Scope 3 in construction – what you need to know

The built environment is responsible for 37 per cent of global energy-related greenhouse gas emissions, and in Australia, it contributes a fifth of all emissions. Achieving meaningful carbon reduction in this sector requires a whole-of-life approach to building and construction, addressing emissions across every stage of a building’s lifecycle.

Emissions are categorised into three scopes:

Scope 1
Direct emissions from sources owned or controlled by the organisation, such as fuel combustion in on-site machinery or company-owned vehicles.

Scope 2
Indirect emissions from the generation of purchased energy, including electricity and heating.

Scope 3
All other indirect emissions occurring in the value chain, both upstream and downstream.

For the construction sector, Scope 3 emissions are particularly significant, often constituting the largest share of a project’s total carbon footprint.

Upstream and downstream activities

The building and construction industry’s significant carbon footprint makes addressing Scope 3 emissions critical for achieving meaningful climate goals.

These emissions often account for 70-90 per cent of an organisation’s total footprint. They include upstream and downstream activities that are vital to understanding and reducing the sector’s overall impact.

Examples include the embodied carbon in construction materials, emissions from material transport, waste generation, and the energy used by completed buildings over their lifecycle.

Upstream activities

Purchased goods and services
Emissions from producing materials like concrete, steel, and timber. When suppliers provide transparent product carbon data, specifiers are able to make informed choices that support their sustainability goals.

Transportation and distribution
Emissions associated with delivering materials to construction sites. Local sourcing and optimising transportation routes can help reduce these emissions.

Waste generated in operations
Emissions from disposing of unused materials during construction. Strategies like modular construction and efficient material usage help minimise this waste.

Downstream activities

Use of sold products
Operational emissions generated during the lifecycle of a building, including heating, cooling, and lighting. This underscores the importance of designing energy-efficient buildings with durable materials.

Tenant fit-out and refurbishments
Embodied emissions from construction and installation processes, which can account for up to 32 per cent of lifecycle emissions in commercial buildings.

End-of-life treatment
Emissions from the disposal or recycling of construction materials. Specifying recyclable or reusable materials can significantly reduce this category’s impact.

Why Scope 3 emissions reporting matters

Scope 3 emissions reporting represents opportunities for both carbon reduction and competitive advantage in the construction industry:

Major impact
Reducing embodied carbon in materials and fit-outs directly addresses the largest sources of emissions.

Future-proofing
With emerging regulations mandating Scope 3 reporting in Australia, including the Corporate Sustainability Reporting Regime, early action ensures compliance and readiness.

Stakeholder expectations
Transparent reporting builds trust with clients, investors, and regulators, and facilitates collaboration across the supply chain.

Demonstrate your commitment to sustainability

For manufacturers and suppliers, measuring and reporting Scope 3 emissions is a chance to demonstrate leadership in sustainability.

Provide accurate data
Obtain and transparently share Lifecycle Assessments (LCAs) or Product Carbon Footprint (PCF) certifications for carbon data that aligns with mandatory reporting requirements

Collaborate with customers
Work with architects and other specifiers to understand their sustainability needs.

Build transparency with providers
Strengthen relationships with raw material providers to improve data accuracy and implement emission reduction strategies across the supply chain.

A path toward sustainable construction

For building material suppliers and manufacturers, transparent Scope 3 reporting demonstrates a commitment to sustainability. For specifiers, tools like Rebuilt’s product comparison supports them to make better selections and incorporate sustainability into the earliest stages of the project.

By integrating comprehensive Scope 3 emissions management into every stage of construction, the industry can achieve:

Substantial carbon reductions
From material production to lifecycle energy use.

Enhanced market positioning
Meet regulatory and market expectations while supporting innovation.

Alignment with global goals
Contribute to Australia’s net-zero targets and global decarbonisation efforts.

With Rebuilt, the building and construction sector has the tools it needs to navigate the complexities of Scope 3 emissions, transforming challenges into opportunities.