What climate pledges are being made in construction?

By Lucy Barnard14 December 2022

Major contractors, construction equipment manufacturers and rental companies are among those pledging to cut the greenhouse gasses they produce. But how much do these corporate climate pledges really tell us, and what more could they be doing? Lucy Barnard reports.

With a couple of clicks of his computer keyboard, Marius Verwoerd, VP for Sustainability at Finnish mining equipment manufacturer Metso Outotec scrolls through a series of charts on the company website to show the carbon emissions.

In 2021, Metso produced 52,216 tonnes of carbon dioxide from its own operations, an increase of 14% from the 44,913 tonnes in 2020, but down 58% compared with 2019. This was mostly achieved, Verwoerd says, by switching energy sources from fossil fuels to renewables or renewable energy certificates where that isn’t possible.

That, he says, is keeping the company on track to meet its latest emissions reduction targets, set by the company in 2021, promising to halve CO2 output compared with 2019 levels and to ‘net zero’ by 2030.

Net zero is the point at which the amount of carbon emissions produced by the company will be so low it will be balanced out by the amount it removes from the atmosphere.

Metso Outotec says it incorporates sustainability in every aspect of the company. (Photo: Metso Outotec)

“Yes we are on track to reach our target,”Verwoerd says confidently. “We have quite a long history of setting climate related emissions targets in the company.

“We are also clear about what the next steps between now and 2030 will be. We have a company-wide roadmap for how we plan to achieve our target.”

And Metso is far from alone. More construction organisations than ever are signing up to ambitious climate pledges to reduce their carbon footprints as companies around the world face unprecedented pressure from customers, employees, shareholders and lenders to operate in a more environmentally sustainable manner.

An International Construction analysis of the sustainability reports produced by a selection of 50 of the world’s biggest contractors, construction equipment OEMs and rental companies, found that nearly all of them had made some sort of commitment to reducing emissions and improving their impact on the environment – see the box below for the full list.

Encouragingly, there are signs that these efforts are bearing fruit. Research from the Science Based Targets Initiative (SBTi), a UN-backed organisation which has become the gold standard in assessing corporate climate pledges, found that companies with approved targets collectively reduced direct emissions by 12% in 2020.

Even taking into account the effect of the Covid pandemic during this time, the organisation reported that SBTi companies have delivered “excess reductions in comparison to their peers within their countries.”

However, there are still big caveats.

At the COP27 climate change summit in Egypt this year, the UN climate science panel reported that global CO2 emissions are on track to increase by around 1% this year, making it even harder for the world to avoid disastrous levels of climate change.

Allegations of greenwashing in construction 

Although much of the blame for this rests with world governments, the fact remains that many of the world’s biggest emitters have yet to sign up to a voluntary agreement.

Moreover, delegates heard that many of the corporate pledges which have been made are either not ambitious enough, or are not being implemented – leaving companies open to allegations of ‘greenwashing’.

“Despite [the] growing [number of] pledges of climate action, global emissions are at an all time high and they continue to rise,” UN Secretary General, Antonio Guterres told the conference. “To avert a climate catastrophe, we need bold pledges but matched by concrete, measurable action.”

For a start, although many companies have pledged to cut emissions, fewer of these have agreed to become net zero within an agreed time frame. Of the 50 companies surveyed by International Construction, around half had published a specific commitment to become net zero. Moreover, there was a significant variation over the timescales by which the companies surveyed hoped to achieve net zero.

Just two – Metso Outotec and Canadian engineering company SNC Lavalin Group – stated an aim of becoming net zero by 2030. Swedish vehicle and equipment manufacturers Scania and Volvo Group, said that they aimed to become net zero by 2040, while another 15 explicitly said that they would become net zero by 2050 – the year by which the UN says global emissions must fall by almost 50% to keep global temperature rises to a 1.5ᵒC target.

Delegates gather at COP27 in Egypt Delegates gather at COP27 in Egypt. (Source: Reuters)

A UN commission convened to assess the robustness of these corporate climate pledges, chaired by Catherine McKenna, a former Canadian minister of environment and climate change, found that even amongst those firms which had made a commitment to net zero, progress on emissions reduction was patchy and difficult to assess.

According to McKenna’s report, delivering on net zero requires three key measures.

Firstly, putting in place short, medium and long term plans to show how they will achieve their goal.

Secondly, focussing on reducing their own emissions as much as possible rather than buying carbon credits to offset their emissions.

Finally, addressing carbon emissions across their entire value chain – the ones produced by suppliers and customers – as well as the ones caused by their own operations.

“If you’re saying to the world ‘I am net zero’ then there is a price of admission,” McKenna told the conference. “You need to walk the talk. You need to deliver on it.”

One way in which many companies are attempting to put clear plans in place is by joining the SBTi, an initiative led by the UN Global Compact and involving a partnership of ‘green’ organisations and charities such as WWF, CDP and the World Resources Initiative.

What are Science Based Targets?  

The initiative works with businesses around the world to agree science-based target that limits a business’s global share of greenhouse gas emissions.

The initiative has quickly grown to become the gold standard for independently-verified corporate emissions targets with more than 4,000 businesses around the world already signed up, including 22 of those surveyed by International Construction.

Karl Downey, senior technical manager at the SBTi says that the organisation helps each individual company set meaningful emissions targets by assessing current emissions levels and plans to reduce them compared with those of industry peers.

Then, using a computer algorithm to work out how the proposed cuts would tie in with global emissions targets to keep warming to well below the 2ᵒC (or preferably 1.5ᵒC) above pre-industrial levels proposed in the Paris Climate Agreement.

Downey says that although the SBTi is unable to check whether companies are telling the truth about their emissions or sticking to their plans once they have set them, the initiative is important because it adds to the pressure corporates are facing to make meaningful changes to their operations.

Climate activists take part in a protest at the COP27 summit in Egypt Climate activists take part in a protest at the COP27 summit in Egypt. (Photo: Reuters/Mohamed Abd El Ghany)

“For the construction sector, the technology to enable companies to make these emissions cuts is already there,” Downey says. “The challenge we face is that the sector is so fragmented that we need to get lots of different individuals to each cut their emissions.”

Echoing McKenna’s second point, Downey says that the biggest problem his organisation comes up against in the construction sector when attempting to agree corporate climate pledges is the number of companies who propose that, rather than cutting their own carbon emissions, they plan to reduce their overall carbon footprint by investing in ventures such as renewable energy projects or tree planting - known as carbon offsets.

“We see a number of attempts at greenwashing but offsetting is definitely the biggest one,” Downey says.

“We are against using offsets as a way of meeting corporate targets, although we do say that of course companies can finance additional emissions reductions beyond their science-based target or net zero target.”

Some environmentalists go further, pointing out that tree planting events and the like have poor success rates and can even have a detrimental effect on the environments they are supposed to help.

“Carbon offsets mean climate sabotage,” Teresa Anderson, climate policy coordinator at ActionAid International told the COP26 summit in Glasgow in 2021.

“They aren’t just a tool to greenwash climate inaction and delay the transformation we need, they’re also going to drive devastating land grabs in the Global South.”

Other ways companies attempt to manipulate their emissions targets, says SBTi’s Karl Downey, include choosing an atypical base year from which to measure their emissions reductions, or by attempting to make their emissions cuts sound bigger by calculating tonnes of CO2 emitted per US$1m of company sales.

Manipulating emissions targets

“These figures can provide a useful way of looking at corporate emissions but overall we need to see total carbon emissions,” he says.

Claire Danamur, a sustainability analyst at ESG ratings agency EcoVadis, says that, although most large companies in the construction industry in Europe are capable of producing detailed and reliable information about the carbon emissions they produce through their own operations (scope 1 emissions) or the energy they buy from outside sources (scope 2).

Many face significant challenges when assessing scope 3 emissions - the greenhouse gasses produced by both the company’s suppliers and its customers. (In the case of equipment rental businesses, scope 3 emissions would include the carbon emitted by their machines when used by customers.)

“Some 20-50% of a building’s lifetime emissions take place during the construction phase,” Danamur says. “Every project is unique and involves a team of engineers, architects, consultants, suppliers and subcontractors that may not have worked together before.

“Furthermore, building materials are often sourced from global markets where labour and occupational health standards vary. This makes it challenging for global construction firms to account for all actors within their value chain.”

In the International Construction survey, only 20 of the 50 companies surveyed made any mention at all of scope 3 emissions at all in their climate pledges.

Downey says the SBTi is developing specific methodologies and guidance for some companies in the building sector which will require them to make greater scope 3 emissions cuts than average to account for a predicted 75% growth in the floor area of buildings between 2020 and 2050.

Back at Metso, Marius Verwoerd says that one of the ways his company aims to ensure it is working towards hitting its carbon reduction targets is by regularly publishing detailed data about a range of sustainability metrics including scope 1,2 and 3 emissions, the amount of water it uses and the amount of energy it consumes.

For president and CEO Pekka Vaurramo to receive his full share bonus in 2024, the Metso Outotec board has stipulated that one of the key performance metrics, carrying a weighting of 10%, is that the company must achieve its carbon emissions improvement target of reducing scope one and two CO2 output by 50% compared with 2019.

Al Halvorsen, Sunbelt Rentals' VP of ESG. Al Halvorsen, Sunbelt Rentals’ VP of ESG. (Photo: Sunbelt Rentals)

“In our company where sustainability is linked to our management’s renumeration and to our finance arrangements, as well as externally verified, we consider sustainability data as important as any other data in the company,” Verwoerd says.

“The more companies embed sustainability into their business models, and the more regulators ensure that regulations related to sustainability reporting push companies to be precise and open about their sustainability actions and data, the less likely ‘greenwashing’ will become.”

Yet with the wave of climate pledges made following the COP26 summit last year followed by a number of lawsuits about greenwashing in advertising campaigns, many firms are choosing not to publicise the details of their climate goals in an effort to avoid scrutiny and allegations of greenwashing.

A study of 1,200 companies by UK-based climate consultancy South Pole, found that although corporates are setting more net zero goals than ever before, with more science based goals to back them up and to more ambitious timelines, around a quarter said that they planned not to announce these targets to the public – a process it describes as ‘greenhushing.’

“More than ever we need the companies making progress on sustainability to inspire their peers and make a start,” says Renat Heuberger, CEO of South Pole. “This is impossible if progress is happening in silence.”

Voluntary emissions reporting

Critics also point out that the current voluntary system of emissions reporting and reduction includes no way to ensure that companies stick to the targets they have set themselves.

Even independent third party organisations like SBTi have faced criticism of potential conflicts of interest over the fact that they charge companies a $9,500 fee to assess their climate goals – funding which the SBTi’s Downey says makes up “only a small proportion of the organisation’s funding,” and about which it is “very transparent.”

“It’s tough to go and figure out who’s greenwashing and who’s not,” said Al Halvorsen, Vice President of ESG at Sunbelt Rentals, a subsidiary of the UK-based Ashtead Group, speaking at the Access, Lift & Handlers conference in Chicago, earlier this year. “There are companies that go out and set very aggressive goals, don’t reach their goal, and then five years later they set another aggressive goal.

“You look at the transparency of the company and if companies are honest in saying, ‘here are our challenges, here’s our performance’, and they don’t try to hide some of the faults that they have, I would say that would be a sign of somebody maybe who is not greenwashing. If you hear somebody making claims that they can’t or won’t back up – that would raise a flag to say, I wonder if that’s true or not.”

Mandatory regulation of zero emission targets

To combat this, the UN High Level Expert Group on Net Zero Emissions Commitments’ top recommendation is for governments around the world to introduce regulations and standards in areas including net zero pledges, transition plans and disclosures in order to ensure that companies are both consistent and transparent about their emissions. 

“Voluntary schemes are not enough,” the UN’s Catherine McKenna said. “Regulation will be essential here, both to ensure that voluntary climate roadmaps are replaced by mandatory strategies and to level the playing field.

“If we are to avoid a future where our children are buying ‘net zero’ bacon between floods and fires, we must close the gap between the promises we hear and the action we need.”

Construction industry climate pledges
Construction equipment OEMs
Company Emissions target Net Zero Pledge SBTi
Caterpillar

30% reduction in scope 1 and 2 by 2030 from 2018

Scope 3 emissions to be disclosed from 2023
The company aspires to be net zero by 2050

CNH Industrial

60% reduction in scope 1 and 2 emissions by 2030 against a 2014 baseline Yes Near term committed
Cummins

50% reduction in scope 1 and 2 emissions by 2030 from a 2018 baseline

Reduce scope 3 absolute lifetime GHG emissions from newly sold products by 25% by 2030
Carbon neutral by 2050 Near term 1.5ᵒC
Deere & Co

Reduce scope 1 and 2 GHG emissions by 50% against a 2021 baseline by 2030

Reduce scope 3 emissions by 30% by 2030
Near term 1.5ᵒC
Doosan Corp

Committed to establishing corporate-wide mid-to long-term climate change response strategy and roadmap; measuring environmental impact of business activities across the entire value chain; reducing GHG emissions; setting energy efficiency goals

Signed MOU on achieving carbon neutrality by 2050
Hitachi Construction Machinery

Reduce scope 1 and 2 emissions by 45% by 2030 compared with 2010

Reduce scope 3 emissions by 33%by 2030 compared with 2010
Carbon neutrality by FY2050 Near term 2ᵒC

Hyundai Construction Equipment

Plans to reduce annual carbon emissions by 42% from the 2021 level by 2030 and by 71% by 2040 Carbon neutral at global business sites by 2050
Epiroc

50% reduction in scope 1 and 2 CO2 emissions by 2030 from 2019 base

50% reduction in scope 3 CO2 emissions by 2030

50% reduction in CO2 emissions from transport,

50% reduction in CO2 from relevant suppliers

Near term 1.5ᵒC

Net zero committed
JCB

50% reduction in GHG emissions across scope 1 and 2 by 2030

Scope 3 target and roadmap in place by 2023

Near term committed

Net zero committed

Komatsu

45% reduction in CO2 emissions from production by FY2024 compared with 2010

24% reduction in emissions from product use by FY2024 compared with 2010

Carbon neutral by 2050

Near term: well below 2ᵒC

Kubota Corp

50% reduction in CO2 emissions by 2030 compared with 2014 baseline

25% reduction of CO2 emissions per unit of production at global production sites by 2025 compared with base year of 2014

Net zero CO2 emissions by 2050

Liebherr

Strategies decided by each independently operating divisional control company.Liebherr mining to offer completely fossil fuel free mining equipment for hauling, digging and dozing by 2030

Manitou

Reduce scope 1 and 2 emissions by 46% by 2030 compared with 2019 baseline

Reduce scope 3 emissions by 34% for every hour of use of the machines

Near term: 1.5ᵒC

The Manitowoc Co

Reduce scope 1 and 2 GHG emissions by 15% by 2025 compared with 2019

Metso Outotec

Cut scope 1 and 2 emissions by 50% by 2024 compared with 2019 baseline

Reduce Co2 emissions by 20% in logistics by 2025

Require 30% of suppliers (by spend) to commit to science-based targets by 2025

Net zero by 2030

Near term 1.5ᵒC

Mitsubishi Heavy Industries

50% reduction in scope 1 and 2 CO2 emissions by 2030 compared with 2014

50% reduction in scope 3 emissions by 2030 compared with 2019

Net zero CO2 emissions from operations by 2040

Net zero emissions from value chain by 2040

Net zero GHG emissions across corporation by 2050

Oshkosh Corp

25% reduction in normalised GHG emissions by 2024 compared with 2014 (achieved in 2022)

7.5% reduction in GHG intensity normalised by revenue by 2025

Committed to setting enterprise-wide science-based targets within 24 months of June 2022

Near term committed

Net zero committed

Palfinger

25% reduction in CO2 emissions by 2030 compared with 2015 baseline

Near term committed

Sandvik

50% reduction in CO2 emissions from our own production by 2030 compared with 2018

50% reduction in CO2 footprint for transportation, people and products by 2030 compared with 2018

Net zero emissions by 2050 at the latest

Near term committed

Net zero committed

Sany Heavy Equipment International Holdings

Reduce GHG emissions per 10K RMB of operating income by 25% in 2030 compared with 2019

Sumitomo Heavy Industries

Reduction in scope 1 and 2 emissions by 50% by 2030 compared with 2019

Reduce scope 3 emissions by 30% by 2030 compared with 2019

Resolved to reach carbon neutrality for entire SHI Group by 2050

Tadano

Reduce scope 1 and 2 CO2 emissions by 25% by 2030 compared with 2019 baseline

Reduce scope 3 emissions by 35% by 2030 compared with 2019 baseline

Terex Corp

15% reduction in GHG intensity from scope 1 and 2 emissions by 2024 compared with 2019 baseline

AB Volvo

Net zero value chain emissions by 2040Reduce emissions in own operations by 50% by 2030 compared with 2019Achieve 30% inabsolute reductions in the use of its products compared with 2019

Volvo Group commitment to reach net zero by 2040

Near term 1.5ᵒC

Net zero committed

Wacker Neuson SE

Long-term objective to introduce binding qualitative goals for driving continuous improvement in the fields of environmental and energy efficiency. The goal of rolling out minimum standards has been postponed from 2021 and will likely take place in 2023

XCMG Construction Machinery

50% of total energy use to come from renewable energy by 2035

Carbon footprint of key products reduced by 32% compared with 2020

Aims to reach carbon neutrality by 2049

Contractors climate pledges
Company Emissions target Net zero pledge SBTi
Arcadis

Reduce scope 1 and 2 emissions by 45% by 2025 from a 2019 base

Reduce scope 3 travel related emissions by 35% by 2025 from a 2019 base year
Committed to net zero across operations by 2035

Near term 1.5ᵒC

Net zero committed
BAM

Reduce scope 1 and 2 emissions by 50% by 2030 compared with 2015 levels

Reduce scope 3 emissions by 50% by 2030 compared with 2019 levels
Want to have a net positive impact on the climate by 2050

Near term 1.5ᵒC

Net zero committed
Bouygues

Reduce scope 1 and 2 emissions by 40% by 2030 compared with a base year of 2019

Reduce scope 3A emissions by 30% compared with a base year of 2019
Scope 1 and 2 net zero by 2025

Near term committed

Net zero committed

China State Construction Engineering

Aims to achieve a 25% reduction in carbon emissions intensity by 2025 (2018 base year)

Near term committed

Net zero committed
Eiffage

Committed to reducing scope 1 and 2 emissions by 32% by 2030 using 2012 as a base year.

Reducing scope 3 emissions by 20% by 2030 using 2012 as a base year

Near term committed

Net zero committed
Ferrovial

Committed to reducing scope 1 and 2 emissions by 32% by 2030 using 2012 as a base year.

Reducing scope 3 emissions by 20% by 2030 using 2012 as a base year
Near term 2ᵒC
Hochtief

Reduce scope 1 emissions by at least 20% until 2025 compared to a base year of 2019

Reduce scope 2 emissions by at least 35% until 2025 compared to a base year 2019

Net zero by 2045 Climate neutrality for scope 1 and 2 emissions by 2038 and scope 3 emissions by 2045

Hyundai Engineering & Construction Reduce carbon emissions by 27.3% by 2030 and 52.4% by 2050 compared to 2015 emissions (annual average 2.1%). Scope 1,2 and 3 emissions are all subject to reduction

Carbon neutral by 2045

Royal Boskalis Westminster NV Plans to progress a near and mid term carbon reduction strategy and investigate initiatives for scope 3 emissions Ambition to be climate neutral by 2050 across global operations
SNC Lavalin Group Reduce scope 1 emissions from 55,765 CO2e in 2019 to 3,570 in 2030. Reduce scope 2 emissions from 29,400 CO2e in 2019 to 14,351 in 2030. Reduce scope 3 emissions from 58,731 CO2e in 2019 to 38,929 in 2030 Net zero carbon emissions by 2030 across corporate activities

Near term committed

Net zero committed
Strabag Plans for climate neutral administration by 2025, climate neutral construction projects by 2030 and climate neutral building operation by 2035 Climate neutral along entire value chain by 2040

Vinci

Reduce scope 1 and 2 emissions by 40% by 2030 compared with 2018

Embarking on an improvement drive with strategic suppliers and subcontractors
Net zero greenhouse gas emissions ambition: 2050

Near term well below 2ᵒC

Rental companies and others:
Company Emissions Target Net Zero Pledge SBTi
Aggreko By 2030 Aggreko will reduce the amount of fossil diesel fuel used in customer solutions by at least 50%

Net zero across all its own business operations by 2030

By 2050 or sooner Aggreko will be a net zero business across all the services it provides

Ashtead Group Decrease carbon intensity (emissions per $m of revenue) of scope 1 and 2 emissions by 35% by the year 2030 from 2018 base year. Working to estimate scope 3 emissions

Boels

Reduce emissions by 3.5% annually

Finning International Reduce absolute GHG emissions by 40% by 2027 compared with 2017 baseline
Herc Holdings Reduce scope 1 and 2 greenhouse gas emissions intensity by 25% by 2030 compared with 2019 baseline

Kanamoto

Reduce scope 1 and 2 emissions by 50% by 2030 compared with 2013
Loxam Reduce direct emissions by 50% by 2030 and reduce indirect emissions by 30% by 2030 measured against a 2019 baseline

Near term committed

Net zero committed

United Rentals

Committed to reducing scope 1 and 2 and third party hauling within scope 3 emissions intensity by 35% by 2030 from a 2018 baseline

Engaged in ongoing efforts to determine how best to track and report on scope 3
WillScot Mobile Mini Holdings Our board of directors, at the direction of its nominating and corporate governance committee, is actively involved in the development of our ESG strategy and approach.

Source: company websites

Useful weblinks:

Associated Builders and Contractors (USA)
www.abc.org/Politics-Policy/Issues/Energy-Environment

Association of Equipment Manufacturers (USA)
www.aem.org/sustainability

Associated general Contractors of America (USA)
www.agc.org/industry-priorities/energy-environment

European Construction Industry Federation (FIEC)
www.fiec.eu/priorities/climate-change

CECE - Committee for European Construction Equipment (Europe)
www.cece.eu/environment/co2

European Rental association (ERA)
www.erarental.org/sustainable-suppliers/

ERA’s equipment CO2 calculator
https://equipmentcalculator.org/en

Science Based Targets initiative (SBTi)
https://sciencebasedtargets.org/

MAGAZINE
NEWSLETTER
Delivered directly to your inbox, World Construction Week Newsletter features the pick of the breaking news stories, product launches, show reports and more from KHL's world-class editorial team.
CONNECT WITH THE TEAM
Andy Brown Editor, Editorial, UK - Wadhurst Tel: +44 (0) 1892 786224 E-mail: andy.brown@khl.com
Neil Gerrard Senior Editor, Editorial, UK - Wadhurst Tel: +44 (0) 7355 092 771 E-mail: neil.gerrard@khl.com
Catrin Jones Deputy Editor, Editorial, UK – Wadhurst Tel: +44 (0) 791 2298 133 E-mail: catrin.jones@khl.com
Simon Kelly Sales Manager Tel: +44 (0) 1892 786 223 E-mail: simon.kelly@khl.com
CONNECT WITH SOCIAL MEDIA