Sustainability

Sustainability as a Key Enabler

For almost 200 years, we have adopted an entrepreneurial mindset combined with a long-term and sustainable approach to how we do business. Today, our approach is more relevant than ever, as we face an increasingly complex and volatile landscape. With this in mind, we continue to believe that seeking opportunities to build resilience in our businesses, the communities we serve and future generations is vital for business continuity, and this is a fundamental part of our corporate purpose.

Over the past year, the Group continued to progress its sustainability agenda, with a focus on providing greater transparency of sustainability activities across our businesses. The Group reached a key milestone with the publication of its inaugural Sustainability Report in June 2022, disclosing the sustainability practices and performance of the Group and its businesses. We have continued to work with our Group businesses to enhance alignment across Jardines, while our businesses have actively led sustainability agendas relevant to their own operations.

Building Towards 2030

Jardines strongly believes that creating a shared sense of purpose in sustainability will encourage closer collaboration and support between our businesses and the Group. It will also enable us to move forward together to build resilience to challenges that lie ahead and ensure long-term value creation for our stakeholders.

The Group’s sustainability strategy, Building Towards 2030, is informed by the Group’s response to social and environmental megatrends shaping the future of our business and the communities in which we operate. It is built on nine focus areas under three strategic pillars: Leading Climate Action, Driving Responsible Consumption and Shaping Social Inclusion. Demonstrating our commitment to support the global agenda to end poverty, protect the planet and ensure that all people enjoy peace and prosperity by 2030, our sustainability strategy is aligned with five of the 17 United Nations Sustainable Development Goals (‘UNSDGs’).

Building Towards 2030 articulates our sustainability direction at the Group-level and facilitates consistent implementation of sustainability strategy across our portfolio. With support and guidance from the Group, our businesses drive their own sustainability agendas, taking account of their business nature, operating markets and the benefits of alignment with the Group’s sustainability approach.

To ensure we focus our efforts and resources, we have identified key priorities to enable us to deliver effectively on the matters which are most important. In 2022, we maintained our focus on implementing our decarbonisation strategy, with a number of our Group businesses committing to develop, or progressing the formulation of, science-based medium-term targets. We have also dedicated significant efforts towards proactively communicating our journey to our stakeholders and developing our Group sustainability culture.

Sustainability Governance

We have underpinned our sustainability approach with an effective governance structure, which enables us to operate to the highest business standards and deliver sustainable value creation. Our sustainability governance structure includes the Sustainability Leadership Council (‘SLC’), the Jardine Matheson Board and the boards/Risk Management and Compliance Committees of our Group companies, supported by the Group Sustainability Team and a number of sustainability working groups.

Sustainability Leadership Council

The SLC is led by Jardine Matheson Executive Chairman, Ben Keswick. It currently comprises more than 20 members, including the Jardine Matheson Group Managing Director, Executive and non-Executive Directors, Chief Executives of all the Group's principal businesses and the Heads of relevant Group functions as core members.

Meeting twice a year, the SLC serves as a collaboration platform for the senior management from across the Group to exchange insights and perspectives on sustainability strategy, planning and direction for the Group. Material sustainability issues are communicated and discussed at the SLC, and the Group’s sustainability strategy and policies are further refined with input from the management teams of our Group businesses. The SLC provides opportunities for the Group and our businesses to regularly share best practices and discuss Group-wide sustainability (including climate) risks and opportunities, with the aim of improving the Group’s performance and ensuring consistent integration of sustainability considerations into corporate policies and business operations.

Group Sustainability

The Group Sustainability Team is responsible for facilitating the Group’s development and implementation of the sustainability strategy and initiatives, as well as the setting of appropriate and relevant ESG metrics and targets to track material ESG issues. The team monitors sustainability trends and provides advice on sustainability-related issues, as well as progressing the Group's approach to improving ratings, reporting and disclosure, and driving a range of Group-led initiatives. The team also coordinates with representatives from our Group businesses to facilitate cross-business activities.

In addition, the team works with other Group functions including Group Finance, Group Audit & Risk Management (‘GARM’), Group Human Resources, Group Corporate Secretariat, Group Legal, Group Tax and Group Communications to offer support on sustainability matters, including budgets and reporting, sustainability risks and opportunities, human capital, corporate governance, business ethics, tax reporting and sustainability communications.

Sustainability Working Groups

Each pillar of our sustainability strategy is supported by a working group, which is chaired by representative(s) from our businesses and consists of individuals from across the Group who are responsible for driving the relevant sustainability agendas within their organisations. The primary objectives of the working groups are to support the execution of the Group’s sustainability strategy within businesses, identify, develop and recommend Group-wide initiatives that will strengthen cohesion between the Group businesses, and share knowledge and experience across the Group.

Group Businesses

The boards of our Group businesses are responsible for overseeing sustainability within their respective businesses. Each individual business is expected to develop and implement a sustainability strategy that is aligned to the Group strategy, and set sustainability metrics and targets to effectively address material issues. The leadership of each of the Group’s listed and private businesses reports twice a year on the progress of their sustainability agenda to their own boards (in the case of listed businesses) or their respective Risk Management and Compliance Committees ('RMCCs')(in the case of private businesses).

Audit Committee

The Audit Committee supports the Board in overseeing and reviewing the consolidated Group-wide principal risks and uncertainties (including climate risks). The Audit Committee also has oversight responsibility for reviewing independent assurance obtained by the Group in respect of the effectiveness of sustainability metrics that measure the Group’s sustainability strategy, initiatives and goals, as disclosed in the Company’s annual Sustainability Report. In support of this, external and internal assurance is conducted on the Group’s sustainability reporting and the effectiveness of its governance, respectively. Please refer to the Audit Committee Report and the Principal Risks and Uncertainties section of ths Report for details.

Sustainability, including climate action, is a regular agenda item at Board and RMCC meetings, both for our individual businesses and at the Group level. Senior management of the Group (a number of whom who also sit on the Company's Board) are members of the boards of our Group businesses, and have the opportunity to reiterate to our businesses the strategic importance of sustainability to Jardines and make sure the commitment to sustainability (including climate action) is ingrained in major business decisions. For details of the Board, please refer to the Corporate Governance section of this Report.

Stakeholder Engagement and Materiality Assessment

We are committed to conducting an ongoing dialogue with our stakeholders, to communicate our sustainability progress and seek their valuable feedback. Through these engagements, we gather stakeholder feedback on the key issues they are focussed on, which helps us confirm and further refine our sustainability strategy and focus areas.

Following the launch of our first standalone Sustainability Report last June, we conducted a series of meetings with our investors to share key highlights from the Report, and our current progress and future plans in our sustainability journey. We simultaneously collected our investors’ views and suggestions on the Group’s sustainability strategy, performance and disclosure. We also actively engaged with rating agencies in a more systematic manner, to ensure that the analysis of Jardine’s sustainability performance accurately reflects our sustainability approach, commitments, actions and progress. Through the coordinated efforts made across the Group’s businesses, we have achieved a significant improvement in our ESG ratings in 2022.

Engaging our internal stakeholders is a key focus, and we use a range of channels, from internal surveys to events and campaigns, to encourage a dialogue among colleagues on sustainability . We use an internal sustainability communication channel to provide regular updates to our colleagues on sustainability accomplishments and events, share the latest sustainability news and trends, and provide access to sustainability-related learning courses.

We also reference the latest global reporting standards, the sustainability reports of our Group businesses and those of our peers, expert insights and environmental and social megatrends to identify new and emerging sustainability issues relevant to the Group. Informed by the results of our stakeholder engagement activities and the rapidly evolving sustainability landscape, we continuously review and enhance our sustainability strategy and focus areas to ensure relevance and materiality to the Group.

Climate Action

We know climate change will increasingly impact our business and we are actively identifying the physical and transition risks we face, as well as approaches for mitigation. At the same time, we view supporting and contributing to the transition to a low carbon and, ultimately, a net-zero world as not only a business imperative but also a source of new opportunities for impact and growth. As a primarily Asian-based owner and operator, we fully understand the challenges and the operating environment in the region. Our network of partners, the skills of our colleagues and the credibility we have in the region, give us a unique platform to accelerate the transition, by creating and leveraging opportunities to leapfrog to the sustainable economies of the future.

While this Sustainability section provides the Group’s perspective, we acknowledge that Jardines’ overall climate change performance is the result of a collaborative effort with each of our businesses. As our Group businesses continue to build their climate resilience, the Group will provide support, guidance, and oversight to ensure that Jardines as a whole is ready for the future.

TCFD Report

This section provides details on our climate journey based on the TCFD recommendations. Please refer to the Consistency with TCFD Requirements section for a detailed view on the extent of alignment with the recommendations.

Governance

Climate action is one of the critical topics reviewed and assessed by the SLC. The SLC receives updates on global and regional climate and sustainability trends, policies, initiatives and activities undertaken by Group businesses and the Group twice a year. Progress on climate risk assessments and identified climate risks and opportunities are also provided to the SLC, to inform their discussion of sustainability strategy and priorities. A number of sustainability-related policies, including the Group’s Climate Change Policy, were reviewed by the SLC and published in 2022. All sustainability-related policies are periodically reviewed by executive management and updated as required.

The Climate Action Working Group comprises representatives from each of our businesses, who are responsible for delivering climate-related initiatives within their companies. The Working Group meets on a quarterly basis and the chairpersons provide updates on progress to the SLC.

The Group Sustainability Team, headed by the Group Head of Corporate Affairs and Sustainability, supports the SLC and the Climate Action Working Group in developing the overall sustainability strategy and respective initiatives. A monthly meeting is held by the Group Sustainability Team with the Executive Chairman, to report progress on our sustainability agenda.

For more information on respective roles and responsibilities, and management oversight of the sustainability agenda (including climate risks and opportunities) across the Group, please refer to the Sustainability Governance section.

Strategy

Over the past few years, we have been engaged in an ongoing exercise to identify and analyse material climate risks and opportunities across the Group. Climate scenarios are adopted, to evaluate the resilience of our businesses to the impacts of climate change on our strategy and financial planning. At Jardines, we use three sets of time horizons to analyse climate-related risks and opportunities: short-term (within five years), medium-term (five to ten years) and long-term (beyond ten years).

In 2021, we completed a preliminary study of physical risks likely to have a material impact on the Group, through asset damage and business disruption. We analysed the exposure and impact of acute¹ and chronic² hazards on more than 800 significant assets across our Group businesses in 22 countries and regions, under three Representative Concentration Pathways (‘RCPs’) developed by the Intergovernmental Panel on Climate Change (‘IPCC’)³. Our top identified climate hazards, their corresponding impacts and mitigation measures are summarised in the table below.

In 2022, the Group initiated an assessment of transition risks that may impact our businesses, with the assistance of Group Sustainability and GARM. The exercise aimed to develop a consistent set of scenarios and assumptions for risk assessment across the Group, setting the foundation for a robust methodology which would result in comparable outcomes across our businesses. Two scenarios were developed based on internationally recognised data sets⁴ with the following characteristics:

The scenarios will be periodically refreshed to align with the climate science updates and significant changes in our operating environments as a result of shifts in policy, regulations and other signals.

The assessment produced distinct transition risk heat maps for the High-emissions and Low-emissions scenarios, identifying the critical impact of transition risk drivers across the business activities of our Group business in their most material geographic regions, based on revenue and/or strategic value. A number of mitigation planning workshops have been conducted across the businesses to kickstart thinking in relation to building a structured approach to climate resilience and equipping our businesses with the right knowledge and resources to implement it.

We believe that climate risks are emerging in the short term, but are most likely to materialise in the medium and long-term. A summary of the identified physical and transition risks that may have a material impact on our business, and our response (mitigation measures) , is included in the table below:

We are progressively building on our learning every year, to further enhance our methodology and future-proof our business. We have been proactive in responding to climate risks, but there is still much to learn and do. The climate risk assessment will help inform discussions on business strategy, financial planning and capital allocation, to move forward in a way that leverages the opportunities uncovered by the transition, while mitigating climate change impacts and adapting to the effects that are already taking place.

Our success as a business is based on our ability to identify emerging risks and opportunities and make the right capital investment decisions. The risk management process described below enables the integration of these risks and opportunities, including climate-related ones, into our long-term strategy. This is the first step in putting climate risk on the agenda in all aspects of how we operate our businesses, including strategic and financial planning, investment and divestment decisions, managing our supply chains, developing products and services, and daily business operations across all Group businesses.

With guidance from Group Finance and Group Sustainability, each of our Group businesses allots a budget to fund sustainability and climate action-related activities. The budgets are approved by the Chief Finance Officers of our businesses and the Group Finance Director. One of the Group's focus areas for 2022 is the development of a framework for a systematic incorporation of sustainability considerations, including climate risks, into capital allocation decisions.

We are pursuing climate resilient development on the journey to a low carbon economy. As an Asian-based conglomerate, we want to be a key partner for the region in contributing to an orderly and equitable transition, which helps to reduce energy poverty, create economic opportunities, and strengthen climate resilience. In this context, Jardine Matheson and our Group businesses published a Just Energy Transition statement in June 2022.

We are actively expanding our involvement in the renewable energy sector, with key investments in this area by Refrigeration Electrical Engineering Corporation (‘REE’), a Vietnam-based associate of JC&C, and our Indonesian subsidiary, Astra. Vietnam is one of the region’s fast-growing markets for renewables, where installed capacity of wind, solar and hydro is forecast to double to 150GW by 2030; and REE has been a leading developer of sustainable infrastructure since 2010. Astra is investing in hydro, wind and solar projects, as well as exploring new technologies and innovations in biomass waste-to-energy.

Risk Management

To evaluate and prioritise the climate risks faced by the Group, risk heat maps have been developed, which classify all relevant risks into different impact severity groups ranging from low to high. Understanding the implications of these risks to the businesses and the Group will guide our planning of risk mitigation and enable us to prioritise action.

An important objective of the climate risk assessments we have conducted in the past two years was building a culture of climate action across our businesses. Most of our businesses are actively attuning their business capabilities to better evaluate and respond to climate risk. The Group will continue to guide the discussion, to further improve our businesses’ approach to assessing the significance and impact of climate risks in relation to other risks.

We have incorporated the best practices of enterprise risk management into the process of climate risk identification and assesssment. The teams responsible for risk management in each of our Group businesses provide a business-specific risk perspective to the sustainability team in the business. GARM also collaborates with the Group Sustainability Team to develop the Group's climate risk assessment framework and approach. In addition, different business functions, including Procurement, Operations and Marketing & Sales are involved in the process to provide feedback on the identified climate risks.

Physical and transition risk reports have been provided to the Group businesses to further explore the implications for, and develop mitigation measures to minimise the impact to, our businesses, including both property damage and business disruption. The Group businesses are also encouraged to assign risk owners to manage risks in a holistic manner. Guidance and support on climate risk management and mitigation measures planning are provided by GARM and Group Sustainability, when needed. Climate risks and mitigation measures are reported to GARM twice a year. GARM and Group Sustainability will review the information and provide feedback, if any, to the Group businesses to improve the process and outcome.

In addition, climate risk is a topical area frequently included in internal risk management training and conferences, and it is also included in risk newsletters published by GARM to raise the awareness of climate change and climate action across the Group, particularly targeting finance and risk management colleagues.

The Group’s approach to overall risk management combines a top-down strategic view with a complementary bottom-up process. As with other principal risks and uncertainties, those risks identified as material to our businesses are consolidated at the Group level into the Group’s risk register and risk heat map, which are reported to the Audit Committee twice a year. Climate risks have been already been reported by some businesses who are advanced in their sustainability journey and featured in the Group’s Principal Risk and Uncertainties.

Building on the Group-wide climate risk assessments performed in 2021 and 2022, climate change modelling and financial impact assessments will be conducted for our businesses based on a common set of scenarios and assumptions which have been developed. The financial impact of existing climate risks reported by some businesses will be revisited. For the businesses which have not yet reported climate risks in their risk registers, financial impact will be assessed, so that the climate risks identified can be fully integrated into risk registers and managed together with other business risks within the existing enterprise risk management framework.

Please refer to the Risk Management and Internal Control section of this Report for details of the Group’s risk management framework, including risk identification, assessment, treatment, and reporting and monitoring. The Monitoring of Risk Management and Internal Control Systems section provides details on how GARM monitors the approach taken by the businesses to managing risk.

Metrics and Targets

Building on the climate risk assessment work carried out in the past couple of years, we are now in the process of establishing metrics and indicators to help the Group manage relevant climate risks and opportunities. As we drive forward the climate action agenda in 2023 and beyond, we will consider forward-looking metrics to help us build resilience to climate change.

In 2021, we developed GHG emissions guidance which is in line with the GHG Protocol methodology on measuring Scope 1 and 2 emissions, and aggregated data to provide a Group-wide picture of our collective GHG emissions. At the time of publication of this Report, the Group’s 2022 performance is still undergoing external assurance, and further details will therefore be provided in the forthcoming Sustainability Report 2022. The Group’s 2021 performance is extracted in the table below:

^*The data was subject to independent limited assurance by PricewaterhouseCoopers as part of our 2021 Sustainability Report which is available on our website.

2021 was the first year for which we collected GHG emissions data across the Group, starting with direct emissions (Scope 1 and 2). The Group is aware of the importance of collecting our indirect emissions (Scope 3) data, and we are already planning to collect and disclose it in the near future.

Decarbonisation has been a key focus area of the Group’s sustainability strategy. The Group’s ultimate strategic ambition is to transition towards net-zero, in line with climate science. The Group has set its sights on developing a credible medium-term target aligned with a 1.5°C trajectory. The success of the Group in reducing carbon emissions is dependent on the decarbonisation progress by each individual business. Every business is responsible and held accountable for developing science-based decarbonisation plans and delivering on the agreed targets. In 2022, the Group continued to build momentum on our net-zero strategy, and the following businesses made significant progress aligning to the Group’s net-zero approach:

• Hongkong Land had its 1.5°C near-term⁵ target validated by the Science-Based Target initiative (‘SBTi’); and
• Hactl and Gammon submitted commitment letters for 1.5°C near-term⁵ targets to SBTi.

A number of our other businesses are also progressing the development of a science-based approach which will align with the Group's ambitions in this area.

Consistency with TCFD requirements

Our climate-related disclosures meet the reporting requirements for UK standard listed companies, and are consistent with the TCFD recommendations on:

• governance – all recommended disclosures;
• strategy – disclosures (a) and (b);
• risk management – all recommended disclosures;
• metrics and targets – disclosures (b).

As we are still in the early stages of our TCFD journey, we acknowledge that we are not fully consistent with TCFD requirements, including the additional guidance for all sectors published in October 2021. It will take some time for us to fully consider and plan the actions necessary to achieve alignment. We will continue to move forward and improve our disclosure in the coming years.

For strategy disclosure (c), we are still analysing our climate risk assessment results and are in the process of identifying potential climate opportunities, and we have not yet fully adjusted our business strategy for climate resilient development under the low emissions scenario. This is an ongoing area of collaboration between Group Sustainability, GARM and Group Strategy in the short term.

For metrics and targets disclosure (a), as we are finalising the results of climate risk assessment, we have not yet reached the stage of developing metrics. For disclosure (c), as a conglomerate operating across a variety of sectors, setting a single Group-wide target is complex. We will start developing the metrics and explore the feasibility of setting a Group-wide target in line with climate science in the short term.

Responsible Consumption

Promoting resource efficiency and seeking opportunities for circularity are at the heart of our operations. In early 2022, we established the Responsible Consumption Working Group (‘RCWG’) as a platform for our businesses to collaborate and drive the Group strategy across three focus areas: Plastic, Food and Nature. The RCWG met quarterly in 2022 to establish a framework and a coordinated approach for more efficient use of resources across our operations. Through closer collaboration, we create more value as a Group by leveraging our synergies and cross-sectoral expertise. Our businesses are actively sharing insights and exploring collaboration opportunities.

In 2022, one of the key priorities of the RCWG was to identify major waste streams and expand ongoing waste reduction initiatives. We prioritised our efforts on the major types of wastes produced in our operations, namely food waste, plastic waste and construction waste. Going forward, the members of the RCWG will continue to collaborate and seek ways to enhance data collection and improve data quality, to support target setting in the future.

Group Sustainability keeps up-to-date on the latest market trends and engages with our businesses to discuss specific issues that may have a significant impact on our businesses. In 2022, external experts were invited to host a workshop on the latest legislation and best practices in circularity in relation to the food and beverages industry in Hong Kong. Relevant Group businesses also shared their initiatives and challenges in waste management and circularity. They actively sought waste reduction collaboration opportunities, and actions have been identified to follow up the discussions.

Contributing to the protection of nature is a key element of our commitment to sustainability. Nature risks include loss of biodiversity and degradation of ecosystems. As part of a global effort to protect and restore nature for current and future generations, governments from around the world came together in December 2022 for the UN Biodiversity Conference (‘COP 15’). A series of goals and targets for 2030 and 2050 were established as part of a framework to halt and reverse biodiversity loss. Jardines is closely monitoring global developments post-COP15, including the regulatory requirements of the Task Force for Nature-related Financial Disclosure (‘TNFD’), and increasing interest on biodiversity conservation, as well as future opportunities for the Group. We have engaged closely with our businesses and relevant stakeholders to address biodiversity issues, including supporting the long-term preservation of the Tapanuli orangutan in the areas near the Martabe mine in Indonesia. More details can be found in the statement on the Martabe mine and Tapanuli orangutan in the Sustainability section of the Company’s website.

Social Inclusion

Supporting our communities has been a longstanding commitment at Jardines. Our community investment strategy focuses on positively contributing to the issues of education, health (especially mental health) and livelihoods.

In 2022, the Jardine Foundation celebrated its 40th anniversary of providing access to higher education. Over the past four decades, the Foundation has awarded over 400 scholarships at the undergraduate and postgraduate level to help outstanding students from the Group's Asian markets study at top UK universities. As part of the anniversary celebrations, we announced the expansion of the Foundation's focus to support access to leading Asian universities, with the launch of two new scholarships, with the University of Hong Kong and the Universitas Gadjah Mada in Indonesia.

Recognising the prevalence of mental health-related issues and the need to increase access to quality mental health care and effective treatments, Jardines established MINDSET in Hong Kong in 2002, with a vision to create inclusive communities where everyone is empowered to improve their mental health. When MINDSET was first established, the mental health community was underserved and affected by social stigma. As MINDSET celebrated its 20th anniversary in 2022, the awareness and understanding of mental health have improved as more resources are available to support people tackling mental health difficulties and help rehabilitated individuals integrate into the community. Operations expanded into Singapore in 2011. MINDSET collaborates with several mental health organisations to raise awareness and support people with mental ill-health. Since the launch of MINDSET Hong Kong in 2002, over HK$78 million has been raised to support 198,000 beneficiaries.

Engaging our employees and developing a sustainability culture, where everyone is aware they have a role to play in our sustainability journey, is essential to the success of our strategy. Sustainability was a key focus of our employee engagement activities in 2022. We also hosted several events dedicated to raising the awareness of our colleagues on sustainability. During LearnFest 2022, Jardine’s annual learning week, sustainability-related sessions provided colleagues with the opportunity to increase their knowledge in this area. The Jardine Internship Programme and Jardine Executive Trainee Programme included a Sustainability Challenge to inspire innovative ideas amongst our young talents, with guidance and support from Group Sustainability. We will continue to provide a range of learning opportunities to build up sustainability capabilities and further develop a sustainability culture for our employees across the Group.