Climate risk is changing how construction projects are planned and delivered, and how disputes arise when conditions change.
At the 2026 American Arbitration Association® (AAA®) Construction Conference, “Building Resilience: The Future of Construction Disputes and Alternative Dispute Resolution (ADR) in an Ever-Changing World,” panelists examined how climate and environmental, social, and governance (ESG) concerns are affecting construction risk and dispute strategy.
The message for construction teams: Climate risk should be addressed before work begins, when project assumptions are tested and responsibilities are defined.
Climate Risk Is Moving to the Front End of Projects
Climate-related conditions can affect project costs, schedules, and performance long before a claim is filed.
That may require legal, insurance, risk, and engineering teams to work together earlier to identify potential exposure and address it in the contract.
Standard Contract Clauses Need a Closer Look
ESG and climate-related issues may not be addressed through a single dedicated clause. Instead, they often depend on standard provisions addressing delays, site conditions, insurance, and changes in law.
If those clauses are too broad or outdated, parties may later dispute whether a climate-related event was foreseeable, excusable or already included in the contractor’s scope.
Insurance Gaps Can Become Contract Disputes
Insurance coverage is becoming a more important part of construction risk planning. Builder’s risk, business interruption coverage, exclusions, deductibles, and other limitations can create significant exposure when climate-related damage or delay occurs.
When coverage and contract terms are not aligned, parties may be left fighting over who bears the loss. Reviewing insurance and contract language together can help reduce those disputes before work begins.
ESG Disputes May Look Familiar
One of the session’s key points was that ESG-related disputes may not appear as standalone claims. They may look like traditional construction disputes involving delays, cost overruns, defective work, or regulatory compliance.
What may be different is the cause. A familiar delay or cost claim may turn on climate data, specialized materials, site conditions, or changing environmental requirements.
Read the Full Report
The AAA report, “Building Resilience: The Future of Construction Disputes and ADR in an Ever-Changing World,” examines the risks reshaping construction projects and disputes.
Download the report for insights on identifying risk earlier, managing claims, and using ADR to keep complex projects moving.