February 2024
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-2023-005 |
|---|---|
| Certificate no. | SFCS-2024-001 |
| Date of application | 2023.11.20 |
| 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 adapted products, production technoloties and process |
| Eligibility Criteria | Use of MiC. Over 90% of material installed in prefabrication factory |
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 | Construction of Public Housing Development at Kwu Tung North Area 19 Phase 1A and Phase 1B |
| Location | Area 19, Kwu Tung North New Development Area |
| Project description | This contract comprises of six 38 to 40-storey domestic blocks in modular integrated construction (MiC) (total 4,968 flats), one 9-storey welfare & carpark block, one district tenancy management office, one district maintenance office, one estate management office, one child care centre, one centre for home care services for frail elderly persons, one integrated family services centre, one integrated children and youth services centre, one long stay care home, one supported hostel for ex-mentally ill persons, two kindergartens, one refuse collection point and retail facilities etc. |
| Highlights of green elements and estimated environmental impact | Green Elements & Estimated Environmental Impact Wastage Reduction: Over 90% of materials installed in the prefabrication factory, materials usage can be effectively controlled such that materials wastage can be minimized and surplus materials can be reused or recycled in the prefabrication factory. Waste generated due to mould wastage can be minimized. Reduce Environmental Impact by Construction Activities. On-site construction works activities can be reduced, environmental impact by construction activities such as dust, noise generated can be significantly reduced due to over 90% production works are carried out in prefabrication factory where construction process can be effectively controlled in the factory. |
Yau Lee proposes to raise Green Loan for the Construction of Public Housing at Kwu Tung North Area 19 Phase 1A and Phase 1B.
Yau Lee highlighted the green element of the project, such as to adopt MiC, and Yau Lee stated that over 90% of the material will be installed in prefabricated factory. The environmental impact to construction site can be minimized.
Based on the information submitted, it is considered that the project would bring significant environmental benefits.
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
Yau Lee has submitted a "Environmental Organization Chart and Responsibilities (Environmental Protection)" illustrating each level of participants and their duty relating to environmental protection.
Demarcation and hierarchy is clearly shown in the Chart.
Top management is involved to monitor the performance of Policy implementation and establish regular meeting to review the environmental control activities.
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
Yau Lee has confirmed that the loan proceeds, project receipts and payments will be made through a designated account with a specific project code so that all cash flow can be traceable.
Project cashflow report and analysis are prepared in order to control the site expenditure.
Yau Lee has also confirmed to establish a register of funds which contains the information required as above.
YAU LEE CONSTRUCTION COMPANY LIMITED is committed to transparent reporting and will publish Project Progress 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 | Reusable and Recyclable Material; Waste Reduction |
| Methodologies | KPI:- A. The % increase in materials, components and products that are reusable and recyclable, as a result of the project and/or in absolute amount in tonnes / cubic meter p.a. Methodology:- 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; KPI:- B. Waste that is prevented, minimised, reused or recycled before and after the project in % of total waste and/or as absolute amount in tonnes / cubic meter p.a. Methodology:- The amount of waste in tonnes before the project was estimated compared with the actual waste generated and disposed in tonnes after the project such that the waste that is prevented, minimized, reused or recycled can be measured. |
Yau Lee has committed to perform allocation and impact reporting at project level annually as part of the relevant project documents such as project progress report.
Yau Lee has defined two KPI's, i.e. (i) Reusable and Recyclable Material, and (ii) Waste Recycling Rate. These two KPI's are presented in terms of percentage with methodology stated.
Yau Lee stated in their reply to Assessor's comment that the overall weight of MiC is 160,654 tonnes, which represents more than 90% of the overall material as stated in the submission. Yau Lee has not provided historical data from previous projects about the % of MiC adopted as a base line. However, the figure of 90% is considered satisfactory for adoption of MiC.
Yau Lee confirmed to adopt KPI for Waste Recycling Rate (%) for impact reporting with the methodology stated. According to the supplementary information together with further supporting documents submitted by Yau Lee, a previous project using MiC technology can reduce about 30% of non-inert waste compared with a past conventional project, which is equivalent to about 1,960 tonnes as the baseline. Yau Lee also clarified that only non-inert waste is covered in KPI B since inert waste will be recycled in various ways.
| 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-2023-005, Certificate no.: SFCS-2024-001) of the CIC Sustainable Finance Certification Scheme with validity from 06-02-2024 to 05-02-2026 .