Can we transform the building sector? (part two)

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Can we transform the building sector? (part two)

In part two of his article on transforming the building sector, TURLOUGH GUERIN explores ethics in construction, developments in supply chains and more.

Miss part one of the article? Click here to read it.

Ethics in construction

An ethics conversation was kicked off by a panel of industry company directors. It was recognised that the implications from the banking royal commission (BRC) could well apply to other sectors. This includes building and construction, where recent Opal Tower failings, flammable building cladding and state government streamlining of approval processes were called out in particular as examples of overall governance failures in the construction and building sector in Australia.

The parallel was that common responses to the BRC report indicated that individuals raised concerns but organisations did not respond in a timely way. The BRC quote shared with the panel and participants was that “culture, governance and remuneration all march together”.

Other ethical dilemmas and issues raised included:

  • Fairness was raised as a critical issue to be considered by the construction sector. Organisations need to determine where accountability lies in each particular part of a business or supply chain.
  • More attention will be put onto construction contracts and their fairness and reasonableness to comply. Acciona v. NSW Government is an important case to follow as it raises issues of fairness, equity and probity directly applicable to other construction contracts.
  • Purpose will and is playing an important part in decision making. Future leaders gave their views indicating that a more positive dialogue is needed to address climate change. For example, people do not like being told what not to do and they don’t like nor respond to doom and gloom.

A good question for directors and executives to ask of their organisations is, “is this way of doing business potentially cause harm?” This inevitably leads organisations down a human rights path – considered by the panel and audience to be a useful model/process. Some feedback from non-executive directors in 2018 modern slavery legislation briefing sessions was, “who are we to impose our western values on our suppliers?” This response is not likely to pass the social or community licence test.

A former senior executive from Facebook raised a series of questions about ethics in relation to how our data is used by data collectors. They shared how artificial intelligence (AI) digs for insights into the data. It was acknowledged that social media companies such as Facebook are creating “filter bubbles” that insulate individuals from the wider reality around them.

The implications for buildings is in the challenge to trust, identity, privacy and how building data users need to respect the rights of individuals. In particular, the aggregation of lots of small pieces of data on individuals is likely to pose significant ethical dilemmas in the near future, impacting asset owners, operators and occupiers. It’s a complex issue still very much in the process of being understood.

Creating sustainable places and place management

Mirvac’s ‘This Changes Everything’ plan is a new strategy to drive the business with purpose. Social performance has been integrated into the organisation’s annual report, as has information on the social return on investment. Its latest report identified a saving related to health through their developments of about half a billion dollars. Mirvac’s also using the London Benchmarking Group to measure its community investment in areas such as volunteering and donating.

The organisation’s next challenge is defining what it means to belong. An early definition proposed is, “a life of purpose and meaning, achieving a balance between material needs and relational needs”. The next steps will be to determine measures and KPIs to evaluate how it is achieving this.

Developments in supply chains

The following insights were gleaned from the supply chain workshop. We in the sector should be “seeking truth (about various building products) not trust”. Companies should be clear about motivations in supply chain otherwise efforts can be negated. Companies should also be open enough to consider and address unintended consequences rather than ignoring emerging concerns such as modern slavery.

One key piece of advice provided to businesses is to “stay and play” and work with suppliers rather than cutting them loose when concerns arise. The rationale being that there is no reason for suppliers to change their ways if they are no longer part of an organisation’s supply chain.

Here are some other tips that were shared:

  • Start by looking at what your organisation’s biggest spend areas are.
  • Consider how organisations can be recognised for good procurement.
  • Don’t forget one area at the expense of another, as this negates progress and trust.
  • Some conversations will be required that put price back on the table when negotiating with suppliers.
  • It is important to use the language of the business and not “sustainability speak”.

Key questions raised included:

  • What key signals should we be sending to our supply chains in relation to new laws and changing societal expectations?
  • In relation to supply chains, companies should be considering the cost of not taking action. Are there competitive risks?
  • What could be a role for blockchain and other more specific markers that associate a product to a particular source and allow it to be traced through a supply chain?

No clear direction was provided in this regard for construction at this conference.

Other outcomes and insights

Housing affordability represents an economic opportunity that can no longer be ignored. There is currently a gap for 125,000 affordable private properties in NSW alone (not including social housing) that could have an important impact on the overall economy.

Further, modularised construction is inevitable to address cost, quality and minimise and manage building/supply chain emissions.

Other insights highlighted during the event include:

  • How to sell sustainability: Don’t try and sell the sustainability elements, sell the tangible benefits (or dividends), says GBCA Young Professionals. This applies to many aspects of government programs, including increasing the delivery of net zero energy homes.
  • The circular economy: Australia Post developed Revamp, a network of corporates and NFP to develop solutions on circular economy and social inclusion. UNSW cast a vision of what is possible with micro manufacturing using industrial and consumer waste as inputs.
  • The audience challenged one of the conference panels of construction executives that the sector needs to lift the game so that “what you get (in an as-constructed entity) is what you pay for”.
  • One participant also raised the idea that resilient cities should also look beyond the infrastructure lenses to incorporate a social lens, such as in the creation of jobs, rather than economic return alone.
  • Green Star does not currently require verification of thermal losses.
  • Mirvac’s Marrickville development was discussed. The negative community response resulted in complete redesign, highlighting the importance of systems thinking and of creating real communication/dialogue with the communities from an early stage to ensure buy-in and support.

With the fear of missing out present within the current residential buying market, people don’t really consider quality. This represents an opportunity for the differentiation of great products to ensure homebuyers are making a more informed choice.

Consideration was also given to how best to communicate the sustainability benefits of homes to various audiences. The language most understood by different stakeholders regarding green or sustainable infrastructure (the best understanding being first in each list below), was highlighted:

  • Developers: high performance building → green space → green infrastructure → biodiversity → trees and canopy.
  • Councils: urban forest → canopy → green places → street trees → green infrastructure.
  • Community: nature strip → street trees → biodiversity → urban canopy → mitigation → urban forest → pocket park → heat island.
  • Positive words used by the media: green space → liveability.
  • Negative words used by the media: urban heat → concrete jungle.

Turlough Guerin is a non-executive director on several boards including Bioregional Australia Foundation, a champion of the global One Planet Living framework. He is an advocate for sustainable business, strong and effective climate governance and is a Fellow of the Governance Institute of Australia.


Image: Aleksejs Bergmanis via

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