July 2023
CIC has not carried out any audit mission for nor commissioned any consultancy services with AJC Joint Venture and there is no established relationship (financial or others) between CIC and AJC Joint Venture.
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 AJC Joint Venture’s employees, nor performed any on-site assessment and tests to check the accuracy of the information provided by AJC Joint Venture. The accuracy, comprehensiveness and trustworthiness of the information collected rests with AJC Joint Venture. 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. AJC Joint Venture 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 AJC Joint Venture, 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 AJC Joint Venture can only be used by AJC Joint Venture and the Financial Institution. The distribution and publication are at the discretion of AJC Joint Venture, subject to CIC’s approval.
| Application no. | SFCS-APPLY-2023-002 |
|---|---|
| Certificate no. | SFCS-2023-002 |
| Date of application | 2023.06.03 |
| Company name | AJC Joint Venture |
| Business registration no. | 56660909 |
| Company profile | A JV company formed to build the first desalination plant using reserve osmosis technique in HK. |
| Sustainable financing instrument | Green Loan |
| Application level | Project Level |
AJC Joint Venture has confirmed the proceeds will be used for the specified Project Categories that meet the eligibility criteria stated:
| Project Categories | Renewable Energy |
| Eligibility Criteria | Demonstrate renewable energy generation capacity to reduce the demand for conventional power generation sources by at least 2.5% (The project has adopted solar panels.) |
| Project Categories | Energy Efficiency |
| Eligibility Criteria | Demonstrate the project reduce GHG emissions through the energy efficiency equipment, technology or product. (The project has adopted energy recovery system.) |
| Project Categories | Sustainable Water and Wastewater Management |
| Eligibility Criteria | Demonstrate the project related to sustainable water management such as water reuse and recycling, efficiency, conversation, wastewater recycling. (The project is design and construction of a desalination plant using reserve osmosis technology.) |
| Project Categories | Climate Change Adaptation |
| Eligibility Criteria | Demonstrate adaption measures that reduce the climate risk. (The project produces potable water of 135,000 cubic metres per day in the first stage with provision for future expansion to the ultimate capacity up to 270,000 cubic metres per day when necessary.) |
| Project Categories | Green Building |
| Eligibility Criteria | Provide project specification to demonstrate green building assessment target rating, e.g. LEED, BEAM Plus, WELL, EDGE, etc. (The project has achieved Provisional Platinum rating under BEAM Plus NB v1.2) |
AJC Joint Venture has confirmed that the selected Project Categories and Eligibility Criteria are in line with the following internationally recognized frameworks across financial markets:
Frameworks
AJC Joint Venture has also confirmed the following purposes of the proceeds:
Purpose of financing
AJC Joint Venture has identified the below project(s) as eligible green projects which meet the eligible criteria:
| Project name | Design, Build and Operate The First Stage of Tseung Kwan O Desalination Plant |
| Location | Area 137, Tseung Kwan O |
| Project description | The works include design and construction of seawater desalination facilities, including Reverse Osmosis Building, Actidaff, Combined Intake and Outfall shaft, Post Treatment Building, Administration Building; and testing, commissioning and operation of associated systems. The following website contains the project details for reference: https://www.tkodesal.hk/Project_Description |
| Highlights of green elements and estimated environmental impact | Solar Panels (1,800 panels adopted, saved 810,000 kWh electricity per year); Recycled water irrigation system (design in progress, TBC); Energy recovery device (saving 270,000 kWh electricity per day); Turbines and green landscapes. |
AJC Joint Venture proposes to raise Green Loan for the ‘Design, Build and Operate The First Stage of Tseung Kwan O Desalination Plant’ project that falls into five project categories under the Green Loan Principle including (1) Renewable Energy category, (2) Energy Efficiency category, (3) Sustainable Water and Wastewater Management category, (4) Climate Change Adaptation category and (5) Green Building category.
For (1) Renewable Energy category, AJC Joint Venture submitted part of the technical specification of the project which shows that the renewable energy generation capacity of the project will reduce the demand for conventional power generation sources by at least 2.5%. AJC Joint Venture claimed that 810,000 kWh of electricity can be generated by installing 1,800 solar panels per year. Besides, AJC Joint Venture submitted a duly signed undertaking letter to undertake and agree to comply with the User Guide and Terms and Conditions of the Sustainable Finance Certification Scheme. Therefore, the submitted documents demonstrate that the compulsory technical requirements of Renewable Energy category are fulfilled.
For (2) Energy Efficiency category, AJC Joint Venture submitted part of the technical specification of the project which shows that the project has adopted energy recovery system to reduce GHG emissions. The energy recovery system is considered as a kind of energy efficiency equipment, technology or product that reduces energy consumption. AJC Joint Venture also claimed that by installing the energy recovery system, around 270,000 kWh electricity saving will be achieved per day which results in reducing GHG emissions. Besides, AJC Joint Venture submitted a duly signed undertaking letter to undertake and agree to comply with the User Guide and Terms and Conditions of the Sustainable Finance Certification Scheme. Therefore, the submitted documents demonstrate that the compulsory technical requirements of Energy Efficiency category are fulfilled.
For (3) Sustainable Water and Wastewater Management category, AJC Joint Venture submitted part of the technical specification of the project which demonstrates that the project is design and construction of a desalination plant using reserve osmosis technology, which is related to sustainable water management such as water reuse and recycling, efficiency, conversation, wastewater recycling. Besides, AJC Joint Venture submitted a duly signed undertaking letter to undertake and agree to comply with the User Guide and Terms and Conditions of the Sustainable Finance Certification Scheme. Therefore, the submitted documents demonstrate that the compulsory technical requirements of Sustainable Water and Wastewater Management category are fulfilled.
For (4) Climate Change Adaptation category, AJC Joint Venture submitted part of the technical specification of the project which shows that the project will produce potable water of 135,000 cubic metres per day in the first stage with provision for future expansion to the ultimate capacity up to 270,000 cubic metres per day when necessary. This is considered as an adaption measure that reduces the climate risk. Besides, AJC Joint Venture submitted a duly signed undertaking letter to undertake and agree to comply with the User Guide and Terms and Conditions of the Sustainable Finance Certification Scheme. Therefore, the submitted documents demonstrate that the compulsory technical requirements of Climate Change Adaptation category are fulfilled.
For (5) Green Building category, AJC Joint Venture submitted a copy of certificate that shows the project has achieved the Provisional Platinum rating under the Provisional Assessment of BEAM Plus NB v1.2. Besides, AJC Joint Venture submitted a duly signed undertaking letter to undertake and agree to comply with the User Guide and Terms and Conditions of the Sustainable Finance Certification Scheme. Therefore, the submitted documents demonstrate that the compulsory technical requirements of Green Building category are fulfilled.
Based on the above information, we concluded that the project will bring significant environmental benefits.
To ensure that the projects financed by the sustainable financing instrument meet the eligible criteria, AJC Joint Venture has established an evaluation and selection process with the following key elements:
Evaluation and selection
AJC Joint Venture submitted an organization chart which shows that AJC JV Project Manager, AJC Construction Manager, AJC Commercial Manager and Environmental Monitoring Manager of this project forms a Sustainable Finance Working Group to conduct the process for project evaluation and selection. AJC Joint Venture also confirmed that JV board members who are in the most senior position of the project and the Sustainable Finance Working Group are the internal governance body to evaluate and select eligible projects.
AJC Joint Venture has provided information regarding the internal governance process through which the company can track allocation of funds towards green projects. AJC Joint Venture will establish a register of funds to contain the following information:
Information
Pending the full allocation of the proceeds, AJC Joint Venture intends to hold and/or invest the balance of proceeds not yet allocated in accordance with internal governance
AJC Joint Venture confirmed that the green loan proceeds will be dedicated to a designated account for the project. AJC Joint Venture will only use a general bank account to deposit the green loan proceeds as long as the green loan proceeds will be tracked properly through an internal fund register. The procurement department and account department will work closely to track the allocation of funds. The construction manager will be accountable for the internal governance of loan proceeds management. AJC Joint Venture also confirmed to adopt the attached fund register template to track the allocation of green loan proceeds to the project.
AJC Joint Venture is committed to transparent reporting and will publish A standalone green finance report called ‘Green Financing Allocation 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, AJC Joint Venture will report on relevant environmental metrics of the projects to which the proceeds have been allocated in line with the technical requirements.
| Project Categories | Renewable Energy |
| Metrics | Annual GHG emission reduced/avoided in tCO2e (Permanent works) |
| Methodologies | CIC Carbon Assessment Tool (CAT) |
| Project Categories | Renewable Energy |
| Metrics | Total installed capacity of renewable energy in MWh |
| Methodologies | BEAM Plus credit |
| Project Categories | Renewable Energy |
| Metrics | Annual renewable energy generation in MWh |
| Methodologies | BEAM Plus credit |
| Project Categories | Renewable Energy |
| Metrics | Total carbon emission reduced/avoided in tCO2e (Temporary works and site impacts) |
| Methodologies | CIC Carbon Assessment Tool (CAT) |
| Project Categories | Energy Efficiency |
| Metrics | Annual GHG emission reduced/avoided in tCO2e (Permanent works) |
| Methodologies | CIC Carbon Assessment Tool (CAT) |
| Project Categories | Energy Efficiency |
| Metrics | Total installed capacity of energy efficiency equipment in MWh |
| Methodologies | BEAM Plus credit |
| Project Categories | Energy Efficiency |
| Metrics | Annual energy saving in MWh |
| Methodologies | BEAM Plus credit |
| Project Categories | Energy Efficiency |
| Metrics | Total carbon emission reduced/avoided in tCO2e (Temporary works and site impacts) |
| Methodologies | CIC Carbon Assessment Tool (CAT) |
| Project Categories | Sustainable Water and Wastewater Management |
| Metrics | Annual reduction in water use consumption (m3 per year) |
| Methodologies | BEAM Plus credit |
| Project Categories | Sustainable Water and Wastewater Management |
| Metrics | Annual volume of wastewater treated/avoided (m3 per year) |
| Methodologies | BEAM Plus credit |
| Project Categories | Sustainable Water and Wastewater Management |
| Metrics | Annual amount of sewage sludge that is treated and disposed of |
| Methodologies | BEAM Plus credit |
| Project Categories | Sustainable Water and Wastewater Management |
| Metrics | Total carbon emission reduced/avoided in tCO2e (Temporary works and site impacts) |
| Methodologies | CIC Carbon Assessment Tool (CAT) |
| Project Categories | Climate Change Adaptation |
| Metrics | Number of operation days lost due to climate hazard |
| Methodologies | By AJC Joint Venture’s 98% reliability standard (i.e. <7days lost is acceptable) |
| Project Categories | Climate Change Adaptation |
| Metrics | Number of operation days lost due to disrupted transport networks by the climate hazard |
| Methodologies | By AJC Joint Venture’s 98% reliability standard (i.e. <7days lost is acceptable) |
| Project Categories | Climate Change Adaptation |
| Metrics | Total carbon emission reduced/avoided in tCO2e (Temporary works and site impacts) |
| Methodologies | CIC Carbon Assessment Tool (CAT) |
| Project Categories | Green Building |
| Metrics | Percentage of energy use reduced/avoided compared with local baseline or building code |
| Methodologies | BEAM Plus credit |
| Project Categories | Green Building |
| Metrics | Percentage of water use reduced/avoided compared with local baseline or building code |
| Methodologies | BEAM Plus credit |
| Project Categories | Green Building |
| Metrics | Water minimised, reused, recycled in percentage of total waste and/or in tonnes p.a. |
| Methodologies | BEAM Plus credit |
| Project Categories | Green Building |
| Metrics | Green roof area (square meter) |
| Methodologies | BEAM Plus credit |
| Project Categories | Green Building |
| Metrics | Total carbon emission reduced/avoided in tCO2e (Temporary works and site impacts) |
| Methodologies | CIC Carbon Assessment Tool (CAT) |
AJC Joint Venture confirmed to perform allocation and report impact annually by publishing a standalone green finance report. AJC Joint Venture also clearly defined the key performance indicators applicable for the impact report with the underlying methodology.
| 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-2023-002, Certificate no.: SFCS-2023-002) of the CIC Sustainable Finance Certification Scheme with validity from 03-07-2023 to 02-07-2025 .