The construction industry must step up to combat climate change

Global investors with trillions of dollars in assets are calling for change – is the industry equipped to respond?

Neha Bhatia is the editor of Construction Week.
ITP Media Group
Neha Bhatia is the editor of Construction Week.

A multitrillion-dollar community has called on the global cement industry to decarbonise its operations, effectively bringing the spotlight on the role that the construction sector can play in combating climate change.

Institutional Investors Group on Climate Change (IIGCC) and participants in Climate Action 100+ – a shareholder initiative with more than 320 investors that collectively have $33tn in assets under management – told global cement heavyweights CRH, Lafarge Holcim, and Hiedelberg Cement, this July that they must work against climate change and achieve net-zero emissions by 2050.

Cement makes up 7% of global man-made CO2 emissions, IIGCC said in its Investor Expectations report, adding that “if the cement industry were a country, it would be the third-largest global emitter, behind only the US and China”.

Elsewhere, the steel sector is also being pushed to go green. In July, a CDP report named Melting Pot found that the steel sector was failing to reduce emissions at a rate that would limit the rise in global temperatures to 2°C by 2050.

CDP’s analysis of the environmental practices followed by the world’s 20 largest steel companies ranked India’s Tata Steel fourth on the list of firms exhibiting business-readiness for the low-carbon transition, with JSW ranked 10th.

India’s decarbonisation efforts are also visible in the cement sector, with IIGCC’s Investor Expectations report citing the example of India’s Dalmia Cement, which has “set out one of the most ambitious visions by a company in the sector – to be carbon-negative by 2040”.

Decarbonisation is a clear priority for business giants around the world, and as chief executive officer of Ethos Foundation – one of the investor signatories in IIGCC’s campaign – explained, investors are already expecting “construction materials companies to substantially increase the R&D budgets available for research into decarbonising cement production”.

He added: “Construction materials companies may ultimately risk divestment and lack of access to capital as an increasing number of investors seek to exclude highly carbon-intensive sectors from their portfolios to meet their own decarbonisation plans.”

The construction industry’s internationalism means the global building materials sector shares similar challenges – be they related to cash flow, supply chain operations, or environmental standards – regardless of geography. Investor requirements for carbon-neutrality look set to drive a change in the construction industry’s practices – the Middle East’s building sector must ensure its decarbonisation strategies are equipped for the future. 

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Construction Week - Issue 765
Jun 29, 2020