Climate change and the construction industry

A sector note setting out the key considerations arising for the construction industry in relation to climate change.

Scope of this note

This note sets out the key considerations arising for the construction industry in relation to climate change, including:

• Its impact on climate change.

• Climate change law and regulation that relates specifically to construction and the built environment.

• Emerging climate change trends and the industry's reaction to climate change.

For an overview of:

• The key climate change legislation that can impact on businesses more generally, see Practice note, Climate change issues for business.

• Practical Law's resources on climate change, see Climate change toolkit.

• Related environmental, social and governance (ESG) issues, see ESG and sustainability toolkit (UK).

The construction industry's impact on climate change

The construction industry involves many stakeholders with long supply chains operating across many countries, and includes the production and use of materials. As such, the industry contributes significantly to climate change.

In 2022, the global construction sector accounted for 39% of gross annual carbon emissions worldwide. This figure comprises both operational carbon which is the ongoing emissions from an in-use phase of a building, as well as embodied carbon, which is emitted in the production of materials.

For more information on the construction industry's impact on the climate, see Practice note, Climate change clauses for construction contracts: Construction industry's impact on the environment.

Existing and anticipated law and regulation relating to climate change

Climate regulation affecting the construction industry in the UK can broadly be divided into three categories:

• Regulation addressing the construction process.

• Regulation of carbon emissions from the operation of built assets.

• General climate regulation applicable to the industry.

Most of the law in this area seeks to limit carbon emissions from completed buildings. Construction operations and materials are generally governed by more flexible, voluntary schemes adopted with a view to minimising operational emissions.

For more information on UK policies and schemes to tackle buildings' greenhouse gas (GHG) emissions, including CO2, see Practice notes, Legislative and policy measures to tackle buildings' GHG emissions in England and Wales and Zero carbon buildings.

Construction process

BREEAM

The Building Research Establishment Environmental Assessment Method (BREEAM) measures the sustainable value of a development against various metrics including land use, construction methodology and as-built energy efficiency. Although obtaining a BREEAM rating is not a legal requirement, it is specified as a planning condition by some Local Planning Authorities.

For more information on the use of BREEAM in construction contracts see Practice note, BREEAM in construction contracts.

Materials

According to the UN Environment Programme (UNEP), embodied carbon in construction materials such as steel, cement and glass accounts for around 10% of global carbon emissions (see UNEP: 2021 Global Status Report for Buildings and Construction). In spite of this, there is currently no regulatory regime addressing the environmental impact of construction materials in the UK. However, the September 2022 government response to the Environmental Audit Committee's report indicated that it intended to consult in 2023 on its approach and interventions to mainstream the measurement and reduction of embodied carbon in the built environment. The results of this consultation have yet to be published (see Practice note: overview, Legislative and policy measures to tackle buildings' GHG emissions in England and Wales).

Responsible sourcing of materials is required under certain British Standards (BES 6001 and BES EN 8902) and BREEAM certification. These are not mandatory but may nevertheless be imposed on parties to construction contracts in the form of contractual requirements.

Certain industry bodies, including the Royal Institute of British Architects (RIBA), have called for amendments to the Building Regulations (see Building Regulations 2010) to set specific embodied carbon targets (see Legal update, Government consults on introducing Future Homes Standard on energy efficiency for new dwellings in England). This is an approach also endorsed in the UK Green Building Council’s Net Zero Whole Life Carbon Roadmap (see Legal update, UK Green Building Council launches Whole Life Carbon Roadmap). An alternative approach to minimising the use of high carbon materials would be to require whole-building life-cycle assessments when calculating a building's energy efficiency. This would assess the impact of building materials over their entire life cycle, from extraction and manufacture through to disposal or recycling.

Life-cycle assessments across the entirety of the construction project also allow organisations to accurately track and report their scope 1 to 3 emissions. These terms first appeared in the Green House Gas Protocol of 2001 and categorise three sets of emissions:

• Scope 1 emissions which are direct GHG emissions such as onsite fuel combustion.

• Scope 2 emissions address indirect GHG emissions from the generation of purchased electricity, steam, and other energy providers.

• Scope 3 emissions measure other indirect GHG emissions upstream and downstream of a company’s activities, such as employee travel and waste processing.

Air quality

Air quality regulations may touch upon construction projects. In central London, Low Emission Zones for non-road mobile machinery (NRMM) were introduced in 2015. The government is considering, as part of its Clean Air Strategy, whether to introduce environmental permitting to reduce emissions from significant NRMM, particularly in urban areas.

For an overview of the air quality regulatory regime see Practice note, National Air Quality Strategy and local air quality management (LAQM) system.

Building operations

Building Regulations 2010

The Building Regulations 2010 (implemented under the Building Act 1984) provide the framework for controlling construction standards. Part L (Conservation of fuel and power) and Part F (Ventilation) are of particular relevance to the construction industry in combatting climate change (see Building Regulations: Approved Documents).

The Building Regulations implement a standard for minimum energy performance in new buildings by reference to emissions, requiring that a new building must not exceed the target CO2 emission rate, which is an amount defined by the annual CO2 emissions of a notional building of the same type, size and shape to the proposed building. For an overview of the application of the Building Regulations see Practice note, Building Regulations: an overview.

Before Brexit, the Building Regulations 2010 were partly used to implement EU standards, including under the EU Energy Performance of Buildings Directive 2010 (2010/31/EU) (EPB Directive 2010), which requires member states to:

• Set minimum performance requirements for buildings.

• Certify building energy performance.

• Ensure all new buildings are "nearly zero-energy buildings" by 2021.

For more information on the EPB Directive and its implementation into UK law, see Practice note, EU Energy Performance of Buildings Directive 2010.

The Building Regulations are enforced by local authorities under the Building Act 1984. Enforcement may take the form of an enforcement notice, injunction or prosecution in the magistrates' court. Even if the local authority does not prosecute, it may refuse to issue a completion certificate, which can raise issues upon the sale of an asset. For more information, see Practice note, Building Regulations: enforcement.

The EPB Directive 2010 also set minimum requirements for electric vehicle (EV) charging infrastructure in new and existing non-residential buildings. Following a consultation on amendments to the Building Regulations to require EV charge points in July 2019, the UK government confirmed in December 2021 that it will introduce new requirements for installing EV charge points in certain new buildings and buildings undergoing major renovation in England. To enact these changes, the Building Regulations etc (Amendment) (England) (No 2) Regulations 2021 (SI 2021/1392) were laid before Parliament in December 2021 and came into force on 15 June 2022 (see Legal update, Amending Building Regulations and new approved document require electric vehicle charge points in new buildings). Approved Document S (Infrastructure for charging electric vehicles), also published in December 2021, provides technical guidance on the installation and charge point requirements contained in the Building Regulations. For more information, see Practice note, Electric vehicles and charging infrastructure: UK policy.

In October 2021, the government published a Net Zero Strategy and a Heat and Buildings Strategy in the lead-up to the UN Framework Convention on Climate Change (UNFCCC) climate summit in Glasgow (COP26) in November 2021 (see Practice note, Legislative and policy measures to tackle buildings' GHG emissions in England and Wales: Heat and Buildings Strategy).

Energy Performance Certificates

The Energy Performance of Buildings (England and Wales) Regulations 2012 (SI 2012/3118) (EPC Regulations 2012) require sellers and landlords to provide prospective buyers and tenants with an energy performance certificate (EPC).

For more information on the requirements and enforcement, see Practice note, Energy performance certificates (EPCs).

Minimum Energy Efficiency Standards (MEES)

The Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 (SI 2015/962) (MEES Regulations) impose minimum standards of energy efficiency for private rented property (by reference to the EPC regime). They also enable tenants to seek landlord consent to make energy efficiency alterations. Where a building falls below minimum energy performance levels, a landlord may not grant a new tenancy or continue to let domestic private rented property.

In response to a consultation in October 2019 on amending the MEES Regulations, the UK Energy White Paper 2020 set out the government’s plans to raise the minimum standards of energy efficiency for private rented property, for example requiring commercial property to reach EPC Band B by 2030 (where cost-effective) (see Practice note, UK Energy White Paper 2020). The government published a further consultation in March 2021 seeking views on the implementation of this standard.

For more information, see Practice note, MEES: minimum energy efficiency standards: overview.

Energy Efficiency Regulations and Energy Saving Opportunity Scheme (ESOS)

The Energy Efficiency (Eligible Buildings) Regulations 2013 (SI 2013/3220) implemented requirements originally introduced under the Energy Efficiency Directive 2012 (EED 2012), requiring member states to implement strategies to refurbish existing buildings, with the public sector leading the way. Procurement Policy Note 07/14 also implemented procurement strategies to drive energy efficiency. For more information, see Practice notes, Climate change issues for public sector: Energy efficient products, services and buildings, Legislative and policy measures to tackle buildings' GHG emissions in England and Wales: Energy efficiency target for central government buildings and PCR 2015: sustainable procurement: Energy Efficiency Directive.

The Energy Savings Opportunity Scheme (ESOS) implemented Article 8(4) of the EED 2012 and requires larger companies and non-public sector organisations in the UK to carry out mandatory energy efficiency audits and identify opportunities for energy savings. The energy efficiency audits must cover energy used in buildings, transport and activities such as industrial processes.

In July 2021, BEIS published a consultation on options for strengthening ESOS, including:

• Improving ESOS audits and reports and increasing the number and scope of ESOS recommendations that participants implement (for Phase 3 (compliance year 2023)).

• Extending coverage to include medium-sized enterprises and making it mandatory to implement ESOS recommendations (both for Phase 4 (compliance year 2027)).

For more information see Practice note, Energy Savings Opportunity Scheme (ESOS).

Future regulation

Future Homes Standard (FHS) and Future Buildings Standard (FBS)

In January 2021, the government published a response to its October 2019 consultation on a proposed Future Homes Standard (FHS). The response confirms that the government will introduce an FHS that will require new build homes to be future-proofed with low carbon heating (particularly heat pumps and heat networks) and high levels of energy efficiency. They will be required to have carbon emissions 75 to 80% lower than those built under current standards.

This will be achieved principally by improving standards under Part L (Conservation of fuel and power) and Part F (Ventilation) of the Building Regulations 2010. The Standard will be introduced by 2025, although, from 2021, an interim uplift in Part L will require homes that produce 31% less CO2 emissions compared to current standards. The government consulted on a technical specification for the FHS in 2023, where there are two options for transitioning to the standard: either a six-month period or up to 12-month period between the legislation being laid and it coming into force in 2025, with either options then followed by a 12-month transitional period (see Practice note, Zero Carbon Buildings: New homes, Future Home Standards (FSH) for new-build homes).

Responses from much of the industry suggest that the proposals are not ambitious enough. In June 2020, the Committee on Climate Change issued a report to Parliament, which echoed these concerns and called upon the government to reform energy efficiency standards (see Committee on Climate Change, Reducing UK emissions: 2020 Progress Report to Parliament (25 June 2020)).

In December 2020, the Energy White Paper introduced the proposal for the FHS (see Practice note, UK Energy White Paper 2020: Chapter 4: Buildings).

The government has also consulted on changes to Part L and Part F of the Building Regulations for both domestic and non-domestic buildings, proposals for a Future Buildings Standard (FBS) for non-domestic buildings, along with a proposal to reduce the risk of overheating in new residential buildings. For more information, see Legal update, Government publishes response to consultation on Future Homes Standard and consults on Future Buildings Standard.

In addition, the Heat and Buildings Strategy was published in October 2021, building on the commitments for the installation of low carbon heating systems in UK buildings made in the Energy White Paper. It sets out the government’s plan to significantly cut carbon emissions from all homes and workplaces in the UK and focuses on implementing a transition from gas boilers to cleaner alternatives such as electric heat pumps, with initial steps being to drive-down heat pump costs and incentivise consumers to switch from gas boilers (see Legal update, Government publishes Heat and Buildings package including long-awaited Strategy).

On 20 September 2023, the Prime Minister introduced a number of changes to net zero policies, citing that the UK had overdelivered on reducing greenhouse gas emissions, which he indicated that it could allow for a more "pragmatic, proportionate and realistic approaches to achieving net zero".

The government announced a change to the 2021 Heat and Buildings Strategy to:

• Delay the ban on installation of off-grid oil and LPG boilers, and of new coal heating, for off-gas grid homes to 2035, instead of phasing them out from 2026, as many of the homes targeted were not suitable for heat pumps.

• Set an exemption to phase out of fossil fuel boilers, including gas, in 2035, so that households that will struggle most to make the switch to heat pumps or other low carbon alternatives will not have to do so. This is expected to cover about 20% of homes, including off-gas grid homes that will need expensive retrofitting or a very large electricity connection.

The phasing out of new natural gas boilers from 2035 was a key part of the 2021 Heat and Buildings Strategy which included a policy that no one would be forced to remove their existing boilers (see Practice note, Government announces changes to net zero policies).

Key climate change risks for construction industry corporate reporting

Many UK companies are legally required to report on climate-related and environmental matters in their annual reports. The Streamlined Energy and Carbon Reporting (SECR) framework introduced in April 2019 extended the reporting obligations for a number of UK companies to include additional reporting on greenhouse gas (GHG) emissions, energy consumption and energy efficiency action. Requirements are increasing, including proposals for mandatory climate transition plans (see Practice note, Climate change issues for business: Climate transition action plans).

The Taskforce on Climate-Related Financial Disclosures (TCFD) was launched in 2015 by the Financial Stability Board (FSB) and works with companies to disclose their financial exposure to climate risk. Following a consultation, the government announced in October 2021 that for all accounting periods beginning on or after 6 April 2022, the largest UK registered companies and financial institutions will be required to report in line with the TCFD recommendations, in the form of a non-financial and sustainability information statement (NFSI statement). This represents part of the government’s overarching plan to make TCFD disclosures mandatory for all companies in the UK by 2025, as announced by the Chancellor of the Exchequer in November 2020 (see GOV.UK: Chancellor sets out ambition for future of UK financial services, 9 November 2020). Entities subject to the new requirements will be required to make climate disclosures of an increased quantity and quality, in line with the four pillars of the TCFD (governance, strategy, risk management and metrics and targets). For more information, see Practice note, Strategic report: non-financial and sustainability information statement: financial years beginning on or after 6 April 2022.

The UK government has also announced the roll out of new sustainability rules that will be based on those issued by the International Sustainability Standards Boards (ISSB). Guidance for the UK Sustainability Disclosure Standards (UK SDS) has been released by the UK government and will require disclosures on the sustainability risks and opportunities that companies face. The UK SDS is expected to be endorsed by the government in July 2024, and will apply to all UK registered companies and limited liability partnerships, and by the Financial Conduct Authority for UK-listed companies (see GOV.UK: UK Sustainability Disclosure Standards, 2 August 2023). At the time of writing, there is currently no guidance available on whether these standards will be enforced by the government in July 2024.

For Practical Law's resources on the environment and climate-related disclosures required as part of annual corporate reporting, see Climate-related and environmental disclosures toolkit.

Key risk factors identified by some of the largest companies in the UK construction industry include:

• The availability and cost of raw materials and water.

• Large fluctuations in energy costs including increasing costs of fossil fuel energy and the price of carbon.

• Increasing intensity and frequency of extreme weather events, including flooding and high winds, which could impact sites negatively.

• New planning requirements for climate adaptation measures for new buildings with an associated uplift in construction costs.

• Sustainability performance failing to keep pace with demands.

• Sudden tightening of environmental or planning legislation to improve air quality and/or reduce CO2 emissions.

• Supply chain carbon emissions, climate-related disclosures and compliance.

• Aside from regulation, investors are beginning to exert significant pressure on companies in the construction industry to improve transparency regarding their climate impact. For example, in 2019, institutional investors wrote to European construction-material companies to commit to a 2050 net-zero target (see Funds managing $2 trillion urge cement makers to act on climate impact, Reuters, 22 July 2019. For more information, see Lending.

Extreme weather events and the changing climate

For construction projects, extreme weather events can result in significant delays and increased expense. For example, strong winds render working at height unsafe and may damage scaffolding and equipment. Heavy rains can prevent access to machinery, flood the site or prevent safe installation of electrics. Poor visibility or freezing conditions also raise safety issues. There have also been new provisions inserted in standard form construction contracts which take a more proactive rather than reactive approach to climate change issues.

The most commonly used standard form construction contracts provide relief events for the contractor where extreme weather impacts the progress or cost of the works, as set out in the following table:

Form of contract	Weather provision
JCT 2016	The unamended JCT lists "exceptionally adverse weather conditions" as a Relevant Event, which entitles the contractor to an extension of time for completion of construction (but no increased cost associated with the event). The definition does not refer to any specific metrics, instead relying on the principle that words in a commercial agreement should take their natural meaning. In practice, the initial decision as to whether an event is "exceptionally adverse" will be taken by the Contract Administrator and will likely take into account the nature and location of the project. JCT contracts also allocate the responsibility to insure the project against damage by "Specified Perils", which includes lightning, storm and flood.
NEC4	NEC entitles the contractor to time and money where a weather measurement is recorded that is shown to occur less frequently than once in ten years. The contract allows the parties to specify weather metrics for rainfall, freezing conditions and snow. In light of changing weather patterns, parties may consider amending the contract to allow for wind and extreme heat as well. NEC4: Option X29 clause The new NEC4 contract has also included a climate-change option clause which prompts projects to work towards net zero. In particular, the clause introduces "Climate Change Requirements" which is to be defined in the scope of the contract. This allows parties to the contract a certain degree of autonomy to incorporate sustainable working practices within their projects (see Practice note NEC4 suite of contracts: key changes).
FIDIC 2017	FIDIC contracts allow an extension of time for completion in the event of "exceptionally adverse climatic conditions", which must be unforeseeable in light of the weather data available.

Note that all terms of standard form contracts can be negotiated to determine which party bears the risk of extreme weather conditions.

Many construction contracts also contain "force majeure" provisions, which may apply in the event that progress is prevented by extreme weather (although such clauses are unlikely to apply where there is specific provision for adverse weather in the contract). Most force majeure clauses require an element of unforeseeability. As extreme weather becomes more common, the parameters of what can be deemed "unforeseeable" will change.

For more information on claims for extensions of time, loss or expense or other claims that may arise under a construction contract, see Practice note, Claims arising under a construction contract.

Popular movements and emerging trends relating to climate change

For a wide-ranging tracker of climate change initiatives of particular relevance to construction practitioners, see Construction climate change tracker.

Concrete

A major component of concrete is cement, the production of which yields high levels of CO2 (for more information, see GreenSpec: The environmental impacts of concrete). Data published by the Global Carbon Project found that emissions from concrete totalled 2.6 billion metric tonnes in 2021, up from 1.2 billion metric tonnes in 2002. This equated to 7% of global CO2 emissions in 2021.

The concrete industry also contributes to climate change in other ways, such as the destruction of landscape for extraction and processing, increased GHG from vehicle emissions due to the transportation of concrete in the supply chain, and water usage.

The concrete industry has been ear-marked as a key area that can be improved in terms of its impact on climate change. For example, the UK brought in a Concrete Industry Sustainable Construction Strategy in 2008 and produces annual performance reports in order to monitor progress. The 2021 report included the following commitments:

• Contribute to the delivery of a low carbon built environment.

• Develop a Material and Resource Efficiency Programme to inform best practice across the life cycle of concrete in the built environment.

• Develop a low carbon freight initiative to support improvement in transport through the concrete supply chain to construction sites.

• Target continuous improvement of sustainable production performance and report annually.

(Source: Concrete Industry Sustainability Performance Report, 13th report).

Renovation

Waste from the construction sector, including in particular from demolition, constitutes 35% of all waste in the UK every year (source: UCL Urban Lab and Engineering Exchange report, Demolition or refurbishment of social housing? A review of the evidence, October 2014). When buildings are demolished, not all materials can be recycled. For example, bricks, tiles and concrete can only be used in civil engineering projects such as roads or sent to landfill.

Renovation, on the other hand, reduces waste, saves energy, and decreases pollution from transportation of materials to and from the construction site. Increasingly, voices within the construction industry are advocating that renovation should be preferred to demolition and that changes, for example to the VAT regime, could be made to encourage this.

Waste

The construction industry generates large quantities of non-recyclable waste (120 million tonnes in 2014) (source: GOV.UK: Digest of Waste and Resource Statistics, 2018 edition) and expends significant energy processing waste, which generates a large amount of carbon dioxide emissions.

The construction industry contributes considerably to the high demand for landfill and generates a lot of waste for several reasons including:

• Construction materials left unused either from over-ordering or due to poor design.

• Damage caused to the materials due to lack of storage on the construction site.

• Damage caused during transportation on the site or during delivery.

Much of this waste ends up in landfill because it comprises composite products that are difficult to recycle.

Reusing excess materials (as opposed to sending them to landfill) or recycling products and/or materials, will reduce the construction industry's impact.

For more information on UK circular economy initiatives, see Practice note, Circular economy: EU and UK initiatives. For more information on waste, see Waste and extended producer responsibility (EPR) regimes toolkit.

Lending

Over the last ten years there has been an increase in the sustainable financial market. This has been aided by governments, regulators and the European Commission's focus on issues relating to sustainability.

In the UK, steps to ensure progress towards cleaner economic growth include:

• Green loans for projects with clear environmental benefit, green assets or for businesses which operate in a green sector.

• Environment, social and governance (ESG) loans, which are less restrictive than the green loans mentioned above, but where the borrower is measured against an agreed set of ESG performance targets.

• Mobilising private finance for green investment projects.

For more information on sustainable finance, see Practice note, A guide to key resources: sustainable finance.

The current market is creating conditions that ensure greater access to green financial products. For example, developers may seek to access financial products for renovating or constructing buildings that are sustainable or improving energy efficiency in the operation of an existing building. An emerging ESG trend at the board room level is the increase in companies entering into sustainability-linked loan arrangements. Such agreements may, for example, track progress against key sustainability metrics such as reducing carbon intensity, diverting waste from landfill and increasing female numbers in project delivery positions, and incentivise or penalise the company on its progress against those targets.

Lenders now recognise that the risks associated with climate change go beyond physical damage to buildings. Increased insurance premiums (or insurance unavailability), demographic changes and consumer awareness all represent transition risks as climate change accelerates. Assets also need to be future-proofed against retrofitting required by regulatory developments.

For more information on ESG, see Environmental, social and governance (ESG) toolkit.

In addition, the UK's government-backed UK Infrastructure Bank, which launched in June 2021, cites climate change in its investment criteria. In particular:

• Its Investment Principle 1 requires that "the investment helps to support the Bank's objectives to drive regional and local economic growth or support tackling climate change". (It also states that "where an investment is primarily to support local and regional economic growth, we will ensure that it does not do significant harm against our climate objective").

• Its Investment Principle 2 identifies "clean energy" as a priority sector.

• It expressly states that "we do not invest in projects involving extraction, production, transportation and refining of crude oil, natural gas or thermal coal with very limited exemptions".

For more information, see UK Investment Bank: where we invest and Practice note, Project finance: UK law overview: Environmental, social and governance issues.

The government in 2021 published its Green Financing Framework, which sets out the process for identifying, selecting and verifying the green projects that are eligible for financing from the UK's green gilt programme. This framework sets out environmental eligibility criteria for any expenditures coming from government-backed green financing initiatives. The UK’s first green gilt of £10 billion was issued in September 2021, the largest inaugural green bond issuance by any sovereign, and a second issuance the following month raised a further £6 billion for green projects.

For more information, see GOV.UK: UK Government Green Financing Framework, June 2021.

Technology

The use of artificial intelligence (AI) is increasingly being used to tackle climate change. Some of the areas that are being investigated include energy production from renewable resources, controlling CO2 emissions and tracking natural disasters.

Industry's climate change strategy

Decarbonisation efforts are already underway in response to existing regulation and ongoing consultations. Industry bodies across the built environment, representing architects, engineers, contractors and project managers have begun to issue climate emergency declarations. The Construction Declares movement describes itself as: "...a global petition uniting all strands of construction and the built environment. It is both a public declaration of our planet's environmental crises and a commitment to take positive action in response to climate breakdown and biodiversity collapse."

The UK Green Building Council's (UKGBC) Climate Commitment Platform maps the climate commitments of its membership, which consists of contributors throughout the supply chain (see UKBGC, Climate Commitment Platform).

The UK government launched its Construction Playbook in December 2020 and updated it in September 2022. The Construction Playbook seeks to improve how the government assesses, procures and delivers public works, and to set out policies and principles developed with the private sector and drawing on best practice across the public sector. Among other things, it:

• Recognises the industry's role in achieving the UK's target of net zero greenhouse gas emissions by 2050.

• Is accompanied by guidance notes on "Promoting Net Zero Carbon and Sustainability in Construction" and "Modern Methods of Construction", both of which are likely to interest those concerned with climate change issues.

For more information, see Legislation Tracker, Construction tracker: Construction Playbook.

The following sections highlight some of the practical steps being taken by the construction industry to date.

Off-site manufacturing (OSM)

The industry is increasingly making use of off-site manufacturing (OSM), which:

• Reduces waste materials.

• Reduces over-ordering and contingency ordering of materials.

• Reduces the transport of materials and personnel to construction sites.

• Reduces the use of cement through the use of pre-cast concrete and alternative materials.

• Results in more energy efficient buildings through precision manufacturing and reduced defects.

• Mitigates the risks posed by extreme weather events.

Consultant services

The Royal Institute for Chartered Surveyors (RICS) has mandated the adoption of whole life carbon assessments by its members (see Legal update, RICS standard on whole-life carbon assessment for the built environment published). By including these services as standard to its clients, it ensures that carbon emissions are factored into designs from the outset.

Among other initiatives of relevance to construction professionals, in June 2021 the Construction Industry Council (CIC) published a climate change action plan for professional institutions (see Legal update, CIC publishes climate change action plan for professional institutions).

Integrated design

Sustainable design requires consideration of the energy efficiency of a building throughout its design life.

Building Information Modelling (BIM) allows for the analysis of project data through to the end of the life-cycle of an asset. BIM provides a database allowing the entire project team to consider every design aspect of a project, including energy efficiency and use of resources.

Accurate digital modelling has the potential to influence procurement decisions to reduce waste and minimise design clashes that might require reconstruction to amend them.

For more information, see Building information modelling (BIM) toolkit.

Materials research

Adoption of alternative construction materials is in its early days, but continued research into concrete alternatives such as bamboo, recycled plastic, rammed earth, Ferrock and Timbercrete have the potential to reduce costs and increase viability.

Climate litigation

Climate change litigation is a growing risk for both the public and private sectors. The construction industry, with its interface with energy, infrastructure and individuals' private lives, is significantly exposed.

Climate-related actions that may impact the construction industry can generally be divided into the following categories:

• Administrative cases. Recent years have seen numerous cases in which decisions by public bodies have been challenged by judicial review on the grounds of failure to consider climate commitments. For example, in early 2021, the Paris Administrative Court held that the French government was liable under EU and French law for taking insufficient action to meet its commitments to reduce greenhouse gas emissions (see Legal update, French government liable for inadequate climate action (Paris Administrative Court)). It is worth noting that in late 2020, the UK Supreme Court overturned the Court of Appeal’s decision that the Secretary of State had failed to take into account the government’s commitments under the 2015 Paris Agreement, and there is therefore no successful example of an administrative challenge in the UK to date (see Legal update, Heathrow expansion: Plan B and FoE challenge to Airports NPS fails (Supreme Court)).

• Liability for greenhouse gas emissions. There are a growing number of cases worldwide against oil majors for their role in historic and ongoing emissions of greenhouse gases under various causes of action including violation of human rights, nuisance, trespass, strict liability claims and fraudulent misrepresentation. In due course, such actions might be brought against businesses in the construction industry. In early 2021, Biobabundance CIC commenced judicial review proceedings to challenge a local planning proposal, on the grounds that the plan did not adequately consider climate impacts of the housing proposals.

• Failure to adapt: professional liability and operations. The increasing frequency of extreme weather events has given rise to negligence claims for failure to account for the effects of climate change in design and construction. In the US case of Harvey v Costello in 2018, a collection of homeowners in Texas sued the engineering firm responsible for the construction of a levee system, alleging that design flaws resulted in the intrusion of rainwater into their properties during Hurricane Harvey.

• Failure to adapt investment decisions. European courts have shown that they are willing to hold company resolutions invalid where they give effect to investment strategies that do not take into account climate related financial risks. In 2018, in the case of ClientEarth v Enea, a company resolution authorising construction of a coal-fired power plant was annulled on the basis that the board members breached their fiduciary duties for failing to act in the best interests of the company and its shareholders. The claimants successfully alleged that the investment decision harmed the company's economic interest because it failed to account for rising carbon prices, increased competition from cheaper renewables, and the impact of EU energy reforms on state subsidies for coal power (see Practice note, Climate change litigation: Claims against companies, directors, underwriters and pension funds for a failure to manage or disclose climate risk).

• Disclosure. There have been instances in which shareholders have sued companies for failing to disclose climate change-related business risks, including investment in high polluting assets (for example, see O'Donnell v Commonwealth & Ors (22 July 2020, VID482/2020) (Federal Court of Australia)).

• Regulatory investigation or sanction. By way of example, in recent years, China has issued guidelines for the prosecution of companies and individuals found guilty of pollution offences, including the improper disposal of waste.

• Compliance with international law. In 2021, a Dutch court in the Hague ordered Royal Dutch Shell to cut its global carbon emissions by 45% by the end of 2030 compared to 2019 levels. This was a precedent setting case, and the first time a private company was found to have a duty under the Paris Agreement.

• Climate change and human rights. In April 2024, the European Court of Human Rights ruled that Switzerland had failed to adequately address climate change. The Court held that Switzerland did not act in a timely and efficient manner to adopt and implement legislation to mitigate climate change, which violated Article 8 (the right to respect for your private life, your family life, your home and your correspondence) of the Convention. Article 8 was found to include "a right to effective protection by the State against the serious adverse effects of climate change on the lives, health, well-being and quality of life citizens".

For more information on key issues, trends and cases in climate change litigation globally, see Practice note, Climate change litigation.

This article was published on Thomson Reuters Practical Law.