Feature: Cost consultant role is evolving to support developers’ ESG aspirations

By Sean Clemons, Managing Director, MGAC | RLF 

The way we think about cost efficiency in real estate and construction has been rapidly changing in recent years, as businesses adjust to the demands of an ever more environmentally conscious world. Reports by the UK Green Building Council have revealed that around 10% of the UK’s CO2 emissions are directly linked to the construction industry, with another 28% linked to building operations.

A cost consultant traditionally helps a client from proposal stage, assessing the feasibility of their project, continuing to manage and advise on capital costs through from tender to construction and completion. Nowadays, a far more complex role is needed, as buildings adhere to greener and more exacting energy efficiency standards, and wider ESG obligations are placed on developers by their funders and end users.

However, viability is no longer just about cost but needs to consider the ‘triple bottom line’ of profit, people, and planet which is the basis of most corporate ESG policies. Many institutions, investment funds, and pension funds have clear ESG requirements to enable funding, and developers are realising that they will be unable to develop if they fail to satisfy these requirements. The requirement currently receiving the greatest focus is that new development should be Net Zero Carbon (NZC).

Major commercial developers are assessing their existing portfolios and how they can be ‘Paris Aligned’ to keep global warming at 1.5%. They are setting their own ESG objectives for NZC and focusing on how to provide buildings that meet the end users’ own corporate commitments for NZC. All of which are driving the need to look beyond cost and focus also on carbon.

The focus is now turning to embedded carbon, which is the amount of carbon generated to produce a building. This includes emissions created during extraction, manufacturing, transportation, and installation of every component of a building. Within a typical new build residential development, this can account for around 50% of the carbon emissions over the life of a building. When factoring the cost of replacing components over the life of a building and its eventual demolition, embedded carbon can rise to almost 70% of the whole life carbon for a new build office or apartment block.

In terms of risk management, mitigating the effects of climate change and reducing the construction industry impact on the environment is as crucial as reducing the financial cost of buildings. Once an integrated approach is adopted, it becomes clear these considerations are highly correlated, since high-performance buildings are not only energy efficient and eco-friendly, but also more financially viable.

Adopting more passive solutions, such as daylighting and natural ventilation, may require more space and cost initially, but when modelled over a building’s life cost significantly less, radically reduce carbon emissions, and improve the health and wellbeing of building users.

The carbon challenge is momentous, especially for the construction industry. The cost consultant’s role could be pivotal. Who better is there to count carbon?