Long-Term Demand for Construction Materials Intact Despite Industry’s Sizable Carbon Footprint

Following consideration of environmental, social and governance, or ESG, risks relevant to the construction materials industry, we make no change to our respective per-share fair value estimates of AUD 7.35 and AUD 3.15 for no-moat Boral and narrow-moat Adbri. Our medium uncertainty ratings for both stocks also remain unchanged. Carbon emissions represent the most significant ESG challenge to the industry, with cement and concrete production accounting for an approximate 5% of total global greenhouse gas, or GHG, emissions. This sobering statistic owes itself primarily to the ubiquitous use in the built environment, with extensive application found in the construction of residential and commercial buildings and in infrastructure. As a result, concrete is the most widely used architectural medium and the second-most consumed substance globally, after water. Despite the industry’s significant contribution to global GHG production, we expect concrete to remain omnipresent within the built environment into the future.