Posted: 09 Nov. 2021 5 min. read

Delivering Sustainable Capital Projects

Capital projects have a uniquely large impact on climate change. These are long-term projects most commonly involving construction, infrastructure and ongoing asset maintenance and are generally large in scale and cost. The built environment sector alone contributes 45% of UK Greenhouse Gas (GHG) emissions, and so can contribute significantly to achieving our local and global net zero goals. The sector has the capability and mandate to ‘rewrite the future’ of sustainability. 

Our Path to Net Zero team set out their vision for a sustainable capital project, one that embraces Environmental, Social and Governance (ESG) principles to pursue goals for reduced GHG emissions and reduced consumption of finite resources. It is also a vision that creates a positive cultural legacy by encouraging sustainable operations, social change and biodiversity.

The path to net zero

The move towards a clean energy future is under way and is changing how capital projects are delivered. Corporations and governments have made bold commitments to reach net zero: where the amount of GHG emissions going into the atmosphere are balanced by the amount removed from it.

Capital projects have shown how they can help ‘rewrite the future’ with solutions to our climate crisis, but to achieve net zero targets, capital project organisations must adapt. Right now, business enablers and public pressure are converging to motivate change, so the companies that lead on climate action will improve their reputations.

In a new report Delivering Sustainable Capital Projects, we draw on research and insights from across Deloitte, as well as examples from the capital projects industry, to outline the case for change. Our report defines the benefits and characteristics of the Sustainable Capital Project (SCP) Lifecycle, and highlights the exciting potential for making a difference now.

The time to act

We are at a turning point in the climate crisis. The technology and solutions for reducing net zero emissions are now as effective and compelling as the societal and political pressures to act.

Capital projects operate in the industries responsible for the highest levels of waste and emissions, and therefore have a disproportionate ability, opportunity and responsibility to meet local and global sustainability goals.

Some capital project organisations, such as Shell, have begun to declare carbon neutrality goals, but the industry still lacks in changing to achieve net zero. Although commitments have been made, these have been criticised for not delivering big changes now – typically because industries such as oil and gas have historically put carbon at the core of their business.

Countries recovering from the effects of COVID-19 are putting infrastructure investment high on the agenda, with the UK looking to ‘build back better, greener and fairer’. This presents an immediate opportunity to embed sustainability at scale, so now is the time for action.

Transformation helps both planet and business

End-to-end sustainability across the capital project lifecycle can improve top- and bottom-line value, and benefits both employees and society. Sustainable projects can also support positive social and cultural transformation, to improve an organisation’s reputation while still meeting its commercial requirements. And importantly, current talent and future leaders will actively favour organisations with strong environmental and social values.

Capital project organisations that act now to embrace ESG principles will benefit from greater investment, attraction and retention of top talent, and improved credit quality.

The cost of sustainable delivery is lower than ever before meaning that  transformation has become an industry norm rather than a pioneering risk. Regulatory incentives and taxes on pollution from governments also make the commercial argument more compelling.

Practical steps throughout the lifecycle

Capital-intensive organisations must assess both their emissions and appetite for change. Our SCP Lifecycle model helps pinpoint emission hotspots and helps to embed sustainability across project operations. It assists organisations in aligning project design and financing with ESG principles, to drive action on emissions throughout the value chain.

Capital project organisations embracing the SCP Lifecycle will need to change their operating model to see the long-term benefits. In our latest report we explore the practical steps needed for  sustainable delivery: from building sustainability metrics into project reporting, to appointing net zero specialists to governance roles.

Embedding the SCP Lifecycle involves a thorough challenge to traditional methods, to embed sustainable thinking throughout the project, and create lasting change.

How we can help

Deloitte understands the ‘stick or twist’ dilemma that many organisations are now facing. We help clients digest the challenges and get started on their own net zero agendas, identifying ambitious targets across the lifecycle.

With expertise across capital project industries, and experience in designing and managing large capital projects, the Deloitte Capital Programmes team is well-placed to help deliver sustainable capital projects.

Read our full report here and explore our vision for sustainable capital projects.

Contributors:


George Apostolides
Manager
Major Programmes Path to Net Zero
gapostolides@deloitte.co.uk

Susan McDonald
Manager
Net Zero Transformation
susanmcdonald@deloitte.co.uk
 


Miffy Oliver
Senior Consultant
Major Programmes Path to Net Zero
miffyoliver@deloitte.co.uk
 


Guy Harrison
Senior Consultant
Major Programmes Path to Net Zero
gwharrison@deloitte.co.uk

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Get in touch with one of our capital project leaders today:

Marc O'Connor

Marc O'Connor

Partner

Marc leads Deloitte's Capital Projects consulting business globally and the Energy, Resources & Industrials sector in UK Consulting. He is a partner in the Major Programmes business in Human Capital. Marc has 30 years of international experience in management consultancy (15yrs) and before that in the asset/construction industry (15yrs). Marc works with clients to design and deliver business transformation in Energy & Resources (Mining, Oil & Gas, Power, Water, Gas & Renewables) Infrastructure (Rail, Roads & Airports), Telecommunications and Construction.

Devin-Paul O’Brien

Devin-Paul O’Brien

Director

Devin is a Director and the Major Programmes Sustainability and Climate lead in our Human Capital practice. Devin helps clients to design, setup and deliver their major sustainability-related transformations, focused on infrastructure clients in the Oil and Gas, Power and Utility and Transport sectors. He gets particularly enthused about increasing the sustainability of capital projects and construction.