ESG reporting provides transparency on energy use. However, the question remains: how can companies use this information to manage their business and contribute to their success? Anne Jacobs, Senior Expert, Sustainable Construction, BASF, looks at how Chartered Secretaries can use information about building energy efficiency to make a significant contribution to the bottom line.

In 2016-2017, many companies in Hong Kong reported on their environmental, social and governance (ESG) performance, as a requirement set forth by The Stock Exchange of Hong Kong to all listed companies in Hong Kong. The move demonstrates that society is putting an increasing focus on gauging the sustainability performance of companies.

A substantial area covered by ESG reporting is energy use. Companies spend a great deal of time collecting this data, but is the information useful? One key take-away is the importance of energy efficiency for buildings in Hong Kong. Hong Kongs buildings account for about 90% of the citys electricity usage. Over 60% of our carbon emissions are attributable to generating electricity for buildings. Much of the energy used can be attributed to increased demand for cooling and heating inside buildings. As living standards rise in the city, people continuously strive for more comfortable dwellings: mobile heating units replace warm clothes in winter time, and dehumidifiers run around the clock in the humid season.

Yet it is possible to provide the comfort people are striving for while reducing energy consumption with energy-efficient buildings. Energy-efficient buildings not only offer a reduction in carbon emissions and a smaller environmental impact, but also lead to lower operating and maintenance costs and a longer building lifespan. By examining the information about a buildings energy use, Chartered Secretaries can find opportunities for efficiency and savings.

The building envelope

Among the various electricity uses, air conditioning takes up the largest portion (usually between 30% and 70%) of consumption in hot and humid Hong Kong. There is huge energy and cost saving potential if the need for air conditioning can be reduced. This calls for an efficient, integrated building envelope design that can minimise heat transfer and reduce the amount of energy required for cooling. A building envelope controls the flow of air between the interior of the building and the outdoor environment. It is crucial in regulating interior temperatures and helps determine the amount of energy required to maintain thermal comfort. The key to an efficient building envelope is having effective insulation materials for all components of the envelope, including walls, foundations, windows and roofs. The market is well-equipped with advanced technologies to fit the needs of different environmental conditions of buildings. With quality materials, not only can the building envelope lower electricity consumption and operating cost, it can also create a more comfortable and healthy environment with better indoor air quality, a rising demand resulting from higher living standards.

Choosing building materials

To improve the energy efficiency of buildings, begin by using quality, sustainable building materials. Together with a sustainable building design, these materials can help lower energy consumption and hence contribute to a lower carbon footprint. For example, a good thermal insulation material used in faades, roofs and floors, enables buildings to consume less energy for cooling in summer and heating in winter months.

Some building materials additionally offer the benefit of contributing to lower greenhouse gas (GHG) emissions during the construction phase. The construction industry consumes up to 40% of the worlds energy and contributes to 30% of global GHG emissions. It is therefore essential to use materials that have smaller environmental impact and still offer high performance. Various concrete technologies actively reduce the carbon footprint during construction by allowing for the replacement of parts of the cement by recycling materials or by eliminating the need for vibration to cure the concrete. All of this shortens overall construction time and cost, thus improving the eco-efficiency of the construction process.

Selecting lighting

Apart from air-conditioning, lighting is also a major source of electricity consumption in buildings in Hong Kong. Energy-efficient lighting equipment is gaining popularity as people are more conscious about saving energy. Options range from energy-saving fluorescent tubes, LED lamps, to smart lighting systems with motion sensors and electronic ballasts. All of which help lower electricity consumption. Apart from that, maximising the use of daylight (for example with active daylight redirection systems) can also reduce the need for using artificial lighting, thus minimising the use of electricity.

Adopting international standards

A building with advanced energy-efficient measures can even achieve the passive house standard. A building certified to the passive house standard is a comfort-improved, low-energy building brought to a new level. Its energy demand has been reduced so much that traditional heating or cooling systems are unnecessary. The passive house standard is a strict international building standard designed to reduce energy consumption and create a healthier living environment. As an approach to integrated building design (site selection, material use, setback, etc), it delivers 60% to 90% savings on energy use. A building can be certified by the German Passive House Institute (PHI) or its certification partners worldwide to ensure the quality standards are met. Because reaching passive house standards requires extreme dedication to every detail in construction, passive house buildings achieve excellent construction quality standards, which often also result in reduced maintenance costs.

The first passive house was constructed in Germany in 1991. This single-family, row house proved the feasibility of the ideas put forward academically by Wolfgang Feist and Professor Bo Adamson. The two men followed up on this concept and Feist later founded the PHI to promote and facilitate the idea. In the early years, it was mainly visionaries adhering to the idea, but it soon became more mainstream. With the increasing demand for technology suitable for this type of buildings, prices for improved building elements began to drop, and it became more and more affordable to construct this way. Reduced energy costs quickly offset higher investment at construction phase. The concept began to be applied to non-residential buildings like schools, offices, hotels and special use buildings; the projects also became bigger in size.

Thus, most of todays buildings constructed to the passive house standard are located in the northern European climate zones. However, the concept is now extending to other locations around the world. The first certified passive house in Asia, the Hamburg House, was constructed in 2010 in Shanghai as an office building. This showcase building used innovative insulation materials, high performance windows, airtight layers and efficient building services, none of which were standard in the Chinese market. Therefore, the building also served as a learning project for all the building experts involved.

Passive houses are also viewed as highly desirable in other countries: one Japanese company for prefabricated houses recently extended their portfolio to include this building concept. As most of the South Korean and Japanese climate zones are very well suited for this standard, the concept was quickly adopted there, and several passive houses have been registered with PHI.

How far can this concept go? The worlds tallest building constructed to the passive house standard, a project for two 16-floor residential buildings, is currently under development in Tianjin, China.

Passive houses for Hong Kong?

Hong Kong in many areas is seen as a technology and innovation leader, but the city has yet to construct its first building certified to the passive house standard, even though there are sustainable buildings being constructed in Hong Kong.

Considering the extremely high electricity consumption of the building sector, the savings potential is compelling. Adding the advantage of good indoor air quality, it can only be a matter of time before the first passive house is constructed in Hong Kong and this will serve as a showcase for others to come. The conditions are right: there is a high demand for comfortable, high-quality dwellings; rising awareness of sustainability is making people look for energy-efficient buildings; and the construction sector is technologically ready to take on this new task.

Hong Kongs climate is suitable for constructing a passive house. Even an ordinary Hong Kong high-rise building in a dense neighbourhood could implement the standard, as in contrast to other climates, the building would not need to receive significant solar gains to heat it up in winter. The few cold days in winter could easily be covered in this well-insulated building by the energy recovering unit. In summer, shading in a densely-inhabited area could help the building keep cool, and in combination with good insulation, the air inside the dwellings would stay comfortably cool.

What can Chartered Secretaries do?

So why have highly energy-efficient buildings been so well received in Mainland China, but not in Hong Kong? Do construction experts believe that insulation works only to keep out the cold? Many examples worldwide prove the opposite. To showcase the innovation and efficiencies that Hong Kong is famous for, it is time for Hong Kong to build its first passive house.

In this situation, Chartered Secretaries may hold the key to success. With their keen attention to efficiency, corporate structure, regulatory compliance, and risk management, Chartered Secretaries have the crucial capabilities to see both the big picture overall company efficiency while also understanding the importance of attention to detail at the micro level. Annual financial reports have become an expected routine, and their value is well understood. Now, it is time for Chartered Secretaries to use their ESG or sustainability reporting to play an equally important role in uncovering the potential for efficiencies in energy usage.

Anne Jacobs, Senior Expert, Sustainable Construction

SIDEBAR:Five ways to improve your building energy efficiency

Start with construction. Look for high energy use not only in existing buildings, but during construction of new buildings: the construction industry consumes up to 40% of the worlds energy.

Insulate the building envelope. Air conditioning uses the most energy in buildings, at 30% to 70% of total consumption. However, an efficient building envelope, with effective insulation materials for all components of the envelope, from walls, foundations and windows to roofs and gaps, can significantly reduce the need for air conditioning.

Choose better building materials. Modern thermal insulation materials are thinner and perform up to 20% better than conventional insulation, and can create significant energy savings in cooling.

Look at your lighting. Apart from air conditioning, lighting contributes to the highest level of electricity use.

Get certified. A building built to the passive house standard can save as much as 90% of a normal buildings energy demand.