Civil Engineering July 2022 | Vol 30 No 6

36 July 2022 Civil Engineering P otential ESG considerations for construction and design companies include: Q Q E – Environmental Q Q Material selection – use of components that are produced using less energy Q Q Water consumption – both during construction, as well as over the life cycle of the building Q Q Construction methods – less carbon-intensive and more environmentally-efficient Q Q Use of new and innovative technologies Q Q Waste management – reducing and reusing Q Q Future proofing design – anticipating future climate change and constructing a climate-resilient built environment. Q Q S – Social Q Q Community impact – transportation (public/private) Q Q Accessibility – economic, and in consideration of impairment/disability. Q Q G – Governance Q Q Procurement (including supply chain management) Q Q Stakeholder engagement. “We are at a crossroads. The decisions we make now can secure a liveable future. We have the tools and know-how required to limit warming,” said Hoesung Lee, Chair of the UN’s Intergovernmental Panel on Climate Change (IPCC), on 4 April 2022. Lee made the announcement on the day the IPCC published a stark warning to the world: without immediate and deep emissions reductions across all sectors, limiting global warming to 1.5°C – a central goal of the 2015 Paris Agreement – is beyond reach. Cities, urban areas, and buildings were highlighted as offering opportunities to reduce carbon emissions: “We see examples of zero energy or zero-carbon buildings in almost all climates,” said Jim Skea, Co-Chair of IPCC Working Group III. “Action in this decade is critical to capture the mitigation potential of buildings.” A SECTOR WITH A HEAVY FOOTPRINT It’s little wonder that pressure on the construction sector to clean up its environmental, social and governance (ESG) act is intensifying. Buildings are responsible for around 40% of global energy consumption, a quarter of global water usage, and a third of greenhouse gas emissions . Every year, more than four billion tons of cement are produced, accounting for around 8% of global carbon emissions . In addition to the ‘embodied carbon’ of buildings, which are the emissions associated with their overall construction and its supply chain, the built environment also generates emissions from heating, cooling, and lighting systems. Over 80% of buildings that will be here in 2050 have already been constructed , meaning their effects could be felt in a future with unknown weather conditions and possibly scarce resources. Calls for the construction sector to act are coming from many directions. Investors and consumers are voicing concerns about ESG issues, with legislation, regulation, and reporting require- ments evolving quickly in many jurisdictions around the world. In the UK, all companies bidding for government contracts worth more than £5 million a year must now commit to net zero by 2050 , while new proposals in the EU call for the mandatory disclosure of the emissions potential of new buildings over their whole life cycle, effective from 2027 to 2030. Strong sustainability metrics are attracting investors who recognise that they make property more marketable, can attract lucrative tenants, increase property value, and lead to higher profitability. Construction professionals need to rise to the chal- lenge presented by climate change, not only for the greater good, but to attract investment and minimise their exposure to claims and litigation. THE WHAT AND THE HOW OF BUILDING There are two main areas to consider when looking at where the potential liabilities for the design and construction industry may rise in the context of climate change – what it builds and how it builds. Key areas of focus are sustainability, durability, resilience, energy efficiency, waste reduction, and water conservation. We’ve become used to the spectacle of skyscrapers on our urban horizons, but their energy-intensive need for air-condi- tioning and heating has been called into question. Indeed, we have seen a steady development in claims resulting from design errors from mechanical and plumbing plans and specifications, and heating, ventilation and air-conditioning systems (HVAC), including losses from overheating of floors and temperature fluctuations, heightened maintenance and replacement equip- ment costs, as well several other related issues that generate high exposures for insureds. In addition, in the future, buildings must also be able to with- stand the consequences of changing weather patterns, whether it’s soaring temperatures, floods in Continental Europe or wild- fires in California. This is particularly true if those buildings are contractually designed to last for a certain number of years. Energy efficiency needs to be built in, including renewable sources such as solar, wind and geothermal, with energy perfor- mance boosted by smart monitoring technologies, careful use of natural light, insulation, and features that maximise natural heating. In the past, simple energy efficiency was the goal, but Diego Assef Head of Global Practice Group for Professional Indemnity Claims Allianz Global Corporate & Specialty diego.assef@allianz.com Glen Mangold Regional Practice Leader North America – Architects & Engineers Allianz Global Corporate & Specialty glen.mangold@agcs.allianz.com Building on change: ESG considerations for the construction industry As ESG concerns continue to evolve at a rapid pace, there are a number of environmental-related risk challenges in planning, process and coordination for construction and design professionals that must be considered. SUSTA I NAB I L I T Y AND ESG