Jane Marsh, Editor-in-Chief of Environment.co, explains how optimising procurement can help decarbonise the construction industry.
Suppliers for the construction industry have a responsibility to help decarbonisation through their clients’ value chains.
Procurement departments for suppliers can help builders, manufacturers and shipping companies in sourcing and transportation with a net zero goal. It requires optimising tech and procedures for modernisation because antiquated methods often ignore sustainable priorities.
Here is what procurement in the supply chain can do to help construction companies get closer to a carbon-friendly business structure.
What areScope 3 emissions?
Carbon emissions come in several levels. Scope 1 encompasses impact directly from the company, Scope 2 is utility-related and Scope 3 is company emissions caused by suppliers. This structure acknowledges how far-reaching a product’s carbon footprint extends and that companies are not solely responsible for eliminating the carbon footprint of their products. Parts and material suppliers often emit as much if not more carbon than the manufacturer themselves.
Every industry is unique, so one decarbonisation strategy for procurement in the building and construction sector may look different than automotive manufacturing. Hard-to-abate sectors that rely on carbon to survive, like steel, will use more intense measures than sectors that don’t. Since construction relies on numerous materials, decarbonisation must come from many unique angles.
Clients need to communicate with suppliers on their goals, but suppliers should also consider circular economics for their products. Customers are also part of Scope 3 emissions and progress on that front starts with third parties who are transporting, storing and making products. How can their efforts make it easier for customers to responsibly dispose of or reuse the construction materials they purchase?
How can procurement optimise?
Environmental commitments alongside digital transformations will be the key to decarbonising suppliers for construction industries and related manufacturing and shipping. Inventory management, tracking and reporting is the most prominent reason. Luckily, Industry 4.0 trends put advantageous tools on spotlight, like machine learning, blockchain, IoT devices and automation. These tools immediately input new data into databases that the entire supply chain can access, increasing visibility and inventory understanding.
Third parties will need to communicate to their clients’ procurement teams about their progress. What technology will they use to measure, track and store carbon-related data? How much progress should they make month-over-month or year-over-year to match client corporate social responsibility goals?
Another way to optimise is to look at compliance. Many nations have regulations procurement and supply chains can use as a framework for process improvement and sustainable advancement.
Compliance can empower companies previously unfamiliar with the sustainability landscape to make rapid adjustments for immediate impact and implementation. Germany recently announced the Supply Chain Due Diligence Act that embraces environmental, social and governance objectives by forcing chains to analyse their risk awareness through remote monitoring.
How will construction procurement look after changes?
These benchmarks will become more common as they help companies find ways to decarbonise and reuse raw material byproducts for energy or product upcycling or reduce energy use. Construction supply chains must consider how they can communicate these goals with clients to make their products and services more eco-friendly.
Transparency will be the most notable change for procurement in the construction industry. It will also impact stakeholders, so making notes of improvements could make or break a supplier. Construction suppliers will have to provide details on any of the following:
Procurement will invest more into experimentation and atypical product offerings. Will production take a hit because they’ve eliminated clear-cutting practices, changing lumber availability? Do they want to try new carbon-sink concrete, which could change prices?
Decarbonising procurement in construction
The supply chain for construction companies must take ownership of their carbon footprint to decrease Scope 3 emissions for their clients. The building industry is one of the largest contributors to greenhouse gas emissions because of how many materials in construction rely on and expel carbon.
Making meaningful change requires going as far back into the construction process as possible, which will eventually lead to changes at the end-of-life cycle. Eventually, net zero emissions can become a possibility for an environmentally rigorous industry.
