Construction industry report reveals mismatch between Net Zero carbon ambitions and reality in Asia

• 70% of construction industry executives in Asia have Net Zero goals as part of long-term ESG-related objectives for their operations and supply chain, but only 18% believe their organisations are well-prepared
• The most significant barriers preventing companies from meeting their decarbonisation targets include a lack of standardised ESG metrics, syncing with cross-border partners, and finding low or Net Zero materials
• 82% of respondents are adapting advanced technologies to track, measure and better understand sources and quantities of carbon emissions and other generated waste

The global construction industry has endured a lot recently, from the pandemic and supply chain disruption to an energy crisis aggravated by the largest war in mainland Europe for 80 years. Despite these significant challenges, the industry is in recovery and transformation mode and long-term strategic priorities are shifting, according to a new report from global law firm DLA Piper, Constructing the Future: Striving and thriving in the era of disruption.

One of the key findings in the report, which surveyed senior construction executives across Europe, Asia and the Middle East, is that the industry is coalescing around a universal sustainability agenda. This has seen many market participants adopting environmental, social and governance (ESG) frameworks that address stakeholder sustainability expectations and concerns.

According to DLA Piper’s research, while many respondents surveyed are making efforts to minimise their impact on the environment, many are reluctant to commit to a Net Zero target by 2050. But this is not the case in Asia, where 70% of respondents said they have Net Zero carbon targets as part of long-term ESG-related objectives for their operations and supply chain, compared to 50% of respondents in Europe. Yet despite these high aspirations, only 18% of executives in Asia feel that their organisations are well prepared to meet the target, compared to 32% in Europe and 9% in the Middle East.

The motivations for adopting an ESG-driven strategy varies by region. 52% of construction executives in Asia cite alignment with customers’ ESG ambitions and compliance in securing projects with long-term frameworks as the two most equally important driving factors. This is followed closely by Net Zero targets and social value commitments being a prerequisite to win government contracts (49%). 66% of respondents in the Middle East and 62% in Europe (the region with the deepest commitment to addressing ESG issues in the survey) also emphasise alignment with government and private sector clients as a key motivator.

Ted Yi, a DLA Piper partner in Seoul, says: “The construction industry has an obligation to ensure that the pursuit of profit does not come at the expense of sustainability and ethical conduct. But it is, by its nature, a resource and energy intensive industry, which makes the road to Net Zero a challenging one. Executives in Asia have admirable goals but they also need to grapple with maintaining competitiveness at a time when margins are already stretched through supply chain issues and rising inflation. Carbon pricing is a good example of an effective tool for calculating carbon usage and costs in construction projects. But a lack of standardized ESG metrics doesn’t help, giving rise to differing industry perspectives around the world.”

Indeed, the survey found that the most significant barrier in meeting decarbonisation targets, cited by all construction executives, is the challenge of tracking and measuring progress. This was the biggest concern for respondents in Asia (55%), then by Europe (50%) and the Middle East (49%). In Asia, this is closely followed by challenges synchronising objectives with cross-border supply chain partners (46%) and a lack of availability of, or a premium for, low or Net Zero carbon materials (40%).

To tackle these barriers, executives are turning to advanced technology to provide solutions. Our survey shows 82% of respondents in Asia and 74% of respondents in Europe are adopting technologies to track, measure and better understand sources and quantities of carbon emissions and other generated waste.

To download the report please click here.