CLP Holdings Limited (the Group) has embarked on a journey to become a Utility of the Future, a transformation which demands a keen understanding of changes occurring in the energy sector, the global economy and society more broadly. CLP's ambition is to pursue best of breed policies, processes and technologies in all of its operations. The Group operates for the long term and seeks to create value for all stakeholders, internal and external, and the communities in which it operates.
Building on the materiality assessment results from last year, CLP engaged a broad range of stakeholders to seek their feedback on material topics. Based on this some adjustments were made to the strategic discussions on the most important environmental, social and governance (ESG) topics facing the Company. In recognition of the need for increased ambition by companies on climate change, CLP has advanced its disclosure in accordance with the recommendations by the Task Force on Climate-related Financial Disclosure (TCFD). The Group also continues to disclose its management approach and performance in relation to a set of secondary topics in the Standard ESG disclosure section.
Feedback on this report is welcomed, and can be sent through the online survey or via As a token of CLP's appreciation, each stakeholder who sends feedback on or before 30 June 2020 will receive four CLP Carbon Credits, which can be used to offset their carbon footprint.
GRI reference: 102-44, 102-46
The materiality assessment process was guided by the Applying enterprise risk management to environmental, social and governance-related risks guidelines published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and the World Business Council for Sustainable Development (WBCSD) in October 2018.
The assessment process is summarised in the diagram below.
In November 2019, CLP conducted two focus group workshops and 15 individual interviews with subject matter experts in ESG reporting, finance and investment, industry, climate change, digital transformation, human rights, gender, and sustainability.
There were two objectives for this exercise:
To gauge feedback and comment on CLP’s material topics; and
To identify improvement areas on reporting quality, presentation method, categorisation, target setting, and other reporting criteria.
The external stakeholders commended CLP’s sustainability governance practices and level of ESG disclosure, and were in a consensus on the prioritisation of the key topics which were most material to CLP. In preparing the 2019 report, CLP has taken on many of their suggestions, including discussing business purpose as an overarching topic and enhancing specific disclosure in each of the material topics. Other recommendations related to improvements in CLP’s future sustainability disclosure and operational performance were also shared with internal functions and business units.
Learn more about the materiality assessment results
Megatrends are "large, transformative global forces that define the future by having a far-reaching impact on business, economies, industries, societies and individuals". A megatrend is distinguished from other trends in that it cannot be stopped or significantly altered, even by powerful actors such as governments.
CLP's materiality assessment process started with a megatrend analysis to deepen the understanding of how broad changes in the environment, society, technology and governance were affecting CLP’s operating environment. Starting with the big picture provided the necessary context to review risks and opportunities, thereby making the organisation more agile in responding to changes. This makes it easier to identify and prioritise the ESG topics that CLP should be managing and reporting.
The table below summarises the 12 most important megatrends that were considered. They could be categorised into three big drivers: Decarbonisation, Digitalisation, and Social and Demographic Change. Each of them shapes one or more of the prioritised ESG topics and how CLP responds.
The adverse impacts of climate change are growing in frequency and severity, taxing the resilience of built and natural environments. Stakeholders are increasingly focused on how a business identifies, responds and discloses its mitigation and adaptation efforts.
See Climate change
Technological innovation, regulatory incentives, cost efficiencies and growing consumer and industrial demand are increasing the commercial viability of clean energy. Renewable power capacity is expected to expand by 50% in the next five years.
See Climate change, Technology
Governments, cities, institutional investors and energy companies are leading players in the slow but inevitable transition to a lower-carbon global economy. Clean air initiatives, tighter environmental regulations, support for clean energy technologies, carbon pricing initiatives and green finance mechanisms are prompting a range of energy transition pathways.
See Climate change, Technology
Decentralisation is increasing consumer options for sourcing and managing energy. As a result, traditional utilities may need to change their business models to respond to the competitive pressures associated with distributed solar PV systems, new storage technologies and microgrids.
See Technology, Cyber resilience , Workforce
New technologies such as the Internet of Things, robotics, and autonomous vehicles are changing the world faster than ever and blurring the lines between industries. But new business opportunities – even whole industries – are also presenting.
The world is entering the fourth industrial revolution; a computing revolution which has Artificial Intelligence (AI) and machine learning as its cornerstones. Traditional business models are being challenged by new market entrants that have embraced these technologies.
See Technology
An exponential rise in the use of data has increased the scale and severity of successful cyberattacks. With customers increasingly concerned about how their personal information is protected and used, the financial and reputational cost of a major breach can be significant.
Electric vehicles, smart factories and cities, more efficient heating and cooling systems, and rapidly rising energy demand in the developing world are spurring the electrification of energy systems.
See Climate change, Technology
Many developing societies are young and growing, with expanding labour forces and increased consumer spending by millennials. Others, especially in the developed world, are ageing, with negative implications for productivity and government budgets. Social inequality is creating significant uncertainty for business.
See Workforce
Given the pace of changes resulting from the energy transition and digitalisation of the energy sector, the workforce must be agile. In addition, social and demographic changes, combined with increasing competition for STEM skills, are driving the need for an inclusive and sustainable workforce.
See Technology, Workforce
The role of business is changing. Stakeholders increasingly expect organisations to demonstrate how they are creating value for communities and the environment, but not for shareholders alone, and to act ethically in their interactions with governments, suppliers and consumers.
See Climate change, Workforce
Strategic competition between global powers, an increase in protectionism and the continuing re-invigoration of Asian economies are increasing global uncertainty, opportunities and threats. The state of global climate change negotiations creates further uncertainty.
The GRI is an international independent organisation which provides widely used standards for sustainability reporting.
This report has been prepared in accordance with the GRI Standards: Core option. It also reports on the GRI G4 Electric Utilities Sector Disclosures. These are disclosures that cover key aspects of sustainability performance which are meaningful and relevant to the Electric Utility sector. CLP has been reporting with reference to the GRI reporting framework since 2007 and has adopted the GRI Standards for the fourth year since it was launched in 2016.
The IIRC is a global coalition behind the International <IR> Framework, which has become a widely used guideline for integrated reporting.
This report applies its guiding principles to illustrate how integrated thinking has been embedded in CLP. In particular, it adopts a forward-looking view and considers the material trends that affect the ability to create value over time.
CLP’s Annual Report has been prepared with reference to this guideline since 2011, and includes a focused discussion of how the Company creates value for stakeholders under different capital structures.
The TCFD develops voluntary, consistent climate-related financial risk disclosure recommendations for use by companies in providing information to investors, lenders, insurers, and other stakeholders. The recommendations consider the physical, liability and transition risks associated with climate change and what constitutes effective financial disclosures across industries. TCFD covers four main areas of disclosure: governance, strategy, risk management, and metrics and targets. Referencing recommendations by the WBCSD TCFD Electric Utilities Preparer Forum, CLP’s climate-related disclosure in these areas has been enhanced in the Annual and Sustainability reports, as well as via CDP – Climate Change.
Read CLP's disclosure in accordance to TCFDIn 2019, the Exchange conducted a consultation on Review of the ESG Reporting Guide. The Company has submitted a response in support of the new initiatives for upgrading the disclosure obligations of the existing requirements as proposed in the Consultation Paper. Read the response here.
Companies listed on the Stock Exchange of Hong Kong (HKEx) are required to meet the ESG Reporting Guide disclosure obligations from financial years commencing on or after 1 July 2020. In this 2019 Sustainability Report and in the Annual Report, CLP has adopted the revised HKEx ESG Reporting Guide published in December 2019. In particular, the materiality assessment process as outlined under the mandatory disclosure requirements has been applied to prioritise CLP's response to the "comply or explain" provisions of the Environmental and Social Aspects.
CLP’s greenhouse gas (GHG) emissions inventory covers the six greenhouse gases initially specified in the Kyoto Protocol. The Company has also considered the seventh mandatory gas added under the second Kyoto Protocol compliance period, namely nitrogen trifluoride (NF3), but has deemed it immaterial to operations. In 2019, CLP enhanced its GHG disclosure to also include Scope 3 emissions. Key scope 3 categories are independently assured, and the Group is working towards assuring the total Scope 3 emissions in the future.
CLP's GHG emissions are reported with reference to: The World Resources Institute (WRI) / World Business Council for Sustainable Development (WBCSD) GHG Protocol, the Intergovernmental Panel on Climate Change Guidelines for National Greenhouse Gas Inventories (2006), the International Standard for GHG Emissions ISO 14064, and relevant local statutory guidelines where applicable.
To facilitate implementation, in 2007 CLP developed the first version of the Group-wide GHG reporting guideline which referenced the guidelines above. This reporting guideline is reviewed in accordance with CLP practice at least every three years.
All financial data in this report is consistent with the figures published in the audited financial statements of the 2019 Annual Report. These financial statements were prepared in accordance with the Hong Kong Financial Reporting Standards (HKFRS) issued by the Hong Kong Institute of Certified Public Accountants (HKICPA) and the requirements of the Hong Kong Companies Ordinance (Cap.622).
GRI reference 102-45, 102-48, 102-49
CLP reviews its reporting scope regularly to ensure the material impact of the Group’s overall portfolio is covered. In 2019, the reporting scopes of the following data points have been adjusted:
Employees: part-time employees are covered in employee metrics reflecting the expectation of increasingly flexible working arrangements in the future.
Health and Safety, Environmental (HSE): any assets that have been operating during the year are included in the reporting scope. In 2019, additions to the reporting scope include the Laizhou II wind farm and Meizhou solar farm in China; Newport and Jeeralang power stations in Australia; Indian wind farms (Andhra Lake, Bhakrani, Chandgarh, Harapanahalli, Jath, Khandke, Mahidad, Samana I & II, Saundatti, Sipla, Tejuva and Theni I & II) and solar farms (Gale, Tornado and Veltoor).
The HSE data of Satpura Transco Private Limited (STPL) transmission network, acquired by CLP India in November 2019, were not included in the 2019 data points, but will be included in the 2020 reporting cycle. Environmental data of Paguthan power station, the power purchase agreements (PPA) of which expired in December 2018, were not included.
Climate Vision 2050: while CLP continues to report on carbon intensity based on equity, the Company tracks its performance based on equity plus long-term capacity and energy purchase to reflect more holistically on the developments of generation capacity from other sources.
Limited assurance is provided by PricewaterhouseCoopers (PwC) on a selected set of environmental, social and governance-related Key Performance Metrics for this report in accordance with International Standard on Assurance Engagements 3000 (Revised), Assurance Engagements other than Audits or Reviews of Historical Financial Information, and, in respect of greenhouse gas emissions, International Standard on Assurance Engagements 3410, Assurance Engagements on Greenhouse Gas Statements.
Below is the definition of the Company boundary for each of the main categories of data included in this report. Please refer to the CLP 2019 Annual Report for more details on the entities included in the consolidated financial statements.
Includes people employed by CLP entities and their subsidiaries. It does not include non-CLP employees of joint ventures, joint operations or associates.
Selected financial figures are extracted from the Annual Report and the consolidated financial statements of CLP Holdings Limited and its subsidiaries (the Group) which is in accordance with Hong Kong Financial Reporting Standards (HKFRS) issued by the Hong Kong Institute of Certified Public Accountants (HKICPA). For a detailed description of the financial reporting scope, please refer to the Significant Accounting Policies – Consolidation and Equity Accounting on pages 229-230 of the 2019 Annual Report.
Includes people employed by CLP entities and their subsidiaries. It does not include non-CLP employees of joint ventures, joint operations or associates.
Includes power generation assets, transmission and distribution infrastructure, coal mines, fuel storage facilities and offices:
That are majority owned by CLP or under CLP’s operational control, defined as full authority to implement CLP’s operating policies; and
That are under construction or in operation during the reporting year.
100% of the performance data for in-scope assets is reported without adjustment based on CLP's equity share, unless otherwise stated.
Includes power generation assets, transmission and distribution infrastructure, coal mines and fuel storage facilities:
That are majority owned by CLP or under CLP’s operational control, defined as full authority to implement CLP’s operating policies; and
That are in operation during the reporting year; and
That pose material impact to the environment.
100% of the performance data for in-scope assets is reported without adjustment based on CLP's equity share, unless otherwise stated.
Scope 1 CO2e
Includes power generation assets, transmission and distribution infrastructure, coal mines and fuel storage facilities:
That are owned by CLP, where assets are included on an equity basis (i.e. accounts for the data according to CLP’s equity share in the asset); and
That are in operation during the reporting year.
Scope 2 CO2e
Includes power generation assets, transmission and distribution infrastructure, coal mines, fuel storage facilities and offices:
That are owned or rented by CLP, where assets and offices are included on an equity basis (i.e. accounts for the data according to CLP’s equity share in the asset); and
That are in operation during the reporting year.
Scope 3 CO2e - Category 1a: Purchased goods and services (products)
Includes the upstream emissions of EnergyAustralia’s natural gas retail business, covering the emissions from upstream gas production and transmission, and distribution leakage in the state pipeline systems.
Scope 3 CO2e - Category 3: Fuel- and energy-related activities
Includes the upstream emissions of purchased fuels and electricity for CLP’s power generation. In addition, it includes the direct emissions and upstream emissions from generation of purchased electricity that is sold to CLP's customers.
The upstream emissions of purchased fuels and electricity for CLP’s power generation include assets:
That are owned by CLP, where assets are included on an equity basis (i.e. accounts for the data according to CLP’s equity share in the asset).
The direct emissions and upstream emissions from generation of purchased electricity that is sold to CLP's customers include:
Generation assets whose capacity and energy are purchased by CLP to meet customer demand, where the purchase agreement duration is at least 5 years and where the capacity or energy purchased is no less than 10MW; and
The net electricity purchased by EnergyAustralia from the Australian Energy Market Operator (AEMO) in Australia.
Scope 3 CO2e - Category 11: Use of sold products
Includes the downstream emissions of EnergyAustralia’s natural gas retail business, covering the emissions from combustion of natural gas supplied to the customers.
Includes power generation assets, coal mines or fuel storage facilities:
That are majority owned by CLP or under CLP’s operational control, defined as full authority to implement CLP’s operating policies; and
That are in operation during the reporting year; and
That pose material impact to the environment.
100% of the performance data for in-scope assets is reported without adjustment based on CLP's equity share, unless otherwise stated.
Data are consolidated on an equity basis with two variations:
Equity basis
Includes power generation assets:
That are owned by CLP, where assets are included on an equity basis (i.e. accounts for the data according to CLP’s equity share in the asset); and
That are under construction (for generation capacity only) or in operation during the reporting year.
Equity plus long-term capacity and energy purchase basis
In addition to (1) above, this scope includes the power generation assets whose capacity and energy are purchased by CLP to meet customer demand where:
Purchase agreement duration is at least 5 years; and
Capacity or energy purchased is no less than 10MW.
Includes power generation assets involved with the delivery of electricity to CLP Power Hong Kong customers, and:
The CO2 and CO2e emissions are from generation assets in Hong Kong only (as power generation from the nuclear assets does not result in significant carbon emissions); and
The kWh is from the total electricity sales for CLP Power Hong Kong.
