The construction industry is in one of its severest crises in decades. Rising interest rates, collapsing new construction activity, and geopolitical uncertainties are burdening nearly all segments. Yet while cement, brick, and steel producers struggle with massive revenue declines, ISOVER (Saint-Gobain), specialist in mineral wool and other insulation materials, is recording growth against the trend. This raises the question: What structural factors protect the insulation business – and can this resilience approach be transferred to other building material segments?
Regulation as a demand driver: The underestimated lever
The key difference from crisis-ridden new construction lies in renovation dynamics. While new building projects fluctuate strongly with economic cycles, energy-efficient renovation is increasingly driven by regulatory requirements. The tightening of building energy codes in Germany, Austria, and other European markets creates a de facto obligation for retrofitting insulation. The Building Energy Act (GEG) has required significantly more ambitious U-values for comprehensive renovations since 2020, which are hardly achievable without high-quality insulation. This path dependency makes the business less cyclical than classical building products.
Added to this is the European taxonomy regulation, which defines climate-friendly investments and practically forces institutional investors to renovate if they want to build ESG-compliant real estate portfolios. For insulation manufacturers like Isover, this means: Demand is increasingly determined by long-term compliance requirements rather than short-term building cycles. While a concrete plant or brick factory has few alternative markets when new construction demand collapses, insulation producers benefit from a structurally growing renovation market.
Funding programs: Liquidity despite interest rate turnaround
A second factor is targeted support for energy-efficient renovation. While KfW new construction funding was effectively discontinued in 2022, funding for existing building renovation – albeit with cuts – remained in place. The Federal Funding for Efficient Buildings (BEG) explicitly subsidizes insulation measures, reducing price sensitivity of demand. Even with rising material costs, renovation remains economically viable for property owners through subsidies.
This funding mechanism works differently than for new construction products: While concrete, bricks, or structural steel are funded through project subsidies that are quickly cut during budget crises, energy-efficient renovation is given higher priority in climate policy and is thus more stable in terms of funding. This creates planning security – for builders and manufacturers alike.
Sustainability positioning as a differentiation feature
Isover has consistently aligned its strategy with sustainability. This includes not only product performance – such as higher recycling content in mineral wool or bio-based binders – but also communication with planners and investors. In a market where ESG criteria increasingly determine contract awards, a credible sustainability strategy provides competitive advantages.
This is also evident in comparison to other insulation categories. While EPS (polystyrene) and XPS increasingly come under pressure due to their petrochemical base, mineral and bio-based insulation materials benefit from a positive sustainability image. Manufacturers like ROCKWOOL and Isover strategically position their products as enablers of the climate transition – a narrative that resonates in tender processes and with institutional builders.
Competitive comparison: Rockwool and Knauf Insulation
A look at competitors shows that resilience is not an Isover-specific phenomenon. ROCKWOOL, global leader in stone wool, has also reported stable to slightly growing revenues in recent quarters – despite collapsing new construction activity. Here too, the explanation is: Focus on fire protection and sound insulation in renovations creates demand that is less cyclically sensitive than classical building products.
Knauf Insulation, part of the Knauf group, is increasingly focusing on bio-based insulation and has expanded its product lines to include wood fiber and hemp solutions. This diversification into sustainable niches is a direct response to growing demand for ESG-compliant building materials. The market for wood fiber insulation is growing disproportionately – a sign that sustainability is not just a marketing argument but a real demand driver.
Structural advantages: Why insulation materials are resilient
The crisis resilience of the insulation industry can be traced back to several structural factors. First: The products are typically lighter, more transport-cost-efficient, and less energy-intensive to manufacture than, for example, concrete or bricks. This reduces cost volatility during energy price spikes – a problem that severely burdens the ceramics and cement industry, as the insolvency of Deutsche Steinzeug demonstrates.
Second: Insulation materials are efficiency products. They save energy over their entire lifespan – an argument that gains weight with rising energy prices. While other building materials are primarily cost factors, insulation can be sold as an investment in reducing operating costs. This fundamentally changes the purchase logic.
Third: Market fragmentation is lower than in cement or bricks. Large corporations like Saint-Gobain (parent company of Isover) or Rockwool have global economies of scale, professional ESG reporting structures, and resources for product innovation. This gives them advantages over smaller, regionally-operating suppliers.
Limits of replicability: What other building material segments can learn
The question remains: Can the Isover strategy be transferred to other building material manufacturers? Only to a limited extent. The regulatory privilege of energy-efficient renovation is specific to insulation materials. Concrete or brick manufacturers can certainly also focus on sustainability – for example through CO₂-reduced formulations or recycled building materials – but they remain fundamentally dependent on new construction volumes. The DGNB study on climate-friendly construction shows: Climate-neutral building materials are possible, but they do not replace missing demand.
Nevertheless, there are learning effects. First: Diversification into renovation markets. Manufacturers that align their product portfolios toward existing building upgrade – for example through modular concrete prefabricated elements for building extensions or prefabricated facade elements – can build resilience. Second: ESG positioning as a strategic priority. Those who can credibly demonstrate that their products contribute to decarbonization secure access to growing market segments – for example in public procurement or with institutional investors.
Circular economy as the next step
One area where the insulation industry still has potential is the circular economy. While Austrotherm is leading with a recycling facility for XPS insulation materials, scalable take-back and recycling systems are still missing for mineral wool. Here, Isover and Rockwool could reach the next differentiation level through investments in closed-loop systems – and simultaneously anticipate regulatory requirements for waste avoidance.
Conclusion: Resilience through regulation, not through economics
Isover's growth during the construction crisis is no accident but the result of structural market conditions. Regulation, support programs, and ESG requirements create demand that is largely independent of building cycles. The strategy is successful – but only limitedly transferable to other building material segments. For manufacturers outside the insulation industry, the rule is: Sustainability alone is not enough. What matters is whether products are embedded in regulation-driven markets. Those who create this path dependency can better weather crises. Those who continue to operate purely cyclically remain vulnerable.
