Construction Brief: sustainability insights February 2021

A roundup of recent developments in the sustainability sphere, including modern methods of construction (MMC) coverage issues tackled by the Spanish Courts, the impact of MMC on insurers, how to minimise the risks of retrofitting homes by 2050 in the race to zero and the impacts of the Supreme Court decision in permitting a third runway at Heathrow Airport.

Is software failure considered material damage under machinery breakdown coverage?

As we have been saying all year, Insurers need to be aware of issues arising with their traditional wording on MMC projects. As the courts in Spain have shown, the traditional wording will not work for Insurers, with cover being provided where they thought that traditionally it would not trigger the policy and with harsh results in terms of interest.

Contacts: Olivia Delagrange, Javier Montero and Iain Corbett

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The impact of modern methods of construction on insurers

MMC arguably re-writes the rule book. It encompasses new skills, new materials, the use of old materials in new ways and new processes, all of which create new risks across all stages of the construction process.

There are a number of solutions that deal/will deal with these new risks and there are plenty of examples in the UK of buildings that have been successfully constructed using MMC. However, the scope for significant losses is very real and a careful, considered and joined up approach will be required by all stakeholders to make MMC work.

Contacts: Michael Smale and Christopher Butler

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Retrofitting homes: how to minimise risk

The heating of residential homes is one of the four highest carbon emitters in the UK, which is why the government is focusing on retrofitting homes to increase energy efficiency. More and more local authorities are pledging to retrofit homes with green heating systems by 2030. Completing this initiative in such a short time is a mammoth task and will inevitably raise risks. There appears to be little centralised government planning on this achievement and who will be responsible for overseeing it? This lack of a centralised strategy has led to individual councils adopting their own targets and methods of achieving them. We must also ask whether the construction industry has the skills and capacity to meet this target.

While we do not want to detract from the need to reduce carbon emissions, it is important to highlight the potential risks that could result from the race to zero. The hope is that a standardised regulatory system is implemented soon, averting a climate and legal catastrophe.

Contacts: Aoife Marrett and Robert Welfare

Related item: Retrofitting homes: how to minimise risk

Supreme Court gives green light to third runway at Heathrow

The Supreme Court recently held that the decision taken by the Secretary of State for Transport regarding the expansion of Heathrow Airport was in fact lawful. Whilst the ANPS (the Airport National Policy Statement) did not make specific reference to the Paris Agreement, the Supreme Court held that the Secretary of State had taken the contents of the Paris Agreement into account, including carbon targets and budgets and he was not legally required to give it more weight than he decided was appropriate.

Significant future infrastructure projects in the UK particularly in the energy, transport and waste sectors, are likely to face similar scrutiny as the expansion plans at Heathrow Airport. Planning and development consents are unlikely to be granted for such projects if these are seen as incompatible with environmental law and policy. Going forward, construction professionals working on such projects will need to have close regard to the latest policy commitments on combatting climate change in order to avoid lengthy and costly legal challenges.

Contacts: Tom Handley and Gemma Williams

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