Accelerating Carbon Footprint Disclosure and Decarbonisation in the Built Environment

Transitioning to a low carbon future is critical for tackling climate change. The built environment, responsible for 39% of energy-related emissions and 11% of material and construction emissions, is crucial for decarbonisation.

The OECD forecasts that global demand for building products will more than double by 2060, driven by emerging economies and rising populations, making it crucial to advance innovations that reduce emissions in the building sector.

Sustainability in the built environment encompasses emissions across the entire building lifecycle, from raw material manufacturing to end-of-life stages. Environmental Product Declarations (EPDs) measure embodied carbon and environmental impacts across a product’s lifecycle, ensuring compliance with sustainability ratings like Green Star.

Decarbonising buildings and infrastructure, particularly in addressing embodied emissions, is a complex challenge that demands extensive collaboration and informed decision-making. Access to accurate and shared data is critical for making impactful choices. In response, there has been a growing focus on embodied and lifecycle carbon emissions in building products, with EPDs emerging as a key tool for providing this data.

Early adopters and pioneers like Holcim, Bluescope, InfraBuild, Iplex, Vinidex, the Forest and Wood Products Australia, to mention a few have been instrumental in driving the adoption of EPDs in Australia and New Zealand. These industry leaders have demonstrated the benefits of transparency, setting a strong example for others to follow in reporting verified environmental data and embodied carbon.

Despite the increased use of EPDs, especially with sustainable procurement standards and carbon disclosure regulations, a significant data gap persists. In Australia and New Zealand, for instance, only 300 EPDs from 100 organisations are registered, including some major product suppliers, but representing just a small fraction of the products and organisations in the market.

Declarations (EPDs)

Although EPDs are the gold standard for product transparency, several challenges impede their widespread adoption:

• Time and Budget: Producing an EPD requires time and money. The typical process spans six to nine months. The financial commitment, often reaching tens of thousands of dollars, combined with the six to nine months required for EPD development, deters smaller companies from beginning the process.
• Capacity and Expertise: There’s a scarcity of LCA experts, consultants, and verifiers with the skills needed to analyse environmental data compliant with EN15804, leading to long waiting times. For smaller organisations in particular, the data collection and EPD development process is seen as complex and potentially overwhelming.
• Complexity: Organisations with extensive product lines struggle with the time and resources needed to produce and update EPDs, especially when product mixes change frequently.

There has been progress to address these challenges, through efficiencies, automation and self-service tools, but the barriers are still significant.

Expanding carbon footprint disclosure is not just critical; it is urgently required to meet our global and national climate goals.

Our current methods are proving too slow and cumbersome to match the pace of change required. Our approach to carbon footprint disclosure must be streamlined to help achieve the required decarbonisation of the built environment.

While an EPD is comprehensive, this often exceeds the immediate needs of most users, who are looking for reliable and comparable carbon footprint information. Data over-production can deter organisations from starting the process, due to significant time, budget, and resource investments.

Decades of experience in the built environment sector show limited options for organisations starting their journey toward transparency and carbon footprint disclosure.

The journey must be broken down into manageable steps.

We recommend introducing a tiered system, allowing organisations to gradually develop and refine their carbon footprint disclosures, making the process more accessible and manageable. No matter if they’re just starting out or have already published EPDs, the tiered system can make the pathway towards carbon footprint disclosures more accessible for all types of organisations.

Potential benefits range from reduced costs and resource allocation by adopting a gradual approach to carbon footprint disclosure, to rewarding organisations to benchmark their products and identify areas to reduce emissions from day one.

Figure 1: Tiered system towards carbon footprint disclosures, with year-on-year reduction reporting.

The tiered system offers a gradual progression from generic LCA adaptation to full EPD development and certification, making carbon footprint disclosure accessible for all. The different graduation stages for manufacturers and suppliers:

1. Generic LCA adaptation: this stage sees an organisation adapting generic LCA data to estimate its products’ carbon footprints. This will provide a high-level understanding of an organisation’s impact and establish the context for more detailed assessments.

The adaptation could be limited to confirming that the generic dataset is based on comparable manufacturing techniques and technology, and adapting the electricity grid-mix used.

2. Screening and scoping carbon LCA: an organisation can incorporate specific data on key inputs such as the quantity of raw materials, energy use and transport distances to refine its carbon footprint estimation.

3. Full Product Carbon Footprint: this stage sees an organisation moving to a comprehensive carbon footprint that’s ISO 14067 compliant. This involves using comprehensive and specific data for modelling the product life cycle, with a focus on production inputs and outputs.

4. Peer reviewed Full Product Carbon Footprint: an organisation ensures their carbon footprint is independently reviewed by peers to provide extra assurance.

5. EPD development: this is the stage where an organisation develops an EPD that’s verified and meets EN 15804 standards, using detailed data and modelling from previous stages. This is where the assessment is expanded from carbon to full environmental profile (including a broad range of environmental impacts and indicators)

6. Benchmarking and eco-label certification: an organisation can build on their EPD and benchmark its carbon footprint and other environmental impacts against alternative solutions and work towards achieving the ISO 14024 ecolabel certification if the product demonstrates superior environmental performance.

7. Demonstrate year-on-year product-level carbon reduction: this is arguably the most important aspect, for organisations to demonstrate its year-on-year improvements by reporting progress independent of the stage of disclosure. If there are significant change and improvements, update the product EPD or Product Carbon Footprint disclosure.

To address concerns about potential greenwashing, the tiered system includes stringent peer reviews and third-party verifications, even in the early stages. This ensures that companies beginning the carbon footprint disclosure journey maintain credibility and build trust with stakeholders. The framework prioritizes transparency at every step, mitigating the risk of data manipulation for marketing purposes.

The table below provides a summary of the graduation stages and guidelines for carbon footprint disclosure.

The communication examples are illustrative, and we recommend to always adhere to best practice guidance such as The Handbook to help you communicate with confidence, the ACCC’s Making environmental claims - A guide for business and the Commerce Commission New Zealand’s Environmental Claims Guidelines.

Table 1: Graduation stages and guidelines for carbon footprint disclosure

To make real strides in carbon footprint disclosure and decarbonisation, organisations should follow these straightforward principles:

• Keep Pushing for More Transparency: Organisations need to show they're serious about moving forward. For example, start with a generic LCA adaptation, upgrade to a screening carbon LCA within six months. Then, within 12 months, move on to a more detailed carbon LCA. This graduation process provides the stages for continuous improvement for better transparency.
• Measure and Show Your Progress: It’s not enough to just collect data, the key is to act on it. Organisations should focus on reducing the embodied carbon in their products and regularly updating their footprints to reflect these improvements.

By sticking to these principles, organisations can make steady, transparent progress in carbon footprint disclosure. This approach not only builds trust but also helps drive the entire industry towards meeting our decarbonisation goals.

It is important to emphasize that the tiered system is designed to provide a scalable entry point for smaller manufacturers or products without established EPDs, without diminishing the importance of full EPDs.

The ultimate goal remains full compliance with international and domestic standards, ensuring transparency and comparability of data. Organisations with verified EPDs and/or certified eco-labels should in our opinion receive the highest recognition.

Securing a low-carbon future requires a simple, practical framework that encourages all organisations to understand and publish their carbon footprints.

Our recommended tiered system can deliver competitive and operational benefits, encourage organisations to get on board and increase the availability of reliable and accurate carbon footprint disclosures of products and services in the construction sector.

Aligning graduation stages with industry rating schemes like Green Star and IS Rating Scheme, by awarding credits for responsible product practices, is vital for scaling industry change. Implementing by awarding credits for responsible product practices within industry rating schemes is an approach that has proven itself in the past.

Our tiered system proposes a pathway to accelerate carbon footprint disclosure across the built environment, focusing on progress over perfection.

To ensure broad-scale adoption and effective implementation, we propose the following actions:

1. Incentivise Early Progress: Industry rating schemes like Green Star and IS Rating should recognise and reward early-stage carbon disclosure efforts. By offering partial credits for pre-EPD stages, these schemes can drive broader participation and encourage industry-wide change.
2. Lower Barriers to Entry: Industry bodies and trade associations should support smaller companies by providing tailored training and tools such as the concrete industry’s GCCA tool. This can help them navigate the complexities of carbon footprint disclosure and progress effectively through the tiers.
3. Enable Sector-wide Collaboration: Manufacturers, designers, contractors, and regulators can adopt the unified framework for carbon transparency. Collaborate on joint initiatives, industry workshops, and shared platforms to ensure consistent standards and practices across the sector.
4. Promote Continuous Progress: Organisations should commit to continuous improvement, with clear timelines for reducing embodied carbon. Regular updates to disclosures will keep carbon reduction a priority and foster a culture of ongoing progress and sharing progress and best practice.

By adopting this tiered system, the built environment sector can lead by example, setting a global standard for democratising carbon transparency.

The time to act is now, collectively, we must make carbon transparency the standard across the industry, to unlock meaningful and targeted carbon reductions in a time when we need urgent action and progress.

After all, continuous improvement is central to the tiered approach. Transparency and comparability is great, but only if it ultimately leads to rapidly eliminating life cycle carbon emissions in the built environment.

Appendix: Key Stakeholders and Their Roles in the Carbon Graduation Scheme

The successful implementation of the carbon graduation scheme relies on the active participation and collaboration of various key stakeholders within the built environment sector. Each stakeholder group plays a role in advancing carbon footprint transparency and contributing to the overall sustainability of the industry.

The primary stakeholder categories, their specific roles in the carbon graduation scheme, and the anticipated benefits they can expect from their involvement include:

Building Rating Schemes (NZGBC, GBCA, ISC)  Building rating schemes like Green Star and the IS Rating Scheme will play critical roles in recognising and incentivising early progress on carbon disclosure. They achieve this by awarding credits for pre-EPD stages and other carbon disclosures in their rating systems.

These schemes drive industry-wide change by encouraging broader participation in carbon transparency efforts, ultimately helping to accelerate the shift towards sustainable building practices. We would welcome a shift towards rewarding carbon reductions and continuous improvements over detailed declarations and reporting.

Government and Regulators (ABCB, MBIE, State Department of Planning): Government bodies and regulators are responsible for setting and enforcing standards for carbon disclosure in the built environment. They create incentives for compliance and drive industry-wide adoption of these standards.

Their involvement ensures that national emissions reduction targets are met, industry standards are adhered to, and future policies are robust and forward-looking. Inclusion of embodied carbon standards in the construction code would establish a much needed minimum compliance level.

Product Certification Bodies (incl. GECA, Eco Choice Aotearoa, Global GreenTag, C2C, Steel Sustainability Australia): Product certification bodies develop and administer certification schemes that are aligned with the tiered carbon disclosure system. They provide third-party verification of carbon disclosures to ensure accuracy and credibility.

These bodies help fill market gaps with new certification pathways, improve overall industry standards, and remain competitive in the evolving sustainability landscape. Product certification bodies play an essential role in providing trust in manufacturers claims.

EPD Programme Operators (EPD Australasia, Global GreenTag, International EPD System): EPD programme operators provide the necessary governance, rigour, and certification for Environmental Product Declarations (EPDs). They ensure that the data is accurate, reliable, and adheres to international standards.

These operators help build trust in carbon disclosures, ensuring that they are comparable and credible, which is essential for widespread industry adoption and compliance. Collaboration on central solutions like the ECO Platform will help simplify and centralise for all data providers and users.

Building Product Manufacturers (manufacturers without EPDs): These manufacturers can begin their journey towards carbon transparency by participating in the tiered disclosure system. This will allow them to gradually build their capabilities in carbon footprint reporting and disclosure.

By engaging in this process, these manufacturers will future-proof their operations, increase competitiveness in a market that increasingly values sustainability, and unlock potential cost savings through efficiency improvements.

Industry Bodies and Associations (BPIC & members, MECLA, ALCAS, LCANZ, MBA): Industry bodies and associations promote the adoption of the tiered system among their members, providing necessary training, tools, and resources to facilitate this transition. Existing examples include the GCCA tool for the cement and concrete industry.

By leading this charge, they enhance industry leadership, drive widespread adoption of carbon footprint disclosure practices, and help future-proof their member organisations against market and regulatory shifts.

Architects and Designers (AECOM, Warren and Mahoney, FJMT Studio, Cox Architecture, Hassell): Architects and designers should integrate carbon data into their design processes, using it to enhance the sustainability of their projects and inform material selection decisions.

This integration will lead to improved project outcomes, higher client satisfaction, and a stronger competitive edge by meeting the growing demand for low-carbon materials.

Contractors (Lendlease, Multiplex, Fletcher Construction, Hutchinson Builders, Downer): Contractors play a critical role by prioritising the use of low-carbon products and materials in their construction projects, ensuring that sustainability is a key consideration from the outset.

By doing so, contractors will meet sustainability targets, enhance their project credentials, and future-proof their businesses against impending regulatory changes.

Consultancies: (Edge Impact, Beca, Tonkin + Taylor, Aurecon, Arup): Consultancies provide the expertise needed to guide companies through the carbon graduation scheme, offering services in carbon footprint analysis and lifecycle assessments.

This allows consultancies to expand their service offerings, strengthen relationships with clients by helping them achieve their sustainability goals, and stay competitive in an increasingly eco-conscious market.

Asset Owners: (Dexus, Mirvac, Kiwi Property, Stockland, GPT Group): Asset owners demand transparency from their suppliers and integrate verified carbon data into their asset management and development practices.

This approach will increase the value of their assets, future-proof their investments, and lead to reduced long-term costs through improved sustainability performance.

Table 2: Stakeholders, Roles, and Benefits

The active participation of these stakeholders is crucial for the success of the carbon graduation scheme. By understanding their roles and the benefits they stand to gain, these groups can contribute meaningfully to the advancement of carbon transparency in the built environment, ultimately leading

Case Study: The Insurance Industry's Slow Response to Climate Change

The insurance industry offers a cautionary tale about the dangers of inaction in the face of emerging risks. In the late 20th and early 21st centuries, despite mounting evidence of the impacts of climate change, many insurers were slow to adapt their risk models. They continued to rely on historical data that failed to account for the increasing frequency and severity of climate-related disasters, such as hurricanes, floods, and wildfires.

This slow response had severe consequences. As climate-related disasters became more frequent, insurers were hit with claims far exceeding their expectations, leading to massive financial losses. Some companies faced bankruptcy, while others were forced to withdraw from high-risk markets, leaving homeowners and businesses without coverage. The industry's failure to adequately prepare for and respond to these risks also led to significant reputational damage, with customers losing trust in their insurers.

The lesson for the built environment is clear: failing to act on carbon footprint disclosure and decarbonisation carries similar risks. Companies that delay may face financial penalties, reputational damage, and a loss of competitiveness as the industry increasingly prioritises sustainability. Just as the insurance industry suffered from its reluctance to adapt, so too could the built environment sector if it does not take immediate, decisive action.