The construction industry has lagged others in reducing greenhouse gas emissions in support of the 2015 Paris Agreement to limit global warming to 1.5ºC over pre-industrial levels. But soon, winning contracts will require companies to innovate rapidly and adopt sustainable practices.
To learn more about scope 1, 2 and 3 emissions and how a leader in the construction industry is working to eliminate them, Built recently interviewed Sara Neff, head of sustainability for Lendlease Americas. Neff shared background on the goals Lendlease has set, its roadmap for achieving them, and the tools and strategies it plans to use.
Built: Lendlease has set a goal to achieve net zero for scope 1 and scope 2 emissions by 2025. What prompted these goals?
Neff: Lendlease did a lot of climate planning analysis and decided we want to live in a world warmed by no more than 1.5ºC. So, we want to achieve net zero carbon emissions by 2025 and absolute zero across our entire business without offsets by 2040.
Built: How do you plan to achieve your scope 1 and scope 2 emissions goals?
Neff: Scope 1 emissions are related to the fuels we burn and scope 2 to the electricity we consume. For scope 1 emissions, we are reducing them all the time by electrifying our processes—for example, by using all-electric construction equipment. Whatever we’re not able to address will be dealt with through carbon offsets.
For scope 2 emissions, we are participating in installation of a large utility-scale renewable facility, which will cover the bulk of the renewable electricity for our whole portfolio. In addition, we procure 100% renewable power from our utilities wherever it makes sense to do so.
Built: How will you reach carbon neutral status on construction sites?
Neff: We are starting to see the rapid evolution of electric construction equipment and alternative fuels. For example, this is the first year we’re going to see renewable diesel on a construction project. Right now, we’re focusing on making sure we have either early temporary power or battery power on site—because obviously it defeats the purpose to get an electric excavator and then charge it on a diesel generator.
We’ll need carbon offsets to achieve our goals but know that by 2040 offsets will no longer be allowed. We’ll have to figure out how to electrify everything and use 100% renewable fuel, because we can’t have any scope 1 emissions at that point. We’re not waiting until the next decade—we’ve already created roadmaps for reaching our goals.
Built: How did Lendlease decide to achieve absolute zero for all greenhouse gas emissions by 2040? Especially for scope 3—that’s a daunting target.
Neff: Scope 3 emissions are hard to measure and even harder to manage. But we know that more than 90% of our emissions are scope 3. We have to take drastic measures to reduce our emissions. Focusing only on the smallest part will not get us there.
I’ve been shocked by how much our supply chain recognizes this issue and is innovating quickly. We’re seeing rapid increases in the availability of lower carbon concrete. Net neutral steel is already available. I’m lucky to have a dedicated supply chain team that can call every supplier of major materials before we bid a job and get the environmental product declarations on their products.
Built: How does that help your clients achieve their environment, social and governance goals?
Neff: We can choose the best options and bring those to our clients. Some are willing to pay a premium for a low carbon product. Others want to keep the budget neutral, but we can still choose a lower carbon option.
Built: How do you address contributors to scope 3 outside materials?
Neff: We plan to spend part of the second half of this year determining what’s in and out of bounds on scope 3 emissions—transportation? Utility transmission losses?
We also have many internal tools that let us rapidly assess the embodied carbon of a development project in-house. For example, in Los Angeles, the office portion of the 3401 South La Cienega Boulevard development used cross-laminated timber instead of steel and concrete to enable us to achieve a lower embodied carbon structure.
Built: How is participating in the Steel Zero Initiative helping?
Neff: Manufacturing steel produces 8% of global climate emissions. It’s critical that it gets zeroed out quickly. But just calling up suppliers and asking for zero carbon steel is not enough. We have to be in partnership with our industry, so we’ve joined a consortium of like-minded consumers.
Built: How is Lendlease being proactive with lower embodied carbon options?
Neff: Some construction companies may think that if the client didn’t mention it, there’s no reason to bring up new possibilities. But there’s been an explosion in sustainability requirements to award jobs. Companies that haven’t figured out how to provide more sustainable practices aren’t going to win. I think the construction industry is being forced to innovate rapidly.
Built: What are three steps a construction company can take to get started?
Neff: First, tools like EC3, the Embodied Carbon in Construction Calculator, can help construction companies calculate embodied carbon. Training is free online, so at least one staff member should learn to use that tool to get the lowest carbon options when they’re procuring materials. Before bidding a job, you’ll know where you can obtain the lowest carbon product.
Second, there must be much more demand for all-electric construction equipment. The more people demand it, the more it will exist, along with working with utilities to get temporary power online faster so you’re able to charge that equipment without having to use diesel or other fuels.
And third is deep innovation around construction practices. For example, how can we cure concrete without using fuels? We need to figure out how to manage processes.
Built: How do you think the SEC’s proposed ruling on climate-related disclosures will impact the construction industry?
Neff: I think it will help create the market conditions for our supply chain to rapidly innovate and provide the lower carbon products we’ve been asking for. Once companies start disclosing emissions, they’ll want to have fewer emissions and show improvement quickly. We saw that with energy efficiency, and we’re going to see the same thing with emissions. The companies that will win business will be those who have products that perform great and are cost competitive.
Built: What do you see as the most urgent action for construction companies to take?
Neff: Few real estate companies have set scope 3 targets. It’s tricky to measure; it’s tricky to figure out what is in and what is out. But we must wrangle; we must wrestle with our scope 3 emissions and reduce them.
It’s also important to note that the cost of carbon offsets has tripled or more in the past few years. Many companies have set carbon neutrality goals and achieved them through renewable energy certificates and offsets. But it’s going to become an increasingly expensive proposition. That’s going to lead to massive changes, because you won’t be able to buy your way out of emissions.