Real Estate and Construction: The ESG Metrics That Matter Most in India

India's real estate and construction sector is among the most scrutinised for ESG performance, and for good reason. Buildings account for approximately 37% of global carbon emissions when construction and operational energy are combined. In India, where rapid urbanisation is adding hundreds of millions of square metres of new built environment each year, the sector's ESG profile is under increasing scrutiny from institutional investors, green finance providers, and international sustainability frameworks.

The Two Carbon Problems in Construction

Construction companies and developers face two distinct carbon challenges. Embodied carbon refers to the emissions associated with producing and transporting the materials used to build a structure — concrete, steel, glass, and insulation. Embodied carbon is locked in at the point of construction and cannot be reduced after the building is complete. Operational carbon refers to the emissions from running the building — heating, cooling, lighting, and equipment. Most ESG frameworks for the real estate sector now require disclosure of both, though embodied carbon measurement is newer and less standardised.

Key ESG Metrics for Indian Developers and Contractors

The most material ESG metrics for Indian real estate companies include: energy intensity (kWh per square metre) for operational assets, percentage of assets with green building certification (LEED, IGBC, GRIHA), embodied carbon per square metre for new construction, water consumption intensity and wastewater recycling rates, construction and demolition waste diverted from landfill, Scope 1 and 2 emissions from directly operated assets, and percentage of construction contracts with ESG requirements for suppliers and subcontractors.

Carbon Credits in the Real Estate Sector

Carbon credits play two roles for real estate companies. First, they can be used to address residual operational emissions that cannot be eliminated through energy efficiency and renewable energy purchases — allowing developers to make credible carbon neutral building claims. Second, some types of real estate development — particularly afforestation projects on degraded land, or energy efficiency retrofits of commercial buildings — can generate carbon credits that can be sold to other buyers. Csquare works with real estate companies and developers to assess their ESG position, build carbon measurement systems, and develop carbon credit strategies aligned to their portfolio.