The hubbub around fund flows into environmental, social and governance-related causes has cast the spotlight on the built environment sector, which contributes 39% of carbon emissions globally. As a global infrastructure and urban consultant powerhouse, Surbana Jurong has the opportunity to truly make a difference, to turn abstract green goals and targets into reality.
The Temasek portfolio company anchors sustainability at every stage of the project life cycle in the design and delivery of single buildings to entire townships on behalf of governments, public agencies and corporate clients.
Global brand names in the sustainability space have joined Surbana Jurong in quick succession as member companies since the Group was formed six years ago in 2015. Atelier Ten, Robert Bird Group and B+H lend their expertise to mitigate the damaging effect of construction on the environment through nature-based designs and biomimicry, green steel and super low carbon approaches that track embodied carbon in concrete.
In addition, a key member company, the global engineering, management and development consultancy SMEC, delivers nation-building green infrastructure projects including tunnels, airports, rail and metro systems.
With a global footprint of 40 countries across the Asia Pacific, Africa, Europe, and the United States, Surbana Jurong’s 16,000-strong specialists help clients around the world manage carbon emissions in design and construction and leverage data-driven tech tools to manage smarter and more sustainable buildings.
Increasingly, Surbana Jurong is helping clients take more control over sustainability outcomes by designing for deconstruction, in which building materials are recycled for use in rejuvenation and redevelopment projects using Buildings as Material Banks, or BAMB, technology.
In line with the company’s commitment to deliver sustainable urban solutions, Surbana Jurong is designing its global headquarters to meet the Building and Construction Authority’s (BCA) Green Mark Platinum Certification for Super Low Energy (SLE) Building. The blueprint for the campus was awarded Green Mark Platinum (SLE) by the BCA in 2019. Surbana Jurong is committed to achieving net-zero carbon emissions on its campus by 2030.
Jointly designed with renowned architect Moshe Safdie, the 68,915 sq m development in the Jurong Innovation District will integrate harmoniously with the natural landscape, accommodating up to 4,000 employees when it opens next year.
The campus uses solar photovoltaic technology and integrates features like rain gardens to enhance water sustenance. It also boasts smart lighting control, the largest underfloor air-distribution system in a Singapore commercial office and predictive smart building control systems, such as live energy and water management dashboards.
Aside from showing how green projects can be built, Surbana Jurong is leading the way in green financing by demonstrating how commercial sensibilities dovetails overarching sustainability goals. In February, Surbana Jurong issued a 10-year $250 million sustainability-linked bond (SLB).
The SLB holds multiple firsts: it was the first Singapore dollar-denominated SLB and the first public SLB issuance from a Southeast Asia-based company.
This is also the first SLB in Asia to feature a premium step-up structure at maturity. The bond, carrying a coupon rate of just 2.48%, was very quickly snapped up by investors. By the time book building was halted, more than $1.7 billion in orders were received, making the issue more than six times oversubscribed. Wong Heang Fine, Group CEO of Surbana Jurong speaks with The Edge Singapore on the rise of SLBs and the importance of future-proofing through green buildings.
Q: Global SLB issuance is expected to hit US$100 billion by year end. Why are ESG bonds running hot?
A: Globally, there has been a shift towards impact investing, where investors want to see their money being put to a good cause with a positive impact on the environment. Since Covid-19, there has been an even greater focus on sustainability and social causes.
Now, regulatory bodies like the Monetary Authority of Singapore (MAS) are encouraging investments into the growing sector. For Surbana Jurong, tapping the ESG bond market for funding was a natural move, and reinforces our commitment towards ESG.
Apart from our cornerstone investors who invested in our first bond, we also saw interest from several new investors. This is encouraging for us, as one of our objectives is to diversify our investor base.
Q: Sceptics say the measurement of KPIs and financial costs coincide with times when the bonds are callable. This gives the issuer an option to redeem the bonds early and avoid paying a financial penalty. What are your thoughts on this?
A: SLBs are usually structured with certain ESG KPIs that the issuer has committed to meet. We see this as a more holistic commitment to ESG causes as the KPIs are at the company level, rather than at the asset level.
Surbana Jurong’s SLB was structured with two ESG KPIs: a 10% reduction in greenhouse gas emissions in three of our core businesses by the end of 2029 (Surbana Jurong in Singapore, AETOS and SMEC Australia and New Zealand), and net-zero carbon emissions at Surbana Jurong Campus by August 2030.
If we are unable to meet the KPIs, we will pay a premium of 0.75% at the bond’s maturity in 2031. By structuring the bond with targets tested close to maturity, the company is committing to meeting the KPIs throughout the tenor of the bond, which we feel is more meaningful than having the assessment of KPIs at the midpoint. Moreover, these KPIs would need time to be met.
Q: For all the enthusiasm over ESG, the sector still lacks a common set of measurement tools and quantifiable targets. How is Surbana Jurong keeping abreast with industry standards?
A: Surbana Jurong is committed to contributing meaningfully to the UN Sustainable Development Goals and meeting global standards, such as ISO 37100 and the World Green Building Council. We have aligned our work to the goals outlined in the 2030 Agenda, the UN’s blueprint for all countries to promote prosperity while protecting the planet.
Surbana Jurong is among 96 signatories of the Net Zero Carbon Buildings Commitment. Organised by the World Green Building Council, the commitment aims for 100% uptake of net-zero carbon buildings by 2050.
We have also committed to measure and assess our asset and portfolio carbon emissions for the Surbana Jurong Campus against standards by the Global Reporting Initiative, an international independent standards organisation that helps businesses and governments publicly communicate their impact on climate change.
Locally, many Surbana Jurong-designed buildings have achieved Platinum certifications under the BCA Green Mark certification scheme.
Q: Some say green buildings are costlier to build and maintain. Others say such projects may be more difficult to fund, as the technology is newer and less common than other conventional buildings. What are your thoughts?
A: Asset owners need to take the bold step to reframe their calculations on cost. For one, commercial and retail asset owners need to calculate cost from a whole life cycle perspective, to target payback between two to four years, depending on the technologies employed for the project. Some technologies, such as photovoltaics, have a much longer payback but will reap a return on investment nonetheless. What is quite common now is to work with a supplier on an operation expenditure model.
Q: During construction, green buildings are saddled with more regulations and require more clearances and approvals. Is the additional work worth it?
A: As green buildings use new and innovative materials, it is therefore subjected to additional regulations including clearances and approvals. Hence, enhanced development regulations are necessary if we are to achieve the ambitious sustainability targets that have been set under the Singapore Green Building Masterplan.
By 2030, Singapore aims for 80% of all new builds to be Super Low Energy and for 80% of both existing and new buildings to improve energy efficiency. Regulators are helping asset owners to meet these targets by taking a phased approach, starting now.
For one, the Building & Construction Authority is considering a 50% improvement in energy efficiency target for new developments by the end of this year, up from the current 30%.
The costs associated with these enhanced regulations can be mitigated if a robust eco-system of public-private partnerships is in place. Many of these partnerships have been successful, contributing to numerous examples of buildings benefitting from the adoption of sustainable design through delivery compared to a decade ago.
Photo: Safdie Architects and Surbana Jurong