Sustainable Development Report 2020
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Risk management

Risk management

Effective risk management is key to ensuring the long-term viability of the Group. It is embedded within all our operating companies. It is essential that every Swire Pacific employee works together to address the risks to which our Group is exposed.

The Board and the management of each division are responsible for identifying, analysing and managing the risks to us associated with achieving our business objectives, 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.

The GRMC provides oversight on all the risks to which the Group is exposed, except for those expressly covered by the Finance Committee. It includes divisional chief executives, is chaired by the Finance Director and reports to the Board via the Audit Committee.

The GRMC:

  • Reviews divisional risk registers which set out current and emerging risks, including ESG risks
  • Sets group risk management policies and strategies
  • Oversees functional committees and working groups

In 2020, the GRMC met three times and its functional committees and working groups met 36 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 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.

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. 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 and format and standard risk ranking criteria.

More details of our ERM process can be found in our Annual Report.

For our company to continue to grow, we must try to anticipate the risks threatening us and our customers, whilst capitalising on new opportunities.

Swire Pacific engages with people inside and outside the organisation to assess the material risks. In 2020, we conducted an internal review of the 2019 findings.

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Materiality matrix Materiality matrix
Importance to stakeholders
LOWHIGH
Importance to business
LOWHIGH

Economic

  • 15Trade barrier

Social

Economic

Social

Economic

Social

Environmental

Economic

Click on the materiality assessment map to view and learn more about the material issues

We have highlighted four potential emerging risks.

Unstable geopolitical context

Possible impact

International 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 worldwide6”.

Mitigation measures

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

6 OECD (19 September 2019). OECD Sees Rising Trade Tensions and Policy Uncertainty Further Weakening Global Growth. Retrieved from 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, including the impact of extreme weather events on our physical assets, the cost of changing to new sources of energy and the environmental and social impact of greenhouse gas emissions.

Mitigation measures

    Climate Change Policy
    Climate TCFD
  • Climate change is a core focus of SwireTHRIVE and is included on our corporate risk register
  • We have a climate change policy
  • We have 2030 and 2050 decarbonisation targets
  • We are using more renewable energy in our buildings, by self-generation and purchase agreements
  • We encourage the use of low-carbon fuels
  • We assess the risk to our buildings from extreme weather events and put in place mitigation and resiliency measures

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

    Sustainable Water Policy Waste Management Policy
    ClimateWasteWaterSupply chain
  • We have policies and targets for carbon, waste and water reduction
  • We implement circular economic principles and use alternative materials and techniques, with a view to reducing our reliance on primary natural resources
  • Swire Coca-Cola has targets for post-consumer waste and has formed a joint venture to operate Hong Kong’s first food-grade plastics recycling facility

For details, please refer to the Climate, Waste, Water and Supply chain sections of this report.

Infectious diseases and pandemics

Possible impact

Health and safety Communities Global pandemics can have material impacts in the economies and sectors in which we operate, as demonstrated by COVID-19.

Mitigation measures

  • Business continuity plans regularly updated and tested
  • Appropriate health measures in place
  • Close communication with government and medical authorities
  • Maintenance of substantial liquidity
  • Regular health and safety reporting to the Board

Swire Pacific has, and monitors compliance with, a cyber security and information security policy. It has adopted the US National Institute of Standards and Technology Cyber Security Framework.

Regular cyber security reports are provided to the GRMC and to the Audit Committee. Our Information Technology Committee oversees the cyber security programmes of our operating companies. These programmes include the regular testing and monitoring of systems. A working group of cyber security professionals meets regularly to promote the sharing of cyber security best practices and to enhance cyber security awareness.

We regularly review our policies relating to sustainability. Where we identify policy gaps, we create new policies to guide the Group’s approach. We are reviewing our supplier corporate social responsibility code of conduct and our climate change and biodiversity policies. We will review our Sustainable Development Policy to ensure it is aligned with our updated strategy.

Policies are developed at the working group level, before review by the Swire Group Environment Committee and the GRMC, and approval by senior management.

TCFD