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Companies setting science based targets in the building sector face formidable challenges due to the long value chain. Mike Scott reports on a WBCSD initiative to come up with a systems-level approach to cutting whole-of-life CO2 emissions
With the signing of the Paris Agreement on climate change in December 2015, governments committed themselves to limiting average temperature rises to well below 2C.
Many companies embraced the deal as a clear signal that the transition to a low-carbon economy was accelerating and that the private sector would play a key role.
The contribution that companies can make is set out by the Science Based Targets initiative (SBTi), which encourages corporations to set targets in line with the level of decarbonisation required to keep global temperature increases below 2C. Following the publication of the Intergovernmental Panel on Climate Change’s 1.5C report last November, the SBTi recently published new guidance encouraging companies to commit to a more ambitious 1.5C pathway.
More than 500 of the world’s biggest companies have signed up to the initiative, including almost 100 from the building and construction sector. The Global Alliance for Building and Construction says that “buildings, construction and operations accounted for 36% of global final energy use and nearly 40% of energy‐related CO2 emissions in 2017”, so the sector will be vital in helping companies to meet their SBTs.
We are looking at opportunities for collaboration across the value chain. Without collaboration, it’s hard for the tenant to have any influence
“What do we expect from the sector?” asks Cynthia Cummis, director of private sector climate mitigation at the World Resources Institute and a member of the SBTi’s steering committee. “We expect to see improved energy efficiency, increased use of renewable energy and new business models.”
But addressing emissions from building and construction is complicated because the industry remains highly fragmented, the value chain is long and complex, and stakeholders span investors, architects, construction companies, property developers and tenants.
Further complicating the issue is that construction only produces 10-25% of a building’s emissions, with the vast majority coming during the use phase. As a result, says Cummis, “we are looking at various opportunities for collaboration across the value chain. Without collaboration, it’s hard for the tenant to have any influence.”
But there is no common language between the various actors, says Emmanuel Normant, vice-president for sustainable development at Saint-Gobain. “If a real estate company wants to set carbon targets, what does it mean and how does it link to what we, as a manufacturer of building materials, offer the developer? It all needs to be aligned.”
Landsec, the first property company to set an SBT, discovered that 90% of its emissions are Scope 3, relating to either embodied carbon or how energy is used in its buildings. But for its suppliers, these emissions are often Scope 1 and 2, covering direct emissions.
Normant points out that companies in the supply chain that are thinking about how they can decarbonise their own processes, often “only look at one side of the coin”.
There has to be a link between the impacts of what we produce and the benefits we bring further down the value chain
For example, Saint-Gobain’s products include glass, insulation material and plasterboard. “Our product portfolio has an impact at the point of production, but our products also create significant benefits further up the value chain, including improving energy efficiency and reducing energy consumption,” Normant adds.
“If we wanted to minimise our own emissions, we would recommend single-glazed windows, because it requires less energy to make them. But for the performance of the building, double-glazed is obviously much better. There has to be a link between the impacts of what we produce and the benefits we bring further down the value chain.”
In an attempt to address this issue, the World Business Council for Sustainable Development (WBCSD) is working on a system-level approach. It recommends a building sector carbon metric of CO2 equivalent per square metre of building floor area and a whole-building approach to lifecycle analysis as a framework for assessing the sector.
Companies will set targets for their direct emissions (Scope 1 and 2), but they will be able to better understand and demonstrate their impact/contribution to reduce full lifecycle carbon emissions of a built structure (known as Scope 3 emissions and “beyond”).
“The approach is expected to enable architects, designers, engineers, construction companies, real estate firms and tenants to identify the best emissions-reduction strategies for all parts of the value chain,” says the WBCSD. “This is an important prerequisite for the transformation of the built environment towards decarbonisation.”
The key question, says Normant, “is how do you decarbonise the buildings and construction sector in the most efficient way?”
We have only a limited understanding of carbon content because the concept of lifecycle analysis is not yet fully mainstream
Cummis says that real estate companies need to talk to architects to ensure that efficiencies are designed in from the start.
However, there is a lack of transparency at the moment, says Niels van Geenhuizen, global sustainable solutions leader at Arcadis. “We don’t have a carbon footprint for buildings. These things are not measured yet.”
Normant agrees. “We do need more transparency. If you want to set targets, you need to know the carbon content of a building and the most important carbon flows. It seems obvious, but we have only a limited understanding of carbon content because the concept of lifecycle analysis is not yet fully mainstream.”
While the WBCSD’s sector guidance will be developed this year, there is not much happening around SBTs at the moment, says Van Geenhuizen. “The industry is ready to change the way it works, but I’m not sure the demand side is ready yet.” In part, this is because there is still an emphasis on upfront costs when commissioning buildings.
“What we need is, if a project costs €10m, for the client to pick a developer that can deliver that project at the lowest carbon footprint – but instead, the company that wins is the one that offers to do it cheaper,” Van Geenhuizen says.
The SBTs can enable such an approach. Tom Byrne, sustainability manager at Landsec, says that the company is now “deliberately designing and developing buildings in a way that aligns with our agreed decarbonisation pathway and energy goals. Ultimately, the science brings meaning, and grounds our ambition in reality: targets are no longer numbers pulled from thin air, they are goals linked to a real issue. Science-based targets provide the ‘spine’ of a long-term sustainability strategy.”
Mike Scott is a former Financial Times journalist who is now a freelance writer specializing in business and sustainability. He has written for The Guardian, the Daily Telegraph, The Times, Forbes, Fortune and Bloomberg.
This article is part the in-depth Built Environment Briefing. See also:Science Based Targets Initiative IPCC WBCSD WRI Landsec