ESG: Collaboratively Exploring New ESG Practices and Co-Creating a Thriving Sustainable Future

10.Jan.2024

Addressing global climate change, high-quality development, and the green upgrading of industries are core issues related to sustainable social development. The focus of ESG on environment, social, and corporate governance is not only a requirement for the disclosure of information by listed companies but also represents an innovation in a new model of social collaboration. China Merchants Port Group Co., Ltd. (hereinafter referred to as 'CMPort'), as a responsible international enterprise, has in recent years actively referred to the ESG development concept. The company has established and perfected sustainable development management mechanisms, integrating ESG into its business strategy and daily operational management. While striving to become a world-class comprehensive port service provider, CMPort has always worked hand in hand with shareholders, customers, employees, suppliers, and partners, forging a unique approach to ESG implementation abroad that is characteristic of CMPort's values and practices.

ESG: Remarkable Achievements in the Path of Sustainable Development Practice

In 2023, CMPort closely focused on promoting high-quality development of the real economy, firmly grasping new characteristics in industry development. In the face of new global development trends, CMPort's domestic and overseas businesses progressed side by side. On the foundation of maintaining stable development in production and operations, the company actively pushed forward the transformation towards sustainable development, achieving remarkable results in ESG management performance. In 2023, CMPort achieved notable recognition in the realm of ESG. The company was successfully listed on the "China ESG Top 100 Listed Companies" list, ranking 68th and third in the transportation industry. In September of the same year, CMPort was selected for the "Top 100 Listed ESG Companies in China" and was officially included as a constituent stock in the "CSI-Securities Times ESG Top 100 Index." In October, the international ESG authority MSCI announced its latest ESG ratings, with the company's Hong Kong-listed platform China Merchants Port Holdings Company Limited upgraded to a "BB" level ESG rating, a two-level increase. In December, China Merchants Port Holdings Company Limited was honored with the "Best Listed Company for ESG Practice" award on the Hong Kong International ESG List, reflecting the high societal and industry recognition for the company's ESG practices.

"E": Protecting the Blue Planet and Adapting to Local Conditions to Preserve the Green Ecology

The 'E' (Environmental Protection) in ESG is a global consensus. Since starting its overseas expansion in 2008, CMPort has rapidly grown its business and now operates in 25 countries across six continents. Despite differences between international and Chinese ESG standards, as well as the varying ESG regulatory requirements and focuses in different regions, there is a fundamental commonality. Facing diverse national cultures and different ESG regulations, CMPort adapts its approach to suit local conditions. It actively engages in environmental protection efforts, tailored to the characteristics and strengths of each project location. The company is committed to implementing measures to minimize the impact of its operational activities on neighboring communities and marine ecosystems, collaborating with local areas to build a sustainable development ecosystem.

Brazil is rich in hydropower resources, and CMPort's terminal in Brazil, TCP, has embraced green electricity for its daily operations through collaboration with third parties. In 2022, TCP's green electricity usage exceeded 80,000 megawatt-hours, resulting in a 60% reduction in carbon emissions. On another note, TCP is located in a protected bay, an area of global significance for ecosystem conservation. To create a conducive environment for local flora and fauna, TCP has implemented 19 specific plans focused on wildlife protection, including the "Whale, Turtle and Grass Beach Monitoring Program" and the "Aquatic Biota and Bioindicator Monitoring Program." Furthermore, CMPort places a high emphasis on biodiversity conservation. In Africa's Togo and Brazil, the company has carried out sea turtle conservation initiatives. In Sri Lanka, CMPort has undertaken a series of sustainable environmental projects including afforestation, beach cleaning, and waste segregation management.

"S": Practicing Social Responsibility and Integrating into Local Community Development

The "S" in ESG (Social Responsibility) is represented by public welfare, charity, and community development. In 2022, CMPort donated HKD 20 million to the China Merchants Foundation, and overseas philanthropic activities amounted to an investment of USD 713,200. Under the support and guidance of the China Merchants Foundation, CMPort has created the “C Blue” philanthropic brand. Domestically, CMPort, with the vision of "Igniting the Light of Rural Education with the 'Torch' of Education," vigorously implements rural education charity projects. Relying on the strength of volunteer teams composed of C Blue employees, CMPort has provided educational assistance, comprehensive care, and spiritual enlightenment to nearly 20,000 rural children across 5 cities (counties) and 11 schools in China.

Turning its focus internationally, CMPort has consistently hosted 11 editions of the "China Merchants C Blue Training Program" with a global outlook. This initiative maximizes the core advantages of port business operations, linking industries along the supply chain. It creates a platform for sharing international transportation experiences within the context of Belt and Road, providing opportunities for professionals from various countries in the transportation sector to learn about the development of ports, shipping, and free trade zones in China. The program has opened a window for 331 industry professionals to explore China's development, thus promoting cultural integration and people-to-people connections.

When expanding overseas, enterprises need to respect local cultures, adhere to business ethics, expand their operations legally and compliantly, and integrate into local societies, allowing residents to experience the improvement in their quality of life brought about by corporate development. In Sri Lanka, CMPort initiated the "C Blue Hope Village – Journey to Brightness" project, performing free cataract surgeries for over 450 local patients, helping them regain their sight. In the impoverished Sri Lankan villages of Panila and Kenda, CMPort’s overseas homebase ports, CICT and HIPG, have constructed community activity centers, medical health centers, sports centers, crop cultivation bases, and poultry breeding bases. They have vigorously advanced greenhouse planting schemes and provided training for the villagers in agriculture, handicraft skills, and production, processing, and sales supply chains. This truly embodies the principle of “teaching a man to fish,” enhancing the local villagers' living standards and driving the development of the local rural economy. CMPort's teams worldwide have united in a consensus towards kindness and charity, committed to orderly advancing overseas ESG efforts and continuously enhancing social value creation.

"G": Effective Risk Identification and Local Regulation Compliance in Corporate Governance

The "G" in ESG (Corporate Governance) is fundamental to sustainable development. In international business practices, enterprises must comply with regulatory requirements, provide detailed, reliable, and public ESG disclosures, and align the company's operational outcomes with the sustainable development and employment of the local community.

In CMPort's ESG practices, the operational management departments are also responsible for overseeing ESG activities. The performance evaluation of investment-focused enterprises encompasses not just financial success but also ESG achievements, encouraging a holistic integration of operational efficiency and ESG commitments. Under the ESG policy of China Merchants Group, CMPort’s terminals in various overseas locations regularly conduct identification and assessment of ESG risks. They proactively identify issues and develop management measures and contingency plans. By aligning with local legal regulations, industry standards, and stakeholder demands, CMPort continues to refine its ESG implementation strategy. This approach has led to the development of a process for risk identification that emphasizes self-assessment and self-improvement, thereby perfecting an ESG management mechanism that meets overseas requirements. In an era increasingly focused on low-carbon, environmentally-friendly, and sustainable development, CMPort's teams globally have, through years of hands-on practice, adeptly addressed the "essential question" of accelerating the development of a world-class enterprise – ESG practices, providing valuable experiences for Chinese enterprises in overseas ESG endeavors.

CMPort upholds the principle of "benchmarking against world standards, reflecting Chinese characteristics, suiting the practical needs of China Merchants, and persisting in stable and progressive development." Maintaining openness and shared success and cooperating for mutual wins, the company, alongside stakeholders, explores new ESG practices, thereby extending the radius of green development. Together with various societal sectors, CMPort aims to co-create a prosperous environment, moving towards a future that is greener, more efficient, smarter, and more fulfilling. This approach contributes China Merchants' strength to economic prosperity and all-round high-quality development.