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In her most recent blog, responsible investment analyst Esmé van Herwijnen writes about one of our recent RI initiatives. We engaged with 11 of our holdings in the construction sector to understand how they are managing their approaches to waste, and to use our voice as responsible and sustainable investors to push for better, more sustainable practices in waste management.

Engaging on construction waste

Esmé van Herwijnen Esmé van Herwijnen Responsible Investment Analyst
Engaging on construction waste
Opinion

Engaging on construction waste

Esmé van Herwijnen

Esmé van Herwijnen
Responsible Investment Analyst

In our recent Amity Insight: The Waste Problem, one of the sectors that we looked at was construction, which our research showed was a major contributor to landfill in the UK.

A recent update from the Department for Environment, Food & Rural Affairs (DEFRA) revealed that the UK generated 222.9 million tonnes of waste in 2016, with construction, demolition and excavation generating 61% of total UK waste.

We decided to engage more in depth with 11 of our holdings in the construction sector to understand how they are managing their approaches to waste, and to use our voice as responsible and sustainable investors to push for better, more sustainable practises in waste management.

BEST PRACTICE AROUND LANDFILL DIVERSION

The vast majority of UK property developers, construction companies and house-builders that we own in our portfolios have set ambitious landfill diversion targets and have already met these or are on track to do so. However, very few companies have set targets to address the volumes of waste generated.

 

Recovery rate from non-hazardous construction and demolition waste, UK, 2010-16

 

British Land (Amity UK Fund) and LandSec (Amity Balanced Fund for Charities) illustrate the good practice that is representative of the sector when it comes to landfill diversion. Both companies have set a target to divert 100% of waste from landfill and have so far achieved 99% and 100% respectively. However, as developers and property managers, their waste generation differs considerably in content and management to that of construction waste, where there remains much more of a challenge.  

A key difficulty for developers and house-builders is the monitoring of waste volumes and disposal. Often the responsibility lies with sub-contractors and whilst there appears to be some basic oversight into the types of waste generated, a concern is that there seems to be no proper assurance of what happens to waste once it is diverted from landfill.

Good practice would be for developers to discuss waste management standards with contractor’s right from the start and consequently monitor waste on a regular basis to ensure contractors comply with these expectations. Developers and house-builders could also support contractors by incentivising reduction and circular thinking.

VOLUME IS THE ELEPHANT IN THE ROOM

Whilst applauding the progress on landfill diversion, the overall volume of waste generated needs to reduce. As the construction sector has seen significant growth, both the absolute tonnage of waste and waste per completed project have increased. The sector struggles to set standardised reduction targets for the volumes of waste generated owing to the varying nature of projects and companies.  

Amongst our holdings, we commend Great Portland Estates (Amity UK Fund) for publicly disclosing a target for its new developments. Whilst the company has not reported on progress against the target yet, it aims to limit construction waste (excluding demolition and excavation wastes) per 100m² of Gross Internal Area (GIA) to 7.5m³ (or 6.5 tonnes). Taylor Wimpey (Amity UK Fund and Amity Global Equity Fund for Charities) is another example - they have set a 10% reduction target for construction waste intensity (per 100sqm of completed build). Berkeley Group (Amity UK Fund and Amity Global Equity Fund for Charities) have a goal to reduce absolute volumes of construction waste by 10%.

MOVING TOWARDS A MORE SUSTAINABLE MODEL

Whilst we are encouraged by the progress the sector and the recognition that landfill is no longer a viable option, we believe more is needed to address the overall volume of waste generated in construction projects, especially as waste management is poorly regulated.

We need a more integrated approach and the sector needs to be bolder in its circular thinking. When asked, most of the companies did not see any potential value from waste streams; this needs to change.

The government also highlighted the issue of construction waste in its recently published waste and resource stratey and aims to develop plans to increase resource efficiency and minimise waste in the construction sector. It is also exploring on an extended producer responsibility measure for the sector. We may engage with DEFRA or the Green Construction Board in the future to encourage further focus on this issue.