WEC & BCG: Construction Supply Chain key to Net Zero'

Building sector stakeholders across the value chain need a strategic and collaborative approach to realise sustainability goals, says the World Economic Forum (WEF) and one of the world's leading professional service firms, Boston Consulting Group (BCG).

In a joint article on the WEF’s website, the organisations say the construction supply chain is pivotal to achieving global net zero ambitions and for driving sustainable growth.

Co-authors Gim Huay Neo -- Managing Director with WEF MD -- and BCG Senior Partner Yvonne Zhou, say the most obvious and immediate area of impact is “in the way we design and construct our buildings”, and add that “the materials we use matter, as does where they come from and how they are implemented in the built environment”.

The WEF is an international organisation committed to improving sectors globally, while BCG helps organisations with transformation projects, including building competitive advantage through sustainable practices.

Opportunities surround decarbonising the construction industry

Neo and Zhou say the building value chain is responsible for 37% of total carbon emissions globally, and that the green transition of building value chains “could unlock ‘$1.8 trillion in market opportunities globally” and in the process, would have “significant social and environmental value worldwide”.

They add that the transition to more-sustainable building practices “offers numerous opportunities for growth and value creation along its value chain”.

In support of this, they mention analysis from BCG, which found companies with best-in-class sustainability metrics have a lower ESG risk and that sustainability-certified buildings – such as those with Leadership in Energy & Environmental Design (LEED) recognition – command a significant market advantage in today's environmentally-conscious real estate market.

WEF and BCG also stress that energy-efficient designs and systems “could also lead to significant cost savings to value chain players”. 

“Passive building designs, high-efficiency heating and cooling systems and advanced energy management systems reduce energy and material consumption, lowering operational costs,” they write.

As an example, they cite the air-conditioning system upgrade of Beijing’s Taikoo Li Sanlitun shopping centre, which cut energy consumption by 66% annually.

They also point to the Bullitt Center office complex in Seattle, whose advanced sustainability features are projected to generate up to $18.5mn in societal benefits over its lifetime.

The ESG impact of the construction industry worldwide

Neo and Zhou continue: “In reimagining how we approach buildings and our built environment, there is scope to go beyond net zero, and implement nature positive outcomes that bolster climate resilience and enhance our wellbeing.

“Green buildings offer benefits beyond energy efficiency, by reducing pollution, promoting biodiversity, and creating healthier living environments by improving air and water quality.” 

The pair also point out that modular construction and prefabrication technology minimises waste and construction time, and are seeing traction in fast-growing urban areas such as the Middle East. 

Laing O'Rourke are among the major construction companies championing modularity in a bid to reduce waste.

WEF and BCG also believe that, to capitalise on the green transition in building sectors, a coordinated approach is needed between public and private entities if they are to overcome challenges and drive transformation.

They say public and private entities can collaborate by:

• Embracing global standards
• Adopting best practices building flagship projects
• Developing policies and incentives supporting R&D and engaging with innovators

Neo and Zhou continue: “By adopting sustainable practices, value chain players can also offer differentiated products that attract environmentally conscious clients, gain access to the public financing incentives and potential carbon trading to offset initial investment costs, thus improving their financial viability.”

By way of example, they reference Holcim, a leading cement producer, which has launched a circular technology platform to provide up to 100% recycled concrete to buildings.

Bouygues, the French engineering group, is also promoting use of low-carbon cement and recycled materials as well as LafargeHolcim, the Swiss material manufacturer’s ECOPact low-carbon concrete used by multiple major firms.

They add: “the green transition is a strategic move for value chain players, such as developers, constructors and material providers, to align with global trends and grow demand for more-sustainable practices to drive long-term value creation.”

The construction industry holds immense potential for impact on the environment. And by revolutionising building practices, materials, and energy efficiency, the industry can significantly reduce emissions and lead the charge towards a sustainable future.

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