Sustainability Report 2023/24

2 This year, Sanfield did not identify any non-Tier 1 critical suppliers. The number of critical suppliers (Tier-1 and non-Tier 1) was 27. 27 suppliers (100%) were assessed via desk/on-site assessment. No suppliers with actual/potential negative impacts were identified. No suppliers required corrective action, termination or support in corrective action plan implementation. We engaged with all critical suppliers identified in capacity building programmes. who meet Sanfield’s requirements and pass a preliminary evaluation are invited to tender. We assign a minimum weight to ESG criteria when selecting suppliers and contractors. Preference is given to those with better ESG performance. Identification and Management of Critical Suppliers Critical suppliers and contractors are determined according to procurement spending by ranking their awarded contract sum in aggregate during the reporting period. Those who together account for 50% of the total contract sum awarded are defined as critical suppliers and contractors. Their risk identification and management are as follows: Our construction, property management and hotel subsidiaries have implemented comprehensive procedures and guidelines for supplier selection and assessment: Monitoring and Improvement During Contract Period Regular inspections identify and assess safety and environmental concerns, such as air pollution, waste and wastewater. Biannual assessment at construction sites cover work quality, environmental awareness and measures, efficiency and site safety of our suppliers, contractors and subcontractors. Their sustainability performance and scores are taken into account when assessing future tenders. Unveiling Our Sustainability-Linked Payment Services Programme This year, Sanfield unveiled the Sustainability-linked Supplier Payment Services (SPS) programme. The first of its kind in the Hong Kong construction industry, the programme underscores our dedication to working with suppliers and contractors who share our vision for a sustainable construction ecosystem. Under the SPS programme, Sanfield established a series of sustainability targets, Construction including ESG disclosure, safety performance, waste reduction, adoption of innovative technology and carbon-emissions reduction. Sanfield’s suppliers and contractors may benefit from early payment for their goods or projects when they achieve predetermined targets. This improves their cash conversion cycle and hence provides an incentive to boost their ESG performance. As part of the programme, Sanfield organized a seminar on the concept of ESG for critical suppliers and contractors, encouraging them to work together towards a sustainable future. Due Diligence Questionnaire • We assess the sustainability and ESG performance of critical suppliers and contractors at least once a year through a due diligence questionnaire, which covers environmental management, pollution control, labour practices, anti-discrimination, human rights protection, occupational health and safety, anti-corruption, code of conduct and whistleblowing mechanism • Suppliers and contractors should demonstrate their commitment to labour and human rights, including ensuring workers receive statutory benefits, have complaint channels available and are free from discrimination and harassment Verification and Risk Identification • Evidence provided by suppliers is systematically reviewed and verified to ensure its authenticity and accuracy • High-risk suppliers and contractors are identified according to their scores for ESG performance Follow-up • Where necessary, detailed investigations and corrective action are initiated, chaired and overseen by senior management • Suppliers and contractors who achieve unsatisfactory results are not considered for tenders Result • During the reporting year, Sanfield identified 27 of its 419 suppliers and contractors as Tier-1 critical. No assessed suppliers and contractors were considered to have high sustainability risks 2 Paving the way for green construction with our pioneering SPS programme Implementing the Sustainable Supply Chain Management Guideline in Sanfield Sanfield’s guidelines outline its principles and procedures for vendor registration, tender selection, identification of critical suppliers, sustainability performance-scoring, and risk exposure assessment. ESG Requirements for Suppliers Selection We review our purchasing practices regularly, to ensure they align with the Supplier Code of Conduct and Sustainable Supply Chain Management Guideline. Sanfield’s supplier contract specifies the requirements on the use of sustainable materials. Only contractors Sun Hung Kai Properties Limited | Sustainability Report 2023/24 < 74 > Our Reporting Approach Message from the Sustainability Steering Committee Our Business Our Approach to Sustainability Value Created for the Environment Value Created for People Value Created for Customers Value Created for Supply Chain Value Created for Community Appendices