2017 Sustainability Report

Carbon

Pursuing a long-term goal of decarbonisation

The world needs to act decisively to mitigate climate change. To play our part in this, we aim to decarbonise our operations progressively.

We know it may take time to get there, but our ambition is to be leaders in improving energy efficiency and reducing greenhouse gas emission in the industries in which we operate. This will contribute to the fight against global warming and reduce our own costs.

We aim to reduce our emissions in line with international carbon reduction goals. Innovation and adoption of new technologies will be key to this.

We recognise the world needs to act swiftly and decisively to reduce carbon emissions to mitigate damaging climate change and are committed to supporting this through progressive decarbonisation.

The 2015 Paris Climate Accord aims to strengthen the global response to the threat of climate change, including measures such as holding the increase in the global average temperature to well below 2°C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial levels. Businesses are setting targets to support the global response to the threat of climate change.

New technologies can transform the way energy is generated and used. Taking advantage of them can reduce operating costs, increase returns and reduce the use of carbon.

Group performance

Climate change through extreme weather is a material risk to our businesses, so mitigating its effects is a major business imperative. To reduce the risks associated with climate change, greenhouse gas emissions must be reduced. We work with industry groups and regulators to support emissions reductions.

Indirect GHG emissions by division (thousand tonnes of CO2e)

We aim to reduce our emissions in line with international carbon reduction goals. In 2017, operating companies set targets for reducing carbon intensity. These targets are intended to reduce the Group’s carbon intensity leading up to 2020 by 8-10% by comparing emissions with a 2015 frozen efficiency baseline (a frozen efficiency baseline being one from which performance is projected with the assumption of no improvement in current efficiencies). Achieving these targets will depend on innovation and new technologies. In 2017, our greenhouse gas emissions were 19.06 million tonnes of CO2e, compared with 18.56 million tonnes of CO2e in 2016. The increase reflected additional flights by Cathay Pacific.

Performance against SwireTHRIVE target
(thousand tonnes of CO2e)

*The divisional performance from 2013 to 2016 shown in the chart above is a projection used to create the frozen efficiency curve. For actual consumption data, please refer to the performance data section of this report and previous sustainable development reports.

Greenhouse gases

The Aviation Division accounted for 96.6% of our total emissions in 2017. Cathay Pacific has set a target of improving fuel efficiency by 2% per annum up to 2020 and achieving carbon neutral growth thereafter. This exceeds the agreed industry target of 1.5%. Our strategy for achieving this follows IATA’s four pillar strategy. In 2017, Cathay Pacific increased fuel efficiency by 1.8%, principally as a result of using more fuel-efficient aircraft. Twelve A350-900 aircraft were delivered in 2017. These aircraft are 25% more fuel efficient than the existing wide-body fleet. Since 1998, Cathay Pacific’s fuel efficiency has increased by 24.8% (measured by reference to traffic) and by 17.1% (measured by reference to capacity).

Case study

Cathay Pacific – Fleet renewal

In 2016 and 2017, 22 Airbus A350-900 aircraft joined the Cathay Pacific fleet. By the end of 2019, 20 Airbus A350-1000 aircraft are expected to have joined the fleet. Airbus A350-1000 aircraft are lighter more cost-efficient, and require less maintenance than previous aircraft, bringing a 25% improvement in fuel efficiency. They generate less carbon dioxide and nitrogen oxide emissions and make less noise than previous aircraft. In 2017, Cathay Pacific ordered 32 Airbus A321neo aircraft to be operated by Cathay Dragon. These aircraft are expected to consume 20% less fuel per seat than their predecessors.

Cathay Pacific is a member of the Round Table on Sustainable Biomaterials and of the Sustainable Aviation Fuel Users Group Asia. Cathay Pacific has a minority stake in Fulcrum BioEnergy Inc., a company which converts municipal solid waste into sustainable aviation fuel. We encourage the use of biofuels in the engines of our aircraft, vehicles and vessels. All of Cathay Pacific’s A350-900 delivery flights used jet fuel that contains a 10% blend of biofuel. 22 of these aircraft had been delivered by 31st December 2017. Swire Pacific Offshore is considering whether it can use marine biofuels and hydrogen fuel cell technology instead of fossil fuels.

Swire Properties are working with a research team in the Department of Civil and Environmental Engineering from the Hong Kong University of Science and Technology on a pilot study to measure carbon emissions from the construction of its One Taikoo Place project, including the carbon embodied in construction materials. It wants to develop a method of accounting for carbon in its future construction projects.

Swire Beverages have been using the transport route-optimisation software “Road Show” across all its markets to improve the fuel efficiency and delivery time of its beverage transportation process. It has been phasing out coolers which use CFCs and HFCs as refrigerants since 1998. In Mainland China, they have purchased over 12,000 new units.

Case study

Swire Beverages – The carbon footprints of three major beverages in Taiwan

Swire Beverages commissioned a third party to study the carbon footprint of Minute Maid and Coca-Cola in Taiwan. The emissions from ingredient sourcing, manufacturing, distribution, consumption and disposal or recovery were measured. Ingredient sourcing, manufacturing and distribution were responsible for most emissions, in that order. The results of the study were submitted to the Taiwan Environmental Protection Agency Executive Yuan. Swire Beverages aims to reduce the carbon footprint of these products by 3%.

Carbon offsets

Carbon offsets are purchased by Cathay Pacific and Swire Pacific Offshore. Cathay Pacific’s Fly Greener programme offset 13,696 tonnes of CO2 (tCO2) in 2017 by purchasing offsets generated by Gold Standard certified offset projects, which are in turn certified under the Voluntary Carbon Standard. The Fly Greener programme has offset 150,795 tonnes of CO2 since it started in 2007.

In 2017, Swire Pacific Offshore purchased credits worth 452,824 tCO2 emissions under the United Nations Framework Convention on Climate Change, the EU Emissions Trading System and Climate Care.

The projects were selected with regard for their expected environmental, economic and social benefits.

Energy

Electricity consumption is our second largest source of greenhouse gas emissions. As the cost of electricity rises, making our buildings and operations more energy efficient is a priority. Our indirect emissions (which are primarily derived from using electricity) in 2017 were 608,516 tonnes of CO2e, a 1.5% decrease from 2016. This decrease primarily reflects improvements in energy efficiency at Swire Properties’ portfolio in Mainland China.

Our operating companies exchange information about energy efficiency (from this year through the Carbon Working Group under SwireTHRIVE). The Swire Properties sustainable building design policy requires new and substantially renovated buildings to try to obtain the highest or, as a minimum, the second highest international or local building environmental certification. At the end of 2017, 54 buildings, representing 64% of Swire Properties’ portfolio, had been certified or provisionally certified as green buildings under BEAM, BEAM Plus and LEED independent rating systems. Some other buildings were renewing their BEAM Plus Existing Buildings ratings.

Operating companies are encouraged to reduce energy use and to set energy efficiency targets. Since 2008, Swire Properties has reduced its annual energy consumption in its Hong Kong portfolio by 53 million kWh, which is in line with its 2020 target. In its Mainland China portfolio, it has reduced its annual energy consumption by 17 million kWh from the consumption which would have occurred if no changes had been made, putting it on track to meet its 2020 target.

As part of its SD2030 strategy, Swire Properties is committed to the following by 2020:

2017 progress update

2020 KPI

Reduced the carbon intensity of its Hong Kong portfolio by 23%
A 27% reduction in carbon intensity in its Hong Kong portfolio
Reduced the energy intensity of its Hong Kong portfolio by 29.5%
A 29% reduction in energy intensity in its Hong Kong portfolio
Reduced the energy consumption of its Mainland China portfolio by 17 million kWh/year
A reduction in energy consumption in its Mainland China portfolio of 23 million kWh/year

Swire Properties offers free energy audits to tenants. Since 2008, audits have covered 468,000 m2 of commercial space, identifying potential annual energy savings of 7.9 million kWh.

Swire Properties has obtained ISO 50001:2011 certifications for its energy management systems in all its Hong Kong portfolio and at its Taikoo Li Sanlitun, Beijing and TaiKoo Hui, Guangzhou developments in Mainland China.

Case study

Swire Properties – Winner of Energy Management Award

The United Kingdom Chartered Institute of Building Services Engineers awarded Swire Properties the Energy Management Initiative Award at its Building Performance Awards 2017 in respect of its Hong Kong properties. This award recognises energy reduction achievements of building owners and occupiers globally. It is given to organisations that have most effectively reduced energy use and carbon emissions in their buildings, without compromising the satisfaction of the buildings’ users.

Swire Properties has spent more than HK$6 million to install more than 800 electricity meters in its buildings. The data captured enables Swire Properties to understand the energy use in its buildings, to identify opportunities for saving energy, and to set energy reduction targets.

The principal companies in the HAECO Group carry out energy audits every five years, with the view to save energy and manage its impact on the environment. HAECO’s hangars need a lot of light so that defects in aircraft can be seen and repairs can be made. Lighting accounts for 40% of HAECO’s electricity consumption. More natural light means less energy used to produce artificial light. HAECO Xiamen has installed light sensors to control the amount of artificial light. This reduces electricity consumption by around 160,000kWh a year.

Swire Waste Management is replacing its Euro II tractors with Euro V tractors. Swire Resources is using more energy efficient LED lights in its warehouses. Cathay Pacific Catering Services has saved over 800,000 kWh of electricity by streamlining its chiller systems and optimising its ventilation control system.

Case study

Partnership with Tsinghua University

We work with others to provide innovative solutions to our energy needs. In 2016, Swire Beverages and Tsinghua University started to explore energy efficiency and management at Swire Beverages’ bottling plants in Mainland China. Energy consumption monitoring, analysis and research are being carried out. The aim is to reduce energy consumption and carbon dioxide emissions. A code of practice, energy saving standards and operational guidelines are being developed and staff training is being provided.

Swire Properties and HAECO had already had existing successful partnerships with Tsinghua University. In 2017, Tsinghua University studied energy use at Swire Properties’ Pacific Place development in Hong Kong. The study identified over 4 million kWh of potential savings (worth HK$6 million). In 2018, a similar study will be done at Swire Properties’ Taikoo Place development in Hong Kong. Similar studies of HAECO’s facilities in Hong Kong and Xiamen have identified potential energy savings of nearly 1.8 million kWh.

Renewable energy

We encourage the use of renewable energy in our operations. 11.08 million kWh of electricity was generated from renewable energy sources at Swire Properties, Swire Beverages and HAECO Xiamen in 2017. The Swire Pacific sustainable development fund is available to support suitable renewable energy projects.

Renewable energy sources at four Swire Coca Cola bottling plants generate approximately 6 million kWh hours of electricity a year, saving HK$748,000.

In 2017, the solar panels at HAECO Xiamen’s premises generated approximately 1.28MWh of electricity. HAECO Hong Kong has tried out a micro-wind turbine as a means of generating electricity. It has solar panels in its main office, its mobile planning office and its windscreen working stands.

Looking ahead

Swire Pacific now has a climate change policy. Our businesses are expected to take due account of climate change and extreme weather by identifying the risks associated with them and by doing their best – having regard to global best practices – to adapt and where possible mitigate them.

We are improving our collection and monitoring of our greenhouse gas emissions by developing data protocols and preferred calculation methodologies as well as setting operational boundaries.

We aim to establish ambitious carbon intensity targets for 2030.