Climate Contract Playbook Edition 3
184
[Mary’s clause]
The Origin Story
Child’s name
Mary’s clause
Full name
JCT Energy Efficiency and Environmental Obligations
Practice Area / Sector
Construction
The standard JCT suite of contracts do not include environmental standards. Further they do not provide a remedy for the employer if energy efficiency targets are missed.
Issue
Amendments to the JCT standard Design and Build documents to make energy efficiency part of Practical Completion.
Solution
The built environment contributes around 40% of the UK’s total carbon footprint 107 The more energy efficient the buildings the more carbon that is saved and the more future proof the investment. The JCT suite of contracts are used in a large proportion of the building industry. Amendments to the JCT contracts are common and normal practice for employers. The clause will ensure new and refurbished buildings hit desired energy efficiency requirements. A more energy efficient building should have a lower carbon footprint and be a more resilient long-term asset for the developer or funder. It should also be more valuable. 108
Context
Impact
The key stakeholders that you think need to be engaged to deliver this Impact 1. The Joint Contracts Tribunal 2. RIBA and RICS
3. Developers 4. Contractors 5. Precedent and know how providers 6. Professional support lawyers 7. Private practice firms
Stakeholders
The proposed amendments will mean that a contractor will not be able to achieve Practical Completion without hitting the energy efficiency obligations. This puts energy efficiency front and centre. If the required standards are not achieved, then the contractor would have to retrofit the building until they are satisfied as there are no liquidated damages in lieu. Lenders are providing products which provide access to discounted rates for energy efficient property projects . Therefore, these Lenders and their covenants should be aligned with this clause. The drafting team are aware of a similar clause being used on funded projects 109 where energy efficiency is a core requirement of the employer.
Application
107 https://www.ukgbc.org/climate-change/ 108 https://www.rics.org/globalassets/rics-website/media/knowledge/research/insights/energy-efficiency-and-residential-values.pdf 109 https://www.lloydsbank.com/business/commercial-banking/clean-growth-financing-initiative.asp
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