ISSUE 05 l MARCH 2021
An Outlook for 2021 
Hong Kong International Airport (HKIA) experienced a challenging year in 2020. Nevertheless, our commitments and efforts on sustainability and environment were not distracted by the COVID-19 pandemic. Last year, we formed a new Sustainability Department with an aim of creating synergy between the Three-Runway System (3RS) Project-related environmental initiatives and the corporate sustainability and environmental programmes. We have re-organised the department into four different teams, Biodiversity, Environment, Climate Resilience and Environmental Compliance, with each team designated to specific focus areas. In 2021, we will continue to work on a wide range of initiatives to make HKIA more sustainable and resilient. Here are the updates on our key initiatives:
  • HKIA Long-term Carbon Reduction Target Study – Commenced in April 2020, we are exploring the feasibility of setting an absolute long-term target for 2035 that aligns with the HKSAR Government's commitment to carbon neutrality by 2050. We will conclude the Study by 2021/22.
  • Climate Resilience Study – We made good progress last year and are conducting a physical deep dive assessment to identify and prioritise climate risks relating to HKIA's key assets and operations, and a transition risk analysis to examine how AAHK may be impacted by policy and market changes brought on by a transition to a low carbon economy.
  • Airport-wide Green Airport Design & Construction (GADC) Strategy – Building on the foundation of the green airport design strategy adopted in the 3RS, we will be rolling out an airport-wide GADC Strategy to cover other projects on the airport island that are under AAHK's control and management. We plan to commence the implementation of the GADC Strategy in mid-2021, with an initial 2-year trial period.
Apart from the above initiatives, we continue to implement other sustainability and environmental initiatives, including waste and biodiversity, to reduce HKIA's impact on the environment and enhance the ecological value of our neighbouring habitats. I look forward to working together with the airport community and the wider local community to continue enhancing HKIA's sustainability and environmental performance.

Peter Lee
General Manager, Sustainability
Airport Authority Hong Kong
Incorporating Environmental and Social Considerations into the Financing of 3RS

In June 2020, AAHK agreed a five-year HK$35 billion syndicated loan facilities with 21 local and international banks to fund a portion of the capital expenditure for the Three-Runway System (3RS) Project and for general corporate purposes. The syndicated loan facility was the largest syndicated loan in Hong Kong in 2020 and received two prestigious awards, the “Best Investment Grade Syndicated Loan” in the GlobalCapital Asia Awards 2020, and the “Best Syndicated Loan” in The Asset Triple A Sustainable Capital Markets Regional Awards 2020. The syndicated loan was commended as being the first of its kind in Hong Kong to be compliant with the “Equator Principles”.

Martin Putnam, Senior Manager, Biodiversity of AAHK, shares more details on what the Equator Principles are and AAHK’s work in this area.

Q: What are the Equator Principles (EPs)?

The EPs were first launched in 2003 to provide a global risk management framework intended to assist financial institutions in determining, assessing and managing the environmental and social risks associated with large-scale development projects around the world. The EPs are a set of voluntary guidelines that provide a checking framework for ensuring that large scale construction projects have adequately and appropriately considered potential impacts on the natural environment and on affected communities including risks and impacts on workers.

Q: What is the significance of aligning / complying with the EPs?

As of March 2021, 116 Equator Principles Financial Institutions (EPFIs) in 37 countries have officially adopted the EPs, covering the majority of international project finance options within developed and emerging markets. While the EPs are voluntary and not legally binding, they take force of law from the financing agreements into which they are incorporated. EPFIs commit that they will not finance projects that do not comply with the EPs.

Q: What did or is AAHK doing to ensure the compliance with the EPs?

AAHK’s commitment to independently finance the 3RS Project included the avenue of raising funds from the open market. Because the EPs are so broadly adopted by financial institutions, it was therefore important to undertake a review of 3RS Project compliance against the EPs. The first review was completed in 2017 and concluded that the approved 3RS Project Environmental Impact Assessment (EIA) and adopted environmental and social management systems broadly aligned with the EP performance standards and associated criteria.

The EP assessment was repeated in early 2020 following the release of an updated EP assessment framework (Equator Principles IV) that came into effect in July 2020 and incorporated significant additions to the preceding EP assessment framework, most notably the need to better address certain human rights aspects and a requirement for a climate change assessment for larger projects.

EP assessment results confirmed that AAHK’s Third Runway Division had strong capacity to manage the full range of environmental and social risks associated with the 3RS Project, with a robust construction phase environmental monitoring and audit system developed and in place along with systematic controls to ensure environmental and social compliance across the project. The assessment also identified multiple environmental stewardship initiatives over and above regulatory requirements.

The EPIV assessment found that the 3RS Project generally aligned with the EPs, with some minor gaps identified relating to topics or aspects beyond the scope of Hong Kong regulations and standards, such as a need to better quantify and address increased carbon emissions associated with the airport expansion and to ensure alignment with recognised international standards on social and human rights applicable to labour and working conditions.

In accordance with syndicated loan requirements, AAHK has already established and implemented an Equator Principles Action Plan (EPAP), which specifically stipulates the actions needed to bring the 3RS Project into full alignment with the EPIV. AAHK is required to report to lenders on project progress and on compliance with the EPAP every 6 months.
Tree photo created by jcomp -
Development of Green and Sustainable Finance in Hong Kong
In 2017, the Organisation for Economic Co-operation and Development (OECD) estimated that as much as US$7 trillion will be needed each year up to 2030 to meet climate and development objectives
[1]. The demand for green funding and green investment opportunities is expected to continue to increase as the call for a sustainable recovery from COVID-19 pandemic is becoming ever stronger and clearer.

Building on its strength as a global financial hub, Hong Kong is well positioned to be a leading regional and global centre of green and sustainable finance. In May 2020, the city's financial regulators, including the Hong Kong Monetary Association (HKMA) and the Securities and Futures Commissions (SFC), established the Green and Sustainable Finance Cross-Agency Steering Group, with an aim to coordinate the management of climate and environmental risks to the financial sector, accelerate the growth of green and sustainable finance and support the Government's climate strategies. The Steering Group announced its strategic plan and five key action points in December 2020. In the same month, Hong Kong Exchanges and Clearing (HKEX) launched Sustainable and Green Exchange (STAGE), which is Asia's first multi-asset sustainable investment product platform and an online product repository. The launch of STAGE will support the growth of Asia's sustainable finance market by increasing awareness, accessibility, data availability, and transparency of green and sustainable investment products.

The HKSAR Government is also playing a leading role in promoting green and sustainable finance in Hong Kong. Following the issuance of its inaugural green bond of US$1 billion in 2019, the Government offered the second batch of green bonds totalling US$2.5 billion in January 2021. In the 2021-22 Budget, the Government reiterates the importance of green and sustainable finance as a tool to achieve carbon neutrality before 2050, and plans to issue green bonds totalling HK$175.5 billion within the next 5 years as well as green bonds for public participation. Besides, a Green and Sustainable Finance Grant Scheme will be rolled out to subsidise expenses on bond issuance and external review services.

[1] OECD (2017), Investing in Climate, Investing in Growth Studies, OECD Publishing, Paris
Airport Community Environmental Forum
On 12 March, AAHK organised a virtual Airport Community Environmental Forum for its business partners (BPs). During the Forum, AAHK presented awards to seven BPs to recognise their efforts in setting a carbon reduction target and implementing innovative carbon reduction projects under the HKIA Carbon Reduction Award Scheme 2020.

Besides, representatives from Environmental Protection Department were invited to give a brief introduction on the New Energy Transport Fund and the Green Tech Fund. These two Funds have been set up by the HKSAR Government to provide funding support to encourage the trial of green innovative transport technologies and application of decarbonisation technological solutions. During the forum, AAHK's consultant, Mott MacDonald, also shared the air emissions control measures adopted by other airports.

HKIA Carbon Reduction Award Scheme 2020
As part of the HKIA Carbon Reduction Programme, the Carbon Reduction Award Scheme 2020 was launched in late-2020 and organised into two categories. The Carbon Target Award recognises companies which have taken steps in setting a carbon reduction target, while the Innovation Award commends companies that have adopted new carbon practices and technologies. Below is the list of award recipients:
Carbon Target Award – Excellent Class
  • Hong Kong Aircraft Engineering Company Limited (HAECO)
  • Hong Kong Airport Services Limited (HAS)
 Carbon Target Award – Good Class
  • Aviation Security Company Limited (AVSECO)
  • Jardine Aviation Services Group (JASG)  
Innovation Award Excellent Class
Awardee Project name and highlights
Civil Aviation Department
Retro-commissioning of water-cooled chiller system at CAD Headquarters by Energy Optimisation System (EOS) The EOS fine-tunes the operation of its six water cooled chillers, helping to save energy and water, enhance safety, and reduce system malfunctions.
Hong Kong Aircraft Engineering Company Limited (HAECO) Ground services equipment (GSE) location tracking project The project utilises the latest Internet of Things and Long Range Low Power Technology to track the locations and movements of more than 120 GSEs.
HAECO Electronic Lesser Check Sheet Project The first company to implement a paperless electronic lesser check sheet system at HKIA.

Innovation Award – Good Class
Awardee Project name and highlights
Asia Airfreight Terminal Co. Ltd. (AAT) Application of water mist pre-cooling for air-cooled chillers at AAT Terminal 1Installation of custom-designed high-pressure tubes and fittings, which have enhanced the energy performance of air-cooled chillers.
Cathay Pacific Airways Limited (CPA) Flight Folder – Paperless flight operations – An interactive Flight Folder app to digitalise the cockpit by centralising Flight Deck manuals, charts, maps and pre-flight paperwork. The weight reduction helps reduce more than 4,000 tonnes CO2 emissions per year based on the pre-COVID flight level emissions. 
Civil Aviation Department (CAD) Retro-fitting of fenestration at CAD Headquarters with protective film – Installation of glass panels of triple low-E insulated glazing system at CAD Headquarters to reduce the amount of heat entering the building.

AAHK Sustainability Report 2019/20
AAHK has recently released its Sustainability Report 2019/20 highlighting its sustainability performance in 2019/20 across five key focus areas: "Our People",  "World-class Gateway", "Greenest Airport", "Airport City"  and "Community".  The report is AAHK's eighth annual sustainability report and was prepared in accordance with the GRI Standards: Core option and the GRI G4 Airport Operators Sector Disclosures.

Conclusion of Green Power's In-To Tung Chung River (TCR) Project
A virtual closing ceremony cum the 3rd annual Inter-departmental Interflow was held on 5 March to mark the successful completion of the three-year In-To TCR Project.

Supported by the HKIA Environmental Fund, the Project was launched in 2018, with an aim to conserve the catchment area of TCR by conducting comprehensive water quality and ecological monitoring.  In addition, a series of guided tours and workshops was held to encourage the public to explore the ecosystems at TCR.
We are eager to share and showcase environmental and sustainability practices. Please contact Chris Lee or Zara Lo to discuss your ideas.
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