Construction must embrace BIM and innovation to demonstrate credible sustainability strategies and strong environmental practices, argues Irina Leigh, production innovation architect at L&Q and workstream lead at COLAB
COP26 was a catalyst for many major construction businesses committing to achieving net zero emissions within the next few decades. Linked to that, ESG loans are becoming increasingly common as banks respond to shareholders’ desire for financial institutions to demonstrate their commitment to promote positive change. But is our industry equipped to measure progress against the targets and criteria being set as part of these loan deals?
Whether we like it or not, the construction industry has a poor reputation when it comes to collecting, processing and managing its data. The Hackitt Report outlined lack of data management as one of the deep flaws in the industry and a key issue underpinning system failure. It’s no wonder that lenders are sceptical about the ability of many construction firms to deliver targets on ESG loans. Especially when we’re dealing with increasingly complex datasets which need to be captured, monitored and assessed.
Companies with credible sustainability strategies and strong environmental practices have a lower credit risk. Therefore, firms that are able to secure ‘green’ loans can get better terms, with interest rate discounts usually around 5-10 basis points. With many lenders targeting businesses able to make these ESG commitments, firms struggling to define their own targets may find it increasingly hard to secure finance.
The industry needs to embrace BIM and technological innovation
To overcome this challenge, the industry needs to embrace BIM and technological innovation. The COLAB DfMA Toolkit – developed by L&Q alongside our partners Virtual Viewing, HTA Design and HawkinsBrown – is part of our response to this challenge.
Our DfMA toolkit includes a Business Intelligence platform, which allows clients to monitor, analyse and evaluate datasets in an interactive way. It facilitates data transparency and tracking, enabling stakeholders to compare their data with industry benchmarks, as well as their own track record. This is really the starting point for developing a Golden Thread of information that can be followed through the whole life of a building.
The increased popularity of ESG loans, and the scrutiny that comes along with that, has highlighted the importance of having third-party verification services in place to assess whether agreed targets are being met. Currently it is up to the borrowers to make sure they not only set the right targets but that they also rigorously measure progress against these. With a platform like the Business Intelligence tool and the right initial set-up, companies can navigate their way to capturing the relevant metrics. They’ll gain a better understanding of gaps in their data, enabling them to make the right strategic decisions around sustainability, data management, investment and innovation.
Climate change is the most urgent challenge of our time
In a climate-conscious, ESG-led era, it is critical for construction businesses to be ambitious and address the most urgent challenge of our time, climate change. Drastically reducing our carbon emissions will require an immense effort to innovate and collaborate across value chains. Doing so successfully involves not only sound sustainability strategies and stretching net zero targets but also the right data management platform to inform key decisions at a strategic level with maximum impact. Our DfMA Toolkit and Business Intelligence platform shows how this can be done and paves the way to building more sustainable homes which align with the world’s net zero agenda.
The DfMA Toolkit is an Innovate UK (UKRI) funded project. This funding is from the Transforming Construction Industrial Strategy Challenge Fund, part of the Construction Sector Deal.