ISSUER TRAINING ON ENVIRONMENTAL, SOCIAL AND …mms.prnasia.com/hkex/20160322/english/Presentations.pdf · 2016-03-22 · Environmental – Aspect A3: The Environment and Natural

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ISSUER TRAINING ON ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTING GUIDE

RUNDOWN

10:30 – 10:35 Opening Speech 10:35 – 11:00 Introduction of ESG Guide 11:00 – 12:00 Practical Training 12:00 – 12:30 Q & A

ISSUER TRAINING ON ENVIRONMENTAL, SOCIAL

AND GOVERNANCE REPORTING GUIDE

March 2016

Listing Department

2

Disclaimer

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The information contained in this document and training seminar is for general information purposes only. It is not directed at, and is not intended for distribution to or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation or which would subject Hong Kong Exchanges and Clearing Limited (“HKEX”), or The Stock Exchange of Hong Kong Limited (“SEHK”) (together, the “Entities”, each an “Entity”), or any of their affiliates, or any of the companies that they operate, to any registration requirement within such jurisdiction or country. No section or clause in this document may be regarded as creating any obligation on the part of any of the Entities. Neither of the Entities guarantees the accuracy, validity, timeliness or completeness of the information or data contained herein for any particular purpose, and the Entities and the companies that they operate shall not accept any responsibility for, or be liable for, errors, omissions or other inaccuracies in the information or for the consequences thereof. The information set out in this document is provided on an “as is” and “as available” basis and may be amended or changed. It is not a substitute for professional advice which takes account of your specific circumstances and nothing in this document constitutes legal advice. Neither of the Entities shall be responsible or liable for any loss or damage, directly or indirectly, arising from the use of or reliance upon any information provided in this document. Each issuer is unique and, as such, should develop its own steps and procedures for Environmental, Social and Governance reporting in view of its specific circumstances.

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1

Agenda

Introduction

2 How to Prepare an ESG Report

3 General Disclosures of ESG Guide

3

INTRODUCTION

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5

Background

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2011-2012

31 Dec 2012

2015

1 Jan 2016

1 Jan 2017

Consultation on ESG Guide

Implementation of ESG Guide

Consultation on Review of ESG Guide

Rule changes, upgrade of “General Disclosures” to “comply or explain” and revised recommended disclosures effective

Upgrade of Environmental KPIs to “comply or explain” effective

1 2 3 Introduction

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Appendix 16 and Companies Ordinance

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1 2 3 Introduction

Appendix 16, Para 28(2)(d)

Applies to all issuers listed on the Exchange (regardless of place of incorporation) for financial years ending on or after 31 December 2015

Companies Ordinance, Schedule 5

A discussion of certain ESG matters in the business review section of the annual directors’ report:

Environmental policies and performance

Compliance with relevant laws and regulations that have a significant impact on the company

An account of key stakeholder relationships

Incorporated into

Upgrading ESG Disclosure Obligation

ESG Reporting Guide

Rule 13.91

− Obligation to publish an ESG Report on an annual basis, covering the same financial year as annual report

Provisions in the Guide – two levels

− “Comply or explain” provisions − Recommended disclosures

“Comply or explain” provisions: − General Disclosures − Environmental KPIs

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1 2 3 Introduction

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New Structure of ESG Guide

A. Environmental B. Social

Emissions Use of resources Environment and

natural resources

Employment and Labour Practices Employment Health and safety Development and

training Labour standards

Operating Practices Supply chain

management Product

responsibility Anti-corruption

Community Community

investment

Aspects Aspects

ESG Subject Areas

1 2 3 Introduction

Use consistent methodologies for meaningful comparisons of ESG data over time

ESG report should provide an unbiased picture of an issuer’s

performance

Where ESG issues become sufficiently important to investors and other stakeholders to be reported

Key Performance Indicators (KPIs) should

be measureable and accompanied by

a narrative

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Reporting Principles

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Materiality Quantitative

Balance Consistency

1 2 3 Introduction

HOW TO PREPARE AN ESG REPORT

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11

How to Prepare an ESG Report

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Key Steps for ESG Reporting

Toolkit

Reporting Guidance on Environmental KPIs

Available on the ESG page in the HKEX website: http://www.hkex.com.hk/eng/rulesreg/listrules/listsptop/esg/howtoprepare.htm

1 2 3 How to Prepare an ESG Report

http://www.hkex.com.hk/eng/rulesreg/listrules/listsptop/esg/howtoprepare.htm

http://www.hkex.com.hk/eng/rulesreg/listrules/listsptop/esg/howtoprepare.htm

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Key Steps for ESG Reporting (For general reference only)

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1 ESG working group

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Understand standard requirements

Reporting boundary

Materiality assessment

Writing the ESG Report

Key stakeholders

Information collection for General Disclosures and data collection for KPIs

1 3 How to Prepare an ESG Report

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Toolkit

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A process to identify General Disclosures and KPIs that are material to the issuer

The Toolkit contains practical tools to assist issuers in identifying the appropriate information for disclosure in respect of each of the General Disclosures and KPIs

Materiality and Relevance

A process to select and engage its stakeholders

Collect information and identify information gaps

Stakeholder Engagement Data Collection

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ESG Reporting Flowchart (For general reference only)

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2

See next slide

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ESG Reporting Flowchart (For general reference only)

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Reporting Guidance on Environmental KPIs

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Contains data collection methodologies and practical guidance on how to collect the information and calculate the data called for under the Environmental KPIs

For each Environmental KPI, sets out:


What to Report

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How to Report

GENERAL DISCLOSURES OF ESG GUIDE

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“Comply or Explain” Provisions of ESG Guide

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1 2 3 General Disclosures

of ESG Guide

Environmental General Disclosures and KPIs

Social General Disclosures

General Disclosures

General Points

Example disclosures are based on previous ESG Guide or other existing

international ESG reporting guidance Example disclosures are not “model” answers Formulate General Disclosures according to your specific circumstances Tailor General Disclosures to address the interests and concerns of stakeholders

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of ESG Guide

General Disclosures

If not comply, how to explain?

Explanations should be as full as necessary to meet stakeholders’ expectations and

based on issuer’s own unique circumstances

May consider including action plans for mitigations

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of ESG Guide

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Environmental - Aspect A1: Emissions

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of ESG Guide

General Disclosure Information on: (a) the policies; and (b) compliance with relevant laws and regulations that have a significant impact on the

issuer relating to air and greenhouse gas emissions, discharges into water and land, and generation of hazardous and non-hazardous waste. Note: Air emissions include NOx, SOx, and other pollutants regulated under national

laws and regulations.

Greenhouse gases include carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons and sulphur hexafluoride. Hazardous wastes are those defined by national regulations.

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of ESG Guide

Environmental - Aspect A1: Emissions - Examples

Aspect A1 General Disclosure

“At PetroChina, we strictly monitor waste discharge during production, reinforce environmental monitoring capacity, complete the installation and data networking of online monitoring equipment for waste water and waste gas, and perform real-time monitoring and early warning of discharge from major pollution sources, to ensure treatment at source and process monitoring. We make every effort to reduce waste emissions. Our emission reduction objectives are broken down to all the subsidiaries and integrated into the performance evaluation of the subsidiary top management. We have established the emission reduction verification and accounting center to verify the emission reduction measures and performance of key subsidiaries on site.”

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of ESG Guide

Environmental - Aspect A1: Emissions - Examples

Aspect A1 General Disclosures

“Each of the Group’s power plants has installed a monitoring system to monitor the emission volume of sulphur dioxide and nitrogen oxides on a real-time basis. The emission is inspected regularly to determine whether the relevant standard has been satisfied before discharging. During the power generation process, conventional coal-fired power plant discharges waste water and emits air pollutants, such as sulphur dioxide, nitrogen oxides and fine particles. The Group’s power plants are fuelled with natural gas which is a cleaner fossil fuel. Unlike conventional coal-fired power plants, the Group’s power plants emit significantly less amount of nitrogen oxides and barely any sulphur dioxide and fine particles. For the same amount of heat generated, combusting natural gas releases less than 50% carbon dioxide as compared to combusting coal. The Group believes that the environmental protection system and facilities of our power plants are in full compliance with the national and local regulations on environment protection.”

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of ESG Guide

Environmental – Aspect A2: Use of Resources

General Disclosure Policies on the efficient use of resources, including energy, water and other raw materials. Note: Resources may be used in production, in storage, transportation, in buildings, electronic equipment, etc.

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of ESG Guide

Environmental – Aspect A2: Use of Resources - Examples


“Efficiently Using Resources and Reducing Waste Resources such as energy, water and raw materials are essential inputs to our business. Li & Fung is committed to using resources wisely and efficiently and reducing waste generation within our own operations. Throughout all of our operations, we have been progressively implementing water-efficiency measures, ranging from the installation of water-efficient faucets, fixtures and fittings in our offices and equipment in our facilities, to the behavioral change of our people. This has enabled us to achieve year-on-year intensity reductions in water usage within our Trading business from 2011 to 2013, despite water consumption increasing in absolute terms as our operations expanded. In 2013 and against our baseline of 2010, consumption intensity reduced by 5% per person within Trading. With our new baseline of 2014, absolute water consumption reduced within Logistics. An increase within our Trading business is attributed to an expansion of business volume within our manufacturing facilities in Malaysia and Indonesia. Within our manufacturing facilities, systems are in place to reduce water consumption and waste generation in the production process, to treat and monitor wastewater discharges, and to handle, store and dispose of chemical and solid materials and waste. In 2014, all facilities operated in compliance with regulatory requirements…”

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of ESG Guide

Environmental – Aspect A2: Use of Resources - Examples


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of ESG Guide

Environmental – Aspect A3: The Environment and Natural Resources

General Disclosure Policies on minimising the issuer’s significant impact on the environment and natural resources.

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of ESG Guide

Environmental – Aspect A3: The Environment and Natural Resources - Examples


“Implementing sustainable development China Wind Power and its subsidiaries follow strict sustainable development methods throughout their operations. In the process of design, development, construction and operation of each project, the Group and its subsidiaries put the environment and biodiversity as one of their top priorities. During the design and development of wind farm projects, the potential impact of the surrounding environment is evaluated, and measures are implemented to slow down or prevent such effects. During the construction and operation of the projects, the company places great emphasis on the prevention of soil erosion, and uses engineering, biological and temporary measures to form the soil and water conservation and recovery system. The company strives to improve its technical know-how in order to reduce the environmental impact of its operations.”

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of ESG Guide

Environmental – Aspect A3: The Environment and Natural Resources - Examples


“Environmental Management We take into account the environmental impact of our activities and decisions, improve the environmental management system, strengthen target and responsibility assessment, and environmental supervision and management, and strictly control environmental risks, in order to minimize our negative impact on the environment during operation and production. Environmental management is implemented in the whole process of construction projects, and preliminary environmental impact assessments are required in experimental pre-EIA projects. For each construction project, environmental protection facilities are required simultaneously with the main project in the process of design, construction and operation. With regard to environmental risk factors in production, such as oil & gas spills, emissions and waste discharge, we have developed a multi-tiered risk management mechanism and formulated strict environmental protection measures, to eliminate pollution and protect the ecological environment at the source. While working in environmentally sensitive areas, we strive to minimize the occupation of arable land, ensure soil and water conservation, and take measures to restore vegetation restoration measures, in order to restore the ecological environment and protect the biodiversity wherever we operate.”

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of ESG Guide

Social – Aspect B1: Employment

Aspect B1 General Disclosure Information on: (a) the policies; and (b) compliance with relevant laws and regulations that have a significant impact on the issuer relating to compensation and dismissal, recruitment and promotion, working hours, rest periods, equal opportunity, diversity, anti-discrimination, and other benefits and welfare.

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of ESG Guide

Social – Aspect B1: Employment - Examples

Aspect B1 General Disclosure

“To reinforce the employees’ sense of belongings to the Company, a wide range of sports events are provided by the Company for its employees every year, including basketball and table tennis contests, etc. In addition, we have provided activities that are of educational significance and served to enhance the work performance of our employees, including the “Business Oral English”, “Training and Assembly for Fire”, “Sales Training”, “Joint Training and Team Building Program for Financial Department”, and “Annual Sales Meeting” etc… Staff Code The staff code of the Company is based on the PRC labour law and is in line with the national standards of the PRC. The Company has also been providing its staff with guidance in accordance with the national legislation.”

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of ESG Guide

Social – Aspect B1: Employment - Examples


“Employment Policy Almost 99% of employees hired by the Group have been located in the PRC. The Company strictly complies with the requirements of the Labour Law of the PRC without violating the relevant rules and regulations: 1. Workers’ wages, overtime payments and related benefits are made in accordance with the local minimum wage

(or above);

2. Holidays and statutory paid leaves are compliant with the requirements of the PRC;

3. The Company treats all the employees equally, and their employment, remuneration and promotion will not be affected by their social identities such as ethnicity, race, nationality, gender, religion, age, sexual orientation, political faction and marital status;

4. Integrated computation of working hours is implemented with reference to the requirements of the Labour Law.”

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of ESG Guide

Social – Aspect B2: Health and Safety

Aspect B2 General Disclosure Information on: (a) the policies; and (b) compliance with relevant laws and regulations that have a significant impact on the issuer relating to providing a safe working environment and protecting employees from occupational hazards.

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of ESG Guide

Social – Aspect B2: Health and Safety - Examples


“To ensure a safe working environment at our offices and worksites and that the work undertaken by us does not pose any danger to the general public, we have implemented a health and safety management system at our office and at construction sites. In particular, we provide intensive training programs for the management personnel of our construction sub-contractors to improve their safety awareness, allocate full-time safety engineers to supervise the construction process and monitor high risk sites to ensure each phase of the construction is monitored for safety. We also conduct daily inspections, weekly evaluations and give monthly awards to motivate our staff to operate safely…”

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of ESG Guide

Social – Aspect B2: Health and Safety - Examples


“Occupational Health and Safety Occupational Health and Safety (OHS) is a crucial component of the Group’s overall safety performance. Reducing health and safety risks in the workplace that are directly or indirectly under our control, and thus providing a safe working environment for our staff and contractors, is one of the Group’s highest priorities. In 2014, we continued to reinforce our strong leadership, management system and training and educational programmes in order to strengthen our safety culture and enhance our overall OHS performance. We have established and are continuing to implement a safety management system in accordance with the OHSAS 18001 standard to ensure the occupational safety of Towngas employees. In 2011, We were the first utility company in Hong Kong to be designated as an “International Safe Workplace” (ISWP) under the framework of the World Health Organisation’s Safety Community. Supported by the Occupational Health and Safety Council in Hong Kong, the designation involves adhering to seven ISWP indicators which strengthen safety practices while fostering a safe and healthy workplace…”

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of ESG Guide

Social – Aspect B3: Development and Training

Aspect B3 General Disclosure Policies on improving employees’ knowledge and skills for discharging duties at work. Description of training activities. Note: Training refers to vocational training. It may include internal and external courses paid by the employer.

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of ESG Guide

Social – Aspect B3: Development and Training - Examples


“Employee Training CNOOC Limited has offered a variety of training course options. Guided by the Annual Plan for Key Training Programs, the training courses continued to focus on key specialties and critical roles. In 2014, 54 core training programs and projects involving 3,444 attendees and 40,742 days were complete.” Cultivation of International Talents The Company has always placed a strong focus on the cultivation of talents with an international perspective, insight into international practices and strong competitiveness. During the reporting period, the Company sent its employees to prestigious universities abroad for continuous education, organized technical training overseas, and held international operation and management workshops. In addition, it also sent young technicians and personnel in critical roles to study at some international organizations. In 2014, 260 employees completed 19 overseas training programs. These programs covered a series of key areas such as unconventional oil and gas exploration, heavy oil development, deep-water drilling and well completion, low permeability oil and gas field exploration and development, legal regulations pertaining to the international oil sector as well as petroleum finance and taxation. These employees played an important role in advocating the Company’s technology innovation and addressing critical technical challenges in the areas of deepwater, heavy oil, low permeability and unconventional oil and gas.”

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of ESG Guide

Social – Aspect B3: Development and Training - Examples


“Training and Skills Development We allocate ample resources to staff training and development with the aim of sustaining a competent, professional and ethical staff force that will contribute to the success of the Bank. Our commitment to staff development is also aligned with the expectation that authorised institutions should engage and deploy personnel with sufficient skills, knowledge, professional qualifications, experience and soundness of judgment for the discharge of their duties. Depending on their role, staff members will receive relevant training in areas such as financial knowledge, banking products and operations, compliance, risk management, leadership & management, and sales & relationship management. Reinforcement and refresher training programmes to ensure employees have the latest information and skills to carry out their duties to the highest standards. Other internal training offerings are designed to help employees develop their capabilities, advance their careers and enhance their management and interpersonal skills. We also operate the Staff Education and Professional Qualification Award Scheme that supports members of staff who wish to further their higher education (e.g. undergraduate and postgraduate degrees) and/or attain professional qualifications… Our average number of training days per full-time member of staff in 2014 was six – the same as in 2013.”

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of ESG Guide

Social – Aspect B4: Labour Standards

Aspect B4 General Disclosure Information on: (a) the policies; and (b) compliance with relevant laws and regulations that have a significant impact on the issuer relating to preventing child and forced labour.

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of ESG Guide

Social – Aspect B4: Labour Standards - Examples

“Policies on Labour Standards and Human Rights CLP prohibits the employment of child, forced or compulsory labour in any of our operations. In 2014, we have not identified any operation or supplier as having significant risks of child labour, young workers exposed to hazardous works, or forced or compulsory labour. We are aware of the provisions of the UN Framework and Guiding Principles on Business and Human Rights (the Ruggie framework) and its potential implications for our business. However, we have yet to carry out a detailed assessment of these implications on our business activities.”


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of ESG Guide

Social – Aspect B4: Labour Standards - Examples

“Labour standards All work should be voluntarily performed and shall not involve forced labour, debt repayment or contractually binded labour or involuntary prison labour. All employees may resign upon reasonable notice. The Group prohibits child labour in any workplace. “Child labour” refers to any employee under the age of 15 (or the minimum legal age for child labour). The Group makes use of apprentice programmes in accordance with laws...”


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of ESG Guide

Social – Aspect B5: Supply Chain Management

Aspect B5 General Disclosure Policies on managing environmental and social risks of the supply chain.

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of ESG Guide

Social – Aspect B5: Supply Chain Management - Examples

“Supply Chain Management At PetroChina, we actively promote the sustainable development of its supply chain and the joint fulfillment of corporate social responsibility with our partners to provide the public with high quality products and services. We have established a steering team for contractor management, composed of the managers of relevant departments and subsidiaries and headed by PetroChina’s Chairman. We have also established a complete supplier quality management mechanism which covers quality accreditation, inspection, supervision and factory supervision for major products. Moreover, specific supplier requirements on business ethics, human rights, HSE, quality standards and public responsibility were highlighted for the process of supplier approval, evaluation, strategic supplier development, materials procurement, tender invites and tender evaluations. A supplier database was established and through open tenders and online transactions, we provide suppliers with fair, transparent and competitive opportunities. With “open business, controlled processes, fully documented, and permanently traceable” as our watchwords, we ensure the quality of procured products and services.”


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of ESG Guide

Social – Aspect B5: Supply Chain Management - Examples


“Supply Chain Management As a time-honored traditional Chinese medicine brand, Tong Ren Tang is well known throughout the world by virtue of its “high quality materials”. As such, supply chain management is always one of the key links in the Company’s quality control system. With a focus on product quality risk management, the Company keeps a close eye on quality and safety crisis signals of its medicines. Attaching great importance to product compliance, the Company organizes self inspections and rectifications in a timely manner to ensure product quality. To ensure the quality of the purchased traditional Chinese medical raw materials, auxiliary ingredients, packaging and other materials, the Company has established a supplier management system in strict compliance with the Law of the PRC on the Administration of Pharmaceuticals, GMP, and relevant laws and regulations. Standard management is implemented on procurement of raw materials under a comparatively well-established management system. The Company exercises a high level of scrutiny over the selection of suppliers. Based on adequate qualifications, suppliers are subject to assessment and on-site audits on product quality as well as suitability and quality consistency tests made by our quality department. Suppliers must pass the audits and assessment before being included into the “Qualified Supplier List”, and the Company shall only make purchases from a suppliers included in the list. The Company also carries out long-term quality monitoring and regular reviews on all suppliers. In case of a significant change in supplier qualification or serious quality issue, the Company may suspend delivery of the supplier in question immediately and, if necessary, cancel its qualification as a qualified supplier to ensure pharmaceutical quality of the Company.”

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of ESG Guide

Social – Aspect B6: Product Responsibility

Aspect B6 General Disclosure Information on: (a) the policies; and (b) compliance with relevant laws and regulations that have a significant impact on the issuer

relating to health and safety, advertising, labelling and privacy matters relating to products and services provided and methods of redress.

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of ESG Guide

Social – Aspect B6: Product Responsibility - Examples

“To manage the impacts on local people and eliminate their concerns and misunderstandings especially on waste-to-energy facilities, we conducted environmental and social impact assessments for all new projects prior to the constructions and operations, and disclosed the findings in accordance with national law and regulations. We continuously monitor major environmental impacts of our plants, and provide real time disclosure of air emissions of waste-to-energy operations. We also established transparent local community grievance mechanism to address social impacts associated with our operations. In 2014, no complaints and grievances on social impacts were filed…”


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of ESG Guide

Social – Aspect B6: Product Responsibility - Examples

“Product Liability: The Group believes that products are the core competitiveness of an enterprise. To enhance product quality and protect the interests of the customers, the Group organized the “Quality Month” activity in September 2014 to carry out all-round and multi-dimensional project quality management in the areas of water leakage prevention, temperature control and energy saving, structural works, decoration and renovation. Meanwhile, the Group established the on-site label standardization administration measures to display the name and trademark of the Group in a unified, standardized and reasonable manner in order to build up its brand image. In 2014, the Group also focused on conducting post-assessment on certain projects. The post-assessment reports for the 晶實一標段, Xi’an A-4 and Urban Cradle Block F (萬源F街坊) projects were completed. The Group required that a summary and analysis of the entire project implementation process should be carried out on completed projects, including advance project positioning, marketing planning, project planning, project management, economic benefits of the project and qualified suppliers, etc..”


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of ESG Guide

Social – Aspect B7: Anti-corruption

Aspect B7 General Disclosure Information on: (a) the policies; and (b) compliance with relevant laws and regulations that have a significant impact on the issuer relating to bribery, extortion, fraud and money laundering.

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of ESG Guide

Social – Aspect B7: Anti-corruption - Examples

“The Code of Conduct allows our people to understand explicitly on several areas, which include the provisions of anti-corruption, anti-bribery and conflict of interest, gift policy, norm of data confidentiality and security, and fund management policy. We definitely have zero tolerance on violation of the Code of Conduct and any inappropriate behavior.”


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of ESG Guide

Social – Aspect B7: Anti-corruption - Examples


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of ESG Guide

Social – Aspect B8: Community Investment

Aspect B8 General Disclosure Policies on community engagement to understand the needs of the communities where the issuer operates and to ensure its activities take into consideration the communities’ interests.

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of ESG Guide

Social – Aspect B8: Community Investment - Examples


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Social – Aspect B8: Community Investment - Examples


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Thank you

ISSUER TRAINING ON ENVIRONMENTAL, SOCIAL

AND GOVERNANCE REPORTING GUIDE

22 March 2016

Mark Harper Senior Manager –ESG Advisory Business Environment Council

2

Disclaimer

2

The information contained in this document is for general information purposes only. It is not directed at, and is not intended for distribution to or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation or which would subject Hong Kong Exchanges and Clearing Limited (“HKEX”), or The Stock Exchange of Hong Kong Limited (“SEHK”) (together, the “Entities”, each an “Entity”), or any of their affiliates, or any of the companies that they operate, to any registration requirement within such jurisdiction or country. No section or clause in this document may be regarded as creating any obligation on the part of any of the Entities. Neither of the Entities guarantees the accuracy, validity, timeliness or completeness of the information or data contained herein for any particular purpose, and the Entities and the companies that they operate shall not accept any responsibility for, or be liable for, errors, omissions or other inaccuracies in the information or for the consequences thereof. The information set out in this document is provided on an “as is” and “as available” basis and may be amended or changed. It is not a substitute for professional advice which takes account of your specific circumstances and nothing in this document constitutes legal advice. Neither of the Entities shall be responsible or liable for any loss or damage, directly or indirectly, arising from the use of or reliance upon any information provided in this document. Each issuer is unique and, as such, should develop its own steps and procedures for Environmental, Social and Governance reporting in view of its specific circumstances.

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1

Agenda

Key Facts

2 Key Steps for ESG Reporting

3 Calculate and Report on Environmental KPIs

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KEY FACTS

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Company E – Key Facts

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1 2 3 Key Facts

Established in 1920, and Headquartered in Hong Kong, Company E offers a comprehensive range of commercial and personal banking, financial, and insurance services. Its major markets are in Hong Kong and Mainland China, but also operates in Korea, Malaysia, Singapore, Thailand, and Vietnam.

45%

29%

11%

9% 6%

Hong Kong

Mainland China

Korea

Malaysia

Others

Fig. 1: Revenue by Location

52% 32%

6% 10% Retail Banking

Corporate andCommercial Banking

Insurance Services

Wealth Management

Fig. 2: Revenue by Segment

KEY STEPS FOR ESG REPORTING

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7

Key Steps for ESG Reporting (For general reference only)

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1 ESG working group

2

3

4

5

6

7

Understand the ESG Guide

Reporting boundary

Materiality assessment

Writing the ESG Report

Key stakeholders


1 3 Key Steps for ESG Reporting

2

See “How to Prepare an ESG Report” at HKEX’s website https://www.hkex.com.hk/eng/rulesreg/listrules/listsptop/esg/index.htm

https://www.hkex.com.hk/eng/rulesreg/listrules/listsptop/esg/index.htm

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Step 1: ESG Working Group

8

1 2 3 Key Steps for ESG Reporting

Reports to the board

Comprises senior management and other staff with sufficient ESG knowledge

Clear terms of reference that set out the powers delegated to it by the board

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Step 2: Understand the ESG Guide

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Understand reporting requirements of the ESG Guide

ESG Guide recommends the Board to determine ESG risks and strategy

Listing Rules and “Comply or

explain” Provisions

ESG Risks and Strategy

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Step 3: Reporting Boundary

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Geographical Scope e.g. operations in Hong Kong

but not those in Mainland China

What parts of the business does the issuer intend to report on? Consider what ESG risks the ESG report aims to address

Business Scope e.g. only certain aspects of the

business such as retail banking as well as corporate and commercial banking, but not others

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Step 4: Key Stakeholders


Internal Stakeholders different departments within the issuer

may include corporate communications,

human resources, investor relations, sales and marketing, procurement, legal, etc.

Derive a full list of stakeholders

External Stakeholders

depending on the issuer’s business, industry and other factors

may include investors, customers, suppliers / business partners, employees, governments and regulators, and NGOs

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Reduce the list using Toolkit – Stakeholder Influence – Dependency Matrix

Supplier A

Employees

Institutional Investors

NGO

Media

Example: Customers – with large commercial &

Retail Banking arms Supplier A – one of the many

suppliers who supply to Company E, e.g. printing paper

Employees – over 13,000 staff across all operations and markets

Institutional investors – wish to increase stake in Company E and has requested ESG information

Customers

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Engagement Engagement methods may include inviting comments in writing, through online

mechanisms, via telephone, meetings, questionnaires, etc.

Refer to Toolkit – Stakeholder Profile template

Before engagement Decide on the most effective engagement methods and prepare materials

(e.g. invitation letters, presentations)

Refer to Toolkit – Stakeholder Engagement Plan

After engagement Create an action plan to address the most important and relevant

stakeholder concerns

Refer to Toolkit – Post Stakeholder Engagement Action Plan

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Step 5: Materiality Assessment

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Conduct internal and external materiality assessments using Toolkit – Materiality and Relevance

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15


Merge two sets of data using Toolkit – Materiality Matrix

Deemed material – should disclose Deemed relevant to some stakeholders – consider disclosing Not material – need not disclose

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Example:

KPI A1.2 is found to be material. The issuer should try to disclose the required information. Otherwise, it must provide considered reasons in its ESG report for not reporting this information.

KPI A2.5 calls for disclosure of total packaging material used. It is found to be immaterial both internally and externally. If the issuer decides not to disclose the information in this regard, it could consider using materiality/relevance as an explanation.

Materiality Matrix

5

4

3

1

2

0

Cru

cial

Not

rele

vant

Ex

tern

al A

sses

smen

t (Im

pact

on

stak

ehol

ders

)

0 1 4 5 2 3 Not relevant Crucial

Internal Assessment (Impact on business)

Aspect A2: General Disclosure

KPI A2.3

KPI A2.4

KPI A2.1

KPI A2.2

KPI A1.1

KPI A1.2


KPI A1.3

KPI A1.4 KPI A1.5

KPI A1.6


KPI A3.1

KPI A2.5

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Step 6: Information and Data Collection

17


Collate information needed for reporting using Toolkit – Identifying Information Gaps


Information required Data situation Data source

Internal responsibility

References / additional

information Report text

18

Step 7: Writing the ESG Report

18


Target the readers of the report

Consider what key messages you wish to convey

Be simple, concise and to the point

Should provide explanations of data that is presented in graphs or charts

May include case studies to highlight your policies or practices

Some tips to consider…

CALCULATE AND REPORT ON ENVIRONMENTAL KPIs

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Aspect A1: Emissions - KPIs

20

1 2 3 Calculate and Report

on Environmental KPIs

A1.1 The types of emissions and respective emissions data.

Greenhouse gas emissions in total (in tonnes) and, where appropriate, intensity (e.g. per unit of production volume, per facility).

A1.3 Total hazardous waste produced (in tonnes) and, where appropriate, intensity (e.g. per unit of production volume, per facility).

A1.4

A1.2

Total non-hazardous waste produced (in tonnes) and, where appropriate, intensity (e.g. per unit of production volume, per facility).

A1.5 Description of measures to mitigate emissions and results achieved.

A1.6 Description of how hazardous and non-hazardous wastes are handled, reduction initiatives and results achieved.

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KPI A1.1

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Concerned with air pollution in the locality of the issuer’s operations

Key air pollutants include Nitrogen Oxides (“NOx”), Sulphur Oxides (“SOx”) and Particulate

Matter (“PM”)

KPI A1.1 - The types of emissions and respective emissions data.

Examples of what to report: Emissions data from gaseous fuel consumption

Emissions data from vehicles

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KPI A1.1

22



NOX or SOX emissions = units of fuel consumed x 48MJ x Emission Factor

For Towngas:

For Liquefied petroleum gas (“LPG”):

NOX or SOX emissions = units of fuel consumed x 46MJ x Emission Factor

Note on Emission Factors: The Emission Factors above are based on “The Clean Air Charter - A Business Guidebook” published by the Hong Kong General Chamber of Commerce and the Hong Kong Business Coalition on the Environment (http://www.cleanair.hk/eng/guidebook/guidebook_eng_r.pdf) and data from the Towngas Sustainability Report 2014 (http://www.towngas.com/sustainabilityRpt/2014/index-en.html).

NOX Emissions Factor for both Towngas and LPG is 4.02 kg / million MJ of gas

SOX Emissions Factor for both Towngas and LPG is 0.02 kg / million MJ of gas

* Gaseous fuel consumption is not a significant source of PM emissions

Emissions from gaseous fuel consumption

http://www.cleanair.hk/eng/guidebook/guidebook_eng_r.pdf

http://www.towngas.com/sustainabilityRpt/2014/index-en.html

KPI A1.1

23



NOX emissions = kilometres travelled x Emission Factor

For NOx:

For SOx:

SOX emissions = units of fuel consumed x Emission Factor

Emissions from vehicles

For PM:

PM emissions = kilometres travelled x Emission Factor

Emission Factors are set out in Appendix 2 of “How to Prepare an ESG Report” on HKEX’s website. See link on slide 7.

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KPI A1.1

24



Examples of how to collect data:

Kilometers traveled Record shown on the odometers

Online mileage calculators

Units of fuel consumed Expenses record of corporate fuel card

or fuel receipts from gas stations

KPI A1.2

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Concerned with the global warming effect of greenhouse gas (“GHG”) emissions

KPI A1.2 - Greenhouse gas emissions in total and, where appropriate, intensity

Examples of what to report: Total GHG emissions (i.e. the summation of CO2 emissions and CO2 equivalent

emissions of other GHGs)

Scopes 1 to 3 emissions

Other indirect emissions

Scope 3 Direct emissions or removals from sources

Energy indirect emissions

Scope 1 Scope 2

Source: Hong Kong Environmental Protection Department’s “Guidelines to Account for and Report on Greenhouse Gas Emissions and Removals for Buildings (Commercial, Residential or Institutional Purposes) in Hong Kong” ; and the “Carbon Audit Toolkit for Small and Medium Enterprises in Hong Kong” published by the University of Hong Kong and City University of Hong Kong . Issuers may also find it helpful to refer to the Greenhouse Gas Protocol.

KPI A1.2

26



Scope 1 emissions include:

GHG emissions from stationary combustion sources

GHG emissions from mobile combustion sources (e.g. road, air and water transport)

KPI A1.2

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For CO2

Scope 1 emissions - from stationary combustion sources

CO2 equivalent emissions (E) = A × EF

A= Amount of fuel consumed E = Emission Factor Emission Factors (by fuel type) are set out in Appendix 2 to “How to Prepare an ESG Report” on HKEX’s website. See link on slide 7.

KPI A1.2

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Towngas example:

Scope 1 Emissions - CO2 CO2 equivalent emissions = A × EF A = Amount of fuel consumed = 13 units EF= Emission Factor for Towngas = 2.549 (see HKEX’s Reporting Guidance on Environmental KPIs) = 13 units x 2.549 kg/unit = 33 kg

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KPI A1.2

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For CO2

Scope 1 emissions - from mobile combustion sources

CO2 equivalent emissions (E) = A × EF

A= Amount of fuel consumed E = Emission Factor Emission Factors (by fuel type) are set out in Appendix 2 to “How to Prepare an ESG Report” on HKEX’s website. See link on slide 7.

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KPI A1.2

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CO2 equivalent emissions = Q × EF

Electricity / fuel type Emission Factor Unit of Emission Factor

Electricity supplied by Hong Kong Electric 0.79 Note1 kg / Unit (kWh)

Electricity supplied by China Light & Power (“CLP”) 0.63 Note2 kg / Unit (kWh)

Gas supplied by Towngas 0.60Note3 kg / Unit

Note1 See page 42 of Hong Kong Electric Sustainability Report 2014 Note2 See page 7 of CLP Sustainability Report 2014 Note3 See page 2 of Towngas Sustainability Report 2014

Q = Quantity of purchased electricity / gas EF = Emission Factor (site specific or default)

Scope 2 emissions

KPI A1.2

31



CO2 equivalent emissions = Q × EF Q= Quantify of purchased electricity = 265 units EF= Emission Factor of electricity supplied by HK Electric = 0.79 = 265 units x 0.79 kg/unit ~ 209 kg

Note: Please refer to the carbon calculator by HK Electric for the latest emission factor/ calculation: https://www.hkelectric.com/en/customer-services/carbon-calculator

HK Electric example:

https://www.hkelectric.com/en/customer-services/carbon-calculator

https://www.hkelectric.com/en/customer-services/carbon-calculator

32

KPI A1.2



CO2 equivalent emissions = Q × EF Q= Quantity of purchased electricity= (Present Meter Reading - Previous Meter Reading) x Multi Factor = (67,524 - 66,451) x 10 = 10,730 units EF= Emission Factor of electricity supplied by CLP = 0.63 kg/unit = 10,730 x 0.63 = 6,760 kg

CLP example:

Source: https://www.clp.com.hk/en/customer-service-site/billing-site/how-to-read-your-bill-site/Documents/How%20to%20Read%20Your%20Bill_NRT_ENG.pdf

https://www.clp.com.hk/en/customer-service-site/billing-site/how-to-read-your-bill-site/Documents/How to Read Your Bill_NRT_ENG.pdf




KPI A1.2

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Scope 2 Emissions – CO2 CO2 equivalent emissions = Q × EF Q= Quantity of purchased gas= 13 units EF= Emission Factor of gas supplied by Towngas =0.60 kg/unit = 13 units x 0.60 = 7.8 kg

Towngas example:

KPI A1.2

34



Scope 3 emissions may be generated from:

Business air travel by employees

http://www.icao.int/environmental-protection/CarbonOffset/Pages/default.aspx

International Civil Aviation Organisation - Carbon Emissions Calculator

http://www.icao.int/environmental-protection/CarbonOffset/Pages/default.aspx

KPI A1.3

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KPI A1.3 - Total hazardous waste produced and, where appropriate, intensity Examples of what to report: Total hazardous waste produced and the intensity

• Find the definition(s) of "hazardous waste" in the relevant national regulations

- e.g. in Hong Kong, "hazardous" waste can comprise "chemical wastes“, “clinical wastes” and “hazardous chemicals“.

• Definitions set out in international conventions may also be considered

- e.g. Hong Kong adopted Basel Convention on the Control of Transboundary

Movements of Hazardous Wastes and their disposal, 1989. “Hazardous wastes” include clinical and chemical wastes, as well as inks, dyes, paints and lacquers products wastes, etc.

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KPI A1.3

36



Hazardous waste intensity = annual hazardous waste produced / e.g. units of production volume, number of facilities

Calculation of hazardous waste intensity

37

KPI A1.3

37



Example of hazardous wastes record:

38

KPI A1.4

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KPI A1.4 - Total non-hazardous waste produced and, where appropriate, intensity

Commercial wastes

Residential / domestic wastes

Grease trap wastes Garden

wastes

Construction / demolition

wastes

Wastes can be divided into…

Issuers should report metric tonnes, split by management method (landfill, recycled, incineration)

Waste data can often be obtained from facilities managers and / or waste contractors

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KPI A1.4

39



Non-hazardous waste intensity = annual non-hazardous waste produced / e.g. units of production volume, number of facilities

Examples of what to report: Total non-hazardous waste produced and the intensity

Calculation of non-hazardous waste intensity

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KPI A1.4

40



Example of non-hazardous wastes record:

41

KPI A1.5

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Set targets and / or policies for the reduction of emissions, disclose measures employed to mitigate emissions and the results

KPI A1.5 - Description of measures to mitigate emissions and results achieved

Examples of what to report:

Targets and / or policies for the reduction of emissions

Measures employed to mitigate emissions

• e.g. installing a NOX reduction system

Results achieved, with reference to the targets set

• e.g. the decrease by percentage in a particular type of emissions

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KPI A1.5

42



How to report…

Set out the targets and / or policies, with the measures that the issuer has adopted

State the results these policies / measures have brought to the issuer

and

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KPI A1.6

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Set targets and / or policies for the reduction of wastes, disclose measures employed to reduce wastes and the results

KPI A1.6 - Description of how hazardous and non-hazardous wastes are handled, reduction initiatives and results achieved


How hazardous and non-hazardous wastes are handled

Targets and / or policies for the reduction of hazardous and non-hazardous wastes

Measures employed to reduce hazardous and non-hazardous wastes

• e.g. implementing recycling and/ or incineration processes

Results achieved, with reference to the targets set

• e.g. the decrease by percentage in a particular type of waste

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KPI A1.6

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How to report…

Describe how hazardous and non-hazardous wastes are handled, and set out the targets and / or policies and measures employed

State the results these policies / measures have brought to the issuer

and

Aspect A2: Use of Resources - KPIs

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A2.1 Direct and /or indirect energy consumption by type (e.g. electricity, gas or oil) in total (kWh in ‘000s) and intensity (e.g. per unit of production volume, per facility).

Water consumption in total and intensity (e.g. per unit of production volume, per facility).

A2.3 Description of energy use efficiency initiatives and results achieved.

A2.4

A2.2

Description of whether there is any issue in sourcing water that is fit for purpose, water efficiency initiatives and results achieved.

A2.5 Total packaging material used for finished products (in tonnes) and, if applicable, with reference to per unit produced.

46

KPI A2.1



Data can be collected by type from bills, meter readings and expense claims

Total energy consumption = non-renewable fuel consumed + renewable fuel consumed + electricity, heating, cooling and steam purchased for consumption + self-generated electricity, heating , cooling and steam – electricity, heating, cooling and steam sold Energy consumption intensity = total energy consumed / e.g. units of production volume, number of facilities

KPI A2.1 - Direct and / or indirect energy consumption by type in total and intensity

Examples of what to report: Direct energy consumption Indirect energy consumption

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KPI A2.2

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Consumption data can be collected by taking measurements at the source of water abstraction (direct), or bills or meter readings (indirect)

KPI A2.2 - Water consumption in total and intensity

Water consumption intensity = annual water consumption / e.g. units of production volume, number of facilities

Examples of what to report: Water consumption in total and the intensity

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KPI A2.2

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on Environmental KPIs Water bill example:

A company produces 100 units of goods. Water intensity= 85 / 100 = 0.85

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KPIs A2.3 and A2.4

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Efficiency initiatives might include…

KPI A2.3 - Description of energy use efficiency initiatives and results achieved

KPI A2.4 - Description of whether there is any issue in sourcing water that is fit for purpose, water efficiency initiatives and results achieved

Process redesign

Conversion and retrofitting of equipment

Changes in employee behavior

Operational changes

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KPIs A2.3 and A2.4

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Any issues in sourcing water that is fit for purpose Policies and / or measures adopted specific to energy / water use Impacts these policies and / or measures have had on the issuer

How to report…

Describe any issues that the issuer has or may have in sourcing water that is fit for purpose

Set out the policies / measures that the issuer has adopted

State the impacts these policies / measures have made

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KPI A2.5

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Amount of packaging materials used can be collected through procurement records

KPI A2.5 - Total packaging material used for finished products and, if applicable, with reference to per unit produced

Intensity of packaging material use = total packaging material used / units produced


Total packaging material used by type (e.g. plastic, paper, metal) in total metric tonnes

Intensity of packaging material used

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KPI A3.1

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Significant impacts of activities on the environment and natural resources

Policies and /or measures adopted specific to the environment and natural resources

• e.g. waste recycling schemes at the workplace

How to report…

Describe the significant impacts that the issuer’s activities have or may have on the environment and natural resources (e.g. global warming, stratospheric ozone depletion, eutrophication, resource depletion, land use, water use, etc.)

Set out the policies and/or measures that the issuer has adopted

and

KPI A3.1 - Description of the significant impacts of activities on the environment and natural resources and the actions taken to manage them

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Thank you

Q & A SESSION