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Green Buildings in a Circular Economy

One of the key concerns of green building certification is “whole lifecycle” carbon emissions. In other words, there is a focus not only on the operational phase of a building’s life but also on the construction phase, the demolition phase, the materials that are used and – sometimes overlooked – the supply chains that source those materials.

In order to be considered fully green, a building must incorporate sustainability throughout its entire lifecycle. Recently this has led to the disruption of traditional supply chains and the introduction of Green Supply Chain Management (GSCM), where manufacturers, suppliers and customers are required to work together to ensure that better and more sustainable practices are upheld. This may range from reactive monitoring of the supply chain to more proactive measures like reverse logistics strategies. As a recent study points out,

The most important areas [of GSCM] for green practices are the procurement, production, distribution and reverse logistics. The last of the three elements is about waste reduction in the supply chain, as the five practices (reduce, reuse, remanufacture, recycle and disposal alternatives) aim to minimize the waste.[1]

As with other ESG concerns, then, the effect of sustainable supply chain management may be to increase efficiency as well as minimize environmental impact, adding value by reducing overheads. As the paper also points out, the construction industry is rightly viewed as “one of the biggest waste generators in the world” and building owners are concerned with improving brand reputation, especially given the prevalence of ESG investing.

Arguably this value creation has been key to the growing popularity of green supply chain management so far, but Gartner points out that “Fifty-one percent of supply chain professionals expect that the focus on their circular economy strategies will increase over the next two years” and this should be considered as well.[2] The COVID-19 crisis has shown that supply chains can become a weakness when the availability of raw materials plummet, or when unforeseen disruptions (like a tanker blockading the Suez Canal) force manufacturing to halt. As Sarah Watt of Gatner Supply Chain Practice points out, “the circular economy is a great opportunity to improve raw material resilience and decouple material consumption from financial growth.”

There are challenges of course, and Gatner list four of the most immediate: ownership of used materials, quantity of materials, value of materials, and product complexity. In other words, low-value items or items that contain toxic materials will be hard to return to the supply chain. But as investor (and occupant) demand for green buildings increases, the design process will naturally incorporate sustainable practices, and the supply of reusable, sustainable building products will continue to grow.

As we have pointed out elsewhere, banks are now offering “green loans” for sustainable projects, and this will further increase the adoption of environmentally and socially responsible building practices as we transition to a “green recovery” from COVID-19. And finally, there is the pressure to stand out in a market rapidly shifting towards ESG investing, sustainable construction, and integrated FM. Environmentally friendly products that can be repackaged and resold in a circular economy will be crucial for building owners who want to set themselves apart.

[1] Benachio, G., “Green Supply Chain Management in the Construction Industry: A literature review”, IOP Conf. Series: Earth and Environmental Science 225 (2019), p.2

[2] https://www.gartner.com/en/newsroom/press-releases/2020-09-22-gartner-survey-finds-more-than-half-of-supply-chain-professionals-expect-a-greater-focus-on-circular-economy-strategies-over-the-next-2-years

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