Responsible supply chain management is critical to mitigating financial risk, maintaining business continuity, and protecting our reputation. It is integral to protecting and empowering workers in our supply chain and helping to ensure the sustainable availability of natural resources.
As a Group, we source from thousands of suppliers in countries across the globe. They provide goods and services including aircraft parts, fuel, food products, packaging materials, cleaning services, office supplies, and uniforms. We advocate inclusive, ethical and sustainable procurement practices. We aim to source all key materials responsibly and sustainably, in a way that does not degrade nature and ensures that the people who produce them are treated with dignity and respect. This is what our investors, those with whom we do business, and the communities in which we operate expect. Consumers are demanding responsible products and looking for supply chain transparency.
We do not have a central procurement function. Each operating company is responsible for its own procurement. They are guided by Group policies and guidelines that set out the Group’s expectations of suppliers.
All staff involved in making procurement decisions must adhere to the Swire Pacific Sustainable Procurement Policy in conjunction with the respective procurement policies of each operating company, the Swire Pacific Supplier Code of Conduct, and the Swire Pacific Human Rights Policy.
Our Sustainable Supply Chain Working Group is chaired by Group-level sustainability personnel and convenes senior procurement managers from our operating companies to share best practices, develop the policies and guidelines applicable to procurement teams, and to shape team member roles and responsibilities in operating company supplier programmes. External supply chain service and subject matter specialists are invited to help build capacity.
At the operating company level, our businesses determine appropriate supplier ESG programmes for their industries. This includes, for example, applying weighting to sustainability criteria so suppliers or products with better ESG performance get preference, and exclusionary criteria for suppliers identified as not complying with our policies and failing to improve over time.
Our Sustainable Procurement Policy references the sustainable procurement guidance in ISO 20400:2017. It requires our operating companies to establish a process to identify potential sustainability risks in their supply chains and develop a segmented approach to managing suppliers based on those risks.
Under the policy our operating companies should integrate the SwireTHRIVE principles and other material sustainability considerations into supplier selection and retention. Preference should be given to suppliers that have ISO-certified management systems in place, and that can significantly contribute to helping the company achieve its sustainable development objectives. Preference should be given to products which do not adversely affect the environment, including on ecosystems and biodiversity, and that can help us reduce our environmental impact.
Our Supplier Code of Conduct (SCoC) sets out the Group’s requirements for responsible sourcing. It applies to all suppliers and contractors of all Group subsidiaries, associated, and joint venture companies. Suppliers are expected to cascade the SCoC’s requirements to their own suppliers such that they apply to multiple tiers in our supply chain.
The SCoC is based on the International Labour Organization (ILO) Declaration on Fundamental Principles and Rights at Work and the Ethical Trading Initiative (ETI) Base Code. It requires regulatory compliance, prohibits forced or child labour, and sets out our expectations on health and safety, environmental issues, compensation and working hours, human rights, subcontractor management, and ethics and reporting.
We monitor and assess compliance with the Code and other sustainability performance criteria. Where gaps are identified, we may require suppliers to undergo audits and to develop and adopt appropriate corrective action plans to ensure compliance, with a focus on those deemed high risk.
Individuals within our supply chain who suspect or have witnessed actual improprieties can raise concerns in confidence through either of our dedicated whistleblowing channels: directly to Internal Audit Department or through EthicsPoint, a third-party service provider. This sets out our expectation that suppliers should be prepared to be open and transparent in order to verify compliance with the Code.
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Trading & Industrial
We conduct our businesses in a manner which respects the human rights and dignity of our employees, those employed in our supply chains and the communities in which we operate. Our Human Rights Policy is informed by the International Bill of Human Rights and by the International Labour Organization’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. We include in our agreements with suppliers and contractors, provisions which encourage them to adhere to our Human Rights Policy and we expect third parties who deal on our behalf to adhere to its principles.
Swire Properties requires service providers to perform well in the areas of health and safety, the environment, procurement, management, and quality. It is standard practice to require that all suppliers in Hong Kong, Chinese Mainland, and Miami, U.S.A. comply with its SCoC.
New suppliers must complete self-assessment questionnaires to confirm that they have appropriate policies and systems in place to comply with the SCoC. The questionnaire captures information on the company’s management practices on 21 sustainability criteria encompassing environmental considerations, labour and human rights, ethics and sustainable procurement. It includes the criteria outlined by the Ten Principles of the UN Global Compact, the International Labour Organization conventions, the Global Reporting Initiative (GRI) standards, ISO 26000, the CERES Roadmap, and the UN Guiding Principles on Business and Human Rights. Due diligence is performed to verify the responses and sites 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. Suppliers that fail to comply fully with its SCoC risk termination of their contracts, subject to the contractual terms therein, and removal from our approved contractors list.
Understanding and managing ESG risks of its significant suppliers
In 2023, Swire Properties launched a Business Partner Sustainability Programme to effectively implement its SCoC, and improve supply chain data transparency, accuracy and reliability. The programme has three key stages: supplier screening, supply chain ESG assessment, and continuous supplier development.
Swire Properties prioritised 300 of its tier-1 suppliers to engage in the programme. Suppliers were selected based on potential risk of ESG impacts and how critical they are to operations. Through a third-party partnership these top suppliers have been enrolled in a three-year ESG performance assessment cycle using a proprietary platform. Assessment will be regularised based on risk exposure, allowing the monitoring of progress and corrective actions. Suppliers will gain in-depth insights into their strengths and areas for improvement, along with access to information on ESG best practices and valuable resources through an online e-learning platform. In 2023, a total of 100 suppliers underwent the assessment process.
All suppliers of Swire Coca-Cola’s critical materials and ingredients for beverages, packaging and any items with TCCC’s logo must comply with TCCC’s Supplier Guiding Principles (SGP) and Principles for Sustainable Agriculture (PSA). Supplier compliance with the SGP and PSA is verified by independent third-party audits arranged by TCCC. Approximately 460 suppliers were reviewed in 2023.
Knowledge is shared with other Coca-Cola bottlers in the Chinese Mainland to manage procurement better. This facilitates the identification and selection of suppliers who follow appropriate procurement principles.
As part of the China Bottlers Procurement Consortium (CBPC), Swire Coca-Cola works with its suppliers in the Chinese Mainland to strive for a green and low-carbon end-to-end supply chain.
HAECO identifies its critical suppliers based on volume and asks them to complete self-assessment surveys. It assesses their compliance with its requirements and engages with them based on their responses. This is done every two years. Critical supplier audits are conducted periodically when necessary.
Swire Properties tracks consumption of office supplies, building services equipment and building materials that meet specific environmental criteria, such as certifications and accreditations by reputable, independent third parties. The data is used to evaluate its sustainable procurement performance and to identify opportunities for sourcing more sustainable products. In 2023, HK$559 million of sustainable products were procured.
Swire Properties specifies low-carbon concrete, reinforcement bar (rebar) and structural steel in its contract for new developments in Hong Kong. It is working with Tsinghua University to explore the availability of low-carbon building materials in the Chinese Mainland. Swire Properties tracks the consumption and environmental impacts of specific construction materials such as timber, concrete, and rebar, which enables benchmarking across its new developments. It aims to promote greater innovation and availability of low-carbon building materials by sharing its experience with primary contractors and building material suppliers through publications, presentations at conferences and other methods.
Swire Coca-Cola integrates sustainability into its procurement decisions and has committed that by 2025 key agricultural ingredients (sugar and corn) will come from sources verified by third parties to be sustainable. Its procurement teams work with suppliers to identify or develop packaging and cold drink equipment options that help it meet its sustainability targets. A tracking system, introduced in 2020, helps it identify improvement areas and communicate its decarbonisation strategy to suppliers.
HAECO is developing sourcing policies for key materials such as plastic, fuel and gas to provide procurement and buying teams with guidance to make more responsible choices.
For more information on our operating companies’ approaches to sustainable procurement, please refer to each company’s 2023 Sustainability Report.