The construction industry stands at a critical juncture, poised for transformation. Responsible for nearly 40% of global CO₂ emissions, it is one of the largest contributors to climate change. Yet, this challenge brings with it a profound opportunity to innovate, lead, and thrive in the transition to a low-carbon economy.

While the design, construction, and operation of buildings often receive the lion’s share of attention, a substantial portion of emissions—estimated at 10% to 15%—originates upstream in the supply chains that power construction. These emissions are tied to the production of foundational materials such as cement, steel, and glass, as well as the energy-intensive manufacturing processes and global transportation networks that sustain them. Reimagining these supply chains is not merely an environmental imperative; it is essential to achieving the world’s net-zero targets.

A concrete challenge

Take cement, for example, a material so fundamental to modern construction that its production rivals entire countries in emissions. Cement accounts for 8% of global CO₂ emissions, with most stemming from the production of clinker, its core ingredient. Similarly, steel, another construction staple, is responsible for nearly 7% of emissions worldwide. These figures underscore the immense challenge facing the industry.

But progress is being made. In Sweden, a groundbreaking carbon tax of €130 per ton of CO₂ has reshaped how construction materials are produced and sourced. This policy has led companies to prioritize recycled steel and low-carbon concrete, reducing emissions in real and measurable ways. One standout project, the Slussen urban redevelopment in Stockholm, utilized these materials to cut its embodied carbon by nearly 40%. Sweden’s approach is a model for the rest of the world, proving that ambitious policy can drive transformative action.

The policies that pave the way

Across the globe, governments are stepping up with regulations and initiatives to decarbonize the construction sector. These policies are not only shaping supply chains but also driving investment in sustainable technologies and materials. The European Union’s Emissions Trading System (ETS) serves as a prime example of how economic levers can incentivize cleaner practices. Launched in 2005, the ETS has reduced emissions in covered sectors by 42.8%, illustrating the effectiveness of cap-and-trade systems in compelling industries to lower their carbon footprints. Meanwhile, in the United Kingdom, the Net Zero Carbon Buildings Standard has made it mandatory for large-scale developments to disclose their embodied and operational carbon. Transparency breeds accountability, and this requirement is already pushing developers to adopt greener materials and processes.

The Netherlands is pioneering circular construction, aiming to use 50% circular materials in all major projects by 2030. The Edge, a pioneering office building in Amsterdam, exemplifies this approach. Built with cradle-to-cradle certified materials and designed for minimal energy use, it sets a global benchmark for sustainable design and showcases how circular principles can dramatically cut emissions.

Building better: industry leadership and how companies are driving change

While policies lay the foundation, it is the private sector that must turn these ambitions into reality. Across the construction landscape, innovators are rethinking traditional practices and developing technologies to decarbonize supply chains.

• Industry leadership: how companies are driving change
While policies lay the foundation, it is the private sector that must turn these ambitions into reality. Across the construction landscape, innovators are rethinking traditional practices and developing technologies to decarbonize supply chains.

• Materials innovation: low-carbon cement and green steel
Heidelberg Materials, a global leader in sustainable cement, is at the forefront of material innovation. Their ECOPlanet product line incorporates supplementary cementitious materials, reducing emissions by up to 50%. In Germany’s Elbphilharmonie Concert Hall, this low-carbon cement helped deliver a stunning architectural masterpiece with a fraction of the carbon footprint. In the steel sector, initiatives such as Hydrogen Breakthrough Ironmaking Technology (HYBRIT) are pioneering fossil-free steel production. By replacing coal with hydrogen in the ironmaking process, HYBRIT aims to cut steel-related emissions by up to 90%, representing a seismic shift in industrial decarbonization.

• Digitalization: optimizing construction processes
Digitalization is playing a key role in transforming construction supply chains. Skanska, a global construction giant, has embraced digital twin technology, which allows developers to simulate the entire lifecycle of a project before construction even begins. This approach, used in Finland’s Tripla Mall project, reduced material waste by 15% while optimizing energy use across the supply chain. 

• Electrification of equipment: Lowering site emissions
On construction sites, equipment manufacturers like Volvo are pioneering electric construction machinery. These vehicles, deployed on Norway’s E39 Coastal Highway project, have halved emissions compared to traditional diesel-powered equipment. By reducing reliance on fossil fuels, these innovations are paving the way for cleaner, more efficient construction operations

A vision for the future: economic and environmental gains

The decarbonization of construction supply chains is more than a challenge; it is a trillion-dollar opportunity. According to the World Economic Forum, the green building sector could generate $1.5 trillion annually by 2030, creating jobs and fostering innovation. Companies that invest in sustainable practices today will be well-positioned to lead in the economy of tomorrow.

The environmental benefits are equally profound. The International Energy Agency (IEA) has found that supply chain efficiency improvements, coupled with circular economy practices, could cut lifecycle emissions by 30% across major projects. These efforts align seamlessly with the United Nations’ Sustainable Development Goals, particularly those focused on responsible consumption, production, and climate action.

Singapore’s Jewel Changi Airport offers a glimpse of what is possible when sustainability is prioritized. With solar panels, energy-efficient glass, and recycled steel, the airport reduced its embodied carbon by 55%. It stands as a testament to how ambition and innovation can coexist, creating infrastructure that is both sustainable and iconic.

The time to act Is now: building beyond bricks

The construction industry has the tools, the knowledge, and the opportunity to lead the global transition to a net-zero future, but it requires bold leadership, cross-sector collaboration, and investment in emerging technologies.

For too long, construction has been seen as an obstacle to climate goals. It’s time to rewrite that narrative. By decarbonizing supply chains, the sector can become a cornerstone of sustainability, proving that progress is not only possible but profitable.

Financial incentives will play a crucial role in accelerating this transformation. Governments and investors must collaborate to fund green infrastructure, support research into carbon-neutral materials, and incentivize companies that adopt low-carbon innovations. Public-private partnerships can bridge the gap between ambition and execution, ensuring that sustainable construction is not just a niche initiative but the industry standard.

As we stand on the brink of a defining decade, the question for the construction industry is not whether it can afford to decarbonize. It’s whether it can afford not to. Those who take decisive action today will not only contribute to a healthier planet but will also position themselves as leaders in a rapidly evolving global economy. The time to act is now.

illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability & Energy writers, their opinions do not necessarily represent those of illuminem.