First it was Coldplay, then David Cameron, now even parts of the gas-guzzling construction industry are trying to go ‘carbon neutral'. Katie Puckett reports on how mounting pressure from clients, the government, investors and consumers is forcing the industry to face up to its eco sins. Illustration by Michelle Thompson

When David Cameron straddled his mountain bike and decreed that Conservative central office would from now on be "carbon neutral", it was a canny piece of political positioning. Climate change and the need to reduce our fuel use - or go carbon neutral, to use the fashionable term - has risen to unprecedented prominence in the public consciousness, and it's not only Cameron who has chosen to tap into this. Chancellor Gordon Brown made the environment a central political battleground in last week's Budget when he raised the climate change levy, a tax on the most polluting companies. And although Tony Blair may have stopped short of attaching solar panels to the roof of Number 10, there is nonetheless a concerted push throughout government to reduce carbon emissions from public and private buildings.

Given that the built environment is responsible for 41% of carbon dioxide emissions - more than either transport or industry - it is unsurprising that it is a prime target for attention. The construction industry is coming under pressure from all sides - government, investors and clients - to green up its act. And, slowly but surely, it is responding. Firms such as Bovis Lend Lease, Amec and Overbury are winning environmental brownie points by minimising their own offices' impact on the atmosphere, and are beginning to differentiate themselves in a heavily polluting industry by offering their clients the chance to do the same.

"It's the future and we all have to do it," says Rob Watts, project director at developer Stanhope. "Whether developments are sustainable will be a high-profile issue. There'll be a business benefit and people who aren't taking it seriously will not be seen as the leaders in their field. It's essential to businesses going forwards."

One of the most irresistible pressures on construction firms is the Building Regulations. There has been a slew of new rules, many of them, such as the revised Part L, intended to minimise construction's environmental impact. There are also the ODPM's proposed Code for Sustainable Homes and the European Union Energy Performance of Buildings Directive, which will introduce environmental performance ratings for buildings, much in the same way as fridges. Garry Felgate, a director of The Carbon Trust, the government-funded champion of low energy, believes these will have a marked effect on the way consumers perceive buildings. "When you walk in you'll know how good the product is. I don't know anyone who buys a B-class fridge any more."

Credit: Michelle Thompson

Influential clients

The government is deploying not only its regulatory clout but also its spending power. Perhaps predictably, the Department for Environment, Food and Rural Affairs signed up to a six-month project with The Carbon Trust to make Overbury's recent refurbishment of its offices as energy efficient, and therefore

as non-polluting, as possible. The trust has also worked with the Treasury, the ODPM, the Ministry of Defence, the NHS and a number of councils. All homes constructed under the Housing Corporation's £3.9bn building programme must have a minimum EcoHomes rating of "very good", in the hope that by creating such a large market for alternative sustainable building products it can drive the costs down and make them a possible option for other developments.

In the past 18 months, interest from clients has surpassed even my expectations

Riccardo Rizzi, environment manager, Overbury

Clients are also having to impress consumers with conspicuously green credentials - another pressure on developers trying to attract occupiers. Leading the charge are companies such as Shell or BP whose businesses have a high environmental impact and are adopting visible carbon neutral policies as a tactic for offsetting negative PR. But other corporate giants such as HSBC, Barclays, Clifford Chance and HBOS have also spotted the trend and are competing to offer the most eco-friendly image to consumers.

Improving the environmental performance of buildings and the process by which they are built is therefore a concern for developers, and major contractors are having to follow suit. Stanhope's Watts says it will be actively seeking partners that can demonstrate a low-energy approach. "We're looking for like-minded contractors. As part of our contracts, we'll be insisting that people implement sustainable policies. If they're unwilling, we would not want to work with them." Nobody has refused so far, he adds.

… and influencing clients

Although all construction firms will sooner or later have to show they are saving energy, a few have already heeded Felgate's advice to treat it as "an opportunity rather than a threat" and are actively marketing their own environmental credentials and planning how to help clients improve theirs.

At Bovis Lend Lease, for example, environment manager Andrew Kinsey says that it started looking at offering a more eco-conscious service a few years ago. "None of our competitors had done much and we thought we could use it as a marketing tool," says Kinsey. "Now a lot of our clients are asking about environmental issues. Land Securities, Stanhope, British Land and government clients in particular are asking some detailed questions."

In the first instance, a growing number of construction firms are turning to "offsetting", where you pay for other activities that absorb the equivalent of the carbon dioxide you produce, such as tree planting or sponsoring clean energy projects in the developing world. David Cameron has gone down the tree-planting route, E E as did rock luminaries Coldplay to soak up the CO2 emitted in the production and distribution of their album.

The CarbonNeutral Company is one firm that specialises in helping firms atone for their carbon sins and its client list in construction includes Berkeley Homes, Bovis Lend Lease, Morgan Sindall and its fit-out arm Overbury.

It emphasises, though, that companies should reduce their energy use in the first instance, and then pay to offset the remainder. Kinsey says that Bovis has spent £150,000 on low-energy lighting in its head office, and that it encourages staff to use public transport rather than driving. It also paid the CarbonNeutral Company £15,000 to reforest 647 ha of woodland at Carrifan, Scotland. It now plans to offer the offsetting service to clients.

Overbury has also spent £9000 neutralising its emissions with a tree planting project in Staffordshire and it offers to calculate the amount of fuel used and waste produced on its fit-out developments so clients can do the same. Riccardo Rizzi, Overbury's environment manager, says the level of interest is rising quickly. "Ten years ago, most people didn't know what climate change was. Considering how complex the issues are, the industry, business and government have moved really far in a very short time. In the past 18 months, interest from clients has surpassed even my expectations."

It doesn’t cost, it pays – that’s certainly been the case for us

Andy King, sustainability manager, Amec

Every link in the chain

Rizzi admits that merely offsetting emissions doesn't really tackle the issue. "Going carbon neutral is simple to do and simple to understand. We use that as a bit of a leader. To capture the long-term good you have to look at the supply chain. But there are so many people involved, plus logistical pressures, budgetary pressures, time pressures, which make it really hard."

This is the crux of the issue. Until saving energy and reducing waste is spread throughout the supply chain, the industry's environmental impact will remain high. After all, as Stephen Hine, head of international relations at the Ethical Investment Research Service, points out: "A lot of construction companies are almost virtual, they don't own their own plant, use their own workers or design the buildings. They need to be speaking to their suppliers or they can't implement any improvements."

Perhaps it is this internal pressure that will produce the greatest transformation in the construction industry, as even small firms find they must fall into environmental step with government and PR-conscious corporations. Amec, like Overbury and Bovis, is pressing its suppliers to cut their energy use, adding an environmental criterion to subcontractor performance evaluations and developing BS 8555, which is a British Standard for environmental performance that is aimed at smaller firms, and which provides a bite-sized route towards the international standard ISO 14001.

All the firms are keen to point out that acting to reduce emissions does not have to be a big cost. Rizzi says Overbury's comparatively advanced low-energy fit-out for Defra's offices added only 2% because it was planned well in advance. Modus Interiors has tried to incorporate more sustainable methods into its office fit-outs and managing director Toby Benzecry says that although more efficient air-conditioning systems will cost more, specifying carpet tiles from a carbon neutral company such as Interface need not do. And, he adds: "If you're considering re-using materials, the costs can work out less."

Other firms cite similar examples. Since October, Stanhope has been routing deliveries for four of its London sites through a consolidation centre it set up in partnership with Bovis. The developer claims this has halved journeys to site and almost doubled the instance of deliveries being right first time. And Andy King, Amec's sustainability manager, says it has cut its landfill bill from £7m in 2003 to £1m by reducing waste on site and recycling. "It doesn't cost, it pays - that's certainly been the case for us."

There is, he adds, a less easily quantifiable benefit to the bottom line, and one that other firms may in the end find the most persuasive: "It's a bit more difficult, but we do find it helps you win work with clients if you've got a good environmental record."

Credit: Michelle Thompson

Put your money where your mouth is

It’s not only the government and clients that are putting pressure on construction firms to go green. Investment is also becoming a more eco-conscious business and financial institutions are starting to look at the social and environmental risks of where they put their money. In 2003, the European Social Investment Forum, which promotes socially responsible policies among investors, found that almost £200bn worth of UK equities were subject to scrutiny from fund managers on socially responsible criteria. Stephen Hine, head of international relations at the Ethical Investment Research Service, says:“They’re looking in particular for property firms to be developing buildings that are carbon neutral, not using excess water, with good health and safety in the supply chain. That’s going to put pressure on contractors.”

According to a survey commissioned last month by the UK Social Investment Forum, nearly nine out of 10 pension funds now believe that effective environmental management has an impact on shareholder value, the fastest growing area of concern. “I can imagine that a number of construction companies will be asked by investors what they are doing about climate change,” says Hine.