One of the industries that faces high pressure to reduce carbon emissions is construction. The materials at the heart of construction—concrete and steel—are essential but carbon-intensive. Together, they contribute to approximately 13% of global CO₂ emissions.
In response, Carbon Direct and Microsoft have launched a unique guide. It’s called Criteria for High-Quality Environmental Attribute Certificates (EACs) in the Concrete and Steel Sectors. This guide helps companies reduce supply chain emissions. It also speeds up the decarbonization of built environments by tackling its significant emission source: embodied carbon.
The Problem with Embodied Carbon
Embodied carbon is different from emissions from energy use. It refers to emissions released when producing and transporting building materials. Concrete and steel are two of the biggest contributors to this problem.
As of 2025, cement production remains a major source of global carbon emissions, accounting for about 7–8% of total CO₂ output. The most recent data from the World Economic Forum estimates that the industry emitted around 1.6 billion metric tonnes of CO₂ in 2022 alone.
About 60% of these emissions come from decarbonating limestone, called process emissions. The remaining 40% comes from burning fossil fuels to heat cement kilns.
The industry has a big climate impact, but it has made some progress. From 2020 to 2022, it cut carbon intensity by 2.2% per tonne of cement.
However, more aggressive action is needed to stay on track for global climate goals. Without major changes, cement production emissions might nearly double. They could hit 3.8 billion tonnes a year by mid-century. This rise is fueled by increased construction demand in developing countries and fast urbanization around the globe.
With the global construction sector expected to double in size by 2060, the demand for these materials will keep rising. Yet the supply of truly low-carbon alternatives remains limited and difficult to source. This disconnect has created a gap between corporate climate goals and real procurement strategies.
Many companies aim to cut their supply chain emissions. However, tools and systems for this are still being developed, especially for concrete and steel. This is where Microsoft and Carbon Direct’s partnership comes in.
Environmental Attribute Certificates: A Flexible Solution
Environmental Attribute Certificates (EACs) offer a promising way forward. EACs work like Renewable Energy Certificates (RECs). Companies can still enjoy the environmental perks of low-carbon concrete and steel, even if they don’t use them in their supply chain. This flexibility helps companies with complex or global construction projects. They often can’t source green materials directly.
The new guide from Carbon Direct and Microsoft outlines how EACs can be used as a credible tool to bridge this gap. It uses strict criteria to make sure EACs cut emissions for real. This way, they won’t just move emissions around but will help lower carbon emissions in production.
The report is designed to support procurement teams, sustainability officers, and material suppliers in navigating the emerging EAC market with climate integrity.
What Makes an EAC High-Quality?
For an EAC to drive meaningful decarbonization, it must meet specific standards. The guide identifies several critical quality criteria:
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Additionality:
EACs must represent real emissions reductions that go beyond business-as-usual. The projects should not already be financially viable without the EAC revenue. -
Catalytic Impact:
EACs should promote systemic change by encouraging broader market shifts, technological innovation, or policy adoption that accelerate decarbonization in concrete and steel. -
Procurement Flexibility:
EACs are designed to decouple environmental benefits from the physical material, enabling companies to support low-carbon production even when direct procurement isn’t feasible. -
Quantifiable and Verifiable:
Emissions reductions must be measurable and verified through transparent, third-party processes. Reporting frameworks should follow established methodologies. -
Robust Safeguards:
Projects issuing EACs must meet environmental and social safeguards, avoiding harm to local communities, ecosystems, or other sustainability criteria. -
No Leakage or Double Counting:
EAC systems must prevent double claims or emissions leakage, ensuring that claimed reductions are unique and not offset by emissions elsewhere.
These criteria help build trust in carbon markets. This is important as worries about greenwashing and double-counting emissions claims increase.
For the sector-specific requirements, the guide specifically identified:
Growing Demand for Low-Carbon Materials
Market trends signal a growing appetite for decarbonized materials. A 2024 report from McKinsey & Company says green steel demand might hit 50 million metric tons a year by 2030. This would be 10–15% of all steel demand.
In another estimation by Grand View Research, the green steel market could grow at 6% from 2025 to 2030.
Similarly, low-carbon concrete markets could grow 13% each year until 2032, says Transparency Market Research.
Regulatory pressure is also playing a role. The U.S. government’s Buy Clean initiative and the Inflation Reduction Act help buy low-carbon construction materials. In Europe, the Green Deal Industrial Plan promotes sustainable construction and materials innovation. These policies drive demand and set clear expectations for transparency. So, verified tools like EACs are now more important than ever.
Microsoft Walks the Green Talk
Microsoft’s involvement reflects its broader climate commitments. As part of its pledge to become carbon negative by 2030, the company is taking a supply chain-first approach. It has invested in carbon removal.
Now, the tech giant views EACs as a way to cut Scope 3 emissions. These emissions come from suppliers and purchased goods, like construction materials.
Julia Fidler, Fuel and Materials Decarbonization Lead, Microsoft, stated:
“EACs have the potential to address a number of the most critical challenges to scaling deep decarbonization solutions, not least by providing financial certainty. By setting a high bar for EACs, we’re ensuring that our investments drive real, additional, and scalable emissions reductions as we invite the industry to join us in shaping a credible, high-impact market for low-carbon building materials.”
Microsoft’s partnership with Carbon Direct shows how companies can take real steps to decarbonize. The new guide serves as a model for measurable action. Their joint efforts aim to reduce emissions, wanting to create a market for environmental integrity in material procurement.
Toward a Climate-Aligned Materials Market
While still in its early stages, the market for EACs in concrete and steel could mature rapidly. The guide is released as investors and regulators push companies to show and cut emissions throughout their value chains.
Emissions from buildings and infrastructure keep increasing, and concrete and steel are tough to decarbonize. Tools like Environmental Attribute Certificates can help the industry build in a climate-friendly way.
Carbon Direct and Microsoft’s new guide defines high-quality EACs. It shows how to use them for real, measurable decarbonization that can allow companies to match their buying power to their climate goals.
The post Building Cleaner: Microsoft and Carbon Direct Launch EAC Guide for Concrete and Steel appeared first on Carbon Credits.
Most businesses that decide to act on their net-zero targets reach the same point of friction. Buying carbon credits has meant tracking down brokers, sitting through sales calls, and requesting a quote just to learn a price, sometimes with limited proof of what you are buying.
The earnings calls that quietly reframed climate from sustainability question to operating risk.
Three earnings calls in the last 18 months tell the story without any help from a press release.
Hershey, May 2024: cocoa price exposure compresses margin, and the company attributes part of the cost shock to West African weather. Olam, July 2024: coffee climate exposure quantified in the annual report. JBS, January 2025: supply chain climate disclosures expanded materially in response to investor pressure and regulatory expectation. None of these companies issued the announcement as climate news. They issued it as financial news. The climate-linked supply chain risk did not arrive with a sustainability framing; it arrived as a P&L line.
You are probably reading this article because you suspect the same thing is happening to your business. This piece walks through what is showing up on which earnings calls, how procurement and finance leaders are quantifying the exposure, and what serious corporates are doing about it before the regulator asks.
Where climate risk has already appeared in earnings
The pattern is consistent across resource-intensive sectors. A weather event compresses supply, the price spikes, the cost flows through the income statement, and the analyst on the call asks whether the event is anomalous or structural. Increasingly, the honest answer is the second one.
Cocoa is the cleanest example. The 2023 to 2024 West African harvest fell sharply on the back of erratic rainfall and disease. Cocoa futures more than tripled. Companies with concentrated West African sourcing absorbed the cost; companies with diversified sourcing absorbed less. The exposure was not climate as ESG topic. It was climate as cost of goods.
Coffee follows the same pattern. Brazilian and Vietnamese harvests have moved on weather more sharply across the last several seasons. Roasters with long-tenor supplier relationships and origin diversification have managed the volatility; roasters with spot-market exposure have not. Wheat, sugar, palm oil, beef: the same dynamic in different commodities, a pattern the IPCC AR6 Working Group II report projects will intensify across agricultural systems through mid-century.
What this means: climate risk is no longer a footnote in the 10-K. It is a line item the CFO has to explain on the call.
The three commodity exposures that hit margin first
For most companies with material Scope 3 exposure, three exposures dominate the near-term P&L risk.
- Concentrated single-origin sourcing in a climate-vulnerable region. If your tier-one supply for any material commodity sits in one geography, you have a concentration risk that climate amplifies. Diversification across origins is the obvious hedge, but it takes years to build and requires relationships you cannot acquire by tender.
- Supplier financial fragility under climate stress. Smallholder farmers, who supply a large share of the global cocoa, coffee, and palm oil market, do not carry the balance sheets to absorb yield shocks. When yields collapse, they exit. When they exit, your supply base shrinks, and the surviving suppliers raise prices. The risk is structural, not cyclical.
- Logistics and storage exposure to extreme weather. Hurricane disruptions to Gulf shipping, drought-driven Panama Canal restrictions, flooding in European inland waterways: each of these has moved input costs in the last three years, a pattern documented in Munich Re’s natural catastrophe data. The exposure shows up as a one-quarter event in the financial press but accumulates over time on the cost line.
TCFD and ISSB disclosure changes
The disclosure architecture has now caught up with the risk. The Task Force on Climate-related Financial Disclosures, whose recommendations are now embedded in the ISSB’s IFRS S2 climate standard, requires companies to disclose climate-related risks across physical and transition categories, with quantification where possible.
For physical risk specifically (the climate-linked supply chain risk you are reading about), the disclosure must address both acute exposures (extreme weather events) and chronic exposures (gradual changes in temperature, precipitation, and growing seasons). The disclosure must address the time horizon over which the risk is material, the parts of the value chain exposed, and the financial impact under different scenarios.
The CSRD imposes similar requirements under European law, with double materiality (both financial and impact materiality) embedded in the assessment. The practical effect: your auditors and your investor relations team now need a defensible answer to the climate-linked supply chain risk question, and the answer needs to be quantified.
What procurement and finance can do now
Three actions matter near-term.
Map your exposure. Most companies do not have a clear view of which tier-one and tier-two suppliers sit in which climate-vulnerable geographies. Without the map, you cannot quantify the risk, and without the quantification, you cannot disclose it credibly. The map is the foundation, and World Resources Institute climate risk research provides useful public tooling to start.
Diversify and deepen, in that order. Diversification across origins reduces concentration risk, but the deeper move is to invest in the resilience of the suppliers you already have. Regenerative practices, agroforestry, soil health interventions: these reduce yield volatility under climate stress and protect your input cost trajectory.
Embed the climate spend inside procurement, not outside it. Treating climate risk as a sustainability cost line subordinates it to the ESG budget. Treating it as a procurement and resilience investment puts it in the budget that matters, which is the cost-of-goods budget that the CFO defends quarterly.
Nature-based supply chain investments are the asset class designed for exactly this purpose. They sit inside the value chain, they reduce climate-linked supply risk, they generate verifiable Scope 3 reductions, and they produce the documentation an auditor and a regulator can both test.
If you are quantifying climate-linked supply chain risk in advance of the next earnings cycle or the next disclosure period, the carbon and sustainability experts at Carbon Credit Capital can help you map your exposure and structure a Dual-Value Model response that addresses reduction, resilience, and disclosure-readiness in a single program. Schedule a consultation.
More and more small and medium-sized businesses are hearing the same question from their larger customers: What is your carbon footprint? That question now travels down entire supply chains, and it arrives next to tender requirements, certification criteria, and rising customer expectations.
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