If commercial real estate development is like piecing together a jigsaw puzzle, then ensuring that a scheme is as sustainable as possible is like working on one without even having seen what the final image should look like, says Ben Cross, development director at General Projects.
The B-Corp-registered company sees the planet as its “most important client”, Cross told the audience at EG’s ESG Breakfast Briefing. It has committed to be operationally net-zero carbon by 2030, to use only renewable sources, and to retrofit first. Hitting these marks takes more innovation and enthusiasm than an old-fashioned approach, Cross said. But the alternative is no longer thinkable.
“No matter what role you play in making that picture, if you are afraid of doing the more difficult jigsaw puzzle, then that is the issue that we have got to overcome,” he said. “You need to care about the planet and not just about the bottom line.”
One of the hurdles is the issue of insurance for schemes that centre on low-carbon materials – principally timber. Cross and fellow guests joined a panel to discuss the shifting attitude of insurance companies when it comes to sustainable schemes. Along with panellists from the worlds of architecture, engineering and insurance brokerage, Cross explored barriers and what the real estate community can do to lower them.
Time to talk
Timber could hold multiple solutions to real estate’s sustainability conundrums, said Gareth Atkinson, a structural engineer and director at Civic Engineers.
“We are engineers – we love getting our calculators out, we know how to calculate the embodied carbon of materials and we know that using timber has a far lower embodied carbon than using steel and concrete,” Atkinson said.
“But the other aspect about using timber is that growing timber takes CO2 out of the atmosphere. So when building out of timber, we have got a way to grow forests, use that timber to build our cities of the future, and actually help take CO2 out of the atmosphere. It’s really important as a material for us to be considering it more.”
But the perceived risks are great, Atkinson acknowledged, not least due to a renewed focus on fire safety after the Grenfell Tower tragedy in 2017. “We have always been used to designing and building in timber but the scrutiny now is massive,” he adds.
Scrutiny is no bad thing, added Stephanie Crombie, senior associate and head of sustainability at architecture firm Morrow + Lorraine, which specialises in commercial retrofits – but the challenge is the availability of information around schemes that will put developers and insurers alike at ease.
“The two major issues around timber construction are fire and water, and we have quite a risk-adverse market at the moment within insurance,” Crombie said. “What we are missing are the case studies for how we can address and have a consistent approach to designing buildings in such a way that everybody – insurance, clients, architects – are comfortable that we are addressing what are perceived to be the big risks.”
That calls for more collaboration and conversation, too. “I’ve never as an architect presented to an insurer,” Crombie said. “And that conversation across that barrier is really important to addressing what are the perceived risks of building in low-carbon materials.”
System breakdown
Dominic Lion is a former construction professional who is now director and head of sustainable real estate at insurance broker Gallagher. A specialist in handling insurance for mass timber schemes, Lion says insurance can be “a positive facilitator for change”. “There is a long way to go in that respect,” he admitted. “But I’m a glass-half-full kind of guy.”
Lion too knows that conversations have been the exception rather than the norm. “I have got an architect friend who flippantly tells me I am the only insurance guy he has ever met in 25 years – that’s shocking,” he said.
“But we are on a massive U-turn. Insurers are rightly, for the first time in 15 years, asking a heck of a lot of questions. It is frustrating, I get that, especially when it hasn’t been happening for the past 15 years. But, frankly, it is what needs to happen, because without that communication, it breeds mistrust. And what has that mistrust led to over the years? It has led to a lot of claims, insurers losing money and a complete breakdown in the system.”
But engagement between the two sides are picking up pace. Lion pointed to six major or hybrid timber schemes he is advising on. One has spades in the ground, the other five are at least six months away from that stage, while some are still 18-24 months away. All are already “fully engaged” with insurers, Lion said.
“Insurers rightly are incredibly nervous,” he added. “Some of them unfortunately are just saying, ‘There’s still enough steel and concrete out there for me to insure, why would I bother to insure a timber scheme?’ But there are pockets of expertise, pockets of passion, pockets of enthusiasm within insurance.
“And it is about finding those and working with those, educating them, bringing them on the journey and creating this sea change of culture.”
Finding those pockets has been a crucial lesson for Cross and colleagues at General Projects.
“Where we have been historically is you take a scheme to stage three design, you tender it, you get a contractor on board, you complete stage four, you start to move on to site – and at that point in time, you have got sufficient information to take it through the regulatory approvals process, you think, ‘It’s probably worth getting some insurance’, and that is too late,” Cross said. “That is far, far too late. You need to be thinking about it in stage two and you need to be bringing people together and having a collective, collaborative conversation about how it can be better.”
And with that, another piece of the puzzle hopefully falls into place.
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