A report from the House of Commons indicates that the built environment contributes about 25% of the UK's total Greenhouse Gas (GHG) emissions. Every stage of the construction cycle emits significant emissions, from the production of raw materials to building construction and maintenance. While much emphasis has been placed on reducing operational emissions through energy efficiency and renewable energy integration, there remains a vast and complex layer of carbon impact that is often overlooked: Scope 3 emissions in property development. These indirect, value chain emissions account for the majority of a development's total carbon footprint, and failing to address them could jeopardise the industry's ability to meet climate targets.
Understanding Scope 3 Emissions in Property Development
Scope 3 emissions are indirect greenhouse gas (GHG) emissions that occur outside of a developer's direct operations. Unlike Scope 1 (direct emissions from owned or controlled sources) and Scope 2 (indirect emissions from purchased energy), Scope 3 encompasses emissions from both upstream and downstream activities in the value chain. In property development, this includes:
- The extraction, manufacture and transport of building materials
- Construction-related emissions from subcontractors
- Tenant emissions during the lifecycle of the building
- Emissions from demolition and end-of-life waste
Scope 3 emissions differ fundamentally from Scope 1 and Scope 2 because they require extensive collaboration across the entire value chain. This distribution reflects the resource-intensive nature of construction throughout a building's lifecycle. This key distinction creates significant data collection hurdles for property developers. Real estate Scope 3 emissions stem primarily from embodied carbon in new developments (upstream) and energy usage and gas/heating (downstream). According to research from Morningstar Sustainalytics, Scope 3 emissions can represent up to 95% of a commercial real estate developer’s total emissions footprint, especially in new-build projects. When applying operational control boundaries, building owners typically classify tenant-purchased electricity within the Scope 3 category.
Image credit: Morningstar Sustainalytics
Key Components of Scope 3 in Property Development
To get a proper measure of the Scope 3 emissions in property development, stakeholders need to understand the various methodologies and components that contribute to it. These can be broken down into several categories, many of which are particularly carbon-intensive:
Measuring Embodied Carbon in Materials
Embodied carbon refers to the emissions associated with the production, processing and transportation of construction materials such as concrete, steel, glass and aluminium. It is one of the most significant contributors to Scope 3 emissions in the built environment. Emissions from concrete alone is responsible for between 4 and 8% of global CO2 emissions. Building developers need specialised methods and tools to calculate embodied carbon throughout a building's lifecycle. These methods help them measure the environmental effects of construction materials and processes.
Learn More: Calculating Embodied Carbon in Construction
Conducting Life Cycle Assessments (LCA) for Building Materials
LCAs are the main scientific method that evaluate building materials’ environmental effect throughout their lifecycle. This complete approach looks at everything from raw material extraction and manufacturing to operational energy use and final demolition or recycling. Projects can earn up to 10% of total credits through LCA when seeking BREEAM certification, which makes it a vital part of environmentally responsible development. Developers can use LCA to find stages with the highest environmental effects and compare different design choices and materials.
Using Environmental Product Declarations (EPDs) for Scope 3 Data
An Environmental Product Declaration (EPD) is a third-party verified document that quantifies the environmental impact of a product over its lifecycle, based on Lifecycle Assessment (LCA) methods. EPDs are essential for understanding embodied carbon and comparing products on their sustainability credentials. These declarations follow globally recognised standards like ISO 14025 and EN 15804 to ensure consistent coverage. There are three main types:
- Cradle-to-gate that covers manufacturing only.
- Cradle-to-grave that includes the entire lifecycle with maintenance and end-of-life.
Cradle-to-gate with options.
EPDs have become vital for Scope 3 emissions reporting because they provide transparent, third-party verified data about construction products' embodied emissions.
Learn More: Obtaining an Environmental Product Declaration | Tunley Environmental
Construction Supply Chain
Subcontractor emissions, logistics and on-site machinery are frequently excluded or under-reported. However, emissions from transportation of materials and diesel-powered construction equipment form a significant part of Scope 3.
End-of-Life Stage
Demolition, recycling, landfill disposal and site restoration also fall under Scope 3. If not planned for in the design phase, these emissions can be substantial.
Limitations in Tracking Scope 3 Emissions
Despite their scale, Scope 3 emissions remain under-addressed for several reasons:
- Challenges in Supplier Data Collection and Verification: Tracking emissions across diverse suppliers, contractors and products is time- and resource-intensive. Notably, this deficiency creates significant gaps in transparency, particularly when working with smaller businesses.
- Lack of Standardised Reporting: Until recently, there has been limited guidance tailored specifically to property developers. Initiatives like the UKGBC’s Guide to Scope 3 Reporting in Commercial Real Estate and the growing adoption of Whole Life Carbon Assessments (WLCA) are pushing the industry toward more comprehensive carbon accountability.
- Ownership Ambiguity: Developers may not see themselves as responsible for downstream emissions or subcontracted works.
- Geographical Variance in Scope 3 Reporting Regulations: Different regions have varying rules for Scope 3 emissions that shape reporting practises. The UK is considered a leader in this aspect with 93% disclosure rates recorded amongst organisations thanks to mandatory carbon reporting schemes.
The Bottom Line
Scope 3 emissions in property development is a critical but often underreported component of a building's environmental footprint. The industry is transitioning towards more sustainable construction and infrastructure practices necessitating developers take emissions from the planning stage to the maintenance stage into account. Incorporating Scope 3 emissions into their carbon reporting can help organisations enhance transparency, align with ESG expectation and prepare for a more regulated and carbon-conscious market. To learn more about how you can measure and manage emissions in your construction projects, speak to our expert sustainability consultants here.