Partners

GRI reference: 2-28, 415-1

In response to the climate crisis, energy transition is a critical priority for governments around the world. CLP is continuing to engage with governments and regulators to formulate decarbonisation policies and plans, while promoting the sustainable development of energy systems. Through its participation in a range of industry and professional bodies, CLP is also providing input into the major issues affecting the energy sector and establishing itself as a thought leader for the industry.

CLP maintains a politically neutral stance and refrains from making political contributions. When considering proposals for CLP to become a member of an organisation, the respective Corporate Affairs teams review the proposals based on CLP’s business objectives and the purposes of engagement. All membership proposals are subject to the final approval of the senior management of the Group or its Business Units.

GRI reference: 2-28, 201-4, 415-1

Joint efforts by the private and public sectors are crucial to addressing the emerging challenges in the energy sector. In Hong Kong, CLP Power has been actively collaborating with the Hong Kong SAR Government on the Development Plan under the current Scheme of Control (SoC) Agreement, which sets out the electricity regulatory framework and mechanism for the supply of electricity to the city. Approved by the government in November 2023, the new five-year Development Plan for 1 January 2024 to 31 December 2028 provides strong support for the government’s policy priorities. It focuses on investments designed to drive Hong Kong’s economic and infrastructural development, the continued delivery of a world-class reliable electricity system, the transition to becoming a smart and resilient city, and the continuation of the decarbonisation journey.

In addition, the 2023 Interim Review of the SoC Agreement between CLP Power, Castle Peak Power Company Limited (CAPCO) and the Hong Kong SAR government was completed. Agreements were reached on the incentive and penalty mechanism, fuel cost arrangements in the event of a fuel crisis, and further enhancement to information transparency.

CLP maintains regular communication with government officials and legislators through channels such as site visits and information sharing sessions, to facilitate mutual understanding of strategies and policy directions relevant to the shaping of a low-carbon future. CLP also actively responds to major public policy consultations and develops carefully considered positions relevant to the energy sector on ways forward for the energy industry and the community.

CLP’s responses to major public policy consultations, along with its position on critical issues such as climate change, are available on the Company’s websites and other online channels.

• CLP Power has pledged full support for the Hong Kong SAR Government’s Hong Kong’s Climate Action Plan 2050 since its announcement in 2021. One of the government’s key strategies is to encourage motorists to switch to electric vehicles (EVs). In support of the government’s EV-charging at Home Subsidy Scheme, CLP Power launched the advanced service Eco Charge 2.0 in 2020. EV charging-enabled infrastructure was successfully installed in several private residential blocks in 2023. The first project completed under the scheme has converted more than 300 existing parking spaces by installing an EV charging-enabling infrastructure. The largest project, located in Yuen Long, has seen EV charging-enabled infrastructure added to more than 400 parking spaces.

• In October 2023, CLP Power together with 14 businesses and organisations launched a cross-sector partnership called the eMobility Network to further promote the wider use of electric commercial vehicles (ECVs) in Hong Kong. This partnership, comprising ECV manufacturers and operators, charging service providers and a bank offering green finance services, aims to facilitate technology exchange, accelerate the popularisation of ECVs and support government policies promoting the new energy transport industry. CLP Power is also collaborating with the government and the transport industry on e-transport trials for buses, public light buses, taxis and ferries.
• EnergyAustralia is strongly committed to engaging with policymakers at all levels to advance the country's clean energy transition. Policy developments are expected to promote investments which enable more renewable energy to enter the grid reliably and affordably. EnergyAustralia is also continuing to work with partners to ensure a reliable supply of clean energy to meet customer demand and support the transition to a lower-carbon power market. 

• Apraava Energy actively contributes to domestic and global discussions on energy and climate change-related legislative and regulatory changes. For example, it participated in stakeholder consultations by the Bureau of Energy Efficiency (BEE) regarding the design of the National Carbon Market in India. Apraava Energy is also a member of the Product Advisory Committee of the National Commodity and Derivatives Exchange (NCDEX) which is involved in designing the derivatives market for carbon markets.

• CLP contributed to the public consultation on proposals to enhance climate-related disclosures under the environmental, social and governance (ESG) framework introduced by the Stock Exchange of Hong Kong Limited (the Exchange). The proposals outline detailed climate disclosure requirements which better align with the International Sustainability Standards Board (ISSB) Climate Disclosure Standard for Hong Kong-listed companies.

None of CLP’s businesses receive any significant government financial assistance.

CLP supports and actively participates in a range of organisations that enable it to keep abreast of different stakeholders’ views, navigate policy uncertainties and shape informed policymaking. The table below outlines the total amount CLP has contributed to organisations influencing public policy. These contributions include membership fees, donations, sponsorships and input into policy position papers. CLP has a general policy of avoiding political contributions, and no contributions were made to political parties, government officials or political candidates during the year.

CLP prioritises its engagement with organisations that are actively involved in climate change and broader energy market policies. Significant resources are devoted to the organisations listed below (in alphabetical order) through membership, sponsorship and other contributions, including active participation by CLP senior management.

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

CLP’s Code of Conduct sets out 15 Principles that guard against corruption within CLP. The Code is applicable to the entire Group, including CLP Holdings and its wholly owned subsidiaries, joint ventures and companies under CLP’s operational control. It is available to the public in both English and Chinese.

15 Principles of CLP’s Code of Conduct

All CLP employees, irrespective of their position and function, are expected to fully adhere to these principles. In the case of joint ventures or companies in which CLP does not hold a controlling interest, 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. Contractors working for CLP are encouraged to follow the Code for the duration of their contract.

In addition to the Code, CLP has implemented an Anti-Fraud Policy as part of its Corporate Governance Framework. This is aimed at preventing and controlling fraud activities such as corruption, conspiracy, embezzlement, money laundering, bribery and extortion.

CLP has a Whistleblowing Policy in place to encourage and assist employees and related third parties (including customers and suppliers) who engage with CLP to raise concerns about any real or perceived misconduct, malpractice or irregularity. 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 and confidential whistleblower hotline or email. Any concerns received are 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). This review includes refresher training for all employees to reinforce their understanding of the Code’s Principles, and to ensure business practices remain compliant and ethical.

During the review 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 involving Code violations. Contractors are encouraged to attend the sessions alongside CLP employees.

The latest BPR training was completed in 2022 for all regions, including Hong Kong, Mainland China, India, and Australia. The next round of BPR training is scheduled to commence in 2025.

Monitoring and follow-up

The General Representation Letter (GRL) process serves as a reporting mechanism for instances of non-compliance with the Code of Conduct. Leaders in areas of responsibility are required to sign a GRL annually 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.

This process reinforces the need for personal responsibility for good governance, and facilitates internal assessment of 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, with any irregularities or exceptions being reported to senior management. Leaders including managers or above, Finance and Procurement staff, secretaries in the Group, and other key staff identified by management, must also sign an annual Code of Conduct Compliance Statement.

The Group-wide reporting system for Code of Conduct violations applies to any alleged or potential breaches. Potential cases of the Code of Conduct violations can be reported to Group Internal Audit (GIA) by employees, vendors, contractors and GIA auditors through anonymous letters, emails or phone calls. The Group Code of Conduct Committee, which comprises the Chief Financial Officer, the Chief Strategy, Sustainability & Governance Officer and the 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 those related to human resources, which are investigated by the Human Resources (HR) department. The number of Code breaches and any cases of corruption are reported annually to the Audit & Risk Committee (ARC), with the relevant data verified by a third party.

To expedite responses to Code of Conduct violations in Australia, EnergyAustralia has been delegated the responsibility of managing and addressing violations by its employees. Under this arrangement, EnergyAustralia informs the ARC of CLP Holdings of cases involving senior EnergyAustralia employees.

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

GRI reference: 406-1, 417-2, 417-3

In addition, there were no convicted cases of corruption. The breaches were managed internally in accordance with CLP’s complaint handling process for Code of Conduct breaches.

Regarding whistleblowing cases, nine cases were received in 2023 compared with five in 2022.

Records of confirmed cases of Code of Conduct Principles breaches during the past five years are shown in the table below. Between 2019 and 2023, CLP did not have any breaches related to six Code of Conduct principles, namely Political Contributions, Gift & Entertainment, Laws & Regulations, Representation, Response to Incidents, and Compliance & Report.

CLP aspires to go beyond meeting its basic legal requirements and to apply international best practices in its operations. It therefore voluntarily follows high standards that reflect the Company’s principles and values, and is prepared to forego opportunities or advantages where necessary in order to uphold the highest standards of corporate governance and integrity. Specific policies and guidelines for each operational area are in place and are reviewed regularly to assist CLP in ensuring compliance with the differing jurisdictional laws and regulations. These policies and guidelines set the standards and requirements for compliance with laws relating to competition, personal data and privacy, intellectual property, health and safety, environmental protection, emissions, employment and human resources amongst others. Any compliance issues are escalated according to the policy requirements and in accordance with the code of conduct and applicable laws. Adherence to policies and procedures is also evaluated by CLP’s internal audit function in accordance with their audit cycles and assessment scope.

Monitoring and follow-up

One of the ARC’s responsibilities 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, which covers key regulatory compliance issues and legal cases involving CLP as a defendant, for submission to the ARC.

CLP is often confronted with changes in the legal and regulatory regimes of the jurisdictions in which it operates. The Company closely monitors emerging regulations and ensures that it is prepared for changes. CLP’s businesses in each jurisdiction have a process in place for monitoring, tracking and documenting all applicable legislation and amendments to it, and ensuring details are communicated to all relevant personnel, business units and management.

In reviewing new and amended laws and regulations which came into effect during the 2023 reporting year, CLP has identified those which had or will have a significant impact on the business for inclusion in this report. The threshold applied for assessing inclusion in the report is whether significant investment or expenditure was or will be required to ensure compliance. Laws and regulations that met this threshold are outlined in the respective sections of this report:

1. Emissions – laws and regulations addressing air and GHG emissions, discharges into water and land, and generation of hazardous and non-hazardous waste;
2. Employment – laws and regulations regarding compensation, dismissal, recruitment and promotion practices, working hours, rest periods, equal opportunity, diversity, anti-discrimination measures and other benefits and welfare;
3. Health and Safety – laws and regulations providing for safe working environments and protecting employees from occupational hazards;
4. Labour Standards – laws and regulations preventing child and forced labour;
5. Product Responsibility – laws and regulations on consumer data protection and privacy; and
6. Anti-corruption – laws and regulations on bribery, extortion, fraud and money laundering.

SASB reference: IF-EU-140a.2, IF-EU-550a.1; GRI reference: 2-27, 205-3, 206-1, 306-3 (2016), 411-1, 413-2, 416-2, 417-2, 417-3, 418-1, EU22, EU25

In the spirit of transparency and accountability, CLP reports cases of legal non-compliance annually in its Sustainability Report. These include cases of criminal convictions against CLP, and major breaches that resulted in significant fines (greater than HK$1 million) or equivalent non-monetary sanctions. CLP’s 2023 legal compliance performance is summarised below, according to the GRI Standards 2021 and the HKEx Environmental, Social and Governance Reporting Guide.

The Company is also exposed to the risk of contractual disputes and litigation in the course of its normal operations. The Group considers each instance separately in accordance with legal advice and makes provision and/or discloses information as appropriate.

CLP's effective procurement and supply chain management system cultivates long-term and mutually beneficial relationships with suppliers who share CLP’s values and goals. The system is centred on the CLP Group Procurement Standard (GPS) which is supported by a set of policies that include CLP's Value Framework, CLP Procurement Values and Principles, CLP SCoC and other procurement policies that govern daily CLP operations.

The system aims to continually improve CLP's competitive advantages by building commercially viable strategic relationships with preferred suppliers. It evaluates business value outcomes based on total cost of ownership management, environmental, social and governance (ESG) value, supply chain resilience and innovation.

Strategies and procedures

The GPS sets out a framework for strengthening CLP’s supply chain management capability to support its “Power Brighter Tomorrows” vision and match world-class procurement practices. The GPS provides a structured path for the business to deliver value outcomes in the four areas mentioned above, and is regularly reviewed internally.

The latest version of the GPS, which places a special emphasis on safety across the supply chain, was released in early 2022. Its five dimensions 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 the level of functional capability it requires to support its business outcomes, and then develops a plan to progress from its current level towards more advanced practices.

CLP's Group Procurement Standard

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

The CLP Procurement team actively participates in membership of project steering committees, providing 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 identify suppliers that best meet its requirements and that deliver value at an acceptable level of risk.

Under the standard procedure, supplier selections are conducted through competitive tendering which assesses each supplier’s ability to fulfil criteria of quality, health and safety, environmental protection, delivery, innovation, sustainability and cost. Every supplier contract is designed to safeguard CLP stakeholder interests and ensure the supplier meets its commitments and obligations in areas such as legal and regulatory compliance, 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. The Group Procurement team has enhanced its in-house capacity by bringing in a sustainable procurement specialist to support the planning and implementation of procurement practices relating to sustainability.

Procurement and business unit personnel work collaboratively to review and assess the performance of incumbent suppliers in the market. They also monitor sustainability risks in the areas of human rights/modern day slavery, environment and community. These initiatives provide useful information for formulating effective sourcing strategies as well as managing risk and supplier relationships.

To better manage 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 factors. The tiers are reviewed on an annual basis. This process of segmentation allows CLP to apply appropriate levels of governance and engagement for more efficient supply chain management.

In addition, regular risk assessments are conducted according to the Corporate Risk Matrix for strategic suppliers with high business criticality and spend value. The assessments are conducted in conjunction with supplier risk management and supplier relationship management processes, covering modern slavery, labour practices, supplier continuity, employee health and safety and cybersecurity. Risk mitigation plans are developed to address identified risks related to delivery performance, supply disruptions, 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 continues to enhance its supplier relationship management process for strategic suppliers. The reviews consistently assess the delivery performance of each strategic supplier, and are used to drive ongoing improvements.

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, CLP also values direct feedback from its suppliers. This offers candid two-way communication opportunities and, when it has a specific focus on technology roadmaps and innovation, helps CLP prepare for future challenges.

GRI reference: 2-6, 2-24, 204-1, 308-1, 308-2, 407-1, 408-1, 409-1, 414-1, 414-2

CLP defines critical projects by considering their importance to its business operations, as well as their sustainability risks and contract value.

Suppliers of critical projects are assessed on their sustainability practices through tools such as questionnaires, proposal evaluations, site visits, and where subcontracting is involved, audits on the subcontractor's capability to meet project requirements.

In 2023, all critical projects awarded underwent sustainability risk assessments. These critical projects represented 55% of total procurement projects by value, as compared with 51% in 2022, and 67% in 2021.

In 2023, the Group sourced products and services from 4,215 suppliers to the total amount of HK$42 billion – 52% of this total was spent on local suppliers based in the respective Hong Kong, Mainland China, India and Australia markets. Charts on the number of suppliers by region and the spend per region are shown below.

In Hong Kong, CLP Power introduced several initiatives in 2023 designed to enhance the procurement team’s capabilities for managing its supply chain and associated risk. These included:

• Contract law training sessions to reinforce the understanding of key contract terms relevant to potential supply chain disruptions or supplier non-compliance events; 
• A Know Your Counterpart (KYC) questionnaire was launched and screening of existing and potential suppliers was put in place to identify potential compliance and sanction risks arising from third party suppliers;
• A Learning Portal was created to encourage self-learning in Commercial and Supply Chain Management; and
• A Supplier Survey was conducted to understand CLP's position in suppliers’ markets.

In Australia, in line with its obligations under the Australian Modern Slavery Act 2018, EnergyAustralia submitted its third Modern Slavery Statement to the government in 2023. To assess the risk of modern slavery to its operations, EnergyAustralia used an in-house developed risk matrix based on supplier locations and commodities. This matrix has a special focus on modern slavery and enables the identification of high-risk suppliers. Subsequently, EnergyAustralia reviewed the policies, processes and internal governance practices of these suppliers. A training series on modern slavery was also delivered to over 150 team members, including those from non-procurement functions, for awareness raising. In the case of medium to large businesses lacking policies or practices prohibiting child labour or forced, bonded or involuntary prison labour, EnergyAustralia provides them with tools for developing such policies and practices in alignment with EnergyAustralia’s SCoC. Small business suppliers are asked to confirm in writing that they will abide by EnergyAustralia’s SCoC, and EnergyAustralia subsequently conducts surveys to monitor their compliance.

EnergyAustralia remains committed to fostering indigenous inclusion by including indigenous participation clauses in its supplier contracts, particularly for contracts relating to generation sites. By doing so, it seeks to encourage its suppliers to help drive indigenous inclusion by increasing their indigenous business spend and employment as well as boosting their cultural awareness.

In 2023, EnergyAustralia redesigned its market templates to include questions relating to participants’ indigenous supplier engagement in areas such as employment and supplier base. These questions are enabling EnergyAustralia to differentiate participants and gain insights into the progress suppliers have made towards working with Aboriginal and Torres Strait Islander communities and businesses.

These initiatives stem from EnergyAustralia’s Reconciliation Action Plan (RAP) strategy. The release of the second “Innovated” RAP in 2023 further clarified EnergyAustralia’s commitment to promoting reconciliation and cultural understanding as well as enhancing relationships with Aboriginal and Torres Strait Islander peoples and organisations. This year, members of the workforce participated in various local cultural learning sessions in Gippsland, Victoria, Lithgow and New South Wales. These sessions provided them with a closer connection with local Traditional Owners and Custodians, as well as enhancing their understanding of the connections between EnergyAustralia’s project sites and local history and culture.

By year end, the procurement team reported that it had sourced goods and services from 17 indigenous suppliers with a total of A$669,749 in spending.

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

CLP proactively engages with suppliers to promote responsible procurement practices for a sustainable supply chain. Since the release of its Supplier Code of Conduct (SCoC) in 2022, CLP has been widely communicating the values, policies, standards and objectives embedded in the SCoC with its supplier community. The SCoC outlines responsible procurement practices that support CLP’s environment, social and business objectives in 11 areas:

For each of these, the SCoC specifies practices that the supplier must comply with and others that they should work towards achieving. While the SCoC is embedded in CLP tender documents and contracts, CLP also encourages its suppliers to monitor, manage and disclose their performance in accordance with the SCoC. CLP extends similar principles to its own upstream supply chains. Since the release of the SCoC, over 500 of its suppliers have agreed to abide by the SCoC requirements. In 2023, CLP also conducted on-site due diligence checks on selected suppliers based on the SCoC principles.

EnergyAustralia’s latest SCoC also reflects CLP Group’s responsible procurement practices. It includes a whistleblowing channel that suppliers may contact directly or raise any concerns with anonymously. The Code has been

added to supplier contract templates and to EnergyAustralia Purchase Order Terms and Conditions.

Operational responsibilities

CLP’s contract terms and conditions include 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.

CLP’s responsible procurement team actively 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 is striving to shift from a reactive approach of risk mitigation to a proactive approach of advancing opportunities in the strategic sustainability agenda.

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, taking into account responsible procurement practices. This evaluation considers the following risks:

• 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 process 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 for developing sourcing strategy and risk mitigation measures for strategic suppliers in each category.

Training and development

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

Endorsed by the Sustainability Executive Committee, the Roadmap builds on five strategic directions, namely building suppliers’ awareness, assuring suppliers’ compliance, managing priorities, driving positive impact and getting stakeholders’ recognition.

In the first year of the three-year Roadmap, foundational capabilities and aspirations for sustainability in procurement were established. Currently, a Supply Chain Risk management framework is under development. This will help assess a supplier’s sustainability profile by considering their industry and geographical location. All active and new suppliers will be assessed to identify sustainability risk hotspots, and be informed of further actions required, including possible support to improve their sustainability performance. The launch of the proposed assessment process is planned for 2024.