Goldman Sachs GS SUSTAIN: ESG of the Future Construction Materials Our analysis considers 23 companies „ skewed towards Asia Pacific „ and we received emissions estimates for about 50% of them. Our work comprises 7 companies in Americas, 3 in Europe and the remaining 13 in Asia Pacific. Covering analysts provided GHG emissions estimates for 12 of them — or 52% of the total. Emissions intensities are calculated dividing Scope 1+2 emissions by a volume production index — built from total volume produced or YoY p.p. change in production, depending on the company. This differs from our colleagues Carbonomics work, where Construction Materials companies — primarily active in cement — are benchmarked based on cement production. To represent the sector, emissions intensities are weighted average of market cap. Analysts estimates indicate a 2% CAGR reduction in emissions intensities among Construction Materials companies. GHG estimates we received suggest a reduction in Scope 1+2 emissions intensities by 2025E vs. 2019 base — about 2% CAGR — on a market cap-weighted average basis. The flattish outlook for emissions intensities originates from Scope 1+2 emissions projected on a modest rise (below 1% CAGR in 2025E vs. 2019), offset by increasing volumes — captured through the production volume index. Please see Exhibit 36 for more details. Why we believe this will matter for investors. The Construction Materials — which, while not exclusively, primarily consists of cement companies — is the fourth highest emitting sector among the seven key sectors in our analysis. As highlighted in our Green Capex: Making Infrastructure Happen, annual global investments on path to Infrastructure goals would need to rise to $2.5 tn — of the $6.0 tn annual investments required on path to Net Zero, Clean Water and Infrastructure objectives — vs. the 2016-2020 average of $1.7 tn (see Exhibit 16 ). In our view, Construction Materials companies will be instrumental in achieving those goals, and we expect investors focus to increase on the ability of companies in the sector to meet demand while successfully curb their carbon footprint. In 2021, our research colleagues highlighted the potential for existing technologies to help reduce carbon intensity of cement by 40% (cement accounts for c.8% of total global emissions). To achieve this, we would need to see an acceleration in emissions intensity reductions in the second half of the decade. Investment Implications. As stated above, we believe investors will gravitate towards those Construction Materials companies that are successfully able to decarbonize their operations while maintaining the ability to meet demand. In addition, we also note the Construction Materials sectors is characterized by below-average corporate returns, and we thus expect investors to privilege those companies that are capable of ensuring a favorable profile in corporate returns while reducing their GHG footprint.