Climate change is one of the biggest challenges of our age and we are determined to play our part in tackling it. In early 2023, we announced our commitment to reach net zero emissions by 2045 across our value chain, building on our existing science-based target.
Committed to net zero
We have committed to reach net zero emissions across our value chain ahead of UK regulation. Our two key commitments are:
Net zero emissions in our operations by 2035 (Scopes 1 and 2)
Net zero emissions across our value chain by 2045 (Scopes 1, 2 and 3)
Our main target incorporates our existing science-based reduction target for scope 1 and 2 and is supported by several sub-targets.
Our targets were developed with the Carbon Trust in line with the requirements of the SBTi Corporate Net Zero Standard. We have submitted them for validation by the SBTi and expect to receive this during 2023. We have modelled the costs and investment required to reach our goals as well as our approach to neutralising residual emissions.
Incentivising performance: In 2022, 10% of the bonus in our Executive Incentive Scheme was linked to progress on developing our Net Zero Transition Plan and achieving a reduction in carbon intensity. An environmental measure will be included in the long term incentive plans for senior management and regional management in 2023.
Science-based approach: The SBTi has confirmed that our 2025 operational target is consistent with reductions required to keep warming to 1.5°C, the most ambitious goal of the Paris Agreement. Our net zero value chain target has been developed to meet the SBTi Corporate Net Zero Standard and we have submitted it for validation by the SBTi.
External assurance: Our carbon and energy use data is externally assured by the Carbon Trust to a limited assurance level. In addition, our Scopes 1 and 2 footprint, and three selected Scope 3 categories (Purchased Goods and Services, Fuel and Energy-related Activities and Use of Sold Products) are verified to ISO 14064-3. We are the only UK homebuilder to hold the Carbon Trust Standard for our overall approach to carbon management, including our policy, strategy and verification of our data and processes.
Benchmarks: We participate in CDP Climate Change and publish our submission. We received a score of A- for 2022 (2021: A-). We were included on the Financial Times European Climate Leaders list 2022 and were ranked seventh on climate change in the Responsibility100 Index, an ESG ranking of FTSE 100 companies. We have been recognised by the CDP as a Supplier Engagement Leader and received a Supplier Engagement score of A for our approach to engaging suppliers on climate change.
Risk and scenario analysis: Natural resources and climate change is one of our Principal Risks. We support the Task Force on Climate-related Financial Disclosures (TCFD), and disclose consistently with its recommendations in our Annual Report and Accounts. We conducted further climate scenario analysis during 2022 to deepen our understanding of the likely impacts of climate transition risks and opportunities across short term (2025) and medium term time horizons (2030). The analysis considered our level of exposure to 15 transition risks in a low carbon economy where temperature rises would be limited to 1.5oC this century as well as modelling the physical impacts of climate change on our assets and supply chain in two temperature scenarios (1.5 and 4oC warming) over the medium and long term. You can read a summary of the results in our Annual Report and Accounts.
Our carbon footprint
Our operational emissions intensity (scope 1 and 2), has decreased by 15% against our 2019 baseline with absolute operational emissions falling by 26% over the same period. This is due to increased use of renewable electricity, energy efficiency measures and a reduction in diesel use on our sites.
Since 2013, we have reduced absolute emissions (scope 1 and 2) by 39.7%, and reduced our direct emissions intensity by 51.5%.
Our total carbon footprint (scopes 1, 2 and 3) was 2.54 million tonnes in 2022 (2021: 2.40). Total intensity increased to 190.0 tonnes per 100sqm of build (2021: 172.1).
In 2022, we developed a more accurate methodology for measuring Scope 3 supply chain emissions, using a combination of quantity based data (drawing on data on the quantity of materials purchased and emissions data from environmental product declarations) as well as spend data. Our previous methodology relied on spend data only. We have also made some methodologies improvements for the Scope 3 categories of Business Travel, Use of Sold Products, Employee Commuting and Upstream Transport and Distribution. We have restated our data from 2021 to reflect this change.
Scope 3 emissions increased year on year reflecting an increase in procurement spend.
Operational carbon and energy use
Energy efficiency: We have set energy reduction targets for each regional business to drive improvements. Our Sustainability Champions work with our site teams to reduce energy use on site and apply our Energy Use Dos and Don’ts guide. We have been partnering with cabin manufacturer Danzer and the Carbon Trust to design and trial new energy efficient portacabins and have also introduced some cabins partly powered by PV panels.
Renewable and lower carbon energy: We purchase 100% renewable electricity for new sites during construction (including temporary building supplies), offices, show homes, sales areas and plots before sale. This is around 70% of our Group electricity consumption (2021: 72%). Our green electricity is REGO backed, confirming it comes from genuine renewable energy.
We successfully trialled a hybrid generator on one of our sites during 2022 and achieved a significant carbon and financial saving. We are extending the trial to further sites during 2023. We have successfully tested hydrotreated vegetable oil as a lower carbon alternative to diesel for plant on site and are assessing the potential to extend its use and address cost issues. We use all electric forklifts at our logistics centre (previously diesel).
Company car fleet: Our car benefit scheme ‘MyDrive’ enables employees to have access to a new low emission car, fully maintained, and provided in a tax-efficient way. It incentivises employees to choose electric and ultra-low emission vehicles. We now only offer cars with a CO2 rating of less than 120g/km and will gradually reduce this threshold. By the end of 2022 we had reached 56% EV or hybrid vehicles (2021: 43%). Many of our offices now have electric vehicle charging points. We have reduced company car fleet emissions (excluding grey fleet) by 68% since 2019.
Embodied carbon in the goods and services we buy and materials we use to build our homes accounts for around 52% of our carbon footprint. To meet our net zero goals, it is essential to work with suppliers and the wider industry to reduce the carbon footprint of the materials we use but this can be challenging.
During 2022, we undertook analysis with the Carbon Trust reviewing the potential for emissions reductions up to 2045 focusing on five key materials - concrete, diesel, asphalt, bricks and steel. These materials account for around 68% of emissions in purchased goods and services. We also looked at the carbon footprint of groundworks suppliers on our construction sites. The findings will help us prioritise carbon reduction opportunities and to engage our supply base.
During 2022, we have been working with suppliers to identify new brick and block products that can reduce embodied carbon and to scale-up use of lower impact products already used in our business. Products we are focusing on include half bricks that are thinner than standard bricks reducing materials use and allowing more insulation to be installed in the home and more bricks to be transported on each load. We are also looking at block types with a higher air content. These reduce materials use and embodied carbon and can offer better thermal insulation.
We are engaging with suppliers on carbon emissions through our procurement processes, research and development and through our membership of the Supply Chain Sustainability School (SCSS).
Expanding our use of timber frame
Timber frame can have a significantly lower carbon footprint than traditional ‘brick and block’ building techniques due to the materials and use of off-site construction techniques. It can also help to reduce waste volumes and improve efficiency in the build process.
In 2023 we are opening a new timber frame production facility near Peterborough to help us expand our use of timber frame. Alongside the carbon benefits, this will help us to improve logistics efficiencies and provide security of supply.
We aim to increase from around 18% of completed homes built using timber frame today to 30% by 2030.
Homes in use
We are reducing the carbon footprint of our homes through improvements in fabric energy efficiency, use of renewable and efficiency technologies and, from 2025, the phase-out of gas boilers.
From 2022 we are rolling out changes to our homes that will result in an average 31% improvement in carbon efficiency compared to our current specification (2013 Regulations). The homes will integrate enhanced fabric standards, further energy efficiency measures and low carbon technology including wastewater heat recovery systems, thermally enhanced lintels and PV panels. More homes will also include triple glazing and EV chargers. The specification complies with the updates to Building Regulations Parts F, L, O and S.
We started building our first trial of five all electric plots at our site in Sudbury.
We have achieved the Carbon Trust Standard for our overall approach to carbon management, including our policy, strategy and verification of our data and processes. We are the first and only major homebuilder to achieve this. Our climate change data is verified by the Carbon Trust.
We’ve also been added to the Financial Times European Climate Leaders list and received an A- rating from CDP Climate Change, the investor led initiative.
We are committed to transparent disclosure of our ESG performance and are aligning our reporting with the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD).