Nine main contractors endorsed the Treasury’s Infrastructure Carbon Review last week, pledging to work towards significantly lowering the levels of carbon in infrastructure by 2050. Four of the signatories discuss what they have pledged to do to – and what challenges they will have to overcome.
- Fostering supply chain innovation
- Thought leadership required
- 100% of projects
- Collaboration on every level
- Missing piece of the puzzle
Infrastructure spending and green costs are both politically contentious topics.
Last week’s update to the National Infrastructure Plan set out a pipeline of work valued at more than £375bn, with the government showing a renewed commitment to infrastructure investment despite the climate of austerity.
Meanwhile, debate has been raging about what to do about the rising cost of energy, with considerable differences of opinion over how best to save money without abandoning the green agenda.
The week before the new NIP was revealed, the Treasury launched its Infrastructure Carbon Review, a document that seeks to alter the way contracts are procured to reduce carbon by as much as 24m tonnes a year by 2050.
But reducing carbon is not the only aim of the review: making cost savings is also important. The Treasury hopes to be able to save £1.46bn annually on infrastructure by 2050 as, according to the report, “reducing carbon reduces costs”.
Fostering supply chain innovation
In all, nine contractors, six clients, three engineers and two trade organisations have endorsed the review, signing a pledge to work towards meeting its aims.
As well as the stated goals around carbon and costs, the ICR hopes to increase innovation and collaboration throughout the supply chain.
“For this to achieve its aims, it is absolutely reliant on collaborating with the supply chain”
David Picton, Carillion
Working with suppliers is the “meatiest part” of the review, according to Carillion chief sustainability officer David Picton.
“For this to achieve its aims, it is absolutely reliant on collaborating with the supply chain,” he says. “We need to work closely with them to help develop their sustainability agendas.”
He says the “top 50 or 100 suppliers are used by all of us”, referring to the main contractors who have endorsed the ICR. “It is good news to improve the carbon-efficiency of tier two suppliers, as it will be beneficial to us all,” he adds.
Balfour Beatty UK sustainability director Paul Toyne agrees, saying the relationship with suppliers is “absolutely key”, as is how main contractors approach their own procurement strategy.
“We also have an effect on our side, through our own procurement strategy and frameworks,” he says. “We can stipulate certain things that our supply chain will have to do, and certain kinds of materials they will have to use.”
Thought leadership required
Alongside innovation and procurement, the third factor cited in the ICR as important to lowering carbon is leadership. The main contractors have slightly different approaches to this.
Carillion has explicitly nominated Mr Picton with “express responsibility to drive the carbon reduction agenda”, while Skanska UK director of environment Jennifer Clark says sustainability is “everyone’s responsibility” at the company.
“Our environment department will lead, but we pass the responsibility on to the commercial teams, the procurement teams, developers – everyone,” she says.
“When there’s fragmentation, there are issues – and effective leadership will help to bring everyone together”
Paul Toyne, Balfour Beatty
Bam Nuttall head of sustainability John Hutton hopes to work with the other contractors who have signed the pledge, as well as with his own vendors.
“We want to work with others who are not afraid to try new ideas and experiment,” he says. “We know that co-operation and collaboration lead to innovation.”
For all the contractors that have signed up so far, sustainability is already a core part of their business. The ICR, rather than doing anything radically new, is about working together more effectively to push the low-carbon agenda forward.
“Where this review is really helpful is for the parts of the supply chain and client base that didn’t realise before that [lowering carbon] needs an integrated approach across the industry,” Dr Toyne says.
“When there’s fragmentation, there are issues – and effective leadership will help to bring everyone together.”
100% of projects
While no figures around cost or carbon savings were mentioned in direct relation to the ICR’s aims, all contractors expressed their backing for effective carbon reduction strategies across all projects.
“We should genuinely aim to achieve as much as we possibly can, rather than aim to hit a target”
Jennifer Clark, Skanska
One of Carillion’s stated pledges is to “commit to making carbon reduction a requirement on all our major projects and programmes by 2016”, with Mr Picton emphasising that this means “100 per cent of projects”.
“We should genuinely aim to achieve as much as we possibly can, rather than aim to hit a target,” he says. “As it gathers pace, I’m sure we will be able to do more than we thought.”
Ms Clark says Skanska is focused on developing a culture of low-carbon working, rather than overall group targets.
“We prefer to focus on the mechanisms through which we can develop the culture,” she says. “One objective is to link carbon budgets to bonus schemes.
“We’re doing research and trials on this at the moment, getting people to understand where the carbon is, so that from 2015 they can be linked.”
“We can push customers to consider those possibilities, and they may also set us targets and challenges in return”
Paul Toyne, Balfour Beatty
Dr Toyne says Balfour Beatty will work to try and influence its clients and other customers to lower levels of carbon.
“We want to try to demonstrate to them how we can best manage the risks and opportunities around carbon as part of the process of winning work,” he says.
“We can push customers to consider those possibilities, and they may also set us targets and challenges in return.”
In 2012, 11 per cent of Balfour Beatty’s infrastructure projects had agreed sustainability outcomes prior to contract signature.
When asked how much that would increase by, Dr Toyne says: “I can’t tell you a percentage, but we know it will increase.”
Collaboration on every level
Implementing the aims of the review will not be easy, and Ms Clark says securing both horizontal and vertical collaboration “like never before” will be the biggest challenge.
“We need to start developing relationships and trust,” she says. “In the low-carbon future we’ll need to work differently. Contracts will need to be reviewed more regularly, green agreements will need to be more common.
“We still work in silos a lot of the time. We need to step back and see what’s in it for all of us. Some may have more to gain than others at times, but we’ll all lose out in the end if we don’t do this.”
“The difficulty is getting customers and clients to do it, and letting us all prove it can be done”
John Hutton, Bam Nuttall
Mr Picton agrees, saying the industry needs to view the ICR as more than “just another initiative”.
“We think this will be achieved through behavioural change at all levels,” he says. “The biggest challenge is that it requires a sea-change of commitment.
“It is as much incumbent upon clients as it is on us as contractors to pull it together.”
Securing the help of both clients and the supply chain will be important, according to Mr Hutton. “We will need our supply chain and customers to work with us in a different way,” he says.
“We will have to challenge current thinking and practices on materials, methods, specifications and contracts. We don’t have all the right answers and therefore know that we are asking the right questions.”
Missing piece of the puzzle
Dr Toyne comes back to costs when discussing the challenges, arguing that one element is missing from the review.
“If you have someone who wants to build and then sell straight away, there is a question of how you drive the low-carbon agenda with them”
Paul Toyne, Balfour Beatty
“I think we need to consider the financial community,” he says. “It’s not always the client that pays for infrastructure – there is often third-party funding from a sovereign wealth fund, for example.
“If you have a paying customer in at the start, they can really see the whole lifecycle benefits of saving carbon. But if you have someone who wants to build and then sell straight away, there is a question of how you drive the low-carbon agenda with them.”
It is clear the aims of the ICR will only be achieved through extensive collaboration – whether that is between contractors themselves, with clients, or down through the supply chain.
The aims are bold, covering a long period of time, but the potential outcomes are also ambitious: lowering the levels of carbon in infrastructure will benefit not just the environment but clients, contractors and suppliers, too.
The ICR explicitly states that “reducing capital and operational carbon makes good business sense”, primarily because it lowers costs.
With everyone on board, it could help to improve resource efficiency, foster innovation and increase the UK’s competitive advantage and export potential – all while contributing to the mitigation of climate change through lower carbon.