Scope 3 Carbon Accounting: The Construction Sector

Global construction operations continue to experience rapid growth. It is estimated that our planet will add floor space the size of New York City each month till the year 2060! [1]

This presents an environmental challenge. As buildings account for roughly 40 percent of global energy consumption, carbon emissions from the construction sector can have significant consequences on our collective goal to reach net-zero. [1]

Unsurprisingly, a growing number of MPs are pushing to reduce emissions in the construction sector. [2] Such regulatory pressures will usher in a new era for the construction sector, where meeting carbon emissions goals become existential to businesses.

The supply chain has started to acknowledge and eliminate emissions resulting from construction-based projects. However, one key element seems to be missing from their vision: net zero must be achieved across their entire value chain rather than just their fixed and operating footprint. Scope 3 Carbon Accounting can help to close this gap.

What is Carbon Accounting?

Scope 1 Carbon Accounting – is the process of tracking and reporting direct greenhouse gas emissions from sources owned or controlled by an organisation. In the construction sector, scope 1 emissions can come from the use of fossil fuels, excavation and demolition activities, and the use of materials with a high embodied carbon footprint.

Scope 2 Carbon Accounting – considers the indirect carbon emission impact of an activity, product, or service. Examples of this can be anything from the energy used to power a factory, the water used in a manufacturing process, or the food consumed by employees. These activities require resources that may generate emissions during production, but do not have significant direct carbon emissions.

Scope 3 Carbon Accounting – involves reporting the carbon footprint of a company’s supply chain. Scope 3 emissions can be categorised into 15 different sources, such as purchased goods and services, capital goods, business travel, employee commuting, waste generated in operations, etc.

For the construction sector, some of the most relevant scope 3 sources are: [3]

Purchased Goods and Services: The emissions from the production of materials and equipment used in construction projects, such as steel, cement, concrete, wood, etc. These materials can have a high carbon intensity and a long lifespan, which means they can lock in emissions for decades or even centuries.
Transportation and Distribution: The emissions from the transport of materials and equipment to and from construction sites, as well as the transport of workers and subcontractors. Transportation can involve various modes of transport, such as road, rail, air, and sea, each with different emission factors.
Waste: The emissions from the disposal or treatment of waste, such as demolition waste, packaging waste and hazardous waste. Waste management includes landfilling, incineration, recycling, or composting, each with different emission impacts.
End-of-life Treatment: The emissions that arise from demolishing buildings and infrastructure at the end of its useful life, including dismantling, recycling, or landfilling of materials.

Challenges to Measuring Scope 3 Carbon Emissions:

Scope 3 emissions are typically measured either by tracking activities of a project or by tracking various expenses. For simpler projects, each activity can be tracked to measure its carbon footprint across the value chain. However, given the complexities involved in many construction projects, a spend-based method – where expenses are taken as proxies of carbon emissions – might be more appropriate.

Regardless of which method is adopted, Scope 3 emissions can be challenging to measure and report for several reasons:

Data collection and estimation from multiple sources along the value chain can be complex and time-consuming.
Limitations such as poor data quality, emission factors and allocation methods can cause uncertainty and variability.
Scope 3 Carbon Accounting depends on the boundaries and assumptions that are used to define what is included or excluded from the Scope 3 inventory.

Despite such complexities, companies can now use machine learning tools and leverage the knowledge of subject matter experts to accelerate their journey towards net-zero. Innovative startups like Accasia and Greenly have developed machine-learning based solutions to measure carbon emissions. However, Scope 3 Accounting is as much a work of art as it is a science. Therefore, it is crucial to have relevant parameters for the construction sector, as well as accurate data.

A Unique Opportunity:

Scope 3 Accounting presents a unique opportunity for companies to showcase their resilience and sustainability practices by managing emissions from across the whole value chain. Companies who fail to consider Scope 3 emissions are likely to face increased regulatory pressure and reputational risk due to the public’s growing climate consciousness.

Deecon’s subject matter experts have supported many construction organisations in benchmarking their supply chains. Contact us to find out how Deecon can help realise your Scope 3 objectives.