Swire Pacific Sustainable Development Report 2020

We aim to promote inclusive, ethical and sustainable procurement practices.

As supply chains become longer and more complex, sustainable sourcing limits the risk of disruption, protects our reputation and helps to ensure the continued availability of natural resources, on which our businesses depend.

We have thousands of suppliers. They provide goods and services including ships, aircraft, fuel, food products, packaging materials, cleaning services, office supplies and uniforms.

We aim to source all key materials responsibly and sustainably, in a way that does not degrade nature and ensures that the people who produce them are treated with dignity and respect. This is what our investors, those with whom we do business and the communities in which we operate expect. Consumers are demanding responsible products and looking for supply chain transparency.

Property

Swire Properties’ principal suppliers perform or assist in the planning, design, construction, marketing, sale, leasing, management, maintenance and demolition of properties

Aviation

The principal suppliers to our airlines are manufacturers of aircraft and engines and suppliers of fuel and engineering services

Beverages

Supplies obtained directly from TCCC include juices, concentrates and other ingredients, fountain packaging and advertising materials. Goods which TCCC authorises third parties to supply include packaging, speciality merchandise, sales and marketing equipment, sweeteners and carbon dioxide

Marine Services

The principal suppliers to Swire Pacific Offshore and Hongkong United Dockyards are shipyards, engine manufacturers and suppliers of fuel

Trading & Industrial

The principal suppliers of footwear and apparel to Swire Resources and of vehicles to Taikoo Motors are international brand-owning companies, with their own sustainability policies and standards

We do not have a central procurement function. Each operating company is responsible for its own procurement. However, we have policies and guidelines that set out the group’s expectations of suppliers.

Supplier Corporate Social Responsibility Code of Conduct

Our Supplier Corporate Social Responsibility Code of Conduct sets out the group’s expectations of all our suppliers and contractors. It covers regulatory compliance, no forced or child labour, health and safety, environmental issues, compensation and working hours, human rights, subcontractor management, and ethics and reporting.

Compliance with the code is assessed. The results determine which suppliers need to be audited to ensure compliance, with focus on those deemed high risk.

We are updating the code with reference to the latest internationally recognised standards.

Sustainable Procurement Policy

Under our Sustainable Procurement Policy, our operating companies should, where possible, give preference to products which do not adversely affect the environment. In 2020, we updated the policy with reference to the sustainable procurement guidance in ISO 20400:2017. Under the updated policy, we intend to strengthen our evaluation of sustainability risks in our supply chain, and to integrate the SwireTHRIVE principles and other material sustainability considerations into supplier selection and retention.

Human Rights Policy

Our 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. We seek to include, in our agreements with suppliers and contractors, provisions which encourage them to adhere to the principles in our policy.

In compliance with UK legislation, Cathay Pacific and Swire Pacific Offshore issue annual statements on what they are doing to prevent modern slavery and human trafficking in their businesses and supply chains.

We have a Sustainable Supply Chain Working Group, which shares best practices and develops sustainability policies and guidelines for suppliers. The working group is made up of senior procurement managers from our operating companies.

Supply chain management

Swire Properties requires service providers to perform well in the areas of health and safety, the environment, procurement, management and quality. New suppliers must complete self-assessment questionnaires to confirm that they have appropriate policies and systems in place to comply with the supplier code of conduct. Due diligence is performed to verify the responses and sites in Hong Kong and the Chinese mainland may be visited. Independent certification in accordance with internationally recognised standards, and the submission of environmental and health and safety management plans, may be requested for internal review. In 2020, Swire Properties assessed the compliance of over 300 Tier-1 suppliers (representing over half of its 2020 procurement expenditure) with the supplier code of conduct. None were considered high risk.

The compliance by Swire Coca-Cola’s suppliers of critical materials and ingredients for beverages, packaging and any items with TCCC’s logo with TCCC’s Supplier Guiding Principles is audited by third parties. Knowledge is shared with other Coca-Cola bottlers in the Chinese mainland in order to manage procurement better. This facilitates the identification and selection of suppliers who follow appropriate procurement principles.

Cathay Pacific requires all suppliers to declare that their products and services comply with the code of conduct. It evaluates suppliers using a scorecard which measures performance in six different areas: cost, innovation, satisfaction, quality, assurance of supply and sustainability.

Cathay Pacific Catering Services has stringent procedures for supplier selection and ingredient procurement. It conducts regular audits of its food suppliers’ food safety systems.

HAECO Group identifies its critical suppliers based on volume and asks them to complete self-assessment surveys. It assesses their compliance with its requirements and engages with them on the basis of their responses. This is done every two years. Critical supplier audits are carried out periodically when necessary.

Sustainable materials

Swire Properties tracks consumption of office supplies, building services equipment and building materials which have been certified or accredited by independent third parties. The data is used to evaluate its sustainable procurement performance and to identify opportunities for sourcing more sustainable products. In 2020, HK$1,196 million of sustainable products were procured.

Swire Properties specified low-carbon concrete, rebars and structural steel in the contract for a new development in Hong Kong. It procures Forest Stewardship Council (FSC) certified and Program for the Endorsement of Forest Certification (PEFC) certified timber and rebars and structural steel with recycled content for its Two Taikoo Place development.

Swire Coca-Cola has committed that by 2025 key agricultural ingredients will come from sources verified by third parties to be sustainable. It estimates the carbon emissions associated with its packaging. A tracking system, introduced in 2020, helps identify improvement areas and communicating its decarbonisation strategy to suppliers.

In 2020, Cathay Pacific Catering Services purchased 58 tonnes of sustainable seafood, representing around 55% of its total seafood purchases. It purchases peanuts produced from palm oil certified to be sustainable, and hydroponic vegetables grown in Hong Kong.

For more information on our operating companies’ approaches to sustainable procurement, please refer to their 2020 sustainability reports.