17 January, 2023
Following the Energy Strategy released in 2022, which was aimed at accelerating the use of renewables such as new nuclear, hydrogen and wind power to secure clean and affordable energy for the long run; renewable energy for 2023 seems to be continuing in an upward swing. In 2022 we saw energy prices rise to prices higher than we have ever recorded previously and with the war in Ukraine causing turbulent energy security, the demand for clean and secure energy has never been more important. The construction industry is working towards more energy-efficient practices and a net zero future, which is to continue throughout 2023. Many businesses are putting new sustainability measures in place to protect the long-term future of both the planet and the construction industry. Using renewable energies is one way the industry can become more sustainable, instead of relying on the depleting reserves of fossil fuels.
As businesses become increasingly accountable for their use of renewable energy, they also become more accountable for the sustainability of their supply chains. In the construction industry, clients and their stakeholders have their own reputation to maintain and values to uphold. They are becoming more conscious of sustainability and the importance of protecting the environment and the welfare of people. Construction companies' reputation and revenue are increasingly becoming reliant on sustainable business practices. Businesses are, therefore, having to re-think the way they approach their supply chains.
Sustainability in supply chains is the recognition by businesses that they have a duty, both moral and legal, to act ethically and responsibly to take steps to reduce the negative social and environmental impacts they may have, and where possible have a positive impact. In so doing they will protect their reputation and their profitability.
Increasingly, stakeholders including customers, clients, investors, employees, and communities expect businesses to adopt more sustainable practices and demonstrate what they are doing to protect the triple bottom line of profits, people and planet. It's no longer seen that businesses which prioritise sustainability are going the extra mile - it has become an expectation. Failing to address these issues can present risk to the business from a reduced ability to win work, or by breaking laws that govern issues such as pollution prevention or modern slavery.
We are increasingly experiencing these expectations being imposed on a contractual basis or being asked to draft such requirements into construction contracts.
The construction industry is facing increasing pressure to position sustainability at the heart of the supply chain management. It is the responsibility of the business owner to reduce the negative environmental and social impact that the business and supply chain relationships can have. The construction industry has a huge impact on the environment, so it has an important role to play in global efforts to combat climate change and protect the planet.
Businesses should look at the different stages and operations involved in the processes the business has and consider the environmental, social, and economic impact of each of those stages. Once a better idea is established of the stages that affect the sustainability of the supply chain, an action plan can be made from this. This should include talking to and understanding what the clients want so this can addressed and demonstrations provided as to how these goals can be achieved. An example of this would be for businesses to look at existing contracts in place with existing suppliers and determine whether those suppliers do in fact contribute to the sustainability of the business. If the answer is no, it would be then to determine whether those suppliers should be exchanged for new ones and whether the existing contracts need to be terminated.
Our Construction team at Forbes Solicitors are experts in dealing with construction projects from start to finish. They are also experts in drafting contracts and can assist with the renegotiation of contracts with suppliers or provide advice on how termination can occur between construction companies and suppliers.
For more information contact John Pickervance in our Construction & Infrastructure department via email or phone on 0333 207 1134. Alternatively send any question through to Forbes Solicitors via our online Contact Form.
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