Allied : Environmental, Social and Governance Report 2020

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT 2020

二零二零年環境、社會及管治報告

Contents

Environmental, Social and Governance Report 2020

• About This Report

Allied Group Limited (stock code: 373) (the "Company" or "AGL", together with its subsidiaries, the "Group") is pleased to present its Environmental, Social and Governance ("ESG") Report (the "Report"). It is prepared in accordance with the "comply or explain" provision of the Environmental, Social and Governance Reporting Guide (the "ESG Guide") set out in Appendix 27 of the Main Board Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Stock Exchange"), and covers the period from 1st January, 2020 to 31st December, 2020 (the "Reporting Period"), unless otherwise specified. This Report supplements information disclosed elsewhere in the Company's published Annual Report 2020.

The Company is substantially an investment holding company and with subsidiaries involved in real estate, finance and money lending, property leasing, management services and elderly care services. This Report covers all material business entities, except business divisions without physical operations or associated joint venture companies in which the Company has no control in their operations. Unless otherwise stated, this Report covers the offices and branches from the following units and their subsidiaries in Hong Kong and Mainland China:

AGL

Sun Hung Kai & Co. Limited ("SHK")

United Asia Finance Limited ("UAF")

Sun Hung Kai Credit Limited ("Sun Hung Kai Credit")

This Report sets out the ESG policies, initiatives and performance of the Group. All information has been compiled according to the data and information obtained within the Group. The Group's internal control and formal review process are in place to ensure that all information is presented in an accurate and reliable manner. This Report has been reviewed and approved by the Board of Directors (the "Board"). The preparation of this Report strictly adheres to the reporting principles of "materiality", "quantitative", "balance" and "consistency".

Environmental, Social and Governance Report 2020

As a responsible company, AGL is highly committed to addressing global sustainability challenges and using our influence to further advance the agenda of sustainable development. Our Sustainability Policy covers our principles in environmental and social issues. In order to reflect the changes of the evolving market and better prepare for future risks, the Sustainability Policy is reviewed annually and enacted upon the approval of the Board.

SUSTAINABILITY VISION AND COMMITMENT

Central to our ESG approach is our commitment to creating sustained value for all our stakeholders, including shareholders and investors, employees and the broader environment and society. This vision reflects our belief that business development is inherently intertwined with delivering ESG value. As such, we strive to carry out business activities while creating a positive impact on the planet, as well as shaping a diverse and fair society for future generations to inhabit.

SUSTAINABILITY GOVERNANCE

We attach great importance to a robust governance structure in managing ESG performance. To pursue our vision, we have established a comprehensive management system across our business to govern sustainability risks and opportunities.

The Board retains the overall responsibility of stewarding the Group's ESG management, through setting up ESG goals and targets and reviewing the ESG performance on an annual basis, with the ESG initiatives implemented by management of various businesses. The heads of business unit and department are responsible for identifying ESG-related risks and determine the appropriate risk profile for the Group. Systems and procedures are put in place to identify, evaluate and manage the risks of business and activities, including ESG-related risks. The result and findings are reported annually by the management to the Chairman of Executive Committee who puts forward the same to the Audit Committee and the Board for review. Details of which are under "Risk Management and Internal Control" section contained in the Corporate Governance Report included in the Company's published Annual Report 2020.

For further information about our corporate governance, please refer to the Corporate Governance Report in the Company's published Annual Report 2020.

STAKEHOLDER ENGAGEMENT

Stakeholder opinions are crucial for the continuous improvement of the Group's ESG performance. We strongly believe that stakeholder engagement is vital to understand the interests and expectations of our stakeholders, as well as to help us prioritise ESG topics that may ultimately serve the Company. To this end, we engaged with our stakeholders through multiple communication channels.

MATERIALITY ASSESSMENT

We defined material stakeholder groups as those who we have frequent connections, significant financial and operational influence, and form a long-term and strategic relationship with the Group.

Environmental, Social and Governance Report 2020

• Business

ANTI-CORRUPTION

Our Whistle Blower Policy ensures that employees avoid engaging in any improper financial or other reporting, unlawful or improper practices, or wrongful conduct. Where a suspected non-compliance or misconduct is discovered, it shall be reported to the relevant committee or department through designated channels. All suspected cases are assessed with extensive investigative measures, including obtaining relevant documents for examination, preparing an investigative report, and discussing with relevant departments deemed necessary to the investigative matter reported. Shall the case be confirmed as improper, appropriate disciplinary actions would be taken accordingly. To maintain appropriateness to our business and regulatory compatibility, both our Code of Conduct and Whistle Blower Policy will be subject to review from time to time whenever necessary.

The internal audit departments, of respective business units, will also review the enforcement of such policies and procedures on relevant operations in the course of performing ongoing review of the internal control systems.

To strengthen business ethics and to keep updated in relation to regulatory requirements, all relevant staff of SHK group in Hong Kong are required to complete the Anti-Money Laundering and Counter- Terrorist Financing e-learning course. Also organised annually by SHK group, training sessions are conducted for its board members, senior management, all new hires and existing staff by invited representatives from the Independent Commission Against Corruption (ICAC) in Hong Kong. However, due to the coronavirus epidemic ("COVID-19"), SHK group had to cancel in-person training this year and instead designed an e-learning course on Anti-Bribery. Through this course, staff enhanced their understanding on the Prevention of Bribery Ordinance and increased their awareness of the corruption risks businesses face. During the Reporting Period, 88 employees of UAF completed 44 hours of Anti- Money Laundering and Counter-Terrorist Financing training while 611 employees of UAF completed 305.5 hours of anti-bribery training through its learning management system.

ANTI-MONEY LAUNDERING

SHK group actively fulfils its anti-money laundering responsibilities as a financial institution, all of SHK group's loan businesses in Hong Kong follow the Prevention of Money Laundering and Terrorist Financing Guidance Manual (the "Group AML Guidance Manual"). The Group AML Guidance Manual sets out the procedures to manage and mitigate risks when handling loan applications from individuals and businesses, and is designed in strict compliance with applicable laws and regulations. During the customer onboarding process, SHK group performs comprehensive due diligence, risk assessment and verification of documents to safeguard the interests of the customers as well as its business. In addition to ongoing monitoring obligations, suspicious activity reporting and regular reviews of customer's information are appropriately conducted. Sun Hung Kai Credit places strict monitoring protocols for the loan application process to facilitate early detection of fraudulent activities and maintain high standards of service.

Regular training and internal communication ensure that employees are informed of the latest regulatory developments and that ethical conduct is upheld. This year at Sun Hung Kai Credit, employees underwent compliance training on sanction to keep abreast of the increasing global regulatory rigor in enforcing these requirements. At UAF, all Hong Kong employees attended compliance training on sanctions in order to understand the core principles.

Environmental, Social and Governance Report 2020

INTELLECTUAL PROPERTY

We respect intellectual property rights, including but not limited to trademarks, patents and copyrights. Employees shall not privately use or allow outside parties to possess and exploit intellectual property, unless permission has been obtained by copyright owners. Employees are required to notify the department head before the use of any name, slogan or mark for any product, program or service. To safeguard our own intellectual property, the relevant information technology department carries out periodic inspection of employees' computers, thus ensuring that genuine software is installed.

SUPPLY CHAIN MANAGEMENT

We work with a range of service providers across the Group, spanning areas including but not limited to information technology, legal, marketing, agents, consultants and office equipment suppliers. In general, suppliers are selected based on their pricing, reputation, track record of good practices and value-added service to the Group. As for UAF, we also consider whether they have any significant violation record or conflict of interest, whereby a site report and business performance report may be requested if appropriate. Once contracted, the performance of suppliers are then reviewed periodically by relevant departments. These basic requirements are in place to guarantee the delivery of quality products and services.

In regards to the sustainability risks present in the procurement practices, our suppliers do not pose significant environmental or social risks to the Group. However, we promote environmentally friendly technology in our supply chain. For example, UAF actively procures through digital media agencies, in order to market our products through electronic platforms rather than through traditional marketing channels. This is expected to grow alongside our pursuit of introducing more innovative products with advanced technology.

In our loan business segment which comprises UAF and Sun Hung Kai Credit, we appoint external debt collection agents to assist in the recovery of overdue debts. We pride ourselves on maintaining a strong market position through the sincerity of agents. To this end, agents are carefully selected based on performance and reputation, among other factors, and are added to our Authorised Agents list. To certify the authenticity of Authorised Agents, they are required to provide relevant certifications, qualifications and business performance reports. All Authorised Agents are obliged to follow the Authorised Agents Manual that details the procedures for general business ethics, know-your-customer, data privacy, and customer confidentiality. The relevant code of conduct also extends to our agents, in which they are required to abide by relevant laws and regulations, uphold information data protection and avoid conduct that undermines the integrity and goodwill of UAF and Sun Hung Kai Credit.

For continuous improvement of quality of service, the performance of our Authorised Agents is annually assessed on the basis of several criteria, as stated in the evaluation form. Such criteria include, but are not limited to, service effectiveness, operational behaviour and data handling. In addition, surveys are regularly distributed to customers and the public in order to receive feedback on service quality. During the Reporting Period, SHK group engaged with 68 Authorised Agents across various countries including Hong Kong, Mainland China, Philippines and Indonesia.

LABOUR STANDARDS

The Group respects all basic human rights and forbids any forms of child or forced labour practice. During the recruitment process, we require all personnel to provide valid personal identification documents for verification purposes, while background checks will also be carried out whenever necessary. In the unlikely event that false information or a false identity is discovered, the Group will address the situation by closely following the necessary procedures in accordance with laws and regulations. During the Reporting Period, the Group was not aware of any material non-compliance with relevant laws and regulations that have a significant impact on the Group relating to labour standards. Additionally, no cases of child or forced labour were reported during the Reporting Period.

Environmental, Social and Governance Report 2020

• Investors and Customers

The Group is dedicated to bringing value to our investors and customers through quality products and services. To achieve our vision of creating sustained value requires that we engage in a meaningful way with customers and investors and ensure that their interests are being reflected and protected. We take pride in our long history of developing excellent customer relationships and value the reputation we have received of being trustworthy, caring and professionalism. The Group will continue to develop robust procedures to meet stakeholders' expectations and drive better results.

CLIENT PROTECTION

Protecting the general interest of our customers is our utmost priority. Hence, we are committed to incorporating industry best practices and influencing policy development to maintain the stability of the money lending industry as well as to safeguard our customers' rights.

UAF, a founding member and executive committee member of the HKSAR Licensed Money Lenders Association Limited ("LMLA"), led the drafting of the Code of Money Lending Practice ("Code") for the money lending industry. The Code is a comprehensive framework of market practices and standards, developed based on the Hong Kong Monetary Authority's guidelines to banks in Hong Kong. It details the guidelines and procedures on various aspects including customer relationships, know-your customer, anti-money laundering, credit evaluation, collection and recovery and data privacy. Through practicing the Code, we aim to strengthen consumer confidence and promote a corporate culture that treats customers fairly, so as to ensure their interests are being protected. Apart from the participation of the Code, UAF is also a member of a special task force for the Multiple Credit Reference Agency, a project led by The Hong Kong Association of Banks ("HKAB"). Additionally, we contribute to efforts that enhance consumer education, in order to raise awareness of issues caused by unsustainable debt and the importance of sound financial management.

In recognition of our customers who have been severely impacted by the repercussions of COVID-19, UAF has joined the Interbank Debt Relief Plan in 2020, a framework agreement jointly formulated by HKAB, The DTC Association and LMLA, which aims to alleviate the financial difficulties of borrowers by offering debt relief plans. When qualifying for the Interbank Debt Relief Plan, customers are entitled to adjust their debt repayment plan and receive assistance to work towards financial stability and maintain a positive credit track record.

DATA PRIVACY

It is our legal obligation to safeguard the interests of our stakeholders by maintaining high standards of data protection. The Privacy Policy of SHK group explains how data are collected, managed and protected, which closely follows the Personal Data (Privacy) Ordinance (Cap. 486 of the Laws of Hong Kong) and Code of Practice on Consumer Credit Data. Compliance is not only the prime management objective, but also the direct responsibility of every staff member of the Group. To preserve the confidentiality of our customers, personal data will only be collected for necessary purposes by lawful and fair means. We implemented appropriate physical and electronic management measures to ensure that personal data is protected against unauthorised or accidental access, and processing or erasure. To further monitor the safety of our customers when using online services, encryption technology is employed for sensitive data transmission. If customer data is needed for operational or marketing purposes, we ensure that formal consent is provided. For instance, during the loan application process, customers are issued a Personal Data Collection Statement that communicates the purpose of collection, the personnel who will have access to the information, the rights to access, and other relevant information.

The Code of Conduct in the Staff Handbook further outlines the Group's expectations on handling confidential information.

Environmental, Social and Governance Report 2020

DATA PRIVACY (CONT'D)

At UAF, employees closely follow the Information Classification Policy, which provides mandatory guidelines for establishing, implementing, maintaining and continually improving information security management systems. To enhance cybersecurity awareness, e-learning courses on information security training were provided to non-IT staff, covering topics such as current challenges and emerging trends of information security, threats, vulnerabilities and impacts of security issues, and the control techniques to prevent their occurrence.

RESPONSIBLE MARKETING

We ensure that investors and customers are informed with complete product information to protect the risks and rights of individuals. The publicity and promotion of our materials is in compliance with the Guidelines on Additional Licencing Conditions of Money Lenders Licence as well as the Trade Descriptions Ordinance (Cap. 362 of the Laws of Hong Kong). To uphold strict risk management, all advertisement materials relating to our money lending business include a telephone hotline for handling complaints and risk warning statements. This is displayed in a clear, consistent and understandable manner to ensure that individuals understand the terms and conditions and are able to make conscious financial decisions.

The Group prohibits any false or misleading information that deceive or mislead customers in the purchasing of financial products. To this end, we have implemented various measures to inform customers of lending scandals. At UAF, the Beware of Money Lending Scam leaflet is available on its website, which warns customers of the signs to look out for when communicating with a fraudster. Moreover, the Note to Intending Borrowers is available online and provides guidance and precautions about applying for loans.

CUSTOMER SERVICE

The Group's quality customer service has helped us deliver long-term value for all stakeholders and maintain sound customer relations. We care about our customers and we serve them with the most professional, comprehensive and caring experience. To this end, we strive to recognise customer needs, enhance corporate brand connection and the overall customer experience.

UAF has conducted Customer Satisfaction Survey to enable honest feedback on a variety of our products and services. This enables us to assess the efficiency and accuracy of services and communications, as well as the ability to meet timelines and expectations. In this Reporting Period, 1,980 existing customers have completed the survey for the evaluation of services from different frontline departments, including Branch Operations, Electronic Credit Department, Phone Credit Centre, Overseas Workers Loan Department, Direct Sales Department and Customer Service Department.

Resources are also in place to address customer complaints, which are spearheaded by our dedicated Customer Service Department ("CSD"). CSD conducts a standard procedure to investigate and rectify situations appropriately and professionally. The procedures outline measures to handle complaints according to different levels of severity and by seniority of handling officers. All complaints are appropriately recorded and filed for follow-up and future references. Relevant staff are responsible for investigating each complaint, evaluating possible causes, providing detailed response to the customer, and issuing corrective actions if appropriate. To understand how we can enhance the customer experience, complaints are reviewed regularly and analysed for improvement.

Environmental, Social and Governance Report 2020

• Employees

Our employees are the most important asset and drive the long-term development and sustainability of the Group. Hence, we are committed to creating a supportive working culture and investing in the development of our employees to demonstrate their fundamental role in growing and prospering with the Group. Our human resources practises are governed by the Employee Handbooks, which documents guidelines and conditions of employment, recruitment and selection, working conditions, benefits and remuneration, code of conduct, as well as training and development. It is regularly reviewed according to any changes in the Company policy or any legal requirements.

TALENT RECRUITMENT AND RETENTION

Trust is at the core of our interactions in the workplace as we believe that when given flexibility, employees will respond with a deeper ownership of their work. The Unlimited Paid Leave approach of SHK has continued to empower its employees to produce exceptional results through better control over their work-life balance. The SHK head office also developed an intranet system that allowed employees to arrange flexible hours, work remotely, and remain productive during COVID-19 restrictions. Looking ahead, we aim to continue embracing modern working styles to foster employee engagement.

The Group attaches great importance to the recruitment and retention of our workforce. We offer competitive salaries, and are reviewed annually to maintain our competitive advantage.

In order to foster an engaging and productive workforce, whilst valuing high-flying performers, the SHK head office continues to utilise the Incentive Program Policy. In UAF, a Long Service Award scheme is also adopted to reward individuals who completed significant years of service. During the Reporting Period, UAF continued to sign the "Good Employer Charter" organised by the Labour Department, recognising its outstanding human resource management. As of 31st December, 2020, the Group employed 3,415 (2019: 3,562) employees.

Workforce Breakdown

11%

Environmental, Social and Governance Report 2020

TALENT RECRUITMENT AND RETENTION (CONT'D)

Workforce Breakdown (Cont'd)

%

100

56%

from Hong Kong

44%

DIVERSITY AND EQUAL OPPORTUNITIES

We believe a diverse talent pool enables us to create value to our stakeholders and makes AGL a great place to work. As an equal opportunity employer, we strictly prohibit any form of discrimination of employees and job candidates on the grounds of gender, race, colour, nationality, religion, sexual orientation, disability, military service or marital status and other status protected by law. Guided by the Employee Handbook, our approach to inclusion is addressed in the recruitment and selection of our candidates, where we incorporate a diversity and inclusion clause in all our job postings and assess candidates based on competency and performance. In addition, during the Reporting Period, UAF continued to pledge to "The Racial Diversity and Inclusion Charter for Employers," run by the "Equal Opportunities Commission", advocating our support for diversity, equality and inclusion in the workplace.

Environmental, Social and Governance Report 2020

10 Employees (Cont'd)

DEVELOPMENT AND TRAINING

The development of our employees is our strategic priority as we want our employees to realise their potential. Our culture promotes lifelong self-development, encouraging employees to acquire professional knowledge outside the workplace to develop new skills and attain qualifications that will help with their career development.

We provide a wide spectrum of internal and external training with some examples including anti-corruption,anti-money laundering, counter-terrorist financing, fraud awareness, data privacy and health and safety. To ensure that the programs deliver value to our employees and our business, UAF invited staff from different business functions to fill in the online training survey on their top preferences in topics annually. Each year, we also encourage employees to set their professional objectives and goals in which we will provide the necessary support to meet these targets.

We are committed to foster a culture that supports continuous improvement and opportunities to grow. To promote lifelong learning, UAF employees are entitled to pursue courses, seminars, diplomas, undergraduate and post-graduate courses outside of office hours with subsidies under the Advanced Learning Allowance Policy. Owing to our dedication in cultivating employee's talent, SHK and UAF Hong Kong were awarded the "Manpower Developer" from the Employees Retraining Board for three and eight consecutive years respectively. During the Reporting Period, the Group's frontline and supporting employees completed 20,448 hours (2019: 16,996 hours) of training.

Every year we attract bright minds and cultivate talented individuals through UAF's tailor-made Graduate Trainee Programme (Branch Operations). In the programme, we offer 12 months of training, during which the graduate trainees will rotate through different business functions to have an all-rounded financing experience. In addition to gaining on the job training, the programme develops critical thinking and soft skills, which are necessary skill sets for trainees to fast-track to senior positions. Graduate trainees are also given opportunities to lead, organise and participate in various corporate community events.

In the hotel sector, we have formulated strategic plans for talent retention, growth and development. We also provide training courses on regular basis for talents.

Environmental, Social and Governance Report 2020

HEALTH AND WELLBEING

Workplace Safety

The Group is committed to creating a safe and secure environment for all our employees. To this end, employees are required to be familiarised with the location of fire alarms, fire-fighting equipment, fire escape routes and emergency response protocols. Fire drills are also conducted regularly in accordance with property management guidelines. Safety equipment including first-aid boxes, earmuffs and trolleys for heavy goods is accessible in the workplace. In addition, to maintain good indoor quality, smoking indoors is strictly prohibited.

We have established safety precautions as specified in the Employee Handbook. Any work-related injuries and personal accidents that occur during and outside office hours are required to be reported to the HR department. In this Reporting Period, twenty-seven cases of workplace related accidents whereas twenty-five cases and two cases from within office hours and out of office hours were reported respectively, resulting in 780 lost days. In addition, no work fatalities were reported for the past three years. Moving forward, we aim to conduct regular safety assessments to minimise potential workplace injuries.

COVID-19 Response

At the beginning of the Reporting Period, Hong Kong and Mainland China were among the first regions to be impacted by COVID-19. To protect our employees' health and well-being while maintaining business-as-usual, the Group reacted quickly to implement a set of measures at the offices and branches to minimise risks as much as possible. Through monitoring the situation stringently and keeping informed of local and regional guidelines, we adjusted our updates and advice on a regular basis.

At the AGL and SHK head offices, apart from work at home arrangements, we also offered free masks for our employees. In addition, at SHK and Sun Hung Kai Credit, we supported junior staff who were bearing the risks in their daily duties with a hardship allowance during the early parts of the year.

To safeguard our employees and customers at the UAF branches, we ensured that stringent procedures were in place. With the periodic closures and constantly changing guidelines, we developed a decision- tree and checklist for different risk scenarios to help employees determine whether it was appropriate to proceed business-as-usual. During the different waves of COVID-19, UAF implemented split operations for separating critical departments into two teams in order to address business continuity scenario for confirmed case in the workplace. Among daily activities, we maintain 1-metre distance from each other at all times, offer masks to guests, and place signs and posters to raise awareness of personal hygiene and safety. The following table details additional key control measures that were practised across our operations.

Environmental, Social and Governance Report 2020

12 Employees (Cont'd)

HEALTH AND WELLBEING (CONT'D)

COVID-19 Response (Cont'd)

Key control measures

Head Offices and Branches (AGL, SHK, Sun Hung Kai Credit and UAF)

• Conducting body temperature screening for staff and guests
• Hand sanitiser was made accessible and replenished whenever necessary
• Frequently replenishing the supply of masks for all staff
• Frequently cleaning and disinfecting meeting rooms
• Restricting the number of occupants in meeting rooms, and encouraging use of digital forms of meeting instead
• Require mask wearing and performing hand hygiene for all guests before entering
• Clean and disinfect frequently touched surfaces, including reception counters and doors every two hours

Head Offices and Branches (UAF)

• Frequently replenish supply of masks for guests
• Require mask wearing for all staff at workplace
• Perform body temperature checks for all incoming staff and guests
• Provide digital thermometers, hand sanitisers, face shields and masks

Environmental, Social and Governance Report 2020

We care about making contributions to our local community to create an inclusive and sustainable society. In light of COVID-19, we had to postpone or cancel many community activities in consideration of the health and safety of our staff as well as our community members. However, we still managed to participate certain fund-raising events such as Skip-A-Meal in June 2020 and Mooncakes for Charity in September 2020. In an effort to promote a caring and sustainable community, the Group will continue to actively participate in local community projects and invest in causes and initiatives that we believe in.

HELPING PEOPLE GROW

The Group believes in the value of 'Helping People Grow', whether it be through offering financial assistance to individuals or by contributing to capital through investment management. This same philosophy guides our attitude towards community investment, where we believe in strengthening community partnerships to build lasting relationships, nurture future leaders and alleviate the challenges experienced by the most vulnerable members of society. Through this approach, we inherently supports the society and communities through all walks of life. In the past six years, the Group has donated over HK$45.6 million in ESG initiatives through the Sun Hung Kai & Co. Foundation (the "Foundation").

In recognition of the contributions made towards our community, SHK has been named a "Caring Company" for the 5th consecutive year, and UAF for the 16th consecutive year, demonstrating our Group's effort and involvement in community development and creating a more inclusive society. In 2020, SHK was also recognised for its outstanding performance in environmental, social and governance through attaining a "Gold Award" in The Asset ESG Corporate Awards.

EMPOWERING THE UNDERPRIVILEGED

SHK has established a long history of philanthropic giving through the Foundation. The Foundation, sponsored by SHK, serves as a significant platform for SHK, its business associates and partners to contribute to the communities. Over the past several years, the Foundation has continuously sponsored initiatives benefiting communities that focus on alleviating the challenges of the underprivileged and improving the environmental health of our communities. To help our communities in need, particularly those affected by COVID-19, SHK has provided support to the Crossroads Foundation, a Hong Kong- based NGO who serve people in a world of need. One of their key service is to collect high-quality goods from donors and donate them to people in need, locally and internationally.

In order to bring growth and progress in society, we believe in promoting and offering equal access to quality education. To this end, SHK established the Sun Hung Kai & Co. Foundation Fellowship Fund to sponsor the Harvard Business School's need-blind admission initiative to help exemplary MBA students pursue their dream to study in an internationally renowned institution. The Foundation also supported the Dalton School of Hong Kong, a non-profitdual-language and multicultural primary school, to provide quality education to younger generations in Hong Kong.

SUPPORTING YOUTH DEVELOPMENT THROUGH SPORT

Following our belief that sailing nurtures great life skills, the Foundation established an initiative, the Sun Hung Kai Scallywag Foundation, to provide sailing opportunities for underrepresented youth and build on Hong Kong's rich sailing legacy. In partnership with Sailability Hong Kong and Hebe Haven Yacht Club, a number of introductory courses and taster days were offered to develop sailing skills and team building skills. Despite COVID-19 restrictions that inhibited the number of days in the water, SHK still managed to have 52 children aged 10-18 years old complete 112 sailing days during the Reporting Period. SHK also welcomed a mixture of disadvantaged youth and young adults to give them a flavour of the sailing programme, which contributed to an additional 26 individuals who completed 42 days of sailing. To strengthen sailing passions, sponsorship is provided to youth who have demonstrated exceptional talent and desire to pursue sailing further. In the hope of making sailing widely accessible and enjoyable for all, SHK is committed to expanding its sailing events geographically across Hong Kong.

The spirit of competitive sailing echoes our core values of endurance, adaptability, and excellence, as such SHK is the main sponsor for the Sun Hung Kai Scallywag race team, Hong Kong's professional offshore sailing team. Competing on behalf of Hong Kong in the Volvo Ocean Race 17-18, the race team enduringly journeyed more than 45,000 nautical miles across four oceans. The ultimate goal is to raise awareness and inspire adventurous youth in Asia and internationally of the incredible sport of sailing. To further our agenda, we look forward to sailing in global events in the future.

Environmental, Social and Governance Report 2020

14 Community (Cont'd)

INDUSTRY ORGANISATIONS AND NGO PARTICIPATION

Beyond our charitable activities, the Group are involved in a variety of professional associations, Chambers, and non-profit organisations. We are honoured to have supported and contributed to these various organisations below.

In the hotel sector, we have been promoting community contribution within the organisation for years. However, due to the outbreak of COVID-19 pandemic in Hong Kong, all community activities for local non-governmental organisations have been suspended in 2020.

Environmental, Social and Governance Report 2020

We recognise that our influence extends to the environment and society in which we operate. For this reason, we are committed to advancing the global environmental agenda by striving to improve our environmental performance within our operations. Our Sustainability Policy sets out the commitments to mitigating environmental impacts, reducing emission and waste, improving energy efficiency, managing paper usage and recycling, and raising environmental awareness. As we are primarily office based, we also aim to adopt various environmental practices that cultivate a green workplace.

RESPONSIBLE USE OF RESOURCES

Part of our global responsibility is to ensure that all resources are used responsibly and efficiently. We strive to minimise our consumption in paper, energy and water, thereby reducing the carbon emissions of our operations.

Paperless Operations

We have long considered the importance of paper usage and have made it a priority in the last few years to digitalise our operations and reduce the reliance of paper.

Since June 2013, electronic board paper systems have been promoted and implemented throughout the Group, allowing our directors to access meeting papers online anytime, anywhere with the use of portable electronic devices, improving Board efficiency whilst saving paper.

The Company has for some years established an electronic communication channel with shareholders, allowing shareholders to select to receive our corporate communications, such as annual reports, interim reports and circulars, by accessing online versions instead of receiving hard copies in mail. As a result, printing quantities of our corporate communications are substantially reduced and consumption of paper are thus minimised.

At SHK head office, we implemented an employee self-service system to allow employees to complete administrative forms such as reimbursements and leave notice online. Electronic and digital mediums are also extensively used and have substituted paper for the issuing of invoices and bills for vendors and suppliers, as well as for all internal communications. For example, internal company publications are digitised and electronic documents are distributed before the commencement of meetings.

For SHK, to optimise workflow and effective communication between staff at the SHK head office and extensive branch network, we use an electronic platform to facilitate internal communications and administrative documents. Documents such as company internal circular, employee handbook, relevant company policies as well as lending guidelines are made easily accessible. Moreover, the HR department of SHK utilises human resources information system that enables efficient processing of leave applications, staff performance review and management of employee profiles. In 2020, UAF has developed its own learning management system that enable Hong Kong employees to complete the entire training process on one platform, including enrolment, attendance, examination, evaluation as well as issuing of certification. The online document management system used by UAF and Sun Hung Kai Credit effectively stores, retrieves, and manage documents to facilitate our business activities. We are constantly striving to minimise our paper consumption, hence we are looking to implementing paperless initiatives and monitoring methods to track improvements and continue effort over time.

Environmental, Social and Governance Report 2020

16 Environment (Cont'd)

RESPONSIBLE USE OF RESOURCES (CONT'D)

Paperless Operations (Cont'd)

UAF developed various innovative products that not only offer flexible loan solutions, but also encourage customers to use various digital channels for loan applications in Hong Kong and Mainland China. Launched in 2020, the "YES UA" mobile app became the first app by a financing company in Hong Kong that offers authentication from all Hong Kong identity cards, thus providing customers the ability to experience the entire loan process from application to cash transfer entirely on their digital device. Loan application requests are also made possible through the "No Show" Personal Loan service, where customers could apply for loans through the telephone without providing physical paper documents for approval. Customers have responded positively, with about 54% making loan origination through electronic channels during the Reporting Period. To further encourage the transition to paperless operations, a service fee is charged for any paper statement request made from 2016. Looking ahead, we shall focus on digitalising more of our customer interactions to enhance service experience and reduce the amount of paper we consume.

Energy Saving

Managing energy efficiency is necessary to mitigating the impacts of climate change. Energy is primarily used in the form of petroleum for the transportation of the Group's personnel as well as electricity from our offices and branches. Whilst the majority of electricity consumption stemmed from UAF branches, due to a slight reduction in branch network across Hong Kong and Mainland China to 74 (2019: 78) during this Reporting Period, there was a decrease of electricity consumption by 5.7%.

The SHK head office is located in a Final Platinum certified building under Hong Kong's BEAM Plus Existing Certification (Commercial Building), which completed several criteria assessment including good energy performance, and since has been recognised as a sustainable building. Since 2016, UAF in Hong Kong has been presented with the Gold Award from the "Charter on External Lighting" launched by the Environment Bureau through successfully switching off external lighting that may affect the outdoor environment, including advertisements and shop signage after midnight. One of the Group's subsidiary companies, Protech Property Management Limited, has for many years participated in the Earth Hour Campaign (the "Campaign") and encouraged owners/tenants of the flats and buildings which it manages to turn off lights every year for one hour at 8:30 pm on the Campaign nights.

Environmental protection guidelines are circulated to all staff at head office and branches. For instance, staff are reminded to switch off lights and equipment after work, during lunch break or during time working outside the office and wherever possible. Energy efficient office equipment is always preferred in making purchase decisions.

• Only covers consumption within the Group's head office, our subsidiaries including head offices and branches of UAF and Sun Hung Kai Credit.

Environmental, Social and Governance Report 2020

RESPONSIBLE USE OF RESOURCES (CONT'D)

Energy Saving (Cont'd)

To further mobilise energy efficiency, we adopted various energy saving initiatives with the ultimate aim to reduce energy consumption and respective air and greenhouse gas ("GHG") emissions.

Water Efficiency

We endeavour to minimise water consumption and consume water responsibly throughout our business. For Hong Kong operations, water is consumed by municipal water supply and we did not encounter any issues in sourcing water during the Reporting Period. We conducted routine inspection and maintenance on water taps, containers and pipelines to prevent leakage or other issues of the water supply system. Where appropriate, washroom taps are controlled by electronic sensors to manage water consumption. To reinforce water saving practices, water conservation practices are promoted through relevant reminders displayed in pantries and washrooms.

Encouraging Eco-Friendly Options

In the property and hotel business, eco-friendly options are often considered and where possible/ appropriate are implemented in operations, construction and maintenance works. These include:

1. Building Environmental Assessment Method Plus applied to demolition and new building project.
2. Replace air-cool with water-coolair-conditioning system with selection of more efficient oil-free chillers.
3. Up-gradebuilding management system with better control for air-handling units.
4. Carry out energy audits.
5. Replace energy wasting lights with LED lights.
6. Change diesel boilers to gas boilers and heat pumps for hot water system.
7. Use of syphonic double flush WC units where appropriate.
8. Roof waterproofing system using more economical and efficient method to reduce noise, dust and debris.
9. Use of non-Chlorofluorocarbon based refrigerants in air-conditioning unit selection.

• The figure for 2019 has been adjusted to conform with the current year's presentation.

Environmental, Social and Governance Report 2020

18 Environment (Cont'd)

AIR AND GHG EMISSIONS

Emissions

We recognise the importance of reducing our GHG emissions to drive sustainable growth of our operations as well as the society. The Group's GHG sources are primarily attributed to electricity consumption and the use of the Group's vehicles from our offices and branches.

The quantification methodology is in reference to local guidelines and international standards, including the Guidelines to Account for and Report on Greenhouse Gas Emissions and Removals for Buildings (Commercial, Residential or Institutional Purpose in Hong Kong), published by the Electrical and Mechanical Services Department and the Environmental Protection Departments, as well as the latest emission factors, with reference from the Baseline Emission Factors for Regional Power Grids in China published by the Department of Climate Change of National Development and Reform Commission.

To minimise these emissions, the use of digital teleconferencing is encouraged in replacement of business travel. In addition, we perform regular vehicle assessments and maintenance, and check fuel efficiency. We endeavour to implement effective measures to further reduce emissions reductions and to meet our emission objectives and targets in coming years.

Waste Management

The Group's non-hazardous waste consists of paper, office equipment waste, office stationery, as well as domestic waste generated from our employees. We aim to reduce the amount of waste generated by diverting useful resources from landfills to recycling or repurposing, whenever applicable.

In the property and hotel business, recycling scheme for materials, such as paper, plastic, glass bottle, cooking oil and electronic materials, has been launched in certain restaurants and within internal departments. Food saving has also been encouraged in joining the Waste Check Charter with the Environmental Protection Department.

At the SHK offices, we have designated recycling bins placed next to printers and fax machines for paper collection. These are clearly labelled and easily accessible in order to recycle and reuse as much as possible. Meanwhile, recycling of toner, ink cartridges, plastic bottles and batteries are also encouraged. At the UAF head office, we recycled 455 units of toners, 12.96 kg of plastic bottles, 1.60kg of aluminium cans, as well as 467 bags of shredded paper. To promote a repurpose culture, staff are encouraged to preserve leftover food for later consumption and office areas are provided with umbrella stands to avoid the use of single-use umbrella bags. In recognition of active waste reduction efforts, UAF was awarded the Hong Kong Green Organisation Certification - Wastewi$e Certificate (Basic Level) in 2020 by the Environmental Protection Department. At the SHK head office, waste is collected by external licensed collectors for further handling and disposal. We aim to dispose of all waste responsibility and strive to adopt best practices.

Environmental, Social and Governance Report 2020

CLIMATE CHANGE

The Group recognises that the long-term risks of climate change have far-reaching impacts on our operations and environment. As such, we are committed to mitigating the impacts of climate change and other environmental related risks. The largest source of impact derives from carbon emissions that result from the consumption of electricity from the office and branches. We have implemented various mitigation measures as mentioned in "Responsible Use of Resources" and "Air and GHG Emissions".

Changes in weather patterns and the increased severity of extreme weather events will likely disrupt the continuity of daily operations in terms of the ability for our staff to serve our customers and investors. For this reason, we have developed emergency protocols to handle such events, as outlined in the Employee Handbook, including procedures to approach typhoons and black rainstorms.

The direct and indirect impacts of climate change can affect our stakeholders and assets. We shall continue to explore relevant risks and opportunities to develop green products and services that serve the long-term needs of the environment and consider climate resilience in our businesses in the future.

GREEN EDUCATION

In efforts to champion towards a greener future, we strive to raise environmental awareness within our operations as well as the wider society. At AGL, we seek to educate our staff members on how to incorporate sustainability into their everyday lives. Various practices are communicated, including but limited to the following examples:

Office Environmental Awareness

Staff are encouraged to

• Prevent unnecessary prolonged use of office appliances
• Activate energy-saving mode or switch off monitors during their lunch hour and when not in use
• Lower the brightness of their monitor screen
• Switch off lights and air conditioning after the use of a room
• Switch off and unplug all appliances when not in use
• Use reflectors when there was excessive sunlight
• Reuse packaging materials such as plastic bags and plastic boxes

Through the Foundation, SHK actively supports and partners with programmes and organisations that educate and advance the cause of environmental conservation. For example, in 2018, SHK supported the Enough Plastic Movement, a campaign led by Eco Drive Hong Kong and Youth Energy Hong Kong that educated the public of the damaging effects of using single-use plastic. In hopes to preserve our ecosystem for future generations, SHK also supported the Great Barrier Reef Foundation in 2019 through funding projects that accelerates the protection and restoration of the Great Barrier Reef and coral reefs around the world. We shall continue our support in environmental education in the society.

Environmental, Social and Governance Report 2020

20 Laws and Regulations

During the Reporting Period, the Group was not aware of any material non-compliance with any relevant laws and regulations that have a significant impact on the Group. The following table communicates all material laws and regulations that the Group adheres to.

Business

• Money Lenders Ordinance (Cap. 163 of the Laws of Hong Kong)
• Prevention of Bribery Ordinance (Cap. 201 of the Laws of Hong Kong)
• Trade Marks Ordinance (Cap. 559 of the Laws of Hong Kong)
• Anti-MoneyLaundering and Counter-Terrorist Financing (Financial Institutions) Ordinance (Cap. 615 of the Laws of Hong Kong)
• Competition Ordinance (Cap. 619 of the Laws of Hong Kong)
• Guiding Opinions of the China Banking Regulatory Commission
• Model Code for Securities Transactions by Directors of Listed Issuers
• Prevention and Suppression of Bribery in the Private Sector (Law No. 19/2009)
• Prevention and Suppression of Money Laundering Crimes (Law No. 2/2006)
• People's Bank of China on the Pilot Operation of Small Loan Companies
• Special Rectification Documents
• • Notice on Regulating and Rectifying the Cash Loan Business 關於規範整頓現金貸業務的通知
  • Notice on the Implementation Plan for the Special Rectification of the Risks of the Online Small Loan Business for Companies that Print and Distribute Small Loan (Online Loan Rectification Letter [2017] No. 56) 關於印發小額貸款公司網絡小額貸款業務風險專項整治實施方案的通知
    (網貸整治辦函 [2017]56號)
  • Notice on the Special Rectification Work for the P2P Network Lending Risks (Online Loan Rectification Letter [2017] No. 57) 關於做好P2P網絡借貸風險專項整治整改驗收工作的通知(網
    貸整治辦函[2017]57號)
• Landlord and Tenant (Consolidation) Ordinance (Cap. 7 of the Laws of Hong Kong)
• Building Management Ordinance (Cap. 344 of the Laws of Hong Kong)
• Residential Care Homes (Elderly Persons) Ordinance (Cap. 459 of the Laws of Hong Kong)

Environmental, Social and Governance Report 2020

Investors and Customers

• Personal Data (Privacy) Ordinance (Cap. 486 of the Laws of Hong Kong)

People

• Employment Ordinance (Cap. 57 of the Laws of Hong Kong)
• Employment of Young Persons (Industry) Regulations (Cap. 57C of the Laws of Hong Kong)
• Employees' Compensation Ordinance (Cap. 282 of the Laws of Hong Kong)
• Occupational Retirement Schemes Ordinance (Cap. 426 of the Laws of Hong Kong)
• Sex Discrimination Ordinance (Cap. 480 of the Laws of Hong Kong)
• Mandatory Provident Fund Schemes Ordinance (Cap. 485 of the Laws of Hong Kong)
• Disability Discrimination Ordinance (Cap. 487 of the Laws of Hong Kong)
• Occupational Safety and Health Ordinance (Cap. 509 of the Laws of Hong Kong)
• Family Status Discrimination Ordinance (Cap. 527 of the Laws of Hong Kong)
• Race Discrimination Ordinance (Cap. 602 of the Laws of Hong Kong)
• Minimum Wage Ordinance (Cap. 608 of the Laws of Hong Kong)
• Labour Law and Labour Contract Law of the PRC
• Labour Relations Law (Law No. 7/2008)
• Regulation on Prohibition of Illegal Work (Ordinance No. 17/2004)
• Law of Hiring Non-Residents Workers (Law No. 21/2009)

Environment

• Motor Vehicle Idling (Fixed Penalty) Ordinance (Cap. 611 of the Laws of Hong Kong)

Environmental, Social and Governance Report 2020

22 Performance Data Table

• Limited to the Group's head office, our subsidiaries including head offices and branches of SHK, UAF and Sun Hung Kai Credit in Hong Kong and offices and branches in Dalian, Fuzhou, Harbin, Nanning, Qingdao, Shenzhen and Yunnan in Mainland China.

Environmental, Social and Governance Report 2020

26 HKEX ESG Reporting Guide Content Index (Cont'd)

Environmental, Social and Governance Report 2020

Environmental, Social and Governance Report 2020

28 HKEX ESG Reporting Guide Content Index (Cont'd)

Development Through

Sport, Industry

Organisations and NGO

Participation

Environmental, Social and Governance Report 2020