Sustainability Reports 2022/23

Sun Hung Kai Properties Limited Sustainability Report 2022/23 56 Value Created for Supply Chain Our Reporting Approach Message from the Sustainability Steering Committee Our Business Our Approach to Sustainability Value Created for People Value Created for Community Appendices Value Created for the Environment Value Created for Customers Sanfield incorporates environmental considerations into its contract specifications. These include sustainable practices, such as the use of reusable temporary steel platforms, rechargeable power systems for cranes and material hoists and the replacement of wood formwork with aluminium. In our hotel operations, we give preference to suppliers whose products are biodegradable or recyclable, and certified by the Forest Stewardship Council or Marine Stewardship Council. We support small, medium and social enterprises and, where possible, strive to partner with them for operations and procurement. We also prioritize local sourcing, which benefits the local economy and employment, and minimizes transport, which help reduce logistics-related emissions. Mitigating Risks along the Supply Chain We manage and oversee sustainability issues, including our supply chain management and supplier ESG programme. In particular, Sanfield’s executive management is responsible for overseeing the implementation of the Sustainable Supply Chain Management Guideline and the suppliers/contractors ESG programme to ensure the supply chain is effectively managed. This year, we updated the Sustainable Supply Chain Management Guideline to enhance our supply chain risk management. Environmental and social risks along the supply chain are identified and assessed. Social and environmental factors, such as epidemics, safety incidents, labour disputes, natural disasters and extreme weather can destabilize supplies and increase prices of raw materials and services, eventually disrupting our supply chain and operations. We minimize these impacts via two-way and transparent communication with suppliers, and stay abreast of market developments to seek alternative sources that are reliable and reasonably priced. We communicate our expectations for quality, environmental protection, labour practice, and occupational health and safety to our suppliers and contractors through our Supplier Code of Conduct. We regularly evaluate the performance of suppliers and contractors on our tender list, and closely monitor their compliance. All suppliers and contractors are assessed at least annually for sustainability- related factors. If they breach laws and regulations, fail to meet contract requirements, commit misconducts, or fail to achieve satisfactory results during the contract period, they may be downgraded or delisted. Training provided to our suppliers, contractors and subcontractors raises awareness of ESG issues, including occupational health and safety, environmental management and anti-corruption. Quality assurance training is also provided for all staff and contractors at least once every year. We also build internal supply chain management capacity with training, such as providing ESG training to the procurement team, to educate them about supplier ESG programmes. Sanfield updated its Sustainable Supply Chain Management Guideline to enhance its supply chain risk management via the process of vendor registration, tender selection, sustainability performance- scoring and risk exposure assessment to pursue continuous improvement. We identify critical suppliers and contractors according to procurement spending, and implement specific evaluation procedures. The suppliers and contractors are ranked by their awarded contract sum in aggregate in the reporting period. Critical suppliers and contractors are those that account for 50% of the total contract sum awarded. The sustainability and ESG performance of critical suppliers and contractors – including environmental management, pollution control, labour practices, anti-discrimination, human rights protection, occupational health and safety, anti-corruption, code of conduct and whistleblowing mechanism – are evaluated at least once a year via a due diligence questionnaire. In particular, suppliers and contractors are asked if they have incorporated measures to protect labour practices and human rights, such as ensuring worker’s statutory basic benefits and providing complaint channels, and to prevent discrimination and harassment. We categorize suppliers and contractors according to their scores, enabling us to identify high-risk suppliers and contractors in relation to sustainability and ESG performance. Where necessary, detailed investigations with corrective action plans can be instigated, of our total procurement took environmental considerations into account of our suppliers were locally based 37% ~ 99%