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This article first appeared in City & Country, The Edge Malaysia Weekly on August 14, 2023 - August 20, 2023

Speakers at the third International Green Build Conference (GBC), held on Aug 1 in Petaling Jaya, highlighted the importance of long-term sustainability in the country’s real estate industry and urged stakeholders to plan their climate initiatives properly and demonstrate their commitment and ability to take decisive climate-related actions.

Attended by more than 350 participants, the conference was jointly organised by GreenRE Sdn Bhd and Rehda Institute. With the theme “Realising Low Carbon Real Estate”, the full-day conference featured panel discussions and presentations by speakers from all over the world.

In his opening speech, GreenRE chairman and Glomac Bhd managing director Datuk Seri F D Iskandar said the construction industry needed to be greener. “With buildings accounting for over 40% carbon emissions and more than a third of electricity consumption, reducing a building’s carbon emissions can go a long way in enabling us to achieve our nation’s goal of net zero emissions. The actions we take this decade are critical to set us on the right path towards this target.

“As investors are progressively calling on businesses to evaluate their climate risks and plan for transition to a low-carbon future through mitigation and adaptation, ‘Building for the future’ must be the mantra of the real estate sector. In tandem with heightened attention on ESG reporting and benchmarking, the property development industry can leverage robust green building certifications to sustain high performance over the life cycle.”

Minister of Natural Resources, Environment and Climate Change Nik Nazmi Nik Ahmad, who endorsed GBC 2023, noted that the conference showcased the industry’s commitment to advancing sustainable real estate in the country.

“We also know that energy efficiency and the wider sustainability agenda is a significant undertaking, to say the least. It cannot simply be legislated into existence. We must also acknowledge that not only consumers but even big companies and builders, to say nothing of small and medium enterprises (SMEs), will find the process daunting,” he said in his welcoming address.

“The principles of environmental, social and governance (ESG) are now imperatives for trade and investment. Malaysia must master them, but companies will also have to work hard to accommodate these demands.”

Carbon pricing

The first panel session, titled “Pricing Carbon in Malaysia”, was moderated by UN Global Compact Network Malaysia & Brunei board director and Johor state director Edey Suresh. The panel featured the World Bank’s Asia Foundation climate consultant Darshan Joshi and Climate Governance Malaysia (CGM) council member Dr Gary William Theseira.

In his presentation titled “Carbon Pricing and the Business Case for Emissions Reductions”, Darshan said the main issue of climate change pertained to greenhouse gas (GHG) emissions. This is due to the use of fossil fuels, which has led to an exponential increase in GHG emissions, contributing to record levels of atmospheric carbon dioxide and a rise in surface temperature that cause physical impact and economic damage.

He explained that to mitigate GHG emissions, carbon pricing helps to facilitate in decoupling the growth of fossil fuel consumption and transitioning to a more sustainable growth model, while lowering reliance on fossil fuel sources that are subject to global price fluctuations, promoting the internalisation of GHG emission costs by signalling private farms to internalise cost of emissions and invest in low-carbon production, and assisting in meeting international obligations and targets such as Net Zero Emissions (NZE) and Nationally Determined Contributions (NDCs).

Additionally, there are several carbon pricing instruments in place to support the adaptation to climate change. Darshan, however, noted that the country needs to develop a wider instrument framework as there is a lack of economic instruments and these are more predominantly towards aid-based instruments.

Meanwhile, in Theseira’s presentation, “Making Carbon Pricing Work”, he pointed out that there are various instruments to execute carbon pricing, including a carbon tax, emissions trading system, crediting mechanism, results-based climate finance framework and internal carbon pricing.

With the various instruments, there have been efforts to create an enabling environment for the adoption of carbon pricing. The measures include subsidies, incentives in the form of financing and tax breaks, human capital and a framework that includes comprehensive stakeholder engagement.

From left: Yew Weng, Jeffrey, UOB Malaysia CEO Ng Wei Wei, Nik Nazmi, F D Iskandar, Rehda Malaysia president Datuk N K Tong and Progressture Solar Sdn Bhd co-founder and CEO Cliff Siaw (Photo by Shahrill Basri/ The Edge)

Zooming in on the implementation framework, he suggested that it is time for us to move away from the “take-make-waste” economy and embrace a circular economy.

“A shift to a circular economy would reduce GHG emissions by up to 70% and grow the workforce by about 4%,” he said.

In the panel session, moderator Edey set the context of the integral role of carbon trading in reducing GHG emissions.

“Reducing emissions is crucial for mitigating the impacts of climate change and promoting the sustainable future for our planet. The burning of fossil fuels, deforestation, industrial processes and other human activities that release GHG emissions into the atmosphere have [caused temperatures to rise 1.2°C above pre-industrial levels and] towards 1.5°C,” he said.

The panellists discussed the benefits of carbon trading for the real estate industry. Darshan said there is a significant shortfall in financing when it comes to positive initiatives. Therefore, he believes carbon trading will benefit not just the real estate industry but other industries as well in helping to finance projects that lead to reduced emissions. Additionally, he pointed out that it also displayed the commitment of a property developer in addressing climate change.

Theseira explained that carbon trading is part of the Bank Negara Malaysia regulation known as the Climate Change and Principle-based Taxonomy, which local banks are required to adhere to. This means loan applications will be assessed by their impact on the environment and climate.

Edey posed a question on whether there is an alternative option that property developers could look into besides carbon trading, such as offset projects that have renewable energy. Darshan explained that it is important for property developers to undertake a combination of both carbon trading and offset projects to limit global warming to below 1.5°C. He added that decarbonising before and after constructing a building would help to achieve that goal.

Green financing

The second panel discussion, titled “Energising ESG through Green Financing”, was on recent innovations and levers that are being implemented, as well as their implications for the property industry and how they will affect risk management, compliance and investment.

The panellists for this session were International Finance Corp (IFC) chief industry specialist of green buildings and climate-smart cities Prashant Kapoor and United Overseas Bank (UOB) Ltd managing director of sectors solutions and group head of real estate & hospitality and construction & infrastructure Jasper Wong Soong Ling. This session was moderated by Rehda Institute chairman and UOB (Malaysia) Bhd chairman Datuk Jeffrey Ng Tiong Lip.

In his presentation, Prashant observed that a huge amount of carbon emissions worldwide came from buildings alone. “What is scary from that fact is that a whole bunch of new constructions are about to be built. This is why we need to make sure that future developments in the pipeline are built with net zero carbon emissions in mind. Over the last decade, a lot of countries have tried to build developments with reduced carbon emissions, mostly corporate and commercial buildings.

“How do we get this further down the road? Green buildings don’t have to look extraordinary, they don’t need to have green coming out of their noses. It can be a very simple building but it should be a resource-efficient one. Our research shows that resource-efficient buildings offer a chance to secure emission cuts at a low cost and lock in energy and water savings for decades.”

He then introduced IFC’s green building evaluation system and certification called EDGE. Developers can input their project into the EDGE app to determine resource-efficient measures to incorporate and estimate the incremental cost of a green building. By meeting the EDGE standards of at least 20% savings in energy, water and embodied energy in materials, the building will get an EDGE certification.

He added that GRESB (formerly known as Global Real Estate Sustainability Benchmark) includes EDGE as a qualifying certification system for improved scoring of the GRESB Real Estate Assessment and the GRESB Developer Assessment.

Wong spoke about ways to simplify sustainable financing for the real estate industry. “We did a survey recently and found that 84% of our clients think sustainability is an important factor to consider before making a purchase decision. Also, more employees want to work for companies that have a clear sustainability plan.”

Dubbed U-Green financing, UOB Malaysia’s green financing programme aims to support customers embracing ESG and sustainability initiatives to achieve net zero carbon emissions under the UOB Green Sustainability Frameworks, he said.

“Our net zero pathway involves five of our green frameworks for green buildings, smart city model, green trade finance, transition finance framework for brown companies in the mining as well as oil and gas sectors. For the smart city model, we have real estate, renewable energy, the U-Solar programme for energy efficiency and the U-Green programme offering half a billion ringgit of incentives.”

U-Green’s real estate framework covers green loans and sustainability-make loans. It covers eight building types, including industrial, office, retail mall, residential, mixed-use development and data centres.

Wong also listed the benefits of having a green building or infrastructure. “This would be exciting news for developers and investors. Across the region in places such as Singapore and Hong Kong, we are seeing an average increase of 26% to 28% in rental premium for green buildings. In terms of operational cost savings, if you take on green retrofits like LED lighting, smart building controls and install solar panels, the total estimated savings is about 30%.”

Leading the second panel discussion, Jeffrey reminded the audience that large companies and SMEs in Malaysia have no choice but to embrace the industry’s sustainable journey, which is achievable with green financing from financial institutions.

The former CEO of Sunway REIT also emphasised the importance of carbon tax. “Think of carbon tax as a form of penalty. Please don’t underestimate the understanding of your carbon trading, carbon offset and the system of carbon tax itself. The real estate industry already has a huge amount of taxes to pay, but carbon tax is bound to show in your balance sheet’s liabilities in a matter of time,” he said.

“[In Sunway REIT,] we did our internal carbon pricing framework for 18 of our buildings. We did the calculations and found that if we couldn’t manage to meet the target of 5% carbon emissions reduction per annum, we would have to pay about RM2 million per annum of tax.”

On the subject of cost efficiency in terms of retrofitting or demolishing and rebuilding a brown building, Prashant said it depended on how each building was built and what the owner or contractor perceived was more cost-effective. “Almost every project built 10 years ago needs refurbishment. Too many buildings in the past don’t have the basic energy-efficiency features that most newly built buildings have today.”

Giving a Singaporean perspective, Wong said about 50% of the gross floor areas are certified as green buildings. “The Singapore government’s target is to get that up to 80%. We found that a very effective way to drive these numbers is through renovation. We foresee it saving a lot of money in the long run.”

Designing net zero buildings

When it comes to developing net zero buildings, AB Consulting Canada principal Albert Bicol emphasised in his session “Designing the Future of Net Zero Energy Buildings for Resilient and Sustainable Communities” that the key is not to overcomplicate the design and development of the building.

Instead, he said, a key thing to remember when designing and building a project is to stop carbon emissions. He added that an important part of building a project in line with the goal is to incorporate passive design.

“As a building becomes more passive, it becomes more comfortable and the cost of building comes down. [With] more energy systems and more engineering systems, the cost of building goes up.”

In addition to passive design, there are a few other common features that can be found in a net zero and carbon-neutral building, says Bicol. These include having an integrated design, natural ventilation, thermal mass, utilising local heat sources, on-site energy generation and an all-electric building.

“What we need to do is to get to the root of the problems. We do not need to complicate matters. We don’t need to do all the rating systems [and certifications]. None of this matters when we lose our homes. The only way we can stop from losing our homes is to stop carbon emissions.”

Developing embodied carbon framework

Nabers Australia head of market development Magali Wardle introduced the company’s plans in developing a framework to tackle the issue of embodied carbon in her presentation titled “Nabers’ Embodied Carbon Framework: How Measuring and Managing Drives World-Class Performance on Buildings”. Nabers is an initiative by the Australian government to measure and compare the environmental footprint of buildings across various sectors in the country.

On developing an embodied carbon framework, she pointed out that carbon emissions was made up of 16% embodied emissions and 84% operational emissions in 2019. She predicted that while operational emissions could drop to 15% by 2050, embodied emissions could rise as high as 85%, suggesting there is a real and urgent problem that needs to be addressed.

Wardle noted that action on reducing embodied carbon emission comes with the challenge of having a fragmented industry with different methods and assumptions to tackle embodied carbon.

“This means we can’t even have a conversation on how fast we want to reduce carbon emissions because we’re still talking about how to measure these emissions. This is causing a lot of confusion in the market and stalling progress on measuring and managing embodied carbon. All this complexity makes it difficult for stakeholders to work out how to measure carbon emissions and take action on it,” she said.

With the help of the New South Wales government and close collaboration with industry players, Nabers is developing a national framework that will measure, set targets and compare embodied emissions for new buildings with the objective of driving action urgently to reduce carbon emissions, focusing on measuring, verifying, comparing and disclosing embodied emissions, and expediting solving the problem of embodied carbon now.

“The intention of this tool is to boost transparency of building sustainability for investors, building owners and tenants to help create consumer-led demand for low carbon construction materials,” said Wardle.

Future of renewable energy

In the third panel session, titled “The Future of Renewable Energy in Malaysia”, Progressture Solar co-founder and chief operating officer Ng Yew Weng observed that there are exciting opportunities for property developers to tap into their sustainability energy with the launch of the National Energy Transition Roadmap (NETR) on July 27.

He said the roadmap will help to expand solar usage by allowing homeowners to lease their rooftops, whereby the energy generated from the leased rooftops will be distributed to nearby commercial areas and homes through the distribution network.

“As part of the NETR programme, property developers [can] now begin leasing rooftop spaces on top of residential homes to generate solar power … Ultimately, [this] creates a sustainable self-contained renewable energy township and allows developers to achieve their sustainability goals as well as reduce carbon emissions across their portfolios,” said Yew Weng.

“This is a very exciting concept because in the next few years, we would expect the NETR, that all this would create off-site PPAs [power purchase agreements] and third-party access. This means all the energy being generated can be sold not only to commercial, industrial and township developments but also to businesses directly.”

He pointed out that property developers could diversify their portfolios by collaborating with experts such as solar developers to begin investing in renewable energy infrastructure and to be able to sell that energy directly to township developments or high demand users such as commercial and industrial developments and shopping centres and retail outlets.

This will benefit property developers in securing stable, long-term recurring income through PPAs with corporate buyers, strengthening their sustainability agenda, gaining a tax benefit in reducing their overall cost of operation and having the ability to secure multinational corporations as clients and off-takers of energy, he said.

Yew Weng pointed out that the renewable energy space is integral to the sustainability agenda to achieve Malaysia’s mission of net zero carbon emissions by 2050, due to the fact that carbon emissions generated from energy currently stand at 70%. “[This makes] the energy sector a major contributor of GHG emissions in Malaysia, with the majority of electricity being produced by fossil fuel, natural gas and coal.

“Hence, the reason why our country has implemented a lot of policies, particularly in the renewable energy space to achieve net zero emissions by 2050. The property development industry plays a crucial role in achieving this goal.”

Reducing carbon emissions from transport

TSA Management Sdn Bhd regional director for Southeast Asia Gandhi Suppiah, who spoke on “The Role of Zero Emission Transport for Sustainable Urban Centres Planning Management”, highlighted that the global carbon emissions from transport totalled eight billion tonnes. He added that 75% of transport emissions came from road vehicles.

“Increases in road vehicles [both passenger and freight], aviation and shipping were the leading factors behind the global growth in transport carbon emissions between 2000 and 2018. In Malaysia, the transport sector was the third-largest contributor of carbon emissions in 2019, which is why transport needs to be developed to suit our goals in reducing carbon emissions.”

Gandhi elaborated on what could be done by urban centres to reduce carbon emissions from road vehicles. “Urban systems are critical to achieve deep emissions reductions and advance climate-resilient development — key adaptation and mitigation elements in cities.”

This includes considering climate change impacts and risks in the design and planning of settlements and infrastructure; land use planning to achieve compact urban form, co-location of jobs and housing; supporting public transport and active mobility; the efficient design, construction, retrofit and use of buildings; reducing and changing energy and material consumption; sufficiency; material substitution; and electrification in combination with low-emission sources.

To transform Kuala Lumpur into a net zero transport zone, Gandhi suggested three main alternatives: substitute trips by developing more active travel infrastructure such as bicycle- and pedestrian-friendly pathways plus having more electric cargo bikes; shift mode whereby factors such as shared mobility, modern public transport and access restrictions should be taken into account; as well as adding more electric vehicle (EV) charging infrastructure.

A sustainably designed mall

Frasers Property Australia (Melbourne) Pty Ltd sustainability adviser Ruvini Silva shared her case study on “Raising the Bar on Sustainability at the Burwood Brickworks Retail Centre Melbourne”. Located in Burwood, Australia, the 13,000 sq m Burwood Brickworks Shopping Centre — developed by Frasers Property Australia — achieved its very own Living Building Challenge Petal Certification.

The Living Building Challenge is a certification programme that defines the most advanced measures of sustainability. Ruvini said the programme provides a framework for the design, construction and symbiotic relationship between people and all aspects of the built environment.

“Under the Petal certification, we managed to achieve seven of its criteria: place, beauty, material, energy, water, equity, health and happiness. We achieved the place petal mainly due to a significant area of the shopping centre being dedicated to food-productive landscaping. We have a 2,500 sq m rooftop urban farm, heavily landscaped car park and a north-facing pot plant wall of 260 mid-sized citrus trees,” she added.

“We attribute our health and happiness petal to the centre’s combination of windows, louvres and skylights that provide fresh air and daylight. We’ve also incorporated biophilic designs with the use of natural materials such as timber and cork as well as access to plenty of greenery and natural light.”

Ruvini said the material petal was achieved by having all the timber used as certified or salvaged by the Forest Stewardship Council. Some 75% of the materials used were also sourced locally, from within a radius of 9,000km. She also mentioned that it was able to have a substantial reduction in landfill waste during construction and operation.

“Our construction processes diverted an average 99% of building waste from the landfill. The project also accounted for total embodied carbon through a one-off offset post-completion in 2020.”

For energy efficiency, a central Heating, Ventilation and Air Conditioning (HVAC) system was installed to eliminate any impact from the installation of inefficient supplementary systems in tenants’ fitouts, said Ruvini. The centre is also equipped with rooftop solar panels of 1mw. A rainwater harvesting system was also installed to service non-potable water use.

Tenants of the shopping centre came up with some initiatives, including repurposing bottles as light fixtures, using crushed glass in its flooring, baskets and trolleys made from milk cartons and ceiling sculptures made of recycled paper.

Bioclimatic architecture and design

The final speaker of the conference was T R Hamzah Yeang Sdn Bhd executive director Datuk Ken Yeang. He shared insightful pointers on his well-known bioclimatic design in his talk titled “Nature-based Green Architecture and Planning”.

Yeang described bioclimatic architecture as the use of passive, low-energy techniques, such as building configuration, shading, component placement, material selection, solar- and wind-related orientation, natural ventilation, sky courts and vertical landscaping. For him, passive systems built within the design and connecting to the natural environment are the key to sustainable architecture, which the industry desperately needs.

“What we should try to do in a nature-based approach is to make our built environment into human-made ecosystems. It basically means to replicate, emulate and amend the properties of our existing ecosystems. The way to do this is to create habitats that can be put within the building.”

One of Yeang’s most notable projects is Suasana PJH 2C5 in Putrajaya. “The overall façade is perforated with cantilevered vegetative balconies with lush landscaping visible from beyond the vertical glass sun shading, which enhances the local biodiversity and living quality by attracting targeted fauna to the site,” he said.

Another project is Solaris in Singapore, which has two tower blocks separated by a naturally ventilated central atrium. Some of the building’s ecological design features include a continuous perimeter landscaped ramp, a solar shaft, an eco-cell that allows vegetation, daylight and natural ventilation to extend into the car park levels below, as well as a day-lit atrium.

“The continuity of the landscaping is a key component of the project’s ecological design concept as it allows for fluid movement of organisms and plant species between all vegetated areas within the building, enhancing biodiversity and contributing to the overall health of these ecosystems. This can be seen throughout most of the projects we’ve worked on,” said Yeang.

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