Climate related drafting in building contracts – What to add? 


Share

"The eyes of all future generations are upon you. And if you choose to fail us, I say - we will never forgive you." Greta Thunberg

We, as construction lawyers, have a moral duty to use our expertise to help to minimise the impact of the looming climate crisis which threatens to engulf our planet. But what can we actually do? And will it help?

In the words of Lord Carnwath, "Commercial lawyers draft the contracts that shape the economic relationships of society: they can use these agreements to help the transition to a zero-carbon economy." 

We can do more than you probably think.

In construction, which is one of the most carbon intensive industries around, the previous consensus of leaving sustainability provisions to the specification parts of a construction contract, where lawyers usually have minimal involvement, is now being questioned. There are plenty of opportunities in construction contracts to add clauses dealing with sustainability and carbon reduction. We should seize those opportunities and guide our clients towards making such clauses standard.

We should also be adapting to new, greener procurement methods and offering flexible contract strategies to our clients. 

And we don't have to start from scratch: there are a number of sources of green drafting which can furnish us with specimen clauses, toolkits and general guidance on the principles and practice to be followed.

The Chancery Lane project

The Chancery Lane Project is the foremost organisation producing free, green drafting clauses and contract drafting guidance for many types of different contracts, including construction contracts. The clauses it drafts are each named after a child, as a reminder of why we are doing this.

The Project works as a voluntary collective of lawyers from jurisdictions all over the world who come together virtually via "hackathons" to draft collaboratively. It has now drafted over 100 clauses, guidance, definitions and other useful documents and more are being added on a regular basis.

I recommend starting with the Net Zero Toolkit and the Net Zero Implementation Tools as a guide.

The Project currently has 19 clauses for buildings and land (including property, construction, environment and planning) but it is also worth looking at the dispute resolution and arbitration clauses, and the commercial clauses, all of which can be used or adapted for use in construction contracts.

Some of the most interesting are:

  • Estelle's Clause, which expands the standard duty of care requirements to add achieving net zero objectives. 
  • Luke's Clause, which is a standardised green supplier contract that can assist organisations in incentivising their supply chain to reduce emissions.
  • Robyn's Questionnaire, for subcontractors and suppliers to assess their alignment with the employer's climate ambitions.
  • Francis' Clause, which requires the implementation of climate aligned waste management practices, including a Site Waste Management Plan, encouraging minimising of waste, and encouraging contractors to suggest changes to the works to reduce waste materials.
  • Tristan's Clause, which imposes a carbon budget.

There are plenty more clauses and it is well worth taking a look and considering what clauses you may want to include in your contracts.

The clauses are not perfect and will have to be adapted and used carefully, but they are a very useful starting point.

Calculating carbon

A building emits carbon in two main ways: embodied carbon, which is emitted by the manufacture or creation of the materials of which the building is constructed, and operational carbon, which is the carbon emitted by the building as it is used.

In terms of embodied carbon, the greenest building is an existing building: no new carbon will be emitted when building it, it has already been done. Knocking it down and starting again will start the carbon clock ticking again, in terms of materials wasted, energy consumed, new building materials and transport costs.

Measuring carbon can be done in standardised ways using carbon calculators. While these may not be perfect and are inevitably based upon a series of assumptions, we need to start somewhere and the selection of the appropriate tool and how to use it will become increasingly important.

The weighing of the environmental balance between retaining buildings, or demolishing them and starting again, will become more important.

For most buildings, the balance will be in favour of retaining and refurbishing, so we are likely to see a trend towards reusing, adapting and retrofitting existing buildings, which will present new challenges in contract drafting and allocating risk. Design and build contracts, currently the most popular method of procurement for buildings, may become less popular, with other procurement routes best suited to a retrofit or refurbishment project.

Modern Methods of Construction offer environmental benefits in terms of reduced waste, greater efficiencies on site, and reduced transport costs. The contracts for projects incorporating these methods are not yet standard and new drafting will be needed.

Dispute resolution

Nearly all contracts contain a dispute resolution clause.

Why not adapt this clause to incorporate green dispute resolution methods? For example, if you have mediation as one of the steps, why not provide that the mediator must have signed the Mediator's Green Pledge?

Or for arbitration or litigation, specify that the parties will use the Chancery Lane Project's Emilia's Protocols, or that any arbitration will be conducted in accordance with the Green Protocols of the Campaign for Greener Arbitrations?

Adjudication, as a fast dispute resolution method which tends to involve electronic documents, minimal travel, hearings only on rare occasions and great flexibility for the adjudicator, is by its nature greener than the slower, more cumbersome litigation or arbitration. But some green drafting is possible, clauses committing the parties to minimising travel, using electronic documents and to minimising the environmental impact of the adjudication are worth considering.

The commercial imperative to provide green drafting and to deal with sustainability in construction contracts will grow stronger as governments and stakeholders demand climate change action.

But the moral imperative to do something is even more powerful.

And to those who argue that a single contract or a single building will not make a difference, I shall end this article as I began it, with a quote from Greta Thunberg, "I have learned you are never too small to make a difference".

Insight

Webinar: Procurement update

Explore
Insight

Property litigation weekly update – 21 January 2022 

Explore
Insight

Webinar: Construction update 

Explore
News

Recognition for creating collaborative solutions to the building safety crisis

Explore
Insight

Podcast: Positive influencers: a conversation with Melanie Leech

Explore
Insight

Property litigation weekly update – 13 January 2022 

Explore