We would recommend that Authorities proactively engage at an early stage and then on an ongoing basis with the key stakeholders: both public and private.
Public sector stakeholders are likely to include Scottish Government, both from a policy perspective and if funding external to the Authority is to be sought.
From a private sector perspective, Project Co (both the investors and the MSA provider), the funders and the funders technical adviser and the FM provider will all be relevant. It will be useful to establish that the processing of the Change so as to facilitate the pathway to NZ is a common goal and to be clear as to any areas of difference on the part of key private sector stakeholders.
In particular, given the importance of the effect of Changes that assist in achieving NZ targets, it will be useful to understand the stakeholders' own policies and goals in this area in the context of their Environmental, Social and Governance responsibilities. ESG has gained increasing attention over the past few years, with many institutional investors investing only in those companies that provide ESG performance reporting. Considerations around ESG are relevant to investors, consumers and employees, and has become a key topic of discussion by directors at board level. There is evidence that institutional investors are moving on from the baseline of traditional financial targets to include, for example, mapping the transitions from fossil fuels, supply chain overhauls, investing in upskilling or assessing and committing to decarbonisation targets etc. Authorities should leverage their long-term relationships with their respective Project Cos and their investors and start the strategic dialogue with questions of ambition of how investors can help fund, manage and reduce the impact of their environmental footprint. To support this approach, we have had informal feedback to the effect that lenders, with whom Changes to effect NZ goals was discussed, were very positive given their desire to improve the NZ performance of their portfolio.
Other areas to be discussed at an early stage are the processes around the implementation of the Change, for example, ensuring that there is a common understanding as to the commercial effect of the Change Procedure in the Project Agreement, the extent of due diligence required (both legal and technical), the procurement arrangements for effecting the Change and the target costs and timescales.
While there might not be a contractual obligation to require Project Co to engage in respect to the identification and delivery of any NZ opportunities (though some FM SLSs do contain some helpful provisions in relation to energy management), the collective responsibility for NZ, subject to the Change Provisions, should ensure a collaborative, pragmatic and positive outcome for Project Cos and their investors, lenders and supply chain.
Thus, throughout the process it is important to keep open the dialogue with the private sector parties and a collaborative approach is essential. Contact should be at the right levels for relevant issues encompassing both practical and/or technical matters and any resolution of any commercial issues.
It is important from the outset to ensure that there is a common understanding of the required NZ objectives and the likely timescales involved, including as to the implications of the contract as a result of energy efficiency retrofitting work or NZ-related contract Changes.