THRIVING TOGETHER 2019 SUSTAINABILITY REPORT CONTENTS INTRODUCTION 3 OUR BUSINESS 8 OUR PEOPLE 95 ABOUT OUR REPORT 146 Chairman’s statement 4 Swire Pacific 10 Employment 97 Assessing materiality 149 Head of SD’s statement 5 Governance 13 Diversity and inclusion 104 Stakeholder engagement 153 Highlights 7 Risk management 21 Training and development 117 TCFD 27 Health and safety 125 Supply chain 31 OUR PERFORMANCE 155 Looking ahead 36 Performance data 156 OUR COMMUNITIES 134 GRI table 163 Community involvement 136 UN SDGs 178 OUR ENVIRONMENT 38 Glossary 184 Carbon 40 Waste 51 Water 65 Sustainable materials 75 Biodiversity 80 Climate resilience 88 SWIRE PACIFIC • 2019 SUSTAINABILITY REPORT 2 INTRODUCTION OUR BUSINESS OUR ENVIRONMENT OUR PEOPLE OUR COMMUNITIES ABOUT OUR REPORT OUR PERFORMANCE INTRODUCTION A THRIVING ENVIRONMENT Swire Pacific is a highly diversified group and one of the leading companies in Hong Kong, with five operating divisions: Property, Aviation, Beverages, Marine Services and Trading & Industrial. Headquartered in Hong Kong, the Group’s operations are predominantly in Greater China where the name Swire or has been established for more than 150 years.太古 2020 represents a significant milestone as we celebrate 150 years of doing business in, and contributing to the ongoing success of, Hong Kong. Our Sustainability Report is about our approach to integrating sustainability into our activities. It follows global standards of sustainability reporting. The 2019 Sustainability Report is our 13th report. It was published in June 2020. SWIRE PACIFIC • 2019 SUSTAINABILITY REPORT 3 INTRODUCTION OUR BUSINESS OUR ENVIRONMENT OUR PEOPLE OUR COMMUNITIES ABOUT OUR REPORT OUR PERFORMANCE CHAIRMAN’S STATEMENT “We believe that sustainability must be central to what we do for our businesses, and the communities in which they operate, to thrive in the long term.” Social unrest in Hong Kong and global trade tensions We also demonstrated our determination to play a full during 2019, particularly in the second half of the year, part in the creation of a circular economy in Hong Kong, created serious challenges for our businesses. Despite with Swire Coca-Cola’s announcement of the city’s first these challenges, sustainability remained a strategic major plastic waste recycling facility, to be operated in objective for Swire Pacific. We believe that sustainability joint venture with our partners ALBA and Baguio Waste must be central to what we do for our businesses, and Management. the communities in which they operate, to thrive in the long term. We made good progress in 2019, but we must do better and be more resilient in the face of increasing, complex, Swire Pacific has always taken, and will continue to take, sustainability challenges. We intend to set ambitious a long-term perspective on how we run our business. carbon, water, waste and diversity and inclusion targets. Sustainability is very much part of that way of thinking. We remain committed to a sustainable approach to In 2019, we made progress in several important business. We need to think deeply and creatively elements of our group sustainable development about decarbonisation, water conservation and strategy. We outperformed our carbon reduction target waste reduction and recycling. We must respond to by 1.83%. In addition, Swire Pacific published a climate sustainability challenges in a way which creates value for change policy which highlighted the importance of our shareholders, for our people, for those with whom future climate risk and resilience. We also developed we engage in business and for the communities in which our diversity and inclusion strategic framework with we operate. I look forward to sharing our progress with three goals, five diversity focus areas and a five-year you in future reports. plan. At the operating company level, Swire Properties announced a carbon reduction target which was Merlin Swire approved by the Science Based Targets initiative. Cathay Chairman Pacific improved its fuel efficiency by 2%, compared with an aviation industry commitment of 1.5%. SWIRE PACIFIC • 2019 SUSTAINABILITY REPORT 4 INTRODUCTION OUR BUSINESS OUR ENVIRONMENT OUR PEOPLE OUR COMMUNITIES ABOUT OUR REPORT OUR PERFORMANCE HEAD OF SD’S STATEMENT “We need to look further ahead and do more to integrate sustainable development principles and practices into our businesses, and to ensure that we are increasingly resilient and well prepared for whatever long- term sustainability challenges we may face.” What is SwireTHRIVE? You had a goal to reduce your carbon emissions and water consumption by 8-10% and 3-4% respectively SwireTHRIVE is the Group sustainability strategy, by 2020, versus a 2015 frozen efficiency baseline. introduced in 2016. The strategy was developed to Are you on track to meet that commitment? bring clarity and focus to how we address our biggest environmental challenges. I’m pleased to report that in 2019 we have exceeded our carbon reduction target, set when we introduced SwireTHRIVE focuses on environmental sustainability SwireTHRIVE in 2016, by 1.83%. However, we have fallen because our success, and that of our people and the short of our water reduction target by 1.26%. This is communities in which we operate, depends on a thriving largely because Swire Coca-Cola acquired more bottling natural environment. It acknowledges the important plants. role we play in protecting the natural resources on which our businesses depend. A thriving business needs These targets should be viewed as only the start of the a thriving environment. journey. Looking ahead, as the external environment becomes more complex and challenging, and in the light The SwireTHRIVE areas of focus are carbon, waste, of the Paris Agreement and other international climate water, sustainable materials, biodiversity and climate change agreements, we need to be more ambitious. resilience. This means setting new, stretching, carbon and water targets and addressing other important environmental challenges. SWIRE PACIFIC • 2019 SUSTAINABILITY REPORT 5 INTRODUCTION OUR BUSINESS OUR ENVIRONMENT OUR PEOPLE OUR COMMUNITIES ABOUT OUR REPORT OUR PERFORMANCE HEAD OF SD’S STATEMENT Looking back on the last four years of SwireTHRIVE, actions to their own specific sectors and needs. Swire We need to increase our strategic ambition for what are you most proud of? Properties’ SD 2030 strategy stands out as recognising sustainable development. We need to address climate the value that sustainable development can bring change, key international agreements and changes in Developing the strategy itself proved immensely to a business and how thinking about sustainable governmental policies and regulation. All this indicates a valuable. It was an opportunity to reflect on the past development can be integrated into decision making. need for more ambitious plans and targets. and to consider as a group the impact of our businesses on the world. We recognise the extent to which external Swire Coca-Cola’s leadership in water efficiency and We need to look further ahead and do more to integrate factors can affect our ability to plan and manage our management led it to recognise the value of a holistic sustainable development principles and practices into businesses, and how we can position ourselves to approach to sustainability. Swire Coca-Cola identified our businesses, and to ensure that we are increasingly respond to sustainability challenges. the need to address the use of single use plastics in its resilient and well prepared for whatever long-term own business. It has worked with others in this area sustainability challenges we may face. Climate resilience and biodiversity, which were through the Drink Without Waste initiative and has considered emerging issues for the group at the time, formed a plastic waste recycling joint venture in Hong Dr. Mark Watson have proved to be risks that we were right to highlight. Kong. Head of Sustainable Development These areas have become important in our approach to sustainability and, in the case of climate resilience, What does the year ahead hold for SwireTHRIVE in central to our approach to risk management. We have particular and sustainable development at Swire far more to do in these areas. Environmental, social Pacific more generally? and governance matters are increasingly important to investors and other stakeholders. This will lead to much 2020 will be a pivotal year, both for our strategy and for greater focus on these issues. sustainability generally. We will undertake a thorough review of SwireTHRIVE to ensure that it remains fit for It’s also pleasing to see the impact which SwireTHRIVE purpose and acknowledges the important progress that has had, and the actions which it has stimulated, we have made in areas including diversity and inclusion. in the Group. Group companies develop their own We will need to re-focus our strategy due to the rapidly sustainability strategies and plans. They recognise changing business environment in which we operate and the overall direction set at Group level, but tailor their the increasingly uncertain world around us. SWIRE PACIFIC • 2019 SUSTAINABILITY REPORT 6 INTRODUCTION OUR BUSINESS OUR ENVIRONMENT OUR PEOPLE OUR COMMUNITIES ABOUT OUR REPORT OUR PERFORMANCE HIGHLIGHTS 2019 PERFORMANCE HIGHLIGHTS PROPERTY AVIATION BEVERAGES Carbon reduction target Cathay Pacific Reverse vending machines approved by SBTi 2% fuel efficiency introduced in Hong Kong (first real estate developer in Hong Kong and Mainland (CO2/RTK) (HK$0.20