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Blogs 30 apr 2024

Risk and Reward – Untangling Barriers to Circular Building

Madaster was founded on the belief that enabling materials and components to retain their identity once they become part of the built environment, unlocks their onward value and opportunities for reuse. That said, second use of materials can come with higher levels of associated risk.

This was the key focus for the first Madaster UK Network event. Developers and manufactures came together with insurance, material passport and sustainability experts to explore the opportunities and risks associated with circular approaches to building and construction, as well as the tools and techniques to help mitigate these risks now and in the future.  

The discussion around circular construction fell into two broad territories – the repurposing of materials and components extracted by ‘urban mining’ from existing buildings, and ‘closed loop systems’ where materials and products are designed for disassembly and reuse. Both approaches are key to delivering a circular built environment and each have barriers and risk considerations. Several themes emerged:  

Unlocking value 

“If you can measure it, you can price it”.  

Uncertainty around how best to quantify residual value in materials remains a barrier. While there is a need for more consistent metrics to price and insure materials for reuse, there is a clear opportunity for commercial gains when developers and building owners treat products and materials as assets. Two examples of project cost savings where shared, one where the final costs for repurposing existing steel came out lower than recycling fees for the same material, another where savings were made on over all demolition costs by working with the contractor to identify opportunities for material recovery, and the budget was adjusted accordingly. 

Visibility of data 

“We don’t yet have a good understanding of the material make-up of our built environment in the UK”.  

Although data sets are increasingly being generated for new development, they are managed by multiple project stakeholders and delivery partners, as such it can be a challenge to access, consolidate and share the data needed to properly assess opportunities for material reuse. Material passports have an important role to play in tackling this barrier – they are digital data sets that contain key information about origin, composition and environmental impact of materials and components that is useful to assess value, risk and suitability for onward use. When used across the supply and development chain, passports enable data transparency and provide a tool for collaborative-decision making.   

Standardisation and legislation  

“A number of fairly weighty players are sending out tentative legislation”.  

It is still early days for standardisation of metrics and targets, and this can be a challenge. While carbon metrics are currently more top-of-mind for many, a better carbon score does not necessarily make a material or product suitable for deconstruction and reuse. Circular Economy metrics have some catching up to do. That said, there are standards, and potentially legislative measures, in the pipeline from the European Commission with the EU Green New Deal and EU Taxonomy already laying out target areas and action plans. In the UK, Building Regulations, public sector procurement policies and Government waste management regulations are all evolving to incorporate circular principles. Circular Economy statements are now required in London to get planning for significant schemes, though not yet mandated across the rest of the UK. It was also noted that product ‘take back’ legislation is likely on the horizon, with the Welsh Assembly are already exploring compulsory schemes for manufacturers. 

Complexity and perceived risk  

“With innovation comes risk”.  

Most circular interventions represent a deviation from the norm, whether it’s the use of a reclaimed material or a promise of disassembly and relocation. There is relatively low appetite for risk in construction and mainstream insurance services due to low profit margins and a number of high value insurance claims. Risk can be perceived as high, given challenges noted previously around metrics and data and development chains are complex, with separate insurance pots and lack of collaboration between parties. ‘Alternative Risk Transfer’ was highlighted as an insurance solution used in industries and sectors that struggle to access risk cover from the traditional insurance market.  

New ways of working 

“We need a mindset shift across the supply and delivery chain”.  

Achieving circular buildings requires collaboration across parties who may not previously have met to work towards a common goal. Stakeholder engagement and alignment workshops are needed up front to educate and identify new ways of working. In some cases, new project team roles, such as a technical project manager or new team structures, may be needed to enable different project delivery models. As with any innovative or emerging practices, bringing in solution providers early, that would usually be engaged in later in the process, can open doors that might otherwise feel shut. 

In summary  

While there are still hurdles to jump, there are big opportunities for everyone involved in delivering and managing buildings. From the European examples shared, we know that it is possible to achieve high levels of circularity in buildings when there is the desire and collaboration. With increasing adoption of material passports, cross-sector collaboration, evolving legislation, bespoke insurance products, and increasing numbers of positive pilot projects and case studies as proof of concept, momentum is gathering. It’s time to get on board.  

This roundtable was hosted by Madaster, in partnership with Lignum Risk Partners Ltd, and attended by invited industry representatives and members of the Madaster Network.  

The Madaster platform enables you to create and manage material passports effortlessly and unlock environmental and financial insights about your assets. However, we know as a data platform we are only part of the solution, as such, the Madaster Network supports knowledge sharing and peer support, though a programme of events for our partners and invited guests. 

To find out more about upcoming activities, our platform or network, or arrange a no-obligation demonstrations or CPD session please reach out below.  

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