Sustainability Reports 2022/23

Sun Hung Kai Properties Limited Sustainability Report 2022/23 57 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 chaired and overseen by senior management. Suppliers and contractors who fail to achieve satisfactory results are removed from the tender list. During the reporting year, Sanfield identified 23 of its 452 suppliers and contractors as Tier-1 critical. No assessed suppliers and contractors were considered to have high sustainability risks 2 . During the contract period, we undertake regular inspections to identify and assess safety and environmental issues, particularly air pollution, waste and wastewater. All suppliers, contractors and subcontractors are analyzed biannually on their sustainability performance at construction sites, including work quality, environmental awareness and measures, efficiency and site safety. On-site performance scores are recorded and taken into account when assessing upcoming tenders. We continuously review our purchasing practices to ensure alignment with our Supplier Code of Conduct and Sustainable Supply Chain Management Guideline, and to avoid ESG lapses. Sanfield integrates the use of sustainable materials in the contract specifications. Only contractors who fulfil our requirements and pass a preliminary evaluation are considered for tendering. We apply a minimum weight to ESG criteria in supplier and contractor selection and contract awarding. Suppliers and contractors with better ESG performance are preferred. All suppliers and contractors of our property management subsidiaries are required to sign an Environmental, Occupational Health and Safety Commitment and comply with our environment and energy-related policies. Hong Yip’s tendering system, ePro, enables suppliers to receive invitations and submit their tenders online. To identify and manage ESG risks in its supply chain, Hong Yip requires vendors to complete self-assessment of managerial competency, financial conditions, labour compliance and safety during registration. Vendors’ profile and performance are assessed and scored annually, and assessment scores will be adopted in tender analysis as an indicator of vendor’s quality. Those who perform poorly may earn verbal or written warnings, or may be subject to removal from the list of approved vendors. A vendor complaint management system has also been set up to monitor performance and ensure quality. For sizeable projects, vendors are required to submit method statements, work programmes and delivery schedules for approval. Food safety is a top priority for our hotels. To uphold the highest standards in processing and transport, all suppliers are required to sign both the Food Safety Declaration Forms and Health Declaration Forms, and to comply with our safety and quality standards. We also require suppliers to provide business registration documents, food factory licenses, laboratory test reports for products, food health and safety certificates as well as food-grade certificates during preliminary qualification checks. During the contract period, we periodically assess our suppliers’ product quality, punctuality of deliveries, and aftersales service via questionnaires, laboratory tests, pre-delivery quality checks and end-product quality surveys. Audits and on-site inspections are conducted annually to ensure suppliers fulfil our standards for personal hygiene, food processing, storage, waste management, site safety, food safety certification, chemical storage, equipment-cleaning and pest control. We take extra precautions with high-risk products, such as ready-to-eat food and fresh seafood. In the event of non-compliance, immediate rectification is required, followed by a re-audit. During the reporting year, 97% of our active suppliers fulfilled our food-audit requirements. We suspended our procurement from the supplier who failed our food audit. Innovation and technology enhance efficiency and allow us to maintain the highest standards of quality and safety. We incorporate cutting-edge technology into our construction processes and work closely with our business partners to put sustainability into practice and avoid negative impact arising from our operations and value chain. Adopting the Concept of Central Project Office Delivering high quality, timely and cost-effective projects requires forward-thinking and innovation. At our new construction site of the High Speed Rail West Kowloon Terminus project, a Central Project Office (CPO) was established to ensure effective project management and communication with the development’s international architects and engineering consultants. The CPO is equipped with the latest technology, including Cave Automatic Virtual Environment and digital tools that enable the team to visualize and simulate complex construction scenarios. It enhances productivity and provides a better working environment, thanks to its smart interior design and digital technology. CASE STUDY Enabling Digital Transformation for Construction The CPO provides a digitalized and comfortable working environment 2 This year, Sanfield did not identify any non-Tier 1 critical suppliers and the number of critical suppliers (Tier-1 and non-Tier 1) remained 23. 23 suppliers (100%) were assessed via desk assessment/on-site assessment and no suppliers were identified with actual/potential negative impacts. As a result, no suppliers required corrective action/improvement plan, termination or support in corrective action plan implementation. We engaged with all the critical suppliers identified in capacity building programmes.