Markets

Construction's Carbon Conundrum

Uncover the carbon-reduction opportunities embedded in the industry's supply chains.
By Johnny Clemmons
July 13, 2023
Topics
Markets

Look closely at the workings of a construction company’s supply chain and you’ll likely find in abundance potential new resource efficiencies, carbon reductions and other sustainability gains waiting to be captured.

Construction companies are being pressured from virtually every angle—customers, regulators, employees, shareholders, business partners and the communities in which they operate—to behave more sustainably. So finding new ways to move the needle in terms of carbon reduction, resource stewardship and operational efficiency is a must. That includes obvious targets like building design and materials choice, as well as less obvious ones that reside within a company’s supply chain.

In fact, the construction supply chain is full of untapped sustainability potential. Companies just need to know where to look and have the right capabilities on hand to take advantage of the opportunities they identify. Here are four areas worth focusing on:

Let's Get Visible

Gaining visibility into supply chain partners’ carbon footprint and overall sustainability record: Today companies are increasingly judged on their overall sustainability performance, not just of their own operations but that of their supply chain, too. Construction owners are more likely to choose a company with a solid sustainability record over one with a mediocre record. The same holds true for construction companies themselves with their supplier choices.

To effectively evaluate suppliers and logistics providers, companies must have a clear line of sight into their carbon footprint beyond organizational walls so they can weigh sustainability alongside traditional factors like price, quality and reliability. This level of visibility is predicated on a few factors:

1. To understand and report on the carbon profile of their suppliers and the products they provide, companies need suppliers who are willing and able to provide trusted, reportable and auditable data on emissions, resource consumption, the origin and carbon footprint associated with specific products, etc.

2. A connected digital business network of suppliers to provide the conduit for exchange of data. These days, given the interconnectedness of value chains, it takes a village to meet sustainability goals. Companies can create that village by forming business networks with their supply partners, so they’re not only sharing data but also working together toward individual and collective sustainability goals, and supporting the end customer in meeting their sustainability goals. The World Business Council for Sustainable Development is an example of how businesses across various value chains, including construction, are forming networks around common sustainability goals.

3. The ability to collect, verify and standardize vast amounts of data from disparate, sometimes unstructured sources.

4. An acknowledged single source of data truth. Companies must be able to trust that the information their supply chain partners provide about emissions, origin of materials, chain of custody, etc., is accurate and fresh. By adopting a sort of green ledger for verifying carbon footprint and other sustainability data and using blockchain technology, these ledgers already are being employed for large-scale construction projects like the U.K.’s HS2 high-speed rail project.

5. Data science and analytics capabilities to evaluate suppliers and logistics partners based on their sustainability profiles. Companies need analytics tools and people well-versed in using them in order to make sense of all the incoming data.

Procure Properly

Prioritizing sustainable sourcing and procurement. Some construction companies are using renewable energy sources such as solar, wind and geothermal to power construction sites. Others have begun integrating cleaner construction equipment at project sites. Implenia, a Swiss construction firm, is doing both. Meanwhile, several companies are also favoring materials and products sourced locally and those made with higher recycled content or in a circular process, like green steel from Salzgitter or a U.S. source like Boston Metal.

Besides the material or product itself, it’s also important that companies consider transportation and other factors in their procurement decisions. The sustainability impact of purchasing a product with highly recycled content could be minimized if the product requires shipping from far away. These kinds of decisions become more clear with the help of advanced modeling and simulation capabilities.

location services

Real-time track-and-trace capabilities. Several years of supply-chain chaos have reinforced the value of track-and-trace capabilities, not only to ensure supplies arrive when and where they’re needed, but also to help identify the most resource-efficient sources of supply. If one supplier can’t deliver a certain product, what is the most resource-efficient alternative source for that product?

Full, real-time visibility into the availability and whereabouts of products and materials also enables a construction company to anticipate disruptions sooner so it can run its projects more efficiently. What’s more, track-and-trace capabilities help a company ascertain the provenance of a material or product, an increasingly important ethical and ESG consideration.

reduce, reuse, recycle

Creative waste-reduction, reuse and recycling practices. How about taking dirt excavated at one site and using it at another? There’s a marketplace for that. Or, instead of tossing lumber used to make concrete forms at a jobsite into the dumpster once a project is finished, why not use a secondary marketplace to sell it to another company for reuse at a nearby project? As the construction world moves away from a linear take-make-use-dispose model of production and consumption, options like these are becoming more viable.

Later this year, the European Union is set to enact a tariff policy in which imports of materials like steel, cement and aluminum will be taxed based on the greenhouse gases emitted to manufacture them. Now, U.S. lawmakers are mobilizing to enact similar measures stateside. The more efficiencies and carbon reductions construction companies can squeeze from their supply chains today, the better positioned they’ll be to meet their sustainability responsibilities over the long run.

by Johnny Clemmons
Johnny Clemmons is Global Vice President, Industry Head, and former Chief Engineer for the Engineering, Construction, & Operations industry business unit of SAP America. Based in Alabama, he’s LEED AP BD+C certified by the U.S. Green Building Council. 

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