Articles

Introduction

Singapore’s construction market is shifting from voluntary sustainability aspirations to binding legal duties within building contracts, driven by regulation and client expectations. Developers increasingly recognise the long term value of green assets – capturing energy savings, lower financing costs, stronger tenant demand and enhanced values – and are pushing these requirements down to contractors. The key takeaway for contractors is that sustainability performance is now enforceable and priced, not optional.

This article highlights recent public and private sector developments shaping sustainable construction and explains how they are being embedded contractually.

(A) Sustainable Construction Developments and Initiatives

(A1) Push for Sustainable Construction Materials

To meet elevated green building standards, contractors face increasing pressure to use sustainably sourced materials.

Under the Whole Life Carbon section of the Green Mark 2021 certification standards,¹ the embodied carbon associated with construction materials is evaluated as part of certification, incentivising contractors to use advanced precast systems, structural steel, mass engineered timber, and prefabricated modular construction. New public housing developments – such as those in Tengah – are planned to achieve Green Mark GoldPLUS or higher. This requires the calculation of embodied carbon for concrete, steel, and glass. ²

In step with this, the Building and Construction Authority (“BCA”) has published a series of relevant guidelines,³ including a guide on Sustainable Construction Material for Buildings⁴ (such as reusable steel) and a guide on the Use of Recycled Materials⁵ (such as copper slag and concrete from construction, renovation and demolition of old buildings) for sustainable construction.

The direction of travel is clear: both public and private sector developers are pushing contractors towards sustainable materials and methods to meet green building certification targets.

(A2) Centralised Cooling Systems to meet Energy Efficiency Standards

In September 2024, the Mandatory Energy Improvement regime was introduced to accelerate improvements in building energy efficiency. Under this regime, building owners must conduct an energy audit and submit an Energy Efficiency Improvement Plan to BCA if a building’s energy use intensity exceeds a prescribed threshold.

Further, section 22FZB of the Building Control Act and the Building Control (Environmental Sustainability Measures for Existing Buildings) Regulations 2013 permits BCA to conduct periodic energy audits of cooling systems in buildings. Owners must demonstrate that their building’s cooling systems meet the prescribed energy efficiency standards under the Energy Audit Code.⁶ Failure to comply constitutes an offence, attracting fines of up to S$20,000 and an additional S$500 per day for continuing non compliance.⁷

To meet these standards, public and private developments are increasingly adopting centralised cooling systems (“CCS”), which can improve efficiency, reduce operating costs and lower carbon footprint—supporting the pursuit of Green Mark Platinum certification. A 2021 Tampines Eco Town feasibility study⁸ found that a distributed district cooling network (a form of CCS) reduced annual energy consumption by 17% and annual carbon emissions by 18%, delivering about S$4.3 million in yearly economic value from energy, maintenance and equipment replacement savings.

A prominent example is SP Group’s development of the first large scale residential CCS at Tengah, undertaken in collaboration with the Housing & Development Board (“HDB”). Under this model, chilled water is centrally produced by interconnected rooftop chiller plants and distributed across the development to individual residential units, replacing conventional individual air conditioning systems. The CCS architecture required careful upstream coordination of building design, structural provision and mechanical systems to accommodate shared cooling infrastructure at rooftop, riser and unit levels.
Building on this Tengah pilot, HDB subsequently awarded Keppel contracts for the deployment of CCS across several upcoming Build to Order developments, namely Brickland Weave, Plantation Edge I & II, and Plantation Verge within the Tengah estate.

The delivery of these projects has required early alignment between the main builder, CCS operator and design consultants on system interfaces, structural capacity and long term operational considerations — reinforcing the importance of early contractor and specialist involvement.

(B) How Sustainability Obligations are Embedded into Construction Contracts

Project owners are increasingly hardwiring these requirements into tenders and contracts, turning sustainability expectations into tender criterions and enforceable duties. Historically, environmental requirements often sat in technical specifications and annexures, with the main conditions containing high level compliance representations and pass through obligations. Recent developments have shifted practice towards explicit, measurable obligations and performance mechanisms in the contract proper.

(B1) NEC4 Option X29 clauses and collaborative contracting

New Engineering Contract 4 (“NEC4”)’s Secondary Option X29 – Climate Change is designed to embed climate and sustainability driven responsibilities directly into construction contracts.

NEC4 X29 embeds climate related responsibilities directly into the contractor’s scope. Non compliance is a contractual breach. In addition, the Performance Table in NEC4 X29 provides a performance appraisal mechanism (though not mandatory) where employers can set objectively defined environmental targets and incentives (linked to other performance guarantees) for the contractor to achieve. In essence, this gives developers direct contractual levers to enforce the contractor’s compliance with the developer’s specific prescriptions of construction material, methods and environmental performance indicators through contractual remedies rather than just through regulatory conformance with the Building Control Act, Building Control Regulations or other applicable instruments.

(B2) Sustainable construction as tender and eligibility criteria

Public sector tenders increasingly translate sustainability goals into binding obligations. In 2024, the Infocomm Media Development Authority (“IMDA”) launched the Green Data Centre Roadmap, which requires data centre operators to meet strict Power Usage Effectiveness targets (an IT equipment energy efficiency benchmark that measures the total power supplied to the data centre versus the amount of power consumed by the core IT equipment) and to obtain Green Mark GoldPLUS or Platinum certification. These requirements apply directly to tender eligibility – with IMDA explicitly stating it will “allocate new data center capacity to operators which prioritize both sustainability and economic value”.⁹ Hence, this effectively positions sustainable construction as a qualification criteria and if awarded, a binding contractual duty in public tenders, with non-compliance risking exclusion of contractors from Singapore’s data center development pipeline.

(B3) Early Contractor Involvement to interface cooling system design into building design

With CCS adoption rising, Early Contractor Involvement (“ECI”) models become critical to integrate cooling system design early.

Under the ECI procurement strategy, main contractors are expected to collaborate with CCS operators early to plan and integrate CCS infrastructure – such as strengthened rooftops for cooling towers, risers for CCS pipes, and in unit fan coil/trunking layouts¹⁰ – into the overall design and structure of the building.

Where CCS operators are involved at an early stage of design, contracts in both for the main contractor and CCS operator should clearly set out (i) the scope of design input, (ii) interface responsibilities and (iii) staged deliverables, and expressly provide that the main contractor retains overall coordination of design responsibilities. Early clarity at the ECI stage reduces gaps and overlaps in accountability, which are a common source of dispute in Design & Build projects involving complex building services.

Ultimately, effective ECI is as much a legal and procurement exercise as a technical one. Project lawyers can enable developers to harness the benefits of early contractor involvement – improved design integration, reduced construction risk and smoother project delivery – while maintaining clarity of responsibility and protecting the developer’s risk position. In an increasingly regulated and sustainability driven construction environment, such legally structured collaboration is fast becoming a critical enabler of successful project outcomes.

Conclusion

Contractors’ sustainability obligations now carry substantive legal weight. Choices around materials, plant and equipment, and design coordination to achieve energy efficient outcomes are subject to heightened scrutiny and explicit contractual mechanisms. These requirements are no longer aspirational nor subject to best endeavours basis only; they are increasingly featured as tender criterions and enforceable duties within construction contracts in both public and private developments.

(Updated as of 30th January 2026)

Contributed by:

Shemane Chan – Partner, Rajah & Tann Singapore LLP
Kimberly Tho – Partner, Rajah & Tann Singapore LLP

Footnotes

¹ Green Mark 2021 Whole Life Carbon section

² https://www.mnd.gov.sg/newsroom/speeches/view/written-answer-by-ministry-of-national-development-on-whether-the-carbon-footprint-of-building-materials-used-for-public-housing-projects-has-any-bearing-on-hdb-tender-outcomes

³ BCA Sustainable Construction Series Publications

⁴ Guide on Sustainable Construction Materials for Buildings

⁵ Guide on Use of Recycled Materials for Sustainable Construction

⁶ Code on Periodic Energy Audit of Building Cooling System (edition 4.0)

⁷ Section 22(FZB)(4) of the Building Control Act

⁸ Taking the Heat Off Cooling: A Greener Way to Cool: Studying the Impact of a Brownfield Distributed District Cooling Network in Singapore

⁹ https://www.pmo.gov.sg/newsroom/dpm-heng-swee-keat-at-the-asia-tech-x-singapore-2024-opening-ceremony/

¹⁰ Written Answer by Ministry of National Development on Lessons from Feedback on Centralised Cooling System from Tengah Town Home Owners (22 November 2023)