Carbon reporting – why construction contracts have become more complex than ever

News Article

Last summer, the UK Government brought in measures that required Government departments and their subsidiaries or offshoot agencies to only procure large contracts from firms that report and record Scope Three emissions.

However, the issue is that these Scope Three emissions are usually generated by the supply chain itself, and the impact is already felt by small to medium-sized construction companies.

On top of the fact that Scope Three emissions are generated by bringing in goods and services from outside the country, the definition of Scope Three emissions is wide-ranging.

Emissions from various factors, including those generated to transport, manufacture, and dispose of materials and tools, all fall under the remit of Scope Three.

Adam Davis, a Director with Palmers an Head of the firm’s Construction Law team, said: “The current supply chain issues are complex, with multiple causes all contributing to a perfect storm of disruption.”

The Office for National Statistics (ONS) report on stock and supply chain issues in the UK from Quarter One to Quarter Four 2021 found that, overall, the construction industry has seen “fluctuations in stock levels since Q4 2019 as a direct result of increasing difficulty in getting products”.

Adam continued: “Many small and medium-sized construction companies are currently facing uncertainties in their ability to finish projects because of delays further down the supply chain.

“In real terms, this uncertainty means that at any point in the construction process, individual elements could be delayed for reasons outside of any involved parties’ control.”

Given the current demands already being placed on the supply chain affecting construction companies, the movement to using firms that adhere to tight Scope Three might create situations that grind construction sites to a halt.

This is one of the many reasons to seek legal advice when it comes to construction contracts and the importance of creating bespoke contracts to deal with specific terms.

For help and support with putting in place robust construction contracts, please get in touch with us.