Sustainable Finance

Sustainable Transport

As an operator of a reliable, efficient and environmentally friendly public transport system, we offer a low carbon solution connecting communities with a greater carrying capacity than other modes of transport. In terms of operations, we are committed to mitigating our carbon emissions through the adoption of energy efficiency initiatives and renewable energy as well as strengthening our resilience and adaptation to climate-related risks. To tap into a growing market and diversify our sources of capital, we have established a Sustainable Finance Framework and entered into different forms of transactions to support our sustainability initiatives.

Sustainable Transport

Financial Sustainability

Managing Financial Sustainability

Long-term financial sustainability is central to the health of any company, ensuring the stability of business operations and delivery of quality services. We always strive to conduct our business based on prudent commercial principles to ensure the Corporation is financially sustainable over the long haul, with the ability to fund the maintenance and upgrades of assets that ensure quality sustainable services for our passengers.

MTR’s income is primarily generated from fares and we follow a transparent Fare Adjustment Mechanism (“FAM”) for fair and objective annual-fare adjustments to maintain services are for all passengers. The “Rail plus Property” (“R+P”) model not only brings significant benefits to the neighbourhood by optimising the integration between our property development and rail expansion, funds generated from property development are also crucial in bridging the funding gaps and supporting commercially viable railway operations.

From the economic value generated through our transport, property and other businesses, we can contribute to our wide range of stakeholders including employees, suppliers and business partners, Governments, other shareholders, and the community at large. Our Value Added and Distribution Statement can be found in our Sustainability Report.

Fare Adjustment Mechanism

Adopted since the rail merger in 2007, the FAM is an objective and transparent mechanism, using a direct-drive formula in determining the fare adjustment rate. It is based on economic data released by the HKSAR Government (“the Government”) and takes into account the public’s affordability with the inclusion of the “Affordability-linked” arrangement. Pursuant to the Operating Agreement with the Government, the FAM is to be reviewed every five years. For details on the FAM (including the formula), please refer to MTR’s Website.

Rail plus Property Model

MTR’s “Rail plus Property” model utilises resources that our property development bring in to support railway operations to help bridge the funding gap when building new railway lines. The “Rail plus Property” model provides multi-faceted benefits by enabling MTR to bring positive impacts on the communities we serve and integrating development with transit hubs to create seamless connectivity and build vibrant communities in Hong Kong. In addition, it helps lower public spending by minimising investment on railway infrastructure and promoting more efficient land use.

Vision, Purpose and Values

ESG Fund

In 2022, MTR formulated an ESG Investment Framework and a designated ESG Fund to support eligible ESG-focused projects with an aim to achieve corporate-level Key Performance Indicators (“KPIs”) set under the Corporation’s Environmental and Social Objectives. Managed and approved by the E&SRSC, the ESG Fund will be separated to the annual operational and capital expenditure budget and will be used to finance unbudgeted ESG projects which may not have a viable financial business case or to fund the incremental cost of a budgeted item that requires additional investment to enhance its ESG performance.

Sustainable Finance

Sustainable finance is an integral part of MTR’s financing strategy and reflects our commitment to sustainable development. As a pioneer in green finance in Hong Kong, we set up a Green Bond Framework in 2016, in alignment with the Green Bond Principles issued by the International Capital Market Association. Expanding on the foundation of the Green Bond Framework, we further established a Green Finance Framework in 2018 to cover other forms of green financing, factoring in components recommended in the Green Loan Principles issued by the Asia Pacific Loan Market Association.

In 2020, we put in place a Sustainable Finance Framework to cover a wider range of financing transactions where the proceeds are used for furthering the development of sustainable urban infrastructure in support of the United Nations Sustainable Development Goals. The Sustainable Finance Framework sets out how we use the proceeds to fund initiatives to enhance long-term service levels and environmental and social performance, as well as the reporting thereon.

The success of our sustainable and other capital market issuances indicated that MTR’s financing is well supported and recognised by our stakeholders.