From strategy to structure: Why governance must lead on low-carbon circular design

As directors, we increasingly understand the strategic value of climate action. We set emissions reduction targets, adopt transition plans and align executive remuneration with environmental performance.

These are necessary foundations. However, achieving real change – particularly in high-impact sectors such as construction – requires boards to go further.

Construction is responsible for a large share of global emissions and the climate impact of buildings is determined well before construction begins. The early design phase – when project briefs are developed, budgets are set and supply chain expectations are locked in – is where emissions trajectories are largely decided. Boards have a critical role in shaping this front end of the process.

There are three main areas where board leadership can meaningfully accelerate low-carbon, circular outcomes in construction and infrastructure projects.

 

1. Embedding climate outcomes in capital planning

Capital investment decisions offer a powerful point of leverage. Early in project planning, boards can require that design briefs include clear carbon and circularity targets. 

Lifecycle assessments should be integrated from the outset – not retrofitted during procurement or delivery. This ensures climate performance is factored into key trade-offs around materials, design complexity and long-term asset performance.

Boards can ask:

• • Are we evaluating carbon alongside cost, time and quality?
  • Does this project support our overall emissions reduction pathway?
  • What mechanisms are in place to prioritise reuse, adaptability or deconstruction at end-of-life?
  • Are we willing to spend more money up-front in order to extend the asset’s lifetime, reduce maintenance requirement and support a circular economy?

These questions shift project governance from compliance to strategic influence.

 

2. Driving early collaboration across disciplines

Circular, low-carbon design is inherently cross-functional. It requires collaboration between architects, engineers, contractors, suppliers and sustainability specialists – often from the earliest concept stages. 

Boards can encourage management to break down silos, foster earlier stakeholder engagement and invest in design processes that prioritise system thinking over linear delivery models.

This includes supporting:

• • Collaborative contracting models that reward innovation and shared risk
  • Procurement approaches that value sustainability outcomes over lowest cost
  • Investment in digital modelling tools that simulate environmental impacts early

Governance settings should create space for this kind of integrated design thinking, even if it initially challenges conventional timelines or delivery frameworks.

 

3. Building internal capability and culture

Organisations that succeed in delivering sustainable construction outcomes are those where climate goals are not just targets – they are embedded in culture, capability and day-to-day decision-making. 

Boards can support this by setting expectations around upskilling, professional development and knowledge-sharing across teams involved in planning and delivering built assets.

It’s also essential that climate considerations extend beyond technical or sustainability teams. Legal, finance and commercial teams should all understand the implications of design-stage decisions on future emissions liability, compliance risk and access to green finance.

Boards can help by:

• • Ensuring climate skills are reflected in executive capability frameworks
  • Reviewing reporting structures to ensure accountability for design-stage emissions
  • Supporting a culture of continuous improvement, learning and innovation

In a local context, HERA’s research found that by redesigning an actual building project in Aotearoa New Zealand using various low-carbon steel scenarios, embodied carbon could be cut more than 50% compared to the original “as-built” design. These scenarios weren’t built – they were modelled using actual building data to understand the impact of design and material decisions.

This underscores a crucial point: emissions reductions aren’t just about product selection. They start with design. Early choices – such as material types, quantities and structural approaches – determine the carbon profile of a building for decades.

This research also found the optimised use of multiple materials, such as steel, concrete and timber, delivered meaningful carbon reductions. Each material has its part to play and people should avoid discussions that only focus on material choice vs design alongside low-carbon specification.

 

4. Beyond carbon: a planetary view

While reducing emissions is central, it’s increasingly important to take a broader environmental perspective. HERA is now applying a “planetary accounting” approach to measure impacts beyond carbon, such as biodiversity loss, water use and air pollution. These factors are often interconnected with material sourcing, construction methods and end-of-life outcomes.

Good governance involves asking not only “How do we reduce emissions?” but also, “How do we regenerate the systems we depend on?” A circular economy lens can help align construction with both climate and broader environmental goals.

 

5. Governance that builds the future

Momentum is growing. In Aotearoa New Zealand, low-carbon, circular design is no longer a niche ambition. It is becoming a strategic necessity, shaped as much in the boardroom as on the construction site. HERA’s Low-Carbon Circular Design Hierarchy is a material-agnostic framework that can inform design. 

As directors, we do not need to be technical experts, but we do need to ask sharper, more strategic questions to guide better decision-making. Key questions might include:

• • Have we embedded emissions reduction objectives into our procurement and project approval processes?
  • Are we engaging with design teams early enough to influence low-carbon and circular outcomes?
  • Are we using credible frameworks, such as HERA’s How to Specify Low-Carbon Steel and the Low-Carbon Circular Design Hierarchy, to guide design choices?

In the case of steel, the conversation goes well beyond carbon content. It includes considerations around structural efficiency, fabrication methods, end-of-life circularity and supply chain transparency. These are complex factors, yet ones where board-level expectations can drive real progress.

This is precisely where governance comes in. Boards can empower management to make better specification decisions – early, clearly and with credibility. These choices may not always be the lowest-cost option, but they are often the most intelligent in terms of long-term resilience, emissions performance and alignment with sustainability commitments.

The decisions we make today will define the carbon legacy of our built environment for decades. Encouragingly, there is growing momentum for change, with industry certifications, policy signals and investor expectations all moving in the same direction.

In climate governance, it is not just what we build that matters – it is how we build it.

---

Dr Troy Coyle has held a number of board roles in Australia and Aotearoa New Zealand, including as co-chair of Hanga-Aro-Rau (the Workforce Development Council for Manufacturing, Engineering and Logistics), chair of the Sustainable Steel Council, deputy chair of HERA; and director of the Construction Industry Council, Steel Construction NZ, HERA Cert, the National Association for Steel-Framed Housing and the Australian Co-operative research Centre for Energy Pipelines. She is a current member of MBIE’s Building Advisory Panel.