Building Products & Furnishings

Energy Management in Manufacturing

The Building Products & Furnishings industry creates value through energy-intensive manufacturing processes. Purchased electricity represents the largest share of energy consumption across the industry, while companies may also utilize fossil fuel energy on site. The price of conventional grid electricity and volatility of fossil fuel prices may increase as a result of evolving climate change regulations and new incentives for energy efficiency and renewable energy, among other factors, while alternative energy sources become more cost-competitive. Decisions regarding energy sourcing and type, as well as the use of alternative energy, can create trade-offs related to the energy supply’s cost and reliability for operations. As the industry operates on relatively narrow profit margins, reductions in energy consumption may have a significant influence on financial performance. The manner in which a company manages energy efficiency, its reliance on different types of energy and the associated sustainability risks, and its ability to access alternative energy sources is likely to impact financial performance.

Management of Chemicals in Products

The Building Products & Furnishings industry's products may contain substances that have the potential to harm human health, including volatile organic compounds and potential reproductive toxins, carcinogens, and endocrine disruptors. In general, these substances are found in products at low concentrations, if at all, and therefore do not pose a health concern. Nonetheless, the industry is exposed to potentially significant regulatory and reputational risk as a result of the use of substances of concern. Actual or perceived human health risks create the potential for future regulation around product chemical content and possible reputational impacts for companies, which can significantly affect demand for products. Increasing consumer concern over chemical use is driving the industry’s voluntary efforts to eliminate such chemicals from products and use alternative materials. The continued adoption of building certification standards such as LEED are driving demand for products with reduced chemical content. Companies that effectively manage harmful chemicals in their products may enjoy a competitive advantage over the long term through higher demand, reduced regulatory risk, and improved brand value.

Product Lifecycle Environmental Impacts

部ending on the specific building product or furnishing, significant environmental impacts can arise during raw material sourcing, transportation, manufacturing, use-phase, or end-of-life. Rising consumer and regulatory preference for less-impactful products has spawned the development of more sustainable products, broadly termed “green building materials.” In addition, product lifecycle certification has arisen as a tool for companies and their customers to assess and improve a product’s lifecycle impact. Certification programs typically address specific sustainability characteristics of a product category and include the use of closed-loop materials that help minimize a product’s end-of-life environmental impacts and reduce the need for extracting or producing virgin materials. Through product innovation and design that facilitates end-of-life product recovery and the use of less-impactful materials, the adoption of product certification programs, and partnerships with customers, manufacturers of building products can achieve improvements in lifecycle impacts, reduce regulatory risk, meet growing customer demand, and realize cost savings.

Wood Supply Chain Management

The Building Products & Furnishings industry utilizes large amounts of wood sourced from forests worldwide. Unsustainable production and harvesting of timber can result in adverse environmental and social impacts, including biodiversity loss and harm to the livelihoods of forest-dependent communities. Companies may inadvertently source wood from areas that are susceptible to unsustainable forestry practices. Reports of illegal logging, environmental pollution, or adverse impacts on communities can result in reputational repercussions that can damage a company’s brand value, affecting demand for their products. In addition, regulations that address the importation of illegally produced wood can result in penalties and further damage to brand value. To mitigate these risks, companies are increasingly adopting third-party certifications that verify that wood is grown and harvested in a sustainable manner. Obtaining wood sourcing certifications can also provide companies with a potential growth channel, as they can satisfy customer demand for certified products.