Recommended
Recommended
More Related Content
Similar to Business Sustainability Performance of Electric Utility Companies in Hong Kong
Similar to Business Sustainability Performance of Electric Utility Companies in Hong Kong (20)
Recently uploaded
Recently uploaded (20)
Business Sustainability Performance of Electric Utility Companies in Hong Kong
- 1. Business Sustainability Performance of Electric Utility Companies in Hong Kong Capstone Project Department of Industrial and Systems Engineering The Hong Kong Polytechnic University Supervisor: Dr. P.C. Chen Co-examiner: Prof. C.K. Kwong Presenter: CHIU Hiu Tung 16066346D Date of Presentation : 6 May 2020 (4:30-4:55pm)
- 2. Agenda Research Objectives Introduction – Business Sustainability Methodology Sustainability Performance Analysis Conclusion Background – CLP & HKE
- 3. Research Objectives • To identify the key operations of the two electricity companies that pose impacts to the economic, environmental and social aspects of the community To analyze the influence of impacts by applying the GRI Standards To benchmark the companies’ economic, social and environmental sustainability performance 2 1 3
- 4. • A generic definition of sustainability is “Meeting the needs of the present without compromising the ability of future generations to meet their own needs.” Literature Review Introduction – Business Sustainability • The concept of “Shared Value Creation” describes a management strategy to maximize economic value whilst taking environmental and social impacts into account • Addressing societal concerns can yield productivity benefits to a firm. • Opportunities to create shared value arise because societal problems can create economic costs in the firm’s value chain. Fig. 1 Value creating chain (World Commission on Environment and Development,1987) (Porter & Kramer, 2012)
- 5. • In order to take a greater leap in sustainability, electricity companies have recently stepped up their efforts in monitoring and reporting their impacts of operations, and have also taken more initiatives in formulating sustainability strategies for effective management. • Many business experts predict that creating shared value is a key success factor in the next decades Literature Review Introduction – Business Sustainability • GRI Reporting Standards provides a holistic framework to evaluate the shared value creation in economic, environmental and social aspects of a business (Bentham, 2018) (Moore, 2014)
- 6. • Sustainability reporting: is an organization’s practice of reporting publicly on its economic, environmental and social impacts, and hence its contributions towards the goal of sustainable development. • 75% of the largest companies in the world reporting sustainability using GRI • More than 130 policies in more than 60 countries and regions referenced GRI GRI Reporting Standard Introduction – Business Sustainability Fig. 2 GRI reporting standards framework (GRI, 2016)
- 7. Survey • To find out the perceived performance of CLP and HKE • Online survey • Non-probability sampling method Methodology Quantitative method Case Studies • From companies’ annual reports, sustainability reports, news articles, governmental documents, academic reviews Qualitative method GRI Reporting Standards Evaluate and Compare CLP’s and HKE’s Business Sustainability Performances Economic Social Environmental 5 aspects 5 aspects9 aspects
- 8. Methodology Scope Objective Perceived performance of CLP/HKE by customer Fulfilment of GRI Reporting Standards Evaluate the influence of impacts brought to the society Score Allocation 5-point Likert Scale 5-point Likert Scale 5-point Likert Scale Survey Case Studies Social Environmental 4 aspects3 aspects Economic Social Environmental 5 aspects9 aspects5 aspects Extremely Satisfactory 5 Extremely Unsatisfactory 1 Extremely Satisfactory 5 Extremely Unsatisfactory 1 Fulfilled most of the requirements 5 Fulfilled little of the requirement 1
- 9. Sustainability performance grade Short description Score attained A+ Beyond Expectation 95% or above A Outstanding 90% or above B+ Very Good 85% or above B Good 80% or above C+ Satisfactory 75% or above C Barely Satisfactory 70% or above A score in Business Sustainability Performance + + || Methodology 𝟏 𝟑 Economic Social Environmental Sustainability Performance Score in 𝟏 𝟑 𝟏 𝟑
- 10. Background – Business of CLP HONG KONG MAINLAND CHINA SOUTHEAST ASIA & TAIWAN INDIA AUSTRALIA Hong Kong 58% Mainland China 15% India 4% Southeast Asia 1% Australia 22% Profit • CLP Power Hong Kong Limited Company • Founded in 1901 • Publicly listed in Hong Kong in 1998 • One of the largest electricity provider in Asia • Hong Kong: Vertically-integrated electricity supply business • Overseas business: Mainland China, Southeast Asia, Taiwan, India and Australia Fig. 3 Operation locations of CLP
- 11. Background – Business of HKE • Hong Kong Electric Limited Company • Founded in 1889 in Hong Kong • Publicly listed in Hong Kong in 2014 • Vertically-integrated electricity supply business :power generation, transmission and distribution, supply and customer service Fig. 4 Lamma Power Station
- 12. Background – Supply Grid (HK) New Territories Kowloon Lantau Island Hong Kong Island Lamma Island 2.6 million customer accounts 0.58 million customer accounts
- 13. Background – Supply Grid (HK) New Territories Kowloon Lantau Island Hong Kong Island Lamma Island Castle Peak Power Station Black Point Power Station Penny’s Bay Power Station WENT Landfill Lamma Power Station Lamma Wind Daya Bay Nuclear Power Station 5 gas-fired plants 3 diesel-fired plants 5 waste conversion plants 4 coal-fired plants 2 pressurized water reactor 5 coal-fired plants 3 gas-fired plants 1 wind turbine
- 15. 0 20,000 40,000 60,000 80,000 100,000 2014 2015 2016 2017 2018 HK$million Revenue Operating profit 0 2000 4000 6000 8000 10000 12000 2014 2015 2016 2017 2018 HK$million Revenue Operating profit • Fluctuations due to overseas business expansion • Hong Kong operation is stable • Profit to revenue: 1:6.5 • Stable operation • Good cost control • Profit to revenue: 1:3 Economic Performance
- 16. Indirect Economic Impact Investment/policy/campaign to promote community well-being 17 EV chargers in every district on Hong Kong Island 161 EV chargers located in Kowloon and New Territories EV chargers Free EV charging service Fig. 5 CLP’s EV charger Fig. 6 HKE’s EV charger
- 17. Indirect Economic Impact Investment/policy/campaign to promote community well-being Feed-in Tariff HK$5 per kWh HK$4 per kWh HK$3 per kWh• Both companies launched the feed-in tariff in 2018 • To buy the renewable energy at a higher rate from residential/ commercial customers • To promote installation of solar panels Fig. 7 Feed-in tariff pricing 84% 45% Approved Applications
- 20. 81.9 80.1 82.2 88.6 62.6 18.1 19.2 17.8 11.4 37.4 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% HKE CLP, Hong Kong CLP, China CLP, India CLP, Australia Male Female 80% 20% Male Female Diversity and Equal Opportunities Employee Board of directors • Electrical Engineering Industry: Male-oriented • In Asia, Male to Female ratio : 8 to 2 • The ratio is more equalized in Australia • CLP’s overall male to female ratio is 8 to 2 • All board of directors are male in HKE
- 21. 4.4% 6.7% 11.6% 11.1% 27.9% 3.1% 1.7% 5.1% 5.6% 12.3% 1.3% 5.0% 7.5% 5.7% 15.6% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% HKE, Hong Kong CLP, Hong Kong CLP, China CLP, India CLP Australia Female Male Total 8.3% 5.9% 16.4% 6.4% 18.7% 8.5% 4.3% 5.2% 7.2% 15.2% 2.0% 1.7% 1.5% 2.9% 10.5% 1.9% 1.1% 0.0% 2.5% 10.6% 0.0% 5.0% 10.0% 15.0% 20.0% HKE, Hong Kong CLP, Hong Kong CLP, China CLP, India CLP, Australia Above 50 41-50 Turnover Rate Turn Over Rate by Gender Turn Over Rate by Age Group • Overall, the turnover rate at HKE is the lowest • Among all regions of operation of CLP, Hong Kong has the lowest turnover rate, Australia has the highest turnover rate • The overall trend is both companies have a higher turnover rate for employees aged under 40 • More difficult to retain young professionals
- 22. Comparison of rate of fatality and injury CLP, Hong Kong CLP, China CLP, India CLP, Australia CLP, Total HKE Employee/ contractorsa Number of fatalities 0/0 0/0 0/0 1/1 2 0 Fatality rate, number per 200,000 manhours 0/0 0/0 0/0 0.04/0.06 0.01 0 Number of lost time injury 5/5 0/0 0/2 6/4 22 - Lost time injury rate, number per 200,000 manhours 0.1/0.08 0/0 0/0.06 0.26/0.26 0.1 0.05 Total recordable injury rate 0.15/0.2 0/0.07 0/0.19 0.44/1.09 0.25 0.05 Number of day lost/charged 120 0 120 133 253 1 Occupational Health and Safety • To compare the rate of fatality and injury of operations in Hong Kong, both companies had no cases of fatalities, HKE performed better than CLP in safety control
- 23. Comparison of rate of fatality and injury CLP, Hong Kong CLP, China CLP, India CLP, Australia CLP, Total HKE Employee/ contractorsa Number of fatalities 0/0 0/0 0/0 1/1 2 0 Fatality rate, number per 200,000 manhours 0/0 0/0 0/0 0.04/0.06 0.01 0 Number of lost time injury 5/5 0/0 0/2 6/4 22 - Lost time injury rate, number per 200,000 manhours 0.1/0.08 0/0 0/0.06 0.26/0.26 0.1 0.05 Total recordable injury rate 0.15/0.2 0/0.07 0/0.19 0.44/1.09 0.25 0.05 Number of day lost/charged 120 0 120 133 253 1 Occupational Health and Safety • CLP in Australia had 2 cases of fatal incidents and significantly higher injury rate
- 24. Comparison of rate of fatality and injury CLP, Hong Kong CLP, China CLP, India CLP, Australia CLP, Total HKE Employee/ contractorsa Number of fatalities 0/0 0/0 0/0 1/1 2 0 Fatality rate, number per 200,000 manhours 0/0 0/0 0/0 0.04/0.06 0.01 0 Number of lost time injury 5/5 0/0 0/2 6/4 22 - Lost time injury rate, number per 200,000 manhours 0.1/0.08 0/0 0/0.06 0.26/0.26 0.1 0.05 Total recordable injury rate 0.15/0.2 0/0.07 0/0.19 0.44/1.09 0.25 0.05 Number of day lost/charged 120 0 120 133 253 1 Occupational Health and Safety • Overall, HKE performed significantly better than CLP in occupational safety control
- 26. Coal & Oil Natural Gas 15.0 MJ per kWh 11.2 MJ per kWh 3.5 MJ per kWh 8.9 MJ per kWh Coal 38% Gas 26% Nuclear 35% Renewables 1% Coal 68% Gas 32% Fuel Mix Fuel Consumption & Fuel Mix
- 27. Fuel Mix 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Hong Kong Singapore London New York Coal Gas Nuclear Renewables Petroleum Others CLP HKE • Hong Kong’s fuel mix mainly comprises of coal • Natural gas is the primary electricity source for Singapore • London and New York mainly use natural gas, renewables and nuclear for electricity generation • Other developed regions’ fuel mix are mainly cleaner resource • The fuel mix of Hong Kong is behind the well-developed regions
- 28. CO20.74 kg per kWh 0.80 kg per kWh 0.66 kg per kWh 0.74 kg per kWhNOx Emission SOx0.82 kg per kWh 0.27 kg per kWh
- 29. Waste Waster Discharge 55.8 m3/MWh 195 m3/MWh 0.17 m3/MWh 0.014 m3/MWh Water withdrawal Water Withdrawal & Discharge • Water withdrawal sources: Marine, freshwater bodies, town water bodies • Water Discharge Destination: Marine, fresh water bodies, and other destinations • Water withdrawal sources: Marine, town water bodies, rain water • Water Discharge Destination: Not disclosed
- 30. 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% CLP's Liquid Waste CLP's Solid Waste HKE's Liquid Waste HKE's Solid Waste Recycled Disposed 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% CLP's Liquid Waste CLP's Solid Waste HKE's Solid Waste Recycled Disposed Hazardous Waste Non-Hazardous Waste • HKE did not disclose the disposal/recycling of water waste • CLP managed to recycled most of the hazardous solid and liquid waste Effluents and Waste
- 32. Survey • Collected 102 responses • 98 valid responses • CLP customers: 80.6% ; HKE customers 19.4%
- 33. Survey • Method of Survey: Online survey • Sampling Method: Non-probability sampling – purposive sampling • Question Type: 5-point Likert Scale • Question sample: Please rate CLP's effort in providing assistance to customers to reduce electricity consumption. Extremely Unsatisfactory 1 2 3 4 5 Extremely Satisfactory
- 34. Survey 1. Please rate CLP’s/HKE’s effort in providing assistance to customers to reduce electricity consumption. 2. Please rate CLP's /HKE’s effort in reducing Green House Gas emission. 3. Please rate CLP's /HKE’s effort in reducing waste. 4. To what extent do you agree CLP /HKE is a company that cares about the local community? 5. To what extent do you agree CLP /HKE is a company that cares about the customer health and safety? 6. To what extent do you agree CLP’s /HKE’s performance conforms to its official supply reliability rating of ≥ 99.995%? 7. To what extent do you agree CLP /HKE is transparent about how customers' data are gathered, used and secured? 8. Please rate the performance of CLP /HKE in terms of corporate social responsibility. 9. Overall, how do you rate the sustainability performance of CLP /HKE? Main part of the questionnaire
- 35. Section No. GRI Standard Fulfilment of reporting requirements Survey Questio n Survey Results Evaluated Performance Subtotal Manipulated score (Grade) (0-5) (0-5) (0-5) CLP HKE CLP HKE CLP HKE CLP HKE 5.2 200 Economic Performance 5 5 - - - 5 5 10 10 5.3 203 Indirect Economic Impact 5 5 - - - 5 5 10 10 5.4 204 Procurement Practice 5 4.5 - - - 5 5 10 9.5 5.5 205 Anti-Corruption 5 5 - - - 5 5 10 10 5.6 206 Anti-Competition 5 5 - - - 5 5 10 10 Economic Sustainability 50 49.5 100 (A+) 99 (A+) 6.2 302 Energy 5 5 Q1 3.47 2.74 4.5 4 12.97 11.74 6.3 303 Water 5 5 - - - 5 4.5 10 9.5 6.4 305 Emission 5 5 Q2 3.24 3 4.8 4.4 13.04 12.4 6.5 306 Effluents and Waste 5 3 Q3 3.34 2.95 3 2.5 11.34 8.45 6.6 307 Non-Compliance 5 5 Q6 3.99 3.95 4.5 4.5 13.49 13.45 Environmental Sustainability 60.84 55.54 87 (B+) 79 (C+) 7.2 401 Employment 3.5 4.2 - - - 3 4 6.5 8.2 7.3 403 Occupational Health&Safety 5 5 - - - 3 5 8 10 7.4 404 Training and Education 5 5 - - - 4.5 4.5 9.5 9.5 7.5 405 Diversity and Equal Opportunity 5 4.5 - - - 4 4 9 8.5 7.6 406 Non-Discrimination 5 5 - - - 5 5 10 10 7.7 408 Child Labour 5 5 - - - 5 5 10 10 7.8 413 Local Community 4.5 4.5 Q4 3.46 3 4.5 4.5 12.46 12 7.9 416 Customer Health&Safety 5 5 Q5 3.42 3.21 5 5 13.42 13.21 7.1 418 Customer Privacy 5 5 Q7 3.42 3.21 4.8 4.8 13.22 13.01 Social Sustainability 92.1 94.42 88 B+ 90 A Business Sustainability 91.6 A 89.4 B+ Business Sustainability Performance Calculation in details
- 36. Business Sustainability Performance Economic 100 (A+) Social 88 (B+) Environmental 87 (B+) Overall 91.6 (A) Economic 99 (A+) Social 90 (A) Environmental 79 (C+) Overall 89.4 (B+)
- 38. • Stable and profitable business • Can continue to generate great values for Hong Kong market • Stable and profitable business • Can continue to generate great values for Hong Kong market • Recommended to report with exact percentage of spending on local suppliers Economic 100 (A+) Economic 99 (A+) Conclusion - Business Sustainability Performance Economic Sustainability
- 39. • Occupational safety is a huge concern for CLP • CLP is recommended to review its operations and make effective modifications to prevent same fatal incidents in Australia • Done well in creating a pleasant working environment • Perceived performance is less satisfactory than CLP • Recommended to enhance brand image with more promotions Conclusion - Business Sustainability Performance Social Sustainability Social 88 (B+) Social 90 (A)
- 40. • CLP provided very detailed information on environmental impacts • Recommended to improve the waste water management • Recommended to disclose the water discharge location and improve the recycling rate of the hazardous waste • Perceived performance by customer is less satisfactory than CLP Conclusion - Business Sustainability Performance Environmental Sustainability Environmental 87 (B+) Environmental 79 (C+)
- 41. References Bentham, J. (2018). The scenario approach to possible futures for oil and natural gas. In G. G. Lenssen, & N. Smith, Managing Sustainable Business (pp. 5-20). Dordrecht: Springer. CLP. (2019). Annual report 2018. Hong Kong: CLP Holdings Limited. CLP. (2019). Sustainability report. Hong Kong: CLP Holdings Limited. HK Electric. (2019). Annual report 2018. Hong Kong: HK Electric Investments. HK Electric. (2019). Sustainability report 2018. Hong Kong: HK Electric Investments. Moore, K. (2014). Why creating shared value is vital for winning the war for talent. Forbes. Porter, M. E., & Kramer, M. R (2012). Strategy & society: The link between competitive advantage and corporate social responsibility. Harvard Business Review. World Commission on Environment and Development. (1987). Our common future. Oxford: Oxford University Press.
- 42. Thank you!
- 43. Q&A
Editor's Notes
- Read the objectives
- A company’s value chain is affected by numerous societal issues
- The Scenario Approach to Possible Futures for Oil and Natural Gas J bentham 2018 https://www.forbes.com/sites/karlmoore/2014/03/12/why-creating-shared-value-is-vital-to-win-the-war-for-talent/#7064c9fe27c8
- Sustainability performance
- Sustainability performance
- HKE better
- Feed-in Tariff Scheme in Hong Kong 90 MW approved or connected to the grid since May 2018 Received more than 6,900 applications, Around 84% of projects, representing a total capacity of around 90MW, have been approved or connected to the grid 58 Number of Renewable Energy Installations Joining Feed-in Tariff Scheme The Feed-in Tariff (FiT) scheme has received 130 applications for solar energy installations involving a total capacity of 2.6 MW. About 60 systems have been connected to our grid, including two large-scale installations at Ocean Park and Canadian International School.
- CLP’s proportion spending on suppliers is similar to the profit by region, it goes the same for HKE In a way that both companies are promoting the growth of local suppliers.