This year marks a significant milestone for Swire Properties. After six years of reporting our climate-related financial disclosures, we are now integrating nature-related disclosures. Our approach to sustainability recognises the interconnectedness of climate change, nature and biodiversity, all of which are essential for the wellbeing of both society and the environment.
People cannot thrive without healthy ecosystems and a stable climate, which is why policymakers need to act ambitiously on climate and nature together.
The interdependence of climate, nature and biodiversity is undeniable – changes in climate significantly affect an ecosystem’s ability to sustain biodiversity and regulate climate disturbances. Recognising this interconnectedness is crucial to understanding the risks, opportunities and financial implications associated with climate- and nature-related issues. Adopting a holistic approach to managing climate- and nature-related risks and opportunities enhances our decision-making and strategic planning processes, while the transparency of this strategy will provide stakeholders with the necessary information to make informed decisions that align with our sustainability objectives.
Climate-related Disclosures
IFRS S1 and IFRS S2, inaugural standards published by the International Sustainability Standards Board (“ISSB”) in 2023, align with the four main recommendations and eleven suggested disclosures put forth by the Task Force on Climate-related Financial Disclosures (“TCFD”), and with additional requirements such as industry-specific metrics.
We have prepared our disclosures in this chapter with reference to the revised Environmental, Social and Governance Reporting Code (“HKEX ESG Code”) published in April 2024. The HKEX ESG Code, formerly known as the “Environmental, Social and Governance Reporting Guide” and now Appendix C2 of the Main Board Listing Rules, introduces enhanced climate-related disclosure requirements based on the IFRS S2 standard in Part D. Although the new requirements will be effective for reporting periods on or after 1 January 2025, our proactive approach to prepare for the HKEX ESG Code in advance underscores our commitment to transparency and accountability in our sustainability practices, ensuring we are well- prepared for forthcoming regulatory changes.
Nature-related Disclosures
Swire Properties is one of the 40 Task Force on Nature-related Financial Disclosures (“TNFD”) Global Taskforce Members to provide strategic direction to the TNFD Secretariat in the development, consultation and dissemination of the TNFD framework. We are also one of the 320 global companies that joined the inaugural TNFD Early Adopter programme, committing to publish our TNFD-aligned disclosures in our Sustainability Report 2024. This commitment follows our publication of nature-related impacts, dependencies, risks and opportunities based on the TNFD framework in our Sustainability Report 2023.
Our Approach To Climate and Nature
In this report, we have prepared our climate- and nature-related financial disclosures under the four pillars of Governance, Strategy, Risk Management, and Metrics and Targets, with reference to the IFRS S2, HKEX ESG Code and TNFD recommendations.
This section has followed the IFRS-S1 General Requirements to disclose material information about the climate and nature-related risks and opportunities that could reasonably be expected to affect the Company’s prospects. Materiality is defined as, if omitting, misstating or obscuring such information could reasonably be expected to influence decisions that stakeholders make on the basis of this report.
Since 2018, we have been analysing risks and opportunities to understand how climate-related risks, including both physical and transition risks, may impact our business operations and our stakeholders. We assess and disclose potential climate-related risks and opportunities in our business development planning, facility management and enhancements, and day-to-day operations. We also conduct specific physical climate risk assessment and climate resilience studies for our new projects under development. In addition to our climate scenario analyses, in 2023 we adopted the TNFD’s LEAP (“Locate, Evaluate, Assess and Prepare”) approach to analyse our nature-related risks and opportunities.
We aim to continuously deepen our understanding of the potential financial impacts that may arise from physical and transition risks and opportunities related to climate and nature. This year, we piloted the evaluation of nature-related dependencies, impacts, risks and opportunities for key construction materials used in our building construction, including steel and concrete. The results will inform the management of climate- and nature-related risks and opportunities of our portfolio and the development of targeted approaches to enhance resilience and improve resource circularity. This knowledge will also support efforts to engage stakeholders effectively, communicate our sustainability initiatives and align procurement practices with industry best practices.
This section outlines our approach to identifying, assessing and managing both climate- and nature-related risks and opportunities. We seek to provide integrated disclosures that include metrics and standardised qualitative disclosures to evaluate how climate- and nature-related matters and the associated risks and opportunities affect our business.
Swire Properties’ governance around climate- and nature-related risks and opportunities
Board of Directors
The Board of Directors has the responsibility to set and approve the strategic direction of the Company on sustainability, including climate- and nature-related matters. Our SD agenda and the progress of the decarbonisation and other ESG targets under our SD 2030 Strategy are reported and discussed at every board meeting. The Board is responsible for ensuring effective risk management and internal controls, reviewing the adequacy of resources and staff qualifications and evaluating the Company’s financial and ESG-related policies and practices to support sustainable development. The Board of Directors has appointed the Audit Committee to oversee the Company’s financial reporting, risk management, internal control systems and ESG-related matters.
On behalf of the Board, the Audit Committee annually reviews the continued effectiveness of the Group’s risk management and internal control systems dealing with risk and financial accounting and reporting, the effectiveness and efficiency of operations, compliance with laws and regulations, risk management functions and ESG-related policies, practices and matters.
Our corporate risk register incorporates ESG-related risks, including climate- and nature- related risks. We have also integrated SD factors into our corporate risk analysis.
ESG Steering Committee (“ESGSC”)
The ESGSC is chaired by our Chief Executive. Other members are the Finance Director and six strategic leaders from the Human Resources and Administration, Portfolio Management (Office), Portfolio Management (Retail), Projects, Public Affairs and Facilities Management and Sustainable Development departments respectively and an Independent Non-Executive Director, who is the Chair of our Audit Committee. The Chair of the ESGSC reports relevant SD matters, including climate- and nature-related issues, to the Board five times per year.
The ESGSC meets at least quarterly and, in accordance with its terms of reference, has the following overall responsibilities related to climate and nature:
- Formulate and review the Company’s SD 2030 Strategy and climate and nature policies and strategies, including reviewing targets or key initiatives related to climate change mitigation and adaptation and building resilience for climate and nature transitions.
- Review any significant risks, opportunities and investments regarding climate change, energy/carbon management and low-carbon and nature transitions.
- Review on an annual basis the Company’s performance in achieving our energy intensity reduction and decarbonisation targets, including progress towards achieving our science-based targets and other climate change- and nature-related KPIs.
- Review and approve internal carbon pricing (“ICP”) funded projects to assess the potential impacts of carbon emissions on our investments, quantify carbon risks to our business operations, and allocate capital more effectively to low-carbon and energy efficient investments and opportunities.
- Oversee the overall ICP mechanism, project approvals and monitor the performance of approved projects.
Both the Board and the ESG Steering Committee have sufficient knowledge of climate-related issues and the impacts of such issues on the Company's business and operations. To ensure that our Board, the ESGSC and all employees remain informed and that their knowledge is up to date, we provide regular training and materials on climate- and nature-related topics. This training equips employees with the latest information and our strategies to effectively address sustainability issues.
We have established corporate SD performance metrics and targets in areas such as health and safety and decarbonisation that are linked to the variable compensation of our CE, relevant strategic leaders and the general managers of our portfolios. General managers use a balanced scorecard to monitor performance around energy and water management, staff turnover rate and training hours and performance targets related to energy management in their respective portfolios.
SD Working Group
Our SD 2030 Performance (Environment) Working Group is comprised of members with technical expertise in climate- and nature-related issues. Their skills allow the group to develop and implement different mitigation and adaptation policies and measures, and facilitate the integration of climate- and nature- related strategies and management best practices into our business development and operations.
SD Communication and Engagement Committee
We regularly engage with our stakeholders to understand their priorities, expectations and perceptions regarding SD issues, including climate and nature-related matters. In 2023, we conducted a materiality assessment review to gather feedback from over 600 internal and external stakeholders through qualitative interviews and a quantitative survey. The topics of green building construction and renovation, energy efficiency, decarbonisation, climate adaptation and resilience were identified as material issues to our business continuity and development. A significant shift was observed in stakeholders’ perceptions towards biodiversity, highlighting its increasing impacts on the environment, society and our business. These issues are consistent and have been incorporated into our SD 2030 Strategy.
Our Stakeholder Engagement Strategy focuses on reputation management, engaging key stakeholders including government entities, media outlets and community organisations. This strategy is built around four key pillars:
- Government relations: Strengthening partnerships and communication with government bodies to advocate for sustainable practices and policies.
- Media relations: Enhancing our presence and narrative in the media to effectively communicate our sustainability efforts and achievements.
- Internal communications: Fostering a culture of transparency and engagement within the Company to ensure all employees are informed of and involved in our sustainability goals.
- Community engagement: Building strong relationships with local communities to support and promote our sustainability initiatives and gather valuable feedback.
Major Sustainability Policies
We recognise the risks and opportunities presented by climate change and nature degradation to our business. We have a suite of sustainability policies in place that allow the Company to respond to the effects of climate change and protect nature and local communities.
Sustainable Development Policy
Swire Properties aims to be a leader in sustainable development in the real estate sector by 2030. Our focus is on reducing carbon emissions, minimising waste, using water responsibly and protecting natural resources.
Climate Change Policy
We are committed to communicating our management approaches and strategies for climate mitigation, adaptation and resilience to our stakeholders. Our Climate Change Policy details our strategy to mitigate climate risk and enhance resilience.
Biodiversity Policy
Swire Properties recognises that there are biodiversity risks to our business and integrates nature and biodiversity considerations into our developments and operations. Most projects are in urban areas, and assessments of our direction operation show no significant impacts on global or national sites of high biodiversity importance.
Water Policy
Our Water Policy cites our commitments around the responsible use of water. These include understanding the water risks in places where our developments are located; reducing water consumption intensity through improved design; implementing efficient water management measures during operations; ensuring that water is discharged into the environment safely; and engaging our stakeholders to encourage the responsible consumption of water.
Resource and Circularity Policy
This policy guides our approaches to reducing waste, from the design and construction phases of our projects to the daily operation and management of our buildings.
Human Rights Policy
We uphold human rights in our operations and supply chains, and encourage our partners to do the same. Our policy aligns with international human rights standards, including the UN Guiding Principles and the International Labour Organisation’s Declaration.
All policies are reviewed from time to time as appropriate, and at least once every three years.