ESRS 1 · CSRD · Construction

Double Materiality Assessment
for Construction

Construction entities face material topics across emissions, waste, pollution, worker safety, subcontractor conditions, and community impacts from project sites.

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Double materiality assessment for Construction

Construction companies carry a distinctive materiality profile shaped by project-based operations, fragmented subcontractor chains, and the built environment's carbon footprint. The sector accounts for approximately 37% of global energy-related CO2 emissions when both operational and embodied carbon are included (per the UN Environment Programme's 2023 Global Status Report for Buildings and Construction). A European construction group with EUR 200M revenue, 600 direct employees, and a network of 150 subcontractors working across commercial and infrastructure projects will find seven ESRS topics material. The project-by-project nature of construction means the assessment must consider the portfolio of active and pipeline projects, not just a static operational footprint.

E1 Climate change is material through embodied carbon in construction materials (concrete production alone accounts for approximately 8% of global CO2 emissions), Scope 1 from site machinery and transport, and Scope 3 from purchased materials. Financial materiality comes from rising material costs linked to carbon pricing (cement, steel) and client requirements for low-carbon buildings driven by EPBD and green building certification demand. E2 Pollution applies to construction site runoff (sediment, fuel spills, concrete washout affecting waterways), dust emissions, and noise pollution during construction. The EU Construction and Demolition Waste Protocol addresses many of these issues. E5 Resource use is material given the sector's waste generation: construction and demolition waste accounts for approximately 37% of total waste generated in the EU according to Eurostat. Material efficiency, recycled aggregate use, and design-for-disassembly all fall under E5. S1 Own workforce is a critical topic. Construction has one of the highest fatal accident rates in Europe (Eurostat reported 3.5 fatal accidents per 100,000 construction workers in 2021, nearly double the all-sector average). S2 Workers in the value chain is equally significant: the subcontracting model means that a large share of on-site labour is employed by subcontractors or labour agencies, often with weaker employment protections. Posted worker regulations, minimum wage compliance, and working time enforcement across multi-tier subcontracting chains are persistent issues. S3 Affected communities covers construction site impacts on neighbouring residents (noise, dust, traffic, access disruption) and larger-scale impacts from infrastructure projects (displacement, environmental justice concerns). G1 Business conduct addresses bid rigging, procurement fraud, and corruption in public contract awards, all areas where the construction sector has documented enforcement history across EU member states.

Assurance providers consistently flag two weaknesses in construction assessments. First, entities assess S1 for their own employees but fail to extend the workforce assessment to S2 for subcontracted labour, despite subcontractors often performing the highest-risk tasks. ESRS 1.30 requires value chain coverage, and in construction, the subcontractor chain is the value chain. Second, entities treat E1 as limited to diesel consumption on site, ignoring the embodied carbon in procured materials. This underscopes the most significant climate impact in the sector.

Construction entities should structure the assessment by project type (residential, commercial, infrastructure, demolition) and project phase (design, procurement, construction, handover). Different project types generate different sustainability matters. Infrastructure projects in rural areas trigger E4 Biodiversity and S3 more strongly than urban commercial fit-outs. Score each topic using project-portfolio data: aggregated safety statistics, waste diversion rates, material procurement volumes, subcontractor audit results, and community complaint records. Use the data already collected for project-level environmental management plans and health and safety plans as evidence.

Frequently asked questions: Construction

Should construction companies assess E3 Water and marine resources?
For most construction companies, E3 scores below the materiality threshold because direct water consumption is relatively low compared to manufacturing or agriculture. However, companies working on marine infrastructure (ports, coastal defences) or projects that affect waterways (bridges, river crossings) should assess E3 for those project types. Dewatering activities on sites with high water tables can also trigger E3 materiality locally.
How should construction companies handle the S2 assessment for multi-tier subcontracting?
Map the subcontractor chain to at least the second tier for high-risk activities (scaffolding, demolition, electrical work). Assess S2 based on the labour risks in each tier: posted worker status, agency employment, wage payment practices, working time compliance, and safety training provision. Use subcontractor pre-qualification records, site audits, and payroll verification checks as evidence. The EU Posted Workers Directive and national transpositions provide the regulatory baseline for financial materiality scoring.
Is E4 Biodiversity relevant for urban construction projects?
It depends on the specific site. Urban brownfield developments can host protected species (nesting birds, bats, reptiles). Green infrastructure demolition or tree removal on urban sites also triggers E4 assessment. National planning requirements in most EU member states require ecological surveys before construction. Use these surveys as evidence. If the entity has no projects near ecologically sensitive sites and no planning conditions related to ecology, E4 may score below the threshold.
How does the EU Taxonomy interact with the construction sector's double materiality assessment?
The EU Taxonomy's technical screening criteria for construction activities (NACE F41-F43) define thresholds for substantial contribution to climate mitigation and adaptation. While Taxonomy alignment and CSRD materiality are separate assessments, the data requirements overlap. An entity that has assessed its Taxonomy eligibility and alignment already holds data on embodied carbon, energy performance targets, and climate adaptation measures that feeds directly into the E1 materiality scoring. The two exercises should be coordinated to avoid duplicating data collection.

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