CONSTRUCTION

“We are at a crossroads,”  said  Hoesung Lee, Chair of the UN’s Intergovernmental Panel on Climate Change (IPCC), on April 4, 2022.  “The decisions we make now can secure a livable future. We have the tools and know-how required to limit warming.”   Lee made the announcement on the day the IPCC published a stark warning to the world: without immediate and deep emissions reductions across all sectors, limiting global warming to 1.5°C – a central goal of the 2015 Paris Agreement – is beyond reach. Cities, urban areas, and buildings were highlighted as offering opportunities to reduce carbon emissions:  “We see examples of zero energy or zero-carbon buildings in almost all climates,” said Jim Skea, Co-Chair of IPCC Working Group III. “Action in this decade is critical to capture the mitigation potential of buildings.”


Construction is an industry with a heavy footprint


  • It’s little wonder that pressure on the construction sector to clean up its environmental, social and governance (ESG) act is intensifying. Buildings are responsible for around 40% of global energy consumption, a quarter of global water usage, and a third of greenhouse gas emissions [1]. Every year, more than four billion tons of cement are produced, accounting for around 8% of global carbon emissions [2]. As well as the ‘embodied carbon’ of buildings, which are the emissions associated with their overall construction and its supply chain, the built environment also generates emissions from heating, cooling, and lighting systems. Over 80% of buildings that will be here in 2050 have already been constructed [3] – meaning their effects could be felt in a future with unknown weather conditions and possibly scarce resources. 
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  • Calls for the construction sector to act are coming from many directions. Investors and consumers are voicing concerns about carbon emissions issues, with legislation, regulation, and reporting requirements evolving quickly in many jurisdictions around the world. In the UK, all companies bidding for government contracts worth more than £5m a year must now commit to net zero by 2050 while new proposals in the EU call for the mandatory disclosure of the emissions potential of new buildings over their whole life cycle, effective from 2027 to 2030. 
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  • Strong sustainability metrics are attracting investors, who recognize they make property more marketable, can attract lucrative tenants, increase property value, and lead to higher profitability. Construction professionals need to rise to the challenge presented by climate change, not only for the greater good, but to attract investment and minimize their exposures to claims and litigation. 

Reporting to stakeholders on ESG issues is a challenging undertaking. Identifying which standards to follow, what to measure and which metrics to compile is difficult, not least because there are myriad different entities across the ESG space providing everything from standards, goals, and guidance to company-level assessments. 

The lack of clarity around what and how to measure, combined with a lack of consistency both between companies and around specific disclosures, are all barriers to overcome. 

Research led by EY of the top 24 E&C companies in the US (9 public and 15 private) and evaluated them against 24 metrics covering ESG issues. The study shows that even within the top 24 US contractors, disclosures to date are very mixed:

  • Leaders are making disclosures against at least 20 of the 24 metrics (80%-plus), while the bottom tier are covering only around one-third.

  • Half of the companies reviewed produce a stand-alone sustainability report, in addition to their annual reports; of those that produce one, 67% are public companies and 33% are private. Furthermore, among those stand-alone reports, 25% followed Sustainability Accounting Standards Board (SASB) standards, while 29% were in compliance with GRI standards.


Our solution for construction industry automates the data extraction from different relevant sources, process, captures the planning approach and automatically creates the sustainability report with 18 metrics especially those related to carbon emissions.

BANKING


In banking sector, here are some specifics related to the financial industry, when it comes to Scope 1,2,3 emissions:

- The time dimension, which is related to:

● The long cycle of certain products (loans, investments), that requires considering the full- time horizon of both the financial service life-cycle (real-time updating of the outstanding amounts and corresponding emissions), and the time stamp of the carbon emissions accounted for (by considering the life-long impact of the financed assets or projects on carbon emissions)

● The net impact of the financial product, by measuring the levels of emissions in “before v. after” moments.


- The complex nature of the relationship with the clients and suppliers and their activity, which leads to the necessity of using technology to properly connect to this ecosystem, in order to exchange data and information in an effective and efficient manner.


In developing our approach for Scope 3 accounting and reporting, EnterTeq Software team has considered two main directions provided by established experts:

1. Robert Kaplan’s e-liability concept
2. Teubler & Kuhlert’s Foot- and Handprint Based Calculation


As a result, we have created a framework that combines both approaches, moving the concept to a strategic management framework for financial institutions. The area of Scope 3 reporting can be illustrated as follows:



The time dimension when addressing the banking sector is reflected the status of the bank’s client that should be evaluated at two different moments: before and after the bank assistance, more precisely, by the net impact on the emissions allocated to the service. The logic of the calculation is based on the value chain as follows:

Based on this approach, the net impact is calculated as follows:

Where:

● EP is Emission Performance of the services (loan, investment, project)

● EI 0 is the Emission Intensity of the client before the bank assistance

● S3E is the operational Scope 3 emissions of the internal ecosystem of the bank such as the emissions related to employees, operational waste management and business travels

● EI 1 is Emission Performance after the bank financial assistance

For controlling reasons, the planned emission intensity can be added to the calculations based on the presented formula. The scheme below summarizes the logic behind the formula

ECOSYSTEMS

One of the most important aspects when tackling the carbon print challenge is thinking in ecosystems. No company can exist without its clients and suppliers and the environmental impact must be considered along the complete value chain in order for societies to obtain a real image.


Mutual accountability is actually one of the intended dimensions of Scope 3 approach in GHG Protocol, which basically affirms that a company’s carbon print should include emissions from both the suppliers and the clients (upstream and downstream emissions). The message is that a business is responsible for selecting more desirable (“greener”) suppliers, but also for designing and delivering products and services that do not generate many additional emissions by intermediary and end-users, in order for them to use or dispose of those products.


This means that a company needs to collaborate tightly with businesses in its ecosystem, in order to accurately estimate its carbon print, to be fully compliant and to know where to optimize. In the case of Construction and Banking, The Building System Carbon Framework document published by WBCSD (see document and source pictures here: https://www.wbcsd.org/Programs/Cities-and-Mobility/Sustainable-Cities/Transforming-the- Built-Environment/Decarbonization/Resources/The-Building-System-Carbon-Framework ) clearly illustrates the extended structure of the shared ecosystem, when looking at all participants in the value chain of the Constructions economical area:


  • The Structure of the System

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  • The Value Chain Interactions:





    Sharing data in an efficient and safe manner within an ecosystem is much easier when all parties are using the same platform. This is why, our platform was designed to encourage the enrollment also of a company’s business partners, in order to easier capture data and to generate knowledge at the level of each partner about their own carbon emissions.

     
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