Matthew Jones, founder of Open ECX, explores why carbon reporting is key to driving a net zero future
The UK is committed to reaching its net zero goals by 2050, with some regions, such as Greater Manchester, aiming to achieve this as early as 2038. As one of the UK’s most energy-intensive sectors, many are looking to the construction industry to make necessary changes and the sector itself has acknowledged the need for action such as carbon reporting, if we are to achieve carbon neutrality.
Last year, the UN reported that carbon emissions from buildings operations had reached an all-time high, and that the construction sector was not on track to achieve decarbonisation by 2050. To meet the UK’s net zero aims, it’s vital for construction businesses to lower their carbon output, while finding a way to report on it.
As in many other sectors, it’s not enough for businesses to simply state they’ve reduced their carbon footprint – instead they’re being asked to report on it by other members of the supply chain, and as part of the process when they’re pitching for new projects.
The easiest and most effective way to do this is by choosing a comprehensive digital system that can report the carbon cost of each part of their work and collate data from each touchpoint within the supply chain. By adopting these new technologies, digital reporting is giving construction businesses the tools to report carbon effectively and accurately across all transactions in the purchase to pay (P2P) process, from order invoices to GRNs, as well as track their progress and identify opportunities for improvement.
Staying competitive
Last year, the UK Green Building Council (UKGBC) created the Net Zero Carbon Buildings Framework, giving construction organisations easy-to-follow guidance for improving overall sustainability across the sector. One key part of the framework was to improve measurement and transparency.
In accordance with the framework, construction firms must be prepared to measure their emissions using the most accurate data available, and be prepared to publicly disclose them, showing exactly how it was collected and the steps they have taken to consciously lower carbon emissions.
Not only is carbon reporting a key consideration as part of the Net Zero Carbon Buildings Framework, it has also become a non-negotiable for those looking to win public sector projects. Central government, executive agencies and non-departmental public bodies in England buying goods and services with annual contract values of £5m or more, must refer to the carbon reduction guidance set out in Procurement Policy Note 06/21 – in short, large public sector projects now require emissions reporting as a minimum standard.
Automated reporting
The carbon output of a supply chain can include everything from emissions during the manufacturing process of materials, to how they’re transported and disposed of after a project ends, and everything in between. Therefore, reporting all the carbon output across all parts of the supply chain is no mean feat.
Fortunately, new technology within the sector is simplifying the reporting process, allowing it to be almost entirely automated.
Many businesses have already adopted comprehensive digital systems which allow them to navigate the entire P2P journey. For them, the process will be familiar – the only addition being that, alongside being able to track the P2P process, carbon emissions per transaction are also shared.
This allows businesses to collate carbon emissions from all partners and easily generate reports and analytics from a wide range of sources, resulting in a comprehensive final report. In-depth information on total emissions, emissions per invoice or transaction and emissions by category (e.g., energy consumption, transportation) can be easily created and shared.
Furthermore, digitising the P2P process is a scalable solution, meaning that as businesses continue to expand, taking on larger projects and facing higher volumes of transactions, they can easily scale their sustainability efforts alongside their growth.
Digital systems have obvious benefits if you’re required to share reports on emissions to win contracts. But more than that, in the long term it also allows businesses to easily make comparisons between carbon reports to show progress over time.
By measuring and analysing emissions, businesses can uncover opportunities for reducing energy consumption, optimising resource use, and implement more sustainable practices.
This can lead to cost savings in the long run through reduced energy expenses.
Moving to paperless
Beyond being able to track and report on carbon footprint, another benefit of a digital system is eliminating the need for paper invoices. We all know that the production of paper contributes massively to energy consumption, deforestation and carbon emissions, therefore the process of digital invoicing in itself is a contributor to achieving net zero.
Promoting collaboration
Arguably one of the best but often overlooked benefits of digital invoicing is the enhanced communication amongst users from different areas within construction.
Companies that are able and willing to take this one step further and share their carbon emissions data, will help promote a culture of transparency across the entire construction industry. They will be leaders in sharing knowledge and insight to help meet our net zero targets, bringing other members of their supply chain on a similar journey.
What impact will digital systems have on the future of the construction industry?
If everyone made the effort to embrace digitisation, there’s no doubt that we would see great progress being made across the sector.
Having a digitally integrated approach to the P2P journey across the board improves coordination with suppliers and speed ups notoriously lengthy processes, ensuring payments are made on time so businesses can continue to thrive.
With digital systems facilitating the storage, retrieval and sharing of project documents, drawings, contracts and permits, paperless documentation becomes the norm.
Furthermore, by eliminating the need for physical document storage, the risk of information being lost or duplicated becomes almost negligible.
With the correct adoption of digital systems, routine administrative tasks can be moved to an automated process. Those roles, which usually involve time-consuming manual tasks, can be replaced by technology, freeing up time for to focus on value-added tasks which will lead to faster project delivery.
Carbon reporting will be a vital part of a net zero future
Moving forward, the help of digital systems is vital if our industry wishes to continuously grow and evolve in a sustainable way. Carbon reporting is likely to become mandatory beyond public sector projects, and implementing a robust digital reporting system is the first step construction firms should take as the net zero deadline approaches.
While there are many businesses that have already embraced digital solutions and are reaping the many benefits, there is still a long way to go before we see widespread change across the industry, allowing carbon reporting to be easily implemented on top of a digital P2P process.
We look forward to seeing more construction firms embrace new technology, and in doing so, fostering an attitude of collaboration and a culture of transparency in respect to net zero – this approach is vital if we’re to hit our targets.
