Sustainability Report 2021/22

Value Created for Supply Chain 40 Sun Hung Kai Properties Limited • Sustainability Report 2021/22 Managing Environmental and Social Risks of Our Supply Chain ranked by their awarded contract sum in aggregate and they accounted for more than 50% of the awarded contract sums during the reporting year. The sustainability or ESG performance of critical suppliers and contractors will be evaluated at least once a year via a due-diligence questionnaire, which covers environmental management, pollution control, labour practices, anti-discrimination and human rights protection, occupational health and safety, anti-corruption, code of conduct and whistleblowing mechanism. Risk exposure assessments are reviewed by the management of relevant divisions. We categorize suppliers and contractors with scores, enabling us to identify the sustainability high-risk suppliers or contractors, so that detailed investigations with corrective action plans can be instigated, chaired and overseen by senior management. During the reporting year, Sanfield identified 23 of its 322 suppliers and contractors as Tier-1 critical. No assessed suppliers and contractors were considered to have high sustainability risks. In addition, we conduct regular inspections and assess the sustainability performance of all suppliers, contractors and subcontractors biannually at the construction sites during the contract period, covering work quality, environmental awareness and measures, efficiency and site safety. The safety and environmental issues, particularly air pollution, waste and wastewater, could be identified and managed. Their on-site performance scores are recorded in our system and will also be considered when continuing tenders. All suppliers and contractors of our property management subsidiaries are required to sign an Environmental, Occupational Health and Safety (OHS) Commitment, and to comply with our environment and energy-related policies. To foster sustainable practices across our supply chain and the industry at large, we give preference to suppliers who integrate occupational health and safety as well as environmental management into their operations. For example, OSH Star Enterprises that pass the Occupational Safety and Health Council’s strict safety audits are preferred for repair, maintenance and alterations. Suppliers who participate in the Environment and Ecology Bureau’s Energy Saving Charter and 4T Charter Schemes are particularly We identify and assess environmental and social risks along the supply chain, and communicate with suppliers to minimize the impact of those risks. Social factors, such as epidemics, safety incidents and labour disputes, as well as environmental factors, such as natural disasters and extreme weather conditions, including heatwaves or heavy rainfall, can create unstable supply and rising prices of raw materials and services, eventually disrupting our supply chain and operations. To minimize those impacts, we maintain a two-way and transparent communication with suppliers. We stay up-to-date with market information and seek alternative sources with stable supply at reasonable price. By circulating our Supplier Code of Conduct, we clearly convey to our suppliers and contractors the standards that we expect with regard to quality, environment, energy, labour practice and occupational health and safety. We closely monitor compliance and regularly assess and evaluate the performance of our suppliers and contractors on our tender list. Sustainability-related factors are assessed at least annually for all suppliers and contractors across our subsidiaries. Those who breach laws and regulations, fail to meet tender requirements, commit misconduct, or fail to achieve satisfactory results during the contract period may be downgraded or delisted. Apart from closely monitoring the supply chain, we offer training relating to occupational health and safety, environmental management and anti-corruption to raise their awareness of respective issues. All staff and contractors are also required to attend training on quality assurance at least once every year. In Sanfield, the use of sustainable materials is integrated into the contract work specifications. Only contractors who fulfil our requirements and pass a preliminary evaluation are considered for tenders. This year, we refined our sustainable supply chain management. A Sustainable Supply Chain Management Guideline is in place, which outlines general principles for vendor registration, tender selection, identification of critical suppliers, performance scoring and risk exposure. We further enhanced our sustainable supply chain risks management by identifying critical suppliers based on procurement spending, and implemented designated evaluation procedures. Critical suppliers refer to suppliers who are highest up in the list