International real estate giant Lendlease has called on its industry counterparts to expand their decarbonisation efforts by adressing the largest source of the sector’s carbon emissions – Scope 3 emissions.
Scope 3 emissions, representing indirect emissions within an organisation’s value chain, often constitute a significant portion of the carbon footprint.
Lendlease said some of the difficulty arises from the lack of clear guidelines for Scope 3 reporting boundaries, tracking complexities, and the sector’s heavy reliance on carbon-intensive materials like steel, cement, aluminium and glass.
At Lendlease, 90 per cent of total carbon emissions comprise Scope 3 emissions, stemming from both upstream manufacturing of building materials and downstream energy use by building occupants. Lendlease has over 60 projects globally that have Scope 3 emissions reduction commitments attached to them.
In an effort to accelerate decarbonisation and advocate for consistent Scope 3 reporting boundaries within the real estate sector, Lendlease recently unveiled the Lendlease Scope 3 Emissions Protocol v.1 at Climate Week NYC.
This protocol outlines Lendlease’s current perspective on Scope 3 emissions reporting boundaries and aims to serve as a model for stakeholders in real estate investments, development and construction.
“The Protocol is a seminal piece of work on our pathway towards our target of Absolute Zero – with no offsets – by 2040. To know where to focus our decarbonisation, we need to first know how we are accounting for our Scope 3 emissions – what is material and therefore, what is in and out of scope,” Lendlease Group Head of Sustainability and Lendlease Foundation Cate Harris said.
“We want the Protocol to spark conversation and engagement across our sector, to help drive to a consensus on how to account for and report on Scope 3 emissions. If we can achieve this, then we can collaborate as an industry to solve the two big systemic challenges: the decarbonisation of harder to abate materials, and the digitisation and sharing of Scope 3 emissions data. The Protocol is intended as an important first step towards that outcome.”
Jeremy Hutchinson, Group Head of Supply Chain, Lendlease said the group wants to support and drive emission reductions up and down its value chain.
“We do not underestimate the challenges in decarbonising harder to abate materials and we continue to work with our supply chain partners who have aligned aspirations on emission reduction targets, supporting their investment and innovation in decarbonisation,” he said.
Lendlease already has targets to reach net zero in its Scope 1 and 2 emissions by 2025 and absolute zero by 2040, but according to Ms Harris, Scope 3 will be a challenge for the industry.
“We set ourselves that grand target,” she said. “We think that’s what’s going to be necessary to play our part in limiting global warming and addressing the climate crisis.
“We know business as usual is not going to get us there. We also know that we can’t do it alone.”
Ms Harris said the company is now moving its attention from its own emissions to the inclusion of Scope 3 emissions.
“To create the systemic change and the transformation in our sector for Scope 3 emissions is going to require everyone,” Ms Harris said.
Disclosure of material Scope 3 emissions is being proposed by regulatory agencies such as the Securities and Exchange Commission (SEC) in the U.S. and by sustainability reporting standards such as the International Sustainability Standards Board (ISSB). This makes better Scope 3 measurement and reporting an imperative, according to Lendlease.
The group is calling for others in the industry to turn their focus to addressing Scope 3 emissions and for an industry-wide data-sharing platform to enable the secure exchange of digitised, verified Scope 3 emissions data.
While Ms Harris noted that not everyone has shifted their focus to Scope 3 emissions, she felt there is a “growing acceptance that we all need to be accountable”.
“A lot of people’s net zero targets still only account for their Scope 1 and 2 emissions, but there are a few now that are also wrapping in Scope 3 emissions into their targets – which I think is the right thing to do,” she said.
“We’re seeing a drive and an appetite to understand Scope 3 emissions from the investor level down.
“So certainly, our investors and the investment community are starting to really drive this agenda in terms of transparency of disclosures and understanding that full picture.
“I’ve seen when the property industry comes together on these sorts of agendas, and when we all pull in the right direction, we can achieve incredible outcomes together.”