The word ‘sustainable’ is the new stone benchtops and European appliances in the lexicon of construction project marketing – but the recent crackdown by the Australian Consumer and Competition Commission (ACCC) on greenwashing could see those claims subject to scrutiny.

The word ‘sustainable’ is often used quite loosely, and sometimes in tandem with citing a NatHERS rating equivalent to the minimum allowed in the National Construction Code. We need to be clear – code minimum star ratings are not a value-add, they are the bare minimum requirement.

One of the most important things any builder, supplier or consultant needs to communicate is clear and transparent definitions of what they mean by terms such as ‘sustainability’ or ‘net zero’. Beyond the marketing angle, having credible metrics matters because the global finance, investment and insurance communities are increasingly looking for data-based credentials.

‘Carbon neutral’ or ‘net zero’ for example does not necessarily mean a project or a product is a low emissions proposition. Under some certification standards, it simply means the emissions generated by that building, service or material’s manufacturing and supply chain have been balanced through the purchase of carbon offsets equivalent to the emissions generated.

The facts are in the detail

In looking to procure sustainable products or engage a subcontractor or consultant that is carbon neutral, reading the fine print is vital to uncover whether the claim is based on a science-based emissions reduction approach and which emissions sources have been accounted for.

Some carbon neutral accounting may only have factored in Scope 1 (direct combustion on-site), Scope 2 (emissions from energy supplies such as coal-fired electricity) and not Scope 3 (supply chain and associated transport emissions).

Increasingly, major developers, asset portfolio owners, investors and government clients are aiming to shift towards net zero emissions, which means the emissions footprint of the firms delivering new buildings for them is part of their own Scope 3 emissions.

That means they are paying close attention to the basis of sustainability claims, as any hint of greenwash within their own supply chain is a major reputational (and potentially legal) risk. So, if a business is part of the delivery team on a carbon neutral project, any fudging of the emissions figures opens up the potential for being caught up in legal action or regulatory consequences in future.

Why code minimum may become a thing of the past

Across all building classes, there are still a large percentage of projects being delivered at code minimum for National Construction Code Section J or NatHERS compliance. Connecting to gas for hot water, cooking and building services is also still standard in many parts of Australia. That means the eventual asset owner is also purchasing an emissions footprint which will form part of their own Scope 2 emissions if they occupy the property and Scope 3 if they have tenants in place.

Increasingly, it will be a competitive edge for contractors and project teams when tendering for major developments and public projects to have verifiable and credible carbon neutral credentials as a business, and for them to design and deliver all-electric and carbon neutral or net zero projects.

There may be challenges as the wider industry steps up to net zero, for example, fuels used on-site during construction by plant and generators are Scope 1 emissions for the construction contractor. It is still very challenging for builders to reduce these emissions by finding electric alternatives for larger site equipment – but as demand for low carbon machinery grows, so will the market. There are also potentially options emerging for renewable diesel availability at a more commercial scale.

Sustainable procurement cements reputation

And while there is a strong focus on carbon emissions across the industry, contractors and delivery teams can also strengthen their sustainability status by undertaking sustainable procurement for materials. This incorporates other environmental impacts of materials, such as recycled inputs, design for disassembly and re-use and VOC-free sealants and finishes.

Sustainable procurement also ideally addresses social and ethical concerns such as fair trade and fair wages for workers in the manufacturing supply chain, elimination of Modern Slavery and chain of custody documentation for inputs such as timber where provenance is key to avoiding the results of illegal logging.

What you need to do

• If you are disclosing carbon-related sustainability claims publicly be very clear about what you do – your Scope 1 and scope 1 and 2 should be a pathway with progressive reduction targets, and you should have a plan for Scope 3.
• If you are claiming you deliver ‘green’ or ‘sustainable’ projects, you need to have a credibility process in place that incorporates disclosing the basis of those claims, including the relevant data and (ideally) a third-party auditor or verifier that has validated your data and credentials.
• Sustainability strategies or management plans often include goals or claims around diversity and inclusion, community support, biodiversity protection and respect for Indigenous Peoples – again, these need to have some substance to them.
• Sustainability statements also need to indicate clear boundaries that explain what has or has not been included – does your diversity and inclusion approach only highlight D&I on the board, or only on the worksite, or both? Does your emissions data include downstream, supply chain Scope 3 emissions? Have you asked all your suppliers for Modern Slavery statements?
• Beware of empty buzz phrases such as ‘we care about the community’ – be clear and transparent about how you engage with the community and what forms of tangible social value you contribute.
• Be clear with your suppliers about what you expect from them, as your sustainability claims are only as strong as the performance of your suppliers and subcontractors.
• Recognise that net zero is a work in progress for almost every organisation and business in the global economy – having targets and a clear pathway is something to be proud of as it shows you are committed to protecting humanity’s shared global property. Progress is everything.

By Madlen Jamnaschk, APAC ESG Lead, Cundall

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