Building climate resilience is a challenge we must overcome to thrive for the long term. If our businesses are to survive the next 200 or more years, we must look far ahead and be ready to adapt to change. We need to design buildings capable of withstanding extreme weather events. Seaports and airports where we have businesses must deal with the consequences of rising sea levels.
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. Then they will plan how best to mitigate those risks.
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.
The 2018 Global Risk Registry cites extreme weather events, natural disasters, and the human failure to mitigate or adapt to climate change as among its top five likeliest risks relating to climate change. The 2018 IPCC report states that the lower the emissions generated by 2030, the lower the challenge in limiting global warming to a 1.5°C increase in average global temperature above pre-industrial levels. These reports underline the urgency to act sooner rather than later in building climate resilience.
Our businesses need to identify and manage the physical risks of climate change to their operations and supply chains, and the risks associated with changes in regulation consequent upon climate change, in particular, those related to the 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 is important and relevant to our ability to create long-term value for our shareholders.
We require 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.
The Paris climate accord set national emission reduction targets. Businesses must do the same. Accordingly, reducing our GHG emissions is a priority under SwireTHRIVE. We plan to reduce our carbon emissions in line with long-term targets, and to work towards achieving international decarbonisation objectives.
In 2018, Swire Properties committed to the SBTi, which was developed by the United Nations Global Compact, the World Resources Institute, the CDP and the WWF. SBTi encourages corporations to play a substantive role in reducing global greenhouse gas emissions and aims to make science-based target setting a standard business practice by 2020. In 2018, Swire Properties became the first real estate company in Hong Kong to commit to the SBTi, having begun work on establishing new science-based targets for its business in accordance with SBTi criteria.
Shipping and aviation were not included in the Paris climate accord because they operate across borders. But the industries themselves have agreed emission reduction targets. Our shipping and aviation businesses are preparing for this by becoming more efficient in their use of carbon, by investing in the development of sustainable biofuels and by purchasing carbon offsets.
“In 2018, we finalised our internal preparations for CORSIA compliance and will be ready to start the Monitoring Reporting and Verification (MRV) of emissions from 2019.”
From 2021, international aviation emissions will be covered by the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), which was agreed in 2016 to address carbon neutral growth for aviation. Cathay Pacific is preparing for this and has put in place the means of collecting the necessary fuel data.
The IMO aims to reduce annual GHG emissions from international shipping by at least 50% by 2050 (compared to 2008) and to try to phase them out entirely.
We are gaining experience in green technologies. We are investing in biofuels through an equity interest in Fulcrum BioEnergy, Inc. Swire Blue Ocean installs offshore wind turbines. Its vessels have contributed to the installation of 2.97 GW of offshore wind energy in European waters. This figure is expected to increase to 3-3.5 GW on completion of work on the Beatrice Offshore Wind Farm off Scotland’s northeast coast. More information on Swire Blue Ocean can be found here.
These newer investments are in addition to our efforts to reduce our emissions in our established business portfolio, which stretches across Property, Aviation, Beverages, Marine Services, and Trading & Industrial.
We want to reduce our overall emissions in line with international carbon reduction goals. Decarbonisation is a key challenge. Please also see the Carbon section of this report for more information.
Project Hafnium aims to develop an environmentally friendlier and commercially viable Platform Supply Vessel (PSV). Its objective is to assess the viability of alternative fuels for the marine sector and the feasibility of hydrogen-powered PSVs with the goal of radical decarbonisation. The project’s research and development is carried out at the Maritime Energy and Sustainable Development Centre of Excellence at Nanyang Technological University.
The first phase of project is dedicated to identifying the most appropriate hydrogen-based fuels and technologies for marine applications and to addressing safety and other systemic limitations. The other two phases will develop the concept further.
Researchers are collecting data on power consumption, mission requirements and available space from anchored and operating PSVs.
There are no standardised ways to store pure hydrogen aboard a marine vessel. Ammonia and methanol have been identified as easy alternative methods to store hydrogen. By 2020, the project will have explored available procedures for storing fuel cells aboard vessels and the possibility of using methanol and ethanol as fuel sources, having regard to The International Code of Safety for Ships using Gases or other Low-flashpoint Fuels.
By the end of the first phase of the project, the most promising technologies for PSVs to use will have been shortlisted. This will be followed by analyses of the life cycle of GHG emissions from source to use and of the total cost of ownership of the shortlisted technologies.
Including climate adaptation considerations in our business decisions will make us more resilient. Our operating companies consider climate change risks when they compile their risk registers and take appropriate measures in response. HAECO is incorporating climate considerations into the design of new facilities.
Climate change threatens access to water and its availability and quality. At Swire Coca-Cola, selecting the right location for new bottling plants is critical to water stewardship. For all new bottling plants, Swire Coca-Cola assesses 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 reflected in source water protection plans (please see the Water section for more information).
In 2018, Swire Properties started to assess climate risk, with a view to identifying the risks and opportunities posed by climate change for its business. It is evaluating these risks and opportunities under different climate change scenarios. This will be achieved by conducting asset-level modelling of acute and chronic physical risks associated with the four Representative Concentration Pathways (RCP 2.6, 4.5, 6 & 8.5) used by the IPCC.
Swire Properties is reviewing global and local government policies, regulatory, technological, and market trends based on different climate scenarios such as the International Energy Agency 2 degree Celsius Scenario (IEA 2DS) in the global transition to a low carbon economy. By doing so, Swire Properties intends to identify the financial impact on its business of climate change risks and opportunities.
The findings will be used to develop a plan for mitigating climate change risks and building climate resilience strategies and to supplement Swire Properties ERM system.
More information can be found in the TCFD section of the Swire Properties Sustainability Report.
In 2018, Swire Properties was featured in a Special Report on Resilience and Real Assets published by the Global Real Estate Sustainability Benchmark. The report presented the actions being taken by leading real estate and infrastructure companies and funds to make the built environment safer and more resilient in a rapidly changing world. The report, which identifies Swire Properties as a leader in risk assessment and management, contains a case study on its climate risk assessment.
We want to improve the capacity of our businesses, our employees and the communities in which we operate to adapt to climate change. This involves having, and helping to provide access to, information, skills and physical resources.
Swire Coca-Cola supports its local communities by providing bottled water to citizens affected by natural disasters as part of The Coca-Cola Company’s Clean Water 24 emergency plan. Within 24 hours of a natural disaster, Swire Coca-Cola will identify the nearest warehouse and arrange for a delivery. In collaboration with local governments, supporting organisations and NGOs, Swire Coca-Cola can successfully deliver water to affected areas in a timely manner.
Swire Coca-Cola has been participating in this programme 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 October 2018, Swire Properties hosted the Business Environment Council’s (BEC) Low Carbon Hong Kong: Property & Construction Sector C-Suite Roundtable, where representatives of Hong Kong companies discussed climate action strategies.
At the event, Guy Bradley, Chief Executive, and Elizabeth Kok, Director and Senior Advisor, shared views and experiences on how to achieve a low carbon, climate-resilient future. As a member of BEC’s Low Carbon Charter Steering Committee, Swire Properties has helped to formulate a Low Carbon Charter, which is expected to be introduced later this year.
“Swire Properties has committed to setting a science-based target to guide our efforts on the long-term decarbonisation of our business. We fully support and look forward to signing the Business Environment Council’s Low Carbon Charter. We encourage our peers in the property and construction sectors to work together to build a resilient, low carbon and sustainable Hong Kong”.
Guy Bradley, Chief Executive, Swire Properties.
Later this year we will start to identify the acute and chronic physical risks posed by climate change to our key assets and business operations under different climate change scenarios. We are considering how to incorporate climate change into our enterprise risk management and reporting frameworks and how best to address climate change as part of our business continuity planning.
