Partners

GRI reference: 2-28, 415-1

The transition to a clean energy economy remains one of the critical agenda items for governments around the world. CLP continues to engage with governments and regulators in formulating decarbonisation policies and plans while delivering sustainable low-carbon energy systems for infrastructure investment that drives economic growth. Through participation in a range of industry and professional bodies, CLP provides input to the major issues deemed crucial to the energy sector’s ongoing viability and success, advocating as a thought leader of the industry.

CLP’s policy is to remain politically neutral and avoid making political contributions. Joining an organisation as a member is reviewed by the respective Corporate Affairs teams based on business objectives and engagement purposes. All membership proposals are subject to the final approval of the senior management of the Group or Business Units.

GRI reference: 2-24, 2-26, 205-1, 205-2, 205-3, 416-2

CLP’s Code of Conduct sets out 15 Principles that help drive the Company forward and serve as a tool to guard against corruption within CLP. The Code is applicable to the entirety of the Group, including CLP Holdings, its wholly owned subsidiaries, joint ventures or companies under CLP’s operational control or joint operational control. For transparency, it is also available to the public in both English and Chinese.

All employees of CLP, irrespective of their position and function, are expected to fully adhere to the principles. In the case of joint ventures or companies in which CLP does not hold a controlling interest, the representatives are also expected to act in accordance with the Code and to make a concerted effort to influence those with whom they are working to follow similar standards of integrity and ethical behaviour. Likewise, contractors working for CLP are encouraged to follow the Code for the duration of their contract.

15 Principles of CLP’s Code of Conduct

CLP has a Whistleblowing Policy in place to encourage and assist employees and related third parties (such as customers and suppliers) who deal with CLP, to raise concerns about any real or perceived misconduct, malpractice or irregularity through a confidential reporting channel. The Whistleblowing Policy is available to the public in both English and Chinese. Concerns can be reported independently to CLP Group Internal Audit 24/7 through a dedicated whistleblower hotline or email. Any concerns received will be handled with care and treated fairly and properly.

Training and awareness

Code of Conduct training is mandatory for all staff joining the Company. CLP promotes the Code of Conduct and Whistleblowing Policy to employees, on a regular basis, by advising of any updates or revisions.

Every four years, the Company conducts a Group-wide Business Practice Review (BPR) through which all employees receive refresher training on understanding the Code’s Principles, to help ensure business practices remain compliant and ethical.

During these sessions, potential issues are raised and reviewed with management. A number of case studies based on past violations are included to demonstrate the proper way to handle potential and actual situations in which the Code has been violated. Contractors are encouraged to attend the BPR sessions alongside CLP employees.

The latest BPR training commenced in mid-2021 and was completed in 2022 for all regions, including Hong Kong, Mainland China, India, and Australia.

Monitoring and follow-up

The General Representation Letter (GRL) process is one of the means by which non-compliance with the Code of Conduct can be reported. It requires leaders of areas of responsibility to annually sign a GRL addressed to the Group Chief Executive Officer (CEO) and Chief Financial Officer (CFO) outlining their area’s adherence, or otherwise, to the Code of Conduct, amongst other Company policies.

The process reinforces personal responsibility for good governance and facilitates self-assessment on the adequacy and effectiveness of controls at different levels within CLP. As part of this annual process, business practices are reviewed and fraud risks in different areas are assessed, while irregularities or exceptions are reported for the attention of senior management. Leaders, including managers or above, Finance and Procurement staff, secretaries in the Group, or other key staff considered appropriate by management must sign a Code of Conduct Compliance Statement on an annual basis.

The Group-wide reporting system for Code of Conduct violations applies to any alleged or potential breach. Potential violations of the Code of Conduct are reported to Group Internal Audit (GIA) by employees, vendors, contractors and GIA auditors. Communications are received through means such as anonymous letters, emails or phone calls. The Group Code of Conduct Committee, which comprises the Chief Financial Officer, Chief Strategy, Sustainability & Governance Officer and Chief Human Resources Officer, reviews and endorses any disciplinary measures to be taken.

GIA regularly reviews compliance with the Code, and investigates any potential violations, except for those related to human resources, which are investigated by Human Resources (HR). The number of breaches of the Code and any cases of corruption are reported annually to the Audit & Risk Committee (ARC), with the relevant data verified by a third party.

For a quicker response to Code of Conduct violations in Australia, EnergyAustralia has been delegated the responsibility of managing and acting on violations committed by EnergyAustralia employees. Under the delegation, EnergyAustralia informs the CLP Holdings ARC of cases involving senior EnergyAustralia employees.

For Apraava Energy, a separate Internal Complaints Committee has been established to handle complaints of sexual harassment at the workplace in accordance with Indian laws.

CLP is a law-abiding company that aspires to go beyond legal requirements and bring international best practices to its operations. CLP voluntarily follows higher standards that reflect the Company’s principles and values and is prepared to forego opportunity or advantage when upholding the highest standards of corporate governance and integrity is necessary. Specific policies and guidelines for each operational area are in place to assist CLP in ensuring compliance with the differing jurisdictional laws and regulations relating to competition, personal data and privacy, intellectual property, health, safety, the environment, as well as employment and human resources amongst others.

Monitoring and follow-up

One of the responsibilities of the ARC is to review and monitor the Company’s compliance with the Code of Conduct, as well as the Company’s policies on compliance with applicable legal and regulatory requirements such as the Hong Kong Exchanges and Clearing Limited (HKEx) Listing Rules, the Companies Ordinance (Hong Kong) and the Securities and Futures Ordinance (Hong Kong). The ARC also reviews regulatory and legal issues. Every six months, Group Legal Affairs compiles a CLP Group Key Regulatory and Legal Compliance Issues Report for the ARC, which covers key regulatory compliance issues in addition to legal cases in which CLP is a named defendant.

CLP is often confronted with changes in the legal and regulatory regimes of the various jurisdictions in which it operates. The Company closely monitors emerging regulations and ensures that it is prepared for changes.

In reviewing new and amended laws and regulations which came into effect during the 2022 reporting year, CLP identified those which had or would have a significant impact on the business and are relevant for inclusion in this report. The threshold applied for assessing inclusion is whether significant investment or expenditure was required to ensure compliance. Laws and regulations that met this threshold are outlined in the respective sections of this report:

1. Emissions – air and GHG emissions, discharges into water and land, and generation of hazardous and non- hazardous waste;

2. Employment – compensation, dismissal, recruitment and promotion, working hours, rest periods, equal opportunity, diversity, anti-discrimination and other benefits and welfare;

3. Health and Safety – safe working environment and protecting employees from occupational hazards;

4. Labour Standards – prevention of child and forced labour;

5. Product Responsibility – consumer data protection and privacy; and

6. Anti-corruption – bribery, extortion, fraud and money laundering.

CLP's effective procurement and supply chain management system cultivates long-term and mutually beneficial relationships with suppliers who share our values and goals. The system is centred on the CLP Group Procurement Standard (GPS) which is supported by a set of policies.

The system aims to continually improve CLP's competitive advantage by forming commercially viable strategic relationships with its preferred suppliers. The approach measures business value outcomes in terms of the total cost of ownership management, environmental, social and governance (ESG) value, supply chain resilience, and innovation. As an integral part of the business operation, CLP’s procurement commitments are also embedded in a set of policies including CLP's Value Framework, CLP Procurement Values and Principles, CLP SCoC and other procurement policies that govern daily CLP operations.

Strategies and procedures

The GPS provides a framework towards world-class procurement practice and for raising CLP’s supply chain management capability to support CLP's transition to a Utility of the Future.

The GPS provides a structured path for the business to deliver value outcomes in the four critical areas of total cost of ownership management, sustainability, upstream supply chain resilience and innovation. It is regularly reviewed through internal engagement for continuous improvement.

The latest version of the GPS was released in early 2022 with safety within the supply chain serving as an overarching value for the five-dimensional framework. The five dimensions of the GPS are:

• Corporate strategy and guiding principles

• Business value outcomes

• Future-fit structures and collaboration

• People and technology

• Change management

For each dimension, the GPS defines levels of world-class practice from “basic” to “advanced”. Each business unit assesses their required level of functional capability to support their business outcomes, and then develops a plan from their current level of practice towards leading practices. 

CLP's Group Procurement Standard

CLP’s Whistleblowing Policy and Harassment-Free Workplace Policy also enhance CLP's procurement operations and CLP encourages all suppliers to uphold the principles outlined in these policies.

CLP Procurement team is a member of project steering committees and provides appropriate levels of oversight and governance in procurement decision-making. Procurement commitments in the Company’s various regions are made with reference to the clearly-defined authorities set out in the Company Management Authority Manuals.

Monitoring and follow-up

CLP’s fit-for-purpose sourcing strategies are designed to select suppliers who will best meet its requirements and deliver value at an acceptable level of risk.

Following the standard procedure, supplier selections are conducted through competitive tendering which assesses each supplier’s ability to fulfil quality, health and safety, environment, delivery, innovation, sustainability and cost criteria. In every supplier contract, CLP safeguards its stakeholder interests and ensures the supplier meets its commitments and obligations, including legal and regulatory compliance, and obligations in respect of intellectual property rights, data confidentiality and security.

The Procurement Leadership Team, comprising each Region’s head of procurement, oversees aggregated future procurement needs, supply market opportunities and risks, and the development of procurement strategies.

Procurement and business unit personnel work collaboratively to review the market and assess the performance of incumbent suppliers, as well as monitor sustainability risks in the areas of human rights/modern day slavery, environment and community. This joint effort has improved CLP’s ability to formulate effective sourcing strategies, negotiate and manage risk and supplier relationships, and has resulted in tangible commercial benefits for each business.

For better management of supplier clusters, CLP segments its contracted suppliers into tiers based on relative contract value and potential business impact, including risks in relation to supply chain and sustainability. The tiers are reviewed on an annual basis. The process of segmentation allows CLP to apply appropriate levels of governance and engagement for efficient supply chain management.

In addition, quarterly risk assessments are conducted according to the Corporate Risk Framework for strategic suppliers with high business criticality and spend value. Heatmaps assist in determining the likelihood of failure events and their potential impact on the business. The assessment is conducted in conjunction with supplier risk management and supplier relationship management processes. Risk mitigation plans are developed to address identified risks related to delivery performance, supply disruptions and business continuity, and sustainability along the supply chain. Regular meetings with suppliers are conducted to discuss the progress of mitigation plans and explore opportunities for further improvement.

Continuous improvement

Through year-round operational, business, and executive reviews, CLP enhances its supplier relationship management process for strategic suppliers. The reviews consistently measure each strategic supplier’s delivery performance, and drive continuous improvements and alignment.

Past performance data, future business needs, and technology and innovation roadmaps are regularly reviewed with suppliers. While supplier performance is measured under a structured framework, suppliers are also invited to provide feedback to CLP. This approach provides candid two-way communication and continuous improvements in the long run. Supplier input, with specific focus on technology roadmaps and innovation, also strengthens CLP in preparing for future challenges.

For example, as a result of the review process, a talent development programme has been rolled out in CLP Power since 2021. It provides comprehensive training modules, including topics on category management and sustainable procurement, to uplift the capabilities of the procurement team in Hong Kong. Additional sustainability training on sustainable supply chain and other related topics will be arranged in 2023.

GRI reference: 2-24, 407-1, 414-2

CLP newly released the SCoC in 2022 which is derived from CLP's values, policies, standards and objectives. Setting out specific requirements for suppliers to support CLP’s environment, social and business objectives, the SCoC articulates our 11 responsible procurement practices. They are:

1. Legal Compliance

2. Business Ethics

3. Cybersecurity

4. Quality and Safety

5. Environmental Management

6. Climate Change

7. Employee Health and Safety

8. Labour Practices and Human Rights

9. Diversity and Inclusion

10. Community Relations

11. Supply Chain Management

With the introduction of CLP’s first SCoC, EnergyAustralia updated and relaunched its SCoC in December 2022. The new Code reflects the essence of CLP Group's responsible procurement practices. It includes a whistleblowing service that suppliers may contact directly or raise any concerns with anonymously. The new Code has been added to supplier contract precedents and EnergyAustralia Purchase Order Terms and Conditions.

Operational responsibilities

CLP contract terms and conditions outline specific sustainability requirements and expectations regarding business ethics. Suppliers are encouraged to align with the requirements and expectations stated in the SCoC and are expected to adopt similar standards and practices when doing business with the Company.

The CLP team leading responsible procurement engages with key internal and external stakeholders to promote procurement practices that reduce ESG risks and enhance supplier capabilities to meet CLP’s sustainability expectations. The Company strives to shift from reactive risk mitigation to advancing opportunities on strategic sustainability priorities. 

Strategies and procedures

CLP takes a risk-based approach to responsible procurement across the procurement lifecycle. ESG risks are identified and evaluated regularly at category, project and supplier levels against each responsible procurement practice. This evaluation considers:

• Country-specific risks;

• Product/service-specific risks;

• Industry/category-specific risks;

• Legal and regulatory compliance risks;

• Cybersecurity risks;

• Labour practices and sub-contracting risks;

• Health and safety risks;

• Governance and business conduct risks;

• Environmental risks;

• Operational/supply chain risks; and

• Brand and reputational risks.

Specifically, the risk assessment aims to help CLP manage ESG issues, such as labour practices, human rights, modern slavery, child labour, harassment, safety, environment, subcontractor management and anti-bribery along the value chain. The risk assessment results provide insights into sourcing strategy development for categories and risk mitigation for strategic suppliers.

Training and development

CLP regularly conducts workshops for contractors to uplift their safety and environmental awareness and capability. To enhance professional development of contractor staff, workshops and training on procurement practices and supplier relationship management are conducted.