Positive figures for the financial year-end are raising hopes of a surge in activity both on site and on the order books of UK construction — but, this welcome post-pandemic growth forecast comes with conditions attached, warns Jim McClelland.
Make no mistake, big business getting back in the black is good news for all concerned, from the C-Suite to the supply chain, but only if certain conditions are met.
The glimmer of an upward trend emanating from construction overall goes hand-in-hand with positive announcements from key players such as Kier, who are now in a position to make an equity pitch for around £200M off the back of a better balance sheet.
The fact that much of their confidence for the future is founded on a strong performance in long-term public-sector work should come as no surprise. However, the political context is important, here; as is the clear underlying trend in finance and corporate markets.
At their core, both these drivers have one big thing in common: Sustainability.
Profit is great, necessary even; but, not at any cost to People and the Planet.
Jim McClelland Sustainable futurist
Winning the global race to Glasgow
This April saw the UK government announce plans to enshrine in law the world’s most ambitious climate change targets, with the aim of cutting emissions 78% by 2035 compared to 1990 levels, as part of its overarching goal to achieve Net Zero by 2050.
The timing of this aggressive green gambit appears particularly significant, as it puts the UK ahead of the global pack in advance of the nation playing host to the biggest event in the world sustainability calendar for 2021. Coming to Glasgow later this year, the UN Climate Change Conference of the Parties (COP26) will put both political promises and economic performance directly in the environmental (and social) spotlight.
Furthermore, the call to deliver against the climate agenda can be heard far beyond the exalted domain of political heavyweights and policy wonks in the national and international arena — never mind blue-sky thinking, there is plenty of green action on the ground.
To date, some 300 out of a total of 404 District, County, Unitary and Metropolitan Councils (74%) have already declared a Climate Emergency. Carbon plans and budgets abound.
So, from global to local, the climate imperative is here to stay. Not only should this be seen as a good thing for longer-term strategy and investment, it must also actively be built-upon as an engine of growth for jobs and opportunity sector-wide — across property and construction; design and architecture; infrastructure and engineering; homes and housing; renovation and retrofit; management and maintenance; fit-out and FM.
The Green Industrial Revolution
In effect, this is the ‘Green Industrial Revolution (GIR)’ made real. Announced last November, the UK’s 10-Point Plan seeks to mobilise £12bn of government investment, plus, potentially three times that amount from the private sector, to create and support up to 250,000 green jobs. Construction needs to back this revolution, in spirit and in deed.
However, revolutions do not happen top-down. Ultimately, if Westminster’s ’world-beating’ targets for reductions in greenhouse gas emissions are to be met, the GIR should be both designed for, and by, the workforce, argues TUC General Secretary Frances O’Grady:
“It's good to see more robust targets. Our path to Net Zero can be full of positive opportunity for working people. But workers need to have their say on plans. Progress will be fairer and faster if their needs are met with job guarantees and rights to re-train.”
From the C-Suite to the supply chain
As if the push of the political and public-sector context were not incentive enough, there is also an unequivocal pull coming from the world of markets and money.
According to the Climate Bonds Initiative, the sustainable debt market was valued at a cumulative $1.7tn at the end of 2020, with almost 10,000 instruments issued under Green, Social and Sustainability (GSS) labels since 2006.
With 2021 already being dubbed ‘the year of the Green Bond’, some say annual issuance could be set to double this year.
These skyrocketing numbers are underpinning the investment market’s fast-growing interest in Environmental, Social and Governance (ESG) criteria and their adoption.
For corporates and brands, the importance of this investment trend is clearly manifest in a wave of salary and bonus-scheme incentives that increasingly see executive pay linked to ESG performance.
Reputational management is critical, as shown by Boohoo considering such a move, in the wake of heavy criticism around its record on labour rights and ethics.
The impact of this focus on ESG factors is not only being felt in the Board Room — the ripples are eddying out deeper and deeper into all tiers of the entire supply chain.
Right now, the business case is building rapidly week-by-week. Tesco, for example, has announced it will become the first UK retailer to offer sustainability-linked supply-chain finance, whereas acquisitive Silicon-Valley cloud-based giant Salesforce is adding climate obligations into all its supplier contracts. The risk-and-reward game is hotting up.
People, Planet… and Profit
Ultimately, therefore, the message for the construction industry is clear. Unless sustainability is built-in, this much-needed resurgence in the built environment risks being little more than a ‘dead-cat-bounce' for business-as-usual — and evidence to support this strong assertion is visible everywhere, from Westminster, to the High Street.
Profit is great, necessary even; but, not at any cost to People and the Planet.
Jim McClelland is a Sustainable futurist, editor, journalist, speaker
