Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environmental discharges
• Use of resources
• Employment and labour standards
• Operating practices
• Community outreach

Environmental Achievements

• Over 85% of commercial vehicles in Hong Kong are Euro IV or more efficient models.
• Deployed three hybrid trucks for logistics projects.
• Installed solar panels on the rooftop of warehouses in Beijing, saving approximately 40,000 kWh of electricity per month.
• Replaced over 7,400 light tubes with more energy-efficient models.
• PC 3 warehouse in Hong Kong and Kerry Tampines Logistics Centre in Singapore attained LEED (Gold) recognition.

Social Achievements

• Recruited 9 management trainees, 29 graduate trainees, and 22 interns through the Young Executive Academy (YEA).
• Participated in Work-Life Balance Week for the ninth consecutive year.
• Named a “Caring Company” by the Hong Kong Council of Social Service for the seventh consecutive year.
• Received the “Supply Chain Asia Awards 2017: Care & Positive Work Environment of the Year” and “Outstanding Global 3PL” at the Quamnet Outstanding Enterprise Awards 2017.

Governance Achievements

• Implemented a Global Anti-bribery Policy with mandatory induction training.
• Established a Whistleblowing Policy for confidential reporting of misconduct.
• No reported non-compliance with laws and regulations related to employment, OHS, labor standards, or anti-corruption.

Climate Goals & Targets

Environmental Challenges

• Reducing air and GHG emissions from logistics operations.
• Managing waste and material use.
• Conserving water in daily operations.

Mitigation Strategies

• Communicating good driving practices to drivers.
• Piloting delivery by electric vehicles.
• Procuring energy-efficient devices and installations.
• Encouraging reuse and recycling of materials.
• Migrating from hard copies to electronic copies for documentation.
• Harvesting rainwater for irrigation.

Supply Chain Management

Supplier Audits: Over 650 suppliers in Hong Kong underwent performance evaluation in 2017; over 98% retained acceptable or above performance.

Responsible Procurement

• Stringent supplier selection and management process.
• Supplier qualification assessments.
• Regular performance evaluation and monitoring.
• Social Responsibility Policy requiring strong ESG commitments.

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: ESG Reporting Guide under Appendix 27 of the Main Board Listing Rules issued by the Stock Exchange

Certifications: ISO 14001 (in some operations), OHSAS 18001, ISO 9001, Facility Security Requirements of the Transport Asset Protection Association, LEED (Gold) - PC3 and Kerry Tampines Logistics Centre, HK-BEAM (Gold) - PC3

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• KerrierVISION, a real-time internet-based solution for inventory, freight, purchase order, and delivery tracking.

Awards & Recognition

• Supply Chain Asia Awards 2017: Care & Positive Work Environment of the Year
• Quamnet Outstanding Enterprise Awards 2017: Outstanding Global 3PL
• Caring Company (Hong Kong Council of Social Service)

Environmental Metrics

ESG Focus Areas

• Environmental discharges
• Use of resources
• Employment and labour standards
• Operating practices
• Community outreach

Environmental Achievements

• Replaced over 2,400 light tubes with more energy-efficient LED lamps in two warehouses.
• Installed solar panels on the rooftop of one building in Hong Kong and warehouses in Beijing, saving energy and reducing GHG emissions.
• Achieved a B+ rating in Green Council’s sustainability assessment.

Social Achievements

• Recruited 2 management associates, 9 management trainees, 21 graduate trainees, and 14 interns from YEA.
• Employed people with disabilities in Thailand.
• Organised safety training programs and workshops on stress and mental wellbeing.
• Received the “5 Years Plus Caring Company Logo” from the Hong Kong Council of Social Service.

Governance Achievements

• Established an Integrated Management System (IMS) Committee to manage risks related to OHS, quality, environmental, and supply chain security.
• Implemented a Global Anti-bribery Policy and Whistleblowing Policy.
• Maintained ISO27001-compliant information security management system.

Climate Goals & Targets

Environmental Challenges

• Increased NOx and PM emissions due to business expansion in Thailand.
• Supply chain risks related to ESG.

Mitigation Strategies

• Stringent supplier selection and management process with pre-qualification assessments and regular performance evaluations.
• Contingency plans to maintain service reliability and business continuity.
• Active communication with suppliers on industry regulations and ESG standards in Mainland China.

Supply Chain Management

Supplier Audits: Over 700 suppliers in Hong Kong went through performance evaluation in 2019; more than 90% retained acceptable or above performance.

Responsible Procurement

• Stringent supplier selection and management process
• Supplier pre-qualification assessments
• Regular performance evaluations
• Social Responsibility Policy requiring strong commitments to good ESG practices

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: ESG Reporting Guide under Appendix 27 to the Main Board Listing Rules issued by the Stock Exchange

Certifications: ISO 14001, OHSAS 18001, ISO 9001, ISO 22000, HACCP

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Asian 3PL of the Year (Supply Chain Asia Awards 2019)
• Outstanding Global 3PL (Quamnet Outstanding Enterprise Awards 2019)
• Platinum Award, The Asset ESG Corporate Awards 2019
• Best Investor Relations Team Award, The Asset ESG Corporate Awards 2019
• ESG Leading Enterprises 2019 (Bloomberg Businessweek)
• Junzi Corporation Award 2019 (Hang Seng University of Hong Kong)

Environmental Metrics

ESG Focus Areas

• Climate Change
• Workplace Safety and Wellness
• Diversity and Inclusion
• Employee Development
• Supply Chain Sustainability
• Community Engagement
• Data Privacy
• Anti-Corruption
• Environmental Footprint Management

Environmental Achievements

• Reduced total energy consumption by 7.7% compared to 2019
• Reduced GHG emissions by 1.4% compared to 2019
• Reduced NO_x emissions by 60.7%, SO_x emissions by 4.6%, and RSP emissions by 54.1% compared to 2019
• Reduced hazardous waste by 54.4% and non-hazardous waste by 56.6% compared to 2019
• Reduced total packaging material consumption by 32.5% compared to 2019
• Reduced water consumption by 9.9% compared to 2019
• Installed solar panels generating approximately 7,000,000 kWh of electricity annually and reducing associated GHG emissions by nearly 4,000 tonnes

Social Achievements

• Implemented various measures to protect employees during the COVID-19 pandemic, including work-from-home arrangements and provision of hygiene and protective equipment
• Established a diverse and inclusive workplace, adhering to applicable laws and regulations and promoting equal opportunities
• Offered employment opportunities for elderly, retirees, and people with disabilities
• Provided extensive safety training, including OHS training, refresher training, and first aid training
• Organized various workshops on stress management, mental wellbeing, and physical health
• Launched Young Executives Academy to nurture future leaders
• Actively participated in various volunteer activities, such as supporting youth development, helping the underprivileged, and contributing to environmental protection

Governance Achievements

• Established a sound sustainability governance structure, including the Board, ESG Taskforce, Audit and Compliance Committee, and Risk Management Committee
• Developed a climate change policy statement
• Implemented a Global Anti-Bribery Policy with zero-tolerance for bribery, corruption, and fraud
• Established a Whistleblowing Policy to enable employees to report misconduct confidentially
• Implemented various projects to enhance cybersecurity, including replacing anti-virus solutions, enforcing MFA, and upgrading SIEM solutions

Climate Goals & Targets

Environmental Challenges

• Operational risks from extreme weather events due to climate change
• Policy and legal risks from tightening regulations related to climate change
• Supply chain disruptions due to the COVID-19 pandemic
• Maintaining supply chain sustainability and ensuring suppliers adhere to ESG standards

Mitigation Strategies

• Introduced precautionary measures against extreme weather impacts on facilities and business interruptions
• Developed business continuity plans for all business units
• Implemented various measures to protect and support employees during the COVID-19 pandemic
• Established a rigorous supplier selection and management process with environmental and ethical requirements in supplier contracts
• Regularly assesses suppliers’ performance in quality, environmental management, and occupational health and safety
• Actively communicates with suppliers on industry regulations and sustainable practices

Supply Chain Management

Supplier Audits: Over 600 suppliers evaluated in Hong Kong in 2020; >83% retained acceptable or above performance

Responsible Procurement

• Rigorous supplier selection and management process; pre-qualification process; environmental and ethical requirements in supplier contracts; regular performance assessment and monitoring

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events

Transition Risks

• Tightening policy and legal requirements related to climate change

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: ESG Guide under Appendix 27 to the Main Board Listing Rules issued by the Stock Exchange of Hong Kong Limited

Certifications: ISO 45001, ISO 14001, ISO 9001, ISO 22000, LEED (Gold), HK-BEAM (Gold), TAPA FSR

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• LEED (Gold) for Tai Po Product Customisation and Consolidation Centre and Kerry Tampines Logistics Centre; HK-BEAM (Gold) for Tai Po Product Customisation and Consolidation Centre

Environmental Metrics

ESG Focus Areas

• Net zero emissions by 2050
• Environmental and social footprint

Environmental Achievements

• Obtained ISO 14001 certification
• Providing green logistics solutions, minimizing environmental footprint and operating in an environmentally friendly manner
• Actively exploring the possibilities of developing Science Based Targets initiative (SBTi) aligned targets

Social Achievements

• Committed to creating opportunities for employees to develop their full potential
• Nurturing talents through comprehensive MT Programme and YEA
• Providing regular on-the-job trainings, reward schemes and job secondment/ relocation opportunities

Governance Achievements

• Formed a new Sustainability Committee in 2022 Q4 to lead the oversight of KLN’s environmental and social footprint through a board-level involvement
• Taking proactive steps to prepare for reporting in accordance with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations
• Complied with the code provisions as set out in Part 2 of the CG Code

Climate Goals & Targets

Environmental Challenges

• Global freight overcapacity
• Short-term spending patterns evolving from product purchase to service consumption
• Weakened consumer power caused by high inflation and geopolitical tensions
• Integration obstacles (differences in operation models, culture and availability of resources)
• Succession planning and potential loss of talents
• Concerns over key information systems (both operational and financial)
• Credit risk in relation to counterparties
• Uncertainties in the global business environment

Mitigation Strategies

• Accelerating KLN’s strategic development, reinventing its business models and pursuing new markets
• Delivering new and different logistics solutions to meet customers’ various business and operational needs
• Strengthening competitive advantages through building a resilient, agile and sustainable value chain
• Expanding own-controlled air freight network and seeking new business potentials with S.F. Airlines
• Expanding cross-border express network in Southeast Asia
• Deploying electric trucks in Hong Kong
• Diversifying business portfolio, markets and customer pools
• Robust due diligence process for mergers and acquisitions
• Integration checklists in all aspects
• Independent check on the governance and performance of the acquired business by internal audit
• Using the MT Programme developed under YEA to nurture staff
• Benchmarking salary level of management
• Implementing long-term incentives to management
• Implementing succession plan
• Periodic disaster recovery plan and drill tests
• Outsourcing or relocating part of the development or maintenance of systems
• System integration and automate data flows
• Stringent cybersecurity measures
• Applying machine learning and artificial intelligence to combat cybersecurity attacks
• Tightening accounts receivable and setting up credit monitoring controls
• Holding customers’ stocks before payments are settled
• Requesting for deposit before provision of services

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: TCFD

Certifications: ISO 14001

Awards & Recognition

• JADE AWARD
• BEST SUSTAINABILITY TEAM ESG LEADING ENTERPRISE AWARDS
• Bloomberg Businessweek/Chinese Edition – ESG Leading Enterprise Awards 2022 Transport and Logistics – Silver Award
• Hong Kong Awards for Environmental Excellence Global Connectivity Corporate – Leadership Award
• Standard Chartered Corporate Achievement Awards • ESG Benchmark Awards – Silver Award • Outstanding Sustainability and Dividend Growth Award
• ESG Achievement Awards 2021/2022 Outstanding Green Logistics Service Provider
• Quamnet Outstanding Enterprise Awards 2022
• Asian Freight, Logistics and Supply Chain Awards 2022
• Frost & Sullivan Asia-Pacific Best Practices Awards

Environmental Metrics

ESG Focus Areas

• Sustainability
• Climate Change
• Employee Wellbeing

Environmental Achievements

• Committing to investigating medium-term target setting, completing the first phase of its climate risk assessment, and taking efforts to enhance the measurement of its value chain (Scope 3) emissions.
• Obtained ISO 14001 certification.

Social Achievements

• Launched WE KARE Caring platform for employee wellbeing.
• YEA program for employee development and grooming high-caliber talent.

Governance Achievements

• Complied with the code provisions as set out in Part 2 of the CG Code.
• Established six committees (Remuneration, Audit and Compliance, Nomination, Finance, Risk Management, and Sustainability) for overseeing particular aspects of the Company’s affairs.

Climate Goals & Targets

Environmental Challenges

• Decrease in revenue and profit due to elevated interest rates, geopolitical tensions, and sluggish global trade.
• Excess inventories, subdued purchasing power, and stagnant export growth.
• Integration obstacles from mergers and acquisitions.
• Potential loss of key talents.
• Concerns over key information systems.
• Credit risk in relation to counterparties.

Mitigation Strategies

• Divesting express business to focus on core businesses (Integrated Logistics and International Freight Forwarding).
• Cost management measures (headcount realignment, warehouse usage optimization, robotics, and AI).
• Leveraging collaboration with S.F. Holding for cross-selling and synergies.
• Acquiring majority stake in Business By Air SAS to strengthen EMEA position.
• Robust due diligence process and integration checklists for M&A.
• YEA program for talent development and succession planning.
• Periodic disaster recovery plans and drills, outsourcing/relocating systems maintenance, system integration, automation, and stringent cybersecurity measures.
• Tightening accounts receivable, credit monitoring controls, holding customers’ stocks, and requesting deposits.

Supply Chain Management

Climate-Related Risks & Opportunities

Awards & Recognition

• Award of Excellence in Corporate Governance
• Award of Excellence in ESG (Hong Kong Corporate Governance and ESG Excellence Awards 2023)
• Listed Enterprises 2023
• ESG Leading Enterprises (Bloomberg Businessweek/Chinese Edition 2023)
• Cross-border Corporate – Leadership Award (Bloomberg Businessweek/Chinese Edition 2023)
• ESG Benchmark Awards – Silver Award
• Outstanding Sustainability and Dividend Growth Award
• Jade Award
• Best Sustainability Team (The Asset ESG Corporate Awards 2023)
• Best 3PL Provider
• Best Logistics Service Provider – Sea Freight (2023 Asian Freight, Logistics & Supply Chain Awards)
• Asia-Pacific Logistics Company of the Year 2022 (Frost & Sullivan Asia-Pacific Best Practices Awards)
• Top 100 China Cold Chain Logistics Enterprises 2023 (Frost & Sullivan Asia-Pacific Best Practices Awards)
• Many other awards listed in the report