Transforming construction could boost competitiveness, climate action, resource security – UNIDO
*** Please note: You can follow CLEW's Executive Director, Sven Egenter, as he moderates a panel with Smail Alhilali on the topic today (17 June 2026). Sign up here: Building Tomorrow: Transforming the Construction Sector for Inclusive and Sustainable Growth. ***
Clean Energy Wire: Geopolitical conflict has pushed supply chain risks into the spotlight, with circular value chains emerging as a key strategy to address them. How can circular economy approaches mitigate these risks, and what role does the construction sector play in the general transformation towards a more circular economy?
Smail Alhilali: While circularity is not a panacea for all global supply chain challenges, it can significantly improve resource security by reducing dependence on virgin materials and keeping resources in productive use for longer. This is particularly important in a context of geopolitical uncertainty and increasing pressure on natural resources.
The construction sector plays a particularly important role because it sits at the heart of the industrial economy. Estimates suggest that nearly 50 percent of all extracted materials are used by the construction sector. The sector drives demand for cement, steel, glass, aluminium, chemicals, plastics, timber, and critical minerals, meaning that decisions made in construction have implications far beyond individual buildings.
Transforming the sector towards more circular practices therefore represents one of the largest opportunities to strengthen resource resilience while supporting economic growth, innovation, and job creation.
More broadly, it demonstrates how circular economy principles can be applied at scale across industrial systems. For UNIDO, circular construction is not only about reducing environmental impacts; it is also about strengthening industrial competitiveness, resilience, and long-term economic development.
The homes, offices and industrial facilities we build today will stand for many decades, meaning that even if we build for disassembly with materials that can be reused today, it would take at least half a century to recover them. When do you expect to see the results from adopting circular construction methods, and how would these change from the near into the far future?
Many of the benefits of circular construction can be realised immediately. Circular approaches are already being applied today, and the new UNIDO report highlights structural efficiency as one of the most overlooked opportunities in the sector. Through better design, material optimisation, and improved recovery practices, projects can reduce material demand, waste, costs, and embodied emissions from the outset, without waiting for new technologies related to material recovery to mature.
In the medium term, we can expect increasing benefits from modular construction, digital material passports, improved reuse and recycling systems, and circular business models that keep materials in productive use for longer.
While some benefits, particularly those associated with design for disassembly, will be fully realised only decades from now, this should not be reason to delay action. As the saying goes, the best time to plant a tree was twenty years ago; the second-best time is today. The decisions we make now will determine the circularity and resilience of future building stocks.
In many cases, extending the life of existing infrastructure can deliver significant environmental and economic benefits while reducing demand for new materials.
Advanced economies around the world already have a significant built environment. How does that limit their potential for circular construction?
Many existing buildings were not designed with circularity in mind. They often contain materials that are difficult to separate, reuse, or recycle, and in some cases contain hazardous substances that complicate material recovery. This makes renovation and resource recovery more complex.
But a large building stock also creates significant opportunities. The renovation, refurbishment, and adaptive reuse of existing assets are themselves important circular economy strategies.
The biggest lever is to move from isolated projects to systemic change.
Advanced economies can also play a leading role in developing standards, digital tools, material passports, circular procurement approaches, and markets for secondary construction materials. In this sense, the existing built environment should not be viewed as a barrier, but as one of the most important starting points for the circular transition.
It is still rare for buildings to be considered throughout their life cycle, designed for disassembly or built with fewer materials, even if all of this is possible in theory. Where do you see the biggest levers to make better building practices the norm?
The biggest lever is to move from isolated projects to systemic change.
Technology is not the main constraint. Many of the solutions already exist. What is needed is an enabling environment that aligns policy, standards, finance, skills, innovation, and market incentives.
Public procurement is particularly powerful because governments are often among the largest clients of the construction sector. By integrating circularity and resource efficiency into procurement requirements, they can create demand for innovative materials, technologies, and business models.
A second lever is standards and performance-based approaches that reward outcomes rather than material intensity. Structural efficiency is an area where significant gains can be achieved through better engineering and design, as we highlight in the report. In many cases, buildings can achieve the same performance with substantially fewer materials.
A third lever is transparency. Digital tools, lifecycle assessment, building information modelling, and material passports can help make embodied carbon, material use, and chemical content visible and measurable. Greater transparency also helps optimise material choices and reduce the use of hazardous substances that can impede circularity later in the building lifecycle.
The construction sector is also one of the few sectors where progress on climate change, resource efficiency, pollution prevention, chemicals management, and industrial competitiveness can be advanced simultaneously.
Modular and prefabricated construction can further improve resource efficiency and material recovery through standardised, digitally optimised components.
Ultimately, success will depend on collaboration across the entire value chain — governments, architects, engineers, manufacturers, contractors, investors, and technology providers working together to make circular construction the default rather than the exception.
What is at stake if the construction sector fails to adapt or to prioritise more circular, resource-efficient, and resilient construction practices?
The stakes are extremely high because the construction sector is one of the world's largest industrial ecosystems and one of the most significant drivers of resource consumption, emissions, and waste generation. To understand the scale of the challenge, it is important to recall that approximately half of all extracted materials and a significant share of industrial chemicals are used in the construction sector.
The construction sector is also one of the few sectors where progress on climate change, resource efficiency, pollution prevention, chemicals management, and industrial competitiveness can be advanced simultaneously.
If the sector continues along a linear pathway, we risk locking in resource-intensive and high-emission infrastructure for decades. We will face increasing pressure on natural resources, greater supply chain vulnerabilities, rising material costs, and growing environmental impacts.
The question is no longer simply how much we build, but how intelligently, efficiently, and responsibly we build it.
We also risk missing a major opportunity for industrial transformation. Circular construction is not only about reducing environmental harm. It can stimulate innovation, improve competitiveness, create new business opportunities, strengthen resource resilience, and support more sustainable patterns of economic growth.
Much of the world's future infrastructure will be built in developing and emerging economies. The choices made today will therefore have lasting implications for industrial development, resource security, and climate objectives. As highlighted in the report, the question is no longer simply how much we build, but how intelligently, efficiently, and responsibly we build it.
Construction should no longer be viewed solely as part of the sustainability challenge. It should be recognised as one of the most powerful platforms for industrial transformation and one of the greatest opportunities to align economic development, resource efficiency, and environmental stewardship.