A clause that incentivises building contractors to propose 'Green Modifications' to project works, which will benefit the Employer, the overall Project and the environment into the future.Skip to clause
Why use this?
Construction contracts do not typically allow or incentivise Contractors to provide a more sustainable construction solution (i.e. using recycled materials, more energy efficient completed projects, less waste), as the reduction of costs of construction is paramount and the long term savings and impact on the environment is not a consideration for the construction contract.
These clauses seek to tie the incentives of providing a greener solution to long term reduced energy costs of the completed project and to green financing.
How it promotes a net zero future
The proposed clause will allow a contractor to propose a green variation to the project works, thus reducing the impact on climate change and the environment in the long term. Employers will benefit from reduced long term energy consumption/emissions/financing costs, as may be applicable.
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Green Modification means a change to the requirements of the deed or the Works which:
(a) increases the resilience of the completed Project to the impacts of climate change (including gradual onset and extreme weather events);
(b) improves the energy efficiency of the completed Project from the existing obligations in the deed (including through a design change or change to construction materials);
(c) increases protection of the natural environment by:
(i) increasing protection of, or enhancing, existing ecological features on the site;
(ii) increasing protection of wildlife and wildlife habitats on or impacted by the site or the Project;
(d) increases the utilisation of local suppliers;
(e) increases green travel to and from the site;
(f) otherwise assists the Employer in meeting the Green Objectives.
Green Objectives means the following shared objectives:
(a) to carry out the Project responsibly, sustainably, ethically and in accordance with all applicable laws and good business practice;
(b) in relation to the construction phase and the undertaking of the construction activities:
(A) the use of sustainable materials;
(B) the use of materials which result in lower emissions of greenhouse gasses throughout the supply chain; and
(C) the protection of the natural environment;
(A) emissions of greenhouse gases;
(B) the use of environmentally harmful materials;
(C) the use of water;
(D) the generation of waste; and
(E) the generation, emission or transmission of pollution (without diminishing any obligation to avoid pollution in particular circumstances);
(c) in relation to the Employer’s circumstances:
(i) maximising the prospect of achieving the Employer’s Net Zero Target;
(ii) ensuring, insofar as is relevant to the matters the subject of this definition, that the terms of [the Employer’s sustainability linked loan/terms of the Green Loan] are complied with and satisfied;
(iii) [the achievement of or improvement to the achievement of sustainability performance targets of the Employer’s sustainability linked loan];
(iv) [the improvement of the Project’s performance under the terms of the [Employer’s Green Loan]]; and
(v) [the prevention of a default under the terms of the Employer’s Green Loan]; or
(d) in relation to the occupation, operation and utilisation of the Project during its operating life:
(i) minimising greenhouse gas emissions;
(ii) maximising energy efficiency; and
(iii) maximising resilience to the impacts of climate change in a concentration pathway RCP8.5 future or other runaway climate change scenario.
- Contractor’s Green Obligations
The Contractor must, to the extent that is reasonably practicable in the circumstances, undertake its obligations under the deed in a manner which maximises the prospect of achieving the Green Objectives.
- Green Modification
2.1 Green Modification request by Contractor
The Contractor may propose a Green Modification to the Works by giving a written notice to the Employer and Superintendent, setting out:
(a) the proposed Green Modification;
(b) the reason for the proposed Green Modification, including how the Green Modification will assist in delivering to the Green Objectives;
(c) the time within, and the manner in which, the Contractor proposes to implement the proposed Green Modification;
(d) the effect the proposed Green Modification with have on the construction program (including any extension of time required to the Date for Practical Completion);
(e) any Approvals required to implement the proposed Green Modification, and the effect of the proposed Green Modification on any existing Approvals;
(f) the effects the proposed Green Modification will have on the Contractor’s ability to satisfy its obligations under the deed (including any warranties given by the Contractor under the deed and in respect of work health and safety on the site);
(g) the cost impacts to the Employer arising from the Green Modification, including but not limited to:
(i) cost savings or increases to the Contract Sum;
(ii) costs savings to the ongoing operations and maintenance of the completed Project (including reduced energy costs arising from the Green Modification);
(iii) reduced [costs of greenhouse gas emissions obligations/carbon price etc];
(iv) reduced financing costs of the Project; and
(h) any other relevant information reasonably required by the Employer to assess the proposed Green Modification,
(i) (Green Modification Notice).
2.2 Employer’s Green Modification response
Within  business days of receipt of a Green Modification Notice, the Employer must issue a notice to the Contractor which:
(a) approves the proposed Green Modification (either in whole or part), in which case clause [2.3] will apply to those approved parts;
(b) subject to clause [2.4(a)], rejects the proposed Green Modification (either in whole or part), acting reasonably and setting out reasons, in which case clause [2.4(b)] will apply to those rejected parts; or
(c) requests further information from the Contractor to enable the Employer to properly assess the Proposed Green Modification on any part of the Green Modification which has not been approved or rejected, in which case clause [3.5] will apply.
2.3 Approved Green Modification
If the Employer has approved the proposed Green Modification pursuant to clause [2.2(a)]:
(a) the Superintendent must within  business days of the approval, issue a notice to the Contractor which sets out:
(i) where the Green Modification results in an increase to the Contractor’s design or construction costs, the revised Contract Sum valued as a variation in accordance with clause [#] (but not exceeding the amount nominated pursuant to clause [2.1(g)(i)]); and
(ii) any extension of time required to the Date for Practical Completion (but not exceeding the duration of the extension of time nominated pursuant to clause [2.1(d)]); and
(b) the Contractor may proceed with implementing the approved Green Modification.
2.4 Rejected Green Modification
(a) The Employer must not reject a Green Modification (in whole or part) under clause [2.3(b)], where the Project is not meeting the Green Objectives and the Green Modification will assist in meeting those objectives; and
(i) the delay to the completion of the Project arising from the proposed Green Modification would be not be material having regard to the Project’s overall objectives; or
(ii) the cost of the implementing the Green Modification is [not significantly detrimental to the financial viability of the Project]. [Drafting note: consider amending the standard for what is unreasonable. For example, perhaps a % threshold increase to project costs.]
(b) If the Employer rejects a proposed Green Modification (in part or whole) under clause 2.2(b) the Contractor may:
(i) amend the Green Modification Notice to address the Employer’s reasons for the rejection, and re-submit the modified Green Modification Notice pursuant to clause [2.2], in which case the process for approving or rejecting the Green Modification Notice in clauses [2.2] to [2.4] will reapply; or
(ii) issue a notice of dispute in accordance with clause [#].