aim to be carbon neutral and whether carbon reduction figures are referring to intensity or absolute reductions. Sustainability is now used as a barometer for the health of a business. Therefore, transparent reporting provides an opportunity for businesses to show their improvements and build resilience.
The final point to address is adaptation. As climate-related issues continue to manifest, the construction industry will have to adapt to future regulations, taxes such as the carbon tax and changing consumer demands for sustainability. These changes will likely affect costs, for example, those for using certain materials, and operations for many businesses and must be anticipated and managed to minimise their impact.
A holistic approach
In recent years, there has been a significant increase in businesses enhancing their sustainability vision and strategies. The COVID-19 pandemic has accelerated this practice. A key component of this is taking a holistic approach to sustainability. As the panel discussed what this means for the built environment, two key themes emerged.
The first is embedding the sustainability mindset into the business agenda and across operations. It is no longer about a separate green agenda or trend. Sustainability is now featuring in the commercial language of businesses from the top-level chief executive officers and managing directors to the project managers in charge of delivering the projects. There has been a shift in the way costs and value are judged, beyond just the cost of development, to prioritise the life cycle of an asset. This includes design, construction, maintenance, demolition and reuse.
An example of this is businesses engaging with lawyers to incorporate sustainability goals into contracts and ensuring contracts facilitate innovative, collaborative approaches. Although the built environment sector is already making big strides in the life-cycle approach, their method is often disjointed and requires a more holistic, circular economy focus that includes both new and old buildings. It is estimated that 26 million existing homes will need to be retrofitted to reach net-zero emissions by 2050. Tackling the inefficiencies in the existing stock of buildings and accelerating the transition must be kept in the conversation alongside new building methods, materials and technologies. Businesses have the opportunity to drive credible sustainable action in this way.
Second, the importance of community is a key factor in the holistic approach. Businesses are now asking how their projects are fostering community engagement, inclusivity and diversity among various neighbourhoods. Many people are now concerned about having a sense of place that incorporates where they shop, eat and go to school and work as well as air pollution and green spaces. The built environment sector must recognise that community connections and the well-being of building users are essential for building better settlements for the future.
The COVID-19 pandemic has shown that the construction industry can work quickly and effectively in collaboration with governments. This same approach can be used when setting the standards to achieve climate goals. The Green Construction Board that forms part of the Construction Leadership Council could spearhead this, but it will also take collaborations with industry bodies and leaders. There is the opportunity to set clear standards with consistent policies and strong enforcement to level the playing field, thereby enabling those who are most proactive to get the competitive advantage. The government must not lose this opportunity to unify aims, recover from the pandemic and accelerate the transition to net-zero emissions, thereby strengthening resilience to climate change. The sustainability journey is a leap of faith that everyone needs to take, each with their own journey.
The second webinar in the environmental and social governance series was on 15 July 2020 and presented the views of an excellent panel comprising Joanna Gillroy, Head of Sustainability at Kier Group; Dom de Ville, Director at Sancroft; Haydn Keen, Director at RSK; Ellie Reeves, Counsel at Ashurst; and Sadia McEvoy, Counsel, Construction at Ashurst.