The ‘green’ agenda: What developers need to know

5th August 2021

Recent years have seen an unmistakeable cultural shift towards a global community with an increasing environmental conscience.  National and international laws, regulations, policies, politics and wide-ranging commercial pressures (from investors, shareholders and end-users alike) are all motivating businesses to address the climate change agenda.

In particular, as explained in our recent briefings, ‘greenwashing’ (that is, the practice of making exaggerated claims about a business’ environmental credentials and the sustainability of its products, services and environmental impact) and the rise of green litigation are live matters of significant concern for businesses of all types.

In this article, Louise Norbury-Robinson and Kathryn Vickers offer practical advice specifically tailored to help developers navigate ‘green’ challenges.

Understanding the challenge

To date, property development has always been a relatively down-to-earth business.  From site searching and investigations, through feasibility studies and planning applications, to spades on the ground and the raising of bricks and mortar, the industry has always been about physical and demonstrable hard graft (whether that be from behind a desk or on site) to deliver tangible assets.

The first step to tackling the green agenda is understanding that the issues involved are much less concrete, much more pervasive, and therefore perhaps more difficult to pin down and address, than the majority of concerns which development businesses have been used to dealing with in the past.

A practical approach

So, how can property developers make the intangible, tangible?

A successful, practical approach to addressing environmental/sustainability challenges begins with leadership.  From the top down, development businesses should ensure that they achieve the right cultural messaging, and that they make provision for dedicated resource and guidance, so that combatting climate change and engendering a sustainability ethos become endemic to the business.  That may involve, for example:

• introducing ESG-related financial incentives for senior leaders;
• appointing a head of ESG or an ESG committee and ensuring consistent messaging, both internally and externally;
• undertaking business-wide data, operational and contract reviews;
• implementing training for staff on general and specific sustainability issues;
• monitoring national and international legal and regulatory developments in relation to green issues; and
• keeping accurate and up-to-date records of all such efforts and disclosures, statements and reports.

It is also important to appreciate that no property development business is an island.  Developers routinely work with investors; agents; professional consultants; services, materials and labour suppliers; right through to waste disposal operators and countless other stakeholders.  Recent high-profile litigation relating to climate change and human rights (discussed in our ‘green litigation’ article (hyperlinked above)) suggests that businesses might owe duties of care in much wider circumstances than previously anticipated – such as in respect of subsidiaries and throughout supply chains.  That, combined with the need not to fall foul of greenwashing laws, means that property developers must not only consider their own approach to and claims about sustainability and environmental responsibility, but also potentially those of other professionals and third party providers with whom they work.

There are then specific steps that can be taken right across the business.  These can generally be determined following an audit of all aspects of the business to determine those which have an environmental/climate change impact.

Measures could range from, say, implementing paper-free working where possible and purchasing only environmentally friendly office supplies, to leasing only hybrid or electric company cars and ensuring that all aspects of the construction process are undertaken in the most sustainable manner possible.  As indicated earlier, property developers should consider the business’ own, as well as subsidiaries’, investors’ and supply chain third parties’, products, processes and policies when undertaking their green agenda audit.  They should ask whether/how energy, emissions and/or waste can be reduced; and they should investigate what green claims are being made and check that they can be substantiated.  In terms of development projects, developers and their consultants/suppliers should consider at every stage whether contractual obligations or physical measures can promote sustainability, bio-diversity and other environmental protections, and should aim to commit to or to insist on climate-friendly contractual provisions [1] where that is possible.  Developers should aim to incorporate any additional costs associated with environmental responsibility into feasibility studies, option cost calculations and the like, from the outset, and should expect, in the current climate, to be able to negotiate sharing cost and obligations in that regard with other responsible commercial counterparties. Finally, developers should ensure that they keep up-to-date/comply with climate change-related legal, regulatory and reporting requirements which may affect any and all aspects of their business.

Horizon scanning

In terms of what the green agenda is likely to mean for developers and their construction partners in the longer term, it seems that investment in green technologies, assets, infrastructure and renewables is likely to increase.  We are already seeing that businesses are being pushed to consider and proactively address environmental impact at every stage, from the securing of green finance, through supply chains, to the impact of developments ultimately offered to end users, and in respect of any waste/disposal concerns.

Innovation, whether that be in relation to the increased use of recycled or sustainable raw materials in new developments; designing-out carbon wherever possible; or the use of proptech and AI solutions which are specifically designed to help the development industry achieve sustainability and energy efficiency targets across multiple stages of a project both during its development and post completion, will be key.

How we can help

Developers should be aware that they do not have to do it all alone.  Taking specialist advice at a general or a specific level can help to make the seemingly un-manageable, manageable.

As a multi-disciplinary commercial law firm, with specialist lawyers experienced in all aspects of the green agenda, Walker Morris can work with businesses at every step of their journey to establish, and then effectively maintain, a manageable and effective sustainability strategy.

As well as helping with specific practical tasks, such as contract reviews and reviewing/improving policies and procedures, Walker Morris can work alongside businesses to keep them updated and advised as to climate change-related developments that may affect them.  We can also help by carrying out due diligence, assisting clients to secure ‘green finance’ or investments based on green criteria, delivering low carbon, sustainability and other green projects, and assisting with measuring and reporting of energy, carbon and climate risks.

Walker Morris can also provide comprehensive, cross-disciplinary advice and transactional assistance, as well as risk management and dispute resolution strategies if/when any ‘green litigation’ queries or concerns arise.

Finally, Walker Morris can provide tailored training to staff at all levels within a business on any green-related area or issue.

If you would like any further advice or assistance in relation to the green agenda and any of the issues covered in this article, please do not hesitate to contact Louise or Kathryn, who will be very happy to help.

[1] See The Chancery Lane Project‘s model clauses, for example