L.E.K.: Energy Efficiency can Boost Construction Competition
The construction sector, a massive contributor to global emissions, is currently undergoing a transformative shift towards sustainability.
According to the United Nations Environment Programme, buildings and construction are responsible for 37% of greenhouse gas emissions worldwide.
A 2024 report from L.E.K. Consulting shows that an impressive 41% of European contractors now integrate sustainability and ESG (Environmental, Social, and Governance) considerations into their strategic planning.
Despite this, immediate business needs like securing finance and addressing skills shortages often overshadow long-term sustainability goals.
Tom Diplock, Partner and Head of European Building and Construction Practice at L.E.K. Consulting, says: “After a challenging and disrupted period, the construction sector must move beyond short-term fixes and lay the groundwork for future competitiveness.
“By prioritising operational efficiency and advancing sustainability and digital innovation, industry players will not only meet today’s demands but also be well-positioned to lead as the market regains momentum.”
Strategic focus on sustainability and technology
According to L.E.K.'s research, a company's emphasis on sustainability and digital transformation varies significantly with size.
Larger firms, those with a valuation over £50m (US$63.1m), consider these aspects more important to their business strategy — those reporting the highest importance reached 30% for sustainability and 24% for digitisation.
In contrast, smaller enterprises, ranging between £1m-£10m (US$1.2m-US$12.6m) in value, show less propensity to prioritise these areas, with only 14% deeming sustainability vital and a mere 11% for digitisation.
For many contractors, embracing sustainability could mean choosing eco-friendly building materials, reducing waste or incorporating green design principles like natural ventilation.
On the digital front, strategies might include deploying sophisticated Building Information Modelling (BIM), enhancing supply chain transparency through blockchain or utilising smart IoT systems for building management.
Both sustainability and digital endeavours often share a common goal—boosting energy efficiency.
“Demonstrating cost savings and clear returns on sustainability efforts is becoming increasingly important in today’s market conditions,” says Frédéric Dessertine, Partner at L.E.K. Consulting.
Implementing sustainable practices in construction
The report shows between 2022 and 2023, the incorporation of sustainability in projects focused on building performance surged from 44% to 60%.
However, during the same period, the use of sustainable materials witnessed a decline of 22%.
Digital technologies also play a pivotal role, particularly among bigger contractors with the resources to invest.
These digital tools can streamline processes, promoting design excellence and ensuring compliance with evolving regulations.
“Digitisation has clear advantages in construction and the built environment, from streamlining processes to enabling better design and ensuring compliance with evolving regulations,” says Jonathan Hillcoat, Partner at L.E.K. Consulting.
“Development and adoption of digital solutions throughout the building lifecycle will be a key driver of success in the industry.”
Florian Kaiser, Partner at L.E.K. Consulting, says: “Now is the perfect time for producers and distributors to review and develop their sales approach, refine value-creating services, and provide digital solutions and truly sustainable products to address their target groups more successfully.
“This would set the stage for market share gain with a foreseeable market turnaround in the second half of 2025.”
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