Sustainability Report 2020/21

Managing Environmental and Social Risks of Our Supply Chain Identifying, assessing and minimizing the environmental and social impacts of our suppliers is the essence of our sustainable supply chain strategy. For example, natural disasters and unpredictable events such as extreme weather, epidemics, safety incidents, labour disputes, as well as shortage of raw material and natural resources may pose threats to the supply chain, leading to an unstable supply of goods or provision of services. While the Supplier Code of Conduct underpins the minimum standards that SHKP expects from our suppliers and contractors, our policies on tendering and suppliers/contractors management further reinforce our expectations by stipulating the requirements and required certifications with regard to quality, environment, energy and occupational health and safety. Regular assessments and evaluations are conducted for suppliers and contractors who have been accepted on our tender list. Sustainability-related factors are assessed at least annually for all suppliers and contractors across all our subsidiaries to ensure their performance stays aligned with our requirements. In cases where suppliers breach laws and regulations, fail to meet tender requirements, commit misconduct, or fail to achieve satisfactory results during the contract period, we will downgrade or delist them from our tender list. Apart from closely monitoring the supply chain risk, we also provide training programmes related to occupational health and safety, environmental management and product quality to raise suppliers’ awareness about respective sustainability issues. For our construction subsidiaries, only those subcontractors who have fulfilled our selection requirements and pass the performance evaluation will be considered during the tendering process. The sustainability performance of suppliers, contractors and subcontractors is assessed biannually during the contract period. Use of sustainable materials for construction is integrated into the contract work specifications. To identify and manage potential environmental issues arising from air pollution, waste management and wastewater treatment, we carry out regular inspections on our construction sites. All staff and subcontractors are required to attend training on quality assurance at least once every year. During the reporting year, we have launched an exercise to study and identify Volatile Organic Compound (VOC) absorbing or air-purifying paint products which are able to further improve the indoor air quality of our development when completed. The property management subsidiaries require every supplier and contractor to sign an Environmental, Occupational Health and Safety (OHS) Commitment form and to comply with our environment and energy related policies. Preference is given to suppliers and contractors who can demonstrate their commitment to occupational health and safety as well as environmental management. To minimize potential health risk in the supply chain, Hong Yip has participated in the Charter on Preferential Appointment of OSH Star Enterprise scheme to give preferential appointment to OSH Star Enterprises which have sound safety management systems and have passed the Occupational Safety and Health Council’s stringent safety audits to carry out repair, maintenance, alteration and additional works. Our hotel business operation is specifically exposed to food-safety risks. As such, we pay high attention to ensure proper food processing and transportation. Through preliminary qualification checks, suppliers are required to provide certificates such as product laboratory test reports, effective food factory licences, food safety certificates and food grade certificates to prove their materials meet our safety and quality requirements. Supplier questionnaires, food sample laboratory testing and pre-delivery quality checks are also performed to ensure the high quality of the products. Food health certificates are required for each delivery. Suppliers’ performance in terms of the quality of products, punctuality of delivery and after- sales services is assessed periodically. In addition, the Group carries out audits and on-site inspections annually on risk factors related to personal hygiene, food- processing and storage conditions, waste management, safety of working conditions, validity of food safety certification, chemical storage management, equipment cleaning and pest control, ensuring public health and food safety requirements are met. Special attention is given when handling high-risk food such as ready-to- eat food and fresh seafood. During the coronavirus pandemic, we have undertaken stricter control measures for our suppliers such as requiring them to sign health declaration forms, as well as requesting temperature screening for any person who enters hotel premises. In case of non-compliance by the food suppliers, immediate rectification is required, followed by a re-audit. During the reporting year, 100% of our food suppliers in use fulfilled the requirements of our food audits. We also strive to reduce our environmental and social impacts with suppliers and contractors in our operations through the adoption of new technologies such as the application for carbon reduction and efficient use of resources at construction sites. For example, our construction site at Sai Sha Road was the first project in Hong Kong to introduce solar photovoltaic systems, which is expected to generate 50,000 kWh of electricity anually for on-site electrification. In addition, we applied early electrification and low-carbon concrete to further reduce the project’s carbon footprint and used integrated tree-management platforms to monitor the conditions of the trees throughout the entire construction process. The project received the Gold Award Contractor in New Works at the CIC Sustainable Construction Award 2020 by Construction Industry Council (CIC) in recognition of its innovations and significant contributions to sustainability. Value Created for Supply Chain Sun Hung Kai Properties Limited • Sustainability Report 2020/21 36