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.
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).
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.
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.