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 businesses 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 include the five SwireTHRIVE pillars and go beyond them, covering, for example, human rights, biodiversity, and sustainable procurement.
We regularly review our policies relating to sustainability. Where we identify policy gaps, we create new policies to guide the Group’s approach. Policies are developed at the working group level, before review by the Swire Group Environmental Committee (SGEC) and the Group Risk Management Committee (GRMC), and approval by senior management.
In 2023, we updated several policies in line with our internal policy review process:
- Biodiversity Policy
- Carbon Offset Policy
- Sustainable Building Design Policy
- Sustainable Water Policy
All policies related to sustainable development can be downloaded from our corporate website.
As a growing and diversified business, tracking sustainability performance and setting targets can be challenging. To address this, we have a reporting methodology which deals with the scope, boundaries, and calculations of the relevant data. We also have data collection protocols for carbon, waste, and water, that standardises our data calculation methodology, and includes variance checks and procedures for dealing with abnormal data.
We seek third party assurance on key sustainability performance data points. We are also working with a third party to validate the robustness of additional data with a view to expanding the scope of our assured data in future reporting cycles.
Our sustainable development fund (SD 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. The fund provides a capex bridge to make those projects possible. 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.
The fund has been supporting our operating companies since 2016 through the capex bridge mechanism. Since 2019, a new funding stream was created to support trials of innovative green technology solutions. Operating companies invite companies and start-ups to pitch solutions to identified sustainability problems for which we have not yet found a solution. Successful applicants receive funding to pilot their solution in our operations. If the pilots are successful, they can be scaled up for wider use in the operating companies and 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. The SD Fund has helped accelerate SD projects across the Group, including innovative new technologies such as Direct Current Microgrids at Taikoo Li Sanlitun shopping centre in Beijing. In 2023, the fund allocated approximately HK$84.8 million to 12 projects at various operating companies.
Linking ESG performance metrics to our financing mechanisms demonstrates that we are serious about being a sustainable business. Since 2020, Swire Pacific has converted three revolving credit facilities totalling HK$4.2 billion into sustainability linked loans. The interest payable is reducible by reference to indicators of our ESG performance including progress towards targets for energy consumption, water usage, and diversity and inclusion. We must also remain in the Dow Jones Sustainability Asia Pacific Index. Sustainable finance represented more than 47% of total financing across the Group at the end of 2023.
Swire Properties’ commitment to green financing began in 2018 with its inaugural green bond. In 2023, Swire Properties secured sustainability-linked loan facilities totalling HKD7.2 billion and green bonds totalling HKD6.0 billion. By the end of December 2023, approximately 60% of its current bond and loan facilities came from green financing. Swire Properties has already achieved its 2025 KPI of having a minimum of 50% in green financing, two years ahead of schedule, and is targeting for at least 80% of its bond and loan facilities to come from green financing by 2030.
Swire Properties has been recognised by the financial industry for its pioneering efforts in promoting green financing in the real estate industry and in Hong Kong, with its successful launch of the city’s first and the largest-ever corporate public Renminbi (RMB) 3.2 billion green bonds (“green dim sum bonds”) in 2023. It received Best ESG Issuer in Asia at the FinanceAsia Achievement Awards 2023, with the green dim sum bonds offering receiving two other awards at the IFR Asia Awards 2023 and The Asset Triple A Awards 2024.
New Life Plastics Limited, a joint venture to which Swire Coca-Cola is a party, has also obtained a sustainability-linked loan.
Our Board, led by its Chairman, is actively engaged in formulating and implementing SwireTHRIVE, and is ultimately accountable for sustainability matters including progress against our 2030 key performance indicators. The Board provides oversight of our risk management framework and our sustainability risks, including climate related risks. Swire Pacific also conducts regular risk identification, analysis, and reviews management processes throughout the year through the Audit Committee and our Enterprise Risk Management (ERM) system, including our Corporate Risk Register (see ESG risk management section).
The Board currently comprises five Executive Directors, two Non-Executive Directors and six Independent Non-Executive Directors. Members are selected based on their qualifications, skills and experience, knowledge of our businesses, and how they impact Board-level diversity. All Board members have relevant industry experience in either Real Estate, Aviation, Food and Beverage, or Trading and Industrial sectors. Four out of five of our Executive Directors have had executive or board experience with one or more of our subsidiaries. Having the right blend of skills and experience ensures the Board can effectively deal with current and emerging risks and opportunities.
The Board receives training materials or direct training annually. In 2023, the Board received external training on ESG including risk. Further information on our board diversity, processes, and training is available in the Corporate Governance section of the Swire Pacific Annual Report 2023.
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, reports periodically to the Audit Committee, the Terms of Reference for which include oversight of ESG, and attends the meetings of the Swire Pacific Risk Management Committee and ESG Risk Forum. The Board ultimately reviews and approves the Group’s sustainable development related targets.
Responsibility for achieving sustainability objectives and implementing SwireTHRIVE and our ESG policies on a day-to-day basis is delegated to division heads, with oversight from specialist Group departments. The Sustainable Development Office (SDO), the Group Risk Management and Diversity, Equity & 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. Operating companies are required to submit to SDO planned sustainable development capital expenditure budgets that are intended to drive progress towards SwireTHRIVE targets. In turn, the SDO provides the Board of Directors with quarterly reports on performance against sustainability targets and key initiatives being implemented by the operating companies.
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 and Philanthropy Council (which report directly to the Chairman).
The SDO, led by the Group Head of Sustainability, reports monthly to the Group’s Finance Director, who is an Executive Director of the Company. The SDO advises senior management of key developments and emerging risks related to sustainable development. It 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 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. The SDO coordinates the SGEC and six 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) and emerging disclosure requirements. A nature-related working group has been established in 2024.
Swire Pacific has established a three lines of defence risk governance model. The GRMC is supported by four risk forums and a separate Swire Pacific Risk Management Committee, which identifies risks that have a group dimension.
The objective of the Swire Group Environmental Committee is to oversee, on behalf of the Board and Management Team, the management of SwireTHRIVE. The SGEC advises them on matters required to enable:
- the Group to operate sustainably for the benefit of current & future generations
- sustainable growth by maintaining & enhancing the Group’s economic, environmental, human, technological, and social capital in the long term
- the identification and effective management of the Group’s Sustainable Development (SD) risks
The Committee, which meets at least three times each year, is chaired by the Director responsible for the Group SD strategy, co-ordinated by the Group Head of Sustainability, and comprises SD heads from operating companies, while being observed by Risk Management Department, Group Public Affairs, Corporate Finance, and Staff Services.
DISC is responsible to the Chairman of Swire Pacific. It is jointly chaired by the Finance Director of Swire Properties and the Group Staff Director. The other members of DISC are the HR Directors of our operating companies, the Staff Services Group General Manager, and the Group Head of Diversity, Equity, and Inclusion. DISC has general responsibility:
- to provide guidelines about diversity and inclusion to the group of companies comprising Swire Pacific and its subsidiaries, associates, and joint venture companies, and
- to formulate policies designed to promote a diverse workforce and an inclusive working environment for all Swire Pacific Group employees, with a view to ensuring that companies in the Swire Pacific Group are regarded as employers of choice
DISC Terms of Reference are available on our corporate website.
The Health & Safety Committee oversees the process required to ensure that all operations are carried out in a manner that the first priority is to safeguard the health and safety of all stakeholders. It reports three times per year to the Group Risk Management Committee (GRMC) on health and safety performance across the Group. It is responsible for the development of Group Health and Safety policies and processes, monitoring performance and sharing divisional best practices. It builds internal capability by promoting Health & Safety education, directing projects and promoting education and wellbeing in the workplace.
The Swire Group Charitable Trust Philanthropy Council represents the interests of the Swire Trust and oversees its strategic direction and management. Members are senior management within the Swire Group. They are appointed by the Philanthropy Council Chair based on their knowledge on the supported social causes, interest in public service and representation of different operating companies and key functions across the Group. The Group Head of Philanthropy serves as the Secretary to the Philanthropy Council. Its duties include reviewing and approving the annual budget for the Swire Trust, considering and approving proposals for major new projects in accordance with the Trust’s core areas, ensuring that donations are spent consistent with the vision and mission of the Trust, and reviewing compliance with relevant laws.
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Dow Jones Sustainability Index In 2023, Swire Pacific was included in the DJSI Asia Pacific Index. Swire Pacific has been included in DJSI indices since 2001. |
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Hang Seng Corporate Sustainability Index Series In 2023, 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. |
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MSCI Constituent MSCI Global SRI Indexes In 2023, Swire Pacific received an AAA rating from MSCI ESG Research, making us one of the top performers in our sector. |
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CDP In 2023, Swire Pacific achieved a score of A- for CDP Climate Change. |
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S&P Global Sustainability Yearbook Swire Pacific was included in the S&P Global Sustainability Yearbook 2024, which recognises top performers in corporate sustainability based on assessments of over 9,400 companies across 61 sectors. Companies must be within the top 15% of their industry to be included. |
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Bloomberg Gender-Equality Index Swire Pacific was included in the Bloomberg Gender-Equality Index for the third year in a row. |