2019 Sustainability Report

Securing long-term viability

Effective risk management is key to ensuring the long-term viability of the Group. It is embedded within all of our operating companies. Everyone at Swire Pacific has a role to play in risk management. It is essential that we all work together to address the risks to which our Group is exposed.

Sustainability issues linked to risk management include climate change, political and regulatory risks and emerging topics such as climate resilience and biodiversity.

The Board and the management of each division are responsible for identifying and analysing the risks to us achieving our business objectives. They assess how to manage and mitigate such threats, including those relating to sustainability.

Two key management committees monitor the risks affecting the Group, the Group Risk Management Committee (GRMC) and the Finance Committee. These committees comprise members of senior management and are both chaired by the Finance Director, who reports significant matters to the Board as they arise.

About the GRMC

The GRMC provides oversight on all the risks to which the Group is exposed, except for those expressly covered by the Finance Committee, including setting risk management policies and strategies. It is made up of divisional chief executives and managing directors, is chaired by the Finance Director, and reports to the Board via the Audit Committee.


  • Reviews divisional risk registers which set out current and emerging risks, including physical and reputational issues that arise from the social and environmental impact of our business decisions and the environmental and social issues which affect our business
  • Sets group risk management policies and strategies
  • Oversees committees and working groups which cover the following areas: Risk and Insurance, Enterprise Risk Management, Human Resources, Health and Safety, Legal, Information Technology, Cyber Security and Sustainability (including the six SwireTHRIVE areas of focus)

In 2019, the GRMC met three times and its functional committees and working groups met 27 times.

The members of the functional committees and working groups are specialists in their respective areas. Each committee is chaired by an individual with relevant experience. The role of the functional committees and working groups is to identify risks and opportunities which fall within their respective functional areas and to draw up policy recommendations for GRMC review and approval.

The policies approved by the GRMC apply to all companies in which Swire Pacific has a controlling interest. The boards of these operating companies are required to adopt these policies and to establish procedures to ensure compliance. Joint venture and associated companies are encouraged to adopt Group policies.

The management of risks is subject to audit by the Group’s Internal Audit department, with support from specialist external consultants where necessary.

Risk governance structure
Note: The GRMC and Finance Committee report via the Audit Committee to the Board

Enterprise risk management

We use an enterprise risk management (ERM) process to identify, assess, monitor and manage risks. The ERM process is aimed at ensuring robust and effective risk management by the Group and at fostering a risk aware culture. The implementation and execution of the ERM process follows our Enterprise Risk Management Policy. The objective of the policy is to ensure that robust and effective risk management systems are in place to enable management to identify, prioritise and mitigate the risks to which our operating companies are and will be exposed. Each division and major operating company is required to implement the ERM process.

As part of this policy, operating companies must regularly submit corporate risk registers and changes in risk profiles to Swire Pacific. To ensure consistency of approach, these registers are prepared using a standard methodology, format and standard risk ranking criteria.

In 2019, Swire Properties identified new risk areas and evaluated their impact on its business. Existing risks were analysed from a different perspective.

Enterprise risk management framework

The ERM process involves:

  1. Identification of new and emerging risks, through inputs from divisional risk registers and risk workshops, and the review of functional risks identified by functional committees and working groups
  2. Risk evaluation and prioritisation using standardised tools and risk matrices
  3. Devising mitigation plans
  4. Divisional reporting of key risks and mitigations to the GRMC and the Audit Committee, via the GRMC
  5. Continuous monitoring and appraisal of risks, including a review of the group corporate risk register at least annually

Significant sustainability risks

For our company to continue to grow, we must try to anticipate the risks threatening us and our customers, whilst capitalising on new opportunities. We monitor key emerging issues through which early detection helps to protect our business.

Every year, Swire Pacific engages with people inside and outside the organisation to assess the material risks that might have an impact on our business. The output from that engagement in 2019 is presented below.

Sustainability risk matrix
Importance to external stakeholders
Importance to internal stakeholders


  • 12Product quality and safety
  • 13Trade barriers

Click on the risk matrix to view and learn more about the sustainability risks.

In 2019, we highlighted four potential emerging risks.

Unstable local and geopolitical context

Possible impact

International and local political stability is critical to business success. The Organisation for Economic Co-operation and Development (OECD) has warned, “escalating trade conflicts are taking an increasing toll on confidence and investment, adding to policy uncertainty, aggravating risks in financial markets and endangering already weak growth prospects worldwide1”. Continued social unrest in Hong Kong could lead to a decline in business confidence, reduced retail and investment spending and disruption to operations. This could affect our Hong Kong businesses.

Mitigation measures

  • Close monitoring of economic and political developments in Mainland China
  • Strategic relationships with Mainland Chinese companies
  • Regular updating and testing of our business continuity plans
  • Maintaining financial strength and flexibility

1. OECD (Organisation for Economic Co-operation and Development). 2019. “OECD Sees Rising Trade Tensions and Policy Uncertainty Further Weakening Global Growth”. 19 September 2019. Organisation for Economic Co-operation and Development. https://www.oecd.org/economy/oecd-sees-rising-trade-tensions-and-policy-uncertainty-further-weakening-global-growth.htm"

Climate change

Possible impact

Climate change gives rise to significant risks to our business. The risks include the impact of extreme weather events on our physical assets, the financial costs of changing to new sources of energy and the environmental and social impact of greenhouse gas emissions.

Mitigation measures

  • Our climate change policy is in place
  • We have targets for the reduction of our carbon emissions for 2020 and 2030
  • We are using more renewable energy in our buildings, by self-generation and purchasing (16.2 million kWh of electricity was generated from renewable energy sources at Swire Properties, Swire Coca-Cola and HAECO Xiamen in 2019)
  • We encourage the use of alternative fuels, with Cathay Pacific having a minority stake in Fulcrum BioEnergy Inc., a company which converts municipal solid waste into sustainable aviation fuel
  • We assess the risk to our buildings from extreme weather events and put in place mitigants and resiliency measures, intended to ensure the viability of our operations, the safety of our employees and visitors to our facilities and uninterrupted service for our customers
  • Swire Properties has included sustainable development, including climate related risks, in its corporate risk register
  • For further details, please refer to the Carbon and Climate resilience sections of this report

Environmental impact of products and services

Possible impact

Regulations affecting, and public scrutiny of, our products and services and their uses could have an adverse impact on our operations, finances and reputation.

Mitigation measures

  • Waste and water policies are being developed
  • Carbon emissions and water targets are in place for 2020 and the same plus waste targets are being developed for 2030
  • We want to implement circular economic principles and to use alternative materials and techniques, with a view to reducing our reliance on primary natural resources
  • Swire Coca-Cola has formed a joint venture to operate Hong Kong’s first plastics recycling facility
  • Swire Coca-Cola is introducing 300 bring-your-own-bottle refillable Bonaqua water stations in Hong Kong
  • For further details, please refer to the Waste and Sustainable materials sections of this report

Infectious diseases and pandemics

Possible impact

Global pandemics are a new material issue. The risk was identified during the validation process and so does not appear in the above risk matrix but is included in the Risk management section of our annual report. COVID-19 is having a material adverse effect on economic conditions, including industries in which we operate.

Mitigation measures

  • Regular updating and testing of business continuity plans
  • Close communication with government and medical authorities
  • Regular health and safety reporting to the Board


We regularly review our policies relating to sustainability. Where we identify policy gaps, we try to create new policies to guide the Group’s approach. In 2020, we are introducing policies on waste, water and parental leave plus guidelines on renewable energy procurement. We are reviewing and updating our sustainable food policy, our supplier corporate social responsibility code of conduct and our green procurement policy.

Policies are developed at the working group level, before review by the Swire Group Sustainability Committee (SGSC) and the GRMC and final approval by senior management including the Chairman. The management of risks and the implementation of sustainability policies are subject to scrutiny by our internal audit department as part of the standard internal audit processes, with support from specialist external consultants where necessary.

Please refer also to the Risk management section of the Corporate Governance Report in the Swire Pacific Annual Report 2019.


Task Force on Climate Related Financial Disclosures