Sustainability Our business culture
New Horizons MTR Corporation Limited MTR Headquarters Building Telford Plaza, Kowloon Bay Hong Kong Tel (852) 2993 2111 Fax (852) 2798 8822 www.mtr.com.hk
Printed on FSC certified paper
Sustainability Report 2009 www.mtr.com.hk/sustainability
3
From the Chief Executive Officer The 2008 year was one of great opportunity and challenge within our 30-year history. With the completion of the merger, we are now a larger organisation, stronger in our markets and richer in the talent and resources to continue our world-class services. While enhancing our capabilities, these strengths also bring into sharp focus the sobering realities and risks in the sustainable stewardship of our organisation. We engage a more diverse and increasingly vocal universe of stakeholders, we are entrusted with operating Hong Kong’s only rail network, and we are now one of the most substantial owners and managers of real estate properties in Hong Kong. Since the merger, we have purposefully set out to strengthen our culture, organisational architecture and our leadership capabilities to manage the new paradigms. A focus on integrity, concern for stakeholders and results in business operations are foremost in our day-to-day decisions. The discussions within this Report pointedly set out and address these very issues. It has been a year of building trust in our capabilities as a single organisation. We have been and are in progress to deliver fully on our promises to all our stakeholders in relation to the merger. The preparations commenced in 2007 to integrate the multiple layers of operations and systems supported by IT and professional competencies led to the successful unification of the two rail systems from day one of the official merger. Our passengers now enjoy seamless rail travel across our network, often at reduced fares. With our staff, a significant shift in culture is emerging. We introduced a new Vision Mission Values set across the Company in early 2008 with the purpose to establish a single, energetic corporate culture. This new declaration of who we are and what we aspire to drives our stewardship and guides workplace behaviours. Despite its promising start under the yearlong programme of intense and personal engagement with staff, we, as management, are under no illusion as to the further efforts needed to fully integrate this culture into practice. Yet seeing individual staff excel and thrive during the year brings me a genuine sense of pride in our progress. For the broader communities in which we operate, our Vision is to be a globally recognised leader that connects and grows communities with caring service. As the largest public transport operator in Hong Kong, we have a stronger voice to put this vision into practice. This is already in motion with the five new rail lines announced by the Government in 2007. We have in place a series of commitments from our suppliers, contractors, business partners and not least from ourselves that will shape the future of our city and foster long-term environmental protection and sensitivity to evolving social aspirations. Rather than compliance, our expectations arise from industry leadership.
With our staff, a significant shift in culture is emerging. We introduced a new Vision Mission Values set across the Company in early 2008 with the purpose to establish a single, energetic corporate culture.
Our proposition for sustainable community growth is gaining increased recognition worldwide as a leading strategy for 21st Century urban planning. The Corporation’s Rail and Property model is a proven alternative for cities faced with population density and scarcity of land, as seen in many of the developing economies of Asia. We are in continuous dialogue with cities in mainland China and elsewhere on the framework and long-term benefits of this model. Beyond planning, our established reputation and expertise in rail operations and in property services has led to a number of new global consultancies, most significantly, the recent concession granted to operate the Stockholm Metro. Through these abilities to do and be more of a community asset, we help shape a common future for our society. Our clear path as an organisation is to gain the trust from society that we can deliver and that we will work together to achieve that future. As a proud member of MTR Corporation, I believe such unity of purpose will serve us well in the difficult times ahead.
CK Chow Chief Executive Officer
2
12 May 2009
3
From the Chief Executive Officer The 2008 year was one of great opportunity and challenge within our 30-year history. With the completion of the merger, we are now a larger organisation, stronger in our markets and richer in the talent and resources to continue our world-class services. While enhancing our capabilities, these strengths also bring into sharp focus the sobering realities and risks in the sustainable stewardship of our organisation. We engage a more diverse and increasingly vocal universe of stakeholders, we are entrusted with operating Hong Kong’s only rail network, and we are now one of the most substantial owners and managers of real estate properties in Hong Kong. Since the merger, we have purposefully set out to strengthen our culture, organisational architecture and our leadership capabilities to manage the new paradigms. A focus on integrity, concern for stakeholders and results in business operations are foremost in our day-to-day decisions. The discussions within this Report pointedly set out and address these very issues. It has been a year of building trust in our capabilities as a single organisation. We have been and are in progress to deliver fully on our promises to all our stakeholders in relation to the merger. The preparations commenced in 2007 to integrate the multiple layers of operations and systems supported by IT and professional competencies led to the successful unification of the two rail systems from day one of the official merger. Our passengers now enjoy seamless rail travel across our network, often at reduced fares. With our staff, a significant shift in culture is emerging. We introduced a new Vision Mission Values set across the Company in early 2008 with the purpose to establish a single, energetic corporate culture. This new declaration of who we are and what we aspire to drives our stewardship and guides workplace behaviours. Despite its promising start under the yearlong programme of intense and personal engagement with staff, we, as management, are under no illusion as to the further efforts needed to fully integrate this culture into practice. Yet seeing individual staff excel and thrive during the year brings me a genuine sense of pride in our progress. For the broader communities in which we operate, our Vision is to be a globally recognised leader that connects and grows communities with caring service. As the largest public transport operator in Hong Kong, we have a stronger voice to put this vision into practice. This is already in motion with the five new rail lines announced by the Government in 2007. We have in place a series of commitments from our suppliers, contractors, business partners and not least from ourselves that will shape the future of our city and foster long-term environmental protection and sensitivity to evolving social aspirations. Rather than compliance, our expectations arise from industry leadership.
With our staff, a significant shift in culture is emerging. We introduced a new Vision Mission Values set across the Company in early 2008 with the purpose to establish a single, energetic corporate culture.
Our proposition for sustainable community growth is gaining increased recognition worldwide as a leading strategy for 21st Century urban planning. The Corporation’s Rail and Property model is a proven alternative for cities faced with population density and scarcity of land, as seen in many of the developing economies of Asia. We are in continuous dialogue with cities in mainland China and elsewhere on the framework and long-term benefits of this model. Beyond planning, our established reputation and expertise in rail operations and in property services has led to a number of new global consultancies, most significantly, the recent concession granted to operate the Stockholm Metro. Through these abilities to do and be more of a community asset, we help shape a common future for our society. Our clear path as an organisation is to gain the trust from society that we can deliver and that we will work together to achieve that future. As a proud member of MTR Corporation, I believe such unity of purpose will serve us well in the difficult times ahead.
CK Chow Chief Executive Officer
2
12 May 2009
5
Going Global
From our home base in Hong Kong, the MTR Corporation has transformed itself into an internationally recognized player in urban mass transport systems. Our scope includes railway operations in Hong Kong, four cities in mainland China, London’s Overground Rail Operations and the Stockholm Metro in Sweden’s capital. Most recently, we have been awarded a concession to operate Metro Train in Melbourne, Australia’s second largest city. Our company is now serving a larger and more diverse group of communities across the world than ever before. We are clearly reaching new horizons in every aspect of our business.
4
5
Going Global
From our home base in Hong Kong, the MTR Corporation has transformed itself into an internationally recognized player in urban mass transport systems. Our scope includes railway operations in Hong Kong, four cities in mainland China, London’s Overground Rail Operations and the Stockholm Metro in Sweden’s capital. Most recently, we have been awarded a concession to operate Metro Train in Melbourne, Australia’s second largest city. Our company is now serving a larger and more diverse group of communities across the world than ever before. We are clearly reaching new horizons in every aspect of our business.
4
7
Sustainable Transport Systems for the World
Mode Of Land Transportation Energy Consumption (kWh/100p-km)
The success of the MTR Corporation reflects a global trend towards greater connectivity and a lower dependence on fossil fuels. On average, emissions from all forms of transportation now contribute more than half of the global greenhouse emissions (Source: IEA “World Energy Outlook 2008”). It is commonly recognized that mass transport systems are the most energy efficient form of land transportation (Source: “Sustainable Energy – without the Hot Air”).
40
Car Electric train
35
Fastmost energy effcient MTR mode of land tranportation
Trolleybus
30
Tram 25
Dense urban areas are exactly where mass rail and public transport perform best. They form the backbone of any sustainable transport system thus reducing the carbon footprint of these metropolitan areas.
20
Hong Kong is one of the most densely populated urban areas in the world, compared with other OECD countries. The city has also one of the highest per-capita use of public transport where almost 40% is electrically powered. This unique combination compares favorably with the per-capita carbon footprint of other public transport systems in other cities around the world (Source: “Transport Revolutions” Richard Gilbert and Anthony Perl – 2008).
10
Electric scooter Underground train Electric car
Bicycle
Electric high speed train Diesel high-speed train
15
Coach
5
0
50
100
150
200
250 Average speed urban areas (km/h)
Technological Leadership
Transport Revolutions Total (number of daily trip per person)
Our success is firmly grounded in our technological expertise. We are a recognized leader in mass transit rail services, consistently achieving the highest international standards. As a result, we are uniquely positioned to export this valuable experience to the world when countries are shifting towards a low carbon economy. In this sense, we are answering today our common future’s greatest challenges.
1.5
Electric Public Transport Non-electric Public Transport
1.2
0.9
0.6
0.3
To p
10 As ian
Sh
an
gh cit ai ies (av er ag e) Pa ris St ( Fr oc an kh ce ol ) m (S we To de p 10 n) Lo Eu nd ro pe on an (U cit K) ies (av er ag e) To p 10 To No ro nt rth o Am Ne er ica w n Yo cit rk ies (av er ag e)
l ou Se
re po ga
To k
yo Sin
Ho
ng
Ko
ng
0.0
6
7
Sustainable Transport Systems for the World
Mode Of Land Transportation Energy Consumption (kWh/100p-km)
The success of the MTR Corporation reflects a global trend towards greater connectivity and a lower dependence on fossil fuels. On average, emissions from all forms of transportation now contribute more than half of the global greenhouse emissions (Source: IEA “World Energy Outlook 2008”). It is commonly recognized that mass transport systems are the most energy efficient form of land transportation (Source: “Sustainable Energy – without the Hot Air”).
40
Car Electric train
35
Fastmost energy effcient MTR mode of land tranportation
Trolleybus
30
Tram 25
Dense urban areas are exactly where mass rail and public transport perform best. They form the backbone of any sustainable transport system thus reducing the carbon footprint of these metropolitan areas.
20
Hong Kong is one of the most densely populated urban areas in the world, compared with other OECD countries. The city has also one of the highest per-capita use of public transport where almost 40% is electrically powered. This unique combination compares favorably with the per-capita carbon footprint of other public transport systems in other cities around the world (Source: “Transport Revolutions” Richard Gilbert and Anthony Perl – 2008).
10
Electric scooter Underground train Electric car
Bicycle
Electric high speed train Diesel high-speed train
15
Coach
5
0
50
100
150
200
250 Average speed urban areas (km/h)
Technological Leadership
Transport Revolutions Total (number of daily trip per person)
Our success is firmly grounded in our technological expertise. We are a recognized leader in mass transit rail services, consistently achieving the highest international standards. As a result, we are uniquely positioned to export this valuable experience to the world when countries are shifting towards a low carbon economy. In this sense, we are answering today our common future’s greatest challenges.
1.5
Electric Public Transport Non-electric Public Transport
1.2
0.9
0.6
0.3
To p
10 As ian
Sh
an
gh cit ai ies (av er ag e) Pa ris St ( Fr oc an kh ce ol ) m (S we To de p 10 n) Lo Eu nd ro pe on an (U cit K) ies (av er ag e) To p 10 To No ro nt rth o Am Ne er ica w n Yo cit rk ies (av er ag e)
l ou Se
re po ga
To k
yo Sin
Ho
ng
Ko
ng
0.0
6
9
Local Community Impact As we expand into new markets, we ensure that we develop local transport solutions which meet the expectations of the communities where we operate in. The MTR Corporation firmly believes in working and engaging with our local stakeholders in every aspect of our business - from ticket prices, train schedules, station management, vendor selection to the working conditions of our own employees. As a global company, we take our local responsibilities very seriously and we have implemented an active feedback system to ensure our own standards are consistently met and exceeded.
Hong Kong In Hong Kong, MTR trains carry an average 3.7 million passengers every weekday. However, our responsibility goes beyond just transporting passengers. We aim to be part of their lives. In April 2009, over 100 secondary school students joined our “Train’ for Life’s Journeys” initiative to learn communication, team-building and leadership skills. This included visits to MTR stations, depots and the Operations Control Centre. The two-week program was a joint collaboration with the School of Continuing and Professional Studies of The Chinese University of Hong Kong. We also believe in volunteering as an active tool of engagement with our local communities. In May 2009, MTR volunteers made rice dumplings and played games with the senior citizens at the Pentecostal Church of the Hong Kong Ngau Tau Kok Neighborhood Elderly Centre as part of a series of activities organized for Employee Volunteer Week. Art plays a vital role in inspiring people and raise awareness for important issues affecting our planet. This year we collaborated with Oxfam Hong Kong on an art exhibition in our Central Station to raise awareness for climate change. “Canvas for Change” featured 16 pieces of art from Asia, Africa, North America and Europe. The pictures were previously displayed at the United Nations Climate Change Conference in December 2008.
International It is our goal for 2010 to extend our local community activities to all our global operations. We have already started to engage with many local stakeholders as we entered these new markets and established local operations. We expect this work to intensify over the coming months with visible results and measurable impact.
Building Credibility through Sustainability Reporting This 2009 report marks the tenth anniversary of reporting sustainability to our stakeholders. We are celebrating this 10 year journey with every one of them. They all contributed to our success. This report represents our consolidated effort to accurately report on the sustainability impact of all our global operations. It also sets the goal for our company to truly reach New Horizons in terms of sustainability. The report is based on detailed interviews with many stakeholders, internal feedback, data analysis, as well as internationally accepted reporting metrics, including the Global Reporting Initiative’s (GRI) G3 Sustainability Reporting Guidelines. We also endeavor to make this report an interesting and inspiring read by including case studies of key projects and initiatives. A company’s credibility is always a result of its actions so we are proud of what we have achieved in 2009. We invite all our readers to share this pride.
8
9
Local Community Impact As we expand into new markets, we ensure that we develop local transport solutions which meet the expectations of the communities where we operate in. The MTR Corporation firmly believes in working and engaging with our local stakeholders in every aspect of our business - from ticket prices, train schedules, station management, vendor selection to the working conditions of our own employees. As a global company, we take our local responsibilities very seriously and we have implemented an active feedback system to ensure our own standards are consistently met and exceeded.
Hong Kong In Hong Kong, MTR trains carry an average 3.7 million passengers every weekday. However, our responsibility goes beyond just transporting passengers. We aim to be part of their lives. In April 2009, over 100 secondary school students joined our “Train’ for Life’s Journeys” initiative to learn communication, team-building and leadership skills. This included visits to MTR stations, depots and the Operations Control Centre. The two-week program was a joint collaboration with the School of Continuing and Professional Studies of The Chinese University of Hong Kong. We also believe in volunteering as an active tool of engagement with our local communities. In May 2009, MTR volunteers made rice dumplings and played games with the senior citizens at the Pentecostal Church of the Hong Kong Ngau Tau Kok Neighborhood Elderly Centre as part of a series of activities organized for Employee Volunteer Week. Art plays a vital role in inspiring people and raise awareness for important issues affecting our planet. This year we collaborated with Oxfam Hong Kong on an art exhibition in our Central Station to raise awareness for climate change. “Canvas for Change” featured 16 pieces of art from Asia, Africa, North America and Europe. The pictures were previously displayed at the United Nations Climate Change Conference in December 2008.
International It is our goal for 2010 to extend our local community activities to all our global operations. We have already started to engage with many local stakeholders as we entered these new markets and established local operations. We expect this work to intensify over the coming months with visible results and measurable impact.
Building Credibility through Sustainability Reporting This 2009 report marks the tenth anniversary of reporting sustainability to our stakeholders. We are celebrating this 10 year journey with every one of them. They all contributed to our success. This report represents our consolidated effort to accurately report on the sustainability impact of all our global operations. It also sets the goal for our company to truly reach New Horizons in terms of sustainability. The report is based on detailed interviews with many stakeholders, internal feedback, data analysis, as well as internationally accepted reporting metrics, including the Global Reporting Initiative’s (GRI) G3 Sustainability Reporting Guidelines. We also endeavor to make this report an interesting and inspiring read by including case studies of key projects and initiatives. A company’s credibility is always a result of its actions so we are proud of what we have achieved in 2009. We invite all our readers to share this pride.
8
Roadmap to Sustainability The below graph represents an overview of the application of the Sustainable Competitive Advantage model. This graph was introduced in our 2007 Sustainability Report (Merger Case Study, p.13) to demonstrate the validity of the model as a means to guide sustainability of the post-merger organisation. The application, shown in a six-year time frame, uses a predictive-corrective approach to track sustainable development before, during and after the merger. It measures the progressive rebalancing amongst the model’s three processes of risk management, stakeholder engagement and corporate strategy (Corporate Diamond/VMV). In reviewing the 2008 results, we have found that the processes themselves have not changed but rather have fluctuated to reflect responses to external influences, inputs and feedback. Though in the right direction, we have noted that our trajectory for stakeholder engagement did not meet the initially predicted goal for 2009. Engagement tasks, in particular skills training and cultural integration, have required additional time to realign the process. The graph details both the original trajectory predicted and our adjusted path from 2009 forward.
23
MTR Corporation Assets Footprint
Market Shares of Franchised Public Transport in Hong Kong (In percentage)
3.4 Trams & Ferries
Transport
211.6 82 36.2 68 1 19
14.9
(1)
Mini-buses
km Heavy rail route length
Heavy rail stations
42.0
2008
Integrated MTR System
km Light rail route length
“One Company, One Team�
Light rail stops
R
10
E
39.7 Buses
Cross-boundary passenger service
Strategy/VMV reviewed Reduced risk portfolio
3.5 Trams & Ferries
Feeder bus routes
R
09
E
Strategy/VMV review Reduced risk portfolio Heightened engagement
08
R
E
E
Enlarged risk portfolio Heightened engagement
06
R
E
1 2 2
Heightened engagement
R
Mini-buses
Ngong Ping 360 Cable Car Cross-boundary freight service
2007
Mainland China rail lines (2)
14.4 KCRC
European rail-operating concessions (3)
41.0 Buses
Property (1) R E
3.6
Risk management Stakeholder engagement Corporate Diamond / VMV
Performance 2008 Actual risk management
26.7 MTR
China and International
Enlarged risk portfolio
07
14.4
273,122 73,947
m2 Investment properties
Trams & Ferries
14.2 Mini-buses
25.0 MTR
Residential units Property management
Actual stakeholder engagement
05
R
E Performance 2009 (Predicted)
770,556
m2 Property management
2006
Predicted risk management Previously predicted stakeholder engagement Revised predicted stakeholder engagement
2.91
million m2 Land development rights
15.6 Performance 2010 (Predicted) Predicted risk management
22
Predicted stakeholder engagement
(1) Hong Kong only. (2) Beijing Line 4; Shenzhen Line 4. (3) London Overground; Stockholm Metro (awarded 2009).
41.6 Buses
KCRC
Roadmap to Sustainability The below graph represents an overview of the application of the Sustainable Competitive Advantage model. This graph was introduced in our 2007 Sustainability Report (Merger Case Study, p.13) to demonstrate the validity of the model as a means to guide sustainability of the post-merger organisation. The application, shown in a six-year time frame, uses a predictive-corrective approach to track sustainable development before, during and after the merger. It measures the progressive rebalancing amongst the model’s three processes of risk management, stakeholder engagement and corporate strategy (Corporate Diamond/VMV). In reviewing the 2008 results, we have found that the processes themselves have not changed but rather have fluctuated to reflect responses to external influences, inputs and feedback. Though in the right direction, we have noted that our trajectory for stakeholder engagement did not meet the initially predicted goal for 2009. Engagement tasks, in particular skills training and cultural integration, have required additional time to realign the process. The graph details both the original trajectory predicted and our adjusted path from 2009 forward.
23
MTR Corporation Assets Footprint
Market Shares of Franchised Public Transport in Hong Kong (In percentage)
3.4 Trams & Ferries
Transport
211.6 82 36.2 68 1 19
14.9
(1)
Mini-buses
km Heavy rail route length
Heavy rail stations
42.0
2008
Integrated MTR System
km Light rail route length
“One Company, One Team�
Light rail stops
R
10
E
39.7 Buses
Cross-boundary passenger service
Strategy/VMV reviewed Reduced risk portfolio
3.5 Trams & Ferries
Feeder bus routes
R
09
E
Strategy/VMV review Reduced risk portfolio Heightened engagement
08
R
E
E
Enlarged risk portfolio Heightened engagement
06
R
E
1 2 2
Heightened engagement
R
Mini-buses
Ngong Ping 360 Cable Car Cross-boundary freight service
2007
Mainland China rail lines (2)
14.4 KCRC
European rail-operating concessions (3)
41.0 Buses
Property (1) R E
3.6
Risk management Stakeholder engagement Corporate Diamond / VMV
Performance 2008 Actual risk management
26.7 MTR
China and International
Enlarged risk portfolio
07
14.4
273,122 73,947
m2 Investment properties
Trams & Ferries
14.2 Mini-buses
25.0 MTR
Residential units Property management
Actual stakeholder engagement
05
R
E Performance 2009 (Predicted)
770,556
m2 Property management
2006
Predicted risk management Previously predicted stakeholder engagement Revised predicted stakeholder engagement
2.91
million m2 Land development rights
15.6 Performance 2010 (Predicted) Predicted risk management
22
Predicted stakeholder engagement
(1) Hong Kong only. (2) Beijing Line 4; Shenzhen Line 4. (3) London Overground; Stockholm Metro (awarded 2009).
41.6 Buses
KCRC
New Horizons MTR Corporation Limited MTR Headquarters Building Telford Plaza, Kowloon Bay Hong Kong Tel (852) 2993 2111 Fax (852) 2798 8822 www.mtr.com.hk
Printed on FSC certified paper
Sustainability Report 2009 www.mtr.com.hk/sustainability