As a builder and operator of mass transit systems, we are part of the global solution to sustainable transport. We plan and operate our business to reduce traffic congestion and other negative impacts of prime land loss to road systems by creating convenient inter-modal hubs linking the major regional centres of Hong Kong. We apply best practice for eco-efficient operations and foster the growth of green communities around our network to bring a quality of life to the local urban centres in which we operate.Under our culture of continuous improvement, we work within a framework that views set targets as progress measures rather than milestones to be achieved. While we assiduously track our performance against previous records and benchmark to industry, our aim is to continuously excel under best practice. As a result, in many areas of voluntary target-setting for our operations, we express practice in terms of goals and internal standards and track progress towards these, incorporating specified year on year targets. This mindset, although outside of perceived standard procedure, has helped place us consistently amongst the top performing metro systems worldwide.
In 2005, a substantial amount of environmental targets came under review for their actual effectiveness and broader application across our operations. With the introduction of the Enterprise Risk Management system in 2006, the risks, stakeholders and targets may change in relation to the prioritised risk they present to the Corporation. With any new targets identified, our work culture will incorporate these through the IMS into the continual improvement process thus increasing our performance utilising consistent best practice.
Economic reward ĦE We operate under a unique hybrid business model of rail+property that acknowledges the need for fair-priced public transport while operating as a commercial entity under prudent financial principles. Accordingly, we derive our revenue streams from mass transit services augmented by the financial opportunity of development rights to those properties attached to the rail infrastructure. With use of these cross-subsidised sources, we have consistently operated as a profitable business. Since listing on the Hong Kong Stock Exchange in 2000, we have outperformed the Hang Seng Index since IPO and returned to shareholders an average 12.2% return per annum on investment.
As a community asset we do not underestimate our contribution to Hong Kong's status as 'Asia's World City'. In addition to supplying world-class commuter transport services, we support Hong Kong's services-based industries and are a major contributor to tourism as seen with opening of the Disneyland Resort Line and the AsiaWorld-Expo Station. Our dedicated Airport Express, urban transport network and commercial and residential property developments facilitate modern urban lifestyle expectations and enhance the quality of life for our stakeholders and society as a whole.
As we realise our global ambitions, we apply our same framework for corporate stewardship in the markets we operate. As a partner of choice, we transfer innovative industry technologies, establish with partners best practice in project and environmental management and, with the design and delivery of our rail and property projects, we transform the local communities and the businesses that build them.
Championing the environment ĦE Our climate change initiatives are linked largely to the management of electricity, our sole source of energy. The Scheme of Control set by Government restricts our choice of electricity sources to two suppliers, neither of whom presently generates electricity in any significant amount from renewable resources. As a result, our control over GHG emissions is specific to our operations and is demonstrated in our search for the most efficient use of electrical power. In anticipation of the expiry environmental regulations, we encourage and train them through the Partnering Programme to exceed regulatory standards. In collaboration with contractors, we set agreed targets for waste reduction from site and measure the quantities disposed. This mechanism aids in continuously improving environmental management in our projects and identifies opportunities for future efficiencies. In 2005, no contractor employed on our works sites was prosecuted for breach of environmental regulations.
In recycling and disposal of those assets which by contractual or procurement and disposal time gaps are impractical for contractors to assume responsibility, we take steps through internal programmes to manage responsibly the recycling process. With the recent successful adoption of the PAS 55-1 system into railway operations, we are extending the system into our rail projects as well as developing a 'cradle to grave' approach of asset management. This will improve the overall system design process which will effectively deliver better efficiencies in operations.
Promoting eco-efficient mindset ĦE At the workplace, we seek to add value by doing more with existing resources. This is our journey towards eco-efficiency.
As electricity fuels the whole of our operations it is one of our most significant direct operating costs. We continually explore better efficiencies in usage, test alternative resources and continually improve our assets, technology and operations management for maximum effect. In wider company consumption, electricity usage is being addressed through an efficiency drive. As examples, in all our offices and shopping centres thermostats are set at 25.5oC and 23oC respectively and our administration headquarters has been refitted with aluminium lighting reflectors throughout. These usage adjustments combined with installation of energy efficient devices in the building and refurbishing of our properties have progressively produced significant aggregate energy costs savings. In 2005, we saved 1.06% (1,877,073 KWh) on overall property energy consumption compared to the previous year.
Indoor air quality (IAQ) throughout our stations, shopping malls, managed commercial properties and our offices is monitored regularly against the voluntary standards set by Government and our own internally set targets. In 2005, our headquarters' indoor air quality achieved the voluntary targets set by Government qualifying for the Environmental Protection Department's IAQ certification.
We are in the position to substantially influence environmental sustainability from the early planning stages in new projects. We have built up a sustainability expertise bank in developing projects from greenfield site to working within confined areas restricted by a fully-developed urban environment. With each project we address the unique challenges while employing the best practice accumulated in previous projects. Our proposed plan for the Shenzhen Metro Line 4 graphically illustrates this process in action. In our master urban plan for this 21 km line which includes 10 stations and the rights to develop some 2.9 million square metres of gross floor area along the line, we propose a unified green network consisting of "green fingers" incorporating the natural environment together with a "green rail spine" in which new communities link via a primary rail line supported by a series of secondary transport roads. This concept stems from our award-winning Tung Chung Master Layout Plan and the environmental initiatives employed for the Dream City of Area 86 in Tseung Kwan O. Pedestrians are given precedence and environmental and spatial restraints are creatively addressed with sustainable community living as the priority outcome.
Bio-diversity • As no new major rail projects commenced in 2005 and ongoing work that affects bio-diverse areas is confined to the final stages of the NP360 cable car project, no major impacts occurred during the year. The bio-diversity management plans for the NP360 project are based upon the Australian Environment Protection and Biodiversity Conservation Regulations 2000 as a basis to achieve Green Globe 21 after commencement of operations.
Climate change • In 2005, we assumed the chair of the UITP Sustainable Development Commission. The mandate is to develop and promote a formalised industry policy on sustainability that takes into consideration all forms of public transport. We have since introduced a paper on climate change that anticipates public and private transport inclusion into the registry of GHG control.
The sustainable options for climate change management currently tabled are a cap and trade mechanism and the Clean Development Mechanism (CDM), both of which present a significant risk/opportunity to the public transport sector and one that UITP will have an important stake. As a pivotal organisation on the industry development, we seek to participate actively in the debate and the decisions involving these mechanisms. We envision a sector-wide UITP GHG Policy and Strategy by the end of 2006. This supports the Memorandum of Understanding between the UITP and the UN Commission on Sustainable Development signed in July 2005 and provides clear leadership in the world debate.
This broader industry policy serves as a model for our own corporate climate change policy. We are currently reviewing the process of how a climate change policy is to be structured and implemented so as to apply consistently across all our businesses and in the diverse markets in which we operate, in particular, mainland China. Our progress in formulating policy is slower than anticipated due to the issues of gaining consensus internally from our businesses and externally when working in emerging markets with opaque national policy on climate change.
Leadership • Our work practices and proven success under the rail+property model attract worldwide attention. We host international visitors and delegations to share information with our experts and to experience the operating MTR. We take an active role in both global and local initiatives. Locally, as leader of the Community Business Leadership Team (CBLT) under Community Business, we mentored the establishment of the first Hong Kong CSR Charter. We also sponsor and participate in initiatives undertaken by NGOs and local tertiary institutions to promote sustainable best practice across Hong Kong, including ASrIA, Civic Exchange and HK-BEAM. Under the impetus of our Pearl River Delta investments, we are taking a regional role in transferring through our projects the systems, technologies and processes for sustainable best practice. Globally, in addition to our efforts within the UITP, we sit on the Conference Board's Asian Pacific Human Resources Council. In 2005, we hosted their Council for a meeting to exchange best practices for human resources management in the region.
Our awards in recognition of excellence in business, environment and social practices while demonstrating what we have achieved, present us with new challenges and horizons for performance. From these accolades we learn and refine our skills. Amongst our most distinguished awards received in 2005, in addition to those mentioned elsewhere in this Report, were the Best Sustainability Report Award from the Hong Kong ACCA, Intelligent Building of the Year 2004 for Two IFC given by The Asian Institute of Intelligent Building (AIIB), the 2005 Hong Kong Institute of Planners (HKIP) Certificate of Merit for the Master Layout Plan for Tung Chung Station Comprehensive Development Area and, the Global Employer Accreditation Scheme - Platinum ACCA Approved Employer from Global ACCA.
