In this blog

Introduction

Meeting net-zero and ESG targets in construction has become non-negotiable. Buildings account for a huge share of global emissions - the building and construction sector produces roughly one-third of worldwide CO₂ emissions according to UNEP and the World Economic Forum.

In late 2024, the UK launched a new Net Zero Carbon Buildings Standard.

Rules like California's SB 253/261 and forthcoming SEC climate rules require detailed carbon reporting.

Yet many firms struggle – surveys show data quality and siloed systems top ESG headaches.

What you'll learn: This article shows exactly how to simplify ESG reporting on your retrofit or net-zero project. You'll discover the essentials of ESG compliance in construction, the special hurdles of retrofits, and the steps to align with new net-zero building standards.

By the end, you'll know how to set up an ESG programme, what metrics to monitor, and how to demonstrate compliance every step of the way.

Understanding ESG Compliance in Construction

ESG stands for Environmental, Social, Governance - a broad set of criteria investors and regulators use to judge how responsibly a company operates.

Environmental: In construction, Environmental measures focus on reducing carbon through cutting energy use, using sustainable materials, and minimising waste.
Social: Social covers workforce safety, diversity, and community impact including site health-and-safety, labour standards, and stakeholder engagement.
Governance: Governance means transparent reporting, risk management and meeting laws through keeping meticulous records so auditors can verify your carbon numbers.

Why ESG Matters Now

Almost every major construction client and financier demands ESG data today. Performance Magazine reports that 96% of the world's 250 largest companies now issue sustainability reports.

Frameworks like the GHG Protocol for carbon inventories and TCFD/ISSB for climate risk disclosures see widespread adoption according to Harvard's Corporate Governance studies. In 2023, over half of companies already disclosed greenhouse gas emissions in line with TCFD recommendations as Harvard research confirms.

ESG has become standard business practice, not a niche luxury.

EU: Require thousands of companies to publish verified ESG reports under the Corporate Sustainability Reporting Directive starting 2024.
US (California): Force large companies doing business in California to report Scopes 1-3 carbon emissions starting 2026 (Persefoni analysis).
US (Federal/SEC): Proposed rules require all public companies to report ESG and carbon data.

Business Benefits Beyond Compliance

Complying with ESG unlocks green financing - lenders offer better terms for projects with verified sustainability credentials. ESG compliance reduces risk: a retrofit that meets emissions standards faces fewer fines or shutdowns.

In competitive markets, high ESG performance attracts clients and investors who value sustainable, forward-looking builders.

ESG Reporting Requirements

You need to know which frameworks and data apply to your projects. Key global frameworks include:

GHG Protocol - the standard for measuring carbon that separates Scope 1,2,3 emissions.
TCFD/ISSB - recommended disclosures on climate risks that many companies now follow for investor reporting according to Harvard Corporate Governance research.
Local Regulations - UK's new Net Zero Carbon Buildings Standard launched in 2024, LEED Zero and BREEAM in UK, or India's ECBC Energy Conservation Building Code.

Current Reporting Landscape

Most large contractors already track carbon and sustainability internally, but formal public reporting catches up rapidly.

The latest IFRS/TCFD progress report noted about 63% of companies disclosed their GHG emissions in 2023 research say.

Over 50% published other climate metrics or targets, and over half report board oversight of climate issues as Harvard research confirms.

Retrofit Project Compliance Challenges

Retrofitting existing buildings powerfully cuts emissions - older buildings often leak energy or rely on fossil-fuel heating. Careful retrofits can reduce a building's energy use by around 30% or more according to ABM research.

But retrofits pose special hurdles for ESG compliance.

Assessment Complexity

Older structures often lack detailed blueprints or energy data. You may need extensive surveys or audits to gauge insulation, HVAC performance, or hidden issues like asbestos.

Each surprise including wet rot or old wiring can throw off energy and cost models.

Cost Volatility

Early estimates remain uncertain. Until contractors open walls, true conditions and costs stay unclear.

That makes planning budgets and carbon reduction targets in advance difficult.

Occupant Disruption

Unlike new builds, retrofits often must work around existing residents or tenants. Coordinating schedules and minimising downtime plus emissions from portable generators if used creates tight logistical challenges.

Skills Gap

Energy-efficient retrofitting requires specialised knowledge including historic preservation and green materials. Many regions have shortages of contractors familiar with high-performance retrofit techniques.

- Data Collection Challenges: Collecting accurate ESG data on retrofits proves tricky.
- You might have limited baseline data: an old building may never have had metered energy use or digital plans. Tracking improvements requires extra instrumentation for before versus after energy comparisons.
- Measurement standards vary: comparing a renovated 1970s office to a brand-new one requires careful frameworks.
- Regulations overlap: you may need to meet local codes like Ireland's NZEB, UK standards, plus global certifications like BREEAM or LEED.
- Solution Approach: Many retrofit teams handle these with staged plans. Start with a detailed energy audit such as ASHRAE Level 2, then target the biggest gains through insulation, lighting, and HVAC.

Use temporary sub-meters to collect data as early as possible. Keep ample contingency.

Net Zero Buildings Compliance Framework

Achieving Net Zero for a building means balancing its lifetime carbon. That covers operational carbon from heating and electricity use plus increasingly embodied carbon from CO₂ in materials like concrete and steel.

Recent net-zero building standards follow science-based approaches that aim to align with the 1.5°C climate goal.

UK Net Zero Carbon Buildings Standard

Launched in late 2024, this new standard sets strict targets. For each building type including offices, homes, and hospitals, it defines a maximum annual carbon footprint then requires both predictive modelling and post-occupancy verification.

Key Requirements:

Whole-life carbon: Targets cover both embodied and operational emissions. Designers must calculate upfront material carbon and plan for renewable energy to offset the rest.
UKGBC's existing framework already emphasises whole-life carbon, and the new standard follows suit.
Sector-specific limits: Offices have different budgets than schools. Each limit ensures the sector stays on track with national net-zero pathways.
For context, cement and steel production alone contribute approximately 18% of global emissions, according to UNEP, so material choices prove critical.
In-use verification: Critically, a building isn't deemed net-zero until tested in use. The standard requires at least 12 months of real energy meter data after occupation according to the Net Zero Carbon Guide.
This catches any performance gaps between design and reality such as extra heating needed or unexpected occupancy patterns.
Renewables and offsets: If on-site renewables aren't enough, developers may need accredited offsets. However, like the UKGBC's approach, priority focuses on cutting and saving energy first.

Other Certifications

Other green building certifications align with this approach. LEED Zero and BREEAM's new standards also require measurement.

Internationally, targets like Net Zero Energy Building or ISO 20400 for sustainable procurement can overlap.

Compliance Steps

A typical compliance path includes:

Set Targets: Use the chosen standard to establish carbon and energy goals for your project such as maximum kWh/m²/year.
Whole Life Assessment: Carry out a whole-life carbon study often called WLCA or LCA. Tools from RICS or CIBSE can calculate expected embodied carbon.
Design to Targets: Incorporate renewables including solar and heat pumps plus efficiency through high-performance envelope and efficient HVAC so predicted operational use meets the limit.
Install Metering: Ensure the building has accurate metering for heating, electricity, and water linked to a central system for monitoring.
Post-Construction Monitoring: Collect 12 months of utility data. If operational carbon overshoots, adjust through tuning systems or adding capacity to achieve net-zero claim.
Independent Audit: Finally, an accredited verifier as defined in the standard reviews the models, documentation and performance data before certifying compliance.

Adhering to such a framework might feel daunting, but think of it as step-by-step targets to tick off. For retrofit projects, focus on the in-use part: baseline a year of pre-upgrade data, implement upgrades, then validate post-upgrade performance.

For new builds, embed the carbon targets from day one. In all cases, a central digital system helps track each requirement.

ESG Reporting Tools and Software Solutions

Manually tracking all this data across projects becomes nearly impossible. You need software that brings together financial, project and sustainability data.

Here's how to choose a solution, and how Xpedeon's ERP platform helps you stay compliant.

How to Choose ESG Software

Look for a system that offers:

Data Unification: It should pull from all your sources including project budgets, procurement orders, timesheets, field logs and IoT sensors. Automated data collection through linking an energy meter to the system cuts errors and speeds reporting.
Framework Alignment: The tool should support multiple reporting standards. Built-in templates for GHG Protocol inventories, TCFD disclosures, or specific schemes like the UK Net Zero Standard or LEED ensure you can produce the right format for whichever auditor or regulator you face.
Audit Trail & Security: Your system must log who enters or changes data. If a third-party audit asks "show me the evidence" including invoices and calibration certificates, you need to retrieve it quickly. Cloud platforms often include document storage and traceability features.
Scalability: The software should cover everything from one-off projects to enterprise-wide portfolios. You want to see performance per project and roll it up at company level.

Xpedeon's ESG Reporting Capabilities

Xpedeon ERP meets these needs through construction-focused features:

Real-time Monitoring: Every material order, piece of equipment, and energy meter feeds into Xpedeon's dashboards. You can set up KPIs like CO₂e per project m² or waste volume per week and watch them live according to Xpedeon documentation. If a site suddenly orders 30% more concrete than planned, the dashboard alerts you so you can address it through redirecting surplus or adjusting future orders as Xpedeon confirms.
Unified Procurement & Inventory: By tracking all purchases in one place, the ERP ensures every sustainable procurement decision gets recorded. You can tag materials by green certification such as percentage recycled content and force approval flows that prioritise eco-friendly suppliers according to Xpedeon features.
Stakeholder Dashboards: Management, investors or regulators can receive view-only dashboards. They see key metrics at a glance such as percentage of renewable energy used without digging through spreadsheets.
System Unity: Xpedeon connects with your existing systems, including HR and finance. This eliminates data silos so carbon figures stay consistent from planning through construction.

Real Results

Customers using Xpedeon have seen concrete results: Greencore, a UK homebuilder, reduced administrative overhead by 25% through automated procurement and reporting. This freed their team to focus on sustainable design details.

Lovell partnerships saw 2.5× faster payments processing and tenfold better project visibility after switching to Xpedeon as company data shows. Less admin waste means more time to optimise energy efficiency, worker training and other ESG priorities.

Implementation Best Practices

A structured roll-out helps. Xpedeon suggests a "crawl-walk-run" approach: first audit your current carbon and waste data.

Then set simple KPIs in the system such as CO₂e per tonne of material used and watch the dashboards according to Xpedeon guidance.

Regularly review reports: if a project spikes fuel use or has too many safety incidents, take action through the system such as adjusting schedule or adding training. Include teams from finance, operations and sustainability from day one.

Provide training so everyone knows how to enter data properly. Over time, gradually expand what you track including more Scope 3 supplier data or social metrics like injury rates.

Implementing ESG Reporting: Step-by-Step

Putting ESG reporting into practice means embedding it into daily workflows. Here's a phased approach to follow:

Phase 1: Foundation - Set Strategy and Scope

Define ESG objectives: Meet with your leadership or project sponsors and set clear goals. For example: "Reduce energy use 20% in retrofit projects" or "Achieve BREEAM Excellent in all new hospital builds." Tie these goals to business benefits including cost savings and safety targets.
Identify carbon Scope: Determine which emissions you'll track. Scope 1 includes onsite fuel and refrigerants, Scope 2 covers grid electricity, and Scope 3 encompasses subcontractor travel and embodied materials. For construction, Scope 3 often dominates - EPA notes it can exceed 90% of an organisation's carbon footprint according to MHW Magazine analysis - but start with 1 and 2 if needed, then add Scope 3.
Baseline measurement: Before any upgrade, measure current performance. Install sub-meters if possible, survey fuel usage logs, and estimate embodied carbon of existing materials. This gives a baseline to measure improvements against.
Stakeholder mapping: Know who cares about your ESG data including customers, local authorities, and financiers. Engage them early so your plan covers their reporting needs.

Phase 2: Data Collection System

Automate monitoring: Equip projects with sensors and tools. This could mean smart meters on electricity, fuel logs on machinery, or even wearable tech for safety data.The goal feeds data automatically into your ESG platform like Xpedeon. Automation slashes errors.
Supplier engagement: Reach out to material suppliers for embodied-carbon data. Many contractors now demand Environmental Product Declarations for concrete and steel. You can use standardised templates or online databases to import this data.
Documentation process: For every reported metric, decide what evidence you'll need. If you claim zero workplace accidents, you'll need incident reports signed off. If you claim solar energy use, keep inverter logs or green certifications. Store these documents in your system so any auditor can find them.

Phase 3: Reporting and Verification

Internal dashboards: Produce monthly or weekly ESG dashboards for your project team and executives. These can show trends such as energy use over time and flag any deviations. This keeps everyone accountable – if emissions spike one month, the team investigates immediately.
Regulatory reports: Prepare the required filings. For example, an annual greenhouse gas report for regulators or sustainability metrics for a building certifier. Xpedeon and similar tools can generate these automatically once data sits in place.
Third-party audit: Finally, get an independent check. Many standards require an external verifier. Compile your evidence including data logs, certificates, and receipts and hand it to the auditor. A good system already has everything tagged - the software's audit trail proves invaluable here.

Simplifying the Process

To make ESG reporting less burdensome:

Use templates: Start with ready-made report templates. Government programmes and standards bodies often publish disclosure frameworks such as TCFD or GRI checklists. Incorporate these into your software so entering one piece of data fills multiple fields.
Unify data: One platform as the single source of truth means you don't hunt spreadsheets for numbers. Xpedeon's ERP example collects everything from procurement to payroll, so your carbon inventory links automatically to projects and costs.
Automate with tech: Wherever possible, let IoT devices, BIM models or even drones gather data. A tablet-based timesheet app can log machine hours and fuel use as it happens, pushing the info into the system. AI tools can scan invoices for emissions-related items. These shortcuts save time.
Predictive analytics: Some advanced systems offer alerts. You might set a threshold such as "If building energy use exceeds 20 kWh/m² per month, flag it." This early warning can catch compliance issues before they become serious.

Key Performance Indicators

Pick a few KPIs to track at all times. These should include:

Environmental: CO₂e intensity such as tonnes CO₂ per m² per year, energy or water use per unit, waste recycling rate. For net-zero buildings, you might track percentage of energy from renewables.
Social: Safety incidents per million hours worked, percentage of workforce trained in sustainability, or even staff diversity ratios. An ESG-conscious company might aim for 50% of its workforce to have formal ESG training by next year.
Governance: Reporting completeness such as percentage of required ESG disclosures submitted on time, audit compliance rates, or number of sustainability audits passed.

By measuring these, you create a feedback loop. If one KPI slips such as waste volume spiking, you drill into the data and fix it through adjusting procurement or adding a recycling programme.

With every cycle, your ESG programme becomes more robust.

Conclusion and Next Steps

ESG compliance is no longer optional in construction - it's a core part of running your business. Buildings contribute roughly one-third of global emissions according to UNEP and World Economic Forum data, so every retrofit or net-zero project must tackle both operational and embodied carbon.

By understanding ESG frameworks like the UK's new standard or GHG Protocol and using the right tools, you turn compliance from a headache into a competitive advantage. Platforms like Xpedeon's ERP help by pulling data into one place, automating reports and keeping real-time dashboards - so tracking carbon, safety, and governance measures becomes part of daily workflow.

Starting early and involving the whole team from site crews to finance ensures your retrofit meets all requirements and even attracts green funding.

Immediate Next Steps for You

Assess readiness: Use a simple checklist or gap analysis. Review whether you have meters on all energy sources and how you currently track materials. Identify missing processes like Scope 3 collection.
Choose the right tools: Evaluate reporting software and consider Xpedeon or similar platforms. Ensure it covers your project scale and the frameworks you need. A trial or demo can show if it fits your workflows.
Plan implementation: Create a phased plan with clear milestones such as "By Q2 2026, have automated Scope 1/2 tracking in place." Assign responsibilities - who will manage data collection, who will update the system, who will liaise with external auditors?
Engage stakeholders: Communicate to your team, clients and partners that ESG reporting will be part of your process. This way, even subcontractors know they must log their fuel use or waste.

Get started today: Schedule a consultation for a retrofit project ESG assessment. By acting now, you'll not only meet regulations but build trust with clients and investors - positioning your projects at the forefront of a sustainable future.

Frequently Asked Questions

1. What is ESG compliance in construction?

ESG compliance means meeting the environmental, social and governance criteria set by regulators and stakeholders. In construction, this typically involves tracking and reporting on a project's carbon emissions, energy and water use; ensuring site safety, fair labour practices and community impact; and maintaining transparent records and risk management. Complying often requires following standards like GHG Protocol, TCFD recommendations and any local green building laws.

2. How do I achieve Net Zero buildings?

To achieve net zero, a building must balance its annual emissions with an equivalent reduction or offset. Practically, you design for efficiency first through insulation, efficient HVAC, and renewable energy so that remaining energy use stays minimal. You also calculate and reduce embodied carbon in materials. During operation, you monitor energy use and invest in on-site renewables like solar panels. Finally, if there is any leftover carbon, you compensate through certified offsets. Following a net-zero standard such as UK's Net Zero Carbon Buildings Standard and verifying performance over a year are key steps.

3. What are ESG reporting requirements?

Requirements vary by region and company size, but common themes include annual or biennial reporting of greenhouse gas emissions for Scopes 1-3, energy use, and social metrics like safety incidents. Publicly listed companies often must follow frameworks like the IFRS Sustainability Standards or TCFD. In the EU and UK, large companies have mandatory sustainability reporting under CSRD/SECR. In the US, rules are emerging through SEC climate rule and California's SB 253/261 specifically target GHG disclosure. Check the rules that apply to your projects and use software templates to generate the correct formats.

4. How can I manage retrofit projects effectively?

Managing retrofits effectively means meticulous planning and data collection. Start with a detailed energy audit to pinpoint upgrades including insulation, lighting, and HVAC controls. Engage occupants early to schedule work around their needs. Use project management software to track costs, schedules and sustainability metrics together. You should plan for contingencies in both budget and timeline, since uncovering surprises like asbestos proves common. Finally, measure the results: install temporary meters before and after retrofit to quantify energy and carbon reductions, and adjust if the project falls short.

5. What is retrofit compliance in the UK?

Retrofit compliance in the UK involves meeting various regulations and standards for existing buildings. If you upgrade a home or office, you must comply with local building codes for insulation and efficiency like Part L of UK building regulations. To claim any kind of carbon-neutral retrofit, you'd align with guidance such as the UKGBC's home retrofit principles or the emerging Net Zero Carbon Building Standard. You should also continue to meet health & safety and planning rules. Document all your improvements including materials and energy systems and show, via data, that you're achieving the promised carbon savings.

ESG Reporting for Retrofit and Net Zero Projects