Civil Engineering May 2022 | Vol 30 No 4

34 May 2022 Civil Engineering B uildings have a massive impact on global resources and social wellbeing, which makes it critical that the highest environmental, social and governance (ESG) principles are ap- plied by developers of new buildings and owners of older buildings. Infrastructure more broadly, such as roads, dams, and telecommunications, can have even more far-reaching and long-lasting effects on the environment and communities. Some of these issues are addressed through compliance with the National Environmental Management Act (NEMA) and the regulations thereunder, which requires environmental impact assess- ments to be conducted for certain projects before they can proceed, and which are monitored throughout. These measures notwithstanding, there remains an increase in incidence of community protests and so-called business forum interventions around projects (large and small). Apart from the failure to address the expectations of the community, this can also arise from poor governance. Collusive tendering or cor- ruption in procurement processes results in projects not being delivered at the right cost, the right quality, or sometimes not delivered at all. ENVIRONMENT According to Architecture 2030, buildings generate nearly 40% of annual global CO 2 emissions. Of this, building operations are responsible for 28% and building materials for 11%. Over the past decade, considerable progress has been made in reducing the greenhouse gas emissions associated with new buildings in South Africa. In 2007 the Green Building Council of South Africa (GBCSA), a member of the World Green Building Council, was established. It awards Green Star certification to buildings that meet certain criteria. In 2011, the South African Bureau of Standards introduced the South African National Standard, in which Part X deals with environmental sustainability. There have been changes to the Income Tax Act which incentivise green projects. The capital costs of installing certain green technologies such as water and energy can often be tax-deductible. Green building certification may also be a requirement for property lenders, both traditional and development financial institutions (DFIs). The DFIs may introduce requirements from their global head offices, for example applying the Equator Principles, which provide a risk management framework for assessing environmental and social risks in projects. The need to reduce greenhouse gas emissions is one driver of green buildings. The other driver is the imperative for energy efficiency to control costs and ensure security of supply. Today, fit-for- purpose office blocks are cheaper to build and run than their smaller predecessors because of more efficient use of space, water, and power. There is pressure on property owners/managers from tenants of older buildings who want to occupy more environmentally friendly spaces, and so contracts and leases may impose sustainability obligations on the property managers. Alternatively landlords may find themselves compelled to make the shift to greener buildings or face losing tenants. Developers of green buildings are now taking a holistic approach to development, which goes beyond constructing buildings that are energy/water/waste efficient to the lifecycle of the raw materials used. For example, cement companies now use captive power in manufacturing, are adopting new ways to mine, and consid- ering circular economy opportunities to use alternative waste products rather than new cement. SOCIAL Managing the impact of new construction activities on local communities is crucial to protect assets, particularly given the ever-present danger of intervention by the so-called construction mafias (often acting under the guise of business forums). These Env i ronmental , social and governance Greater ESG compliance will help to address cost and reputational problems in building contracts Hielien Venter Partner Webber Wentzel Garyn Rapson Partner Webber Wentzel Tyron Theessen Partner Webber Wentzel ESG compliance is essential to address some of the environmental, social and governance problems that have beset the South African construction industry in recent years.