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Assessing materiality

The coverage of our annual sustainability report is determined by reference to a detailed GRI-aligned materiality assessment. The assessment identifies and evaluates the sustainability issues most important to our businesses and stakeholders, for the year under review, at the time of the assessment, and in the near future.

We review our materiality topics annually and conduct an in-depth assessment every two years. In 2023, we conducted a comprehensive materiality assessment that applied the concepts of double and dynamic materiality, which considers both financial materiality and impact materiality, and how these may evolve over a short- to medium-term time horizon. The approach determines topics that positively or negatively influence enterprise value (financial materiality), as well as those that reflect the impacts we have on the economy, environment, and people (impact materiality).

Our comprehensive assessment involved input from a range of external frameworks and stakeholder engagement was a key element of this approach, as recommended by GRI and ISSB. Our assessment had three key phases.

1. Identification

2. Assessment and Prioritisation

Engaging our stakeholders in the process of assessing our priorities is essential. In 2023, an external consultancy conducted one-on-one interviews and focus group discussions with our internal and external stakeholders. We describe our process further in ‘Stakeholder engagement’. Detailed stakeholder feedback was analysed and insights from the materiality assessment exercise were shared with the leadership team and relevant departments.

To assess the impact on society and the environment, we evaluated (a) the likelihood that each sustainability issue’s potential or actual impact will happen in the next three to five years, and (b) the severity if it happens and its impact on the environment, economy, and people in terms of scale, scope, and irremediability or irreversibility.

In line with our Enterprise Risk Management process, we assess financial materiality based on impact to enterprise value considering both vulnerability and impact. A high score may reflect areas where we already have robust management controls in place but where the financial impact is significant (e.g. Climate change mitigation), or it could indicate an emerging issue where we may need to strengthen our policies and practices to reduce our vulnerability (e.g. Responsible sourcing).

Our approach in 2023 built upon our previous assessment in which members of senior management were asked to determine the actual or potential impact of each topic on the Group’s enterprise value using the six areas of our enterprise risk management framework (financial, disruption, reputation, regulatory, human and strategic). They were also asked to consider the Group’s vulnerability to the impacts of each topic, taking account of the level of controls in place to manage the impacts, our readiness to respond and the degree to which we can control the impacts.

Our business partners, investors, peer companies and civil society representatives were engaged to evaluate the severity and likelihood of the Group’s positive and negative impacts for each topic, considering scale, scope and whether impacts are reversible.

3. Validation

Materiality matrix

How the Group impacts on society and the environment through our material topics is described under SwireTHRIVE. This includes any impacts to be mitigated and topics on which we generate value for our stakeholders, and which may influence the decision making of our providers of capital.

The table below shows the most material issues identified, their definitions and the GRI Standards we reference, where applicable.

Topic	Topic definition		Material impact		GRI reference
		Upstream	Own operations	Downstream
ENVIRONMENTAL
Climate change mitigation	The reduction of carbon emissions delivered through energy efficiency of both direct and indirect energy consumed and emissions produced in our operations, production processes, transport, and the use of and investment in renewable energy sources.	•	•	•	GRI 302: Energy GRI 305: Emissions
Climate change resilience	The ability to prepare for and recover from physical and transition climate impacts in our regions of operations.	•	•		GRI 201-2: Financial and other climate risks
Natural capital and resource use	The relationship our business has through its impact and dependency on natural capital, the stock of renewable and non-renewable natural resources, such as plants, animals, air, water, soils and minerals, and the ecosystem services they provide.	•	•	•	GRI 304: Biodiversity
Waste management and circularity	The implementation of a systematic and life-cycle approach to identify, manage, reduce, and responsibly dispose of or recycle effluents and waste, at all stages of sourcing, production, sale, use and end-of-life; including food and packaging, as well as efforts to reduce effluents from operations and manufacturing facilities.	•	•	•	GRI 306: Effluents and waste
Water management	To stimulate water conservation within our sphere of influence and contribute to water positivity through the implementation of a systematic approach to conserve, reduce use of, and reuse water in our operations and supply chain.	•	•	•	GRI 303: Water
SOCIAL
Diversity, equity and inclusion	A commitment to a workforce free of unlawful discrimination involving any distinction, exclusion, or preference that has the effect of nullifying equality of treatment or opportunity; and our efforts to ensure that the company workforce (at all levels, including the Board) reflects our business strategy and the diversity (in gender and age) of the workforce pool in our countries of operation.	•	•		GRI 405: Diversity and equal opportunity GRI 406: Non-discrimination
Employee wellbeing	The part of an employee’s overall well-being (physical and psychological) that they perceive to be determined primarily by work and can be influenced by workplace interventions.		•		GRI 403: Occupational health and safety
Labour practices and human rights	Labour standards in working hours and conditions, wages, compensation and benefits, freedom of association and right for workers to negotiate contracts with their employers, and humane treatment of direct employees.		•		GRI 401: Employment
Local communities	Process of diversification and enhancement of economic and social activity on a local scale in a territory where the company is operating or sourcing materials, including direct or indirect generation of employment resulting from our company’s activities and investing in local development of education and environmental preservation.	•	•	•	GRI 201: Economic Performance
Product quality and safety	Products should be safe for consumers and manufactured in a way that meets appropriate quality assurance standards and applicable regulations.		•	•	GRI 416: Customer Health and Safety GRI 417: Marketing and Labelling GRI 418: Customer Privacy
Talent recruitment and retention	Providing opportunities to promote professional growth and learning among new and existing employees, and matching employee skills with the needs of the business, to remain an employer of choice and retain key talent.		•		GRI 404: Training and education
Technology and innovation	The use of technology and the corresponding impact on labour and human rights including AI to automate white collar jobs, to improve sales/marketing techniques, to enhance surveillance, as well as the impact of robotics and automation on manufacturing, the transportation industry, distribution channels and supply chain logistics.	•	•	•	GRI 401: Employment
GOVERNANCE
Business ethics and anti-corruption	Commitment to comply with voluntary and mandatory regulatory frameworks that are global in scope, as well as established local laws, regulations, standards, and ethical business practices that apply to the organisation including: promoting competitive behaviour; preventing anti-competitive practices; complying with regulatory authorities; working against corruption, extortion, and bribery.	•	•		GRI 205: Anti-corruption GRI 206: Anti-competitive behaviour GRI 419: Socioeconomic compliance
Cybersecurity, privacy and data protection	Mitigation, response, and disclosure measures with respect to matters involving cybersecurity risk and incidents, including cybersecurity policies and procedures and the application of disclosure controls and procedures. Approaches to the way employee and consumer data is captured, stored, and transferred in a secure manner.		•	•	GRI 418: Customer privacy
Responsible lobbying	Efforts to uphold high ethical standards and ensure transparency in lobbying activities.		•		GRI 415: Public Policy
Responsible sourcing	Processes for sourcing external supplies, including supplier relationships and evaluation of suppliers’ environmental and social practices.	•			GRI 408: Child Labour GRI 409: Forced or Compulsory Labour GRI 308: Supplier Environmental Assessment GRI 414: Supplier Social Assessment
Sustainability governance	Corporate level sustainability governance with board level and executive oversight, and defined roles and responsibilities to manage sustainability related matters, including through dedicated functions and teams.		•		GRI 2: General Disclosures 2021

Topic	Impact outward	Impact inward
Climate change mitigation	Due to the diverse nature of our Group, our reduction of carbon dioxide emissions in our operations and value chain, including transport, and the use of and investment in renewable energy reduces the emissions profiles of our operating companies’ customers.	Our stakeholders recognise the increasing risks associated with climate change. Climate change mitigation is particularly important with regards to financial impact as two of the main divisions – Properties and Aviation – are challenging sectors in which to reduce emissions.
Climate change resilience	Stakeholders value efforts to enhance infrastructure resilience and adopt adaptive measures to ensure business continuity in the face of climate-related challenges. Water security is a resiliency issue that Swire Coca-Cola manages well, and with Swire Pacific has set targets to replenish 100% of the water it uses.	The changing climate can potentially impact on our assets, and business continuity due to extreme weather events.
Waste management and circularity	Manufacturing, production and construction can be waste intensive. Waste diverted from landfill can support the circular economy and reduce its negative environmental and health impacts.	Waste Management and Circularity is seen to be increasingly important in some of Swire Pacific’s locations, particularly Hong Kong, where new legislation will be introduced in 2024.
Water management	Withdrawal and consumption of water for agriculture, production and manufacturing, as well as wastewater discharge, can negatively impact the functioning of ecosystems and local communities’ access to water. Implementation of a systematic approach to conserve, reduce use of, and reuse water can stimulate water conservation within the Group’s sphere of influence and contribute to water positivity.	Water security is a resiliency issue in parts of Chinese Mainland which may pose reputational or financial risk. Supply chains may be disrupted due to water scarcity that can impact on prices.
Diversity, equity and inclusion	Swire Pacific has a commitment to a workforce free of unlawful discrimination involving any distinction, exclusion, or preference that has the effect of nullifying equality of treatment or opportunity. With our scale and as we operate in less gender-balanced industries, we can have a positive impact on our workforce.	Increasing diversity in the workforce, leadership and Board results in increased diversity of thought and therefore strengthens Swire’s ability to develop and implement effective business strategies and innovate.
Health & safety	Hazards in our operations, particularly in manufacturing plants and during road travel, can lead to injuries and fatalities. A culture of safety and robust OHS management can support employees to be healthy, safe, and more productive.	Violations of OHS labour standards pose a risk of fines or litigation and to reputation. Maintaining healthy and safe workplaces could also lead to the opportunity that Swire Pacific achieves financial and strategic objectives.
Local communities	Supporting the success of communities where we operate through community investment and volunteering positively impacts communities and stakeholders across multiple issues, and on education, marine, and the arts in particular.	There are potential reputational and revenue benefits associated with strengthening local economies and stakeholders’ prospects for development through community investment projects, infrastructure, services, jobs, and capacity-building.

Overview Stakeholder engagement