SINCE the late 1980s, concern and advocacy over climate change has been steadily picking up. The movement’s growth began ramping up back in 2015 when the Paris Agreement was formed, ushering a new era in the global climate change response.
As many countries began heavily shifting their focus towards developing renewable energy (RE) sources, governments and companies alike began investing in green infrastructure, advocating for more sustainable consumption behaviours, and undertaking large scale multi-nation projects such carbon capture and pricing.
Malaysia is no exception to this wave, with the government aggressively pushing for several carbon reduction measures, including a nationwide energy transition to renewable energy, targeting to have a RE capacity target of 70 per cent by 2050.
This shift in attitude has prompted many sectors to begin taking sustainability issues more seriously, including the energy-intensive property and construction sectors where there has been an observed interest by players to apply and obtain green certifications for their projects.
While green building certification bodies have existed within the country since the late 2000s, the actual number of buildings that are certified within the nation remains to be rather lacklustre.
According to the Green Building Index (GBI), Malaysia’s largest and also first home-grown green certification body, as of September 2023, there are currently 662 GBI certified projects in Malaysia with another 1,168 projects currently undergoing its GBI application process.
Meanwhile, other prominent green certification bodies such as GreenRE which was developed by the Real Estate and Housing Developer’s Association (Rheda) reported to have 280 certified projects as of August 2023.
A few other well recognised green certification bodies within Malaysia include the likes of LEEDS, MyCREST, BEAM, and EDGE by International Finance Corp (IFC).
In contrast, Singapore’s national sustainable building certification body, Green Mark, has certified over 4,500 buildings.
Speaking to The Borneo Post, GBI general manager Andrew Kong shared that while the current certification rates may appear small compared to regional giants like Green Mark, they believe that this will soon change in time as they confidently foresee a steady increase of applications in coming quarters.
“Besides a top down push from the federal government stemming from their new green-centric policies, there has been a lot of encouragement from the local level as well with some states seeing local authorities and developers working together to implement stringent building codes and regulations that incentivise the adoption of green building practices,” Kong said in an exclusive interview.
Sarawak is looking to be following suit as the green certification body reported that have begun serious discussions with Sarawak’s Housing and Real Estate Developers’ Association (Sheda) for future collaborations and have also recently signed its first memorandum of understanding (MoU) with RJ Realty (Sarawak) Sdn Bhd for to accredit their property projects.
“These are just some of the upcoming ventures in Sarawak and we are optimistic of rapid application growth in the near-term especially considering that Sarawakian developers have been more open towards adopting green building practices compared to other regions.”
According to GBI, Sarawak currently has a total of 20 GBI certified projects and 29 projects in application.
“With these figures alone it places Sarawak on our top tier states with most certified green buildings in Malaysia.
“Ranking just behind Kuala Lumpur, Selangor, Penang, Johor and Putrajaya, Sarawak is showing a promising progress in creating sustainable development,” GBI said.
The Green Building Index
WITH a command of over 70 per cent of the local green certification market, the GBI has been a leading green rating tool in Malaysia since its inception back in 2009 and is currently the only certification tool supported by the Sarawak state government. Notable GBI certified government buildings in Sarawak include the LCDA Tower, Menara SEDC, Sarawak Energy Bhd, UNIFOR COmplex and the University of Technology Sarawak.
GBI is also the only internationally recognised tool supported by the MGBC, the sole organisation that represents Malaysia on the World Green Building COuncil.
Developed by the Malaysian Institute of Architects (PAM) and the Association of Consulting Engineers Malaysia (ACEM), the organisation aims to provide education, awareness and facilitate the establishment of a universally accepted framework of priorities, objectives, and sustainable practices within the construction sector.
Certified buildings in Malaysia as of August 2023: 662 projects
Registered buildings with GBI in Malaysia as of August 2023: 1,168 projects
Amount of CO2 emissions reduced as of August 2023 (from 662 GBI certified projects): 1,749,000 tCO2E/Annum
Amount of Gross Floor Area (GFA) of GBI Rated Buildings as of August 2023: 300.5 million sqft
Are Sarawakian developers ready for the green shift?
DESPITE the optimism from Kong, there are still some worries on whether Sarawak’s local property development and construction sectors are ready for this rapid shift to green building practices as many still highlight the age old issue of increased compliance requirements and high certification costs.
Shedding some light on this issue, Yu Ji, a director of local property developer Hock Seng Lee Bhd (HSL) believed there were no any major constraints preventing local players from obtaining GBI certification for their projects.
With three GBI certified buildings under HSL’s portfolio, Yu guided that none of the categories in GBI’s criteria would pose a significant challenge as most of it can be easily circumvented from the very beginning with logical and good basic planning.
Using the criteria of reduced energy and water usage as an example, he highlighted that there are many ways to meet the criteria but the best and most cost effective would be to start from the planning stages and instead factor in the sun path and environment before commencing designs.
On matters of sustainable management, Yu argued that the criteria should be met regardless of whether a project is pursuing to achieve GBI certification.
“A well-managed building means lower repair costs, and a good project should have long-term management figured out from day one,” he said.
HSL’s three GBI certified buildings include the TEGAS Digital Village in Samajaya, its 10-storey HSL Tower and its four-storey La Promenade Mall.
Moving on to the topic of high certification costs, Sheda President Augustine Wong said it was clear that consumers leaned towards living and working in ergonomic spaces that are not only energy and water efficient but also well-lit and cross-ventilated.
He argued that it is possible for a building to possess these environmentally-considered elements without a green certification, but also notes that is becoming increasingly necessary, not just as a marketing bonus for the discerning customer, but also as a critical benchmarking tool for investors, financial institutions and Governments.
“In this regard, green building certifications are an excellent objective method with established evaluation criteria to measure a developer’s efforts and commitment towards Environmental, Social and Governance (ESG) initiatives as well as the United Nation’s 17 Sustainable Development Goals (SDG),” he said.
Despite this, he recognised that some players, especially those of smaller sizes, might still find the current certification rates to be a limiting factor and advocates for green certification bodies who wish to gain prominence in the Sarawakian market to offer developers investment relevance, competitive financial edge and value-added services in their offerings.
“They need to consider if their respective packages hinder or facilitate the needs of development private developers, given Sarawak’s market and volume. Developers are free to decide which green certification body they prefer, in line with respective business strategies and risk appetite,” he reasoned.
Kong sympathised that the initial expenses associated with green certification could be a pain point for developers, especially if they’re unfamiliar with the process.
To provide developers with cost-effective strategies, he guided that they are committed to offering comprehensive educational resources throughout the certification process, allowing developers to gain access to workshops, webinars, and expert guidance to navigate the certification process efficiently and cost-effectively.
Having said that, Kong shared that they were hopeful that more emphasis would be placed on the long-term benefits associated with achieving a GBI certification as many green design ideas and technologies invested to a project could provide significant cost savings through increased efficiency and decreased maintenance or rectification works.
“GBI is an investment in sustainability that can result in significant cost savings over the life cycle of the building. It’s not just an expense; it’s a strategic financial decision,” he asserted.
When asked what the average cost of achieving a GBI certification is, Kong guided that it would be dependent on the level of GBI Certified rating that the project is targeting.
“Buildings targeting a GBI Certified rating have incurred an incremental green cost on average of 1.1 per cent of the its overall construction cost and for projects aiming to achieve GBI Gold rating, the costs are at 3.8 per cent of the total construction cost,” he shared.
Incentivising green building development
BUT beyond just cost of certification, Wong argued that for Malaysia to achieve its net zero carbon emissions target by 2050, the federal government needs to develop a more comprehensive approach for encouraging green building adoption within the industry.
“The underlying issue we need to get right from the outset is the wide-lens understanding of how green principles can be adopted and demonstrated. If we fail to give proper cognisance to these themes, we risk losing the forest for the trees and addressing symptoms rather than the root cause,” he reasoned.
Drawing from our history with sustainable construction, Wong pointed out that more sustainable building practices such as the Industrialised Building System (IBS) has been available for a number of decades but its uptake in Malaysia has been slow due to its high upfront costs and lack of financial incentives provided.
To avoid a repeat of this, Wong believed that developers and the industry need more economic instruments such as tax breaks and financial incentives that proactively promote and encourage the use of green technology and certifications for widespread acceptance.
To this end, GBI’s Kong noted that there are currently a few tax incentives and rebates available for developers who achieve GBI certification and includes tax deductions or rebates on qualifying green building expenditures which can offset increased construction costs.
Additionally, selected banks such as CIMB have also begun to offer lower interest rates for home loans for GBI certified projects which may drive up demand from the consumer’s end.
These include tax incentives and allowances by the Malaysia Investment Development Authority (MIDA) for investments in green tech and services, and tax exemptions for companies that provide green tech services under the MyHIJAU directory.
For GBI certified projects specifically, Kong guided that project owners are eligible to apply for the Green Investment tax Allowance (GITA and also for tax exemption equivalent to 100 per cent of the additional capital expenditure incurred to obtain their GBI certification.
Expanding on this, Yu shared that another potential incentive that can be explored by authorities are gross floor area (GFA) incentive schemes whereby developers who plan on developing green certified projects can obtain bonus GFA approval for their projects.
He explained that such incentives schemes have proven successful in nearby countries like Singapore and could be hugely beneficial in encouraging more residential projects to apply for green certifications as the extra GFA would increase net sellable area and margins.
“Green retrofit incentives may also be offered to existing buildings. Many apartments’ joint management bodies would no doubt welcome such incentives,” he added.
But regardless of what economic instruments or incentives end up being implemented, Wong staunchly believes that hard-line compliance measures should be avoided as the local economy is still in recovery and imposing potentially unsustainable costs on developers may cause a cascading impact that will be felt by everyday Sarawakians, from home owners to Small Medium Enterprises (SMEs).
“Paraphrasing the Federal Minister of Natural Resources, Environment and Climate Change during the Green Building Conference (GBC) 2023, energy efficiency cannot simply be legislated into existence,” Wong said.
The issue of greenwashing
It’s clear that green building certifications are slowly become a mainstay in our property and construction sectors, but due to the large amount of green certification bodies available internationally, there is a valid fear of a green washing effect occurring in the local landscape as not all certification bodies and their criteria are equal.
Kong underscored that green washing remains one of the largest challenges faced by green certifications systems around the world as it undermines years of painstaking effort by presenting non-sustainable buildings and or practices as environmentally friendly.
“It creates an uneven playing field in the green building market, allowing parties engaged in greenwashing to gain unfair competitive advantages over those who are genuinely invested in the field, our environment and our future,” he said.
“Eventually, it erodes the credibility of other genuine certification bodies, making it harder for consumers, investors, and developers to differentiate between genuine green buildings and those which re not.”
The best way to combat this is through continuous update and strengthening of certifications standards to ensure they reflect the latest advancements in sustainability and environmental practices and this can be done by encouraging third party certification bodies to maintain rigorous and transparent evaluation processes.
“Developers and building owners need to seek certifications from recognised and reputable certification bodies,” he added.
Tackling the issue from the source, Wong guides that he believes greenwashing can become extremely prevalent if stakeholders are forced to adopt a checklist attitude, only obtaining green certificates to avoid penalties and causing them to seek out the quickest and less resource intensive method of obtaining these certificates.
Instead of this attitude, Wong believed that the entire property development ecosystem will need to participate and collaborate, he advocates for a situation where developers are given the opportunity to seek genuine green certification, in collaboration with authorities and financial institutions, with appropriate economic and human capital assistance.
“Having a strong regulatory framework and clear guidelines in place to monitor national green certification bodies is one way to prevent green washing. However, such framework should not increase the existing cost of green building certifications.
“In order for Sarawak to build a robust understanding of greening a building specific to Sarawak, it is imperative that comprehensive stakeholder engagement sessions be conducted, where open, well-informed dialogue can take place.
Through these discussion platforms, it is hoped that unscrupulous practices will be identified and prevented from diluting or irreparably damaging the trustworthiness of Sarawak’s green agenda,” he shared.
He added that consistent and regular media engagement, public awareness campaigns, public service announcements and consumer guidelines are some ways in which property purchasers can understand the impact of our green agenda on the housing and real estate industry.