Construction Materials

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Current language: English
Construction Materials entities have global operations and produce construction materials for sale to construction entities or wholesale distributors. These primarily include cement and aggregates, but also glass, plastic materials, insulation, bricks and roofing material. Materials producers operate their own quarries, mining crushed stone or sand and gravel. They may also purchase raw materials from the mining and petroleum industries.

Relevant Issues (9 of 26)

Why are some issues greyed out? The SASB Standards vary by industry based on the different sustainability-related risks and opportunities within an industry. The issues in grey were not identified during the standard-setting process as the most likely to be useful to investors, so they are not included in the Standard. Over time, as the ISSB continues to receive market feedback, some issues may be added or removed from the Standard. Each company determines which sustainability-related risks and opportunities are relevant to its business. The Standard is designed for the typical company in an industry, but individual companies may choose to report on different sustainability-related risks and opportunities based on their unique business model.
  • Environment
    • GHG Emissions The category addresses direct (Scope 1) greenhouse gas (GHG) emissions that a company generates through its operations. This includes GHG emissions from stationary (e.g., factories, power plants) and mobile sources (e.g., trucks, delivery vehicles, planes), whether a result of combustion of fuel or non-combusted direct releases during activities such as natural resource extraction, power generation, land use, or biogenic processes. The category further includes management of regulatory risks, environmental compliance, and reputational risks and opportunities, as they related to direct GHG emissions. The seven GHGs covered under the Kyoto Protocol are included within the category—carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulfur hexafluoride (SF6), and nitrogen trifluoride (NF3).
    • Air Quality The category addresses management of air quality impacts resulting from stationary (e.g., factories, power plants) and mobile sources (e.g., trucks, delivery vehicles, planes) as well as industrial emissions. Relevant airborne pollutants include, but are not limited to, oxides of nitrogen (NOx), oxides of sulfur (SOx), volatile organic compounds (VOCs), heavy metals, particulate matter, and chlorofluorocarbons. The category does not include GHG emissions, which are addressed in a separate category.
    • Energy Management The category addresses environmental impacts associated with energy consumption. It addresses the company’s management of energy in manufacturing and/or for provision of products and services derived from utility providers (grid energy) not owned or controlled by the company. More specifically, it includes management of energy efficiency and intensity, energy mix, as well as grid reliance. Upstream (e.g., suppliers) and downstream (e.g., product use) energy use is not included in the scope.
    • Water & Wastewater Management The category addresses a company’s water use, water consumption, wastewater generation, and other impacts of operations on water resources, which may be influenced by regional differences in the availability and quality of and competition for water resources. More specifically, it addresses management strategies including, but not limited to, water efficiency, intensity, and recycling. Lastly, the category also addresses management of wastewater treatment and discharge, including groundwater and aquifer pollution.
    • Waste & Hazardous Materials Management The category addresses environmental issues associated with hazardous and non-hazardous waste generated by companies. It addresses a company’s management of solid wastes in manufacturing, agriculture, and other industrial processes. It covers treatment, handling, storage, disposal, and regulatory compliance. The category does not cover emissions to air or wastewater nor does it cover waste from end-of-life of products, which are addressed in separate categories.
    • Ecological Impacts The category addresses management of the company’s impacts on ecosystems and biodiversity through activities including, but not limited to, land use for exploration, natural resource extraction, and cultivation, as well as project development, construction, and siting. The impacts include, but are not limited to, biodiversity loss, habitat destruction, and deforestation at all stages – planning, land acquisition, permitting, development, operations, and site remediation. The category does not cover impacts of climate change on ecosystems and biodiversity.
  • Social Capital
    • Human Rights & Community Relations
    • Customer Privacy
    • Data Security
    • Access & Affordability
    • Product Quality & Safety
    • Customer Welfare
    • Selling Practices & Product Labeling
  • Human Capital
    • Labor Practices
    • Employee Health & Safety The category addresses a company’s ability to create and maintain a safe and healthy workplace environment that is free of injuries, fatalities, and illness (both chronic and acute). It is traditionally accomplished through implementing safety management plans, developing training requirements for employees and contractors, and conducting regular audits of their own practices as well as those of their subcontractors. The category further captures how companies ensure physical and mental health of workforce through technology, training, corporate culture, regulatory compliance, monitoring and testing, and personal protective equipment.
    • Employee Engagement, Diversity & Inclusion
  • Business Model and Innovation
    • Product Design & Lifecycle Management The category addresses incorporation of environmental, social, and governance (ESG) considerations in characteristics of products and services provided or sold by the company. It includes, but is not limited to, managing the lifecycle impacts of products and services, such as those related to packaging, distribution, use-phase resource intensity, and other environmental and social externalities that may occur during their use-phase or at the end of life. The category captures a company’s ability to address customer and societal demand for more sustainable products and services as well as to meet evolving environmental and social regulation. It does not address direct environmental or social impacts of the company’s operations nor does it address health and safety risks to consumers from product use, which are covered in other categories.
    • Business Model Resilience
    • Supply Chain Management
    • Materials Sourcing & Efficiency
    • Physical Impacts of Climate Change
  • Leadership and Governance
    • Business Ethics
    • Competitive Behavior The category covers social issues associated with existence of monopolies, which may include, but are not limited to, excessive prices, poor quality of service, and inefficiencies. It addresses a company’s management of legal and social expectation around monopolistic and anti-competitive practices, including issues related to bargaining power, collusion, price fixing or manipulation, and protection of patents and intellectual property (IP).
    • Management of the Legal & Regulatory Environment
    • Critical Incident Risk Management
    • Systemic Risk Management

Disclosure Topics

What is the relationship between General Issue Category and Disclosure Topics? The General Issue Category is an industry-agnostic version of the Disclosure Topics that appear in each SASB Standard. Disclosure topics represent the industry-specific impacts of General Issue Categories. The industry-specific Disclosure Topics ensure each SASB Standard is tailored to the industry, while the General Issue Categories enable comparability across industries. For example, Health & Nutrition is a disclosure topic in the Non-Alcoholic Beverages industry, representing an industry-specific measure of the general issue of Customer Welfare. The issue of Customer Welfare, however, manifests as the Counterfeit Drugs disclosure topic in the Biotechnology & Pharmaceuticals industry.
General Issue Category
(Industry agnostic)

Disclosure Topics (Industry specific) for: Construction Materials

GHG Emissions
  • Greenhouse Gas Emissions

    The production of construction materials, particularly cement, generates significant direct greenhouse gas (GHG) emissions from on-site fuel combustion and chemical processes. The industry has achieved efficiency gains in reducing emissions per ton of materials produced. At the same time, increasing production is associated with increasing absolute emissions from cement production. The production of construction materials remains carbon-intensive relative to other industries, exposing the industry to higher operating and capital expenditures from emissions regulations. Strategies to reduce GHG emissions include energy efficiency, use of alternative and renewable fuels, carbon sequestration and clinker substitution. Operational efficiencies can be achieved through the cost-effective reduction of GHG emissions. Such efficiencies can mitigate the potential financial impact of increased fuel costs as well as direct emissions from regulations that limit—or put a price on—GHG emissions.
Air Quality
  • Air Quality

    On-site fuel combustion and production processes in the Construction Materials industry emit criteria air pollutants and hazardous chemicals, including small quantities of organic compounds and heavy metals. Emissions of particular concern include nitrogen oxides, sulphur dioxides, particulate matter, heavy metals (for example, mercury), dioxins and volatile organic compounds, among others. These air emissions can have significant, localised human health and environmental impacts. Financial impacts resulting from air emissions will vary depending on the specific location of operations and the applicable air emissions regulations, but they could include higher operating or capital expenditures and regulatory or legal penalties. Active management of the issue—through technological and process improvements—may allow entities to limit the impact of regulations and benefit from operational efficiencies that could lead to a lower cost structure over time.
Energy Management
  • Energy Management

    The production of construction materials requires significant energy, sourced primarily from direct fossil fuel combustion as well as from purchased electricity. Energy-intense production has implications for climate change, and electricity purchases from the grid can create indirect Scope 2 emissions. Construction materials entities also use alternative fuels for kilns, such as scrap tyres and waste oil—often waste generated by other industries. If properly managed, these can lower energy costs and greenhouse gas (GHG) emissions. However, potentially negative impacts could occur, such as releases of harmful air pollutants that entities need to minimise to obtain net benefits from using such fuels. Decisions about use of alternative fuels, renewable energy and on-site generation of electricity (versus purchases from the grid) can be important in influencing both the costs and reliability of energy supply. Affordable, easily accessible and reliable energy is an important competitive factor in this industry, with purchased fuels and electricity accounting for a significant proportion of total production costs. How a construction materials entity manages energy efficiency, reliance on different types of energy and associated sustainability risks, and access to alternative sources of energy may influence its profitability.
Water & Wastewater Management
  • Water Management

    Construction materials production requires substantial volumes of water. Entities face operational, regulatory and reputational risks associated with water scarcity, costs of water acquisition, regulations on effluents or amount of water used, and competition with local communities and other industries for limited water resources. Risks are likely to be higher in regions of water scarcity because of potential water availability constraints and price volatility. Entities unable to secure a stable water supply could face production disruptions, while rising water prices could directly increase production costs. Consequently, the adoption of technologies and processes that reduce water consumption could lower operating risks and costs for entities by minimising the impact of regulations, water supply shortages and community-related disruptions on entity operations.
Waste & Hazardous Materials Management
  • Waste Management

    Construction materials production recycling rates are high. However, waste from production processes, pollution control devices and from hazardous waste management activities present a regulatory risk and can increase operating costs. Cement kiln dust (CKD)—consisting of fine-grained, solid, highly alkaline waste removed from cement kiln exhaust gas by air pollution control devices—is the most significant waste category in the industry. Regulatory risk remains high from evolving environmental laws. Entities that reduce waste streams—hazardous waste streams in particular—and recycle by-products, can reduce regulatory and litigation risks and costs.
Ecological Impacts
  • Biodiversity Impacts

    Construction materials entities often operate their own quarries close to processing facilities. Quarrying requires the removal of vegetation and topsoil. It also requires the blasting and crushing of underlying stone deposits. The process can lead to permanent alterations of the landscape, with associated impacts on biodiversity. The environmental characteristics of the land where quarrying takes place could increase extraction costs, due to increasing awareness and protection of ecosystems. Entities could also face regulatory or reputational barriers to accessing sites in ecologically sensitive areas. This may include new protection status afforded to areas where reserves are located. Ongoing quarrying operations may also be subject to laws protecting endangered species. Entities that have an effective environmental management plan for different stages of the project lifecycle—including restoration during site decommissioning—could minimise their compliance costs and legal liabilities. These entities could face less community resistance in quarrying at new sites and avoid difficulties in obtaining permits and delays in project completion.
Employee Health & Safety
  • Workforce Health & Safety

    Employees and contractors of construction materials entities face significant health and safety risks. Industry hazards include those arising from the use of heavy equipment and from quarrying operations. In addition to acute impacts, workers can develop chronic health conditions from silica dust inhalation, among other factors. Due to these hazards, the industry has relatively high fatality rates, and many entities have implemented a strong safety culture and health and safety policies to mitigate associated risks. Worker injuries, illnesses, and fatalities can lead to regulatory penalties, negative publicity, low worker morale and productivity, and increased healthcare and compensation costs.
Product Design & Lifecycle Management
  • Product Innovation

    Innovations in building materials are an essential component in the growth of sustainable construction. Consumer and regulatory trends are driving adoption of sustainable building materials and processes that are more resource efficient and can reduce health impacts of buildings throughout their lifecycle. This is creating new business drivers for construction materials entities, with an opportunity to increase revenue. Furthermore, some new products require less energy to produce, or use largely recycled inputs, reducing production costs. Therefore, sustainable construction materials can contribute to an entity’s long-term growth and competitiveness.
Competitive Behavior
  • Pricing Integrity & Transparency

    The construction materials market has been subject to instances of anti-competitive behaviour, such as maintaining artificially high prices through cartel activity. Most countries have well-established fair business practice laws in place to prevent such behaviours. Business activity leading to price fixing or other manipulation of prices can lead to material legal fines or business disruption. Managing anti-competitive behaviour within an organisation can effectively mitigate regulatory risks, including those related to investigations of mergers and acquisitions or compliance costs.

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Current Industry: Construction Materials

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