Carbon footprint and scope 3: the predominant impact of buildings in the real estate sector

Thecarbon footprint, a key indicator of environmental impact, represents the sum of greenhouse gas emissions, expressed in CO2 equivalent, generated directly or indirectly by an entity.

In the real estate sector, this footprint is particularly significant, although few owners are really aware of it. Buildings are major consumers of energy and sources of emissions throughout their lifecycle, whether during construction, operation or demolition (and that’s without even mentioning energy consumption).

For players in the sector, particularly property developers and social landlords, rigorous management of their Scope 3 carbon footprint is therefore essential if they are to align themselves with climate objectives and reinforce their environmental responsibility, not to mention their increasingly stringent legal obligations.



Scope 3 fundamentals


A. Definition and outlook

  1. Nature of scope 3

Scope 3, in the context of greenhouse gas emissions management, encompasses a wide range of indirect emissions that are not directly produced by the company’s activities, but are nonetheless intrinsically linked to its operations. These emissions come from sources external to the company, notably the supply chain and post-consumer activities.

In the real estate and construction sector, Scope 3 takes on a particularly significant dimension. Each product and material used in the construction of a building has its own carbon footprint, which must be taken into account when calculating the building’s overall Scope 3 footprint. This footprint encompasses several key stages:

    • Materials production: Every building material, whether concrete, steel, glass or wood, generates greenhouse gas emissions during production. These emissions are often linked to the energy consumed during manufacturing processes, as well as to the industrial processes themselves.
    • Transporting materials: Once produced, materials have to be transported to the construction site. Transportation, whether by road, sea or rail, also contributes to the overall carbon footprint of the material, depending on the distance traveled and the mode of transport used.
    • Installation and processing: The installation or application of materials on the construction site can also result in indirect emissions. Although these emissions are generally less significant than those linked to production or transport, they must nevertheless be taken into account.
    • End-of-life materials: Finally, the carbon footprint of a material also includes the emissions associated with its end-of-life, be it demolition, recycling or disposal. The way materials are managed at end-of-life can have a significant impact on their total carbon footprint.

In short, to accurately calculate Scope 3 in the building sector, it is essential to consider all these stages for each material and product used. This holistic approach enables companies in the real estate sector to better understand and manage their overall environmental impact.

For property companies and social landlords, buildings account for around 90% of Scope 3’s carbon footprint. This dominance is explained by the carbon intensity of building materials and associated processes, underlining the importance of adopting low-carbon construction and renovation practices.

  1. Data, the sinews of war

Scope 3 calculation accuracy relies heavily on data quality and availability. Unlike Scopes 1 and 2, where emissions are often directly measurable and more easily attributable to the company’s activities, Scope 3 requires more extensive and complex data collection. This complexity stems from the need to take into account indirect emissions generated throughout the value chain, including those linked to the production, transport and end-of-life of the products and materials used.

In this context, access to reliable, detailed data is crucial. Specialized platforms, such as Upcyclea’s Circular Passport Bookshop, play an essential role in providing accurate information on the carbon footprint of materials and products. This library provides access to detailed data on products, including their composition, origin, environmental impact, and potential for reuse or recycling.

Using this data, companies can calculate more precisely the Scope 3 emissions associated with each building component. For example, by accessing information on the carbon footprint of a specific type of concrete or steel used in a project, companies can integrate this data into their overall Scope 3 calculation. In addition, this information helps to identify opportunities for reducing emissions, such as choosing low-carbon materials or designing buildings that facilitate the recycling and reuse of materials.

B. Legal framework and scope 3 calculation obligations

The inclusion of scope 3 is increasingly governed by international and national regulations. These regulations are designed to increase transparency and corporate responsibility in terms of sustainability, by requiring companies to calculate and communicate their indirect emissions.

  1. Corporate Sustainability Reporting Directive (CSRD)
    • Aims and scope: The CSRD, a European Union initiative, aims to extend sustainability reporting requirements to large companies. It requires scope 3 emissions to be reported, underlining the importance of transparency in companies’ indirect activities.
    • Implications for companies: The companies concerned must set up robust monitoring and reporting systems for their scope 3 emissions, which implies detailed data collection throughout the value chain.
  2. European taxonomy
    • Definition and application: The European taxonomy is a classification system designed to steer investment towards more sustainable activities. It includes specific criteria for Scope 3 emissions, particularly for carbon-intensive sectors such as real estate.
    • Role in scope 3 management: These regulations encourage companies to adopt more sustainable practices by integrating scope 3 considerations into their investment and development decisions.
  3. Other laws and regulations
    • National and regional legislation: Several countries have introduced legislation requiring the calculation and reporting of Scope 3 emissions, notably as part of their commitments to international climate agreements.
    • Impact on corporate strategies: These laws encourage companies to assess their indirect environmental impact in greater depth, and to look for ways to reduce emissions across their entire value chain.
  4. Consequences for the real estate sector
    • Increased importance of scope 3 calculations: For property companies and social landlords, compliance with these regulations means paying particular attention to scope 3 calculations, given the importance of indirect emissions linked to construction materials and building operation.
    • Opportunities and challenges: While calculating scope 3 presents challenges in terms of data collection and analysis, it also offers opportunities to improve energy efficiency, reduce costs and enhance the overall sustainability of real estate projects.

In short, the legal framework surrounding scope 3 requires companies, particularly in the real estate sector, to develop comprehensive strategies for measuring and reducing their indirect emissions. While these regulations represent a challenge, they are also an opportunity for companies to make a significant contribution to the fight against climate change and to commit themselves to a more sustainable future.

C. How to measure your scope 3

  1. Identifying emission sources
    • Value chain analysis: Start by identifying all the upstream and downstream activities that contribute to your carbon footprint. This includes building materials, subcontracted services, business travel and waste management.
    • Categorizing emissions: Classify these activities according to the standard Scope 3 categories for better organization and analysis.
  2. Collecting data
    • Data sources: Collect emissions data for each activity identified. This may involve working with suppliers, using sector-specific databases, or applying standard emission factors.
    • Estimates and assumptions: In some cases, it may be necessary to make estimates or use assumptions to fill data gaps.
  3. Calculating emissions
    • Use of emission factors: Apply appropriate emission factors to the data collected to convert activities into CO2 equivalents.
    • Calculation methodologies: Follow recognized methodologies such as those proposed by the GHG Protocol to ensure the accuracy and consistency of your calculations.
  4. Uncertainty management
    • Acknowledge limitations: Be aware of the limits and uncertainties inherent in your calculations, and communicate them clearly in your reports.
    • Continuous improvement: Engage in a process of continuous improvement to refine your calculations over time, as better data and methods become available.
  5. Reporting and communication
    • Transparent reporting: Communicate your results transparently, following reporting guidelines such as those of the CSRD or the European taxonomy.
    • Using the results: Use the results of your calculation to inform your emissions reduction strategies and communicate your sustainability commitments.

In short, calculating the scope 3 carbon footprint is a complex but essential process for companies seeking to understand and reduce their overall environmental impact. A methodical approach, supported by rigorous data collection and the use of standardized methodologies, is crucial to obtaining accurate, meaningful results.

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