Tag Archives: development

LGC appoints Ryder to oversee high-rise in Newcastle’s new science hub – ‘Silicon Square’?

17 Mar

Legal and General Capital, which bought a £350million stake in Newcastle’s exciting new science and technology development hub in June 2016, has announced award-winning international firm Ryder Architecture to oversee the first of its grade A office buildings at Newcastle Science Central.

Newcastle Science Central is a site linked both geographically and academically with Newcastle University, which is situated on the 24-acre plot. Commercial space so far is restricted to the 30 businesses operating from the Core, which include among their number a nation-leading computer science institute. Businesses have been selected on the basis of their “positive impact economically, environmentally and socially.”

Also in the pipeline is Newcastle Laboratory, 76,000 sq ft of commercial lab space with supporting office accommodation for science-based companies, which is scheduled to open spring 2018. It will add to the ripe environment for invention fostered by Newcastle University centres such as the National Institute for Smart Data Innovation, and the National Innovation Centre for Ageing.

More vital office space will be provided through a development partnership between LGC, Newcastle City Council and Newcastle University, which aims to raise 100,000 sq ft of Grade A office space, then a second office adding another 100,000 sq ft to the site. A spokesperson envisioned it becoming the ‘gateway’ to the site, and the area enclosed by the three buildings will become a public square, providing a hub and meeting place for workers, residents and visitors to congregate.

Richard Wise, partner at Ryder, said: “Building A promises to deliver a high quality, timeless piece of architecture which will provide unique, much needed flexible office space on one of the most prominent gateway sites in Newcastle.  It will set the tone for the subsequent developments.  Ryder is delighted to have this opportunity to build upon the success enjoyed to date on Science Central.”

Ryder Architecture, alongside Aura, have together been appointed as the design team to deliver the Newcastle Laboratory on Newcastle Science Central. This state-of the art building will provide over 70,000 sq ft of specialist facilities for the flourishing life sciences and healthcare sector in the region, offering high quality, incubation and grow-on space to meet the needs of innovative businesses in this sector. Construction is due to start on site in Spring 2017 and the facility is due to open in Spring/Summer 2018.

You can Insure Against Environmental Damages like BP’s $53.8billion, but it May Not be Enough

9 Oct

CSR: Can Seriously Reveal structural weaknesses in your organisation.

Here’s how to avoid forking out for civil and, worse, government-ordered damages for unwitting environmental harm.

Investors are increasingly concerned about environmental factors, as pensions titan Legal and General demonstrated this week, by publicly announcing its desire to support the move to more sustainable and efficient forms of energy generation and usage.

In a public statement, the Head of Sustainability at L&GIM Meryam Omi said: “Tackling climate change is not about losing financial value. It is about helping to build a much healthier energy system. If tackled holistically and strategically, our investments would benefit. We need to embrace the transition, and this has to be a front of house issue…

As long-term investor, we regularly engage with policymakers and company executives, to embrace changes that are coming – with this will come a better society, greater economic efficiency and ultimately better corporate growth and investment opportunities.”

The recent 98% shareholder endorsement for BP to adopt a resolution incorporating more sustainable strategies into its decision-making again shows the investment community’s growing concern over CSR issues. The resolution was tabled by the ‘Aiming for As’ group of institutional investors, so-called after the ‘A’ rating they campaign for blue-chip UK companies to receive from the CSR ratings body, the CDP (formerly the Carbon Disclosure Project).

The ‘Aiming for As’ group comprises the Local Authority Pension Fund Forum (LAPFF), a number of local authority pension schemes and various Church of England-run funds. Their assets under management total at around £170billion. The final 98% vote, though, numbered many other institutional investors, including but not limited to: UK local authority schemes for Greater Manchester, West Midlands, West Yorkshire; the Church Commissioners for England and the Central Finance Board of the Methodist Church; and other European pension funds, such as Ilmarinen and Swedish buffer funds AP2, AP3 and AP4.

As a result, the company’s annual reporting will now be significantly expanded, with enhanced transparency around operational emissions management; asset portfolio resilience against 2035 scenarios; low carbon energy R&D and investment; executive incentivisation during the low carbon transition; and public policy lobbying on climate change issues. This landmark event was followed by similar levels of support for ‘climate change’ resolutions at Shell and Norway’s Statoil.

It is clearer than the cloud of exhaust-fuel smog that is every London day that social and environmental responsibility are now factors companies need to do more than pay lip service to. Will this mean a continuing move towards energy-efficient, renewable alternatives? LGIM recently delivered a convincing and informative presentation on this.

But even if we eventually transition to an energy generation system which makes no use of fossil fuels at all, countless manufacturing companies will still run the risk of hazardous chemicals leaking into the local ecosystem; and causing damage both to the environment, and to the company’s capital reserves when they are charged for the cleanup.

Environmentally Unsound Investment has Hidden Penalties

The BP case aptly demonstrated how insufficient risk monitoring over environmentally problematic activities can have disastrous financial consequences, – on top of the ecological damage. Attorney general of the USA, Loretta Lynch, announced this week that BP would have to pay a further $20billion in fines, bringing its total pre-tax charge to a whopping $53.8billion.

This augments the prior sum of $43.8billion allocated to pay criminal and civil penalties, and the cleanup costs which are mandatory under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA). This means that the EPA is licensed to collect damages to restore sites contaminated with hazardous substances, as well as more loosely defined “pollutants or contaminants”.

The EPA, or Environmental Protection Agency, has recourse to two methods: it can compel the responsible parties to clean up the sites themselves; or the EPA can perform the restoration, and charge the responsible parties by referring the case to the US Department of Justice which can take out a lawsuit. The DOJ is brought in only when the incident involves pollutants which are not strictly speaking ‘hazardous’.

Obviously in the BP case there was a combination of both ‘hazardous’ and ‘ordinary’ contamination. The associated lawsuit was settled this July, 2015, with the final sum of a further £13.2billion (around $20billion) in damages divided between: $5.5billion in civil payments; $4.9billion in state claims payments; and $7.3billion in natural resource damages. This will be paid gradually into a ‘superfund’ held in trust by the US government to fund environmental cleanups.

Legal treatment of contamination cases in the UK is similarly punitive in its treatment of environmental polluters. Under the environmental damage regulations (EDR), which came into force in 2009, the company responsible must meet the cost of: repairing the environmental damage; compensation where the affected site may never recover, and the business may be required to provide further beneficial improvements at the site or elsewhere; cost of compensating interim losses until the affected area fully recovers (e.g. lost breeding grounds and the like).[1] This added to the provisions of the 1991 Water Resources Act, which allowed the UK’s Environment Agency to mandate a cleanup when contaminants entered the water supply, or charge the responsible party for the EA to deal with it.

Your Insurance Will Cover it Though – Right?

Partly because of the scale of damages businesses are now liable for, the insurance cover they are recommended to take out is a notch above the standard Legal Liability Insurance (Public Liability), where the policy will not apply if there is a known risk of contamination; or, to use legal parlance, where the risk would be reasonably obvious to a reasonable person. The ‘rule of thumb’, as Q.C. David Hart explains[2], is that civil ‘public nuisance’ cases are covered by Public Liability policies. However, when the Environment Agency oversees a cleanup operation and sends the liable company the bill, courts have ruled – and set an as yet unchallenged legal precedent – that this is classed as a ‘debt under statute,’ not civil damages as such, and Public Liability policies do not cover it.

Most lenders now make having a comprehensive insurance contract a condition which is written into the loan covenant. Ben Richardson, in ‘Mandating Liability Insurance,’ describes how “in practice, to strengthen their protection against liability claims, banks have increasingly demanded liability insurance as a condition of financing, creating in effect a mandatory insurance situation for borrowers engaged in environmentally problematic activities.”[3] In fact, insurers have an important role to play in pricing the risk of potentially pollutive activities: the changing cost of Environmental Liability Insurance premiums reflects both the demand for this type of policy, and the weight of claims made as insurers adjust their future income streams to meet their liabilities.

Can you Fully Protect Yourself from such Claims?

Environmental Liability Insurance policies, which include cover for gradual pollution (rather than one-off incidents), are being taken up by a wide cross-section of businesses. UK law holds that if the party originally responsible for the pollution cannot be identified, the owner of the property can be held liable for pollution present on the site. For this reason, EIL is almost obligatory for brownfield site developers, as well as general property developers and Real Estate Investment Trusts (REITs).

Even some of the wealthier agricultural landowners are taking up the policies, to protect themselves from any incidence of prior or subsequent groundwater contamination, or chemical damage to the local ecosystem. In fact, specialist EIL provider CLA, part of the Country Land and Business Association, [4]caters for farmers at risk of EA-mandated charges.

Specialist insurance provider Rowland & Hames[5] offers bigger policies, on a sliding scale to an incident limit of £5 million, with a policy aggregate of £10 million and an excess of £25,000. However, you need to specify if you want the ‘optional extras’ such as: including cover for third-party contractors; first party business interruption losses resulting from a pollution condition; and transportation related environmental liabilities.

Of course, if you want to avoid a disaster on the BP scale, it is wise also to take measures to manage the risk internally, and be honest in auditing your effectiveness on this account.

 

 

[1] http://www.darwinclayton.co.uk/news/environmental-liability-insurance

[2] http://www.1cor.com/1155/records/1207/dhenviroinsblm.pdf

[3] Ben J. Richardson, Mandating Liability Insurance, http://www.scholarship.law.duke.edu/cgi/viewcontent.cgi?article=11380context-delpf

[4] http://www.clainsurance.co.uk/wp-content/uploads/EIL.pdf

[5] http://www.rowlands-hames.co.uk/environmental-liability

fishingasmask

Trialling new remedies for water pollution