HK Electric Investments: Encouraging Progress Across ESG Initiatives

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HK Electric Investments Limited is a Hong Kong-listed vertically integrated power utility, with operations across the generation, transmission, distribution, and supply of electricity. Its sole power generation facility is the Lamma Power Station, which has an aggregate installed capacity of approximately 3,700 megawatts (MW). An analysis of the company's environmental, social, and governance policies are as follows:


Environment


From an environmental perspective, the company scores favorably, particularly outperforming on the Emissions Score front, but underperforming on the Environmental Innovation Score front.


For instance, it has implemented a resource reduction policy, which compares to the presence of a clear policy in the prior year. The company has implemented a water efficiency policy, with an energy efficiency policy implemented as well. This compares to the presence of a similar policy in the prior year.


Environmental policy areas the company is currently lacking include Water Efficiency Targets, Environmental Materials Sourcing, and Toxic Chemicals Reduction. Meanwhile, areas the company has addressed include Environmental Supply Chain Policy, Resource Reduction Targets, Energy Efficiency Targets, the setup of an Environment Management Team, and Environment Management Training.


The company has also not implemented renewable energy use, which compares to the lack of a clear policy in the prior year. The company has also notably not implemented green buildings as well, which compares to the lack of a defined policy in this regard in the prior year.


In terms of its carbon footprint, the company's Estimated CO2 Equivalents Emission Total stands at 8,510,000 in the latest fiscal year, which compares to 8,410,000 in the prior year based on Reported CO2 Estimates.


Social


From a social standpoint, the company scores favorably, particularly outperforming on the Product Responsibility Score front, but underperforming on the Human Rights Score front.


For instance, it has implemented a health and safety policy, which compares to the presence of a clear policy in the prior year. The company has also implemented an Employee Health & Safety Policy, with a Supply Chain Health & Safety Policy implemented as well. This compares to the presence of a similar policy in the prior year.


The company has produced a moderate increase in Net Employment Creation relative to the prior year. The Number of Employees from CSR reporting totals 1,893, relative to 1,800 in the prior year.


As of the latest fiscal year, there have not been Management Departures, while the prior year saw no departures. Meanwhile, the company experienced no strikes this year, which compares to no strikes in the prior year.


Governance


From a governance standpoint, the company scores relatively favorably, particularly outperforming on the CSR Strategy Score front, but underperforming on the Management Score front.


The company does not have a Corporate Governance Board Committee, but has a Nomination Board Committee, has an Audit Board Committee, and has a Compensation Board Committee. The company does have a Board Structure Policy and does have a Policy for Board Independence in place. The Board has held four meetings in the last fiscal year, which compares to 4 in the prior year. The Board size currently stands at 17 members based on the latest annual/ESG report.


The Board has an average tenure of 3.9 years, which compares to 3.3 in the prior year. The Board lacks both cultural and gender diversity.


The company has implemented a Policy for Executive Compensation Performance but has not tied its Executive Compensation Policy to ESG Performance. The company has implemented a Policy for Executive Retention and has implemented a Succession Plan, along with an External Consultant policy.


The company has not implemented CEO-Chairman Separation and does have its CEO as a Board member. Its chairman is not an ex-CEO. Board member term duration stands at one year. In total, senior executives' compensation has risen in the latest fiscal year, along with Board member compensation. Notably, the CEO compensation is not linked to total shareholder return. Meanwhile, executive compensation is not linked to long-term objectives. Sustainability compensation incentives have not been implemented. Thus far, there have not been any executive compensation controversies.


Sources:


https://www.hkelectric.com/en/corporate-social-responsibility


https://www.hkelectric.com/en/corporate-social-responsibility/sustainability-reports

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