• Scope 3 emissions from building materials significantly outweigh Scope 1 and 2 emissions.
• Traditional spend-based accounting discourages investment in lower-carbon materials.
• A new dual-path framework combining process-based and spend-based data guides strategic, climate-positive investments.

Microsoft and RMI’s report “Impact Accounting Methodology for Building Construction” presents an innovative approach designed to substantially reduce greenhouse gas emissions in construction, specifically targeting the embodied carbon in building materials.

Spend-based emission accounting often penalizes companies for investing in lower-carbon materials by inflating reported emissions. This methodology shifts the focus towards meaningful emission reduction strategies, facilitating accurate reporting aligned with corporate sustainability goals.

“Spend-based accounting perversely results in companies reporting higher emissions rather than lower when they willingly make investments to reduce embodied carbon from their building projects.”

The new method identifies two pathways:

• Process-based (Preferred): Utilizes detailed, verified Environmental Product Declarations (EPDs) for key high-emission materials like concrete, steel, and insulation.
• Spend-based (Supplemental): Applied when detailed EPD data is unavailable, ensuring completeness in Scope 3 emission tracking.

“Substantial embodied carbon reductions are possible when EPD data is used to make decisions from building design development through product procurement, especially for high-impact, high-volume products.”

The methodology invites immediate implementation, allowing companies to actively pursue significant emission reductions. Microsoft and RMI collaborated with Building Transparency, LinkedIn, and the University of Washington to refine this methodology

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Continued improvements in data availability will enhance the precision and applicability of process-based emissions tracking, ultimately enabling even broader emissions reductions.

“The impact method is intended to provide a consistent framework for using today’s best available process-based data to ensure that emissions reductions are identified and can be prioritized for measurable action.“

Adopting this hybrid approach aligns corporate spending with climate goals, accurately captures emission reductions, and empowers strategic decision-making towards a sustainable future

Read the full report here.

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