September 2022
CIC has not carried out any audit mission for nor commissioned any consultancy services with YAU LEE CONSTRUCTION COMPANY LIMITED and there is no established relationship (financial or others) between CIC and YAU LEE CONSTRUCTION COMPANY LIMITED.
The opinion provided herein is an independent opinion on the sustainability credentials and management of the financial instrument, based on the information made available to CIC. CIC has neither interviewed any of the YAU LEE CONSTRUCTION COMPANY LIMITED’s employees, nor performed any on-site assessment and tests to check the accuracy of the information provided by YAU LEE CONSTRUCTION COMPANY LIMITED. The accuracy, comprehensiveness and trustworthiness of the information collected rests with YAU LEE CONSTRUCTION COMPANY LIMITED. CIC, in providing this opinion, has not certified the effectiveness, the quality or the irreversibility of the assets to be financed by the sustainable financing instrument. YAU LEE CONSTRUCTION COMPANY LIMITED is fully responsible for attesting the compliance with its commitments defined in its policies, for their implementation and monitoring. The opinion delivered by CIC neither focuses on the financial performance of YAU LEE CONSTRUCTION COMPANY LIMITED, nor on the effective allocation of its proceeds. CIC is not liable for the consequences arising if third parties use this opinion either to make investment decisions or to make any kind of business transaction.
The opinion provided by CIC on YAU LEE CONSTRUCTION COMPANY LIMITED can only be used by YAU LEE CONSTRUCTION COMPANY LIMITED and the Financial Institution. The distribution and publication are at the discretion of YAU LEE CONSTRUCTION COMPANY LIMITED, subject to CIC’s approval.
| Application no. | SFCS-APPLY-2022-002 |
|---|---|
| Certificate no. | SFCS-2022-002 |
| Date of application | 2022.08.09 |
| Company name | YAU LEE CONSTRUCTION COMPANY LIMITED |
| Business registration no. | 08311972 |
| Company profile | Yau Lee Construction Company Limited (YLC) was established in 1958. YLC specialises in construction, maintenance, renovation and design and building projects with advanced technologies/approaches including BIM and Modular Integrated Construction (MiC)/ Design for Manufacture and Assembly (DfMA) technologies. Based on its solid experience, multi-talented professionals, effective management system, advanced information system and highly efficient building technology, YLC has become one of the most innovative construction companies in Hong Kong and successfully achieved various breakthroughs in the past years. For instance, completion of Hong Kong Housing Authority’s (HKHA) first Integrated Procurement Approach (IPA) contract with 3D BIM in 2009, completion of HKHA’s second and the largest IPA contract with 5D BIM in 2018, construction of Hong Kong’s Construction 2.0 Pilot Project to firstly adopt MiC in an Architectural Services Department (ArchSD) project, construction of a long-span pedestrian suspension bridge to firstly adopt Lowering Construction Method for bridge installation in Hong Kong. Carry the same corporate culture, belief, and practice, YLC always strives for excellence to improve construction productivity and buildability as well as sustainability. YLC thinks green, practices green, acts green and aims to provide a smart and green living to the society and the world. |
| Sustainable financing instrument | Green Loan |
| Application level | Project Level |
YAU LEE CONSTRUCTION COMPANY LIMITED has confirmed the proceeds will be used for the specified Project Categories that meet the eligibility criteria stated:
| Project Categories | Circular Economy |
| Eligibility Criteria | Design and production of components, products and assets that support the circular economy |
YAU LEE CONSTRUCTION COMPANY LIMITED has confirmed that the selected Project Categories and Eligibility Criteria are in line with the following internationally recognized frameworks across financial markets:
Frameworks
YAU LEE CONSTRUCTION COMPANY LIMITED has also confirmed the following purposes of the proceeds:
Purpose of financing
YAU LEE CONSTRUCTION COMPANY LIMITED has identified the below project(s) as eligible green projects which meet the eligible criteria:
| Project name | Design and Build Contract for Transitional Housing at Po Lam Road North, Tseung Kwan O for Christian Family Service Centre |
| Location | Po Lam Road North, Tseung Kwan O |
| Project description | The works to be carried out under this contract comprise the design and construction of two blocks four-storey transitional social housing with Modular Integrated Construction (MiC) units with external works and other associated building elements at Po Lam Road North, Tseung Kwan O |
| Highlights of green elements and estimated environmental impact | In this “Design and Build” project, the applicant is responsible for reinforced concrete MiC modules design. It will adopt “3S concept” of Standardization, Simplification and Single Integrated Element, and demountable reinforced concrete for the MiC modules. MiC is of importance to sustainable development of construction industry, with particular to the aspects of innovation and technology. It contributes to environmental sustainability via: 1. reducing air and noise nuisance to the surrounding environment (since the traditional process of formwork erecting, rebar fixing and concreting will be transformed from on-site construction to off-site industrial production, hence it can greatly improve the surrounding environment, at the same time with less energy consumption, less carbon emissions, which eventually improved the sustainability performance); and 2. minimizing construction waste (MiC leads to less construction material wastage and increases cost-effectiveness overall, the modular units can also be reused such that extending the life-cycle of building materials and relieving the pressure on the valuable resources). |
The applicant claims that the proceeds will be exclusively used to finance its service scope under a new project named "Design and Build Contract for Transitional Housing at Po Lam Road North, Tseung Kwan O for Christian Family Service Centre". In this project, the applicant will be responsible for design and manufacture of Mic modules, which can contribute to circular economy in waste reduction and life-cycle extension of construction materials. That's in line with the compulsory requirement under the eligibility of "design and production of components, products, and assets that support the circular economy" in Section 2.6 Circular Economy, Annex 1: Technical Requirements, SFCS User Guide.
To ensure that the projects financed by the sustainable financing instrument meet the eligible criteria, YAU LEE CONSTRUCTION COMPANY LIMITED has established an evaluation and selection process with the following key elements:
Evaluation and selection
The applicant makes it clear that it adheres to "3S concept" of Standardization, Simplification and Single Integrated Element and contributes to extending life-cycle of construction material as well as waste reduction. It also claims an internal governance body which comprises Director/ Project Director/ Contract Manager/ Project Manager has been set up and they will meet up regularly to evaluate and select eligible projects. Although the eligibility criteria and selection process for eligible projects are not clearly explained, the specific project proposed by the applicant in this application is deemed to be aligned with its sustainability objectives and eligible as green project according to the technical requirement of CIC SFCS.
YAU LEE CONSTRUCTION COMPANY LIMITED has provided information regarding the internal governance process through which the company can track allocation of funds towards green projects. YAU LEE CONSTRUCTION COMPANY LIMITED will establish a register of funds to contain the following information:
Information
Pending the full allocation of the proceeds, YAU LEE CONSTRUCTION COMPANY LIMITED intends to hold and/or invest the balance of proceeds not yet allocated in accordance with N/A
The applicant provides a flow chart to demonstrate its process of proceeds management. Based on the information provided, it will assign a specific project code to each green project in its account system. Any payment or transaction to subcontractor, material supplier, etc., regarding this green project will be checked and recorded based on the project code. Though using the specific project code, the funds issued by the bank and revenues paid by the project employer can also be clearly matched and repaid.
Due to the proceeds will be exclusively used to finance a specific project in this application, the applicant does not provide any information about the management of unallocated proceeds, which is not applicable.
YAU LEE CONSTRUCTION COMPANY LIMITED is committed to transparent reporting and will publish allocation report and impact report within one year from the date of issuance of each sustainable financing instrument and annually thereafter until the full allocation of the proceeds. The report will consist of information on the allocation of the proceeds and the environmental impacts of the projects.
Allocation Report
In terms of impact reporting, YAU LEE CONSTRUCTION COMPANY LIMITED will report on relevant environmental metrics of the projects to which the proceeds have been allocated in line with the technical requirements.
| Project Categories | Circular Economy |
| Metrics | 1. the percentage of materials that are reusable and recyclable in as-built material; |
| Methodologies | The as-built amount of materials, components and products that are reusable and recyclable were measured in tonnes / cubic meter compared with the overall materials, components and products (sum of reusable/recyclable and non-reusable/non-recyclable) measured in tonnes / cubic meter to get the % increase |
| Project Categories | Circular Economy |
| Metrics | 2. the waste that is prevented |
| Methodologies | The estimated amount of waste in tonnes without the project compared with the actual waste generated and disposed in tonnes after the project |
The applicant claims it will provide allocation information and the impact of the proposed project annually. The distribution of proceeds earmarked to eligible green project at project level, as well as 2 environmental indicators (1. percentage of reusable and recyclable material and 2. the waste prevented) will be published as part of relevant project documents such as the project progress report. As there is no compulsory requirement to applicant to publicly disclose such information, the approach provided by the applicant is deemed acceptable.
Besides, the 2 indicators proposed by the applicants are in alignment with the post-lending reporting requirement of CIC SFCS. The applicant also explains the calculation methods, which demonstrates its commitment to transparent reporting.
| Use of proceeds | Compliant |
|---|---|
| Project evaluation and selection | Compliant |
| Management of proceeds | Compliant |
| Reporting | Compliant |
Based on the above assessment, we recommend to approve the application (Application no.: SFCS-APPLY-2022-002, Certificate no.: SFCS-2022-002) of the CIC Sustainable Finance Certification Scheme with validity from 01-09-2022 to 31-08-2024 .