The buildings and construction sector is the largest source of greenhouse gases on the planet — accounting for 37% of global emissions. Tackling climate change means decarbonizing this sector, and construction businesses are under growing pressure to address their carbon footprints. The first step is understanding where exactly their emissions come from.
In this article, we provide a baseline picture of common emissions sources in the construction sector, based on Persefoni’s analysis of data from the CDP. This emissions profile is meant to serve as a starting point, enabling organizations to zero in on the activities and emissions sources that are likely worth measuring, so they can move forward with more comprehensive carbon accounting.
What is an Emissions Profile?
A snapshot of leading carbon sources.
Before you can develop a decarbonization strategy and prepare for climate disclosure, it’s helpful to understand which greenhouse gas (GHG) sources you need to track to align with global standards and industry best practices. This is where an emissions profile comes in. It provides a snapshot that shows the typical greenhouse gas-producing activities in a given industry.
You can use your sector’s emissions profile to identify business activities that will likely be material for your company, before collecting the specific financial and operational data needed for robust, audit-grade carbon accounting. We’ll take a closer look at the construction sector’s emissions profile later in this article.
The Construction Sector Landscape
Physical and transition risks from climate change.
The construction sector is already feeling the impacts of climate change — and that is likely to intensify. Severe weather, storms, and rising sea levels mean there is less suitable land available for building. Meanwhile, builders must now make structures more resilient to floods, rain, heat, drought, and hurricanes – which demands additional raw materials, potentially exacerbating emissions. Against this backdrop, geopolitical factors like tariffs on steel and carbon tax policies like the EU’s Carbon Border Adjustment Mechanism (CBAM) threaten to raise the cost of materials further.
There are opportunities, too. Growing demand for clean energy and Carbon Capture and Storage (CCS) infrastructure are opening new construction markets, while material innovations offer promise for alternative ways to minimize operational emissions in the sector. Construction businesses must adapt to this changing landscape, and working closely with industry partners and suppliers will be key. “Collaboration with material suppliers and stakeholders in the value chain is essential,” Madsen says. “The sector needs to build consensus so they can take advantage of opportunities and mitigate risks.”
The Emissions Profile of the Construction Sector
A starting point for carbon accounting.
Construction is part of CDP’s infrastructure category, which includes energy utility networks, non-energy utilities, and property development. Below, we focus specifically on construction, with a breakdown of the top emissions sources reported to the CDP across the sector.
This emissions profile is based on Persefoni’s analysis of carbon benchmarking data from the CDP, an organization that gathers annual voluntary climate reports from companies worldwide. It is intended to provide a roadmap for more comprehensive carbon accounting by helping companies understand the business activities that may make up their carbon footprints.
Scope 1 Direct Emissions
- Stationary combustion from furnaces, backup generators, and fuel-based manufacturing equipment
- Mobile combustion from an owned or leased fleet
- Fugitive emissions from refrigerants in AC and cooling equipment in facilities and offices
Scope 2 Indirect Emissions
- Purchased electricity used in offices and facilities
- Purchased steam used for power, heat, or cooling at manufacturing facilities
Scope 3 Indirect Emissions (Value Chain)
- Purchased goods and services, including direct (raw materials used for manufacturing) and indirect (goods procured to support daily company operations)
- Capital goods, including fixed assets such as manufacturing equipment
- Fuel and energy-related activities not included in scopes 1 and 2, including well-to-tank upstream emissions from purchased fuels, generation of purchased electricity, and transmission and distribution losses
- Transportation distribution from upstream and downstream sources, including purchased third-party transportation and distribution services for inbound, outbound, or inter-company logistics paid for by the reporting company
- Waste generated from operations, including waste volumes, transportation, and treatment services
- Use of sold products, including fuel and energy consumption from sold products — an important category for construction
- End-of-life treatment of sold products, including landfilling, incineration, and recycling
Decarbonization Challenges in the Construction Sector
Companies must tackle emissions from materials.
For construction businesses, materials are the crux of the decarbonization puzzle. Cement, for example, is an extremely carbon-intensive material and underpins nearly all buildings. While low-carbon material innovations are emerging, the economic incentives and political will to promote them have not yet caught up. “We already know where the hot spots are in the construction value chain,” Madsen explains. “It’s about making low-carbon solutions more economical.”
In the meantime, construction businesses need to work closely with their value chains to drive down emissions. They also need good carbon data from suppliers, which can be difficult to come by. Small-scale raw materials companies often don’t have access to the tools needed to calculate their emissions reliably — but that’s changing. As free tools like Persefoni Pro expand access to carbon accounting, suppliers will be able to easily share information with their customers, and carbon data will get better — which benefits everyone. “We will see a huge tail of smaller companies calculating their emissions as big companies share Persefoni Pro with their suppliers, and that will give us good representative data,” Madsen says. “It’s going to trickle down.”
What’s Next? A Playbook for Calculating Emissions in Construction
A step-by-step approach to assessing your footprint.
If you’re in construction and just starting on your carbon accounting journey, we recommend taking a crawl-walk-run approach, with the understanding that your data will likely become more comprehensive and granular over time. Below are steps to help you get started.
1. Create a Project Management Plan
- Secure buy-in: Engaging senior leadership will be crucial for resource allocation and the success of your carbon accounting efforts, especially in the face of budget constraints. Clearly outlining climate risks and opportunities can help cultivate buy-in throughout the organization.
- Designate a project leader: Appoint a dedicated individual to lead your carbon inventory project. This person should have the authority, knowledge, and resources to drive the effort effectively. For many construction companies, the finance function will take the lead.
- Set internal deadlines: Establish clear timelines for each phase of the project. It will help maintain momentum and accountability and ensure you’re prepared to respond to any climate disclosure regulations.
- Develop an IMP: An Inventory Management Plan (IMP) outlines the procedures and methodologies you’ll use for data collection, calculation, and reporting. The plan should be regularly updated to reflect any changes in operations or reporting standards and regulations.
- Ensure consistency: Your IMP should establish repeatable processes for each reporting period. Using automated carbon accounting software is the best way to ensure consistency and transparency year after year.
2. Identify and Assess Emission Sources
- Review potential sources: Consider all possible emission sources as outlined by the GHG Protocol, including scopes 1, 2, and 3. The emissions profile detailed above can serve as a starting point for identifying sources that are likely material to your company.
- Assess materiality: Materiality thresholds will vary for each organization. You’ll need to conduct a thorough assessment based on your unique operations, industry, and regulatory jurisdiction.
- Create a checklist: Develop a Footprint Source Checklist that details the material sources you’ve identified for tracking and data collection.
3. Gather Emissions Data
- Assign data owners: Identify individuals responsible for collecting data for each emission source. These could be department heads, facility managers, or others.
- Set deadlines: Ensure timely collection of data by establishing and communicating reasonable and clear deadlines.
- Collect data: Scope 1 and 2 data are typically straightforward to collect, as they rely on internal energy consumption information, while scope 3 is more complex. It will likely call for engagement with suppliers and consideration of end-of-life treatment for the products you manufacture. You can start by identifying your top suppliers and your most carbon-intensive materials.
- Conduct quality assurance: Designate a person or team to review the data you collect for accuracy and completeness. This will save time later on, especially if you are required to meet climate disclosure regulations.
4. Engage Suppliers Directly
- Streamline communication: As we noted above, you’ll need to work closely with your suppliers to gather detailed data, understand their processes, and ultimately set expectations for future improvements. Using integrated carbon accounting software can greatly facilitate communication and improve data quality.
- Incentivize emissions reductions: Once you’ve collected data, you can begin to source preferentially from lower-emission companies and encourage suppliers to adopt practices that reduce their carbon footprints.
Looking Ahead
The construction sector is at a crossroads. If it doesn’t adapt, its emissions will continue to climb — driving the world deeper into the climate crisis. Companies that take a proactive approach to managing their emissions will not only be a part of the solution, they’ll be in a better position to respond to the substantial regulatory and market risks posed by the transition to a low-carbon economy. Engaging with material suppliers — a significant source of construction emissions — will be a crucial part of this journey.
“As we continue to democratize carbon accounting, supplier engagement will get easier and data will get better, setting the stage for more effective decarbonization in the construction sector.” -Persefoni Senior Director of Carbon Solutions Jacob Madsen
