What can construction learn from M&S, John Lewis and the Co-op?

In recent weeks we have all witnessed a once in a generation event. Not something connected to the pandemic for a change, but something that could alter the way we do business in the future.

What we are seeing that is so unusual, is a group of European companies who would normally be rivals, coming together and acting as one for the furtherance of a single environmental cause. Businesses including Tesco, the Co-op, Marks & Spencer and John Lewis as well as Metro are echoing the stance taken previously by brands including Timberland and The North Face, to publicly push the green agenda.

A sense of social responsibility plus a realisation that ignoring climate change is bad for business, has bound the fiercely competitive retail sector together. As a result, all are threatening to stop using Brazilian agricultural commodities if the country’s Congress passes a law expanding property rights for squatters on public land.

After environmental advocates warned that the proposal would encourage deforestation by rewarding land grabbers who occupy properties illegally in the Amazon rainforest, often clear-cutting areas for agricultural use in the process. The retailers, as well as investors such as Norway’s biggest pension company KLP, said that Brazil’s environmental protections were increasingly inadequate, while the land bill potentially risked even greater threats to the Amazon.

I worry whether we, as a sector, are really equipped to respond to the issues of climate change

This adoption of stakeholder engagement is also starting to filter through to the property and construction sector. Fund manager Invesco is launching what is believed to be the world’s first “green building” exchange traded fund, aiming to fill a gap in portfolios in a world increasingly focused on climate change. The Invesco MSCI Green Building ETF, which listed on the New York stock exchange last month, will target the buildings sector, estimated by the UN Environment Programme to account for 38% of global carbon emissions.

It is designed to encourage investment in real estate companies whose estates boast relatively high energy efficiency, have a healthier indoor environmental quality, and make use of environmentally friendlier construction materials. It will also hold companies involved in the design, construction, redevelopment, retrofitting or third-party certification of green-certified properties to effect climate change mitigation and adaptation. One of the potential holdings reported by the FT is the UK’s own Berkeley Group. This is magnifying a trend that is seeing corporate investors who want to avoid being tarnished with the claim that they are putting profits before pollution increasingly seeking genuine green investment opportunities in the property sector, rather than being perceived as merely “green-washing”.

> Analysis: Construction’s challenge of meeting its green targets

Whatever the motive of investors to engage proactively with issues thrown up by the potential destruction of the planet, I worry whether we, as a sector, are really equipped to respond to the issues of climate change. In a market survey conducted by my own firm which asked over 200 contractors, architects, developers, and surveyors if they had noticed net zero moving higher up the agenda on projects, 81% replied in the affirmative. This is of course good news, but when asked if our sector was currently equipped to meet those net zero targets, 74% said that they did not believe it was.

So, where is this leading and why should we care? Well, in my view it will not be long before those charged with designing, managing, and constructing the built environment will have pro-active, aggressive pressure applied by its stakeholders - from investors to clients - to guarantee that we are reducing embodied carbon in our projects, using materials that were ethically sourced from non carbon producing origination points. We will not just need to respond to climate change in our choice of construction techniques and the way we use buildings, but also in how we source the materials we need to build them in the first place. Just as Tesco and M&S are responding to their consumers, we will also need to be increasingly sensitive to these issues and, make no mistake, construction is going to cost more as a result.

As an exemplar of this, the roll out of the policies cited in the Construction Playbook championed by the public sector is already playing its part in starting to track, audit and measure, in a codified fashion, the methods and materials utilised across the whole supply chain. It outlines what government expects on schemes as varied as new roads and railway lines to schools, hospitals and prisons, and the government says it will expect our industry to bring greenhouse gas emissions down to net zero by 2050. Green initiatives in the playbook for instance include promoting the use of carbon assessments to understand and minimise the greenhouse emissions of projects. It’s amazing what a client that supports over two million jobs in our sector and is worth £117bn to the UK economy can do if it decides to mandate change.

Where Tesco and Marks & Spencer lead, then it may well be that Balfour Beatty and CPRE will need to follow. The power of the customer and active investor should not be underestimated. Climate change is not a passing fad. We ignore its potential to transform the way we work at our peril.

Richard Steer is chairman of Gleeds Worldwide