Supplier Monitoring and Engagement
GRI 308, 403, 414
HKEX Aspect B4, B5, KPI B4.1, B4.2, B5.2, B5.3
HKEX Aspect B4, B5, KPI B4.1, B4.2, B5.2, B5.3
We aim to build long-term, mutually beneficial relationships with our business partners. We believe that better sustainability performance can enhance the overall resilience of our value chain, while helping supply chain partners mitigate ESG-related risks, operate with greater resource efficiency, enhance their reputation, and capture new business opportunities.
We wish to empower our suppliers to understand, track and improve their sustainability performance and, more importantly, to identify new collaboration opportunities with our partners to innovate sustainability practices.
1. New Supplier Selection
Our e-Contractor List Management System is integrated with our vendor requisition process in Hong Kong and the Chinese Mainland. This automated platform facilitates supplier selection, management and performance analysis and allows for timely updates of supplier information. For new suppliers to be included on the list of approved contractors, they must first complete self-assessment questionnaires to confirm they have appropriate policies and systems in place to comply with our SCoC.
2. Existing Supplier Monitoring
We monitor the compliance status of suppliers on our approved contractors list on an ongoing basis. In addition to requesting regular self-assessments, we may also undertake supplier site visits, request that our suppliers obtain independent certification in accordance with internationally recognised standards, and submit environmental and health and safety management plans for our internal review. We may also arrange regular performance review meetings with selected significant suppliers to communicate emerging ESG issues and any follow-up actions required for continuous improvement.
We continuously refine the performance management system for our technical services providers. Any act of non-compliance or malpractice in the areas of health and safety, environment, procurement, quality and site management is recorded, and the technical provider will be subject to disciplinary action. In 2024, there were no incidents of human rights violations identified across our operations.
3. Understanding and Managing the ESG Risks of Significant Suppliers
Swire Properties’ Business Partner Sustainability Programme is a key initiative that allows us to effectively implement our Supplier Code of Conduct and improve the data transparency, accuracy and reliability of the Scope 3 emissions generated from our supply chain.
Building on the success of our pilot programme, we will further expand to roll out our supplier ESG screening to all active suppliers. A three-tier engagement approach was introduced to understand and identify ESG-related risk across the entire supply chain.
3a. Supplier ESG Risk Screening
In 2024, we began to roll out EcoVadis IQ Plus to all our active suppliers. The EcoVadis IQ Plus is an assessment tool designed to provide a high-level evaluation of a supplier’s ESG performance, enabling Swire Properties to make informed decisions about potential partnerships and procurement strategies. This initial assessment focuses on issues that are relevant to the supplier’s specific industry and operational context (related to country, industry sector and the impact of the commodity) and their significance to our business relevance (including suppliers’ criticality, volume, spending and substitutability).
High risk suppliers identified under the screening will be invited to undergo the second tier assessment. In 2024, 100% of our significant Tier-1 suppliers have undergone the screening. None of our suppliers assessed have been identified with substantial negative impact. Swire Properties will regularise the risk screening process, ensuring that our assessments are responsive to the evolving ESG landscape, such that regulatory developments and emerging sustainability risks are reflected in our risk assessments.
3b. Supplier Self Assessment Questionnaire
Where risks are indicated as high in our screening process and the supplier is of significance to our business (including suppliers’ criticality, volume, spending and non-substitutability), we invite our suppliers to fill in a self-assessment questionnaire, leveraging the EcoVadis’ Vitals, to gain further insights into their governance, management practices and specific actions in place to address these high ESG risk areas.
Suppliers’ ESG risk exposure levels will be adjusted based on the response to this questionnaire. If they are identified as high risk, the supplier will be invited to conduct a detailed ESG assessment when necessary.
3c. Detailed Supplier ESG Assessment
In 2023, we became the first real estate company in Hong Kong and the Chinese Mainland to launch a supply chain sustainability engagement programme through EcoVadis’ proprietary ESG assessment platform. A pilot of the programme was rolled out to 60 of our top suppliers during 2023 and 2024, following the process outlined below:
- Supplier onboarding webinar – Webinars introduced our pilot suppliers to the programme, sharing the Company’s ambition and providing details about the assessment process. The webinar gave the suppliers a clear explanation of the assessment process and highlighted the importance of supply chain sustainability and ESG risk management in their operations.
- Customised questionnaire – Individual suppliers received a customised questionnaire tailored to their industry, country of operation and company size. The questionnaire captured information on their company’s management practices in relation to 21 sustainability criteria, encompassing environmental considerations, labour and human rights, ethics and sustainable procurement. It was structured in alignment with our SCoC, making reference to international sustainability standards such as the Ten Principles of the UN Global Compact, the International Labour Organization conventions, the Global Reporting Initiative standards, the ISO 26000 standard, the CERES Roadmap, and the UN Guiding Principles on Business and Human Rights.
- Carbon disclosure – Suppliers were invited to provide relevant information including their carbon management systems, strategy and performance.
- News watch – The ESG assessment platform utilises a comprehensive news monitoring system that scans over 100,000 data sources, including NGOs, press outlets and trade unions. This process combines AI and human analysis to identify relevant sustainability practices of a company over the past five years, both positive and negative. It also incorporates data from the Global Regulatory Information Database.
Of the 60 suppliers who expressed interest, the supply chain ESG assessment attracted a 70% response rate. These suppliers are based in Hong Kong, the Chinese Mainland and the U.S.A., and together they contributed to more than half of our procurement spend in 2024.
The assessed suppliers’ responses and findings were distilled, analysed and summarised into a scorecard. The suppliers also received detailed insights into their strengths and suggested improvement areas. Their results were benchmarked, helping to compare their ESG performance against other participating peers.
According to our findings, none of these suppliers were considered “high risk” under our Enterprise Risk Management System.
3d. Continuous Supplier Engagement – Benchmarking and Capacity-building
Following the assessments, Swire Properties is conducting continuous engagement with participating suppliers. A debriefing review session provided them with information on the best ESG practices in their industry and gave a priority list of improvement areas. These can help the suppliers implement corrective actions and make improvement plans. Suppliers who participate in the ESG assessment are also given access to EcoVadis’ online e-learning platform which contains courses on sustainability and ESG management practices. The course material covers policies, actions and reporting across a variety of sustainability themes as well as broader topics such as training, certification and risk management. This platform is a valuable resource, giving the suppliers knowledge and skills that will contribute to their overall sustainability performance and enhance their ability to meet the evolving expectations of stakeholders.
We provide regular training for the Company’s buyers and relevant internal stakeholders relevant to their roles in the programme. The programme is regularly reviewed by the Supplier Working Group and the progress is reported to and monitored by the ESGSC.
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