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Sun June 13 2021

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Green Credentials

25 Sep 13 These days nearly all big contractors publish annual sustainability reports. But what are they, and what is their purpose, asks Jim Simpson.

In the post-credit crunch landscape where many of the worthy values of Constructing Excellence and Rethinking Construction lie abandoned and unloved there is one ‘soft’ subject that still commands the utmost respect: sustainability. Every company worth its salt has a sustainability policy and a sustainability strategy. Some go further. Carillion, for instance, has Jonathan Porritt, the poster-boy for the environmental movement, sitting on its sustainability committee. Porritt has the credentials and the background to make a convincing spokesman and figurehead – a former director of Friends of the Earth, he founded Forum for the Future, a charity for sustainable development, and chaired the Sustainable Development Commission. Now he is even speaking in Carillion’s defence over the charges that – in common with other leading construction companies – it blacklisted union activists.

Balfour Beatty, another giant of the industry, launched its 2020 Sustainability Vision three years ago and, in May this year, boasted of a ‘sector leading’ sustainability performance in 2012. Albert Ree, director of sustainability, pointed out that the company’s sustainable widening of nearly 40 kilometres of the M25  was a net importer of waste because it used such high levels of recycled materials. The company has a motto – “sustainability touches every aspect of our business” – and ascribes its one-in-four success in passing the pre-qualification questionnaire (PQQ) hurdle to this philosophy. Sustainability is the policy with no enemies – it is up there with motherhood and apple pie, as far as any public pronouncements are concerned. There are few, if any, professionals currently engaged in the construction industry who will either question or criticise the headlong rush to embrace sustainability and the processes of auditing and monitoring that accompany it. Privately, critics will point out three strong reasons for cynicism.

The first is that the enthusiasm for sustainability coincided with the increased importance of the public sector as a source for work. As private sector projects dried up the race for public sector contracts intensified and the client base reacted by putting every project that it could into frameworks that were, effectively, lists of approved contractors.

And every single framework had a substantial section in its PQQs and its invitations to tender (ITTs) that questioned those tendering about their sustainability policies and practices. In the rush to establish credentials in sustainability there were many project managers who found there was a renewed interest in former projects that could show the necessary features, whether that be local employment opportunities or microrenewables. So there is a strongly defined but unspoken belief that for some businesses, sustainability is a case of box-ticking rather than a profound evaluation of construction practices.

The second ground for cynicism is that responsibility for sustainable best-practice is often passed as swiftly as possible onto the supply chain. Just as the public sector can demand that its main contractors fulfill their own responsibilities for sustainability, so the main contractor can pass these demands on to its sub contractors.

Take for example the subcontractor that took on a number of apprentices in order to fulfill the requirements for local employment opportunities for young people and was happy to receive the contract for the first project of a PFI scheme. The scheme went to the consortium mainly on the basis of its sustainable credentials but the subcontractor – which now has the apprentices on its books – did not get the contracts for the other parts of the PFI scheme. Now it has to find other work or let its newly-trained apprentices go. Then there is the City to consider. Unless a construction company is privately owned then it has to satisfy the demands of its shareholders; the pension funds, insurance companies and investment trusts that have obligations to meet in the here and now. Sustainability, together with the audits and the processes that go with it, is by definition a long-term consideration while the City is notoriously short-term in its view.

“To a great degree the City is behind the curve in understanding sustainability,” comments Tim Haywood, who combines the roles of group finance director and head of sustainability at top contractor Interserve. He argues that the problem is one of education: the analysts and the investors do not understand what he sees as the vital role of sustainability in ensuring the long-term viability of the company.

“I think (the financial institutions) have been allowed not to really engage with the impact of sustainability until recently and so it’s not a very important item on their agenda. They won’t see it as important until companies explain to them why it is important for safeguarding the business in which they’re investing.” Interserve is the latest of the UK’s larger construction companies to commit itself to an ambitious and impressive programme of targets in the name of sustainability. The £2bn turnover support service and construction firm announced in March this year that its SustainAbilities plan would see it invest 3% of its profits in local communities, halve its carbon emissions and recruit 500 apprentices by 2020.

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Naturally, the company has involved a leading commentator on the environment and sustainabililty. In this case the plan was drawn up with the aid of Tony Juniper, first president of the Society for the Environment and co-founder of Robertsbridge Group, a partnership of leading thinkers and practitioners in sustainable development. It is a complex plan but revolves around what it calls ‘four capitals’: Natural - energy and natural resources; Social - health and well-being of employees and the community; Knowledge - nurturing talent, enabling innovation and increasing the skill-base of society; and Financial - effective management of risk, reducing cost and realising new opportunities for growth.

To Dr Richard Westaway of sustainability consultancy IMS Consulting, this type of initiative is part of the construction industry playing catch-up. “In general the [construction] industry is moving from seeing sustainability as either an issue of risk management or compliance to seeing it as an opportunity to be exploited. It has lagged behind other industries in doing so and has been guilty of regarding the whole subject as a box-ticking exercise,” he says.

IMS has a strong record in the construction industry, numbering Skanska, Bouygues, Morgan Sindall, Saint-Gobain, Halcrow and British Land among its clients. Westaway argues that adopting a sustainability strategy will enable a company to develop new products and services and will ensure its survival in the future.

“There are financial savings to be made now in terms of carbon emissions and waste and we can expect there to be elements of company performance that do not have a financial implication at the moment that will in the future, such as water,” he says. Both Westaway and Haywood share concerns over the way in which sustainability policies are audited. As an accountant, Haywood wants to see the audit be at least as rigorous as its financial equivalent and is dismissive of what he calls the “anecdote and case study” approach. “Anyone can talk up a few good things that they’ve done,” he says. “We have to avoid green-washing because everyone sees through that pretty quickly. Auditing has to be about verification and validation, checking whether targets have been met and whether the company is on target to meet future targets. Unless your audit’s grounded in hard proven facts then it will bite you on the bum,” he says. Westaway’s emphasis, though, is on relevance. He believes that too many sustainability audits are too long and not actually written for or relevant to the stakeholders. He advocates a new guideline called G4, developed by the Global Reporting Initiative (GRI). This is a non-profit organisation that promotes a comprehensive sustainability reporting framework and G4 is its latest iteration, which says that the audit should focus on ‘material issues’: those that matter most to the business and its stakeholders. “The new guidelines won’t be easy for companies because there will need to be a change in mindset and they first need to consult stakeholders to find out their needs,” he says, adding that this is where his own company would assist. Interserve, meanwhile, has joined 90 other businesses in the International Integrated Reporting Council’s (IIRC) pilot programme to further advance communication of value-relevant sustainability information to investors and stakeholders.

So, contrast and compare. A financial audit is governed by the International Standards on Auditing, issued by the International Federation of Accountants through the International Auditing & Assurance Standards Board. A sustainability audit does not have to comply with any standard: they are all voluntary. And there’s the rub. Balance sheets all have to follow the same format so that they are clear to all shareholders. With sustainability, stakeholders just have to do the best they can with whatever they are given.

Interserve's new regional office in Leicester is one of the first commercial buildings in the UK designed to passivhaus standards. Not much to look at - but very green.

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