Understanding net zero carbon reporting in the UK construction sector

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Published on 03/04/2025

Understanding net zero carbon reporting in the UK construction sector

Carbon reporting refers to the process by which businesses track and disclose their emissions. They should do this with the aim of achieving net zero, when the carbon they emit is balanced by the total removed from the atmosphere.

1. What is net zero?

Strictly speaking, the term net zero covers all greenhouse gases – those in the environment that trap heat released from the earth and make it warmer. These include methane and nitrous oxide, as well as carbon.

But the terminology tends to refer to carbon alone, as most greenhouse gas emissions, including those relating to construction, are in this form.

2. What is net zero carbon reporting?

For construction companies, net zero carbon reporting means assessing emissions from every stage of a project, including:

Procurement

Manufacturing

Transportation

Site activity

Waste management

The built environment accounts for 40 per cent of UK greenhouse gas emissions, so construction is at the forefront of driving change towards sustainability. The need for net zero carbon reporting has become urgent in recent years, for global reasons including:

Accelerating climate change. Increasing global warming creates sharply increased risks of disastrous events taking place, such as floods, famines and land becoming uninhabitable. The United Nations reported in 2025 that the previous year was likely to have been the hottest on record.

The Paris Agreement, the legally binding treaty on tackling climate change adopted by about 200 countries, including the UK, in 2016. This aims to hold the increase in worldwide average temperatures this century to well below two degrees Celsius above pre-1900 levels.

Why net zero carbon reporting is crucial for the UK construction sector

1. Alignment with national sustainability goals

Pressure on the UK construction industry to play a crucial role in emission reductions has also been applied through domestic measures such as the:

Clean Growth Strategy, unveiled in 2017, which sets out how the UK government plans to decarbonise all sectors of the economy throughout the 2020s.

Amendments in 2019 to the Climate Change Act 2008. These mean the UK now has an ambitious goal of achieving net zero overall by 2050 (the equivalent date for Scotland alone is 2045). This aim is accompanied by an interim target of a 68 per cent reduction in emissions by 2030.

Building Safety Act 2022, which transformed the law concerning the design and construction of all buildings.

Energy Efficiency (Private Rented Sector) (England and Wales) Regulations. These have stated since 2022 that privately rented properties must have Energy Performance Certificate ratings of E or better, unless they qualify for an exemption.

UK Net Zero Carbon Building Standard, introduced in 2024, which aims to establish a single, clear definition of net zero carbon for all building types.

Future Homes Standard, to be implemented in 2025, which requires features like low carbon heating and high energy efficiency in new English dwellings.

Carbon budgets set by the Westminster government, which prescribe legally binding five-year caps on emissions.

Upcoming changes to Building Regulations. These set minimum standards for the design, construction and alteration of buildings, aiming to ensure safety, health and welfare.

The government’s push for green recovery post-pandemic has further emphasised the importance of decarbonising industries, including construction.
By adhering to these measures, construction companies contribute directly to the achievement of national targets, while avoiding penalties and reputational risks.

2. Increasing client demand for transparency and sustainable practices

As environmental consciousness grows among the public, clients are increasingly expecting sustainability metrics from their contractors. These demanding groups include:

Government bodies

Large corporations

Developers

Material sourcing

Energy use

Site management

For example, the Greater London Authority has collaborated with the Mayor of London’s Environment Strategy. The latter integrates all aspects of the capital’s environment, including air quality, infrastructure and waste.

The two have developed a framework for construction projects to achieve carbon neutrality. Developers and contractors must show clear evidence of net zero commitments through carbon emissions tracking and reporting.

In addition to clients, investors are prioritising sustainability and assessing businesses based on environmental, social, and governance (ESG) criteria. Notably, these organisations are increasingly demanding their portfolio companies, including construction firms, publish carbon reduction targets and accounting.

Those backers include pension funds and other institutional investors, such as giant multinational asset advisers and managers Legal & General and BlackRock.
The requirements of such businesses align with broader trends in green investment, where companies that fail to meet these expectations risk losing out on potential capital.

3. Long-term cost savings through energy efficiency

Another reason to focus on carbon reporting is the opportunity for financial savings. Adopting sustainable practices and net zero goals tends to reduce operational costs in the long run.

For instance, energy-efficient buildings and low-carbon construction processes typically lower:

Long-term energy consumption

Waste disposal costs

Additionally, contractors can potentially reduce procurement costs over time by using eco-friendly building materials like:

Recycled aggregates

Low-carbon cement

The prices of these options are expected to decrease as demand rises and production processes scale. Long-term savings will then be realised through improved efficiency and reduced operational costs.

Companies embracing sustainable practices can also improve their resilience against volatile energy prices, further stabilising operational expenses.
Furthermore, early adoption of carbon reporting opens up cost assistance options from bodies such as the UK Green Finance Institute. This is a government adviser that tests, demonstrates and scales solutions needed to accelerate the transition to a net zero economy.

The institute has been instrumental in promoting sustainable construction projects through green bonds, eco-loans and other products. These offer favourable rates to companies committed to sustainability and carbon reporting systems are often prerequisites for accessing them.

Importantly, many government-backed incentives are also available for low-carbon projects, such as tax breaks and grants for:

Energy-efficient building retrofits

Renewable energy installations

These can provide substantial savings in capital expenditures.

Steps involved in net zero carbon reporting for construction companies

Achieving net zero requires a detailed, multi-step process to ensure that emissions are accurately:

Measured

Monitored

Reduced over time

Here’s a deeper dive into each step involved:

1. Adopt a standardised carbon reporting framework

Having a clear framework for measuring emissions is key. Some commonly used templates include:

Greenhouse Gas Protocol: This globally recognised standard was developed by the World Resources Institute and World Business Council for Sustainable Development. It provides methods for calculating and reporting emissions, dividing these into three categories or “scopes” (see next section).

ISO 14064: Produced by the independent, global International Organization for Standardization, this is specifically focused on greenhouse gas quantifying and reporting.

Publicly Available Specification (PAS) 2050: Developed by the British Standards Institution, this focuses on a life-cycle analysis of products. It is particularly useful for evaluating the emissions associated with building materials.

By following these frameworks, companies can standardise their reporting processes, ensuring consistent and reliable data that can be trusted by stakeholders, such as:

Investors

Clients

Regulators

These standards also help construction companies compare their performances to industry benchmarks.

2. Establishing a baseline carbon emission profile

The first active step in reporting and reducing carbon emissions is measuring them accurately. This begins with establishing a baseline emissions profile, which provides an essential benchmark for future efforts to reduce them.

The Greenhouse Gas Protocol outlines three types of emission, all of which must be calculated if measurement is to be thorough:

Scope 1 (direct emissions): Construction companies must measure emissions from on-site activities, including fuel used in machinery, vehicles and heating equipment.

Scope 2 (indirect emissions): This includes emissions from energy consumed on-site, such as electricity or heating sourced from external utilities.

Scope 3 (upstream and downstream emissions): This encompasses the supply chain, transportation of materials, subcontractor activities and waste disposal.

An important aspect of calculating Scope 3 emissions is working with suppliers and subcontractors to gather detailed data. This step often involves garnering accurate information about:

Materials

Transport logistics

Product lifecycles

Companies must ask key questions, such as:

What’s the embodied carbon of this material? That refers to emissions associated with its extraction, manufacturing and transportation.

How do we mitigate emissions from transport?

3. Use digital tools and technologies

Carbon reporting can be made less complex by using digital tools and technologies specifically designed for construction projects. These include:

Building information modelling (BIM): This provides real-time data for energy usage, material selection and waste generation throughout the construction process. By using BIM to track emissions, construction teams can quickly identify high-impact areas for carbon reduction.

Energy management systems (EMS): These allow companies to monitor energy consumption in real time, helping them identify inefficiencies and areas where emissions can be reduced.

Carbon management software: Tools like NZC PRO, NZC Plus or NZC LIVE allow businesses to track, analyse and report their emissions over time. This enables them to align outcomes with carbon reduction targets.

These tools can reduce manual data collection errors and provide actionable insights into where changes can be made to reduce emissions.

4. Use verification and third-party certification

After compiling emission data, it’s essential to have it verified by an independent third-party. This process adds credibility to the carbon report, ensuring accuracy and authenticity. To confirm their carbon footprint and emission reduction efforts, companies can partner with accredited certifiers, such as:

The Building Research Establishment Environmental Assessment Method (BREEAM). This very widely used scheme evaluates and certifies the sustainability performance of constructions throughout their lifecycles.

ISO 14064, which we explained earlier.

Global Real Estate Sustainability Benchmark (GRESB). This provides independently evaluated ESG data to investors, asset managers and other financial market professionals.

Certification from these sources also gives construction companies an opportunity to market themselves as leaders in sustainability, attracting clients who prioritise green credentials. Furthermore, third-party certification helps with regulatory compliance, by demonstrating that carbon reductions are genuine.

Challenges in achieving and reporting net zero carbon for the construction industry

1. Data complexity and accuracy

Main barriers to effective carbon reporting include the complexity and accuracy of data. Construction projects often involve vast networks of:

Suppliers

Subcontractors

Contractors

Each of these will have their own emission profile. Tracking and verifying emission data across this complex ecosystem thus requires significant effort.

Construction companies must therefore invest in data management systems. These automate information collection and ensure that emissions are reported consistently across all phases of a project.

2. Challenges in Scope 3 emissions

Tracking Scope 3 emissions is challenging, due to this lack of standardisation and inconsistent data from suppliers. This can be particularly true in the areas of:

Material sourcing

Transportation

Subcontractor activities

This is compounded by the international nature of many supply chains. Materials may come from countries which have different carbon reporting standards or even lack carbon data altogether.

Construction companies must collaborate closely with suppliers to gather accurate emission data for each material, including its embodied carbon.

3. Cost of transitioning to sustainable practices

As mentioned earlier, many sustainability measures will lead to cost savings in the long run. But initial investments can be high when companies make changes such as switching to:

Low-carbon equipment

Eco-friendly materials

Energy-efficient processes

This is especially true for smaller companies, that may lack access to capital.

Opportunities for the UK construction industry in net zero carbon reporting

1. Innovation in low-carbon construction materials

The demand for low-carbon materials is driving innovation in the construction sector. Companies can capitalise on the growing availability of sustainable building materials, including:

Recycled content

Bio-based materials like Hempcrete, made by mixing hemp shiv, the woody core of the plant, with a lime binder. This is used for purposes such as insulation and walling.

Alternative low-carbon concrete mixtures

By adopting these materials early, construction companies can reduce their emissions and demonstrate leadership in sustainability.

2. Financial incentives and green investment

The preferential green finance options, government incentives and attraction of sustainable investors mentioned earlier are increasingly available to companies adopting carbon reporting and sustainability practices.

Conclusion

Net zero carbon reporting isn’t just an environmental necessity for the UK construction sector – it’s also a strategic imperative. By committing to carbon reporting and reduction, companies can:

Gain a competitive edge

Reduce operational costs

Meet regulatory obligations

Contribute to the UK’s 2050 net zero target

The construction sector can lead the way in sustainable practices through:

Detailed reporting

embracing low-carbon innovation

leveraging technology

By investing in carbon management today, businesses can set themselves up for long-term success in a world that is increasingly prioritising environmental responsibility.

See how our construction reporting tools such as NZC Plus and NZC Pro can help your business today.