ESG Reporting Can Benefit the Environment—and Your Bottom Line
With emerging ESG regulations now requiring disclosure of greenhouse gas (GHG) emissions, as well as various organizations requesting the information, the importance of ESG reporting is growing.
Reducing emissions, employing more efficient construction techniques, and integrating renewable energy sources into new projects, can bring your organization financial incentives, tax credits, and grants offered by governments to promote sustainable construction.
By understanding the source of emissions and the industry's impact on the environment, business owners and their stakeholders can make informed decisions, drive innovation, and work towards a more sustainable future.
This article covers the following:
- Understanding GHG emissions in construction
- Strategic approaches to emission reduction
- Incentives and support for sustainable construction
- Overcoming challenges
Understanding GHG Emissions in Construction
The construction industry contributes a significant portion of global GHG emissions. According to the United Nations Environment Programme (UNEP) 2023 Global Status Report for Buildings and Construction, “the buildings and construction sector contributes significantly to global climate change, accounting for about 21% of global greenhouse gas emissions. In 2022, buildings were responsible for 34% global energy demand and 37% of energy and process-related carbon dioxide emissions.”
First, it’s important to understand the landscape of GHG emissions in the construction industry, including common sources of emissions, industry benchmarks, and the regulatory environment.
Sources of GHG Emissions
According to the UNEP report, the largest fuel types consumed in buildings are electricity, natural gas, biomass, and oil. There was an increase in energy consumption between 2010 and 2022.
GHG emissions in the construction industry stem from various sources, including energy consumption during construction activities, transportation of materials, and the operation of buildings.
Sources of GHG emissions include:
- Material production. The production of construction materials like cement, steel, and aluminum is highly energy-intensive and often relies on fossil fuels, leading to significant CO2 emissions.
- Construction equipment. Heavy machinery and equipment used in construction, such as excavators, bulldozers, and cranes, typically run on diesel that produce GHG emissions.
- Building operations. The energy used for heating, cooling, lighting, and operating buildings contributes to GHG emissions. Although this phase occurs post-construction, the design and construction decisions impact the building’s energy efficiency and thus its GHG emissions throughout its lifecycle.
- Transportation. The transportation of materials and workers to and from construction sites generates emissions, with the impact depending on the modes of transport and the distances traveled.
- Waste management. Construction and demolition activities generate significant amounts of waste. The disposal and treatment of waste, such as through landfilling, incineration, or recycling, can also produce GHG emissions.
- Land use changes. Construction projects that lead to changes in land use can also contribute to GHG emissions, especially if they involve deforestation or the disturbance of carbon-rich soils.
Reducing GHG emissions in the construction industry involves improving energy efficiency, using sustainable and recycled materials, employing more efficient construction techniques, and integrating renewable energy sources into new projects.
Strategic Approach to Emission Reduction
To effectively reduce emissions in the construction industry, a multi-faceted approach is necessary.
Understand Current State
Prior to making adjustments to reduce your emissions, your organization must understand your current carbon footprint and what areas of your organization are the largest emission drivers.
Design and Planning
Incorporating sustainable design principles, such as energy-efficient building materials, passive heating and cooling systems, and renewable energy sources, can minimize the carbon footprint of a project.
Construction Process Innovations
Construction process innovations, such as off-site prefabrication, modular construction, lean construction techniques, and undertaking retrofits can reduce waste, energy consumption, and transportation emissions. These methods streamline operations, resource utilization, and project efficiency.
Technology and Automation
Implementing advanced monitoring systems, smart building technologies, and energy management systems can optimize energy usage, improve operational efficiency, and reduce emissions throughout the building's lifecycle.
Incentives and Support for Sustainable Construction
Support for sustainable construction has gained momentum globally, with governments offering various initiatives to encourage environmentally friendly practices.
Governments often provide financial incentives, tax credits, and grants to promote sustainable construction, such as subsidies for energy-efficient materials and renewable energy installations.
Certification Programs and Benefits
Certification programs like Leadership in Energy and Environmental Design (LEED) and Building Research Establishment Environmental Assessment Method (BREEAM) offer recognition and benefits for sustainable buildings.
- LEED certification assesses a building's energy efficiency, water usage, materials, and indoor environmental quality, providing a framework for sustainable design and construction.
- BREEAM certification focuses on environmental performance, covering areas like energy, water, waste, and ecology.
These certifications not only enhance a building's market value but also demonstrate a commitment to sustainability.
According to the UNEP report, the number of certifications issued has grown, but is not on track to meet green building certification goals.
Role of Industry Partnerships and Collaborations
Industry partnerships and collaborations play a vital role in promoting sustainable construction. Collaborations between construction companies, suppliers, and technology providers foster knowledge sharing, innovation, and the development of sustainable solutions, driving the industry towards a greener future.
Overcoming Challenges
Overcoming GHG emission challenges in the construction industry requires a comprehensive approach.
Cost Implications of Sustainable Practices
While sustainable construction may initially involve higher upfront costs, long-term benefits such as reduced energy consumption and operational costs can offset these expenses. It’s crucial to conduct a thorough cost-benefit analysis and consider the lifecycle costs of a project to make informed decisions.
Managing Stakeholder Expectations and Engagement
Engaging with stakeholders, including clients, investors, and local communities, helps build support and understanding for sustainable practices. Transparent communication, education, and involvement in decision-making processes can foster a sense of ownership and commitment to sustainability goals.
Keeping Up with Regulatory Changes
To keep up with regulatory changes, including updated SEC climate disclosure and California Senate Bill requirements, staying informed and proactive is essential. Regularly monitoring industry news, participating in industry associations, and engaging with regulatory bodies can help construction professionals stay updated on evolving regulations. Additionally, establishing internal processes to track and assess regulatory changes and their potential impact on projects can ensure compliance and timely adjustments to sustainable practices.
We’re Here to Help
For guidance on managing emissions in your construction project and including GHG emissions as part of your ESG reporting strategy, contact your Moss Adams professional.