Accounting for almost 40% of global operational energy usage and carbon emissions, construction and the built environment needs to be at the forefront of a low-carbon and ‘just’ transition.

Delivery and decisions

The shift to a resilient and low-carbon sector will require massive shifts and advancements in projects, innovation and financing if buildings are to be aligned with a net-zero trajectory by 2030. As well as coming up with future-proof solutions to new buildings and infrastructure, the sector must move quickly to ensure that the existing building stock can be zero-carbon ready and protect civilians from the growing impacts of the climate crisis.

Renovating the existing building stock is a crucial focus of the sector, but many firms are combatting rising inflation, hardening interest rates, increased fuel costs, and supply chain disruptions that have all delayed efforts to boost renovation rates.

While the scale of delivery is daunting enough, companies within the sector are still grappling with high energy costs, fluctuating commodity costs and supply chain disruption. The additional influx of bespoke guidance and frameworks that require a lot of reporting resources and – much like all sectors- this must all be dealt with against a backdrop of political instability and during an economic downturn.

According to the Climate Change Committee (CCC) retrofitting stands as a crucial tool for decarbonising the UK, expected to account for more than 90% of the necessary reductions in building emissions. However, the CCC argues that the recent shifts in Government policies lack the sustained assurance and backing necessary for businesses, landlords and homeowners to invest in energy-efficient measures for the long term.

The UK has a primary target in place for all new builds to be delivered to zero-carbon standards by 2025, and that all existing buildings be retrofitted to improve energy usage by 2030.

Collaboration and guidance

The World GBC, the industry’s leading coalition for corporate climate action, is targeting a swift and ambitious pathway to net-zero emissions. The Council’s Whole Life Carbon Vision calls for 100% of new buildings to be zero carbon in operation by 2030 while also targeting a 40% reduction in embodied carbon by 2050. In short, all new and existing assets in the global building stock need to be net-zero across the entire lifecycle.

One benefit that this focus on climate targets has delivered is that many firms are now revisiting their relationship with and approach to nature as part of decarbonisation efforts.

Often viewed as two separate entities of the E pillar of ESG, many businesses are now realising how investing in nature restoration and protection can spur decarbonisation efforts and unlock low-carbon innovation.

Under Government rules introduced this year, all major housing developments in England are required to deliver biodiversity net-gain of at least 10%. Should the Government deliver an ambition to deliver 300,000 homes each year, the mandate would avoid the loss of 78,500 football pitches of habitat within five years and create an additional 44,500 pitches, according to biodiversity startup Joe’s Blooms.

Some developers, however, with limited options on-site, will be able to purchase credits to meet their BNG mandate obligations. The UK Government’s Department for Environment, Food and Rural Affairs (Defra) is managing the process for granting consent for credit use by developers. It is also overseeing the credit verification process.

Credits do have to be generated within the UK but could be far from the development. This has, however, raised concerns about the sector potentially offsetting its way out of this problem, without actually delivering on the net-gain aspect.

The BNG mandate for developers has increased the focus on nature amongst businesses and those within the sector note that this is an opportunity to further embed and integrate aspects of sustainability across different parts of the businesses.

Indeed, edie’s research showed that there is an internal shift in senior level engagement with sustainability issues. Internal restructuring, staff upskilling and the deeper integration of sustainability teams are all starting to have an impact.

Innovation and action

Last year, a McKinsey report highlights that professionals in the built environment sector can reduce more than 50% of industry emissions by 2030 using existing technologies. Many of these technologies are either already cost-effective relative to conventional practices or are expected to be by 2030 if industrialised. Industry players can unlock economic benefits by scaling up technology and material production, establishing service companies, optimising supply chains and developing operational skills throughout the value chain, according to the report

Companies such as Ramboll, for example, have set public targets to halve upfront embodied CO2 emissions from its new building projects by 2030. This covers carbon across the lifecycle of a building, including embodied carbon; carbon emitted from manufacturing, raw material extraction, transportation, construction and building use.

Post-life, including dismantling and disposal will also be covered by the new goal. This goal acts as the foundation to spark new ways of thinking. Some of the bigger players in the sector are linking finance to their sustainability metrics in order to drive change.

Canary Wharf Group, for example, agreed to and signed a Sustainability-Linked Financing Framework with structuring support from Deutsche Bank and Société Générale