Management & Policy
Sustainability Framework and Structure
At Prosperity REIT, we believe that corporate responsibility is as equally important as maximizing financial returns for our shareholders. Therefore, we have established a three-layer ESG governance structure to ensure effective sustainability governance and management of Prosperity REIT.
Board Statement
The Board attaches great importance to sustainability matters and climate-related risks and opportunities. The Board provides strategic guidance on the REIT’s overall sustainability matters, including climate-related and diversity, equity and inclusion related issues, as well as the identification and management of sustainability and climate-related risks and opportunities on an annual basis.
Sustainability matters are evaluated and prioritised through an annual materiality assessment. The result of the assessment is incorporated into the REIT’s strategies and programmes. Please refer to the Materiality Assessment section for details.
Incorporating the management vision into sustainability strategies, the Board is also responsible for approving sustainability-related targets. To monitor the progress of achieving these targets, sustainability factors have been included in the annual performance targets of relevant personnel with both financial and non-financial consequences.
Sustainability Steering Committee
A Sustainability Steering Committee was established to assist the Board with setting long-term targets and annual priorities in our sustainability roadmap in order to better incorporate sustainability factors into business decisions. The Committee consists of senior executives from different departments and three dedicated taskforces that oversee employee relations, community affairs, environmental impact, health and safety issues, and supply chain. These taskforces review and update our policies, monitor our sustainability performance, and design plans to maintain our continuous improvement on sustainability aspects.
Sustainability Working Group
To ensure our sustainability visions are integrated into our business operations, the key business divisions of the REIT Manager and the Property Manager collaborated to form a Sustainability Working Group. Sub-groups were formed from time to time to focus on different aspects, such as green and recycling, urban farm, wellness and digitalisation. Over 80% of REIT Manager’s employees have achieved a professional ESG-related qualification, such as BEAM Professional, Certified Environmental, Social and Governance Analyst® (CESGA) and Certified ESG Planner® (CEP), and are well equipped to contribute in different sub-groups.
The Working Group regularly reports to and seeks guidance from the Sustainability Steering Committee on a quarterly basis. It executes and monitors sustainability initiatives and updates the Sustainability Steering Committee on sustainability performance. It also leads sustainability reporting and facilitates the consolidation of data and information for disclosure purpose. In addition, the Working Group is also committed to developing our internal capacity on sustainability-related risks and opportunities. It supports and organises sustainability-related events and works closely with different stakeholders to drive sustainable development in the society.
Our ESG policies and requirements, approved by the Board of Directors, align with Group-level policies. These policies include:
Risk Management
To achieve our financial goals, we understand the importance of mitigating business risks through effective risk management. A standardised Enterprise Risk Management (“ERM”) system that aligns with our parent group was implemented and maintained. The ERM, consisting of risk governance, risk infrastructure and supervision of risk ownership, provides transparent structures of responsibility and accountability to aid risk management.
Regular Risk Management Reporting and Controls at Prosperity REIT
The Audit Committee and the Board of the REIT Manager receives bi-annual reports of our REIT level risk profile, with highlights on changes in risk assessment, quantitative and qualitative factors impacting inherent risk levels, and the effectiveness of mitigating controls for residual risks.
Asset level risk assessment controls have been maintained and key ESG risks have been identified on a property level, with topics including but not limited to:
Supply Chain Management
We are committed to identifying and addressing environmental and social risks in our supply chain.
Our ERM system within the supply chain is integrated with environmental and social hazards, where they are detected through risk assessment. The Property Manager is responsible for updating the risk assessment control on the asset level in respect of each of the properties in the REIT portfolio.
The REIT level risk profile is reported to the Audit Committee and the Board of the REIT Manager at least twice a year.
We are committed to selecting and managing our suppliers with high sustainability standards to better manage the identified environmental and social risks in our supply chain.
Our selection criteria for suppliers include terms from our Environmental Policy that are designed to improve environmental performance. For instance, we prioritise suppliers that provide sustainable building materials, such as those from recycled content and with low carbon sources. We also evaluate the environmental performance of our suppliers on a regular basis. Our Sustainability Policy serves to inform our suppliers, contractors, and business partners of our sustainability-related policies. The Sustainability Steering Committee, together with the Environmental, Health & Safety and Supply Chain Management Task Group, oversee, monitor, and evaluate the relevant ESG issues arising from the supply chain and review the policy regularly to align Prosperity REIT’s practices with the latest developments.
We have adopted the Green Purchasing Policy, which stipulates environmental requirements and standards for contractors and consultants at the property management level, fostering an environmentally conscious culture in our portfolio. The Policy lists out products that meet certain specifications, promoting green purchasing in daily operations. The Asset Management Team of the REIT Manager and managerial employees of our Property Manager ensure the employees’ understanding and compliance with the Policy and offer support when necessary. Meanwhile, we are exploring more environmentally friendly purchasing options and opportunities that are economically feasible.
We strictly comply with the Group Supplier Code of Conduct, which sets out different sustainability standards when conducting business with our suppliers. We aim to maximise value creation along the supply chain while putting our sustainability initiatives into practice through adopting corresponding REIT level policies.
To better manage environmental and social risks, suppliers including contractors are required to follow the environmental protection as well as health and safety rules and adopt the necessary control measures to minimise the potential impact brought to the environment and its employees. For instance, as stipulated in the Health and Safety Rules for Contractor, contractors are required to provide adequate training with suitable personal protective equipment. Health and safety training is regularly provided to the staff of the Property Manager. To monitor contractors’ compliance with these environmental and social requirements, checks are performed by independent safety consultants, as well as representatives from key business divisions of REIT Manager and Property Manager. External property management company is required to align with professional standards including ISO 14001/ISO 45001.
Business Ethics
We comply with the Prevention of Bribery Ordinance (Cap. 201) and maintain an absolute zero-tolerance stance on all forms of misconduct including corruption, fraud, bribery, money-laundering and anti-competition, as well as any non-compliance of sustainability laws and regulations. During the Reporting Year, there was no allegation of any forms of misconduct. Compliance framework consisting of coherent policies, checklists and trainings are in place to keep track of regulatory requirement mechanisms and manage compliance risks.
The Board is responsible for the overall oversight of the business ethics and corruption issues of Prosperity REIT and the REIT Manager. The Board, through the Audit Committee, conducts reviews on a half-yearly basis on the effectiveness of risk management and internal control systems of all Prosperity REIT’s operations, which cover all material controls including anti-corruption and business ethics, with each key operation area be reviewed once every two years. We have an internal audit function in place under the direct supervision of the Audit Committee to provide an independent assessment of the REIT’s risk management and internal control systems and operational functions, which includes issues related to anti-corruption and business ethics, and reviews of their effectiveness. The Internal Auditor prepares an audit plan using a risk-based methodology in consultation with, but independent of, the management for review by the Audit Committee. The audit review focuses on operational and compliance controls of the REIT, as well as effective implementation of the risk management and internal control systems, and compliance procedures.
All employees (including part-time) and contractors are required to follow our Code of Conduct and Business Ethics Policy, Conflicts of Interest Policy, Whistleblowing Policy, Employee Trading and The Handling of Inside Information Policy, Anti-Bribery & Anti-Corruption and The Handling of Gifts, Travel & Entertainment Policy and Anti-Money Laundering and Counter Terrorist Financing Policy. The Anti- Bribery and Anti-Corruption and The Handling of Gifts, Travel & Entertainment Policy provides employees with guidance on declarations procedures according to the monetary value of gifts. Any misconduct including bribery is not tolerated and will be subjected to disciplinary actions including termination and dismissal. While our employees are required to complete annual declarations to acknowledge their compliance with these policies, contractors are required to declare conflict of interest upon tender submission.
As stipulated in the Whistleblowing Policy, we provide formal confidential grievance reporting and escalation channel with legal protection for all employees (including part-time), contractors and any other persons, to report suspected and actual irregularities, frauds, corruption and workplace misconduct. The reporting structure and responsible parties are clearly set out in the Whistleblowing Policy. All information received will be handled with the highest confidentiality and the whistleblower can choose to remain anonymous in the report.
Our training programme on ethical issues covers all employees (including part-time). All employees are trained when they newly join the company and regularly during their employment. We also ensure that contractors including our Property Manager provide training on ethical standards such as content on anti-corruption. We strive to regularly reinforce our ethical standards to suppliers and contractors through communication.