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FIDIC’s carbon management tools for the Red and White Books

May 2026

The International Federation of Consulting Engineers (FIDIC) promoted decarbonisation measures for infrastructure projects through its Carbon Management Framework (CMF). Building on this, and to support practical adoption, FIDIC has since issued Carbon Management Guidance (CMG), together with Carbon Management Principles and Golden Principles (the Principles). It is important that contractors and consultants understand the approach taken under these contract documents and carbon management principles, since this will impact risk allocation, project delivery and profitability of projects.

Overview

The CMG is a project-level document providing for overall strategic carbon management and the CMF’s decarbonisation measures for construction projects. The CMG is positioned for use alongside the Carbon Emissions Management (CEM) Guides, which are tailored to specific FIDIC contracts (including their respective approaches to risk allocation, change control, scope, programme and incentives). Our article “Understanding FIDIC’s Carbon Management Tools” provides more information.

The tools in the CEM Guides aim to give parties greater clarity and consistency in measuring, reporting and managing carbon across project lifecycles. While voluntary, they are designed to support commercially realistic and contractually robust obligations concerning the decarbonisation of construction projects.

We highlight below the key aspects in the FIDIC Red Book and White Book CEM Guides and how these frameworks may help contractors and consultants to embed, monitor and evidence carbon requirements on future projects.

FIDIC Red Book (Conditions of Contract for Construction for Building and Engineering Works Designed by the Employer) CEM Guide (the Red Guide)

The Red Guide comprises five “Sections”, summarised in turn below.

Section 1: Part A – CEM Guide Contract Data: Sets out eight new provisions to be incorporated into the contract to provide clarity on carbon emissions (CE) measurement and reporting, drive behavioural change and embed carbon accountability within the contractual framework.

Part A prevails over Part B (Special Provisions). The Red Guide indicates that the Employer may complete the Contract Data as appropriate, including by reference to the scope or technical conditions.

The regime relies on regular reporting and governance. Carbon Emissions Reports (CE Reports) are issued at interim points including at each CE Milestone, comparing Actual CE (typically be measured from the date the Contractor receives the Letter of Acceptance) with greenhouse gas emissions and identifying any interim CE Damages or CE Incentives (and the value of them). CE Meetings must be held within a defined period to allow the Engineer and Parties to review performance and actively manage emissions risk.

To aid enforceability, CE Damages and CE Incentives must be contract-specific, proportionate and linked to the CE Budget and Carbon Price, with the Parties agreeing they are fair and reasonable pre-estimates of loss or compensation. Relevant factors include project size, scope, duration and industry norms for liquidated damages. FIDIC offers example formulas in the Guide and Annex.

Section 2: Part B – CEM Guide Special Provisions: This is arranged into three parts covering:

1. the CEM Clause, comprising seven new Special Provision and Particular Condition sub-clauses. It identifies five sub-clauses to be amended in the General Conditions as a pre-requisite to ensuring the CEM Clause is operational and enforceable.
2. guidance on the operation and use of the CEM Clause.
3. “optional” General Conditions that the Employer may wish to include (i.e. additional decarbonisation measures including Sustainability Monitoring Assistants, Transport of Goods and Protection of the Environment).

CEM clause 2 (CE Objectives) includes three Contractor obligations, namely to:

(1) collaborate with the Employer to incorporate CE Objectives into the Schedule of Carbon Emissions (the Schedule);

(2) install a practice of sharing relevant information to reduce the Actual CE; and

(3) provide the Employer and Engineer with necessary information to monitor performance concerning the CE Objectives.

CEM clause 3 (Carbon Emissions Obligations) requires the Contractor to complete the Works in a manner so that the Actual CE does not surpass the CE Budget (arguably one of the most significant provisions).

The CEM Clause facilitates delivery of these obligations by setting out CE reporting requirements, the methodology for calculating Actual CE and the CE Meetings used to assess and evaluate performance. The CEM Clause also provides information on the interim CE Damages in the event of higher emissions and CE Incentives for lower emissions which are measured against Actual CE, CE Budget and the CE Milestones. Supporting example calculations and methodologies are included in the Annex.

Section 3: Preparation of the CE Schedule: For the CEM Clause to operate effectively, the Employer must complete the Schedule clearly and in line with the Principles. It contains the project-specific data concerning emissions, the Employer’s aims and other third party objectives or obligations, such as funder requirements. An example template version of the Schedule provides guardrails for Parties to follow.

Section 4: Preparation of the CEM Guide inputs in the Specification: Contains guidance and examples to assist the Employer in ensuring that the Specification’s sustainability and carbon emissions requirements align with the Employer’s requirements for a given project. Effective implementation of the CEM Clause depends upon the contract drafting including clear, measurable sustainability requirements in the Special Provisions and Specification.

Section 5: Preparation of the CEM Guide amendments to the General Conditions for the DAAB Agreement and DAAB Procedural Rules: Contains details relating to the Dispute Avoidance and Adjudication Board (the DAAB). Section 5 requires the DAAB members to readily understand both Party’s environmental obligations under the Red Guide CEM obligations and to conduct their activities, e.g. site visits and meetings, in an environmentally conscious way without compromising dispute‑avoidance functions (i.e. using virtual meetings and avoiding travel where possible). There is also a general obligation on the Parties to use all reasonable endeavours to meet the DAAB objectives in an environmentally conscious manner.

FIDIC White Book (FIDIC Client / Consultant Model Services Agreement) CEM Guide (the White Guide)

Whereas the CEM Guides for works contracts (i.e. the Red Guide) aim to address specific project delivery phases, the services CEM Guides (i.e. the White Book) encompass the entire project lifecycle. Such an approach permits the Parties to consider carbon emissions at an early stage and facilitates the sharing of knowledge and capacity building throughout project phases to ensure that carbon emissions and sustainability remain at the forefront.

The White Guide inserts similar amendments to CEM 2 and CEM 3 from the Red Guide into the Particular Conditions, levying CEM obligations onto the Consultant. However, it installs a “strategic umbrella” for specific CMG-focused provisions and Principles to operate, including:

• Strategic Foundation: Consultants to establish CE Target, CE Calculation Methodologies, and strategies guiding the procurement of subsequent services, supply and works contracts;
• Seamless Transitions: Continuous Consultant involvement ensures carbon is paramount throughout different delivery phases and contractors’ works;
• Technical Continuity: Consultant expertise bridges gaps between works phases, maintaining carbon management momentum; and
• Quality Assurance: Ongoing Consultant involvement provides independent oversight of carbon performance across multiple works contracts.

Rather than requiring the incorporation of significant contractual amendments (compared to the Red Guide’s Special Provisions / CEM Clause), the White Guide relies upon the existing established White Book General Conditions. Instead, the Appendices and example templates in the Annexes guide Parties to insert the CMG and Principles themes into the White Book scope.

In summary, the White Guide comprises the following Appendices:

1. Consultant’s Scope of Services – governs the CEM mechanisms, involving:

• CEM provisions for the project lifecycle from the Inception Phase (3.0) to the End of Operation Phase (3.11);
• Carbon Management (CM) mechanisms and tasks;
• Methods for carbon calculation, design optimisation and Carbon Removal; and
• Flexible frameworks for use for varying projects and Client requirements.

2. Client-Provided Resources and Support – provides examples for managing carbon emissions in the services;

3. Remuneration and Payment – commercial provisions to incentivise performance of the services in line with the CM goals (CE Damages and CE Incentives);

4. Programme – considers the project programme by reference to the CM services / goals;

5. Rules for Adjudication – includes practical and operational measures for dispute resolution aligning with environmental consciousness and the CM services / goals; and

6. Annexes –example mechanisms to administer the CEM Guide, i.e. Carbon Balance Sheet, Scope of Services and formulas for calculating GHG emissions, CE Damages and CE Incentives.

Part of the White Guide considers the Sub-Consultancy version of the White Book.

The White Guide’s CM provisions introduce a modernised advisory model differing from traditional consultancy services, emphasising the need for clearly defined scopes and deliverables throughout the project lifecycle. The White Guide’s framework promotes collaborative delivery between the Parties to support the Client’s carbon‑reduction objectives, while maintaining flexibility to suit different project types, scales, and specific CM needs, whilst aligning with the core CMG Principles.

Key takeaways

The effectiveness of FIDIC’s carbon management tools will depend on active engagement and use by industry stakeholders. To be administered successfully, the tools must be properly priced, effectively managed and regularly reviewed by contractors, consultants and employers alike.

A notable and potentially transformative feature of the CEM Guides is that, unlike many earlier climate- related provisions in other construction industry standard contracts, FIDIC has introduced mechanisms with tangible financial impact, including CE Damages and CE Incentives. By calibrating these CE mechanisms against defined carbon budgets, pricing structures and milestone reporting, these provisions can operate like traditional liquidated damages or performance incentives. Combined with a general obligation to not exceed the CE Budget, these provisions create a regime where carbon performance carries direct and measurable financial consequences for contractors and consultants, rather than remaining aspirational or secondary objectives in the contractual model. In this respect, the CEM Guides set a clear benchmark beyond existing standard forms, embedding real economic consequences and accountability for carbon management.

It remains to be seen whether there will be widespread adoption, however the approach aims help to support meaningful progress towards decarbonising the built environment.

For advice on applying FIDIC’s carbon management tools to your contracts, and projects, please contact our Contracts and Project Advisory Team.

Contributions from Nadir Hasan and Andrew Croft

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