Enhancing Sustainability in Construction with Digital Marketplaces
It’s no secret that the construction industry is one of the most significant contributors to global carbon emissions, accounting for a whopping 37% of global emissions. But it’s also one of the biggest industries; in 2022, the global construction industry accounted for 14.2% of the global GDP and, this year alone, the industry will need more than half a million more workers to meet increasing demand. As a result, now more than ever there is a pressing need for the construction industry to adopt more sustainable processes.
To this end, digital marketplaces have emerged as instrumental tools in reducing emissions throughout the entire construction value chain. These platforms enable construction companies to source materials more efficiently, with a more precise matching, and from suppliers that produce lower-emission products and services. By streamlining procurement processes, digital marketplaces facilitate the precise matching of supply and demand, ensuring that materials are sourced in the exact quantities and from the closest supplier, reducing excess inventory, waste, and distance. Moreover, these platforms optimize logistics by consolidating deliveries and improving route efficiency, further decreasing the environmental impact of transporting materials across complex supply chains.
Digital marketplaces and procurement platforms can enhance the industry’s digital transformation, leading to more efficient and, consequently, environmentally friendly operations. As the industry faces growing pressures to decarbonize, embracing these platforms represents a vital step towards achieving substantial emission reductions and fostering a sustainable construction ecosystem.
The emission problem in construction
Historically the construction industry’s sustainability efforts have prioritized reducing the “operational” carbon emissions of buildings, such as those from heating, cooling, and lighting. This effort has seen promising progress, with energy-efficient building designs and the use of renewable energy sources significantly lowering operational carbon footprints However, addressing “embodied” carbon emissions, generated during the production of materials like steel and cement, has proved more complex. These emissions are substantial and stem mainly from the use of fossil fuels in blast furnaces during the energy-intensive manufacturing processes.
Beyond the emissions generated during the production of steel and cement, the construction industry also grapples with substantial emissions from the acquisition and transportation of these materials. Transporting raw materials to production facilities and delivering finished products to construction sites involves extensive logistics and significant fuel consumption, contributing to the industry’s overall carbon footprint. Furthermore, the widespread reliance on long-haul transportation exacerbates these emissions, highlighting the need for more localized sourcing and optimized delivery routes to mitigate environmental harm.
The complexities of the construction supply chain further compound the emission challenges. The construction value chain includes multiple phases – planning, design, engineering, pre-construction, construction execution, and operation – each involving various stakeholders such as architects, contractors, subcontractors, material suppliers, engineers, and developers. This decentralization often leads to inefficiencies, miscommunications, and delays, all of which can increase emissions. Supply chain disruptions, as seen during the COVID-19 pandemic, have further underscored the vulnerability and environmental repercussions of traditional construction processes. Addressing these complexities will require innovative approaches, which is where digital marketplaces come into the picture.
Role of digital marketplaces in emission reduction
A digital marketplace is any online platform where construction companies can browse and procure materials for their projects. They act as intermediaries between suppliers and buyers, offering a wide range of construction materials and services. For example, let’s say a company wants to procure an eco-friendly alternative to Portland cement, the most common type of cement in general use around the world. A digital marketplace can connect this business with a supplier that uses advanced decarbonization methods in their cement production process, such as carbon capture utilization and storage (CCUS) or alternative sustainable fuels.
Marketplaces can also provide or require on their platform to provide transparency and accountability on the material, providing certificates with the origin, composition, and sustainability (ie. EPDs), enabling buyers to make informed and eco-friendly choices. So marketplaces can help promote materials and products that meet green building standards and certifications, such as LEED or BREEAM.
By connecting buyers with more “local” suppliers, digital marketplaces can minimize the distance materials need to be transported, reducing carbon emissions associated with logistics.
A more immediate way for digital marketplaces to reduce emissions is through verticals that facilitate the exchange and reuse of construction materials. This rapidly growing sector promotes resource efficiency and waste reduction by fostering a circular economy, a vital aspect of the construction industry’s sustainability initiatives. By connecting buyers with sellers of recycled materials, building contractors are incentivized to carefully salvage construction, demolition, and excavation waste (CDEW) for later reuse. This not only diverts materials from landfills but also reduces market demand for virgin resources, resulting in cost savings for contractors and less environmental strain from resource extraction. We have seen iconic projects reusing the same demolition materials from the previous building in the new construction of the building, converting the demolition waste into aggregates for the concrete.
Another vital function of digital marketplaces is the streamlining of supply chain logistics. By and large, construction remains mostly a pen-and-paper-based industry. This outdated approach, coupled with the industry’s decentralized nature, can often result in delays and inefficiencies. Embracing digital marketplaces could drive the digital transformation that the sector urgently needs, resulting in more cost-effective and efficient delivery routes through automated orders, consolidated shipments, and optimized supply chain management. Additionally, this digital shift can minimize transportation-related emissions by reducing the distance materials travel and improving route efficiency, thus contributing to the industry’s sustainability goals.
Digital platforms can also include Waste Management services, for the disposal and recycling of construction waste, ensuring it is handled in an environmentally responsible manner. They can track waste generation and management, helping companies meet regulatory requirements and sustainability goals. When the industry becomes more circular, also transport can be made more efficient, when trucks can deliver waste to a waste treatment facility and at the same time pick up recycled material from the same plant.
Digital marketplaces can support the entire Lifecycle Management of construction materials, from procurement to disposal, ensuring sustainability considerations are integrated at every stage.
Adoption of digital marketplaces
Reducing emissions and embracing a sustainability mindset can present many challenges in the construction industry, particularly for established companies with deeply ingrained traditional methods. However, with regulators tightening emission controls and market trends shifting, clinging to a “business as usual” mindset is quickly becoming a disadvantage. Digital marketplaces offer a simple way for construction companies to connect with a vast network of suppliers, making it easier to find high-quality, sustainable, and competitively priced materials and services.
When selecting a digital marketplace, there are several factors that businesses should consider. First, carefully assess and select the right digital marketplace platform that aligns with your specific needs and goals. Some platforms are highly specialized, catering to specific products and services, such as Soil Connect, that connects those with dirt and aggregates for those who need it. Others are more overarching, such as Structshare, that offers an end-to-end purchasing solution tailored for self-performing contractors that streamlines the entire cycle from field orders, RFQs, and POs through delivery capture and automated invoice/PO reconciliation; all while providing intimate real-time tracking on budget, inventory, and general expenses. Whatever your needs, find a marketplace that suits your requirements.
But that’s not all. Companies can also use digital platforms that measure and reduce the carbon impact of construction projects in conjunction with marketplaces to propel the sustainability and efficiency of their projects. For example, Vizcab’s platform permits manufacturers, designers, real estate developers, and builders to benchmark building materials and practices purchased from specialized marketplaces and set building sustainability strategies, automate LCAs into the construction plan, measure performance to identify impactful insights and get the full overview of scope 3 emissions all while staying connected in one integrated platform.
Next, evaluate the size and diversity of the marketplace’s supplier network. A larger network often translates to increased competition among suppliers, leading to more competitive pricing. Additionally, a diverse supplier network can offer a wider range of products and services. This diversity can be especially beneficial when looking for sustainable or environmentally friendly materials and suppliers. It’s also important to assess the transparency and reliability of the marketplace. Look for platforms that provide detailed information about suppliers, their products, and their sustainability practices. This transparency can help you make more informed decisions and ensure that the materials you’re sourcing meet your sustainability goals.
Lastly, consider the user interface, ease of navigation, and security features of the platform. These factors can greatly influence your overall experience and the platform’s compatibility with other digital systems and existing processes. A robust security framework will be especially important for ensuring your company’s sensitive information remains secure. Key features to look for include verified supplier profiles and secure payment gateways. Additionally, evaluate the level of customer support offered by the platform, which can be essential for addressing any issues or concerns.
Final thoughts
In summary, the construction industry is at a critical juncture where it must take concrete steps to reduce emissions across the entire value chain. The root causes of these emissions are deep-seated and will require all industry stakeholders to revaluate their approach to long-established practices and processes. Digital marketplaces offer a promising avenue for addressing these challenges by linking suppliers and consumers in a shared endeavour.
By working together and embracing best practices, the construction industry can pave the way for a greener, more efficient, and more sustainable future.
