How ESG Is Shaping The Construction Industry (Video)

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Jessica Tresham: Ok Good Morning. Thank you everyone for joining us today for our webinar discussion on how ESG is shaping the construction industry. I am Jessica Tresham and I am a partner in the construction and engineering team here at Gowling WLG. I specialise in disputes but as a team and as a firm we have a deep interest in ESG not only how it is shaping the construction industry but also in turn the ways in which our clients and the industry as a whole is responding. Before we start just a few housekeeping notes. Today's session will be recorded and we will be uploading it to the Gowling WLG website which will be circulated after our talk via follow up email. You will see at the bottom there is a Q&A function for questions throughout. We will try to answer as many questions as we can as we go towards the end of the session. If we don't get to answer your question live don't fear we will try to get back to you separately. I really encourage you to start posting your questions throughout the talk and as I said we will try to address them.

So we have got an hour and a half for this virtual conference but we will try to finish slightly earlier if we can.

We are going to start the session with an overview of some key ESG themes, then we are going to move to social value, what does it look like when it is done well, we are going to discuss ESG from a client's perspective and we are joined today by Cressida Curtis from the contractor Wates and then finally we are going to have a quick look at ESG disputes and trends. As I said before we are going to conclude the session with a Q&A so send through your questions.

So by way of introduction and to discuss how ESG is shaping the construction industry I am joined by Ben Stansfield, a partner at Gowling and co-chair of our ESG, Shah Begum, an outreach and impact manager at the United by 2022 Legacy Charity, Shah is on secondment from our construction team where she works as a senior paralegal, I am also joined by Cressida Curtis who is the group sustainability director at Wates and finally James Ignotus who is a principal associate in the construction team at Gowling.

Right, without further ado I will hand over to Ben, our co-chair of ESG who is going to have a little look at some of the key ESG themes. Over to you Ben

Ben Stansfield: Thank you Jess, good morning everyone, we are just going to get our slides up.

I am going to talk to you this morning about four key topics. I am going to focus more on the environmental, the sort of the real property elements of ESG conscious that Shah and others will be talking about the social aspect so I am going to talk to you about whether there is a presumption against development at planning, I am going to talk to you a little bit about construction materials and sustainable construction materials, construction phase emissions and air quality, big issue there, and then I'm going to talk to you about benchmarks and I think it is important just to highlight the real impact that the real estate and construction sectors have for carbon.

So if we think about global aviation that is 2.5% of our carbon emissions and yet that gets a huge amount of media interest and column inches but construction is responsible for 40% so I am not an accountant but that is, what, 10/15 plus percent sorry 10/15 times the amount of aviation so you know the bulk of those are operational so 28% of our global emissions are from heating and cooling and powering the buildings that we live and work in and 11% of those global emissions are from materials and the construction techniques we use. So this is a really major topic worthy of our consideration.

So if I could have the first slide please?

So this first topic is going to be around the presumption against demolition and I have got some rather crazy AI generated images there so apologies for that and it was only having produced these images that I was told that AI has a bigger carbon footprint than if I just found the pictures online so I am breaking all the rules here. So you might be aware of the Marks and Spencers headquarter building on Oxford Street. Built in the 1930s, quite handsome and Marks and Spencers sought planning permission to knock it down and build a new headquarters shop and Westminster City Council, the local authority, were quite keen on this but Michael Gove, former Conservative minister when the Conservatives were in power, made a holding direction so there was an Inquiry, the planning inspector recommended demolishing the building and granting permission for the new one but Michael Gove disagreed on a number of issues but particularly on, sort of, aesthetics and the carbon assessment of the building. So he said no planning permission, Marks and Spencers' developer appealed that decision and it went to the High Court and the High Court said Michael Gove was wrong with his application of planning policy and they quashed his decision and the new Government needs to take the decision again. But it all hints, it all suggests that we might be moving towards a much greater focus, a real analysis of the carbon emissions, the embodied carbon associated with knocking down a building, you know, glass, steel and concrete structure and rebuilding something.

We don't have national policy on this but you may be aware the new Government are consulting or have consulted on a new national planning policy framework, the national document which sets out all the various planning policies which decisions must be taken against and I think it is a pretty safe bet that there will be something in the NPPF on this presumption against demolition. There is nothing really particularly helpful in the London Plan on this yet, I mean there are some circular economy policies and in there you will find that of all the waste in London only 17% comes from domestic sources, 54%, more than half of London's waste comes from the construction and demolition phases. So as well as carbon, there is a real waste issue which we need to address there as well. Again in the London Plan there is some information or some requirements around developers, requiring developers to undertake a whole life carbon assessment of the building.

Already we have got nine London Boroughs, I have not done the research, at least nine, I've not done the research nationally but we have got at least nine in London who are thinking about retrofit first so they have either got draft policies out for consultation or they are thinking about introducing policies which will require developers to assess the carbon footprint of knocking down and rebuilding. So even if the NPPF does not go as hard or as strong as some of the environmentalists might like we can be fairly sure that local authority, some local authorities will be pushing pretty hard for that. This does not say that you can't demolish, this simply says before we give you permission to demolish you have got a few more hoops to jump through and you have really got to demonstrate that that is the right thing to do. You can't go back to shell and core and then rebuild. So it isn't dreadful news for those in demolition but it is going to make developers work a little bit harder.

Ok next slide please.

So now I am going to talk to you briefly about sustainable construction materials and as I have already said glass, steel and concrete are the fundamental building materials in modern day and those are all particularly carbon intensive industries. So there now needs to be or there is now increasingly a focus on what we can do to have low carbon materials, so it might be that we have green steel but increasingly we might have sustainable timber so timber from UK or European sources that has been grown sustainably will be replaced by diversity in nature addresses part of that agricultural process but we are now seeing timber framed commercial buildings being built, including in London. So after this webinar please do google Land Securities Timber Square in Southwark where a fairly large commercial building has been developed using timber.

At the beginning of my career, 20 odd years ago things like insurance, how do you get a sustainable timber structure building insured, how does that deal with fire risk post Grenfell, all those kind of things. Those issues are now starting to be addressed and being overcome and tenants and lenders and insurers are getting comfortable with it as well. So the image there we might not be going down the straw and bamboo route yet certainly not perhaps at commercial scale, you might have to watch Grand Designs to get inspiration there.

So yes sustainable construction materials we are now starting to see those and we are now starting to see them again starting to be thought about in terms of the fit out as well so when buildings are being refurbed we are starting to see clients specify recycled plastic carpeting all that kind of stuff, reusable or rather reused and repurposed furniture as well.

So these again are issues that are starting to come onto the agenda.

Next slide please.

Ok construction phase emissions, so we have spoken about how significant the impact during the construction phase are in terms of carbon but I think the real issue here is in terms of air quality. Construction emissions are currently unregulated, that is not part of the building regulations, but the London Plan talks about the non-road mobile machinery so diggers, dump trucks, cranes, all that kind of stuff, mobile machines are not allowed to go on the road. The exhaust emissions for those are really significant so we have got serious amounts of particulate, we have got nitrous oxide emissions, I have listed the micro grams per cubic metre there and a great deal of carbon as well. Now these are obviously talked about the carbon but its more about the air quality particularly in urban areas, generators and perhaps engines that haven't been maintained to quite such high standards, Really impacting local air quality so we are starting to see some local authorities address that in terms of either their planning policies or requiring developers to have cleaner machinery as part of planning condition or section 106 agreements but it feels like we are someway off now. You know there is a lot of challenges around the power sources and how you are going to charge these plants, is that hydrogen issues, is it batteries. How do towers get their power as well? So it feels to me that there are a number of obstacles. It feels like we are some way off. There are one or two developers who are trailling this technology and being really responsible in terms of explaining what they are doing in having their development websites, talking about some of the challenges and sharing the information with their development community.

Okay, final slide Rosie.

And then finally I just wanted to talk about some of the ESG benchmarks. So, I think the wider issue here is that delivering a building or a structure that meets certain benchmarks goes to value. You know our clients want to increase the sale prices or they want to increase rent or make their building more attractive so we are increasingly getting more and more of these ESG benchmarks. Where there is a planning requirement in terms of BREEAM or its contractual requirements, these would be their contractors. When I started my career BREEAM seemed to be the only show in town but increasingly we are getting things like GRESB which is obviously very internationally popular. 17,000 assets globally. We have got NABERS an Australian benchmark which looks at some much wider issues in terms of water and waste and indoor environment and you can see we have got others there. A wide score in terms of how well internally wise the tech buildings are as well. So as many of these sort of green benchmarks that our clients can achieve the better. It is likely to improve as I say the value and demand. I think the important thing here is to look at what the planning requires. Typically Town & Country planning permissions are only requiring BREEAM but again that might change if some of those benchmarks become increasingly popular. Increasingly prevalent I guess and I think this all comes down to what client stakeholders are wanting. What are their investors looking for? What are their customers, what are their future tenants wanting to see? Generally driven by the commercial side rather than customers and stakeholders. Again I think we are going to see for a little while yet, more and more benchmarks which is going to be confusing for all of us but hopefully after a few more years, three to five years onwards, maybe some of that consolidation of some of the larger benchmarks if they start to absorb various issues there.

And I think that brings me to time Jess?

Jessica: Thank you Ben for that oversight of essentially the "E" and the "G" of ESG. What we wanted to look at now is the "S". So, I want to introduce to you Shah Begum who as I said before is head of outreach and social value at United 2022 and Shah is going to be looking at what does the "S" look like when it is done well? So, thank you Shah. Over to you.

Shah Begum: Good morning everyone. Thank you for joining us. My name is Shah Begum. I am a senior construction paralegal at the team at Gowling. For the last four years I have been on a six month secondment to the Birmingham 2022 Commonwealth Games and now to the legacy charity where I am head of outreach and social impact. My role at the games was to lead on the measurement and verification of the games' social value and also to help communities navigate their way through the landscape of the games. In legacy mode I am continuing to work on the rolling out of our expertise and knowledge in this sector to anyone who has an interest in this subject and who wants to learn more about how we did it and how we can implement it ourselves.

So, I am going to talk you through our model that breaks down how social value can be embedded and measured in organisations. When I talk about social value and how you can do an end to end process, particularly to people who are coming at this fairly new, one of the things I am reminded of is how do you eat an elephant? My answer is one bite at a time and in this case in five easy bites. Now before I tell you what those bites are, a very quick reminder of what social value is. It is the positive value an organisation contributes to society, beyond the money they spend in operating their business and the profit that they make. So, to look at it another way, if you take corporate and social responsibility which is quite broad, quite generic, quite vague and ESG which is all about meeting regulations, limiting damage, some of the things that Ben has spoken about, social value is that space in between where these two overlap and we see the positive contributions emerging.

Now this is essentially our model. Our five bites of the elephant of how you can unlock social value in five easy steps. You map it. You create a menu. You make it easy. You matchmake and you measure it and you might recognise yourselves as being on some stage of these five steps. You might be not quite as further on as some of your peers. Or you might have already done this and you are looking to take it up to the next level.

So, let us start with the mapping. It is all very well saying that we are going to measure and report on our social value but what kind of things will make that positive contribution. How could it bring together the things that the organising committee and its suppliers were doing, in my case at the games, and ensure that it is cohesive and it all pulls in the same direction. So we carried out a mapping exercise. So we started with a regional needs analysis pulling together data from various sources like the indices of multiple deprivation, NHS information, Department of Education, information on skills, environmental data and this gave us a really starting point picture of what the needs of our communities were and also gave us some pointers as to where we might like to encourage people to concentrate their social value efforts. We then applied this analysis against the five mission pillars that we had at the games, so that is the yellow circle that you can see there. Our mission pillars were bringing people together. Improving health and wellbeing. Helping the region to grow and succeed. Putting the region on the map and to be that catalyst for change. So some of these pillars map well against the regional needs analysis. Others did not but on the whole they did align quite well and then we spoke to the games stakeholders to identify what their key priorities might be in terms of social values. So, West Midlands Combined Authority, key stakeholder. Their kind of thing was all about skills and apprenticeships. Birmingham City Council was focused on health and wellbeing, community cohesion. So you add all of that into the mix as well and when you pull all of these threads together, that bit that emerges in the middle gives you your social value strategy and in our instance it was a public document that set out our vision and mission for the social value strand, our strategic focus and our channels for delivery. At the time, you know I am talking four years ago, it was a very bold move as it set out some clear expectations of all of our stakeholders and gave a reference point for all of our activity.

In your own organisations I would say a similar framework is entirely applicable. What are the needs of the region that you are working in? What are your own priorities as an organisation when it comes to ESG? What are the needs of your stakeholders? So your funders, councils that kind of thing and finally the needs of the communities where the activity will actually be taking place. What is the change that you are trying to create there? And where possible I would encourage you to use the channels and networks that already exist in those communities to find the answers to some of these questions. You do not have to reinvent the wheel.

Now, once you have got your strategy, what do you do? Well strategy is only as effective as its execution and to execute it you need to socialise it. Secure the buy-in. Think of what the scaffolding is that you will need around it. Roll it out and support all of the partners at every stage. So, not all of the bits of the strategy will be relevant or of interest to everyone. So it is being mindful of that as well. In our world we put the social value strategy on our website. It was available for everyone and anyone to download and we held briefings with all of our stakeholders who had been involved in developing that strategy to explain how their input had shaken out and what it meant for them, but also I kind of embarked on a world tour of our internal teams to explain what our thought process was around social value and the roles that they might play in unlocking social values with their own work or what we could leverage through our supply chain.

The biggest sales pitch was to those with procurement responsibility. Those colleagues are extremely busy. They have worked on lots of major events before. They had never had to bother with this before and they did not always have the time or the bandwidth to just run with the strategy, so we had to patiently get to know what their challenge is. We rolled out training and developed a resource bank with templates and how to guides to make their lives easier. The linchpin of our social value strategy was that we would ask all of our suppliers for a social value commitment that was equal to 10% of their contract value. I know now that that is quite market standard. I have seen numbers as high as 40% but this had never been done before in a major event setting and our procurement people were nervous that it would perhaps put people off from bidding or would put extra resource pressure on them. So I had to really bring our procurement managers on side. Explaining what we were doing. How they might need to adapt some of their usual processes and practices. So, for example, including social value questions in the tender requirements and then we would support them to score those.

Now, this approach would still hold true. If you are rolling out in your own organisations I would come round and speak to your various teams in procurement, legal, finance and work with you to establish the tools. In other words, how do you like this particular bite of the elephant solved? We did this from a standing start at the games but I know from speaking to people in the construction sector that most organisations already have started some pockets of this work, so a phased roll out maybe starting with some key contracts each quarter might be an approach that suits you better. But at the same time we also wanted to bring in communities because a key element of our social value strategy was to unlock social value at a local level and ensure that as far as possible all of the opportunities stayed within our region. So we started to speak to grass roots charities who are doing great work aligned with the mission pillars that I mentioned earlier. We bought them into a network and we started to get to know them, what they did. We invited them to have input into some of our programmes and you will see why this was important a few bites on. So as far as possible we wanted to make things easy for everyone concerned and the best way to do that is offer training, support and to be in peoples' faces reassuring them that this was a good thing to do and that we are not just going to let them sink or swim and that we were able to help. We worked closely with procurement, finance, legal to explain that social value covered a whole variety of things and it should be used as a guiding star. It set out our priority areas. It explained what we wanted suppliers and stakeholders to contribute to. But on the other side of the procurement fence you also have to bring on board those suppliers and sponsors. In your case it might be funders and help them to understand and see the value in what you are doing and also make it easy for them, not just your internal teams. So we got involved with conversations with suppliers and potential suppliers. We put on boot camps that explained what we were looking for in the answers to the social value questions and we also said that look, we have created a menu in our social value strategy which we would like you to consider when you are putting in the answer. We are not interested in shiny see yourself programmes that your marketing team might have dreamt up. So, you know, tidied up a community garden, but could you do something that supports the same organisation that runs the community garden? To maybe shore up its HR policies? To get its social media up to scratch? To look at its safeguarding for example, and this is where our network of charities, our united by family as they came to be known, we started to bring them in and developed their capacity to work with corporate organisations as well. We have held on to that family. It is now 500 strong and we continue to work with them and support them to access opportunities. Build their organisational resilience and be partnership ready when a corporate comes knocking in the West Midlands looking for a grass roots charity.

Next slide please.

Now, you might think what was the point in investing in the charities network Shah. What has that got to do with anything? Well, they are actually a crucial piece of the jigsaw when it comes to bringing everything that I have talked about so far into this beautiful, radically collaborated work of art. So we work with our suppliers and internal teams to understand the commitments that they have made. We have mapped them centrally so that they are not forgotten about and we could say where the spread of the commitments were across the strategy as a whole. So if everybody was promising volunteering hours could we do more to encourage apprenticeships or local work experience placements for example? But you cannot push for that without a central register that is constantly monitored. We also continued our dialogue with suppliers. Some of them had never done this type of thing before and we worked with them to come up with a project that they could deliver. We talked to them about the existing projects that our united by family were already delivering that they might like to support and scaffold the delivery on. A lot of our suppliers were not based in the Midlands so they were parachuting teams in to deliver the event and then they were shipping out to the Dubai World Cup straight after. They really wanted to engage with the process but they were not sure of the third sector landscape in the region and what that might look like. So, because we had built that infrastructure and that capacity in our united by 2022 family, we became Cilla Black and did the whole matchmaking piece and introduced our suppliers to all kinds of wonderful charities within our network. So you do not have to establish that network for yourselves. These networks exist in most places, or if you are in the West Midlands I have a network. But also most places up and down the country will have a voluntary sector council, an active partnership, community development trusts, that will have those connections and that local knowledge so, lean into that.

The last and most important stage of all, please measure it. A strategy that you spent so much time and attention rolling out, securing buy-in, will mean nothing if it is not measured and reported on. How could you know that it was all worth it without measuring and reporting on it? I think most of you are familiar with the national framework called the UK TOMs Framework which stands for themes, outcomes and measures. Anybody who is not quite familiar with this, I would be happy to have a separate chat and buy you a donut and explain the TOMs Framework from first principles, but essentially it lists a whole host of interventions, measures that could be classed as having a social benefit. So things like employing a care leaver or a programme to deliver EDI to your staff internally. It takes a whole host of these things and assigns them a monetary value in pounds, shillings and pence. There are a whole range of tools available. I am happy to talk to anyone who wants to explore the tools. I am certified to deliver some of those tools but the best fit for us was to use social value portal so we procured that central measurement tool. We developed the resources and tools for all of our internal teams and suppliers to capture the evidence that we used to measure and independently verify their social value and we continued to support our internal teams with uploading evidence to our data capture site. People had promised 100 hours of work experience. How were they getting on? Were there any barriers that we could help them with? One thing that I would like to draw out here is that if something is not working, pivot with panache. If your suppliers are struggling with a particular type of commitment and you have tried to work with them to identify the blockers, it is just not working, it is okay. Let us look at something else that they might do. The numbers and the evidence are great but what about the individual people? The human interest stories and the case studies. Do not forget about capturing them too because they will be what brings your numbers and your figures to life. They provide a really rich source of marketing materials. Internal comms. Reporting to your stakeholders. Things to put in your annual report. We captured these as part of our contract management process as well.

So, how did we do? What was the magic number? So, across the top in pink, you can see that we have our inputs so our procurement budget for the measured elements was £75M. We had the organising committee's internal operating budget of £120M. We put in the end to end training for the whole process and everyone involved and also our local charities network and across the bottom in blue we have the output. So all told, we generated £300M's worth of verified social value, independently verified social value which is phenomenal and far surpassed everyone's expectations and within that you can see how some of that is broken down and contributed to that figure. Okay? So each of these numbers have a whole host of gorgeous case studies behind them that tell you the local impact and the people level. The importance of these projects and I have got a barrage of case studies, you are all welcome round to ours for a cup of tea and samosas to hear all about them. In legacy mode, we are continuing to deliver a number of programmes to help reach the unusual suspects in our region and make those communities, that did not or could not engage with the games, get a slice of the legacy benefits. We are on track to deliver £1M's worth of verified social value ourselves as a charity with just 18 months of activity. I have got a model that I have talked you through and we would really like to help as many organisations as possible to join us on the journey and to understand and embed that model within their organisations. So all of the tools, the training, the templates, that I have talked to you about, I am really happy to speak to anybody that is interested in that kind of thing.

So, I hope you found that useful and you can see how your own organisation might implement it as a framework and I am happy to take any questions later on or connect with people on LinkedIn. For now, I will pass back to you Jess.

Jessica: Thank you Shah and it is really fascinating to hear about the legacy from the games and the work that has gone on after it and I think having just seen the Paris Olympics and when they are all over that you sort of think, oh that's over, but to sort of understand the work that goes on behind these huge events is fascinating. So thank you so much and am I right in saying that in terms of your kind offer to discuss these issues with people. That's anywhere? It does not matter if it is in the Midlands or not, you are happy to share some thoughts on this with people if they would like to get in touch?

Shah: Yes. This model is replicable anywhere up and down the country as I mentioned. The charities network that we have, they exist all the way up and down the country and I have been speaking to combined authorities in Manchester. I have spoken to a couple of councils up in Scotland, Northern Ireland, a few in London, so everybody and anybody who is interested, whether you are in the public sector, private sector, or even if you are in the third sector and would like to understand a little bit more about how social value can help your organisation, please do get in touch.

Jessica: Thank you again Shah for that very interesting talk.

We are going to move on now to obtain a bit of a client's perspective and I would like to introduce to you Cressida Curtis who is the Group Sustainability Director at Wates. There she is. Hi Cressida. Thank you for joining us today.

Cressida Curtis: It is a pleasure.

Jessica: We are going to have a bit of a chat really, just to find out a bit about your role and the work that Wates is doing in this space. So, as I understand it, you fairly recently joined Wates as the Group Sustainability Director. Could you tell us a bit about that role. What it comprises and why Wates has engaged you to undertake it?

Cressida: Yes. I would love to.

Jessica: Thank you.

Cressida: Just as a little context, Wates has been going for 127 years, so we are quite a longstanding player in the sector and we cover the entire lifecycle of buildings right through from an empty plot of land to end of life and reuse but we have grown over that time to be about £2 billion of turnover. So we are substantial. We have scale. We have reach. Interestingly for me, we are still family owned. We have the fourth generation of the Wates family currently in the boardroom. So I hope that gives you some flavour of what we are like as a business. This role that I took on in January. It is a new role. It is completely dedicated to environment and social value and it is on the executive committee, so the main decision making body of the group and the drivers for the business were that we have always been purpose driven, to some extent, but in recent years there has been a really sharp focus brought to that and we had a new chief exec come in last year who is entirely purpose driven. He says, you get the purpose right, you follow that and profit will follow. We have also concurrently seen a significant increase from our customers. We have roughly got half of our turnover coming from the public sector, half from the private sector across commercial and residential and what we wanted to find out was how can we create the best possible environmental and social outcomes, really well, every time, very efficiently, with the ultimate aim of evolving our business model to make excellent environmental and social performance a natural outcome of what we do every day. So a real shift in how we are thinking as a business.

Jessica: So, you are a large construction contractor as you have said. You have been in the business for well over 100 years. So, how does a large contractor like you approach ESG?

Cressida: So, there is a sense that ...

Jessica: That's a big topic isn't it?

Cressida: Yes.

Jessica: How do you do it. Do you sit down and say right this is what we are going to do. Do you have that key objectives for each year? Perhaps you can tell us a little about how ...

Cressida: I think probably it is worth just thinking about how we sort of approach the big picture. I think about it in two buckets. The first is absolutely minimising any environmental harm and we heard from Ben earlier, the extraordinary impact that our sector has on the environment but that also means that we could be a huge part of the solution. So, minimising the harm is the first piece. Then in the second bucket, it is maximising environmental and social value that we create through our day to day activities. On the minimising harm piece, this is a really interesting agenda, we have recently reviewed our legal and obligations register and we have identified 265 individual legal obligations that may or may not apply to any of our 150 projects. So, there is a logistical piece there of how do we efficiently ensure that each project understands exactly the legal obligations that pertain to them? What they need to do to ensure that they are legally compliant and to give us the strategic view to make sure that everyone is where they need to be and then of course upskilling everyone so that they have the information and skills and they are comfortable with how to go about this and where to go for help. So that first bucket is really big. It is incredibly important. No one wants to end up being the Thames water of the construction industry.

Jessica: I imagine as well that is a significant financial investment for the business about filling that first bucket?

Cressida: Yes, it can be and the important thing is to do it really efficiently. So understand your business. Understand where you are today and do a gap analysis and make sure you know what you are going after. We are very, very clear of how we want to operate the level of assurance we want at board, at group and at business unit level and what that means. Where the accountabilities lie and how we are tracking it. It takes a lot of organisation. This is deeply unglamourous. It is not about saving polar bears. This is about just making sure we do the right thing. Every day. On every site. It is really important and it can be quite a heavy lift if you are starting from scratch. We have been going for quite a long time so there is good things in place. We are just making sure that we are upgrading them as new products come on the market or as new legal obligations come through.

Jessica: So this must be a hugely collaborative approach across the business then. So it is not you sitting in your role telling everybody what to do.

Cressida: God no.

Jessica: It is getting that culture change I suppose and ethos running from the very bottom all the way up to the top, or perhaps the other way round.

Cressida: That is exactly right. No one in this business wants to harm the environment but sometimes people are not aware that what they do could harm the environment. So that is the tricky bit that we had to navigate. Helping people understand what those precise legal obligations are without making it sound as though they are doing something wrong already and just equipping them and supporting them to do it really well. It is a cultural piece to either have it in your business or you have to work to put it there. Most definitely.

Jessica: Yes absolutely and I think we have seen that in our industry for example in terms of bringing EDI concepts into the profession and ingraining that within the business and it is a culture shift. Most certainly but we are really doing that well now, here. What would you say are the main drivers and challenges for the sector as a whole. I have heard you talk about all the things Wates are doing well as a large business but looking perhaps at other smaller contractors that want to adopt the same culture and ethos and have the same drivers, what would you say are those drivers and challenges?

Cressida: Well if we move away from the mitigating risk bucket and we think about the wider agenda on environment, we have all got to realise that we only hold part of the puzzle. If we want to reverse the impact that we have on the environment and be a force for good and I think Ben was talking about the move towards a presumption against demolition and that is really important for our sector. That is a wholesale shift in how we operate and the important thing there is that it means that we are not emitting carbon in the construction phase because we retain as much as possible. We have seen a couple of big commercial clients come out recently explicitly stating that the best method of development is to retain as much of the original building that is on a plot as possible and only replace the bits that have to be replaced. So we are talking about a massive shift from knocking the whole thing down. Having a nice clean sheet and then building something new and sparkly that comes out fresh from a bag and we pop it in place. This is about intricately taking apart pieces of a building, ensuring that the structural integrity is retained and then putting back something that will perform even better environmentally because a great deal of the building's impact comes from the way it is operated.

Jessica: Absolutely.

Cressida: So ensuring that we can make that shift really does mean that we cannot sit there as a contractor going, we know all about how every different component in this building works and can be removed and how the new ones can be put on, or exactly what a customer wants, or how we need to think about the regulatory framework that goes around reused materials, or what the insurance implications are, or how our finance partners feel about it. We need to go and talk to them. We need to get people around the table and go, we have got part of this puzzle, what can you bring? How could we do this in a sector that traditionally has incredibly thin margins? How can we do this quickly and profitably? That is the real puzzle that we have all got to work at. So even if you are the smallest contractor, just getting going, or the largest and you have been around for years, we need to have the humility to go and talk to other people and go, we can see that this is needed, we can see this bit of the answer, can you help us with this piece? Or do you know someone who can? That opens up some incredible conversations.

Jessica: So would you say a big part of the driver is client lead. You are customer lead. Saying, this is how we want to build this particular development, or is it something that you would say, how about doing it this way? What is the collaboration there in terms of ...

Cressida: It comes from various routes. Definitely customers are on this journey and you may have seen recently the announcement of a pilot of the net zero carbon building standard which is a really pivotal moment for our sector. There had been numerous definitions of what a net zero carbon building is, which is not helpful for any of us and the industry has got together with a professional body, some 350 organisations, and gone, let us agree on what this looks like. We now have a pilot version which is out for testing and that will give all of us clarity and we can align our resources to deliver that together. So there is definitely something coming from customers. There is definitely something coming from the industry ourselves. We do not want to have a negative impact on the environment, so how can we do better? We definitely see a drive from our employees and there is a real battle for good talent in the construction sector so that is really important. Younger people today, we know from You Gov surveys particularly, they see our sector as dirty and boring. If they could go to Google instead they probably would. How do we clean up our act so that they can understand that this is a really extraordinary industry to be part of? So there is that whole piece. Obviously the regulatory pressure is growing and I think we will see at the end of this month when the next biodiversity international COP takes place, and they talk about translating the nature framework they agreed two years ago into action that each Government will adopt, even more drive for construction companies particularly to make a nature positive game rather than just minimising harm on the natural environment.

So it is coming at us from all sides. I have to say within Wates we are family owned and there is an absolute commitment from the Wates family that we get on the front foot with this and we play a pivotal role in helping our sector to shift.

Jessica: So would you say the direction has changed from being a nice to have to a must have?

Cressida: Ahh. Well let me give you a couple of datapoints then. We have £3B's worth of work. Remember our turnover is about £2B. We have £3B's worth of work in hand as our forwards pipeline that has to be delivered to very high BREEAM certification. That is not a nice to have, that is simply what we have to do at a base level now. In our residential developments business, 22 of the 24 major projects carry contractual social obligations. So the brilliant stuff that Shah has just been talking about, we do not get paid if we do not deliver the things that we have agreed to deliver on the social side with those projects.

Jessica: That is an actual contractual term now.

Cressida: Absolutely. So, I mean we do not have all the tracking in place yet to arrive at a figure of just what proportion of our turnover is subject to contractual environment and/or social obligations but I am fairly sure we are up in the 80%-90% already.

Jessica: That is interesting to see it is becoming contractual terms and presumably there will be penalties associated with that in those contracts if you do not meet the requisite standards?

Cressida: Absolutely and that is going to tighten as well under the net zero carbon building standard that I just mentioned. The buildings not only have to be built to a certain standard but they have to perform to the operational standard throughout their life to maintain that certification. Ben also mentioned about value and buildings. We know that if a certification is lost, the value of the building reduces. So we would be on the hook for making sure that the building is capable, truly capable of performing to that standard or there will be an impact on our very, very thin margins.

Jessica: So it is a much longer term commitment for your business beyond the usual 12 year limitation period that we usually apply. So you are extending that and taking on that risk I suppose in the project that it is going to perform?

Cressida: Yes, though all the lawyers on the call will be delighted to hear that it is very complicated because we could build it so that technically the building could perform to a certain standard but the way it is used really matters and I think what we are going to see as a result of this, is probably quite an uptick in the use of smart building technologies which have been quite slow to take off so far. Truly to be used to their full potential and that will help people understand how the building is operating. Why it is operating like that and what can be done about it. So I think we are going to see quite a shift very quickly once this pilot phase of the new standard is completed.

Jessica: Well I will be watching that with interest and perhaps we can persuade you to come back maybe in a years' time and tell us how it is all going.

Cressida: Well yes.

Jessica: I suppose from a practical point of view, you have obviously got a considerable amount of experience in this area. For our contractors perhaps that are listening today, what practical pointers could you say are good to bear in mind when you are managing ESG issues in the supply chain?

Cressida: Those suppliers are critical to success and I may need to put that in context. About 2% of our overall footprint as Wates is our own direct omissions. About 98% is within our supply chain. So we cannot do better unless they also do better. So in terms of what it is important to think about with suppliers, they are businesses who want to make the best margin they can but they also innovate quietly behind the scenes and do not necessarily tell you unless you are asking the right questions and so often in our sector and I have been in real estate, built environment for 20 years, so often we will go to a supplier and we will say, can you give us a green version of this widget? They go, oh well we can but it is going to be 15% more expensive and we go well we cannot do that because our margin is only 3% on this project and we get nowhere. Actually asking different questions can really help. What we have been doing this year has been sitting down with some of our biggest suppliers and going, we have got ambition to make a real difference here. We know we do not have all the answers. What have you got going on that you think we should be listening to and looking at? It takes them a little while to adjust to that because that is not the normal relationship to have in this sector but it unlocks the richest conversation. They know their products or their operations brilliantly in a way that we can never do and they can say well actually, if you can change that bit over there, then we can change this and it will not cost any more but the outcome will be a 30% lower carbon profile and suddenly that means that we go and talk to the other supplier and we get them round the table and we make those pieces add up. So I would say it is not about individual products and trying to make them slightly better. That is incremental progress and it is too late in the day to be looking at it incrementally. What we need to do is see how the pieces fit together differently and draw on that fantastic innovative thinking that is actually happening beneath the bonnet of this industry.

Jessica: So it is similar to what Shah was saying in a way, it is that collaboration piece that is really going to make this work in our industry?

Cressida: That is absolutely right. I think, go and talk to people and I am doing this internally within Wates. Well actually we acquired a business last week so we have now got 6000 people so I have got a few more to talk to but just go and talk to people and go in, if there were one thing that you think would help that you know about, that you can see, that has not actually surfaced in the business yet, what is it? And that has unlocked this incredible stream of amazing ideas some of which are already now being put into progress. Some of which it is too early but we are going to come back to them, but then with suppliers we are finding the same thing as well and it just creates a deeper, more trusting relationship which I think is incredibly important for our sector right now.

Jessica: Yes, absolutely. Just one final question and thank you for what you have contributed so far. So, if I were to give you a magic wand and you could make one change in the construction industry, what would it be?

Cressida: A magic wand? Well, time. We get an RFP. We put the tender in. We negotiate. We negotiate some more. Things change. We renegotiate it and then by the time we have to start on site because the client is on a deadline, it is too late to take a breath and go, hold on is there something we can do differently? For me, frontloading that conversation of, I know you think you want "X" but can we just take a breath and look at whether there might be a better approach that achieves your environmental aims better, more cost efficiently and actually more quickly. When I was at British Land we did that quite successfully just by getting people round a table and taking that moment at the start of any project and going, how could we do this better and then what are we going to adopt and go forward with? So, time please Jess with the magic wand.

Jessica: Okay. I will see what I can do. So it sounds to me that it is very akin to the sort of collaborative alliancing type contracts in a way, albeit without those in place because I am assuming you generally build on just more traditional models.

Cressida: Sure.

Jessica: And actually that is the approach that is going to really make a difference.

Cressida: Yes and I would say Jess that I think this sector, with the recent collapse of ISG bringing it into really sharp relief, we are not brilliantly sustainable economically let along environmentally and if there was ever a moment to just go, is there a way of doing this differently, I think now is the time.

Jessica: Well thank you. Absolutely. On that note we are going to make a slight shift of gear but thank you for your time Cressida and I know that we have got an opportunity for some Q&A at the end. Can I just encourage you all, please do put some questions in the chat if there are questions you would like for any of our panel. I know they would be delighted to answer them for you.

So up next is James Ignotus who is a litigator in our construction team and a principal associate and James is going to be taking a quick look at litigation trends. So James, over to you.

James Ignotus: Thank you very much. So in the context of this discussion today I am just going to be looking at some of the key/most interesting things that I think might be coming down the track. It is not an exhaustive look at all types of litigation that might arise in the ESG sphere although obviously there are a huge number of things that I will not be touching on and I am sure people are aware of, for example the number of claims that are being brought for example in Holland against Shell because they are a major polluter and there is a huge amount of public policy wrapped up in that. So they are obviously really, really important issues but today we are just going to be focusing on three things, in a slightly sort of horizon scanning way and firstly we are going to be looking at claims for environmental damage, which I think has become very topical because of the water companies gathering a lot of media attention. Ways to potentially ensure a building's performance, particularly environmental performance and that is sort of really going to be building on some of the things we heard from Cressida and then also enhanced obligations on supply chains.

So if we just move to the next slide please.

The first thing I really want to draw attention to was a recent case, Manchester Ship Canal v United Utilities Water. In very summary terms the Manchester Ship Canal company owned a ship canal in Manchester and it was being polluted by the dumping of raw sewage into it from United Utilities and so the Manchester Ship Canal brought a claim against the utilities company for damages because of the presence of pollution and to a lot of peoples' surprise, the Supreme Court decided that that claim could be brought and I will not go into all the details of it but that was a surprising decision for many and I think it is obviously a really, really tough call because of all the attention that the water companies have been gathering for their dumping of raw sewage and a lot of commentators have looked at this case and said, okay that might be the first step in the court, particularly the Supreme Court in England and Wales, taking the view that they are not just going to allow water companies to get away with this and actually they will have to face the consequences in litigation. I think if I was putting a contractor's hat on and thinking, okay so how might this affect me, I think because obviously it is unlikely that your average contractor is going to be dumping raw sewage into waterways, I would think well actually a lot of developments involve a measure of environmental protections. Indeed I have had disputes in the past about populations of newts being impacted by housing developments and I think that the sort of current trajectory seems to be that the courts will allow these claims more and more and there are also a number of pressure groups, for example Good Law Project who are much more willing to bring these claims on behalf of members of the public. So I think the takeaway I think from this case is just to be much, much more alive to the risk of litigation and adverse media but particularly risk of litigation in the context of this discussion, if you are a company that is perpetrating environmental damage.

The next slide please.

The next one I wanted to look at is how do we ensure a building's performance and I think we have obviously heard from Cressida about how this is becoming more and more and more of an issue and how for Wates a large percentage of their pipeline of work, I think I heard £3 billion pipeline of work, has got pretty strict standards built into it. Environmental standards and I think it is worth just pausing to look at what some of the main forms of construction contract are doing around this. So the JCT now has a provision which encourages the contractor to suggest economically viable amendments to the works that might result in an improvement in environmental performance and the NEC has something similar where it has provisions relating to climate change under one of the optional clauses. I think the general feeling in the industry and certainly from the lawyers that I have been speaking with, is that these clauses are pretty woolly and do not actually create a very robust set of obligations. They are obviously a move in the right direction and that is to be commended but these clauses themselves in the new standard forms of contract are not going to make the difference and really in order to give this teeth, it is the employer and the contractor at the outset of the project have to agree between them what the scope will be and the extent to which that scope will mandate high environmental standards. It is really a bit too late once you are into the works to have an obligation on the contractor to make suggestions,helpful as that might be. And I was then thinking and I have been discussing with people and this really is a horizon scanning point because it is not something I have seen yet, but I was thinking as a litigator, how could you actually enforce an obligation to for example have a certain U-value, a certain thermal performance value within a building and therefore reduce heating bills. And obviously you can have in the employer's requirements or the scope, a requirement that the building will achieve "X" but you then get run into the problem of well what if post-completion, post-defects period it turns out that the building, even if it is being used optimally, is just simply not achieving that because for example the insulation is not as good as it should be or the glass that it has been glazed with is not as thermally efficient as expected, and the obvious answer is well you make a claim and you make a claim for damages but it can be massively difficult to quantify what your loss is in the context of reduced environmental performance because it might be that the loss is a lack of tenants who want to rent the building but that is very, very difficult to quantify or it might simply be that the developer wanted to do something good for the environment which again is very, very difficult to quantify. So, when I was thinking about this, I concluded that probably the best way to really give these provisions teeth would be to have some sort of post-completion performance liquidated damages regime and by that I mean you would have to say, the building will achieve thermal insulation performance of "X" and for each specified unit by which it misses that, liquidated damages will be payable in the sum of "Y". These clauses are really, really common in the power generation industry, so if you are building a power plant you would expect to see a clause which says, if in year one you do not achieve a megawatt output of something specified then you will pay performance liquidated damages for each unit by which you miss it. So there is a precedent in the industry for having these types of clauses. The only thing I would note in relation to this is that I think if you were to try and put one of these clauses in, you would have to be very, very specific. I do not think you could have something as generic as the building will be net zero because there are just going to be too many vagaries notwithstanding the report that Cressida mentioned about trying to better quantify what a net zero building is. I just think there would be too many vagaries as to whether or not you have or have not achieved the standard. So I could see this working in relation to very specific and measurable aspects of a building's performance.

Next slide please.

The final thing I wanted to look at was supply chain management and this really caught my eye because there was a recent case that we can see there Begum v Maran where the facts are quite sad and quite extraordinary but basically a shipbroker Maran arranged for an oil tanker to be demolished in Bangladesh. So the vessel was sold and it was sent off to Bangladesh to be broken. Begum's husband was then killed in the shipyard in Bangladesh because the health and safety practices were not adequate and his widow claimed against the original shipbroker on the basis that it owed a duty of care to her husband because it arranged the demolition. So when I first looked at that I thought that is a really long chain of things that have happened in order to get from the poor widow Miss Begum, right through to Maran the shipbroker based in the UK, which arranged for a ship to be sent half way around the world to be broken up and the lawyers for Maran obviously agreed with that because they tried to take the case to the court and have it struck out immediately in a process called summary judgment and I think to a lot of peoples' surprise, the court said, yes okay the duty of care here has been strained but we actually are not going to strike the case out straight away and there might be a case to answer, there might be a duty of care here. So I think again when I was looking into this a lot of people have looked at that and said okay, a bit like the Manchester Ship Canal, that might be an indication that the courts are going to hold people to a much, much higher standard or hold companies to much higher standards in respect of their supply chains and making sure that the way they cannot just wash their hands of liability once they push it into the supply chain.

On that note, some people might be aware that France has got a duty of vigilance law which is, I will not go into the details of it because it is quite complex in terms of how it operates, but the high level of it is that if you are a French company of a certain size, you are essentially responsible for the activities of your entire supply chain and you have to take steps to clean up any malpractice within your supply chain and I guess most importantly if you do not do that, so you have a couple of bites at the cherry to put things right, but if you do not do that then you face really, really hefty fines like tens of millions of Euros potentially and also in Europe that has been complemented I think by the recent corporate sustainability due diligence directive which I think from memory was published in June or July of this year. It is currently slightly unsure, unclear how that will be implemented. I mean as the name would suggest it is intended to make companies more responsible for supply chains and ensure better standards throughout the supply chain but it will be for European member states to implement the law and also, most importantly, to decide how to give effect to it. So decide how to enforce it but implementation will be between 2026 and 2029 so it is a bit of a watch this space at the moment but again I think that those three examples pulled out, I think demonstrate how in the coming years there is going to be much more scrutiny on companies to maintain good standards throughout their supply chain.

With that I think I will hand back to Jess.

Jessica: Thank you James for that you sailed through the key litigation points that was really interesting. If I could ask all our panellists to now turn their cameras back on and take themselves off mute we have had a few questions come through do feel free to put some more in and to the panellists do feel free to engage in these questions even if I ask them to someone specific it would be good to have an overall view on these. We have had a question from the audience from Marie-Claire O'Hara, this is directed to Shah. She says what do you think about adding in contract penalties in supplier contracts for failure to achieve social value metrics?

Shah: That is a really great question and it is a question that I get asked a lot. At the games we did not have a penalty mechanism, we decided not to we decided to go for more of carrot approach rather than a stick approach because we had looming deadlines, we had quite a small supplier pool so it presented some unique challenges. I have seen at least two councils who have started to include failure to kind of deliver on your social value commitments as part of their liquidated damages and have introduced them in their contract performance measures as well. I think it's risky, you know, who is going to be the first person to take a contractor to Court for delivering a multi-million pound hospital on time in budget, great quality but you did not offer the number of apprenticeships you said you were going to offer. How would you demonstrate that loss, I think that is a risky think to do.

However I do think there is a move in the market towards kind of considering other softer forms of penalties so things like I am starting to see tenders now which have a higher weighting for social value but also some where there is a pass fail requirement for how well you answer that social value question. I have seen two mental health trusts that have said that if you fail to deliver on your social value there will not be a financial penalty, a direct financial penalty, but you may be excluded from their frameworks for the next two years. So we are staring to see that come in but I think with the changes that are coming up in spring in the procurement act there are a number of things there which may not result in a direct penalty but which may kind of be disadvantageous to people who are not taking their social value commitments seriously so for example there is a move from awarding it from the most kind of economically advantageous tender to the most advantageous tender and the guidance from Cabinet Office has been that that can include things like does it create local job opportunities, does it have the social benefits, even it's financially a little bit more expensive, does it have more financial and local benefits for local communities and communities that are easy to be overlooked rather than another tenderer which may be slightly cheaper. I think as well the changes to the public procurement act of moving away from having to have regard to social value to a duty to consider social value so a much higher test and you have to have a good reason as to why you are not including social value will also start to see kind of perhaps public procurement bodies think a little bit more about, you know if we have to consider it and we have to put it in what is going to happen if they do not deliver. I think the fact that you have to publish a minimum of three KPIs against each contract that is awarded through the public sector procurement I think might lead to some interesting developments where we see a KPI on social value that is published and you can see how people are scored against that and how they are delivering.

But going back to what Cressida said about being able to do some early engagement with people before you put out a request for tender, the changes in the procurement act will kind of you know encourage that and really kind of make it clear that you can do that you can speak to your suppliers you can see what is out there, what might be possible and I think that will allow people to kind of gauge if what they are asking for in their social value questions is deliverable. What does the market look like, what can people comfortably deliver so I think, a short story long, I think penalties is perhaps not the way to go and not what the appetite is in the market at the moment but I do think there will be a move towards these softer types of penalties which if you mount them up will have an incremental affect in the market, and I'm here for it.

Jessica: Cressida, you say that is fair from a risk perspective, you are reticent to engage in signing up to liquidated damages for example as James said for failure to deliver on social impact.

Cressida: Sure, it is a really tricky one and measuring it is very very hard but I completely agree with what Shah just said. We see the procurement act as a very important moment in time, that transparency on the three KPIs for each project is going to create a very public arena of winners and losers quite quickly. It is also going to mean that companies operating in this arena realise that you have to properly resource particularly social value obligations which quite often people think just magically happen in the corner. Am I right Shah?

Shah: Yes.

Cressida: And learning from what we have done and what it took to deliver it and therefore using that to inform future negotiations of what we will commit to deliver I think will actually create much better outcomes over time because everyone will take it seriously, so yes I am completely aligned with Shah's representation.

Shah: If I could just add as well, sorry, one of the things that when we are supporting people to score social value questions one of the things we encourage is, right OK, you need to look at, not just like the person who has promised the highest donation to charity and the highest number of volunteer hours and the highest number of apprenticeships, what is their plan for doing that, have they done this before, what is realistic, how do they resource this internally, is this all set out in the answer to their question, and even if that means that somebody is delivering less in terms of a verified figure but they have a plan and you have more confidence in how they will deliver that and they can take that more seriously.

We support people to score that question more highly than somebody who just breezes in making all of the promises knowing that it is not going to end up in liquidated damages and I think some people do hide behind that and will promise - the terms that social value managers use is pink fluffy unicorns - knowing that it is, knowing that they will not be challenged about it, so I think some of the softer moves is where the market will move to rather than direct penalties.

James: Cressida, do you sense that Wates would be willing to accept liquidated damages for certain environmental performance so for example if you had a requirement for solar panels on the roof generating x amount of electricity and actually it turned out none of them worked, is that the type of thing where you might accept liquidated damages.

Cressida: James we would never put ourselves in that position we would always make sure it worked but you should probably talk to our lawyers.

Jessica: Just moving on to the environmental and social impact of buildings, one of the questions that we have received, in fact Ben you might be well placed to answer this, it has been posted anonymously but the attendee asks, if buildings are old how are they actually tested for environment and social impact, and you know we see some very old buildings, 60's tower blocks, how do you make the decision that it is better to restore them or knock them down?

Ben: I am going to do the lawyer's answer of dodging the technical question in terms of how you assess social and environmental impact, there are people with clipboards who are far cleverer than I who can do that. But it does raise a really good question about how planning works in that you have all these issues that get thrown into the planning mix and local authorities decide which is the most important and I think you know for example on the 60's tower blocks, carbon and keeping structures is really important from a carbon perspective but you also first and foremost have to have a safe structure for people to live in and we have seen in history that if a building is not safe terrible consequences so, you know, human safety has to come above carbon I suspect.

You have also got things like, you know, the visual amenity, you know some tower blocks are wonderful structures and some are less attractive. We have a thing called listing where you can preserve buildings because of their architectural or historic significance as well, so there are all sorts of things that get thrown into the mix to decide whether we should keep older structures and I suspect for the short term carbon will not be the overriding principle it will be a very important one but it will not override safety, people's wellbeing you know people do not want to live in there because it's not safe or does not make them feel happy. You can have all the good carbon assessments and environmental arguments but that structure should not be there, having said that we need to be, tall urban buildings are often the most stable because of transport links and all that kind of stuff but yes, it is a great exam question about how does planning work.

Jessica: It will be interesting as well to see what the government does with the Grenfell phase 2 report recommendations and how those are going to be incorporated into practices or legislation and how that is going to impact what developers decide to do and in terms of planning, authorities too in terms of keeping older buildings and weighing up the risk benefit of doing that as against building safety. I think we are all waiting to see what, how the government is going respond to the numerous recommendations that have been made there.

Just moving on I have a question for James, we have talked a bit about litigious options and perhaps the contractual routes to enforcing ESG objectives. Are there any sort of non-litigation options where a claimant may be worried about the risk associated with taking claim to the Courts for example. What other means are there for enforcing these types of duties?

James: So I think as you have touched on your usual route is to go to the Courts but there are also other options available and I think in particular a number of, sort of, jurisdictions / countries have regulatory routes available where there are various ombudsmen types of groups or regulators who have enforcement powers that sit, not immediately in Court where you have to sort of make a claim and go through that entire process. So there are other routes available in that sense as well. I suppose if you are under a construction contract in England you have got adjudication as an option and then any other number of options that might be agreed between the parties so be it expert determination or the like.

So I think the key ones to remember, particularly outside of the UK, is that a number of countries do have these regulatory enforcement routes and ombudsmen and the like.

Jessica: And I wonder if that, maybe, is part of the answer when we are hearing for commercial reasons contractor are perhaps going to be reluctant to sign up to severe penalty clauses directly relating to ESG issues, but perhaps if there is a mixture of contractual routes together with regulatory routes then that will help shift the dial perhaps to make people more compliant with these issues.

James: I think that is absolutely fair, fair comment.

Jessica: Well thank you. We have only got a few minutes left, I just have a question that has come in for you Cressida, how is Wates addressing the skilled worker shortage and how does ESG factor in retaining and attracting talent?

Cressida: ESG is really important in our recruitment process now, we are getting proactively asked about it from people you wouldn't necessarily expect so if someone is coming in for an operations director job, you know traditionally on the gritty end of the scale and not necessarily on the softer end of the scale as it would have been seen in the old days we are getting asked what are you doing about this, do you think it's enough are you going to go further. So we know its important to recruit the smartest people we can to our business and what are we doing about the skills shortage? I think there are two elements to this, the first is we are generally not attracting sufficient people to the sector, we have had a massive programme with schools, we have got research, in fact everyone has got research that shows that that if you wait until people are in secondary school it is too late they are already turned off by the idea. So I think last year we reached 28,000 primary school children to get them thinking about this and then because we have projects all over the country we try and maintain those links and keep the children interested and then we have a big early careers programme where we go out and we find them.

So we just welcomed our latest cohort of 106 very very bright young people and they each, each one of those 106 people beat 57 other people to get their one place so we actually do not have too much of a problem attracting younger people to Wates. The second element though I think is the green skills shortage as we transition to whatever the new world looks like and I think there is an expectation for companies like Wates and other Tier one contactors to be investing and helping people with old world skills so fitting gas boilers for instance to train to fit heat pumps instead for example. That is something we are very alive to and considering where we can play a role.

Jessica: Thank you. That is amazing to hear actually that there is so much competition for those places within your business and encouraging because, you know, we do hear about skills shortage in this country especially post Brexit. But if companies like yours are working hard to get people engaged at an early age hopefully that will help to overcome that.

Cressida: I should say though Jess that the supply chain, parts of the supply chain really struggle to get people in and we have seen a massive hit post Brexit of getting people into the trades. We are great at positioning ourselves and showing we are a long term business and we are not going to go bust, we are careful, we have got big plans for the future, some of our trades are not quite in that space and do not have the same capacity as us to build those relationships to draw people in but we do a lot of work with them through the projects we have to help them connect with secondary schools and draw people through on apprentices so we do as much as we can and always looking for ways to do more with other people in the industry so we are talking with a single voice.

Jessica: Yes absolutely, we have probably got time for perhaps one or two more questions, I did promise we would try and finish a little bit early but we are shortly running out of time. Question for you Ben, we hear the term responsible business used a lot in the media and corporate literature. What in your view does it really mean to be responsible?

Ben: For me it is about being truly thoughtful and thinking about all of your stakeholders and not just your investors and your customers, it is thinking about you know people whether it is in the communities you are operating in, your employees, people who work for your suppliers or just society at large and I think its about being thoughtful about all of your impacts. You know there is a massive focus on carbon, I get that, but you need to think about nature, you need to think about resources, water, you need to think about a much sort of broader variety of issues you know modern slavery, human rights all that kind of stuff. I think you need a realistic plan, you know how you are addressing those issues not just we are going to be net zero, we are going to be super responsible by this date and we have no idea how we are going to get there and I think there is a communication issue as well as in terms of talking very authentically and realistically to people about what you are doing.

I think the final point on responsible business is, you know I talk a lot when I'm talking to clients about ESG, I talk about MoSCoW, what you must do, what you should do, what you could do and what you won't do and I think being a responsible business is going beyond the must. That basic legal compliance, that's fine, it's thinking about what you should and could do, what your values are and I think Cressida made it, talked about fourth generation family owned, the values, what the legacy of that family is will run through the business like a green thread and there are lines you just do not cross way beyond what bare legislation says.

I think responsible businesses talk about legacy and their values and they live and breathe those things.

Jessica: Thank you Ben, we have pretty much run out of time, I know we have a few questions that we have not got to today but we will pick these up after the session and come back to you separately if needed.

This has been a fantastic session and Ben,Shah, Cressida, James thank you for being part of it today and sharing your views and knowledge.

I think for me there has been a few key themes that have come out of it, one of which is collaboration is the key to change, one of which is regulation and benchmarking, ombudsmen, contractual terms, there are lots of different routes including softer routes that Shah has talked about as well and it is the combination of those that need to work together to really bring about the change and keep firing the direction of travel that we have talked about that the industry is on a journey towards.

So once again thank you to everyone, I hope everyone who has joined today has found this talk to be interesting, there are lots of you so it shows how important the topic is, we all look forward to future opportunities to continue this conversation and I hope you all have a lovely rest of your day.

Thank you very much.

The environmental, social and governance (ESG) landscape in the construction industry presents unique challenges and opportunities. How companies manage these issues not only reflects their approach to risk management but also their broader contributions to society. With the right strategy, there are opportunities to 'reset' or reshape your business to meet ESG goals effectively.

In this insightful webinar, chaired by Gowling WLG construction partner Jessica Tresham, our panel of experts delved into the key ESG considerations within the construction sector. With a focus on practical takeaways, the session explored how businesses can navigate ESG risks, leverage opportunities, and contribute positively throughout the construction supply chain.

Panel highlights include:

• Key ESG challenges and where risks and rewards lie within the construction industry
• Best practices for creating social value and embedding it within projects
• Client perspectives on managing ESG issues effectively across the supply chain
• Emerging litigation trends in ESG and potential areas of dispute

Our expert speakers include Cressida Curtis, Group Sustainability Director at Wates, Ben Stanfield, Gowling WLG's Head of ESG, Shah Begum, Outreach and Impact Manager (Secondee) at the United by 2022 Legacy Charity, and Principle Associate James Ignotus.

Watch the full webinar now and gain actionable insights into navigating ESG challenges in construction.

Read the original article on GowlingWLG.com

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.