Clyde & Co Resilience Climate Change Risk Liability Report



As the number of climate-related incidents increases, so too will the need to recover, repair and rebuild responsibly. Moreover, as urbanisation gathers pace, keeping the pressures climate change poses front of mind is paramount when developing new cities. From the continued growth of existing mega-cities such as Tokyo and London, to the explosion of population in new urban centres in previously rural areas, particularly in China, designing-out risk as much as possible has to be a central focus. Reducing energy usage or focussing on renewable energy sources such as solar panels mounted on new buildings is one way; designing resilient infrastructure is another. This creates huge opportunities as well as challenges. For construction companies, it represents a chance to take more of a consultancy role, enabling them to add value and increase revenue streams – an enticing prospect in a sector currently operating on the slimmest of margins. Taking on such an innovative role, would, however require significant investment in R&D. Given the construction industry’s profitability pressures, Liz Jenkins’ view is that: “Public-private partnerships and joint ventures are probably the way forward to get this new infrastructure designed and developed. It’s all about the public and private sectors coming together: and that means governments, local authorities, constructors, designers, insurers, the tech sector and a range of other specialists.”

“Such a collaborative approach should give contractors comfort because the risks will be shared. This includes working with major tech companies who have the bandwidth on their balance sheets to test out ground-breaking techniques using sophisticated data analytics. Insurers can also deploy cutting edge methods such as risk modelling to bring innovative new products to the mix and the public sector should benefit from the increased economic growth and productivity that a more resilient world should deliver.” Co-operative working relationships like this will require the public sector, the owner or the developer to move away from a traditional fixed price turnkey contract. Instead there could be contracts where the parties involved agree on the outputs required, with risks and rewards shared, with all parties incentivised to deliver the best possible solution. There are huge opportunities, as well as challenges, for the construction industry arising from climate change. To address these, the public and private sectors will need to work together. Public-private partnerships and joint ventures will have to come to the fore.

- Liz Jenkins, Partner, Clyde & Co, London

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