Recent climate change legislation imposes challenging targets for the reduction of greenhouse gas emissions, and it is fast becoming clear that the UK will find it impossible to meet its declared environmental targets without reducing the carbon emissions from buildings and those generated during construction. The Joint Contracts Tribunal (JCT) which produces standard form documents for the construction industry has recognised this and, following preliminary consultations with senior industry figures, it initiated an industry-wide consultation in 2008 to consider whether construction contracts should incorporate obligations in relation to sustainability.
Guidance on sustainability
Following the consultation, the JCT published a guidance note "Building a sustainable future together" early in 2009. The guidance note concluded that there is scope for the introduction of sustainability provisions in contract documents on a limited scale and highlighted, amongst other points, how crucial the client's commitment is to the process and the need to involve the supply chain early on to achieve sustainability in relation to the design process as well as in construction practices.
Sustainability clauses in construction contracts
Revision 2 of the JCT 2005 suite of Contracts includes new sustainability provisions. In the Design and Build Contract, these are to be found in the Schedule of Supplemental Provisions, the terms of which will apply unless the contract specifically excludes them. The principal clauses provide for the contractor to be encouraged to suggest economically viable amendments to the works, to improve environmental performance either in relation to the construction process or of the completed development. In addition, there should be disclosure of information by the contractor regarding the environmental impact of the supply and use of materials and goods which it selects.
The objective of the new sustainability clauses produced by the JCT along with guidance is not to inflict an inflexible regime upon parties, but to provide a framework within which sustainability issues can be addressed in the contract. Whilst the inclusion of sustainability wording can be viewed as a positive step towards addressing "green" issues, it is difficult to see how these provisions will be effective or indeed, enforceable. In particular, use of vague language such as "the Contractor is encouraged to suggest" does not impose a contractual obligation which would be easy to enforce and is likely to be open to subjective interpretation. There are no clear remedies for lack of compliance.
How effective will these new provisions be?
The combination of the positioning of the wording in a schedule to, rather than in the body of the contract, the language used and the absence of clear remedies in the event of default suggest that the provisions will be relatively easy for contractors to ignore. That said, the JCT acknowledges that in addition to the contract conditions, the contract documentation may address the issue of sustainability. The response to the consultation highlighted a preference from the industry for inclusion of detailed requirements in the project specification rather than the contract. In recent years, various employers have been importing sustainability provisions into their contracts by imposing an obligation on the contractor to comply with the employer's corporate policies. These policies often include extensive sustainability provisions. Notwithstanding the introduction of the new clauses in the JCT contracts, it is likely that the contract documentation will continue to play the key role in incorporating sustainability provisions.
Employers and developers who wish to include obligations in relation to sustainability in their contracts will need to ensure that there are clear contractual provisions and obligations in the contract documentation, as the JCT wording alone will not be sufficient. From a contractor's perspective, consideration must be given to potential discrepancies that can arise with the incorporation of the employer's corporate policies – the sustainability provisions should be reviewed to ensure that they do not contradict the other contract documents.
A good start
Despite reservations regarding the effectiveness of the provisions, the JCT should be applauded for recognising the requirement for sustainability wording and for launching the consultation and implementing the findings. Revision 2 could be the first step in a larger move towards more concrete sustainability obligations.
Click here to access the guidance note "Building a sustainable future together".