How will net zero targets be introduced in construction contracts?

Thursday 17th March 2022

There has been a lot of recent coverage regarding the implementation of schemes and systems in a drive to meet the requirements of the Climate Change Act 2008, namely to ensure that the net UK carbon account for the year 2050 is at least 100% lower than the 1990 baseline (as amended in 2019). 

The amendment has prompted individuals and organisations alike to consider their contribution to climate change and how they can do their bit to help. The Sustainability Hospitality Alliance reported in November 2017 that the global hotel industry will need to reduce its greenhouse gas emissions per room per year by 66% from 2010 levels by 2030 and, 90% by 2050.

Both the hotel and construction industry have introduced various initiatives with an aim to reduce carbon emissions and achieve net-zero, such as the recent introduction of a sustainability index that ‘scores’ construction projects under various measures such as carbon intensity and environmental compliance. In addition, hotels across the globe are moving towards sustainable methods both in construction processes, the use of sustainable materials and utilising renewable energy systems to provide for the constant power required to continually cater for guests around the clock.

Looking ahead, as hotels are constructed and refurbished alike, the impact of the environment is likely to take much a much greater influence than ever before. The current JCT Design and Build 2016 makes reference to sustainable development and environmental considerations, although these are largely optional and a topic for negotiation between the parties. As parties continue negotiating and entering into construction contracts, it may be useful to consider the following:

  1. Increased research and design for new sustainable materials and renewable energy systems are likely to lead to new products and materials emerging. Consideration, therefore, needs to be given for new working practices that may be introduced and any suitable amendments that need to be made.
  2. The introduction of more sustainable materials and systems into hotel development projects will undoubtedly cause teething problems as they are introduced into the construction phase. As such, likely increased costs and potential delays will need to be taken into account and factored into any development project that is looking to use more sustainable practices.
  3. Employers often have the option to nominate chosen sub-contractors. As the focus on environmentally friendly practices increases, Employers may have a closer interest in engaging sub-contractors who operate in a sustainable manner.  It will no doubt be of interest as to how contractors and sub-contractors will hold themselves out to be ‘sustainable’ workers.

As we continue to approach 2050, it is likely that the Climate Change Act, together with further legislation and guidance, will present challenges across the hotel industry. With proper consideration for construction contracts, it offers exciting opportunities and prospects.

If you want help with any issues, or have any general enquiries, please contact one of Gordons LLP’s legal experts.