The construction sector significantly influences environmental development and is a significant source of carbon dioxide (CO₂) emissions worldwide. Over the years, the sector's decision-making procedures have frequently prioritised economic concerns over sustainability. Nonetheless, recently, there has been growing recognition of the importance of evaluating the environmental impacts at every stage of a building's lifecycle, from the design process to its demolition. This study uses Design Builder software to simulate a base case residential building in Mozambique, aiming to identify the most impactful design parameters for reducing its CO₂ emissions while reducing its energy consumption. By analysing data from both the base case and modified design schemes, this research reveals that employing 95 mm thick foamed expanded polystyrene (EPS) panels for roofing and double glazing of 6 mm/13 mm within an air/wood frame for exterior windows can reduce the energy consumption by 42.14% and decrease CO₂ emissions by 42.20% compared to these values in conventional construction designs. These results emphasise how crucial it is to use alternative building materials to reduce energy consumption and lessen the environmental impact of residential buildings. This study also urges stakeholders to embrace progressive policies and practices that promote sustainable growth in the industry and push for a paradigm change that strikes a balance between environmental and economic viability.