2018 Sustainability Report

Supply chain

Thriving supply chains

We aim to promote inclusive, ethical and sustainable procurement practices. With our substantial purchasing power, we expect, by creating long-term value for those with whom we do business and the communities in which we operate, to create long-term value for our shareholders.

We have over one thousand suppliers globally. They supply goods and services, including ships, aircraft, fuel, sugarcane, auditing, office supplies and uniforms. We use our purchasing power and our close relationships with suppliers in ways designed to meet the needs of our businesses and customers.

Sustainable procurement helps to manage risks, improve efficiencies and reduce costs. We aim to procure goods in a way that does not degrade the environment and to procure services only from those who are accountable for their workplace practices.

It is our policy to comply with all applicable laws and regulations relating to procurement. Our own general code of conduct covers procurement and includes relevant provisions about bribery and competition.

Cathay Pacific

Swire Resources – Supplier assessments

Swire Resources favours suppliers and contractors who share its commitment to sustainable development. Currently, 87% of its stock purchases are of internationally branded goods, for example, Nike, Adidas, Reebok, Columbia, New Balance, Under Armour, Repetto and Puma. The owners of such brands are committed to complying with international manufacturing practice standards. All the factories from which Swire Resources sources goods have signed up to the Swire Pacific Supplier Corporate Responsibility Code of Conduct. 20 factories assessed their own compliance with the code in 2018. Third party audits are being considered. Factories are given three months to rectify non-compliance. If they are still non-compliant, they are invited to join an improvement programme.

The supplier corporate social responsibility code of conduct

Our Supplier Corporate Responsibility Code of Conduct has been adopted by all our operating companies.

It sets out minimum standards with respect to:

  • Legal and regulatory compliance
  • Forced labour
  • Child labour
  • Health and safety
  • Environmental protection
  • Compensation and working hours
  • Human rights
  • Subcontractor management
  • Ethics and reporting

Our SwireTHRIVE Sustainable Materials Working Group encourages consistent implementation of the supplier corporate social responsibility code of conduct by our operating companies.

We respect internationally recognised human rights in line with the principles and guidance contained in the United Nations Guiding Principles on Business and Human Rights. In 2019, we introduced the Swire Pacific Limited Human Rights Policy. This human rights policy is informed by the International Bill of Human Rights and by the International Labour Organisation’s Declaration on Fundamental Principles and Rights at Work. We comply with national laws where they conflict with human rights standards but still do our best to respect the latter. The policy addresses:

  • Diversity and inclusion
  • Suppliers and contractors
  • Labour practices (including child and forced labour)
  • Health and safety
  • Employment (including flexible working and the right to join or not join unions)
Cathay Pacific

Swire Properties – Supplier compliance monitoring

Swire Properties collects information from its suppliers about their social, environmental and governance practices and performance. New suppliers must complete self-assessment questionnaires to confirm that they have in place appropriate policies and systems. Swire Properties does due diligence on the answers.

In 2018, Swire Properties automated its previously manual system for monitoring the selection, management and performance of its suppliers in Hong Kong and Mainland China. Suppliers are requested to self-assess and their sites may be visited. Suppliers are also requested to obtain independent certification in accordance with internationally recognised standards and submit environmental, and health and safety management plans for internal review.

In 2018, Swire Properties assessed compliance by its 25 largest suppliers (by procurement spend) with the Swire Pacific Supplier Corporate Responsibility Code of Conduct. None were identified as high risk.

The code in practice

We need to purchase goods on competitive terms. But in doing so, we must take due account of labour standards, health and safety and the environment.

In addition to Swire Pacific’s supplier corporate social responsibility code of conduct, Swire Coca-Cola follows the supplier guiding principles of The Coca-Cola Company. These principles cover workplace policies, health and safety, human rights, environmental protection and business integrity. Swire Coca-Cola’s own major suppliers are audited.

Swire Coca-Cola shares knowledge with other Coca-Cola bottlers in Mainland China in order better to manage procurement. This facilitates the identification and selection of suppliers who follow appropriate procurement principles.

Cathay Pacific has developed a balance-rated scorecard for procurement to measure suppliers’ performance in six different areas: Costs, Innovation, Satisfaction, Quality, Assurance of Supply and Sustainability. With other members of the oneworld alliance, Cathay Pacific shares information about suppliers using the SEDEX supply chain platform. It is considering whether to continue to use SEDEX or to assess suppliers independently.

Cathay Pacific Catering Services has stringent procedures for supplier selection and ingredient procurement. Its Hazard Analysis and Critical Control Point (HACCP) team and its technical laboratory staff conduct regular audits of its food suppliers’ food safety systems.

Cathay Pacific

Swire Pacific Offshore – Addressing modern day slavery

Swire Pacific Offshore’s Modern Slavery compliance policy is wholly aligned with Swire Pacific Offshore’s wider commitment to running all its businesses in an ethical and sustainable manner. The Swire Pacific Offshore supply chain sustainability code of conduct prohibits the use by its suppliers of bonded, child, coerced, forced, indentured or involuntary labour. Swire Pacific Offshore does not tolerate modern slavery and works with regulators and other third parties to combat it.

Swire Pacific Offshore has a Modern Day Slavery Act Compliance framework and has developed a risk-based assessment process for its material global suppliers. Its new contracts with suppliers contain provisions preventing slavery and human trafficking. It is considering strengthening its existing contracts in this area. Swire Pacific Offshore’s practices in relation to modern slavery were internally audited in 2018. There was one medium risk audit recommendation – to improve the risk assessment process. This has been done.

Swire Pacific Offshore provides training to over 90% of its employees assessed as most likely to encounter modern slavery. It raises awareness of the topic among its sea-going and shore-based employees. In 2018, Swire Pacific Offshore held a lunchtime session on modern day slavery. For more information please find Swire Pacific Offshore’s Modern-Day Slavery statement here.