The integration of ESG (Environmental, Social, Governance) principles within the UK construction sector is advancing, but significant challenges remain. Understanding the state of ESG in the UK construction sector is critical to charting a clear path forward.

Net-Zero Construction

The global built environment accounts for 37% of CO₂ emissions, with construction alone estimated responsible for around 25% of UK emissions. As such, UK construction has a critical role to play in helping the UK to achieve Net-Zero by 2050.

To learn more about what a Net-Zero Construction project might look like, check out our recent blog post.

Scope 3 Emissions

Scope 3 emissions can account for over 70% of total carbon output in UK construction. A 2024 study found that only 54% of Tier 1 contractors had begun collecting Scope 3 data by the end of 2023. Of those, just 41% had methods to measure emissions from employee commutes (one of 15 required categories).

This gap between actual emissions and reported figures undermines ESG credibility. The UK Green Building Council warns that without consistent Scope 3 disclosure, the sector risks missing its net-zero targets by up to 40%.

“Despite being a significant source of carbon emissions, embodied carbon remains unregulated and underreported.”

UKGBC

RICS Whole Life Carbon Assessment

The UK construction sector’s ESG transformation is increasingly guided by rigorous carbon accounting and the RICS Whole Life Carbon Assessment, launched in July 2024, stands as a key benchmark.

The WLCA standard establishes a comprehensive framework for measuring carbon emissions across all stages of a building's lifecycle, from pre-construction activities and material production to demolition and beyond. The updated edition enhances accuracy and scope, reflecting evolving ESG demands and net-zero targets.

Some of the key updates, released in 2024, include:

• Full lifecycle coverage, including pre-construction and demolition emissions
• Mandated realistic energy modelling, moving away from outdated methods
• Integration with the UK Net Zero Carbon Buildings Standard (for projects designed in 2025, the embodied carbon target is 580 kgCO₂e/m²)

The standard has already been adopted by local authorities including London, Manchester, Dundee, and Bristol, with major developments now required to submit WLCAs.

10% Net Gain in Biodiversity

As of February 2024, England became the first country in the world to mandate a minimum 10% Biodiversity Net Gain (BNG) for major developments including housing, industrial, and commercial projects.

Developers must use the DEFRA biodiversity metric to calculate habitat value before and after development, ensuring a measurable improvement. BNG must be maintained for at least 30 years, either on-site or via registered off-site units.

Zero Waste to Landfill

The UK construction sector generates over 60 million tonnes of waste annually, making it the largest waste-producing industry in the UK. Additionally, construction waste costs the industry £11 billion per year and emits 3.5 million tonnes of CO2e. In response, the Green Construction Board launched the Zero Avoidable Waste Route map, outlining:

• 10% cost reduction by 2030 through material optimisation
• 75% reduction in soil to landfill by 2040
• Zero landfill (except hazardous waste) by 2050

Circular Economy

In March 2025, the UK’s Circular Economy Taskforce was launched. The initiative places construction at the heart of national efforts to end the “throwaway society”.

Construction and the built environment accounts for 62% of the UK’s total waste. Despite this, most projects still follow a linear “take-make-dispose” model. The UK construction industry must move towards a circular economy model; where materials are reused, repurposed, and retained.

According to UKGBC, applying circular principles can reduce raw material use by 35% and unlock £1.8 trillion in economic opportunity across the EU by 2030.

Key components of the UK’s circular economy initiatives include:

• Material passports for tracking reuse potential
• Design for disassembly and adaptability
• Green contracts and leases to incentivise circularity
• Marketplace for secondary materials

Skills Shortages

A 2024 report by Bartlett School of Sustainable Construction at University College London found that 100% of respondents aged 18 – 24, lacked any ESG training, while only 48% of respondent aged 45 – 54 said they had received any training.

Echoing these shortages, a 2024 article from Reuters notes that decarbonisation of the UK construction sector will require the reskilling of 251,500 construction workers over the next five years (Adrian Beckingham, strategy and policy director at the Construction Industry Training Board).

ESG skills shortages present a significant challenge for the UK construction sector. As ESG becomes more commonplace on the construction site; organisations must ensure that their staff have the skills required to respond to the growing legislative and commercial pressures and challenges.

Corporate Level Changes

Despite skills shortages, organisations are at a corporate level, beginning to more clearly understand the role and importance of ESG from both a commercial and legislative perspective.

The same 2024 report from Bartlett School of Sustainable Construction at University College London found that while only 28% of UK Construction Law Professional have active ESG roles, 54% consider ESG to be moderately to extremely important.

The report goes on to make several recommendations, most crucially, advising for greater access to ESG training across demographics and establishing standardised metrics and tools for ESG in the built environment.

Legislative Changes

Legislation and governance continue to play a central role within the UK Construction Sector. Earlier this year, the UK Procurement Act 2023 came into effect, and fundamentally changed the way by which suppliers to the public sector operate. Key changes, introduced by the act include:

📝 A Single, Streamlined Regulatory Framework
✅ Simplified Procurement System that aims to improve access for SME’s
🌳 Greater Focus on Social Value and maximising public benefits
🔍 Improved transparency throughout the commercial lifecycle
💬 More consistent feedback for suppliers from public bodies
⚠️ Tougher action on underperforming suppliers who pose unacceptable risks

The Procurement Act 2023 seeks to further embed social value into procurement decisions, making it a critical factor in contract awards. UK Public Sector Tenders require a minimum 10% weighting for social value under the Social Value Model (PPN 06/20).

To learn more about the Procurement Act 2023 and what it means for your business, download our eBook here.

Alongside the Procurement Act, organisations must also prepare for the introduction of the UK Sustainability Reporting Standards (SRS). Set to align with global disclosure frameworks, SRS will require businesses to report consistently on their environmental, social, and governance impacts. For suppliers in the construction sector, this means greater scrutiny of sustainability data and a stronger need to demonstrate transparent, credible reporting.

Data Scrutiny

In Q1 2024 alone, the UK Government awarded 2,021 construction contracts worth a total of £6.6b; a 14% increase compared to the previous quarter. That figure is expected to rise an additional 10% through 2025. As such, the role of Social Value within the construction industry cannot be understated.

As sustainability reporting becomes more commonplace (driven in large part by legislative and commercial pressures), organisations within the construction sector will be under increased scrutiny to ensure the data that they publish is transparent, accurate, and representative.

In 2020, the Competition and Markets Authority found that 40% of green claims made by companies could be misleading, particularly by those in the construction sector.

Audit risks, and accusations of greenwashing are a major concern for organisations across the UK construction industry (more so now as a result of changes introduced by The Procurement Act 2023). Organisations want confidence in the data they are collecting and presenting to stakeholders.

Sincere and transparent reporting, effective supplier engagement, greater standardisation of data, and robust data collection processes will help bolster the validity of an organisation’s sustainability reporting.

About SustainIQ

SustainIQ is an integrated ESG reporting platform that unifies all aspects of an organisation’s sustainability activities within a single environment. Businesses use SustainIQ to measure, monitor, and report on their social, economic, and environmental performance in real time.

Our software saves sustainability professionals from wasting time chasing teams, sites, and regions for reporting information. No more unreadable spreadsheets, awkward (and incorrect) calculations, and endless report building. With SustainIQ, simply pull, input or bulk upload data and get access to your custom-built report at touch of a button.