COMMENT The UK construction industry has experienced several transformative moments in recent decades, often driven by the introduction of new legislation.
For example, consider the changes arising from the Construction (Design and Management) Regulations 1994 – and the subsequent two-stage evolution of this legislation – or, going further back, the Health and Safety at Work Act 1974. Legislation like this has shaped the professional construction industry we recognise today.
Though it continues to adapt to legal changes – it is currently absorbing the seismic impacts of the Building Safety Act 2022 – many recent industry improvements have been driven proactively by businesses. By doing so, those in the industry are also increasingly delivering social value and meeting environmental, social and corporate governance targets that benefit society far outside the world of construction.
As is the case in all industries, social value and ESG are factors that can mean different things to different people, and, as such, parts of the construction industry are working to establish what it considers social value to mean. However, two aspects of the industry are currently leading the discussion and action being taken on ESG and social value: the workforce and net zero.
Net zero
The environmental impact of real estate development cannot be ignored.
According to the UK Green Building Council, embodied carbon from the construction and refurbishment of buildings currently accounts for 20% of the UK’s built environment emissions. This represents a key challenge for the construction industry, especially considering that a quarter of UK emissions are attributable to the built environment.
Efforts have been made to implement legislation to address this issue.
In February 2022, a private member’s bill was introduced into parliament that sought to set limits on embodied carbon emissions in the construction of buildings and to require that the whole-life carbon emissions of buildings be reported. The Carbon Emissions (Buildings) Bill never made it through parliament, however, and was withdrawn after its first reading.
With the onus on industry, developers, contractors and the supply chain have strived to decarbonise. So far, much of this work has focused on the construction cycle, owing to the complexities of embodied carbon during the whole life of a building, including demolition.
As part of this, certain developers are now setting their contractors legally binding targets for the amount of carbon they can emit during the construction of a development. If contractors exceed these targets, they may have to make financial contributions towards offsetting.
On site, this is leading to new innovations. Construction firms are now adopting sustainable fuels for plant and also trialling the latest technology, such as electric excavators.
While representing important progress for the construction industry as it attempts to decarbonise, these changes are often taking place on a small scale. For instance, a construction project might only contain one electric excavator instead of an entire fleet.
These limitations are partly due to the logistical challenges of construction sites. Having enough electrical power to charge a fleet of excavators or local access to sustainable fuels being a good case in point.
Viability does, however, remain the main hurdle for the construction industry to overcome.
The rise in construction costs, combined with a general slowdown in development activity – planning permissions are at record lows – is putting pressure on all levels of the industry. For many, that might mean doubling down on minimising risk and reducing expenditure to see that as many developments as possible remain viable.
It is critical that the government recognises and responds to these risks. First, to maintain the health of the UK construction industry, with all the associated benefits to the overall economy that this brings, and second to ensure that the industry can viably make the changes needed to decarbonise its operations and reduce embodied carbon emissions.
Talent
Attracting and nurturing talent remains at the forefront of the construction industry’s priorities.
Around 26,100 apprentices joined the profession last year. That was up by 6,000 on the previous 12 months, and also an increase on the industry’s five-year average.
Indeed, we are seeing more clients launch apprenticeship schemes and also increase their employer outreach. This is essential to addressing the challenging labour market, but also, at the same time, is enabling developers, contractors and the supply chain to deliver social value. Together, they are providing vital new jobs, opportunities and training.
Bringing people into the industry may also be critical to overcoming other challenges.
For example, new ideas and approaches could prove the difference when it comes to creating the innovative tools required to accelerate the decarbonising of construction or to embracing new technological advances that could have an application in the industry, such as the rise of artificial intelligence.
So, while difficult operating conditions are leading to a focus on minimising risk, the construction industry would be prudent to continue prioritising its people. This talent will support the industry’s future growth and ability to deliver on its net zero ambitions.
Andrew Outram and Patrick Garner are construction partners at Shoosmiths
