The materials sector spans a diverse set of sub-sectors and, therefore, its impacts are often overlooked, yet they are crucial cornerstones of any serious net-zero strategy. From chemicals to packaging to mining, the sector impacts our lives without us even knowing it. Below, we have broken down the Materials sub-sectors and added some broad and pertinent material issues for each. We will also be discussing each sub-sector in subsequent case study articles, so watch this space.
| Materials Subsector | Description / ESG Themes | Key Material Issues |
|---|---|---|
| Chemicals | The chemical industry is one of the largest and most diverse sectors globally, contributing to numerous essential products. Regulatory pressures are driving action on environmental impact, health & safety, and green product development. | Air & Water Pollution GHG Emissions Health & Safety (Employees) Waste and Circular Resources |
| Construction Materials | Materials in construction have long-term impacts. Climate resilience and low embodied energy design are key focuses, along with reduced water usage. Emphasis is on greener, ethically sourced materials and sustainable supply chains. | Waste Management GHG Emissions Green Materials Water Usage |
| Packaging and Paper | Rising online commerce has intensified focus on packaging sustainability. There’s a growing shift from plastics to paper and circular models. Consumers are demanding recyclable packaging and environmentally friendly production processes. | Risk Management Water Usage Labour Practices |
| Metals & Mining | A foundational sector for EV and industrial growth, yet one of the most impactful to ecosystems and communities. Focus is on responsible mining, social impact, deforestation reduction, and hazardous waste management. | Air & Water Pollution GHG Emissions Waste Management Biodiversity |
| Paper & Forest Products | Covers timber harvesting and wood pulp product manufacturing. ESG themes include climate resilience, worker health & safety, and biodiversity preservation. | Air & Water Pollution Health & Safety Biodiversity Stakeholder Engagement |
The materials sector sits at the junction of global commodities trading and ESG progress. There have been many improvements in the broad-scale adoption of low-carbon materials, yet there are still huge problems to solve, such as how to make cement sustainable and how to make mineral mining sustainable in an age of AI and EVs. According to McKinsey, green commodities have seen accelerated growth in recent years. In a September 2024 survey, more than 90 percent of respondents, both buyers and sellers, report stable or growing demand for green materials over the past 12 months.
However, some headwinds continue to block the full scaling up of these materials, such as ‘high energy costs and interest rates, and declining carbon costs’, and now in the short term, tariff wars sparked by the US also threaten co-operation on green supply chains globally. Yet even with these issues, McKinsey predicts that by 2030, demand for green materials could increase by up to 4.5 times. Furthermore, there will also be increased scrutiny on the supply chain by 2030, with 57 percent of respondents expecting to include suppliers’ Scope 3 emissions in their criteria for green materials, up from 48 percent today.
This should help increase transparency, with a Sustainalytics survey finding that approximately 94% of companies in the construction materials industry report using recycled/reused materials to some extent. However, only 28% of companies in a recent survey reported using more than 10% of these materials as inputs. This is an opportunity for ESG leaders to demonstrate value chain approaches to ESG in the sector. To get started on procuring greener materials, PWC offers a useful framework for rolling out a sustainable materials procurement strategy:
Concrete is the second most used resource globally after water, and makes up 7% of global emissions. This is largely due to cement, its binding element. This is perhaps the most impactful ESG opportunity in the industry, as the industry is under increasing pressure to decarbonize. In fact, the Global Cement and Concrete Association (GCCA) and cement associations around the world have created carbon-neutral roadmaps. These have been triggered by a raft of recent regulations like the EU’s Green Deal Industrial Plan (2023), the U.S. Inflation Reduction Act (2022), and China’s Carbon Peak Implementation Plan for the Building Materials Industry.
According to S&P Global, the relatively high stakeholder materiality issues for the materials sector include water management, biodiversity and resource use, and employee health and safety.
This is affirmed by the IEA, but with some additions relating specifically to the various impacts and risks of mining projects, namely: ‘geopolitical tensions, armed conflict, human rights violations, bribery and corruption, emissions, water stress and loss of biodiversity.’
The IEA also warns that the rising deployment of green technologies, such as for the EV market, is supercharging demand for critical materials, creating supply bottlenecks.
To address these risks, the IEA’s ‘Mineral requirements for clean energy transitions’ report advises sector leaders to focus on capacity building in collaboration with stakeholders, improvements to supply chain due diligence, and increasing ESG transparency through better disclosures.
The chemicals industry is often the sub-sector of the materials sector that gets overlooked the most, despite its activities often involving resource-intensive processes, hazardous materials, and creating 6% of global GHG emissions. As Scope Ratings remarks ‘Few industries are as integrated into every segment of the economy as the chemical industry. Its complex value chain encompasses not only consumer goods and agriculture, but also energy, transportation, and infrastructure.’ ESG leaders in the chemical industry should look to stakeholder engagement and partnerships to harness innovation for climate-aligned solutions and healthier products. To get started, the chemical sector has been voluntarily reporting against ESG-related metrics for a number of years, through its own sector-specific Responsible Care ® programme. This should act as a catalyst rather than a tick-box exercise if the sector wants to lead on climate action.
The UAE is leading in many areas of ESG, and this includes the materials sector. The country has a number of initiatives to promote low-carbon development, which necessitates greener materials and chemicals. For instance, the Dubai Clean Energy Strategy 2050 and Abu Dhabi’s Estidama program are key drivers for setting new standards for energy efficiency and environmental performance in construction. The UAE has already taken significant strides towards reducing plastic pollution and advancing sustainability with its new policy targeting single-use plastics. A recent ban on single-use plastics enabled Abu Dhabi to realize a 95% reduction in these plastics. This success, as part of Abu Dhabi’s Mission to Zero, has set the stage for the UAE’s 2024 nationwide ban on plastic bags, with a 2026 target for plastic items such as cutlery, straws, and containers.
A recent driver is ‘The Society of Sustainability and Green Materials’ (SSGM), which launched in the UAE in 2023. The Society aims to support the development of appropriate policies and regulations in materials procurement, with the broader objective to ‘ensure UAE is well placed among leading countries that provide global knowledge in sustainability with the focus on Green Materials’.
The sustainable materials market in the UAE is well-positioned for continued growth, and with more ‘green certified’ projects backed by ‘green bonds’ related to sustainable development, accelerated demand for innovative and eco-friendly materials is alive and well. This shift is backed by policy drivers such as the UAE Policy for Integrated Management of Recyclable Materials, among others, which should help ESG leaders harness new opportunities to lead the way in sustainable and ethical material procurement practices.
The increasing emphasis on sustainable building materials reflects the UAE’s commitment to climate action and innovation in construction, along with customer demand for ‘Green Luxury’, such as in the thriving hotel industry. As the green materials market grows, industry stakeholders have the chance to drive positive impact across value chains through sustainable building practices and partnerships.
