2017 Sustainability Report

Climate resilience

Building lasting climate resilience

If our businesses are to thrive for the next 200 years and more, we must anticipate challenges and be ready to adapt. Building climate resilience is such a challenge and meeting it is vital for us to thrive in the long term. We need to design buildings that can withstand extreme weather events and to deal with the consequences of rising sea levels at ports and airports.

Our operating companies are developing climate resilience strategies. By 2020, they expect to have identified the physical and transitional risks climate change poses to their businesses. Having done that, they will plan how best to mitigate those risks. In doing this, we will be contributing to a sustainable future for our business, the environment and the communities in which we operate.

We will ensure that our operating companies are prepared for, and have the capacity to withstand, the negative impacts of climate change.

Climate change will cause water scarcity, volatile crop yields and more frequent extreme weather events. Regulations will change in response to this. The World Economic Forum identified the failure of climate change mitigation and adaptation, extreme weather events and natural disasters as three of the top five global risks in its 2017 Global Risk Registry.

Our businesses need to identify and manage the physical risks of climate change to their operations and supply chains. They also need to identify and manage the risks associated with changes in regulation consequent upon climate change, in particular those changes in regulation which result in a transition to a low carbon economy.

Climate resilience is the ability of our businesses to prepare for, mitigate and recover from the costs and other effects of climate change. We have made climate change a core element of SwireTHRIVE because it will become increasingly important and increasingly relevant to our ability to create long-term value for our shareholders.

Planning ahead on climate change will make us more resilient and better equipped to create lasting success. Therefore, we are requiring our operating companies to consider climate change risks when compiling their risk registers, and to take appropriate precautionary measures. Some of our operating companies are already building climate resilience into their operations.

We have adopted a climate change policy. The policy covers climate change mitigation, adaptation and building the adaptive capacity of our businesses, our employees and the communities in which we operate.

Our climate change mitigation efforts

The Paris climate accord set national emission reduction targets. Businesses need to do the same. Reducing our GHG emissions is accordingly a priority under SwireTHRIVE.

Although shipping along with aviation were not included within the terms of the Paris Agreement due to the trans-border nature of these businesses, our businesses — through investment in carbon efficiencies, biofuels and the purchasing of carbon offsets — have been preparing for the eventuality of an industry level agreement. Specifically, from 2021, international aviation emissions will be covered by the UN ICAO under the CORSIA scheme, which was agreed in 2016 to address carbon neutral growth for aviation. Similarly, a recent decision by the International Maritime Organisation (IMO) will pave the way for economic measures to regulate international emissions from shipping.

We have investments in biofuel businesses (Green Biologics Ltd. and Fulcrum BioEnergy, Inc.). Swire Blue Ocean installs offshore wind turbines. All our businesses are doing their best to reduce their emissions. Our target is to reduce our emissions in line with international carbon reduction goals. Decarbonisation is a key challenge for the future. Please also see the Carbon section of this report for more information.

Case study

Cathay Pacific – Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA)

CORSIA is a global offsetting scheme aimed at capping the global net CO2 emissions from international aviation at 2020 levels, delivering carbon neutral growth from 2020. Cathay Pacific has been involved in CORSIA since its inception and remains closely involved in the developments through participation in the ICAO Global Market-based Measure Technical Task Force (GMTF).

Cathay Pacific has studied the impact of CORSIA and has obtained the skills and knowledge necessary for it to prepare to meet CORSIA’s carbon neutral growth requirements.
More information on Cathay Pacific’s response to CORSIA can be found in its 2017 Sustainability Report.

“We are cognisant of the potentially high implications of CORSIA to our business and we therefore strive to stay ahead in this space. Our strategy considers carbon offset, biofuel and fuel efficiency holistically to ensure we have an optimal response to CORSIA.”
Yee Chow, Biofuel and Emissions Trading Manager, Cathay Pacific.

Climate adaptation strategies

Planning ahead on climate change by building climate adaptation considerations into our business decisions will make us more resilient. As indicated previously, our operating companies consider climate change risks when compiling their risk registers and take appropriate measures in response.

Some of our operating companies are already building climate resilience into their operations. HAECO, for example, is incorporating climate considerations into the design of new facilities.

Climate change threatens access to water and its availability and quality. At Swire Beverages sourcing the right location for its bottling plants is a critical step in its water stewardship strategy. For all new bottling plants, they assess water access, quality and quantity risks. The risks (to its own bottling operations, the environment and local communities) are assessed by independent third parties forming a Source Vulnerability Assessment. The findings are integrated into Source Water Protection Plans at each facility and regularly reviewed.

Swire Properties has commissioned a study to help identify key risks posed by climate change to its business operations. The study will look at both the physical risks to its assets as well as the transitional risks. The assessment will include an analysis of several climate risk scenarios associated with various climate projections and refer to local and international scientific data to evaluate the exposure of their operations. It will use the findings of the study to develop a plan for mitigating climate change risks and building climate resilience.

Case study

Swire Properties – Brickell City centre withstands Hurricane Irma

In September 2017, Hurricane Irma hit the Miami area of the Florida coast, where our Brickell City Centre development is located. The storm tested the strength of the development’s emergency response systems and hurricane plan.

  • 2nd September
    Operations Management Team begins tracking storm
  • 5th September
    Hurricane Phase I implemented
  • 6th September
    Phase II – Storm supplies procured, and employee rotation initiated to allow time for personal storm preparations
  • 7th September
    Phase III – Installation of flood barrier system, operations team conducts walk-through to assess preparedness, and all remaining employees are released
  • 8th September
    Phase IV – A small team of volunteer employees deploys additional sandbags throughout the site to reinforce the flood barrier
  • 9th September
    Tropical storm arrives, EAST, Miami initiates lock-down of premises. Mechanical plants serving offices and condominiums shut down
  • 10th September
    Winds subside, and site assessment begins
  • 11th September
    Mechanical plants come on-line. Work begins to remove flood barrier
  • 12th September
    All employees return on-site. Offices re-open at 8am. Retail, food and beverage tenants re-open at 6pm
  • 13th September
    Back to business as usual

Brickell City Centre sustained minimal damage from Hurricane Irma. Swire Properties plans to use the experience gained from Hurricane Irma to refine and strengthen its emergency response systems and storm plans, and to supplement its climate risk assessment.

Building adaptive capacity

We want to improve the capacity of our businesses, our employees and the communities in which we operate to adapt to climate change. We need information, skills and physical resources.

Case study

Swire Beverages – Disaster relief

When a natural disaster strikes, there is often a shortage of reliable and safe drinking water. In these circumstances, Swire Beverages provides bottled water to those affected as part of The Coca-Cola Company’s Clean Water 24 emergency plan. Within 24 hours of a natural disaster, Swire Beverages will identify the nearest warehouse and arrange for delivery. In collaboration with local governments, supporting organisations and NGOs, they can successfully deliver water to affected areas in a timely manner.

Swire Beverages has done this for five years. During this time, it has delivered 6.5 million bottles of water to more than 1.6 million people with an average response time of 10.5 hours. In 2017, Swire Beverages participated (with local governments, volunteers and others) in a disaster management forum in Yunnan Mainland China – an area subject to frequent natural disasters.

Looking ahead

Through the Climate Resilience Working Group, we will (in conjunction with those responsible for risk management and finance) review the recommendations of the taskforce for climate related disclosures.

We are looking at how we incorporate climate change into our enterprise risk management framework, and at how best to address climate change as part of our business continuity planning.