Sir Robert McAlpine's Director of Sustainability, Simon Richards, took part in a panel session on “Real Estate: The Challenge of ESG” at this year's BCO Annual Conference.
If you were unable to attend the session, we invite you to read the key points from Simon's presentation below and download our Sustainability Report.
As I am sure we are all aware - there is no action without consequence, and there is no doubt that the built environment has had a significant effect on the natural one and society as a whole.
When I first started my career, 20 years ago, we didn’t talk about Environmental, Social, and Governance (ESG) or sustainability. It was Environmental Management and the focus was legal compliance.
Today we talk about ESG in the boardroom and have Sustainability Managers, specialists in carbon, social value and circular economy in our business.
What has changed?
Firstly, our clients are asking for it:
- Either because they have ESG strategies which need to be addressed
- Or perhaps they are just looking to maximise their asset value or rental yield
For example, if you are building a speculative office block which is not Net Zero Carbon (NZC), particularly in operation, then you may struggle to let it in the future or, if you plan on operating it yourself, you may fall foul of future carbon taxation. That asset will be a growing liability.
Legislation is growing in this space. Therefore, as a business, you need to make sure you are able to comply.
It is also increasingly becoming an element of attraction and retention of employees.
Our response is shaped by our Company Sustainability Strategy and the desire to have every single one of our employees working to deliver our sustainability objectives.
This strategy ensures we do the right thing as a business, but also to make sure we can deliver for our clients.
Our sustainability strategy
- We’ve set an ambition to be NZC as a business, using Science Based Targets to drive down our emissions.
- We’re also concentrating on the Embodied Carbon of the assets we deliver. This is a growing client and future legislative requirement and therefore crucial to address.
- We are identifying and eliminating waste from our business.
- We’re also focusing on giving our clients design, procurement and construction solutions aligned with circular economy principles.
- Where you spend your money is a key indicator of how sustainable you are. This will be in sharper focus in coming years, so this element of our strategy ensures that we procure our materials, services and labour ethically.
- We wanted a structured approach to social value (SV), so it’s embedded into all our projects. We’ve invested in a tool to forecast and measure SV and the Social Return on Investment aligned to the TOMS framework (Themes, Outcomes and Measures).
- With this more targeted approach we are able to implement things to help our project teams deliver improved social value. For example lesson plans developed with educational professionals for our local schools or employability programmes with charitable organisations like Key4Life, which help ex-offenders back into employment.
To deliver this agenda, we need systemic change in how we specify, design, procure and deliver the built environment where the assets we deliver work with our natural systems and are a vehicle for improving our society.
Change doesn’t come easy. In construction we’ve been using the same materials and installing them in roughly the same way for hundreds of years. This gives us confidence on important things like quality, cost and programme.
But we are going to have to adapt:
- We have up to 60 live projects at any one time and our clients have different drivers and targets for sustainability. That variance makes it difficult to consistently deliver. More commonality around targets is beginning to appear. But we’re still hitting a moving target.
- The traditional model of risk ownership, passing it down the supply chain does not help. If we do that, then by the time someone accepts the risk (knowingly or unknowingly), it might be too late to affect the change needed, so we end up overpaying or under delivering. We need to work collaboratively to own risk and opportunities.
- We have very complex supply chains in the industry, which puts us at risk to things like Modern Slavery, which need to be carefully managed. Our supply chains are evolving. We know where we need to get. However, the materials and processes needed to get there are not readily available and where they are the demand is outstripping supply.
- We operate under increasingly tight margins and some of the solutions we need to adopt are not cost neutral. We have to think about longer term payback or see the investment under the lens of where future legislation will be. If we’re making short term decisions, then we run the risk of pricing ESG out of developments.
So what are we doing at Sir Robert McAlpine?
- We’re growing our internal expertise. We’ve appointed a Company Carbon Manager to help decarbonize our projects, upskill our people and be responsible for our Embodied Carbon process on all our projects, building our dataset and expertise.
- We’re also investing in our existing project teams and processes, for example, making sure our procurement teams can deliver our ethical procurement or that our Design Managers are able to confidently assess and reduce embodied carbon at any stage of a project. Our established processes and people have successfully delivered complex engineering solutions for years. So we need to look to refine, not reinvent, in order to collectively address ESG requirements.
- We’re using tools to drive efficiencies. For example, we are working with our Digital Construction teams to use BIM to help us design out waste on elements like our drylining and using data to enable us to forecast performance, highlight potential issues and prove what's been delivered in a transparent way.
- We’ve developed partnerships with organisations to help push our performance aligned to our strategy. For example, ActionFunder has enabled us to set up our Strong Foundation Grant across UK locations close to our projects. In its first year, we donated £108,000 to fund 41 grassroot projects with over 38,000 beneficiaries.
We are also looking at the forms of contract we enter into and the types of project we do.
The projects where we deliver more in the ESG field are when we get involved early in the process. And that is a leap of faith for a client to get a contractor involved early. But when we are, we have the ability to forge a relationship and trust. We work together, all pulling in the same direction.
Early contractor involvement (ECI) and frameworks also allow us to engage our supply chain earlier and overcome some of the challenges with lead time and coordination of things like MMC (Modern Methods of Construction) or DfMA (Design for Manufacture and Assembly) or innovative materials.
This all means that we’re able to understand risk and opportunities and take our fair equitable share. Our work on our Broadgate Framework with British Land is a real showcase of how framework thinking and ECI can maximise ESG performance.
This is the age of collaboration and partnerships, the scale of change and stakes, if we get it wrong, are too big. No one has all the answers and we all need to work together.