AS well as the ‘embodied carbon’ of buildings, which are the emissions associated with their overall construction and its supply chain, the built environment also generates emissions from heating, cooling, and lighting systems.
Investors and consumers are voicing concerns about ESG issues, with legislation, regulation, and reporting requirements evolving quickly in many jurisdictions around the world. In the UK, all companies bidding for government contracts worth more than £5m a year must now commit to net zero by 2050, while new proposals in the EU call for the mandatory disclosure of the emissions potential of new buildings over their whole life cycle, effective from 2027 to 2030.
Questions insurers may ask about design and build
- Will the construction company and its design provide services that are significantly environmentally impactful, such as working in a protected area like a wetland?
- Will the project use raw materials that are mined? What other natural resources will it use?
- Where does the company operate? Regulations vary by jurisdiction and the geography of each region presents different challenges and risks.
- What is the company’s ESG policy and how is this overseen, communicated, and implemented?
- What are the reputations of the company’s partners and suppliers?
- What is the insurance loss history of the company, including on similar projects they have undertaken?
- Are standard or tested contracts issued that clearly communicate the requirements and expectations for all parties?
Information from Diego Assef and Glen Mangold from Allianz Global Corporate & Specialty.
