Published: 12. October 2023,
By Trackunit
I’ve started to notice something when I go out and about in North America attending conferences, talking to customers and just through generally observing what is going on. I say this because what I’m seeing is not something I would have predicted three years ago.
There has been a distinct change in the way construction is viewing sustainability. At first glance, it’s tempting to put this down to regulatory and societal impacts and it’s absolutely correct to say that these shouldn’t be ignored, but focusing too much on those factors can overshadow the incredible work that is happening within the industry and which is subsequently shaping ESG policies.
For want of a better term, it feels like legacy, or the desire to create a legacy, that is playing its part. There are some serious initiatives going on that not only put companies in line with the UN’s 2030 targets on emissions, but go harder and deeper.
Take Bechtel, the Virginia-headquartered engineering and construction company. Its top leadership can regularly be heard espousing strong sustainability policies including this address to the United States Energy Association by CFO Catherine Hunt Ryan who said projects were designed on “the application of circular principles…on a cradle-to-cradle approach and not a cradle-to-grave approach to avoid landfill where possible…that could result in new environmental and reputational issues in the industry,” adding Bechtel wanted to make cleaner life-cycle solutions through “the entire value chain.”
The USD 20 billion/year company has put those energy transition principles in to practice via, for example, its Bechtel Equipment Operations division which has piloted hybrid equipment since 2022. The Hybrid D6XE Dozer uses up to 29% less fuel, according to Bechtel’s website, with an immediate affect on CO2 emissions.
Bechtel wants to cut its emissions by 25% in the next two years — circa five years before the UN targets come into play — and it means business. One part of that is a specific target to cut idling time from an average 50% on their machines (and 60% on excavators) to 30% over the same period. These are not fluffy generalisations that are being thrown out there to test waters. They are hard, corporate KPIs and Bechtel is actively pursuing them.
While Bechtel may be leading the game here, it is not an outlier. I was speaking at the AAMP Leadership Summit of small contractors in 2022 when the mediator stopped me and asked the room for a show of hands on who already had an ESG program in place. Nearly all the audience raised their hands — probably 95% of the room — and these were not just the big players.
This shift perhaps reflects a desire to be remembered for making a difference at work and in the wider world. The trend in many ways mirrors some of the changes in the automotive industry. I attended a conference a few years back where the VP of a major car manufacturer laughed off the threat of electric-car manufacturer Tesla. A few years later, Tesla has absolutely swept the board to have a net worth of USD 800 billion, according to Macrotrends and sold 1.31 million cars in 2022. The Tesla Model 3 went from selling 1,770 in 2017 to 121,610 in 2021 in the US.
That’s what seems to be happening in construction. Companies are looking at the UN 2030 targets on emissions and deciding we can do better. If anything, this has gathered pace over the last six months and it’s across the board with OEMs, rentals and contractors working with hard targets for reductions in their emissions.
If you take it at face value, trying to reach the 2030 targets by 2025/26 seems crazy. And yet, it almost feels as if the competitive streak that typically characterizes the market environment on pricing, quality of service and all the usual metrics has somehow translated into the environmental sphere.
It seems to be apolitical, it most definitely is transformative and it could dramatically change the construction landscape in North America over the next few years.
It’s been a fairly consistent critique of North American construction over the past decade that it could learn a lot from Northern Europe and Scandinavia in particular on putting in place a stronger, more effective sustainability policy. But I’m not sure that’s true anymore. And if that ‘competitive’ environmental push continues on current trajectories, this can only be a good thing.
It adds up to a heady cocktail as the regulatory and societal impacts I alluded to up top also play powerfully into this phenomenon. Take, for example, Gen Z weighing in with their demands — spoken and unspoken — that companies should either embrace good sustainability practice or look elsewhere for hires because if you’re not aligned with them on their views, you can forget about bringing them on board.
Place that kind of unequivocal stance in an environment where labor shortages are prevalent and where construction has a current shortfall of 650,000 workers, according to CNBC, that’s a challenge. And that’s even more of a problem if you’re trying to attract the kind of workers that might help catalyze and change the makeup of the workforce to create the diverse work environment that fully reflects society.
Regulation too is of course playing a part in this and California has been particularly prominent in spearheading that top-down push with its emissions reporting rules that came into force earlier this year setting a standard for others to aspire to.
But, notwithstanding these powerful dynamics, I really do believe it is the fundamental change in direction initiated by the industry itself that will emerge as the decisive factor in changing the environmental landscape over the next few years.
And with construction reported to be responsible for 38% of all global emissions, such a change, it could be argued, comes not before the nick of time too, it’s fair to say.
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