Author: Tracy Keep
Yet it has made an undeniable shift towards sustainability: investments in building energy efficiency rose by 16% in 2021, reaching USD 237 billion, while the number of green building certifications worldwide increased by 19%1.
The Building To COP Coalition, a group of organisations catalysing climate action in cities, regions and the built environment, is committed to halving emissions by 2030 and achieving net zero over the full life cycle by or before 2050. These are substantial goals, given the sector’s current footprint, and will involve seismic change and significant international collaboration.
Tangible changes are already afoot across the globe. Major design and engineering firms have announced global green commitments, and leading developers have published net zero plans. Cities such as London and New York now require whole-life carbon assessments on all projects, while countries like Denmark and Finland have issued sustainable construction strategies to address full life-cycle emissions.2
As with any period of rapid change, construction’s path to net zero is paved within an evolving risk landscape. While no one desires the alternative of status quo, it is important to acknowledge and mitigate the new risks accompanying green construction.
It’s not easy being green
Presently very few building projects calculate and report their full carbon footprint, yet this is likely to change as more stakeholders embed these objectives into their procurement approaches.
While striving to meet its ambitious goals, progress in the sector will be uneven and there could be huge disparity in regional requirements. No universal certification for net zero currently exists, and this makes assessing the legitimacy of “green” claims very difficult.
‘Greenwashing’ is the act of providing the public or investors with misleading or false information about the environmental impact of a company’s products or operations. Research from the UK Competition and Markets Authority (CMA) across all sectors found that 40% of green claims made online in 2020 could be misleading.3
The CMA is currently scrutinising the UK fashion industry’s sustainability claims, and retailers could face enforcement action and criminal penalties if their claims are found to be misleading. Any resulting action could set a precedent, and the CMA has advised that it will potentially examine green claims made by businesses in other sectors as well.
As owners, developers and tenants become more aware of sustainability and energy performance, greenwashing claims may increase against construction firms. Claims could also arise from using environmentally questionable materials or when certain “green” materials are produced using processes that damage the environment.
If works to improve energy efficiency do not create the promised energy savings, or result in the withdrawal of energy grants, the construction companies responsible could face claims for the subsequent losses.
The drive to build green is also competing with a shortage of materials and inflationary pressures. Construction firms must try to balance sustainability with financial and time constraints. What happens when green products are unavailable, but waiting for them will incur costs and delays?
Relying on “green” claims made by subcontractors or manufacturers’ sales information could also leave businesses exposed. While smart technology goes hand in hand with green construction, it could also present a potential claims risk if it has public links to sustainability best practice but actually has a hidden environmental impact. For example, smart systems reliant on blockchain and cryptocurrency transactions had their green credentials questioned after a study revealed Bitcoin has emitted almost 200 million tonnes of carbon dioxide in the cryptocurrency’s brief history.4
Progress depends on collaboration and transparency
As the world becomes more ecologically conscious, businesses must be prepared to justify their sustainability claims. The green building risk landscape will evolve rapidly over the next five years, and new exposures will emerge. Nevertheless, green construction should not be sidelined, as the reputational impact of doing nothing will far outweigh any risk it poses.
Businesses need to be realistic, honest and transparent regarding their path to net zero. They should avoid vague terms they cannot substantiate and consider the full lifecycle of any project they are assessing. Firms should also keep evidence on record for any green claims they make. The more information the sector can share and the closer it collaborates, the more quickly it will meet its goal of a sustainable future.