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Greener Contracting for the Construction Sector
14 May 2021
‘Build back greener’ has been the response of many within the construction sector to how we deal with some of the challenges facing London, and the UK more generally, post-Covid. In fact, the industry was already changing in response to the issues posed by climate change.
As the built environment accounts for an estimated 40 per cent of global energy use, an estimated 30 percent of energy-related greenhouse gas emissions and a large share of waste generation and use of natural resources, it is no surprise that sustainability is at the top of the agenda.
The imperative to act quickly intensified recently with the UK Government’s new target of delivering 78% reductions by 2035 compared to 1990 levels. Taking into account the UK’s hosting of COP26 in Glasgow in November, there has never been a more opportune time to think about the steps that can be taken to reduce carbon emissions.
But how should London’s developers go about this? While sustainability policies are commonplace, what more can businesses do to integrate practices that will help us achieve these ambitious targets?
One of the ways in which lawyers can help is through climate conscious drafting. Ashurst works closely with The Chancery Lane Project, a collaborative body of lawyers, whose aim is to help achieve Net Zero through contract drafting.
But what does this mean in practice? There are actually a surprising number of ways in which construction contracts can be greener. Here are some of them:
Carbon Performance Clause – a clause requiring a supplier to meet emissions targets. If breached, the supplier pays a climate remediation fee to a selected environmental charity.
Climate-resilient Landscape Design – a provision enabling a client to specify the use of native flora and trees to achieve biodiversity gain, ensure hard landscaping is minimised, and protect from the impact of climate change, for example, mitigation against flooding risk.
Green Construction Modifications – a clause that requires suppliers to propose ‘green modifications’, for example, using recycled materials during the course of a project.
Reduction of CO2 from use of certain materials – a provision that incentivises the contractor not to use certain materials, for example, single use plastic.
Circular Economy Clause – a clause that promotes responsible consumption and production by obliging suppliers to consider circular design from the design stage of a project by reference to a careful definition of what constitutes ‘Circular Design Requirements’.
Climate Aligned Construction Waste Management Clause – a provision that includes KPIs in respect of recycling, reusing and disposing of waste materials.
Late Payment – Green Interest Remedies – a provision whereby the parties agree that interest due on late payments is paid to a carbon offset provider or to an NGO supporting environmental improvements.
Of course, legal drafting cannot solve the crisis we face but lawyers have an opportunity to help create new market norms for London developments that bind parties to take a more ambitious approach to emissions and sustainability.
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