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Enabling low carbon supply chains

Emissions reduction targets have become a reputational, financial and in some cases legal imperative for businesses, and a strong differentiator in highly competitive markets. In particular, the ESG (Environmental, Social and Governance) finance market is growing and changing the business landscape.

Supply chains tend to be a significant source of a business’s emissions due to the energy required to make and transport materials. Improving the supply chain emissions data collection and analysis undertaken by companies is crucial for a number of reasons: to inform mechanisms like environmental product declarations (EPDs), product standards, and green public procurement, as well as to be able to model and anticipate future demand.



However, many companies are finding scope 3 emissions to be the most difficult to address due to data limitations, system complexity and supplier engagement. Only around one in five UK manufacturers (17%) measured their value chain emissions in 2022.

Stimulating market demand

Businesses across the world are collaborating to decarbonise their supply chains through initiatives such as the Mission Possible Partnership, SteelZero, First Movers Coalition and bodies such as the Global Cement and Concrete Association (GCCA).

Similarly, industrial clusters or hubs create opportunities for businesses to jointly engage the original equipment manufacturers (OEMs) to develop and test standards for monitoring, reporting, and verifying emissions.

Government procurement power also drives demand and is a major tool at each government’s disposal. Global public procurement amounted to $11 trillion in 2018, 12% of global gross domestic product (GDP)[1]. Existing initiatives to drive green public procurement include the Buy Clean California Act and the Netherland’s Sustainable Construction Calculator, DuboCalc. In the UK, the Environment Agency announced in 2021 that they would use low carbon concrete when constructing flood defences and other critical infrastructure projects[2].

The UN Industrial Deep Decarbonisation Initiative (IDDI), a global coalition, is also collaborating with national governments to establish public and private sector procurement targets for decarbonised steel and cement. This provides greater certainty and targeted demand pull.

However, there is concern about the ability of global and national supply chains to scale up in line with demand for materials needed for the transition to net zero, such as electronic chips and rare earth metals. As such, there is a need to understand and manage the flow of critical materials and minerals. More resource-efficient and circular supply chains can mitigate against this kind of shortfall. Further, a more circular economy has been predicted to reduce emissions from plastics, steel, aluminium, and cement by 40% globally. This will be increasingly important as global demand for critical resources increases.

Meet Sia – she runs a medium-sized builders’ merchant that supplies imported steel and locally-produced cement to construction firms. While price and quality are her main criteria when sourcing suppliers, her customers increasingly expect her to consider environmental impact, including carbon footprint.
  • How can suppliers decarbonise their supply chains and take advantage of the growing low carbon materials market?

Communicate, with both manufacturers and customers, where your priorities are and the importance you are placing on them. Engage your supply chain in those changes, rather than just changing suppliers. For example, Ørsted have announced that it expects all its suppliers to use 100% renewable electricity by 2025[3]. This could attract new customers who share those values.

Accurate and up-to-date data will allow you to assess your supply chain and identify the most impactful actions or changes. Availability of data to measure progress in these sectors is currently particularly poor and limits the effectiveness of monitoring and evaluation.

Don’t assume that buying locally is the lowest-carbon option by default. Instead, be led by the whole lifecycle emissions of products.

Low carbon products

Some low carbon products are at early stages of commercial roll-out, meaning they already are available or will be soon:

Although the characteristics and quality of these new low-carbon materials will face the same health and safety requirements, stress testing and checks, these technologies have not existed for the same length of time or have faced the same real-world applications.

Importantly, international standards and accounting frameworks already exist or are under development for evaluating the emissions intensity of certain materials, both for production (e.g., ISO 14404, ISO DIS19694-3, ResponsibleSteel, Cement CO2 and Energy Protocol) and products (e.g. ISO 20915, EPDs).

These make it possible to compare the impacts of different materials and products to select the most sustainable option. However, as an example, EPD data on French, German or Dutch products is more readily available than products and materials sourced in the UK[6]. This means that the only way to get that information is to call individual suppliers, presenting a challenge to constructing low-carbon buildings with locally sourced materials and developing clear business cases that provide customers with confidence in the decision-making process.

Labelling of products is also regulated to ensure traceability of the source, embodied CO2, energy efficiency or recycled content of materials. Performance bands, as demonstrated by the EU’s well-established energy efficiency labels, provide one example of showcasing credentials and enabling informed purchase decisions.

Meet Adam – he is planning to undertake a renovation of his house and, due to his desire to live sustainably, he wants to use low carbon materials where possible. He is wary of paying more and wants to know if there any government schemes to help him pay for low carbon materials.
  • How can I reduce the carbon emissions associated with building materials?

The two main methods to reduce embodied carbon are by using less material and eliminating waste - which should be more cost-effective and deliver long-term payback – or by switching to lower carbon materials – which generally should have required less energy in their manufacture.

A study was completed by Mesh Energy assessing the embodied and whole-life carbon associated with a building project under scenarios using a range of materials[7], which provides a range of outcomes in terms of carbon and cost.

The report advises that you could conduct a whole-life carbon assessment (WLC). However, WLC assessments in the UK cost £200 to £400 per property as a minimum, and there is no standardised process yet.


Whole life cycle carbon assessment


Therefore, it is important to engage your suppliers or builders’ merchants so that they understand your priorities and ambitions. This will allow you to assess the options more effectively and whether construction firms possess the required skillsets.

  • Will this increase or decrease my costs?

When looking at materials, carbon-intensive products are often cheaper than low-carbon alternatives. Steel is expected to become 20 to 40 percent more expensive if produced from renewable hydrogen, and cement could cost 70 to 100 percent more with CCS[8].

It depends on the sector, but in general, this is not predicted to impose major costs on end consumers. For example, an increased cost of steel is likely to add around £150 to the price of a car. And even with increased cement costs, your predicted increase in total building construction costs is 3%.

An important element of cost, and therefore material and building design choices, is the cost of insurance. Some lower carbon materials, such as timber, can lead to rising insurance costs in some countries. Therefore, it is critical to engage with relevant experts and advisors.

It is also important to be aware of the context that, energy prices reached historic highs in 2022[9]. The effects of those increased energy prices and the knock-on effects on manufacturers worldwide are unknown. There are, examples of energy-intensive industries having to shut down or reduce activities due to the costs – for example, over half of UK manufacturers adjusted their business practices to cut energy consumption and/or raised their product prices in 2022[10]. This could make decarbonising, as an added cost on top of existing energy costs, infeasible or increase the cost of low-carbon products. On the other hand, decarbonisation activities, such as installing renewable energy sources and implementing process efficiencies, could save money and lead to greater production of lower carbon products. The response to this crisis could be critical to developing the market for low-carbon products.

  • Are there any government schemes to incentivise the use of low carbon materials?

Emissions from construction and the materials used are receiving greater scrutiny. In the UK, the Building Research Establishment Environmental Assessment Method (BREEAM) provides a sustainability assessment method for buildings and infrastructure.

However, at the moment, there are no incentives in the UK specifically for individuals to use low-carbon materials. This means that you will have to cover any extra costs yourself. As such, many groups are calling on governments to implement and use fiscal incentives to create market demand and improve the housing stock of their countries.