2019 Sustainability Report

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SUPPLY CHAIN

Thriving supply chains

We aim to promote inclusive, ethical and sustainable procurement practices.

With our substantial purchasing power, we expect to create long-term value for those with whom we do business, the communities in which we operate and, therefore, our shareholders.

We have thousands of suppliers globally. They provide goods and services including ships, aircraft, fuel, sugarcane, auditing, office supplies and uniforms. We use our purchasing power and our close relationships with suppliers in ways designed to meet the needs of our businesses and customers.

Sustainable procurement helps to manage risks, improve efficiencies and reduce costs. We aim to procure goods in a way that does not degrade the environment and to only engage service providers who are accountable for their workplace practices.

It is our policy to comply with all applicable laws and regulations relating to procurement. Our own general code of conduct covers procurement and includes relevant provisions about bribery and competition.

Our supply chain by division

Property

Swire Properties’ principal suppliers perform or assist in the planning, design, construction, marketing, sale, leasing, management, maintenance and demolition of properties.

Aviation

The principal suppliers to our airlines are manufacturers of aircraft and engines and suppliers of fuel and engineering services.

Beverages

Supplies obtained by the beverages division directly from The Coca-Cola Company include juices, concentrates and other ingredients, fountain packaging and advertising materials. Goods which The Coca-Cola Company authorises third parties to supply to the beverages division include packaging, speciality merchandise, sales and marketing equipment, sweeteners and carbon dioxide.

Marine Services

The principal suppliers to Swire Pacific Offshore and Hongkong United Dockyards are shipyards, engine manufacturers and suppliers of fuel.

Trading & Industrial

The principal suppliers of footwear and apparel to Swire Resources and of vehicles to Taikoo Motors are international brand-owning companies, with their own sustainability policies and standards.

Our human rights policy

Supplementary information

Human Rights Policy

We respect internationally recognised human rights in line with the principles and guidance contained in the United Nations Guiding Principles on Business and Human Rights. In 2019, we introduced the Swire Pacific Limited Human Rights Policy, which is informed by the International Bill of Human Rights and by the International Labour Organisation’s Declaration on Fundamental Principles and Rights at Work. We comply with national laws where they conflict with human rights standards but still do our best to respect the latter. The policy addresses:

  • Diversity and inclusion
  • Suppliers and contractors
  • Labour practices (including child and forced labour)
  • Health and safety
  • Employment (including flexible working and the right to join or not join unions)

We seek to include, in our agreements with suppliers and contractors, provisions which encourage them to adhere to the principles in our policy.

Cathay Pacific - Human rights

Case study

Cathay Pacific – Human rights

Cathay Pacific adopts business practices that respect international human rights and strive to keep its global operations free from human rights abuse in any form. Their commitment to operating with respect for human rights applies to all aspects of their business operations globally and is integrated across all of their company policies and processes. They assess, identify, monitor and manage the human rights impact of their business activities on an on-going basis.

Cathay Pacific has a modern slavery and human trafficking policy. Cathay Pacific’s Modern Slavery and Human Trafficking Statement is a public document which describes what Cathay Pacific does to fight human trafficking. There is a second internal document which deals with training, collaboration with third parties and supplier due diligence. Frontline staff training in how to recognise and respond to potential human trafficking cases has commenced. Staff learn what signs and behaviour to look out for, what questions to ask to assess the situation and how to safely report suspected cases to authorities.

Our code of conduct

Supplementary information

Supplier Corporate Responsibility Code of Conduct

Our Supplier Corporate Social Responsibility Code of Conduct has been adopted by all our operating companies.

It sets out minimum standards with respect to:

  • Legal and regulatory compliance
  • Forced labour
  • Child labour
  • Health and safety
  • Environmental protection
  • Compensation and working hours
  • Human rights
  • Subcontractor management
  • Ethics and reporting

Our SwireTHRIVE Sustainable Materials Working Group encourages consistent implementation of the Supplier Corporate Social Responsibility Code of Conduct by our operating companies.

Swire Coca-Cola – Cooperating with suppliers

Case study

Swire Coca-Cola – Cooperating with suppliers

Swire Coca-Cola works with suppliers to enhance their awareness of the value of sustainability beyond compliance. Its procurement team works closely with suppliers to develop new technologies, processes and approaches to achieve its sustainable development objectives. Projects underway include:

  • Redesigning aluminium can ends to reduce the material required by 8%, to be rolled out at selected sites in 2020
  • Not using solvents when printing to reduce the release of volatile organic compounds
  • Obtaining PET resin with 10% recycled content in Mainland China, currently only for export
  • Testing a material made from used agricultural film in Mainland China, for use in secondary packaging

Under Swire Coca-Cola’s World Class Operations (WCO) programme, suppliers are encouraged to improve supply risk and continuity, finance, sustainability, capability and productivity, quality and customer service, innovation and regulatory and social responsibility. By the end of 2019, 11 suppliers had participated in the programme. There were 25 improvement projects in relation to carbon emissions, water and waste. Supplier carbon emissions and water consumption was reduced by 490 and 11,000 tonnes respectively in 2019.

Our code in practice

We need to purchase goods on competitive terms, but we must also take due account of labour standards, health and safety and the environment.

Swire Properties collects information from its suppliers about their social, environmental and governance practices and performance. New suppliers must complete self-assessment questionnaires to confirm that they have appropriate policies and systems in place to comply with the Code. Due diligence is performed to verify the responses and sites in Hong Kong and Mainland China may be visited. Independent certification in accordance with internationally recognised standards, and the submission of environmental and health and safety management plans, may be requested for internal review.

In 2019, Swire Properties refined its performance management system for technical services providers. Non-compliance or malpractice in the areas of health and safety, environment, procurement, quality and site management are required to be recorded and may result in disciplinary action. A risk assessment was carried out in 2019 on Swire Properties’ 25 key suppliers in Hong Kong, Mainland China and the USA, by highest procurement spending. None of them exhibited a high risk of non-compliance.

Swire Coca-Cola follows the supplier guiding principles of The Coca-Cola Company. These principles cover workplace policies, health and safety, human rights, environmental protection and business integrity. Swire Coca-Cola’s own major suppliers are audited. Knowledge is shared with other Coca-Cola bottlers in Mainland China in order to better manage procurement. This facilitates the identification and selection of suppliers who follow appropriate procurement principles.

Cathay Pacific requires all suppliers to declare that their products and services comply with the Code. It evaluates suppliers using a scorecard which measures performance in six different areas: cost, innovation, satisfaction, quality, assurance of supply and sustainability.

Cathay Pacific Catering Services has stringent procedures for supplier selection and ingredient procurement, conducting regular audits of its food suppliers’ food safety systems.

HAECO – Supplier compliance monitoring

Case study

HAECO – Supplier compliance monitoring

HAECO group has a four-step process in place to identify, address and mitigate risks in relation to supplier compliance with the Code. It identifies its critical suppliers based on volume of supply and distributes self-assessment surveys to them. It assesses compliance based on their responses and develops an engagement plan using the results. This is performed every three years.

In 2019, self-assessment surveys were sent to 117 suppliers. Questions covered environmental performance, subcontractor management, documentation and inspection. All the suppliers were assessed as exhibiting low or no risks and demonstrated an improvement in their compliance level.

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