Disclose the organisation's governance around climate-related risks and opportunities
- Board to have strategic responsibility and for climate risk and ESG matters, to be implemented through the executive function.
- Plan approach for how to enable the board to have capacity and competence on climate-related risks and opportunities, including the use of expert committees or through a named individual appointed to the board who has previous experience on climate change risk management.
- Climate-related risks are listed on the risk register and subject to wider risk management and audit procedures.
- Consideration given to how effective 'bottom up' implementation of 'top down' climate strategy will be prioritised and achieved in practice, in an integrated way, working across functions and locations.
- Plan a cross-divisional governance structure and system to enable effective implementation and prioritisation of the board’s climate strategy and opportunity for cross-fertilisation of efforts and ideas - including in relation to risk management, technology and innovation, carbon abatement and carbon pricing - and to keep informed of contractor-wide projects.
- Invest in developing competence and capacity within the executive team to ensure effective leadership and responsibility for enterprise, sustainability & innovation, to drive the innovation agenda and enterprise strategy around providing sustainable contracting solutions for customers.
- Each contracting division to develop their own climate change strategy put together with the help of the wider executive function but with individual identification of its own climate-related risks and allocation of ownership and control at divisional level.
- List climate change as a principal risk in the risk register.
- Develop a governance system to manage climate-related risks and to ensure clear consideration of physical, transition and liability risks.
Disclose the actual and potential impacts of climate-related risks and opportunities on the organisation’s businesses, strategy and financial planning where such information is material
- Develop strategy to ensure procurement and bid teams consistently highlight carbon impact of all new tenders.
- Invest in capability (including digital BIM capability) for assessing and developing energy and carbon efficient design solutions and embodied carbon forecasting and reporting.
- Collaborate with industry and with supply chain on management of transition risks, embodied carbon and green materials.
- Acknowledge and educate all leadership teams to understand that the contractor’s interaction with its supply chain will have a material impact on the rate at which a contractor can decarbonise.
- Designate increased investment in sectors such as battery manufacturing and storage, hydrogen and solar power generation.
- Implement short-term activities including:
- incentivisation to participate in industrial level recycling/reuse programmes;
- waste charges/tariffs as disincentives;
- increased renewable activity;
- improvement of raw materials, directly or through key supply chain members activities as relevant;
- carbon pricing; and
- investment and research into use of new technologies and methodologies.
- Identify plan for achieving medium-term activities including:
- plan for material increased rate of recycling and reuse of materials;
- transition from fossil fuel to renewable energy in construction processes (including supply chain); and
- piloting use of new technologies and methodologies.
- Ongoing engagement and interaction (through research, investment, education, support and activities) for global manufacturing and logistics teams on best practice methodologies and performance measurement for improving efficiencies and lowering emissions within end to end processes.
- Strategy to focus on areas most important to the business – environment, materials and communities.
- Have a showcase and digital innovation hub, encouraging local colleagues and supply chain partners to attend with livestreams and rich media content. Colleagues encouraged to attend live webinars, listen to podcasts and complete sustainability training.
- Ensure that all business units within the organisation have a plan and strategy to implement the increased use and promotion of lower carbon materials.
- Train client teams in understanding any performance or operational impact of reducing embodied carbon and emissions and the use of green materials.
- Upskilling workforce, through an accredited carbon literacy education programme, to make sure colleagues are equipped to help deliver positive change.
- Providing case studies where sustainable materials have been used and what effect this has had on carbon reduction.
- Focus on offsite manufacturing to reduce carbon emissions.
- Build internal BIM, design and digital capability.
- Quantify the short, medium and long-term priorities, plans and activities identified to reduce the impact of climate-related risks and leverage the opportunity for climate-related opportunities and consider how they will impact the contractor's business activities, strategy, and financial planning.
Disclose how the organisation identifies, assesses and manages climate-related risks
- Raise management of climate-related risks and opportunities as a standing board level issue.
- Collaborate with wider industry to collectively plan for the response to climate-related risks: in particular, to enable greater mobilisation on innovation in technology and investment in green capacity.
- Identify climate-related risks through a number of different forums such as risk workshops, risk champion forums and engagement with senior leaders and other stakeholders.
- Begin to explore a contractor-wide integrated Enterprise Risk Management (ERM) process for managing climate-related risks combining a bottom up operational review with a top down strategic review and external perspectives to ensure comprehensive risk identification.
- Begin to develop and implement appropriate risk management strategies for dealing with identified transition risks.
- Consider risks and opportunities created by rapid decarbonisation on a contracting portfolio and identify changes such as the potential for fewer new build opportunities but more retrofit opportunities.
- Assess the viability of construction projects that utilise low-carbon emission materials and work with customers and supply chain to research and test the quality availability/capacity and the performance and pricing of green materials.
- Develop processes to manage climate-related physical risks across operating locations and with major supply chain.
- Consider and develop integrated governance procedures and awareness raising for climate risk management.
- Commission a robust and holistic third-party assessment of potential climate-related risks and opportunities and estimate the likely impact of the risks on the organisation's strategy and financial planning. This assessment should be broad and include internal stakeholder consultation, literature review, peer comparison and scenario analysis.
- Categorise risks into potential and current risk and identify controls and mitigation.
- Identify and assess climate-related physical risks across the organisation’s key operating locations and affecting its major supply chain.
- Climate-risk related physical event assessment will include review of impact of increased severity of extreme weather events, identifying the:
- effect on the business (for example, construction site damage/project design life shortened/difficulty in obtaining insurance); and
- potential adaptation/mitigation (for example close monitoring of weather forecasts/increase resilience of sites to extreme weather/relocation of manufacturing sites to less exposed areas).
- Identify key transition risks with potential to financially impact the business.
- Transition risk assessment includes increased unit costs within Emissions Trading Systems (both UK and EU) and a reduction in free allocation of CO2 allowances under those schemes.
- Transition risk assessments will include a review of the impact of transitioning materials, products and services. Technology to low-carbon alternatives will identify the following:
- effect on the business including (for example) the impact of more stringent compliance regulations, increased need for advanced green materials, contractual requirements from customers to reduce emissions and embodied carbon over the asset lifecycle and need for greater reuse and recycling or materials and reduction in waste; and
- potential adaptation/mitigation risks including (for example) sourcing diversified products and materials, greater use of technology and increased collaboration with key supply chain members.
Metrics & targets
Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities where such information is material
- Measure and report on Scope 1, 2 and 3 GHG emissions and the related risks.
- Commit to reducing GHG emissions to net zero by 2050 and develop and publish quantified targets to reduce GHG emissions in relative or absolute terms (Scopes 1, 2 and 3) and report on performance against these.
- Become a member of relevant “green indices” e.g. ESG Indexes, FTSE4Good Index, the STOXX Global ESG Leaders Index and the Dow Jones Sustainability Index.
- Obtain independent verification of the calculation of 2021 GHG emissions assertion, in accordance with industry recognised standard ISO 14064-3.
- Engage with external Scope 3 reporting experts to support the development of a reporting methodology and to establish a Scope 3 baseline and collect Scope 3 emissions related data across all the contractor’s supply chain.
- Obtain data from a wide variety of sources impacting the contractor’s operations including capital investment data, green capex forecasts, EU taxonomy KPIs, greenhouse gas emissions, climate change science data, costs of exceptional physical events, network reliability, climate transition pathways and customer feedback.
- Develop and employ measurement methodologies in line with recognised guidance for contracting companies working in the contractor’s markets.
- Plan to phase out the use of EEIO conversion factors over time and phase in the use of actual carbon data taking into account that every project is different and effectively has its own supply chain.
- Look for supplied from renewable electricity supplies backed by REGOs. Where REGOs are not available, apply a residual mix emission factor. Calculate CO2 emissions from other activities using appropriate emission factors and in line with the World Resources Institute Greenhouse Gas Protocol (Revised Edition).
- Calculate Scope 2 emissions from electricity in line with the location-based method of the 2015 World Resources Institute Greenhouse Gas Protocol Scope 2 Guidance, using International Energy Agency (2021) Emissions Factors (published in 2021) and eGRID2019 Summary Table for emissions factors (published in 2020) or any other best practice methodology for calculation of emissions from electricity.
- Calculate Scope 3 emissions estimations in line with the GHG Protocol's Scope 3 Standard and the relevant GHG Protocol's Scope 3 Standard for companies supplying materials (e.g. cement, timber and concrete), using the UK government 'GHG conversion factors for company reporting 2021' and other relevant emissions categories for the contractor’s operational activities.
- Ensure that the contractor’s supply chain provide life cycle assessment data and verified Environmental Product Declarations (EPDs) for products being supplied to the contractor.
- Identify and publish metrics to include climate-related risks and opportunities associated with water, energy, land use and waste management.