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MTR's first environmental report last year already established the company amongst leading corporate performers on environmental issues, and in reporting on them. This year they have taken the further step of adding a number of social and community objectives to their corporate goals and mission, and reporting more broadly on their overall contribution to sustainable development. Sustainable development depends very importantly on the views and aspirations of all the different stakeholders who interact with a company - its staff and customers, its investors and lenders, the government and the communities among which it operates. All these have legitimate claims and aspirations for a major company such as MTR. A sustainable company takes care to communicate with all these groups and conducts its operations to optimise its response to all their needs and aspirations. The report indicates that MTR have been active in maintaining dialogues with all these groups and seeking to achieve this optimisation. The Code of Conduct for the company established during the year is one good manifestation of this process. So too is the well-rounded statement of sustainability principles and objectives which is set out in the social section of this report. In the striking visual metaphor of the report MTR have sought to inflate the sustainability rugby ball to its optimum shape. In future reports it might be desirable to explore this basic metaphor in more detail so as to show how the different dimensions of sustainability support one another, and to quantify the effects. In particular it would be interesting to analyse the costs of achieving the environmental and social targets proposed, and to demonstrate how they reap bottom line benefits in terms of reducing other operating costs and risks, enhancing the reputation of the company and customer and staff loyalty, and consolidating the credibility of their basic licence to operate. I am glad to see that the company intends to move forward to seeking certification of their environmental management systems to the ISO 14001 standard next year. This should help to ensure that the achievements and progress of the last few years are consolidated and lead to further continuous improvement. A key element in securing ISO certification will be to ensure that there is a continuing Board level commitment and drive to spread sustainable development values and objectives throughout the company. There will need to be internal structures to set and monitor objectives, and training programmes and internal procedures for making sustainability assessments of key decisions. The single most important contribution that MTR makes to sustainability in Hong Kong derives from the quality of the rail service which it provides. The quality, reliability and frequency of this service plays an essential part in attracting and retaining passengers, and in discouraging people from switching in larger numbers to private cars with all the congestion and pollution which that would entail. Looking to the future the best contribution that MTR can make is to continue to provide this very high quality service at reasonable prices, and to develop the network over time to encourage even higher usage. The material assembled in this report shows that MTR has the service quality and the environmental and social standards to justify this, and the financial strength and performance to make this further development a realistic ambition. MTR also makes a very important contribution to sustainability by developing its property portfolio to high environmental and social standards and locating them well in relation to the public transport network. It is good to see the greater attention to this aspect which has been given by MTR this year, and that the Property Division is making significant innovations in providing for high energy performance in its new developments. It is to be hoped that in future it will also be able to make steady improvements in the energy and environmental performance of its existing property portfolio, to make good environmental services a key part of the management services it offers to partners in property management, and to use its influence as a major property developer, manager and landholder in Hong Kong to promote greater understanding and commitment to sustainability in the property sector generally. The social objectives which MTR are delivering through their programmes and which they have set themselves for future years all look desirable in themselves. The difficult task in this area is to establish an appropriate scale of activity. For education and training inside the company it might be appropriate to benchmark the training effort against other major world class corporations, and to establish the levels of competencies and qualifications the training effort is designed to achieve. For action for the community it might be appropriate to pursue further dialogue with government, community authorities and the public as to what priorities and what scale of activity may be appropriate for MTR, and how resources for this effort can best be mobilised. The object might be to establish where MTR is likely to be the best provider of service either because of its special knowledge and skills, or because of its particular connection with particular communities through physical location or some other tie. So far as human resources are concerned some major companies in the world have set themselves the goal of improving the gender balance of their companies, or of achieving specific levels for the employment of disabled or other disadvantaged groups. It would be interesting to know whether MTR intend to set themselves objectives in these areas in the future. On the environmental objectives I am glad to see significant further progress since I commented on the first environmental report last year. Energy usage and its impact on climate change will remain one of the major impacts of the company on the environment. I am glad to see the commitment to energy efficiency now being extended from the operating railway to the property portfolio and other parts of the company. In future reports it would be helpful to see the energy performance of the different parts of the company consolidated into overall energy and carbon performance for MTR. This would then enable some longer term targets for continuing improvements in energy efficiency at company level to be established, and show what potential the company has to play a part in contributing towards the achievement of local, national or international carbon targets, or in future carbon trading arrangements. I am glad to see continuing progress on other aspects of environmental performance including noise, reduced use of chemicals and ozone depleting substances and waste minimisation. Waste minimisation might be set as an explicit goal to be looked for in all operations, and built into the green procurement initiative, so that at the time of purchase of materials the eventual recycling route is specified. Progress toward the targets that have been set for recycling many of the company's wastes is impressive, though there is clearly more still to be done about the use of paper and establishing realistic targets for usage and for recycling. The natural environment and support for biodiversity often feature in company environmental reports. MTR may not have very much scope for activity on this front within its own land portfolio. But MTR might like to consider in the future whether they have any scope for supporting action to protect the natural environment elsewhere in Hong Kong, perhaps by championing some crucial species or features of the Hong Kong natural environment to complement their social commitment to community development. Going beyond its own operational activities, a company with the standing and reputation which MTR enjoys within Hong Kong and more widely is in a position to exert great influence and leadership in promoting sustainability in other organisations. The company has this year made important steps in extending its influence through its procurement policies to encourage or require sustainable practices from all its suppliers. It will be interesting if in future reports MTR can establish ways to measure the effects of this influence, and to consider how it can be used to help bring about continuous improvement amongst other companies. Overall this first sustainability report shows that MTR have already made a significant commitment to sustainability. I look forward with great interest to seeing further progress in the years ahead. Sustainability issues are at the heart of MTR's core businesses. With determined leadership and continued commitment throughout the organisation MTR could become one of the leading champions of doing business in a sustainable way in Asia and the world.
Derek Osborn
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