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The Importance of Green Buildings
The real estate development sector significantly contributes to greenhouse gas (GHG) emissions, with the cement industry alone responsible for around 8% of global CO2 emissions.
As climate change intensifies, the demand for green buildings—structures designed to reduce GHG emissions through energy efficiency and sustainable materials—has become critical. These buildings not only lower resource consumption and emissions but also enhance indoor environmental quality, contributing to healthier and more sustainable communities.
Green buildings are vital for achieving sustainability goals and securing green financing. Effective decarbonization strategies, such as renewable energy installations and energy-efficient retrofits, are essential.
Learning from leaders in the field, such as City Developments Limited (CDL), is crucial. CDL's achievements in green finance demonstrate how integrating sustainability into real estate can drive both environmental and financial success.
City Developments Limited (CDL) is a prominent Singapore-based real estate firm acclaimed for its sustainable development approach and extensive property portfolio, which spans across Singapore, the UK, China, and the US. CDL is renowned for its commitment to sustainability and decarbonization, setting benchmarks in the industry for green building practices and environmental stewardship.
Business and Financial Overview
Figure 1: CDL’s business and financial overview
CDL's healthy financial performance is underpinned by its strategic investments in sustainable properties and innovative green finance strategies. The company’s portfolio includes residential, commercial, and industrial properties, all of which are developed with a strong emphasis on sustainability. CDL's financial health is also bolstered by its proactive adoption of green finance, which aligns with global sustainability goals and attracts environmentally conscious investors.
CDL's Green Finance Strategy
Figure 2: CDL’s Green Finance Strategy
City Developments Limited (CDL) has developed a proactive green finance strategy that aligns with global sustainability goals and demonstrates its commitment to environmental stewardship.
As of the latest financial overview, CDL's sustainable finance comprises 9% sustainability-linked loans, 2% green bonds, and 89% green loans. The total sustainable finance raised by CDL amounts to $6.3 billion, against a total debt of $14.7 billion, resulting in a Green Sustainable Finance to Debt Ratio of 42.9%. This ratio signifies that nearly half of CDL's debt is allocated to green projects, highlighting the company’s strong dedication to financing environmentally beneficial initiatives.
CDL’s Sustainable Finance Framework embraces leading global frameworks, including the Green Bond Principles, Green Loan Principles, and Sustainability Linked Loan Principles. This strategic alignment ensures that CDL’s financing activities are conducted with high standards of transparency and accountability, reinforcing investor confidence and supporting the company's long-term sustainability goals.
Pros of CDL’s Green Finance Strategy
High Commitment to Sustainability: A significant portion of CDL's debt is allocated to green projects, supporting environmental sustainability and enhancing CDL’s reputation in sustainable real estate.
Alignment with Global Frameworks: Adherence to standards like the Green Bond Principles ensures transparency and accountability in CDL’s financing activities.
Attraction of ESG Investors: CDL’s focus on sustainable finance attracts investors prioritizing ESG factors, leading to favourable financing terms and a broader investor base.
Long-term Financial Stability: Sustainable financing offers long-term benefits such as lower energy costs, reduced regulatory risks, and enhanced asset values.
Cons of CDL’s Green Finance Strategy
Low Percentage of Green Bonds: Only 2% of CDL’s debt is in green bonds, which offer stricter conditions and greater investor assurance.
Need for Improved Finance Mix: Increasing the proportion of green bonds could enhance the rigor and transparency of CDL’s strategy.
Complex Management: Managing a mix of green loans, sustainability-linked loans, and green bonds requires robust governance and continuous monitoring.
Higher Costs: Green financing can entail higher issuance and compliance costs that must be managed to ensure financial benefits outweigh expenses.
CDL's Green Building Strategy
City Developments Limited (CDL) has cemented its position as a leader in sustainable real estate development through a comprehensive green building strategy. With a portfolio that includes groundbreaking developments across Singapore and beyond, CDL is at the forefront of integrating environmental sustainability into its building practices.
Renowned Pioneering Projects
Figure 3: CDL’s transition plan towards green buildings
CDL's commitment to sustainability is exemplified by several pioneering projects:
City Square Mall: Singapore’s first Eco-mall, setting new standards for environmentally friendly retail spaces.
D’NEST: Featuring the largest solar panel installation in a Singapore condominium, enhancing energy efficiency and reducing carbon footprint.
CDL Green Gallery @ Botanic Gardens: Singapore’s first 0 energy gallery, showcasing CDL’s dedication to zero-energy building designs.
Haus @ Serangoon Gardens: The first Singapore Landed Housing with a solar system, promoting renewable energy adoption in residential settings.
11 Tampines Concourse: A milestone as the first Carbon Neutral Development in the Asia-Pacific region, demonstrating CDL’s leadership in climate action.
City Developments Limited (CDL) enhances building performance and operational efficiency through innovative technologies and record-breaking developments, reducing environmental impact while gaining a competitive edge.
CDL aligns with global sustainability standards, being the first Singapore real estate developer to commit to the World Green Building Council’s Net Zero Carbon Buildings Commitment and implementing green lease agreements with all retail and office tenants since 2017.
Additionally, CDL’s 3S Green Building Framework, updated in 2021, integrates smart, sustainable, and super low energy principles, ensuring sustainability throughout development and operation phases in accordance with BCA’s and international standards.
CDL’s pioneering projects and proactive adoption of global sustainability standards underscore its leadership in sustainability. These efforts not only position CDL as an attractive partner for ESG-focused investors and bankers but also set benchmarks for the industry.
By continuing to innovate and adhere to rigorous sustainability practices, CDL remains at the forefront of sustainable real estate development, driving positive environmental and economic outcomes.
CDL's Renewable Energy Strategy
Figure 4: CDL’s renewable energy strategy
CDL has integrated renewable energy into its operations and developments as a key component of its sustainability strategy. Here’s an overview of their current initiatives and challenges:
Current Renewable Energy Adoption
Offices: CDL has achieved 98% renewable energy consumption in its office spaces, demonstrating a high level of commitment to reducing greenhouse gas emissions.
Managed Buildings: Renewable energy adoption in managed buildings stands at 2.5%, indicating a focused effort to increase sustainability across its managed portfolio.
Construction Sites: Currently, there is no renewable energy adoption at CDL’s construction sites, highlighting an area for potential growth and improvement.
Achievements and Impact
In 2023, CDL attributed 100% of its headquarters' electricity consumption to renewable sources through locally-sourced Renewable Energy Certificates (RECs). This initiative offset 412 tonnes of CO2 emissions, equivalent to powering approximately 242 four-room HDB flats for one year.
Challenges and Future Directions
CDL has made significant strides in integrating renewable energy into its operations, particularly in office spaces. However, challenges remain in expanding renewable energy adoption in managed buildings and construction sites. The minimal adoption in these areas underscores the need for CDL to prioritize and accelerate efforts to overcome barriers and scale renewable energy installations.
While CDL has set clear goals for reducing greenhouse gas emissions, a more comprehensive renewable energy strategy is necessary to address the disparities in adoption across different sectors of its operations. Moving forward, CDL aims to explore additional installations of solar panels and other renewable energy technologies to further increase its renewable energy footprint and achieve its sustainability targets.
Takeaway
City Developments Limited’s proactive approach to sustainability through robust green finance and innovative green building strategies establishes it as a trailblazer in the global real estate industry. By continuing to integrate sustainability into every facet of its operations and enhancing transparency through comprehensive disclosures, CDL remains committed to driving positive environmental impact and sustainable growth.
Disclaimer:
The information provided by REANGLE in this article is for informational purposes only and does not constitute investment advice. Any investment decisions made based on this information are solely the responsibility of the investor. REANGLE disclaims any liability for financial losses or legal consequences resulting from investments in any companies or assets discussed in this article. Readers are advised to conduct their own thorough research and seek professional financial advice before making any investment decisions.
REANGLE Services
REANGLE extends its Green Finance Consulting services to institutional investors and corporations across Southeast Asia, Japan, and beyond, harnessing Singapore’s pool of talent. With global sustainable finance platforms and highly motivated green talent, REANGLE delivers Green Finance Analysis and Green Data Analytics services quantitatively, alongside providing Green Investor Relations advisory service to drive authentically sustainable investment decisions.
Do check out REANGLE’s past articles for further clarification or reach out to us at kazu@reangle.co (Kazu Watanabe).
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