WBCSD: BEAM is Hong Kong's Best Kept Secret in the Green Building Industry

Hong Kong is famous for its neon lights and its high-tech, high-rise skyline. Instead of historical figures, Hong Kong banknotes carry images of its landmark buildings. The design and management of buildings plays a huge role in the well-being of Hong Kong residents, economy and environmental footprint accounting for around 70% of total greenhouse gas emissions.

Leading developers Swire Properties and Hongkong Land got together in 1995 and resolved to remove the barriers to greener building in Hong Kong. They recognized that there would be only so much they could do if they simply benchmarked their own buildings against international best practice, but that by working together with others they might be able to shift the incentives for the whole property industry.

As Stephen Fong, General Manager at Swire Properties and Chairman of the Business Environment Council (BEC), says, the decision was based both on direct cost savings, corporate citizenship and future-proofing considerations: "Being a good corporate citizen, we believe that industry should take the lead instead of waiting for legislation to tackle the issue." Their solution was to develop a locally certified system for integrating environmental performance into the planning, design, construction, operation, management and marketing of buildings.

Working together with World Business Council for Sustainable Development (WBCSD) as regional partner, the BEC, the companies began to develop BEAM (the Hong Kong Building Environmental Assessment Method) and, recognizing the need for cross-industry engagement, established the BEAM Society in 2000.

Michael Arnold, then with Hongkong Land and founding chairman of the BEAM Society, says that one critical factor was gaining support not only of developers and landlords but also of architects, planners, engineers, surveyors, contractors, property managers, corporate real estate, researchers and government. Their involvement was crucial "not only in the making of the building, but just as importantly in managing them," he says.

BEAM is now well established and is into its fourth generation of best practice standards covering new and existing buildings, offices, flats and other developments. Almost 150 major developments in Hong Kong have received independent certification for high standards of building performance. The scheme has helped encourage innovative design and construction practices and stimulated local supplies of environmentally friendly building materials previously unavailable in Hong Kong, including sustainable timber, low-toxicity paints and ozone-friendly insulation.

Kevin Edmunds, Chief Operating Officer of BEC, was a key player in the scheme's development and admits that, while BEAM has achieved a high profile among key industry players in Hong Kong, more needs to be done in its broader marketing. Despite covering more square meters than most other building assessment schemes globally, BEAM has been called "The best kept secret in the green building industry."

Edmunds believes that with public awareness and market demand for green buildings growing, both in Hong Kong and Mainland China, BEAM is at a critical time and has the potential to scale up its impacts exponentially. "We have been pushing and pushing and pushing," he says. "Now we are beginning to be pulled."

The challenge for the BEAM program is to grow both its own capacity and that of its industry collaborators to meet this expanding demand. Its strategy is to place greater emphasis on the certification of existing and new buildings, improve public reporting and communication, enable the development of a wider network of professionals to conduct BEAM assessments, and continue to work closely with government to encourage the development of stronger incentives.

While the challenge of expanding from its current base of 6.8 million m² of space, including commercial and institutional buildings and some 36,000 residential units, to impact on the rest of Hong Kong's estimated 70 million m² of property space might seem daunting, over the border in mainland China the challenge is even greater.

Two billion square meters of building space are added annually - the equivalent of nearly thirty new Hong Kong's going up every single year. Many BEC members have mainland China interests, and the BEC has already established a subsidiary and projects in mainland China. BEAM is well placed therefore to contribute its tools and experience, and indeed its secrets, to the development of greener buildings across the region.

Hong Kong BEAMGreen Building Label

The Business Case

The business case for greener buildings is well established. A US study, for example, found that certified green buildings cost 1.8% more to design and construct, but yield 20% cost savings over the life of the building.1 However the obstacles to achieving these benefits in the fragmented property sector are also well documented.

The BEAM initiative from Hong Kong helps overcome these barriers by providing a systematic, locally relevant approach to including environmental performance in the planning, design, construction, operation, management and marketing of buildings. It benefits developers, landlords and tenants alike through:

• Cost savings from more efficient use of energy and resources, in both construction and use of buildings.
  
• Better buildings, which provide healthy and productive accommodation.
  
• Reduced risk through assurance that best practice management is achieved.
  
• Effective markets, as companies are able to give assurance of the green credentials of their buildings and tenants and buyers are able to communicate their preferences.
  
• Regulatory preparedness for both local and international standards.
  
  

Situation

The Business Environment Council

The WBCSD's Regional Network Partner in Hong Kong goes back further than the WBCSD itself. Set up in 1989 by sixteen companies who came together to form the Private Sector Committee on the Environment (PSCE), it was first a forum where businesses and government representatives, recognizing that the quality of Hong Kong's natural environment was critical to maintaining a good business environment, could meet to discuss environmental issues. But the businesses quickly recognized that a simple "talking shop" was not sufficient for the challenges they faced, so in 1991 they established the Centre for Environmental Technology (CET) as a vehicle for more practical collaboration and capacity building.

The membership base and scope of activities of the PSCE and CET continued to grow and in 2000 they merged to form the BEC. The BEC became a Regional Network Partner of the WBCSD in 2003. Its members include large corporations, small and medium enterprises, business associations and trade consulates, and it now has a reach of over 20,000 businesses, responsible for the employment of 1 million people and investment of HK$3 trillion.

Greening Hong Kong's Built Environment

While other places feature historical figures on their banknotes, Hong Kong's carry images of landmark buildings. The design and management of these buildings plays a significant role both in the region's environmental footprint, economy, and the lives and wellbeing of Hong Kong's residents.

Globally, buildings account for over a third of greenhouse gas emissions; however, in service-based economies like Hong Kong's the figure is closer to 70%. Most of these emissions come from the energy used for air conditioning, lighting and ventilation.

In the mid-nineties, public awareness of sustainable development in Hong Kong was relatively low, and legislative demands for environmental building improvements were not stringent. But PCSE's members were certain that Hong Kong would follow the global trend and see increased public demand for energy efficiency and a reduction in environmental impacts, as well as tighter town planning and building regulations. They were also concerned that deteriorating air quality was affecting Hong Kong’s attractiveness both for multinational companies and tourists.

Targets

Developing a building certification scheme in Hong Kong

In 1995, two leading Hong Kong-based property developers who were members of the PSCE, Hongkong Land and Swire Properties, resolved to address the barriers to greener building in Hong Kong. These two companies were already committed to corporate responsibility with a track record of investing in environmental design, operational efficiency, landscaping and urban greenery. For them, compliance with a rigorous certification scheme was a further way to distinguish themselves and to integrate sustainable development thinking more closely into the heart of their business.

Both companies were impressed by the scale of adoption of the BRE Environmental Assessment Method (BREEAM) in the UK, a building certification scheme addressing performance against a range of environmental performance criteria on energy, water, waste and pollution. BREEAM, however, only met the needs of developers facing UK regulations, climate and building practices. Furthermore, Hongkong Land and Swire Properties recognized that they would have limited impact in benchmarking only their own buildings against international best practice. Hence they decided to work together with other key industry stakeholders in an effort to shift the incentives for the whole property sector. Swire Properties' Stephen Fong, current chairman of BEC, says that they were driven by direct cost savings, corporate citizenship and future-proofing considerations: "Being a good corporate citizen, we believe that industry should take the lead instead of waiting for legislation to tackle the issue."

Hongkong Land and Swire Properties took the concept to the PSCE and began working under the auspices of the Centre for Environmental Technology. Their solution was to develop a local assessment and certification system for integrating environmental performance into the planning, design, construction, operation, management and marketing of buildings.

Activities

The first hurdle in developing the scheme was to gain the support of property developers and landlords. The Real Estate Developers Association of Hong Kong (REDA) agreed to lend their support to the project, including convincing their broader membership to put up development funding. The developers themselves made two commitments – firstly to fund the technical development of the standard, and secondly to use it themselves. "Right from the start the landlords and developers have seen the scheme as coming from within," says Kevin Edmunds, who has led the implementation of BEAM since 1996 and is now the chief operating officer of the BEC. "This has really helped to enable its adoption."

A steering committee was brought together to oversee the development of the standard, comprising technical experts from the CET and Hong Kong Polytechnic University, representatives from Hongkong Land and Swire Properties, and from the Hong Kong Housing Authority and the Government's Planning, Environment & Lands Bureau. Developing the technical standard itself was the easy part, says Edmunds. The greater WBCSD challenges lay ahead in persuading the wider community of developers, architects, engineers, contractors, landlords and property managers – in both the public and private sectors – to use them.

The BEAM standards

BEAM defines over 100 best practice criteria to address environmental issues in commercial, residential and institutional buildings, as well as hotels and mixed used complexes. Separate standards have been developed to appraise the environmental performance of new developments and existing premises.

In line with other international assessment schemes, BEAM covers environmental issues at each stage of the building's life cycle, under a range of different impact categories:

• Site Aspects (location, planning and emissions)
  
• Material aspects (selection, usage and waste management)
  
• Energy use (system designs and management)
  
• Water consumption (quality and conservation)
  
• Indoor environmental quality (thermal comfort, indoor air quality, lighting, noise and vibrations)
  
• Innovations (innovative techniques and performance enhancements)

Buildings are submitted for assessment on a voluntary basis and the results are presented on the BEAM certificate as Bronze, Silver, Gold or Platinum.

The assessment process involves a two-stage procedure to enable identified opportunities for improvement to be made, mobilize different stakeholders to work together and encourage introduction of innovative technologies and techniques. It costs between 80 and 150 thousand Hong Kong dollars, including advice on opportunities for improvement throughout the full design and construction process. New buildings do not receive their certificate until they have been completed and their compliance verified.

To keep up with international developments and changes in the business operating environment, the standards are reviewed and updated periodically.

BEAM Society

The PSCE's (and later BEC's) membership comprised companies from all sectors of Hong Kong's economy – finance, manufacturing, transportation, distribution, telecoms – in addition to major property developers like Swire Properties and Hongkong Land. However, the membership did not encompass other key players such as building professionals: architects, engineers, surveyors, contractors, materials suppliers, property and facility managers. BEC realized that more progress would be made through embracing these important stakeholders in the ownership and governance of BEAM, and so in 2000 decided to set up the BEAM Society as a separate entity open to individual and corporate members from all building-related disciplines. Michael Arnold, then with Hongkong Land and founding chairman of the BEAM Society, says that making BEAM's membership reflective of the whole industry has been key to getting buy-in, "not only in the making of the building, but just as importantly in managing them," he says.

Problems and difficulties

As in other places, the challenge of improving the environmental performance of buildings in Hong-Kong is not limited so much by the technical or even financial possibilities, but by the fragmentation of the industry over the course of a building's life. The BEAM team faced four key gaps in getting their initiative off the ground and into widespread adoption:

1. Fragmented ownership across the building lifecycle keeps decision-making horizons short. Developers are the primary actors in commercial construction, but unless they retain the building, they only take a short-term stake in its financial value. Where buildings are sold on, often to multiple owners on a floor-by-floor basis, this further fragments incentives to consider the building's environmental footprint. Where owners do not occupy their buildings they have little incentive to consider investments in energy-efficiency. Tenants often lack the incentive to make necessary investments or behavior changes, particularly if they themselves have short leases.
   
2. Isolated perspectives across the supply chain prevent a collaborative approach to environmental enhancement. A related problem is the isolated silos in which different professional disciplines work. Designers, architects, engineers and construction companies are significant players at the construction stage, often with the know-how to design more environmentally benign buildings, but are constrained by traditional procurement contracts and briefs. In the early years of BEAM, Edmunds found, for example, a reluctance to move away from outdated rules of thumb that built in over-capacity, towards more realistic predictive design techniques such as building performance simulation. Similarly, one of the key challenges in promoting the BEAM label has been finding ways to make sure that the standard is accepted and understood, not only by the design and construction team, but also by the marketing department.
   
3. Regulatory incentives do not encourage green development. BEAM's adoption was not driven by Hong Kong's building regulations; if anything it was held back. While planning and environmental impact assessment ordinances covered such issues as land use and the short-term impacts of construction activities, there was no overall life cycle guidance also covering building design and management practices. In some cases building regulations based on outdated technologies actually outlawed more environmentally friendly measures, for example, preventing natural ventilation in kitchens and bathrooms because of fire risk associated with previous generations of boilers.
   
4. Lack of functioning markets for environmentally friendly building materials means added expense and difficulty in greening development. Many building products with well known environmental merits such as ozone-friendly insulation and low-flow toilets were just not available in Hong Kong, says Edmunds. When BEAM began, the lack of widespread pressure for adopting such products meant that few clients and designers were considering them. With no mass demand, such materials had to be expertly sourced and specially imported, at a premium above locally available products, thus further reducing the incentive to adopt more efficient technologies.

Thankfully, the BEAM certification scheme has provided a mechanism that has helped to shift the industry out of these dead-ends and onto a path where the significant business benefits of greener buildings could be realized. It had to work on many fronts simultaneously: enabling tenants, buyers, developers, landlords and regulators to communicate and share the costs and benefits of energy efficiency and environmental improvements.

Of course, getting this process off the ground meant finding a way to overcome the very deadlocks that were holding back green development across the industry in the first place. The way they achieved this was through the commitment and leadership of key clients such as Swire Properties, Hongkong Land and the Housing Authority, and a handful of progressive architectural, engineering and construction companies that together have helped drive a broader change within the market.

Outcomes

Since the introduction of BEAM to the building industry in 1996, almost 150 major property developments in Hong Kong have achieved recognition for improved performance covering over 6.8 million m² of space, including commercial and institutional buildings and some 36,000 residential units. BEAM's adoption since 2002 has been equivalent to approximately 25% of private commercial space and 10% of private dwellings completed each year.

The largest user of BEAM has been the Hong Kong Government in its various works departments, followed by Hong Kongs larger private commercial and residential developers – especially those that retain rather then sell their properties – and their associated property companies. Both Hongkong Land and Swire Properties, for example, have committed to use the assessment in all new projects, while numerous others have written the BEAM requirements into their project briefs, whether or not they pursue formal certification. Large corporations with extensive property portfolios such as banks are also keen users, with more recent take-up by the education sector. Major developers have also adopted the BEAM framework, using the relevant regional standards for their developments in China.

The BEAM criteria have stimulated market demand for environmentally friendly building materials such as sustainable timber, low toxicity paints and ozone friendly insulation.

There is now greater public awareness and market demand for green buildings, with properties advertised on the basis of their environmental features to attract and satisfy potential buyers and tenants.

Lessons learned

Edmunds, Arnold, Fong and their colleagues put the success of the BEAM initiative down to the wide industry involvement and strong initial commitment of key players in the industry. Early on they realized that if the initiative was to have traction it would have to evolve from a developer lead initiative to one that also involved architects, planners, engineers, surveyors, construction contractors, electrical and mechanical contractors, property managers, corporate real estate, academia and government. "Hong Kong is a small place so news spreads quickly," says Edmunds. They helped this along through briefings to professional institutions, seminars and workshops with building professionals and industry stakeholders. Establishing the BEAM Society with cross-sector representation was also critical to securing its acceptance and usefulness for all these key players.

On the other hand, says Edmunds, in retrospect not nearly enough emphasis has been given to BEAM's marketing. While the technical background of BEAM has increased its credibility with building specialists both in Hong Kong and internationally, too little focus has been given to bringing the message either to their clients' marketing departments or to the general public. US-based green building guru Neil Chambers calls BEAM "the best kept secret in the green building industry".

There has now been a shift in public awareness, says Edmunds, with corporations, the media, green groups and the general public in Hong Kong increasingly focusing on green issues and recognizing the importance of the environmental footprint of buildings. "We have been pushing and pushing and pushing," he says. "Now [that] the market is beginning to move, we need to ensure that our public communications strategy and capacity to deliver can keep pace with increasing demand and expectations."

BEAM is addressing these weaknesses, for example by starting to work with a broader range of stakeholders to improve recognition of the standard, and developing an energy benchmark system so that tenants, landlords, building managers and owners can clearly communicate the greenhouse gas performance of their buildings.

Future developments

6.8 million m² of space including commercial and institutional buildings and some 36,000 residential units have already been certified to BEAM, making it one of the world's most widely used voluntary building labeling schemes. But that leaves nearly 70 million m2 of uncertified property just in Hong Kong. The challenge now is to mainstream and accelerate uptake. Across the border in mainland China, 2 billion m² of building space are added annually - the equivalent of nearly thirty brand new Hong Kongs going up every single year.

The BEAM program and its industry collaborators are poised to increase the penetration of the BEAM standards by increasing emphasis on existing buildings as well as new buildings, better public reporting and communication, new standards for different types of building, the development of a wider network of professionals to conduct BEAM assessments, and stronger collaboration with government. Many BEC members have interests on mainland China, and the BEC has already established a subsidiary and is involved in several projects there. As interest in green building increases on the mainland, BEAM is well placed to contribute both its tools and experience to enable the development of greener buildings across the region.

This case study was compiled and first published by the World Business Council for Sustainable Development.