A call to action: Why the buildings material sector needs to tackle embodied carbon

Green transition 14 November 2019 Xavier Le Den

When gazing at a beautifully designed building, carbon emissions are likely not the first thing that comes to mind. But they are there. Hidden. Embodied. Drawing on a recent report, two sustainability experts point to a new opportunity space for buildings material companies.

10 min

Earlier this autumn, The World Green Building Council published a report on embodied carbon in the building and construction sector

As a ‘call to action report’, the new publication underlines the urgency for a swift response and a new vision for the sector. Ramboll helped deliver the report and in this article, we want to bring some report highlights, reflect on the need for sustainable change, and finally give recommendations on how any building materials company can embark on a sustainability journey.

The climate emergency

The built environment sector has a vital role to play in responding to the climate emergency. With buildings currently responsible for 39% of global carbon emissions, decarbonising the sector is one of the most effective ways to mitigate the worst effects of climate breakdown.

Out of the 39%, 11% of carbon emissions come from what is often labelled ‘embodied carbon’. Embodied carbon are carbon emissions released not only during operational life but also during the manufacturing, transportation, construction and end-of-life phases of all components going into built assets. These emissions have largely been overlooked despite their impact. But this is about to change.

As the world’s population approaches 10 billion, the global building stock is expected to double in size. So, finding solutions to bring down embodied carbon in building materials is critical. While we must continue to focus on addressing operational carbon, we must now rapidly increase efforts to tackle embodied carbon emissions at a global scale too.

A European perspective

From a European perspective, the challenge looks somewhat different: Europe is faced with an ageing existing building stock and expectedly up to 80% of buildings in use in 2050 already exist today.

According the WGBC report, about 35% of current buildings in the EU are 50 years or older, and the energy efficiency of 97% of the building stock does not meet the requirements of future carbon reduction targets. These buildings will require substantial energy efficiency renovation, contributing to increased embodied carbon even as operational emissions are reduced.

Stopping or limiting building construction is clearly not an option. The good news is that massive gains lie in building cleverly with low carbon materials and building efficiently with low carbon construction technologies as indicated in the figure below.

From the report: Bringing Embodied Carbon Upfront: Opportunities to reduce embodied carbon from stage of design process.  Source: HM Treasury: Infrastructure Carbon Review, 2013

Companies aligning to the Paris Agreement

Around the world, you will find companies making bold ambitions and leading the way. For instance, as highlighted in the report, HeidelbergCement Group and ArcelorMittal are two such companies.

Heidelberg is the fourth largest cement company globally with operations in 60 countries and has - as the first company in the sector - set a carbon reduction strategy that is certified to be in line with the Paris Agreement. HeidelbergCement’s carbon reduction strategy for 2030 has been reviewed and certified by the Science Based Targets Initiative as being compliant with sectoral decarbonization pathways needed to achieve the goals of the Paris Agreement.

The company now aims to produce carbon-neutral concrete by 2050. Based on its Sustainability Commitments 2030, the overall target is a reduction of 30% of the carbon footprint in 2030 compared to 1990.

Also headquartered in Central-Europe, ArcelorMittal is a global frontrunner. As the steel production from iron ore currently relies on high temperature carbon monoxide from fossil fuels, ArcelorMittal has committed to achieving carbon neutrality in Europe by 2050 in line with the objectives of the Paris Agreement and the science-based trajectory for the steel sector.

To reduce emissions within the timeframe needed, ArcelorMittal is exploring opportunities for combining different innovative technologies that use more clean power, involve circular sources of carbon, priorities carbon capture and utilization, and leverage storage techniques. ArcelorMittal is investing €250m in order to research and demonstrate these technologies and the company has set out clear policy recommendations, at both global and European level, that it believes will create the market conditions needed to support its transition.

Focused approach for smaller players

It is highly positive to see international leading companies progress towards reducing their environmental impact. But those success stories can also deter smaller companies from looking deeper into sustainability. They may think: This is not for me since I cannot compare myself with those “big guys”.

However, this is equally a window of opportunity for smaller players. Perhaps with less impact but potentially at greater pace. Some of them are clients of ours. When we initially discuss sustainability with companies in the sector, it is clear that many are keen to integrate sustainability into their activities but do not know how to get started.

Some do not consider sustainability yet since they believe that it would require too many resources and too much effort which may hinder their competitiveness. Luckily, those dilemmas can easily be addressed with a more focused approach.

3 recommendations to keep in mind

We typically advise our clients to take the time to understand their current footprint and what is relevant for them and their stakeholders before jumping into concrete initiatives. For instance, a materiality assessment exercise is fundamental to set the right scope for action and build the pillars of a sustainability strategy. The defined strategy must also be closely interlinked with the overall corporate strategy.

For the sake of ease and clarity in a complex world, we often give the following three key recommendations to have top of mind when embarking on a sustainability change journey:

  1. Anchor the sustainability strategy at the core of your business and related to your product/service offering. That means taking a broad point of departure in your stakeholders – their perspectives bring a holistic view of the business specific sustainability footprint and thus of related potential opportunities and threats. 

    Integrating the ideas of your suppliers, employees and customers and the way sustainability topics impact their bottom-line, their work and their lives will enable your company to address the right topics and understand available competitiveness differentiators. In short, by doing so, sustainability will pay off on the triple bottom-line.

  2. Now, zoom in on your customers and their expectations, making sure that your sustainability commitments are aligned with your value proposition to customers. Customers have an increasing focus on sustainability as a purchase criterion. Studies show that individual consumers are willing to pay more for sustainable products or services. 

    Business-to-business customers are adapting their procurement processes and guidelines to source more sustainable materials and thus reduce the impact of their own products or operations. Your value proposition to customers will be strengthened by presenting the sustainability benefits that you can provide as a company.

  3. To build stronger momentum on sustainability, we recommend using the UN SDGs as a strategic framework: The Global Goals are not a list of requirements to be addressed but a framework offered to all organisations providing a common language with the world around you (being consumers, investors, citizens, NGO’s, policy makers, etc…). We thus recommend selecting only the few, relevant SDGs, the ones most relevant to your business. 

If selecting more than a few, make sure to cluster them in a telling headline to crystalise your priorities and the link to the SDGs. This will improve sensemaking and internal line-of-sight; linking business strategy to products/services, sustainability priorities and SDGs. 

Perspectives for actions

Many solutions for significantly reducing carbon emissions in building materials are already known and need to be rapidly scaled. Yet manufacturers will not be able to achieve the levels of decarbonisation required to achieve net zero embodied carbon for the whole sector acting on their own.

They will require finance, supportive policy frameworks and regulation, and adequate demand for their low carbon products. So, coordination of the actions listed here with those of other stakeholders is an urgent priority.

Through disclosure of the embodied carbon emissions in their products, manufacturers also have an important enabling role to play in respect of other actors in the value chain who rely on this data. Best practice in carbon emission reporting includes scope 3 emissions as defined by the GHG Protocol. Scope 3 emissions are all indirect emissions (not included in scope 2) that occur in the value chain of the reporting company, including both upstream and downstream emissions. To be able to report and act on scope 3 emissions, construction companies need their suppliers to also be able to assess and communicate on their own greenhouse gases emission levels.

Just remember; Sustainability is not a compromise - it is about ensuring the long-term viability of your business. To ensure long-term competitiveness, companies should all start their sustainability journey. In our view, impact is not only a matter of size, it is about relevance of actions.

About the authors:

The Embodied Carbon report is written by staff from WorldGBC, with support from C40 Cities and Ramboll. This article is edited and written by Karin Simondon together with co-authors Samy Porteron and Christine Collin.
Karin Simondon works out of Ramboll Management Consulting’s Copenhagen offices. Being part of the Strategy & Sustainability Advisory team, she works at the intersection of business strategy and sustainability helping companies capture the business opportunities of sustainability and the green transition.

Samy Porteron is one Ramboll’s main authors behind the WGBC report. As a management consultant based in Brussels, he assists the EU Commission in bringing insights on the green transition across member states.

Christine Collin works in Ramboll’s Buildings division helping clients in the industry transform via new approaches to building green and by using sustainable buildings certifications such as DNGB and LEED.