Sustainable Development Report 2021

Our approach to
sustainable development


Sustainable development is a strategic objective for Swire Pacific. Using natural resources responsibly, minimising waste and pollution, and investing in our people and communities are fundamental to our ability to create long-term value for shareholders.

To promote sustainability in our businesses and management practices, we have a sustainable development strategy (SwireTHRIVE) and environmental, social and governance (ESG) policies.

A group level strategy facilitates best practice sharing and consistent implementation of sustainability. It also allows us to better communicate the impact we are having as a group. SwireTHRIVE addresses five areas and is supported by policies and targets. All operating companies are expected to make progress in the five areas.

Our Sustainable Development Policy aims to ensure our companies act in a manner consistent with the 1987 Brundtland Commission’s definition of sustainable development: meeting the needs of the present without compromising the ability of future generations to meet their own needs.

Our ESG policies go beyond the five SwireTHRIVE areas, covering, for example, human rights, biodiversity and sustainable procurement.

Policies are reviewed regularly. In 2021, we updated our sustainable development and climate change policies to reflect our updated strategy and net zero commitment.

All policies related to sustainable development can be downloaded from our corporate website.

As a conglomerate, we acquire and dispose of businesses. This makes it difficult to track sustainability performance and set targets. To address this, we have a reporting methodology which deals with the scope, boundaries and calculations of the relevant data. Our data collection protocols for carbon, waste and water include variance checks and procedures for dealing with abnormal data.

Our sustainable development fund offers financial support to operating companies for projects which can provide long-term environmental benefits but cannot be justified by reference to our cost of capital targets. Up to HK$100 million is available annually to support projects that reduce the carbon, water and waste footprints of our operating companies, in line with our targets.

Since 2019, the fund has supported trials of innovative cleantech solutions. Operating companies invite cleantech companies to pitch solutions to sustainability problems. Successful applicants receive funding to pilot the solution. If the pilots are successful, they can be scaled up for wider use in the Group. The fund allows us to test new technologies quickly and at relatively low cost, to determine the solutions most suited to our operations and quantify their actual environmental benefits before implementation at scale. In 2021, the fund allocated approximately HK$8 million to projects at four operating companies.

Linking ESG performance metrics to our financing mechanisms demonstrates that we are serious about being a sustainable business. In 2020, Swire Pacific converted a five-year revolving credit facility of HK$2 billion into its first sustainability-linked loan. The interest payable is reducible by reference to indicators of our ESG performance. There are targets for energy consumption, water usage, and diversity and inclusion. We must also remain in the Dow Jones Sustainability Asia Pacific Index. In June 2021, we converted two more revolving credit facilities totalling HK$2.2 billion into sustainability-linked loans. Sustainable finance represented 18% of total financing across the Group at the end of 2021.

Swire Properties targets for at least 80% of its bond and loan facilities to come from green financing by 2030. Around 30% of its current financing is from green bonds, green loans and sustainability-linked loans. Funds are used for green building developments and the adoption of technologies that will save energy and water and reduce waste. New Life Plastics Limited, a joint venture to which Swire Coca-Cola is a party, has obtained a sustainability-linked loan.

Our Board, led by its Chairman, is ultimately accountable for sustainability matters. The Board is kept informed of sustainability risks and performance by the Group Risk Management Committee (GRMC), which reports to the Board via the Audit Committee. The Board monitors performance through detailed monthly reports on health and safety, and quarterly reports on other ESG matters. It also reviews internal and external audit reports and feedback from external stakeholders. The Group Head of Sustainability briefs the Board and Division Heads twice a year on sustainability matters.

Responsibility for achieving sustainability objectives and implementing SwireTHRIVE and our ESG policies on a day-to-day basis is delegated to division management, with oversight from specialist Group departments. The Sustainable Development Office (SDO), the Group Risk Management and Diversity & Inclusion departments and the Group Head of Philanthropy are jointly responsible for SwireTHRIVE. Each operating company has adopted an appropriate organisational structure to manage its most material sustainability issues and to monitor and report on its performance.

Group departments convene committees and working groups comprising subject matter experts from our operating companies to exchange information on best practices, with a view to developing specific policy recommendations, improving efficiency, tracking progress against targets and managing risks. Formal committees relevant to SwireTHRIVE include the Swire Group Environment Committee (SGEC) and the Health and Safety Committee (both of which are overseen by the GRMC) and the Diversity & Inclusion Steering Committee (which reports directly to the Chairman).

The SDO, led by the Group Head of Sustainability, advises senior management of key developments and emerging risks related to sustainable development, and is responsible for setting group environmental policies and targets, monitoring the implementation of SwireTHRIVE and our ESG policies, and internal and external reporting on ESG matters. The SDO reports to an Executive Director of Swire Pacific.

The SDO coordinates the SGEC and five working groups responsible for defining our climate, waste, water and sustainable supply chain approaches and our response to the Task Force on Climate-related Financial Disclosures (TCFD).

In 2021, Swire Pacific formally adopted the three lines of defence risk governance model, which resulted in the establishment of four new risk forums to support the GRMC and a separate Swire Pacific Risk Management Committee, which identifies risks that have a Group dimension (see Risk management).

The management of risks and the implementation of ESG policies are subject to scrutiny by our internal audit department, with support from specialist external consultants where necessary.

We regularly review our policies relating to sustainability. Where we identify policy gaps, we create new policies to guide the Group’s approach. In 2021, we updated our Sustainable Development Policy and Climate Change Policy to ensure they are aligned with our updated strategy and net zero commitment.

Policies are developed at the working group level, before review by the SGEC and the GRMC, and approval by senior management.

Swire Pacific responds to ESG questionnaires from investors, rating agencies and sustainable stock indices. This enables us to assess our ESG performance having regard to the concerns of sustainability focused investors and to identify emerging sustainability risks and opportunities.

Dow Jones Sustainability Index
In 2021, Swire Pacific was included in the DJSI Asia Pacific Index. Swire Pacific has been included in DJSI indices since 2001.

Hang Seng Corporate Sustainability Index Series
In 2021, Swire Pacific received an AA rating from the Hang Seng Corporate Sustainability Index. Swire Pacific is included in the Hang Seng Corporate Sustainability Benchmark and Hang Seng ESG 50 indices.

MSCI Constituent MSCI Global SRI Indexes
In 2021, Swire Pacific received an AAA rating from MSCI ESG Research, making us one of the top performers in our sector.

In 2021, Swire Pacific received a score of B for CDP Climate Change and a score of A- for CDP Water Security.

S&P Global Sustainability Yearbook
Swire Pacific was included in the S&P Global Sustainability Yearbook 2022, which recognises top performers in corporate sustainability based on assessments of over 7,500 companies across 61 sectors. Companies must be within the top 15% of their industry to be included.

Bloomberg Gender-Equality Index
Swire Pacific was included in the 2022 Bloomberg Gender-Equality Index. This is the first year we participated. We were the only Hong Kong-headquartered company to be included.
Risk management