The New Licence to Do Business: Why Sustainability is Non-Negotiable in Construction
Sterling | Cost & Carbon Estimating
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How Contractors and Developers Must Adapt to Meet the Growing Sustainability Demands?
In a recent article for The Scotsman, Michael Watson, Partner and Head of Climate and Sustainability Advisory at Pinsent Masons, highlighted a critical shift in the construction industry; sustainability is fast becoming a "licence to do business." As we head into 2025, contractors and project developers will be required to embed sustainability practices into their operations, not just as a regulatory obligation but as a vital part of their ability to secure funding, gain planning consent, and ensure long-term competitiveness in a rapidly changing market.?
The article underscores the urgent need for the construction sector to meet the environmental expectations of investors, funders, and regulatory bodies. While many companies have already integrated sustainability measures, these three key drivers: regulatory commitments, funding requirements, and planning consents, are now setting the stage for all businesses operating in the sector to adopt sustainability as a non-negotiable foundation of their operations. This shift presents both a challenge and an opportunity for contractors, one that requires them to adapt quickly to new regulatory landscapes and develop robust systems to track, report, and reduce their environmental impact.?
Sterling’s platform featuring Cost & Carbon Estimating, Forecasting, and Lifecycle Management offers an invaluable solution to contractors and developers looking to stay ahead of these emerging demands. By helping companies integrate sustainability from the very start of a project, Sterling ensures that construction businesses can meet these rising expectations with ease.?
The Three Key Drivers of Sustainability in Construction?
As Watson points out, the construction industry’s sustainability journey is being shaped by three core drivers: regulatory commitments, funding requirements, and planning consents. Together, these elements are converging to create an environment where sustainability isn’t optional, it’s essential!?
1. Regulatory Commitments: Staying Ahead of the Curve?
Regulatory requirements related to sustainability are tightening, with new rules and standards emerging at both national and international levels. The UK’s Taskforce for Climate-related Financial Disclosures (TCFD) rules are already applicable to many contractors, with even stricter sustainability reporting frameworks likely to be implemented in the coming years. For businesses operating in the EU or dealing with EU-based clients, compliance with the EU Corporate Sustainability Reporting Directive (CSRD) and the EU Corporate Sustainability Due Diligence Directive is becoming increasingly important.?
In this rapidly evolving regulatory landscape, Sterling’s Cost & Carbon Estimating tool is an indispensable resource. By providing accurate carbon data for each stage of a project, Sterling enables contractors to seamlessly comply with sustainability regulations. With this tool, businesses can ensure their environmental footprint is accurately tracked, reported, and reduced throughout the estimating process, making regulatory compliance simple and transparent.?
2. Funding Requirements: Aligning with Financial Institutions’ Sustainability Goals?
Another major shift, as Watson highlights, is the growing role that funding requirements play in the construction industry’s sustainability drive. Banks, asset managers, and investors are increasingly focused on financing projects that align with sustainability targets. As financial institutions strive to reduce their “financed emissions” the carbon footprint of the projects they fund contractors must prove that their projects meet specific environmental criteria.?
Sterling’s Forecasting module plays a crucial role in this process, enabling contractors to predict the long-term environmental and financial impact of their projects. By providing accurate carbon forecasts and cost projections, Sterling helps contractors make informed decisions that meet funders’ sustainability requirements and improve their chances of securing investment.?
3. Planning Consents: Meeting Stricter Environmental Standards?
The planning consent process has also evolved. Today, many planning authorities require projects to meet stringent environmental standards, including carbon budgets, biodiversity net gain, and overall sustainability targets. Projects that fail to meet these requirements risk facing delays, increased costs, or even the denial of planning approval.?
Sterling’s Lifecycle Management tools are designed to help contractors stay ahead of these challenges by tracking sustainability metrics throughout the project lifecycle. From initial estimation to handover, Sterling ensures that all aspects of a project’s environmental performance are monitored and managed, allowing contractors to meet planning conditions and secure the necessary approvals.?
How Contractors Can Proactively Mitigate Emissions?
As Watson emphasises, contractors must take a proactive role in mitigating emissions not only to comply with regulatory requirements but also to contribute to broader environmental goals. This means taking responsibility for emissions from the very start of a project.?
Sterling’s Cost & Carbon Estimating tool helps contractors estimate emissions accurately at the outset, providing data that can guide decision-making and reduce the environmental impact of materials, processes, and construction methods. By integrating sustainability into the estimating process, contractors can reduce emissions early on, ensuring that projects are as environmentally friendly as possible from day one.?
In addition, Sterling’s Lifecycle Management solution enables contractors to track and reduce emissions over the course of the entire project, ensuring that sustainability remains a priority throughout the build and beyond. This comprehensive approach helps contractors mitigate the long-term environmental impact of their projects, building a more sustainable future for the industry.?
The Evolving Regulatory and Reporting Landscape?
As the regulatory landscape becomes more complex, contractors must ensure they are prepared for stricter sustainability reporting requirements. According to Watson, new regulations like the EU Corporate Sustainability Due Diligence Directive require businesses to assess sustainability risks across their supply chains, driving the need for greater transparency and information sharing.?
Sterling’s platform is designed to help contractors manage these evolving requirements effortlessly. By capturing and reporting sustainability data in real time, Sterling ensures that contractors can stay compliant with new regulations without adding administrative burden. With the ability to integrate data from multiple sources, Sterling helps contractors meet the growing demand for accurate and transparent sustainability reporting.?
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The Importance of Data in Sustainability Planning?
Data will be the key to staying ahead in the sustainability race. As Watson points out, businesses must be able to track, manage, and report their sustainability efforts in real time. This requires robust data systems that can capture and analyse emissions, resource usage, energy consumption, and other environmental factors.?
Sterling’s comprehensive suite of tools provides contractors with the data they need to optimise their sustainability efforts. With real-time carbon tracking, cost forecasting, and lifecycle management, Sterling enables contractors to make informed decisions that reduce their environmental impact and meet sustainability targets. This data-driven approach is essential for future-proofing construction projects and ensuring long-term success.?
How Contractors Can Stay Competitive in a Changing Market?
The demand for sustainability in construction is only set to increase, and contractors who fail to adapt risk being left behind. As Watson notes, sustainability is not just about compliance it’s about gaining a competitive edge in an increasingly green market. Contractors who can demonstrate their commitment to sustainability will be better positioned to secure contracts, attract investment, and succeed in a rapidly changing industry.?
By leveraging tools like Sterling’s Cost & Carbon Estimating, Forecasting, and Lifecycle Management, contractors can gain a competitive advantage. These solutions help businesses stay on top of sustainability regulations, forecast the long-term impact of their projects, and track carbon emissions from start to finish. With Sterling’s tools, contractors can ensure they are prepared to meet the growing demand for sustainability and remain competitive in a rapidly evolving market.
A Call to Action for Contractors and Developers?
Sustainability is no longer optional, it is a vital component of doing business in the construction industry. As Michael Watson’s article in The Scotsman highlights, contractors and developers must take proactive steps to meet the increasing demands of regulators, funders, and planning authorities. The pressure to embed sustainability into every aspect of project delivery will only increase in 2025 and beyond.?
Sterling | Cost & Carbon Estimating suite of solutions, Cost & Carbon Estimating, Forecasting, and Lifecycle Management empowers contractors to navigate these challenges and stay ahead of the curve. By integrating sustainability into their operations from the outset, contractors can ensure they meet the growing demands for environmental accountability, remain competitive, and drive the construction industry towards a more sustainable future.?
Get in touch with Sterling DCS - Digital Construction Solutions today to learn how our platform can help you meet your sustainability goals and stay competitive in the evolving construction landscape.?
Related Links
The Scotsman Article - https://www.scotsman.com/business/the-new-licence-to-do-business-for-contractors-and-project-developers-4926871
Corporate sustainability due diligence - https://commission.europa.eu/business-economy-euro/doing-business-eu/sustainability-due-diligence-responsible-business/corporate-sustainability-due-diligence_en
Pinsent Mason - https://www.pinsentmasons.com/people/michael-watson
Sterling DCS - https://www.sterling-dcs.com/