Good environmental practices can help property owners gain better access to project financing, but that is not the only reason to create a sustainability strategy. It is also now imperative for property firms to meet their commitments to stakeholders.


Tony Collman is underwriting leader of specialty lines business at RSA Insurance

As an insurer with our own clear climate and sustainability targets, including goals for low-carbon underwriting and investments, we want to work with clients whose ethos aligns with our own on improving sustainability.

Within property development, there are many technologies and adaptations that can be used during the building process to reduce emissions. Our clients are looking at various ways to make the construction phase more sustainable, and to produce buildings that are more sustainable in use.

They are finding ways to reduce the carbon footprint of the production and transportation of materials, using new technologies in the construction of buildings, or adding emissions-reducing elements to existing buildings, among other things. For example, a recent project in London employed modern methods of construction (MMC) to yield an estimated 90% less waste and 60% fewer truck journeys in comparison with conventional construction.

Of course, there are uncertainties with any new technology, where the overall performance across the full lifecycle is not yet proven. There simply won’t be data about long-term performance.

As a result, when we work alongside clients striving to reach sustainability goals and emissions reduction targets, we aim to ensure we have good lines of communication. We want our risk engineering and underwriting specialists to be involved as early as possible to help enable innovation. This gives us the best risk information and data to allow us to underwrite appropriately.

There are uncertainties with any new technology, where long-term performance is not yet proven

Early involvement also gives us the opportunity to guide our clients on how to manage and mitigate any increased risks appropriately, helping to ensure that the finished asset is insurable.

For example, concrete has a large carbon footprint. The manufacture of cement, the key ingredient of concrete, was thought to have contributed about 8% of the world’s total carbon dioxide emissions in 2022.

As a result, some construction companies have begun to use recycled concrete, which has been shown to reduce the carbon footprint by about 60%. But while recycling is clearly beneficial for reducing carbon dioxide emissions, it brings unknowns around risk factors. The material might be weaker than new concrete, for example. Recycled concrete is also believed to absorb more water, which may reduce strength and quality. It may be suitable only for non-structural elements while testing continues.

Another low-carbon material is cross-laminated timber (CLT), a form of engineered wood. CLT can be sourced from sustainably managed forests and its raw material captures and isolates carbon dioxide, helping to reduce the carbon footprint of a building. The thermal properties of CLT can also help to reduce a building’s energy demands once in use. There is, however, only a relatively short history of CLT losses for insurers to look back on.

Building design can also be employed to make properties more sustainable. For example, green walls on the outside of buildings can improve local air quality, boost biodiversity and bring thermal benefits. But they also pose risks to structures. Green walls retain water, for example, meaning buildings might never completely dry out after water penetration. This could potentially be problematic for the integrity of both external and internal walls. Similarly, fire risk is a concern because planting systems often incorporate a lot of plastic – and where plants dry out and die due to poor maintenance, they can become combustible.

Blue roofs, which capture rainwater for non-potable use, also have big environmental benefits as well as risks, including the potential for leaks and overflows during storms.

When looking at risks, underwriters typically like to have many years’ worth of performance data to examine and extrapolate from. In the case of new technology, however, this historical loss information is not available.

We aim, therefore, to be involved in discussions as early as possible, which allows us to design insurance coverage that enables clients to continue innovating and meet sustainability targets – in concert with our own.