Governance

The ways in which the Group manages its sustainability impacts and acts on its governance-related goals — Embed rigorous and effective governance; and Operate responsibly and with integrity — are detailed in this section. This section should also be read in conjunction with the Corporate Governance Report included in the 2020 Annual Report for further detailed information regarding the corporate governance  framework and practices.

Group sustainability governance
 
At the heart of the Group’s corporate strategy is its objective to enhance long-term, sustainable value for all its stakeholders.

The Group adopts a rigorous and effective sustainability governance structure which provides a solid foundation to deliver on this objective and ensure sustainability is embedded at all levels of the Group.

Foundational policies, including the Group-wide Sustainability  Policy, serve as the ultimate guiding principles for the Group and detail the Group’s commitments to its stakeholders and the environment.
 

  

The Board

The Board has ultimate accountability for the sustainability strategy of the Group, as well as its management, performance and reporting through the support of the Sustainability Committee and the Audit Committee.

The Board examines and approves the sustainability goals, objectives, policies and frameworks and reviews progress towards their implementation and achievement.

The Sustainability Committee and the Audit Committee report to the Board on sustainability risks and opportunities, which the Board examines and reviews with the committees periodically, as well as their impact on business strategy and new investments.

Board Diversity
As at 31 December 2020, the Board comprised 19 directors, including seven Executive Directors, five Non-executive Directors and seven Independent Non-executive Directors. The Nomination Committee, chaired by Dr Rosanna Wong, an Independent Non-executive Director, with the Chairman Mr Victor T K Li and Independent Non-executive Director Mr Vincent Cheng as members, is responsible for reviewing the structure, size, diversity profile and skills matrix of the Board. The Group values the benefits of a diverse Board that possesses a balance of skill set, expertise, experience and perspective. Appointment of Directors is based on attributes that the selected Director will bring to the Board. Female directors accounted for 21% of the Board in 2020. On the date of this report, the Board comprised 17 directors of which female directors accounted for 24% of the Board.

Sustainability Committee

The Sustainability Committee, elevated as a Board-level committee in 2020, is chaired by Mr Frank Sixt (Group Finance Director and Deputy Managing Director), with Ms Edith Shih (Executive Director and Company Secretary) and Dr Rosanna Wong (Independent Nonexecutive Director) as members.

The key responsibilities of the Sustainability Committee are to make recommendations to the Board on the Group’s sustainability goals, objectives and strategies. It oversees, reviews and evaluates actions taken by the Group to progress its sustainability priorities and goals. The Committee also reviews and reports to the Board on sustainability risks and opportunities, and assesses emerging sustainability issues and trends that could impact the business operations and performance of the Group. Moreover, it considers the impact of the Group’s sustainability initiatives on its stakeholders and advises the Board on external communication, disclosure and publications as regards to its sustainability performance.

The Committee meets at least twice a year per the Sustainability Committee’s Terms of Reference.

During 2020, the Sustainability Committee reviewed and approved the 2019 Sustainability Report. It also approved the 2021 sustainability priorities for the Group included within this report. As identified Group-wide focus areas, the Sustainability Committee will give particular oversight and receive ongoing updates on the following goals:
 

  • Take action on climate change;
  • Offer customers sustainable products and invest in and embrace innovation to achieve transformational impacts;
  • Create great places to work; and
  • Take all steps to protect employees and support communities and other stakeholders through the pandemic.
   

Audit Committee

The Audit Committee maintains oversight of the effectiveness of the financial reporting, risk management and internal control systems of the Group, and is responsible for reviewing the policies and practices of the Group on corporate governance including compliance with legal and regulatory requirements per the Audit Committee Terms of Reference.

Sustainability Working Group

Supporting the Sustainability Committee is the Sustainability Working Group, comprising two Executive Directors as Co-Chairs, as well as other senior executives from key departments that influence the Group’s material sustainability impacts. To further strengthen its sustainability management approaches, the Company recruited a sustainability lead to drive the Groupwide sustainability strategy, working in partnership with the core businesses’ Sustainability Working Groups.

Governance Working Group

To assist the Audit Committee and the Sustainability Committee in discharging its responsibilities, a Governance Working Group chaired by the Executive Director and Company Secretary, and comprising representatives from key departments of the Company, provides timely updates, identifies emerging matters of compliance, and establishes appropriate compliance policies and procedures for Group-wide adoption.

Cyber Security Working Group

The Cyber Security Working Group is chaired by the Group Finance Director and Deputy Managing Director and includes technical specialists from the core businesses, as well as representatives from Internal Audit and Group Information Services Department. It oversees the cyber security risks and defences of the Group to ensure that its efforts in this area are effective, coherent, and well-coordinated.

Sustainability at the core businesses

Each of the core businesses operates in unique sectors and geographies, therefore they are supported by their own sustainability leads, governance structures and programmes. Where
necessary to their industry and geography, additional policies are adopted to support approaches in addition to the policies of the Group. As a common standard, each core business has set up its own cross-departmental Sustainability Working Group which is chaired by senior management.

Internal Audit

Internal Audit, reporting directly to the Audit Committee and administratively to the Group Finance Director and Deputy Managing Director, provides independent assurance as to the effectiveness of the Group’s risk management activities and controls, including those related to sustainability.

Risk management

As part of its enterprise risk management, the Group adopts a topdown and bottom-up approach to managing sustainability risks. Bi-annually, each core business is required to formally identify and assess its risks and as well as the control procedures that are in place in managing the risks identified.

Subject to independent audit assurance, these self-assessment results are submitted to the Executive Directors and the Audit Committee for review and approval. Relevant assessment results are also shared with external auditors.

In 2020, climate change was given additional focus during the risk assessment process and highlighted as a greater priority going forward.

Sustainability integration in compensation and financial metrics

In its 2020 Sustainability Report, CKHH committed to building sustainability incentives plan by linking sustainability goals to performance metrics and compensations schemes. While the Group will be reporting back on progress in its 2021 Sustainability Report, the Group is already making progress at the division level. At the Infrastructure division, key performance indicators on health and safety are included in the compensation schemes of all its businesses CEOs and executive management. WINDTRE, the largest business within CK Hutchison Group Telecom in terms of registered and active customers, has linked 10% of compensation of all managers and above to sustainability metrics in meeting the business’ commitment to be carbon neutral by 2030 and in metrics linked to inclusion and diversity.

In aiming to also finance the ongoing low carbon transition as well as other social and environmental ambitions, the Group has also developed it’s Sustainable Finance Framework. Tracking mechanisms in line with financial reporting to track sustainable CAPEX and OPEX spend have also been established.