Mitigating Climate Risk in Construction Projects

November 01, 2026

Thomson Reuters Practical Law: The Journal published this bylined article written by Larry Borda and William J. Tinsley, Jr. on Nov. 1, 2026.

Extreme weather events affecting construction projects continue to increase in number and severity. Climate-related conditions, including intense heat and shoreline erosion, have also increased. These circumstances have raised questions about the resilience of projects to climate risks and exposures both during and after construction.

Standard design development and construction approaches do not fully address climate concerns because industry practices typically prioritize scheduling pressures, short-term budgets, and baseline requirements for legal compliance over long-term project performance. These approaches can result in significant climate-related gaps in a project’s development. Additionally, building codes do not effectively address climate concerns because they tend to be backward-looking, drawing on past experience to establish minimum design standards and construction requirements, and do not evolve quickly. Although climate projections focus on future events, relying on trends, forecasts, and predictive modeling, they do not necessarily establish adequate design and construction strategies that address climate concerns.

These gaps are further complicated by the competing interests of the project parties. For example:

Owners want environmentally resilient structures without undue additional expense.
Contractors seek to avoid cost escalation, schedule disruption, and extended liability due to climate impacts.
Design professionals must balance the owner’s guidance on project objectives and compliance with codes, ethics, and the standard of care, while avoiding longer-term design liabilities.
Suppliers seek to limit extended exposure for materials and equipment designed to meet warranty requirements and not future conditions.

This article focuses on how owners can identify and allocate climate risks in private commercial construction projects. It outlines industry reactions to climate and weather-related events and how they affect the planning, design, and construction of private commercial buildings, and addresses project planning, contract terms, and insurance coverage.

(For the complete version of this resource, see Mitigating Climate Impacts on Construction Projects on Practical Law.)

Evolving Climate-Related Construction Standards and Guidance

The construction industry has been focused on reducing environmental impacts for several decades. Because the industry is a significant waste contributor and energy consumer, industry organizations have developed standards for energy efficiency, including:

The Leadership in Energy and Environmental Design (LEED) certification program, which was developed by the US Green Building Council to promote sustainability in building design and construction.
The Green Building Initiative’s Green Globes program, which evaluates the sustainability, health, wellness, and resilience of commercial buildings.

Additionally, some states, including California, Florida, and Texas, have issued regulations on energy efficiency and emissions for buildings.

While these efficiency, emissions, and waste-reduction strategies continue to evolve, an emerging concern is the increasing frequency of severe weather events and their impact on design and construction. Industry and professional associations have responded with updated standards and guidance. For example:

The ASCE/SEI 7-22 Minimum Design Loads and Associated Criteria for Buildings and Other Structures, from the American Society of Civil Engineers (ASCE), identifies tornado-resistant design, 500-year flooding, and sea-level rise criteria, as well as new snow-load modeling and data requirements for environmental hazards.
The 2024 International Building Code, from the International Code Council, includes new tornado-load provisions, updates to wind, earthquake, and snow loads and design rain-load criteria, and new wind-resistance requirements for certain roofing.

With these and other new standards and guidance, as well as the added climate-related design ethics rules from the American Institute of Architects (AIA), the standard of care for design professionals is evolving. This standard of care increasingly requires design professionals to address climate issues and anticipate future environmental conditions when developing designs, and may expand the design professionals’ potential liability to owners. (See The Design Professional’s Standard of Care below.)

Climate-Focused Project Planning

To mitigate climate risk, owners should begin developing a project strategy with their design professionals, owner’s representatives, or other program planners at an early stage of the project.

Site Assessment

A key initial step is a site assessment. For projects following the LEED v5 green building standard, a climate resilience assessment is mandatory. If there is any concern about locating a project in an area susceptible to recent extreme weather events, the site assessment should begin with an evaluation of the following:

100-year storm and flood investigations, and other historical weather, wind, and flood events, including extreme heat conditions, relative humidity, and moisture levels.
Wildfire risks.
Coastal and river proximity.
Site topography features, such as elevation and sloping.
Drought probability and water resource availability.

Additional Climate-Related Due Diligence

In the initial planning phase, owners should conduct due diligence, including:

Identifying the project’s useful life and comparing it with available climate data for a corresponding period of time.
Investigating the design professional’s experience working on similar projects and in similar locations.
Researching technologies that are available to withstand expected climate exposures.
Examining reporting requirements related to building performance, including energy efficiency and emissions standards.
Engaging climate consultants, as appropriate, to establish project goals, requirements, and performance criteria.

As due diligence progresses, the findings should be incorporated into the project program and used to guide the owner in choosing the project team, delivery method, and pricing structure.

Allocating Climate Risk with Design Professionals

On a design-bid-build project, there are separate agreements between the owner and its design professional and its contractor. Because the project design largely determines the project’s climate resilience, the owner should address key climate issues and risks when negotiating the owner-design professional agreement and clearly state the required climate considerations in the design professional’s scope of services. The clearer these issues are articulated, the better they will define the design professional’s roles and responsibilities.

Merely requiring the design to comply with building codes is not enough to protect the owner and the project from climate risk. Building codes vary widely on addressing climate risk. Also, building codes establish a baseline but are backward-looking based on historical data, and they are not consistently and timely updated.

Blanket requirements to comply with all applicable laws and regulations will likely be equally insufficient to achieve the owner’s climate-related objectives, particularly if those laws and regulations do not detail climate risk mitigation requirements. While the design professional may face exposure for a negligence claim if it fails to comply with these types of requirements, the owner will be left with both a dispute and a project that does not meet its needs.

Instead of generic building code or legal compliance mandates, the owner should consider retaining a climate consultant to develop climate projections focusing on future events and relying on trends, forecasts, and predictive modeling. The owner can also have the climate consultant or design professional evaluate applicable building codes, laws, and regulations, including any updates, and then assess whether compliance with these codes, laws, and regulations will satisfy the project’s life cycle and the owner’s climate risk tolerance. Once those assessments are complete, the owner should:

Detail the scope of the assessments in the design professional agreement.
Require that the findings from the assessments be addressed by the project design while maintaining alignment with the owner’s program. If properly developed, the owner’s program should include life expectancy, budget, and other owner requirements for the project, such as:
- sustainability measures; and
- the ability to retrofit the project for climate risk mitigation technologies that are not presently required, available, or financially viable.

General references to addressing climate concerns in a project design do not adequately identify the design professional’s obligations. Instead, the owner should develop climate-related program requirements and reflect them in the design professional’s scope of services. The owner should also detail its climate concerns and desired resilience, ideally with the assistance of a climate consultant. This approach reduces the risks of receiving a design that does not meet the owner’s needs, while providing clarity on the design professional’s responsibility for meeting these needs under its standard of care.

The Design Professional’s Standard of Care

A design professional’s legal exposure and professional liability insurance coverage largely turn on whether the design professional has met the standard of care for performance. The standard of care, often stated in the owner-design professional agreement, benchmarks the design professional’s obligations to the owner.

As generally recognized, the standard of care for design professionals is that level of skill and care ordinarily used by members of the profession performing under similar circumstances, in the same locale and at the same time as the project. For example, the ConsensusDocs owner-design professional agreement outlines the required standard of care as:

Providing the architectural and engineering services required by the owner as stated in the owner’s program and other attached project data.
Performing the basic and additional services consistent with the standard of professional care and skill on a project of a similar nature during the time when those services are provided.

This standard of care is consistent with custom and practice in the construction industry and professional liability insurance requirements. Because this standard of care is tied to the scope of services, it is also influenced by the extent to which the climate-focused services are included in the agreement and how precisely those services and other performance criteria are stated. This approach:

Requires much less reliance on case law, which may not consistently necessitate anticipating and planning for climate events and their impacts on the owner and third parties.
Avoids tying the design professional’s obligations solely to what is shown in existing building codes and weather, storm, and flood records.

As climate data becomes more widely available and evolves, it may further inform the standard of care for design professionals. However, a design professional’s performance is evaluated under the standard of care applicable when the services are performed. As a result, for current engagements, the standard of care applied in evaluating claims against a design professional will likely be based on what a reasonable professional should have anticipated at the time of service.

Anticipating the Design Professional’s Position in Negotiations

In response to the owner’s climate-related requests, the design professional may seek to limit its responsibility by:

Confirming and listing the most current versions of applicable building codes in the agreement.
Limiting the application of any emerging standards and guidance to its services (for example, ASCE’s Policy Statement 360 — Climate Change (2024), which requires design approaches to address climate change and reduce project vulnerability).
Requiring the owner to represent that all owner-provided climate information and research is accurate, and to provide all relevant data.
Informing the owner of climate risks based on the site, program, and selected materials and stating those risks in the agreement.
Identifying the cost of alternative approaches that would increase or decrease climate exposure for the owner’s selection.
Seeking permission to evaluate, at the owner’s expense, the budget implications of addressing 200-, 250-, and, if appropriate, 500-year storms.
Adding a limitation of liability capped at:
- the design professional’s fee for its services; or
- available insurance coverage.
Requiring the owner to indemnify the design professional for third-party claims unless and until there is a legal determination of the design professional’s negligence.
Disclaiming responsibility for:
- climate and extreme weather consequences from owner-selected materials and equipment, including incompatibility;
- a product’s failure to perform as represented by the manufacturer;
- owner-furnished climate information;
- future design performance surpassing identified requirements;
- warranties exceeding the standard of care; and
- reliance on the design professional’s duties beyond the owner-design professional agreement.

The owner should anticipate and address these positions based on the circumstances of the project and its risk tolerance. It should confirm that professional liability insurance is in place and enforceable consistent with the design professional’s scope of services.

Allocating Climate Risk in Construction Agreements

Similar to design professional engagements, owner-contractor agreements should address climate-related responsibilities and the climate-specific elements of the project design. For example:

The scope of work should:
- identify sustainability elements, where appropriate, such as construction activity pollution mitigation and indoor air quality management during construction;
- specify document collection for reporting; and
- identify all climate-related requirements in the construction agreement, plans, and specifications, without qualification.
The contractor should represent its knowledge and experience in performing the stated scope of work.
If building and occupancy permits require proof of climate-based measures or emissions, the agreement should define the party responsible for documenting and reporting this information to the relevant regulatory authorities.
The parties should tailor standard force majeure provisions to address the specifics of the contractor’s scope of work.
The agreement should incorporate a no-damages-for-delay provision to protect the owner from liability to the contractor for at least anticipated weather-related project schedule impacts. Typically, this provision makes an extension of time the sole remedy in cases where the contractor is delayed by the included weather-related events.
The contractor’s obligation to indemnify the owner should cover losses due to the contractor’s failure to follow specified or governmentally mandated climate performance and mitigation requirements, whether they are in the construction agreement, plans, and specifications or required under applicable law.
If climate-resilient or energy-efficient materials and equipment are selected by the owner and obtained through the contractor, all related subcontractor and supplier warranties should be issued in the owner’s name or be readily transferable to the owner.

(For the complete version of this resource, which includes more on a contractor’s scope of work, see Mitigating Climate Impacts on Construction Projects on Practical Law.)

Force Majeure Provisions

Force majeure provisions in the construction agreement should be drafted with careful consideration of the foreseeable weather conditions for the project’s area, season, and nature of the work being performed. Because not all standard industry forms use the term force majeure, any force majeure or comparable provision allowing for schedule relief should specify that the qualifying weather conditions must be those atypical for the project location or season. For example:

AIA Contract Documents require adverse weather claims to be documented with data showing that the conditions that impacted the schedule were abnormal for that time and not foreseeable.
ConsensusDocs allow schedule relief for unanticipated transportation delays or for adverse weather conditions that were not reasonably anticipated.
The Design-Build Institute of America incorporates language regarding adverse weather conditions not reasonably anticipated.

The parties should exclude from the force majeure provision anticipated weather conditions at the project location, such as heat, snow, cold, and rain conditions based on available climate records. The parties may address schedule relief for anticipated weather conditions in other sections of the agreement by:

Allowing temporary work suspensions for extreme heat days where worker safety might be compromised.
Specifying an anticipated number of weather-related delays in the agreement and the project schedule.

Indemnification Provisions

Parties to construction agreements typically use indemnification provisions to shift risk. For climate-related impacts, the owner may seek indemnification where the contractor fails to:

Comply with the agreement’s climate-related requirements, including requirements for specified building moisture controls, heat-resilient materials, and wind and storm protection measures.
Provide planned mitigation measures, such as protecting materials and incorporating flood controls.

If these services are part of the project design and the contractor’s scope of work, the owner should reference them in the indemnification provision. If the owner supplies site information about the project, such as climate data, that proves to be incomplete or inadequate, and the contractor suffers damages, the contractor could seek relief under an indemnification provision addressing owner-furnished information. Before providing any climate data, the owner should verify that it is relevant, accurate, and complete.

Current standard industry form contracts do not include climate and extreme weather terminology within the scope of indemnification. If these forms are used, they should be modified accordingly. Additionally, indemnification provisions, including those relating to climate events, must always be drafted consistently with applicable anti-indemnity laws.

Indemnification is generally unavailable from a design professional, including for climate-related liabilities, largely because the design professional’s professional liability insurance will not cover a contractual risk beyond the design professional’s errors and omissions under the applicable standard of care. Some states statutorily prohibit design professionals from seeking indemnification for design errors or negligence.

Warranties

Warranties should be developed with the project’s anticipated climate exposures in mind. Warranties are typically included in the construction agreement or come with the materials and equipment selected for the project. When addressing warranty-related issues in the project’s design and construction agreements, the parties should be mindful that:

Design professional warranties beyond the standard of care are generally uninsurable and are generally resisted by design professionals.
Longer-term warranties may provide greater protection to the owner against climate risk, including latent defects arising from climate exposures. Materials or equipment specifically incorporated for climate resilience should offer longer-term warranties for added risk protection. They should be issued in the owner’s name or readily transferred to the owner by the contractor or subcontractor.
In most circumstances, warranties require maintenance after project completion to avoid waiver. The maintenance plan should incorporate the climate resilience principles defined in the project agreements.

Insurance Protections for Climate-Related Claims

Apart from indemnification and claims for breach of contract or negligence for failures to meet the contract terms or other performance requirements, insurance is the primary risk mitigation tool used in most projects. To address climate-related losses, the owner must conduct due diligence on available insurance coverage, including available policy types, such as builder’s risk and commercial general liability (CGL) insurance.

Depending on the location of the project, certain coverages may be cost prohibitive or not practically available, such as in flood zones. In some circumstances, flood insurance is only available with documented research on flood events and design accommodations to address those risks. Specific coverages may be needed depending on the anticipated losses. For example, mold-specific insurance may become more necessary in climates facing increased flooding, heat, and humidity. Owners should consult experienced insurance brokers to explore the availability and pricing of coverages early in project planning to confirm adequate coverage is in place and to determine any unique claim reporting requirements.

(For the complete version of this resource, which includes information on builder’s risk, CGL, and professional liability insurance, see Mitigating Climate Impacts on Construction Projects on Practical Law.)