SUSTAINABILITY REPORT

Transcription

1 SUSTAINABILITY REPORT

2 Contents I. Chapl!!r 1 Our Sustainability Report - Ch ai r man and CEO 's Statement - Scope of Report I±l I. Chapt er 6 Climate Change - Our Values - Drivers for Change I±l I ~ Chapter 8 Safety and Health NE~ Our Values Drivers for Change It Chapter 10 Sustainable Development Case Study: Jhajjar - CLP's Climate Strategy Safety Strategy and leadership - Enablers for Action I±l "'E~ Enablers for Action I±l NE~ I. Chapl!!r 2 Corporate Responsibility - Value Framework - Code of Conduct - Our Po rtfolio Performance I±l "'E~ - Our Greenhouse Gas Performance I±l - Creating Value for Stakeholders - Future Outlook - Our Performance NE~ - Creating Value for Stakeholders - Future Outlook NE~ I. Chapter 11 Commitments Beyond Compliance. Progress Corporate Governance I. Chapler 3 Our Company at a Glance I ~ Chapter 7 Environment I ~ Chapter 9 Community Investment I. Chapter 12 Key Performance Indicators - Mapping our Business - Bu siness Performance and Development - Bu siness Ri sks and Opportunities - Our Values - Drivers for Change - Environmental Policy and Management - Our Values - Drivers for Change - Community Strategy It Chapter 13 GRI Content Index - Responsibility to Our Customer s - Enablers for Action - Enablers for Action - Our Emp loyees - Our Performance I±l NE~ - Creating Value for Stakeholders - Future Outlook - Performance and Creating Value for Stakeholders I±l NE~ Future Outlook It Chapter 14 How Can You Contact Us? I. Chapter 4 Stakeholder Engagement - Engaging our Key Stakeholders I±l "'E~ I. Chapter 15 Assurance and Verification NE~ - Proj ect Partici pation - Policy Advocacy NE~ I. Chapter S Economic Value - Manag ement Approach I±l NE~ - Assets and Management Systems 0 1 Table of Contents Table of Contents 02

3 This year's online Sustainab ility Report (SR) takes on a new form of an interactive 'e- book'. We also publish a much shorter printed vers ion wh ich is sent to our shareholders along with CLP's Annual Report. The SR addresses the issues material to CLP and our stakeholders, and makes references to elements and indicators recommended by the Global Reporting Initiative's G3 Sustainability Reporting Guidelines, including the new Electric Utility Sector Supplement (EUSS). In this latest SR, we set out to explain CLP's sustainability initiatives, how they relate to the core values underpinning our business, and as a result of our performance, and howwe bring these issues forward. This year, we further streamlined CLP's overall communication. Our completely revamped Group website, which was launched in March 2010, provides background information about CLP. Our Annual Report accounts for our financial performance and business matters, while a suite of publications over the years serve to cover specific topics such as our Value Framework. Throughout this SR, we have made every effort to reduce overlap of information by providing at the end of each chapter hyperiinks under 'Further Reading'. We continue to take heed of our stakeholders' opinions for our reporting effort. One of the comments we receive regularly is that our previous online report, embedded within the Group website, is difficult to navigate. This stand - alone, printable e- book attempts to address the issue specifically. Furthermore, readers now have full control on how much of the report they would like to print, but we do encourage readers to think twice before printing to save paper. Please tell us your views on our performance, the new report format, and any other issues concerning CLP. Your feedback is invaluable to our effort in making your reading experience an enjoyable and effective one.

4 capability to damage ou r environment for present and future generations. For these reasons we are, and have long been, conscious of the need for our values, abilities and strategy to guide our company along a path of sustained and sustainable business growth. Our values, abilities and strategy must adaptto, ideally anticipate, changes in technology, markets and societies' means, needs and expectations - changes which appear to be occurring with increasing frequency. In recent years, we have developed a formal Value Framework which sets out the values which govern ourselves, our business and ou r relationship with our stakeholders. Ou r abilities have increased and become more attuned to the importance of excellence in the management of the environmental implications of our business - in recent years, we have acquired experience and expertise in a wide range of clean energy technology, including nuclear, hydro, wind and solar energy. Ou r strategy specifically addresses the issue of global climate change through ou r "Climate Vision 20S0 H issued in December 2007, which commits CLP to massive reductions in the carbon intensity of our generating portfolio from 2007 through to the middle of this century. This online Sustainability Report contains a wealth of detailed information and data of CLP's performance in delivering social and environmental value. The printed vers ion, on the other hand, is a summary of the online report and we hope that it will convey the essence of ClP's performance over the past year and the social and environmental trends and developments which we expect to bear upon our business in the years to come. Chairman and CEO's Statement Last year we explained how, in order to survive and prosper over the longer term, ClP must conduct its affairs in a manner which is financially sound, delivers value to the societies we serve and responsibly manages the environmental impact of our activities. The bottom line, in this case the triple bottom line, is that we must deliver economic value to our capital providers (shareholders and lenders) and social and environmental value to all our stakeholders. In this SustainabiHty Report, we concentrate upon the delivery of social and environmental value, whereas our Annual Report deals predominately with the delivery of economic value. Taken together, the two Reports will give shareholders and all stakeholders a clear, comprehensive and honest view of our performance in managing the economic, social and environmental dimensions of our activities (these are sometimes referred to as ~ profit, people and planet'). We believe that this Report describes a company which is mindful of its responsibilities and which takes practical, meaningful and measurable steps to discharge them. By way of illustration only, in 2009, our social initiatives became more wide-ranging as we continued to expand our initiatives, such as CLP's Young Power Programme and S-year Regional Tree-Planting Programme, to a regional basis, benefiting all the communities we serve. Good progress was made in retrofitting our Castle Peak B Power Station with emissions control equipment, although the emissions performance of our Hong Kong generating plants was disappointing this year due mainly to our depleting gas supply. On the safety front, we are pleased to report zero fatalities in all of our operations. We hope that this year's Sustainability Report will reinforce your confidence in the values wh ich ClP attaches to sustainable business practices, ou r ability to give life to the vision of sustainability and our actual performance in doing so. Let us know how you think we are doing. As always, we invite and welcome feedback. whether positive or negative, and any constructive views on howwe might do better. Although the term "sustainabilityh may be a relatively recent one in the business vocabu lary, the concepts which it encompasses have been inherent to the CLP culture for the past century. This stems from the very nature of our business - one which demands large-scale, long- term capital investment in assets whose economic life may span many decades, one which involves the submission of an essential public service to society and one which, if not properly managed, has the The Hon. Sir Michael Kadoorie Chairman CLP Hold ings Limited Andrew Brandler Chief Executive Officer CLP Holdings Limited Hong Kong, 25 February Chapter 1 Chapter 1 06

5 Scope of Report with our corporate reporting cycle, this 2009 Sustainability Report has been updated to cover Our reporting basis includes issues up to 30June , and outlook beyond this date. the annual 2009 performance of operating entities 1 in wnich we have operational control, For those operating entities which we have operational control for the full calendar year, as well as specific information performance data are reported at and we required by the Global Reporting Initiative (GRI) 's G3 and the new Electric Utility Sector Supplement (EUSS) indicators. However, the Group's strategy, performance and commitments related to climate change expand this scope to include all operating units in which CLP has an ownership interest. In line do not adjust the data to renect our equity share. AU performance data was independently verified by external service providers. Some statistical data derived from our overseas operations may not be strictly comparable because definitions vary between different jurisdictions. Q Fangchenggang Power Station (1,260M'N) Huaiji Hydropower Stations (12SMW) ClP Huanyu (Shandong) Biomass Heat and Power (Boxing Biomass) (l4m'n) Dali Yang_er Hydropower Station (SOM'N) Black Point Power Station (2,500MW) Castle Peak Power Station (4,108M'vV) Q Penny's Bay Power Station (300MW) Q ClP Power Hong Kong limited (PolNer Systems, and Marketing and Customer Services) Q Yallourn Power Station (l,480m'vv) and Brown Coal Mine Q Hallett Power Station 1J80MW) Q lona Gas Storage Facility (22 petajoule) 1 There was no significant change in coverage from previous reports. Changes in coverage might occur with entities which CLP assumes or ceases to have operational control due to changes in equity or management arrangements. Q Tallawarra Power Station (420MWJ 2 We also report on any significant issues that materialised after 30 June Chapter 1

6 Materiality Our Sustainabllity Report (SR) is an important instrument in providing material information to ClP's stakeholders. We have formalised o ur stakeholder engagement process since 2006 in order to develop useful and relevant content that reflect stakeholders' interests. The (ontent of this report echoes views gathered from both internal and external stakeholders. Stakeholder Type REFLECTIVE Description People or organisations that have already Identified themselves as a stakeholder by expressing an Interest in CLF or concern about CLP's activities. Stakeholders who are likely to have a big Impact on CLP's decision-making and potential performance (e.g. govemment regulators, shareholders). Stakeholders who have a broader influence outside CLP and can shape other people's view's about CLP's performance and behaviours (e.g. journalists). Stakeholders who are identified to ensure that CLP's coverage of organisations, issues and view's are complete and that all society expectations are covered. STRATEGIC Stakeholders Ir'o'ho have particular knowledge about CLP, the power industry or issues that are central to CLP's performance now and in the future (e.g. academics). Stakeholder Identification and Prioritisation We established and applied a systematic process for stakeholder identification and prioritisation since 2006, as presented in the table on the right, by adapting criteria from the AAIOOO Stakeholder Engagement Standard. A purposely formed panel comprising both internal and external parties executed the process using th e follo'aling criteria along with an internally developed scoring system, resulting in a list of key stakeholders derived from rigorous discussions. Stakeholders who are themselves leaders and highly informed such that they are able to identify and comment on future trends, priorities and critical events in the power industry (e.g. other business leaders). o Responsibility (those stakeholders to whom CLP has, or in the future may have, legal, financial and operational responsibilities); El Proximity (those stakeholders that CLP interacts 'Alith the most, including Internal and external parties); Q Representation (those stakeholders Ir'o'ho can claim to represent a constituency); Q Influence (those stakeholders with influence or decision- making power); and Q Dependency (those stakeholders who are directly or indirectly dependent on CLP's activities and operations). 09 Chapter 1

7 What foliolned was a series of independently facilitated stakeholder focus groups conducted ann ually before each reporting cycle. Our stakeholders informed us that focus groups are their preferred mode of sharing views with ClP, which allow them to understand and debate alternative views among stakeho lders from diverse backgrounds. In 2009, INe re-evaluated and updated the list of material issues gathered through our stakeho lder engagement exercises through a five-uiterion system based on operational Reputatlonal Financial _ Employment - Environment Qu,.I1~ Health of lif. Media Interest General Public Interest Interest Groups Concerns Stakeholder Expectations Compared With Actual Performance Industry Standards Peer Reports,~, Sector SpeCific Discussions completeness, stakeholder expectations and the changing business contexts across jurisdictions as follows: Criteria for Determining Issue Materiality Impact to CLP Impact to Society Stakeholder Concems Stakeholder Perception on CLP's Performance Gap Peer Norms Stakeholder engagement is the most important ClP Holdings 2008 Annual Report won the following two major awards in Hong Kong, for seven years in succession: element of our reporting process that enables us to advance in our reporting effort. Q The Best Report Award of the 2009 Hong Kong Management Association Best Annual Reports Awards 0. The Diamond Award (Hang Seng Index Category) of the 2009 Best Corporate Governance Disclosure Awards, organised by the Hong Kong Institute of Certified Public Accountants 11 Chapter 1 Chapter 1 12

8 Policy of Respecr At CLP, we use the term 'corporate responsibility'. For a more sustainable business, it is important to reflect as a part of our company's responsibilities, the more holistic balance required to incorporate the environmental and economic responsibilities as well as the social ones. Value Framework CLP's Value Framework sets out our vision, mission, strategy, values and policies that underpin our activities. Th e Value Framework, based on our beliefin doing the rightthing as a company, defines who we are and our vision of what we want to be. These principles and the long- term environmental implications of our activities especially relating to climate change, helping our employees to maintain a work life balance, and explicitly addressing the importance of human rights. CLP's Value Framework also articulates our commitment to contribute to the development of sound government policies, plans, programmes and laws that balance the social, economic and environmental needs of the communities we serve. We often provide written in put to pu blic consu Itations about the electricity sector and the environment. Since climate change is a matter of global importance, we are actively engaged in advocating policy actions in the international CLP's Code of Conduct begins with the bas ic principle of respect for others, and requires each of us to behave with courtesy and respect towards everyone we encounter in the course of our business. CLP is committed to providing a fair and equitable workplace where all individuals are treated equally in every aspect of employment. Under our Equal Opportunities Policy, we will not practise or tolerate any discriminatory act or harassment on the ground of gender, phys ical! mental ability, race, age, nationality, religion, family status or alike. This policy applies to all employment activities including, but not limited to, recruitment, promotion and transfer, assignment, reward and benefit provis ions, training and development, termination and other similar aspects. For instance, remuneration is not distinguished by race, gender or any social form. Complaints and Grievance Pracrices CLP des ires to maintain good employee relations and a harmonious workplace. Our aim is to ensure fair, efficient, and equ itable solutions for problems arising out of the employment relationship. CLP's Grievance Resolution Policy encourages employees to discuss issues freely and openly with their supervisors. They are encouraged to bring issues forward to the Human Resources Department or higher level of management jf they think the issues are not resolved or are being unjustly handled. There will be no discrimination, coercion or retaliation for doing so. Indigenous Rights ethics that drive our Company forward cover all aspects of our operation, beginning with how we treat our own people to our relations with investors, business partners, governments and to the wider communities and environment in which we operate. Elements of the Value Framework are incorporated into our performance evaluation. Allegations of breaches in ethics are investigated by our Group Internal Audit department. Director - Group Internal Audit reports directly to the CEO and also the Audit Committee. We first issued our Value Framework in In 2009, we published a revised Value Framework reflecting the views from our community. Human Rights We support and respect the protection of internationally proclaimed human rights within the context of the political, social and cultural conditions in which we operate. The majority of CLP's employees work in Hong Kong and Australia...-here human rights are supported by law. CLP also operates in some developing countries...-here there may be greater risks of discrimination or other disregard for human rights. Child, Forced and Compulsory labour ClP does not employ child, forced or compulsory labour, regardless of regulatory provisions. Our existing policies and commitments have managed issues related to labour adequately, and hence we do not have specific policies, performance measures, investment and procurement practices, training, monitoring or follow- up systems targeted at freedom of association and collective bargaining, abolition of child tabour, prevention of forced and compulsory labour and security practices. CLP abides by established government regulations on provisions for people who are resettled by government for the purpose of building hydropower stations. In the Chinese Mainland, government regulations specify both the nature and quantity of compensation to which people are entitled. While resettlement and compensation are undertaken by government entities, CLP assumes an active role in the stakeholder consultation process, keeps records of input from villagers, and takes measu res to ensure that villagers have received the compensation to which they are entitled. stakeholders including staff, academics and non- governmental organisations. Revisions include an increased emphasis on managing 13 Corporate Responsibility Chapte r 2 14

9 Code of Conduct (LP's Code of Conduct is an integral part of the Our Code of Conduct requires prompt CLP Value Framework and a key component of reporting of any violations, whether or not it is our corporate governance framework. known who may be responsible or how it may It articulates our commitments to all our have occurred. (LP's 'General Representation stakeholders in a set of formal written Letter' process assures that all company requirements. That puts all employees, officers transactions are reviewed for compliance with and directors under stringent obligations as to company procedures, and all instances of the manner in wtlich they should deal with all non- compliance are identified and recorded. issues including ethics and business integrity, Our performance on compliance with our Code conflicts of interest, bribery and compliance of Conduct is reported annually to the public in with company policies, practices, accounting our Annual Report. rules and controls. In 2009, CLP Group was not aware of any material non- compliance or complaints Q Administrative or judicial sanctions levied against ClP for failure to comply Q Non-compliance with laws and regulations concerning the provision relating to corporate governance as listed with laws or regulations concerning and use of products and services. below, save for one case in India where an the provision and use ofclp's employee resigned when he/she came under products and services. investigation for taking kick backs from CLP Code on Corporate Governance suppliers. Q Incidents (including legal actions, complaints registered with ClP or competent authorities through a formal process, or cases identified by CLP) of discrimination (on the grounds of race, colour, sex, religion, political opinion, national extraction, or social origin) and actions taken. Q Substantiated complaints regarding breaches of customer privacy and Q Incidents of corruption, including those in which employees were dismissed or disciplined for corruption, and/or when contracts with business partners were not reviewed due to violations related to corruption, and lor concluded legal cases regarding corrupt practices brought against ClP or its employees. Q Any citation or conviction relating to forced or compulsory labour. A case in Australia relating to a breach of environmental license is reported in the Environmental chapter of this report. During 2009, there were eight breaches of the Code. Sanctions applied in 2009 ranged from reprimands to dismissal. None of the breaches of the Code involved senior managers or was material to the Group's financial statements or overall operations. CLP had no confirmed case of fraud in losses of customer data Chapter 2 Chapter 2 16

10 Management Approach on Organisational Responsibility for Community Monitoring and Following- up of Performance Emergency Planning Investment in Social Development Investment on Society Issues As CLP's business extends across the Asia CLP's service areas range from modern affluent Director - Group Public Affairs and her team are Expenditure and results of our community Pacific region, our portfolio of assets in cities to poor rural villages. CLP's investment in responsible for coordination of community investment programmes are reported annually operation and under construction continues to the community is guided by local needs and investment activities across the Group. In to the Sustainability Committee of the Board of grow. We have emergency response and crisis priorities, and by the interests of staff addition, our larger businesses in Hong Kong, Directors. Many of our programmes span over management systems in place and we conduct volunteers...no would like to undertake specific Australia and India manage full programmes of a number of years. A portion of CLP's regular Grou p wide and facility level activities to projects to benefit their communities. investment in their local communities. community contribution is determined on the manage disaster and emergency situations. CLP reaches out to communities in...nich we basis of volunteer hours recorded and reported operate, helping those...no are elderly, the Training and Awareness on Society Issues by our staff. socially, physically or mentally challenged, or those affected by hardship or poverty. CLP is a member of Community Business and Anti- competitive Behaviour CLP's Value Framework articulates our other organisations that promote high commitments to support social development in standards in community investment. Most of ou r electricity markets are either the communities we serve. CLP provides regular training and review on regulated (Hong Kong) or managed according business ethics, and conducts annual review of to long-term bulk power purchase agreements. compliance and fraud risk assessments. In the highly competitive Australian electricity market, CLP's subsidiary TRUenergy has both Public Po/icy generation and retail arms. However, Australian electricity market rules would not allow us, for CLP's Value Framework articulates our example, to own the transmission system that commitment to contribute to the development carries our product to our customers. of sound government policies, plans, programmes and laws that balance the social, Compliance economic and environmental needs of the communities we serve. We often provide written CLP's Value Framework articulates our respect input to public consultations on the electricity for laws and standards and underscores our sector and the environment. commitment to full compliance. We care how results are achieved, not just that they are Community achieved. CLP is committed to responding promptly to irregularities. Our Code of Conduct CLP's community investments are aligned with requires each of us to notify a supervisor three pillars: ' Community Health ~, promptly and take reasonable action to prevent "Environment ~ and 'Youth & Education". harm in the case of any violation of the lawor CLP provides sponsorship, in-kind support, other applicable regulations. staff volunteers at sponsored events, and other forms of support. 17 Chapter 2 Chapter 2 18

11 Corporate Governance CLP Respects Laws and Standards " We follow high standards of corporate governance, integrity and transparency, and are prepared to forego opportunity or advantage in order to maintain our high standards. " ofthe Chief Executive Officer, Group Executive Director and the Group Executive Director Strategy) are non-executive and independent of Management, thereby promoting critical review and control of the management process. Characteristics of CLP Independent Non-Executive Director (lned) : Q All Directors are responsible for the Board's actions. They are an integral part of the Board, contributing to common objectives and carrying joint responsibility for collective decisions Extract from CLP's Value Framework, 2009 Revi sed version CLP's Corporate Governance Framework and Code of Corporate Governance (ClP's Code) build upon our Value Frame'NOrk and demonstrate the commitment of the Board and senior management to carry out a governance structure based on good standards of business principles and ethics. CLP's Code embraces and goes beyond the Hong Kong Stock Exchange's Code Provis ions and Recommended Best Practices. It would be possible to maintain a full set of policies and systems and still have poor corporate governance. This is because good corporate governance ultimately relies on the right values and culture. Bringing forward such culture is a shared responsibility amongst all departments and staff. From a practical point of view, that means we have to care as much about how results are obtained, as we do about the results themselves. The ClP Board is charged with promoting the success of the Company by directing and supervising its affairs in a responsible and effective manner. The Board comprises Non - executive Directors, Independent Non - executive Directors, and Executive Directors. All Directors (with the exception Susrainabiliry Commirree ClP's Sustainability Committee is a Board level function which oversees CLP's position and practices on sustainability issues that affect shareholders and other key stakeholders. Appointed by the CLP Holdings Board of Directors, the Committee comprises of executive directors and independent non-executive directors of the Board. Group Director - Carbon Ventures, and Director Group Environmental Affairs. The Committee reflects the Board 's increased focus on managing the social, environmental and ethical ris ks and opportunities that CLP faces. Its key function is to ensure thatthese risks and opportunities are properly identified, and steps taken to address them. Recommendations from the Committee are available for the Board 's consideration in setting the overall direction of the company. Further Reading: Q 2009 Annual Report 1+ Q No.1 in Best Corporate Governance, Best Power Company - Best Managed Regional Companies 0: NO.1 in Best Corporate Governance a. No.3 in Best Investor Relations Q No.2 in Best Corporate Social Responsibility Q No.3 in Most Committed to a Strong Dividend Policy 19 Chapter 2 Chapter 2 20

12 Enhance shareholder value R",p,,",,'b', manage the environmental impact of all our operations and projects CLP is headquartered in Hong Kong, where we operate a vertically integrated electricity generation, transmiss ion and distribution, and marketing and customer services business. In recent years, we increasingly invest in and operate energy businesses in the Chinese Mainland and the Asia-Pacific region, including Australia, India, Thailand, Taiwan and other countries in the region. CLP's growth has mirrored and supported Asia's rapid economic expansion. We employ a broad range of modern power generation technologies, including coal, natural gas, nuclear, as well as renewable energy. Deliver world- class product and service or good value to our customers Provide a safe, healthy and fulfilling work environment for our employees Contribute to the economic and social development of the communities 21 Our Company at a Glance Chapter 3 22

13 Mapping our Business CLP has been engaged in the ele<tricity business in Hong Kong since We are now one of the largest electricity investor- operators in the As ia- Pacific region. covering Australia, the Chinese Mainland, India, Southeast Asia and Taiwan. We have a portfolio of over 50 assets and investments that span across the energy value chain, from electricity generation, transmiss ion, distribution, to marketing and customer services business. Ou r business achievements are attributed to more than 100 years of industry expertise, as well as a set of clear, long- term values, based on financial prudence, integrity in business dealings and a sense of obligation to SOciety. Our Group website and Annual Report provide detailed information on our portfolio. are less commercially viable. However, we believe it should bring long-term benefits to ClP including through the management or mitigation of risks and liabilities associated with carbon- emitting generation. The climate change chaptert:;. of this report has more details. Bu siness Development and Assets by Generation Type Chi nese Mainland The main socia- economic benefit of ClP's market presence is the provision of electricity, related infrastructure and services that are reliable and affordable. Our investments in energy in frastructure are crucial to assuring quality of life, economic growth and social development. ClP's contribution is most striking in developing countries, particularly in remote regions where our investments represent a significant boost to the local economy. In the Asia- Pacific region, energy players face a dual challenge. On one han d, reliable, cost- effective energy services are essential to the quality of life and economic development; on the other hand, we need to preserve our finite natural resources and the environment so that future generations have the ability to meet their needs. One of the ways to rise up to the challenge is to inves t in and deploy renewable energy. Pursuing renewable energy may mean taking additional investment risks because they Hong Kong 23 Chapter 3

14 Business Performance and Development ClP Holdings limited, the holding company of ClP, is listed and actively traded on the Hong Kong Stock Exchange, and is one of the largest stocks by market capitalisation. As of 31 December 2009, CLP tops the Hang 5eng Utilities Sub-Index. Despite the global economic downturn, our financial position remains resilient as reflected in our credit ratings. ClP provides electricity and services to our 2.3 million customers in Hong Kong with excellent electricity reliability at about 99.9%. Within our service area in Hong Kong, the percentage of the population not served,...-ho are either not covered by our distribution netv.'ork or off-grid alternatives, is approaching zero. There are isolated cases in W'hich alternative electricity supply, such as diesel generators, have been used to generate electricity. They may apply to CLP for ass istance and we will work out the best supply solution for them. The Town Island case, which is explained in more detail in the Renewable Energy section, is a specific example of such a situation. In Australia, TRUenergy supplies more than 1.28 million households and commercial entities with electricity every day. Beyond our immediate customer base, we feed electricity into national grids that in turn assist tens of thousands of citizens in the region to meet their basic needs. Projects under construction/with. financial commitment (total MW) as of 30jun. 2010: Waterloo Wind Farm (111MW) construction to commericialisation. As a crucial part ofthe project approval process, we assess the economic, environmental and social aspects of potential projects as part of the due diligence process. Moreover, we evaluate the project's contribution, positive or negative, towards our carbon emission intensity targets. This allows management to make informed decisions based on multi- faceted sustainability indicators. We continue to demonstrate our keen interest to invest in proven and economically attractive renewable energy technologies. To increase our non-carbon emitting generation capacity (by equity) to 20% by 2020, we intend to pursue nuclear power with partners who have demonstrated robust management capabilities. We continue to leverage our regional expertise in exploring diverse investment opportunities. Our key strategic issues for the businesses in each of ou r cou ntries of operation are discussed in the Annual ReportC+. Responsible business development is integral to CLP's growth strategy. We employ a comprehensive Project Development Toolkit to track projects from beginning till end, from identification and screening, through feasibility studies, late stage development, financing, 25 Chapter 3 Chapter 3 26

15 Business Risks and Opportunities In late 2008 and throughout 2009, the global In 2009, we are proud and honoured to be listed on the DowJones Sustainability Asia Pacific Index (DJSI Asia PaCific), and the Dow Jones Sustainability Asia Pacific 40 Index (DJSI Asia Pacific 40). Responsibility to Our Customers As a utility company, CLP's mission is to create CLP's Code of Conduct requires employees to safeguard the confidentiality of business information, and the integrity of our business and operational records. CLP does not disclose customer data to third parties without soliciting their expressed permission. business environment has reinforced the vitality of a strong balance sheet, reliable cash flow, prudent investments and management. In fact, these are the core and winning elements of ClP's corporate culture over the years and constitute our overall risk management strategy across jurisdictions. Looking forward, we continue to place importance in maintaining a safe capital reserve and upholding CLP's status as a sound utility stock. The economically challenging climate witnessed recently also poses many new opportunities. We continue to seek out new and financially-sound investments across the region with projected returns that satisfy our defined risk-adjusted hurdle rates. In the fourth quarter of 2009, for instance, CLP India concluded financial arrangements for Jhajjar, one of India's first supercritical power plants that will significantly improve Haryana State's po'ner situation and provide local employment opportunities. These financing agreements reflected the inherent strength of CLP and the confidence of the lending community in the The environment and climate change chapters of this report, as 'Nell as our response to the Carbon Disclosure Project, contain a detailed account of the environmental and climate change related risks and opportunities associated with CLP and our risk management initiatives. The Risk Management section of our Annual Report provides a detailed account of the financial risks and opportunities across different jurisdictions and business environments relevantto CLP Group. Cash flow and Liquidity Risk Risk Exposure Foriegn Currency Risks Credit and Counterparty Risk Key Business Risks Interest Rate Risk value for customers via our 'products' electricity and gas services. In Hong Kong and Australia, we also operate as a retailer, serving millions of customers. People depend on electric power as a basic necessity, and therefore accessibility, reliability and safety are of great importance to our customers. It is (LP's policy to comply with all applicable law's, reg ulations and requirements, and to take reasonable care to ensure that we meet all our business commitments. Customer Service Our Customer Service Quality Policy Statement articulates CLP's commitment to provide quality service and value to customers. The policy contains provisions of reporting on customer service performance, and supporting customers' efforts to use our service more effectively. Product Goals and Performance CLP monitors its performance in product delivery, such as the frequency and duration of power outage, and how promptly we respond to telephone calls and outage reports. As a system operator in Hong Kong, we track and report in the Annual Report our power supply reliability, which is amongst the best in the world. Organisational Responsibility for Customer Service Our Director - Marketing and Customer Services and our Director - Power Systems share responsibility for delivering high- quality customer services. Company. This market confidence is built upon our proven disciplined approach in managing fundamentals and making new investments. Although such risk- based management strategy has probably meant that we may have Climate Change - Carbon Risk Safety and Health Risks missed out on immediate opportunities in some markets, in the long run, we remain convinced that this creates the most value for ou r The way we manage shareholders. In addition to financial risks, environmental and climate change risks and opportunities have become major components of our business. CLP representative Introduces different types of energy efficient appliances to our customers. ~ 27 Chapter 3 ~ Chapter3 28. :

16 Marketing Communications Service Access Our Employees CLP's marketing communications are intended for general audiences and comply with all applicable regulations. As in all of our communications, we value honesty and clarity. This is particularly important in the highly contested market in Australia where there have been reports of unscrupulous sales tactics in the electricity sector. Product and Service labelling Most of ou r products are sold as generic energy. CLP's subsidiary TRUenergy also markets and sells green power under the Australian government's accreditation scheme for renewable energy. Customer Safety and Health CLP's Rural Electrification Programme in Hong Kong Safety is CLP's top priority. This applies not only to our employees and contractors, but also to our customers and the general public, as stated in our Value Framework. CLP provides educational materials on electrical safety for customers. 2 9 Chapter 3 At CLP Power Hong Kong, we care for our customers and we understand that there are circumstances which may result in payment difficulties. In most cases, we are able to work out special arrangement for non- payment accounts to avoid disconnection. We have provisions such as payment deferral or interest free payment by installment for demonstrated cases of hardship. Invariably, there are a variety of reasons for the duration of disconnections, such as overdue payments which have accumulated to a substantial amount or abandonment of property. Our performance pledge is to reconnect the electricity supply within 1 working day upon receipt of payment and customer request. The 2009 figures for duration of residential disconnection for non- payment are given below: 0102 Days 3107 Days 81a31 Days > 32 Oays 1-.- No of residential customers Our business is nothing 'Nithout our employees - apart from doing our best to keep them safe and to promote their health and well- being, we also want to attract, retain and develop the people which our business needs. CLP has a diverse workforce of over 5,700 employees across the region. We believe respect is important and we build it through a number of ways inctuding strict enforcement on anti-harassment and discrimination practices, open and consistent communications 'Nith staff, and getting feedback from employee opinion surveys. We benefit from a stable. loyal and experienced workforce v.ith an average of 16 years of service. To manage the consequence of a relatively high average age, we anticipate and plan well ahead for retirements, particularly for those skills which are specific to the power industry and which cannot easily be sourced in the labour market. Our Management Development and Succession Planning provides a systematic approach to succession, with high potential colleagues being managed from the earliest stages of their careers. As they become more senior, oversight of their career development is the responsibility of the Group Management Development Committee, comprising of Group senior executives. Being a key element to the economic aspects of the company, information regarding our employees, including their development and well being, are fully covered in the Annual Report..- : 0 Our employees demonstrated their team spirit at the 2009 Standard Chartered Marathon... ~ ~ - ~ ~ o 0 "0 "" ~ Chapter 3 30

17 Management Approach on Work Environment and Ethics Human Resources Policy CLP's Human Resources Policy Statement Staff Training and Professional Development CLP provides opportunities to our employees Diversiry and Equal Opporruniry CLP's Performance Management Policy assures Context for Employment sets out our aim to attract, motivate and retain for continuous learning and development of that employment decisions are based on merit. high performing employees through a their careers. CLP's performance management We are committed to fostering a CLP employs thousands of employees competitive and performance- based system (PMS) includes an assessment of performance- oriented organisation and in distributed among several countries in the Asia remuneration structure. learning needs and development plans for each doing so, we provide an effective system Pacific region, though most of our employees employee. whereby managers and supervisors can help are based in Hong Kong. The aging 'NOrkforce is Organisational Responsibiliry for Work their employees improve performance in their a key issue for us. Other important issues Practices and Conditions Labour Management Relations jobs. Through this system, employees are able include professional development, matching of to relate their performance to clearly defined talent with opportu nities across the Group, and The Director - Group Human Resources is One of the provisions of our Human Resources business objectives and expected standards. fairness in terms of how labour issues are responsible for Group-wide employment policy Policy Statement is to foster harmonious Performance evaluation results will also form managed in different countries. CLP also and practices. He reports directly to the CEO, employee relations under an atmosphere of the basis for consideration for other human pursues the potential synergy arising from the and at least annually to the Human Resources open communication, mutual understanding, resources management processes including, sharing of knowledge and experience among a and Remuneration Committee of the Board of trust and respect. CLP's Value Framework but not limited to, rewards, training, diverse 'NOrkforce. Directors. articulates our commitment to providing development, transfer and promotion. positive encouragement of employees' Employment Goals and Performance CLP has Management Development and Succession Planning to help ensure continuity of management as many of our senior executives approach retirement age. In addition, knowledge management initiatives Employment CLP's Human Resources Policy Statement provisions for fairness and competitive remuneration, incentives for high-performance together with an atmosphere of trust and open communication help CLP retain the skills and participation in discussions and willingness to discuss issues and concerns raised at any level in the organisation. CLP provides a number of channels for employees to bring their ideas and their concerns to the attention of senior management. Further Reading: Q 2009 Annual Report li Q 2009 Sustalnabillty Report Climate Change ti- Envi ronment li- were developed to reduce loss of knm...-iedge through staff retirements. The knowledge initiatives led to the production of knowledge resources available to the staff via the company abilities we need for our business. CLP enjoys a very low rate of staff turnover in Hong Kong where we have many staff and retirees who have served the company for 20 years or more. CLP Q ClP Group Website ti- Q ClP's latest su bmission to Car bon Disclos ure Project li- intranet. respects and abides by the labour law's and regulations in each jurisdiction where we do Q ClP's Value Framework li- Monitoring and Following- up on Employment business. Issues The status of a Management Development and Succession Plan is reported annually to senior management. We aim to have designated successors for all key positions, and we track Occupational Health and Safery CLP's goal for occupational safety is zero injuries. Safety is everyone's responsibility at CLP. It is CLP's practice to implement robust o The best performer in Asia in the Electric Utilities Category in the 2009 Platts Top 2S0 Global Energy Company ranking, and also one of the Top is Energy Companies for overall performance in Asia the frequency with which open management positions are filled with the designated successors. safety management systems at our operating facilities. Safety is reinforced with extensive programmes oftraining and other activities. CLP supplies all necessary personal protection 0. CLP's Hong Kong Customer Service Centre was awarded the "Service Retailer of 2009" by Hong Kong Retail Management Association equipment and provides free replacement for any that are lost or damaged. 31 Chapter 3 Chapter 3 32

18 Employees Communication with Senior Executives The key to our corporate performance is, above To enhance management communication, in all, our people. Effective employee engagement mid , we commenced a new interactive is particularly important in times when our "Dialogue with CEO and CFO". Through Engagement of stakeholders is not just a procedure, but an open, continuous two-way communication aiming to inform decisions and Engaging our Key Stakeholders company is heading in a new direction and changing the way we do business. Through engaging our employees, we build understanding and trust, and are able to face-to-face as well as an online medium, our executives held direct discussions with colleagues on topics of interest. The first of its series covered hot issues such as climate anticipate future changes. leverage on the network ofclp employees change and the global economic downturn, and Our Stakeholder Engagement Strategy Stakeholder engagement is an integral part of We regularly and substantively engage internal and external stakeholder groups, including employees, shareholders, customers, suppliers, regulators and interest groups to solicit their views which we take into consideration in our which s pans across the Asia- Pacific region. Their resourcefulness, expertise and dedication to work continues to drive our success. We value teamwork and aim to foster a culture how CLP is positioned to respond. Staff Communication on Climate Change our overall success. It is a key component of decision making process. At the same time, 'tile in which open communication, creativity and CLP's commitment in carbon reduction has led our strategy for anticipating, shaping and encourage stakeholders to voice their concerns initiation are prized. In line with our Value to some major changes in our business. adapting to changes in our business and recommendations to different levels of Framework, we listen to our employees and help We cannot succeed in meeting these reduction environment. management. them achieve their aspirations and targets if our staff are not completely on board. improvements in quality of life through Since 2007 when we first published our To fully realise the potential of our stakeholder continuous learning, volunteering, recreational manifesto 'CLP's Climate Vision 2050', we have engagement activities, we kicked off a review and career development opportunities. been actively engaging our colleagues through process in 2009 w-hich will lead to a Group- wide stakeholder engagement strategy in For this, we are engaging our regional teams who mplovees D We communicate through intranet, broadcast, monthly/quarterly team briefings, ongoing meetings between staff and team a comprehensive 'Climate Change Staff Campaign'. In November 2009, we released 'Beyond Copenhagen - Powering Asia will plan for their own engagement strategies in leaders/managers, toolbox talks, suggestion ResponSibly', a follow- up publication to Climate We will report in more detail in our next boxes, and other two-way communications Vision 2050 detailing our progress and plans, sustainability reporting cycle. including consultative committees and safety and with that we conducted three staff " We value long term relationships and treat our shareholders, business partners, suppliers, associates and the communities in which we operate, with respect and integrity. Our engagement activities encompass regular meetings, site visits, workshops, consultation, community education, and knowledge sharing committees. These are all widely adopted throughout the company. engagement briefings. The objective ofthese engagement activities is to enhance our colleagues' understanding of our company's climate strategy, and to promote green initiatives at work, at home, and at a personal level. We exchange knowledge on governance, social issues and the environment with our stakeholders." Extract from CLP's Value Framework, 2009 Revised Version conferences and seminars. (LP also actively participates in community and public services in support of the sustainable development of the communities 'tile serve. We are signatories of a number of external charters and members of several industry forums. Staff winners of the Climate Care Idea Campaign at the Certificate Presentation Ceremony in recognition of their outstanding performance 33 Stakeholde r Engagement Chapter 4 34

19 Regional Initiatives : Hong Kong CLP Power has set upjoint Consultation Committees UCC) to nurture open communication between the frontline staff and management. JCC representatives are elected among frontline staff. Regular meetings are held betweenjcc representatives and management staff from Human Resources and the line departments. Over the years,jcc has provided a ready channel for our staff to raise their concerns or suggestions. We also communicate with our employees through Monthly Team Briefing Notes. These Notes are prepared monthly at multiple organisation levels (company, business group and department) and communicated to all employees in the respective organisation. They provide information on important events and issues. Employees can seek more information and provide their feedback during the communication meetings. Regional Initiatives : Australia TRUenergy implemented a Positive Workplace Climate Initiative in its customer service centres whereby employees discuss and determine the changes necessary to drive better business performance and cultivate a more positive and engaged INOrkforce. A key as pect of the initiative is for managers and team managers to provide coaching and supportto staff to bring about positive behavioural changes. Early data on levels of absenteeism and staff tu rnover have supported the view thatthe initiative has improved staff engagement. TRU ~- The Ughthouse ~ AlkllM Y.tn'gtm,nt TUm TRUenergy's revamped intranet helps improve staff communications. ~.-- J:." In addition to established staff commu nication channels such as Quarterly Staff briefings, - regular leadership breakfasts and the bi- annual Employee Opinion Survey, TRUenergy also redeveloped its intranet in 2009 to provide staff with an improved platform for information sharing across the business. In addition to being a source of information, employees can also use the intranet to submit questions and feedback directly to the Executive Management Team. Positive Workplace Climate Initiative in TRUenergy 35 Chapter 4 Chapter 4 36

20 Conferences conference calls and a conference event approximately every 18 months. The most China Human Resources Forum Group Public Affairs Workshop Each year, CLP hosts a number of regular recent conference was held on May 2010 Group Human Resources (GHR) has been Over 120 management staff from across the Group- wide conferences where employees in Hong Kong, attended by over 85 colleagues holding the annual China Human Resources Group attended the first- ever Group Public share experience and bes t practices, and gain from 15 facilities and partners across the Forum for colleagues In Hong Kong and China Affairs Workshop in Hong Kong on insight in new developments and innovation in region. to share and exchange HR knowledge, August Entitled "Sharing the CLP IdentityM, the industry. These conferences are held at experiences and best practices. The 2nd the Workshop covered a wide range of topics to different intervals depending on the nature of Forum held in December 2009 was attended by enhance the understanding ofclp's heritage the subject matter. Here are a few examples of more than 20 HR colleagues from Hong Kong, and brand value and how we manage the our Group-wide conferences. Beijing, Guizhou, GuangXi, Sichuan, Shandong, company's reputation through ongoing Yu nnan and Jilin. corporate communications, issues ~ management, policy advocacy and stakeholder Group Insurance Forum ~roup Informacion Technology Forum engagement activites. lndependent consultants 'Nefe invited to share best practices adopted by Thi s is a forum organised by CLP's Insurance & Claims of Group Legal Affairs. Th e last conference was held on 19 November 2008 to promote group synergy and insurance best practices within the Group. Apart from insu rance consultan ts and insu ranee companies sharing industry market trends and addressing key issues on howto handle major insurance losses, there were also guest speakers from CLP Group companies sharing their lessons learnt, highlighting different perspectives of handling major insurance losses in the region. CLP-JV EnVironmental Synergy Forum 2010 Group Operacions Annual Conference Over 100 colleagues of CLP's subsidiaries and joint venture partners attend this conference every year. The 8th an nual conference was held on November 2009 in Hong Kong to share best practices and experience in safety, As CLP continues to expand across the Asia Pacific region, Information Technology (In capability plays an increasingly important role in enabling CLP to meet its changing business demand. Group Information TeCh nology (Group In convenes a Group IT Forum annually which provides opportunities for our regional colleagues to share and leverage IT related developments and best practices. This helps to promote learning cu lture and optimise IT investmen t across the Group. The Forum also demonstrates the latest technologies and systems that strengthen IT innovation in order to give CLP a competitive edge. the world's leading energy companies in community investment initiatives. ~roup Environmental Forum Initiated in May 2005, the CLP-N Environmental Synergy Forum (E- Forum) provides the opportunity for CLP colleagues from subsidiaries of the CLP Group and our engineering, construction, operations and maintenance. The 9th Group IT Forum, held on 27 May 2010, was attended by over 160 business and IT delegates across the region. Apart from extensive sharing of utility industry trends and emerging technologies, the Forum also provided an excellent opportunity for net'norking among CLP colleagues Group Public Affairs Workshop joint-venture partners to share environmental operational experience and topics of common ~LP CfeanTech Forum 2010 interest. Convened by Group Environmental Affairs (GEA), the E- Forum is attended by Carbon Ventures organised CLP's first colleagues leading or working on conference on dean technology on These conferences strengthen the network and environmental related issues. GEA also january Attended by more than 50 mutual learning amongst CLP employees across communicates development of the Group's environmental initiatives, policies and strateg ies Group Operations Annual Conference colleagues, the forum invited experts to speak on dean technology investments, solar and the Group. to E- Forum members through the E- Forum, wind technologies and carbon markets. which convenes on a regular bas is via quarterly 37 Chapter 4 Chapter 4 38

21 Customers CLP is committed to delivering electricity services with a high level of quality, adequacy, safety and reliability. It is CLP's res ponsibility to continue to improve both our productivity and efficiency for the benefit of our customers. Our supply excellence forms the building block for Hong Kong CLP supplies electricity to 2.3 million customers, representing approximately 80% of Hong Kong's total population. Our electricity service is one of the most reliable in the 'NOrid that outperforms other global financial centres such as New York, Sydney, Paris and London, and major Chinese Mainland cities such as As internet plays an increasingly important role in ou r every day lives, CLP also provides Green Bill, Autopay and e- Customer Services to provide greater convenience and flexibility for customers to manage their accounts online, anywhere, anytime. In 2009, we revamped our customer portal, CLPOnline, by streamlining information to allow UP BLECT.II.IC VEHlCI.I!8 _- un... '=......_-- -_ _ ", socia-economic development of the communities in 'IJilich we serve. In Hong Kong and Australia where we operate a retail arm, we offer competitive, tailor- made services to our retail, institutional, small and large commercial customers. We have in place a consultative structure with representatives from all walks of life to solicit customer advice and feedback on our services. We also continue to improve our interaction with customers by enhancing the quality and accessibility of our services, with respect paid towards protecting customers' rights and obligations. Guangzhou, Shanghai and Beijing. To ensure the provision of quality service and value to our Hong Kong customers, we continue to seek out, listen to and act upon their views on our services. Our Customer Service Centres are conveniently located in Kowloon and the NewTerrirories, where we provide professional advice to customers with the aim of enhancing their quality of life, increase their competitive advantage and create a better living environment. The excellent service of our Business Centres, set up in 2007 to provide one- stop solutions to small- and medium- sized enterprises (SMEs) and contractors,led to CLP being awarded the 'Best easier navigation. A new, dedicated environmental section 'Our Environment' provides information to raise customer and public awareness on climate change, energy efficiency and conservation, and on new initiatives such as electric vehicles and their charging locations. Energy and Carbon calculators are also available to help our customers determine their level of carbon emissions from their day-to-day activities. CLPOniine provides customers with information regarding our initiative in building infrastructure for electric vehicles In Hong Kong. u _ _ _-- j... _-..._-,,~ SMEs' Partner Award' by the Hong Kong CLP delivers electricity services with a high level of quality, adequacy, safety and reliability. Chamber of Small and Medium Business Limited in In addition to our five-storey Eco Home that sells a range of energy efficient appliances, in 2009, CLP launched the Beyond Living Ideas online forum - a platform for our residential stakeholders to interact and share green living ideas with us and amongst each other. cu> -- Our Business Centres offer professional advice to our small- and medium-sized enterprise customers. For more details of our range of customer and business services, please refer to ClPOnline 4-. Braille Billing Service To further enhance our service to vision-impaired customers, we have introduced our free braille billing service. Braille bills are available in either Chinese or English formats used by 8S customers as of end of Chapter4 Chapter 4 40

22 Au stralia The profile of energy efficiency has risen sig nificantly in Australia with a number of state electricity grid. To promote the greater take up of such renewable generation options, TRUenergy's Customer Welfare Program aims to provide these customers with a range of In Australia, TRUenergy is licensed to provide based energy efficiency 'white certificate' TRUene rgy offers customers a 'premium' options to get their energy payments back on gas and electricity in most States (including, schemes an d the Federal Government fund ing feed-in tariff rate over above that required to be track, reduce their costs and live a more Victoria, South Australia, NewSouth Wales, introduced in 2009 to support energy efficiency paid to customers under the various State sustainable lifestyle. Efficiency improvement Queensland l and the Australian Capital measures for Australian households and Government schemes. measures are identified via free home energy Territory). TRUenergy also provides accredited businesses. audits which take place in the home or over the green energy, 'Nhich is generated from TRUene rgy has a dedicated team to assist telephone. Home energy advisers provide each renewable resources such as wind power as TRUenergy has established an energy efficiency customers 'Nho are moving homes and/or customer with tailored structural and well as energy efficiency services to households programme including the installation of energy require financial flexibilities in payment. Home behavioural energy efficiency and businesses. efficient light bulbs and shower heads for our services, currently offered in Victoria and South recommendations. customers. Th is has promoted efficient energy Australia include the arrangements of TRUenergy believes it is important to offer use by our customers as well as greater plumbers, gas fitters and electricians, helping TRUenergy also offers customers who have options to meet the growing interest in and customer retention and satisfaction. In 2009, clients stay connected with TRUenergy and language disabilities or have English as their demand for green energy in Australia. TRUenergy purchased or generated energy facilitate their moving process. In terms of second language access to interpreter services All TRUenergy green energy plans are efficient scheme certificates representing over electricity bill payment delays, we treat each through our call centre. accredited by GreenPower which is a 650,000 tonnes of abated greenhouse gases. A customer with respect and take into government accreditation programme. similar commitment will be undertaken in consideration their particular circumstances. Accreditation means that the sales and purchases of green energy are audited by On the back of State Government renewable GreenPower on an annual basis to ensure energy incentive schemes, TRUenergy retailers are investing in renewable energy on encourages customers to generate renewable behalf of customers. Both res idential and energy themselves (through for example roof commercial customers are eligible to choose top solar panels) with the potential to "feed - in ~ the make-up of their energy use on top of their generation back into the TRUenergy's baseline of 10%GreenPower accredited, all the way up to 100%GreenPower accredited (all electricity produced from renewable resources). The 10%wind power accredited baseline is offered at no extra cost to encourage client support in driving renewable energy investments locally. TRUenergy is the second biggest retail provider of GreenPower accredited energy plans with around 17% of the total GreenPower customers as at the end of TRUenergy is committed to assist customers in minimising their impact on the environment by reducing greenhouse gas emissions. l in Queensland.1RUenergy is only an electricity retailer. 41 Chapter4 Chapter4 42

23 Suppliers Evaluation and Selection In Hong Kong, CLP Power improved its Environmental Consideration in Supply Chain Supply chain management, including fair, ethical and respectful treatment, is key to the integrity of CLP's business. Ou r reputation and risk-based Supplier Assessment System (SAS) in August 2009 as a systematic and impartial feedback mechanism on our performance and CLP established Green rt Procu rement Guidelines in 2009 and applied the guiding principles in establishing contracts for success rest on our ability to provide high quality, cost-effective services to our customers which depend, to a large extent, on the effectiveness of our procurement. Since we care not only for results, but also how these results are attained, we believe there are mutual benefits in 'NOrking cooperatively and collaboratively with our key business partners and associates based on a shared vision and common goals. We apply a set of procurement values and principles throughout our Group-wide facilities. We are developing a newclp Suppliers' Code of Conduct that will reiterate CLP's commitment to progress and those of our suppliers. We consider this evaluation system as a catalyst for continuous improvement, and are prepared to maintain long- term relationship with suppliers who have performed and delivered results. As a result of past comments, we undertook an initiative in September 2009 to streamline the CLP Supplier Information System (SIS) to make the registration process more user-friendly. Leveraging experience gained from Asia Pacific Utilities Group (APUG) in developing questionnaires to assess supplier readiness for managing sustainability matters, we have commissioned an external consultant (CSR purchase of computer hardware. Th ese GUidelines are applicable to CLP affiliates overseas so that CLP's commitment in procuring environmental- friendly equipment can be practised throughout the Group. The Guidelines were first applied in 2009 in the procu rement of IT server and storage equipment, with energy consumption, carbon emissions, green specifications and the extent of recycling all considered during tender evaluation. In addition, we also explored energy efficient technologies like server virtualisation and blade servers lo'iitjich would result in significant energy saving through life- cycle operation. uphold a high standard of business ethics through the safeguarding of human rights, ensuring fair labour conditions and achieving good environmental and governance practices throughout the supply chain. This newclp Suppliers' Code of Conduct includes provisions and lor restrictions on forced labour, child labour; human rights; discrimination, harassment and abuse; health and safety; wages, benefits and terms of employment; working hours ; bribery and corruption; and the environment. While we work out regional implementation details, CLP expects all major suppliers to meet or exceed the requirements of our values and the principles which underpin them. Through meetings between senior management of CLP and suppliers, we maintain Asia) to conduct a similar exercise throughout 2009 specifically aimed at CLP operations. This gap analysis will be useful in raising suppliers' awareness of our expectations and identifying areas for capacity building in terms of risk management. In Hong Kong, CLP Power is a Founding Member ofthe Hong Kong Green Purchasing Charter, jointly developed with Green Council, eleven major local corporations and government bodies. The Charter has now expanded to include an additional 31 members and associates across sectors. As a signatory, we are committed to formulating, and implementing, green procurement policies and strategies in our business and to promoting the principles of environmental- friendly purchasing in Hong Kong and beyond. The CLP Group IT Procurement Guidelines were a testimony of how we have integrated environmental considerations into our supply chain, and we will continue to emphasise on minimising our environmental footprint constant dialogue with suppliers to advance overall supply chain ethics through the goods and services we purchase. 43 Chapter 4 Chapter 4 44

24 In Australia, TRUenergy has formally included sustainability into their procurement policy and thus will endeavour to procure commodities, Support Locally- based Suppliers Our preferred suppliers are those who are Shareholders services and supplies that have the lowest possible carbon footprint and impact on the environment whenever it is economically and practically viable. Where possible and appropriate, TRUenergy will ask that our business partners, contractors and suppliers: Q have a climate change policy in place Q use recyclable materials Q encourage the use of green power in their organisation Q are environmentally conscious and careful to dispose of non- recyclable parts and products Q use sustainable products in their process and manufacturing Business partners, contractors and suppliers will be encouraged to establish systems to monitor and report the above information. In some cases reporting may be mandatory in order to su pport TRUenergy's regulatory or company reporting requirements and tender award evaluation. ethical and have demonstrated a commitment to sustainability, Safety, Health, Environment, Quality (SHEQ) competence, internationally competitive pricing and compliance with the necessary performance requirements. Locally- based suppliers with SHEQ competencies on par with their overseas competitors may have a geographical advantage over the latter. In TRUenergy, local suppliers are used where cost effectiveness, service and delivery requirements are met in accordance with corporate procurement policy and guidelines. TRUenergy's suppliers are predominantly Australia- based with exceptions, such as specialist spare parts that require import from overseas to meet original equipment manufacturers' requ irements. In India, Gujarat Paguthan Energy Corporation (GPEC) only uses overseas suppliers mainly for gas turbine, steam turbine and associated auxiliary package, where parts need to be replaced with the same parts and indigenous components and /or competent agencies are not locally available. ClP combines prudent management and responsible corporate governance to create shareholder value. Our financial performance has made ClP a reliable long- term provider of dividends and a reasonable return on investment. We pride ourselves on transparency, and providing detailed information - which goes well beyond statutory requirements - about our financial performance in our Annual Report I+ and at our Group website I+. These efforts have created a solid base of shareholders. We have a duty to maintain the trust and confidence shareholders have placed in us, to report fully and honestly on our performance and respond to their concerns and expectations Annual General Meeting on 27 April 2010 We communicate with our shareholders through: Q Formal corporate communications, such as our Annual Report, Sustainability Report and Quarterly Statements Q Annual General Meeting Q Investor conferences, roadsholns and meetings with institutional investors CLP Shareholder Plant Visit Q Analyst briefings Q Plant and facility visits Q ClPwebsite Q Shareholders' hotline and contact We also respond to a number of surveys, comments, reports and other inquiries made by investment research professionals for investors or shareholders, such as Carbon Disclosure Project, the SAM Questionnaire (for the Dow Jones Sustainability Indexes) and the EIRIS Survey (for FTSE4Good). 45 Chapter4 Chapter 4 46

25 Professional and Industry Bodies CLP actively participates and holds key positions in professional and industry bodies that bear high relevance to our business. Such participation allows us to be active in developing frameworks that we believe are important, keep abreast with local and international initiatives, and foster more balanced and informed views by sharing our experience from a regional perspective. The following are just a few examples of our engagement in professional and industry bodies. Global Reporting Initiative CLP actively participated in the Global Reporting Initiative's (CRt) development of its Electric Utility Sector Supplement reporting guidelines as the industry co- chair of the working group. This guideline became effective in CLP's staff has also been elected to sit in GRI's Technical Advisory Committee (TAC) since The TAC provides high- level technical advice and expertise to GRI Board of Directors and, together with the Stakeholder Council, form the governance bodies of GRI. Asia Pacific Utilities Group ClP is an active member of the Asia Pacific Utilities Group (APUG), which is a net\nork of Utility Procurement Managers who collaborate on supply chain management activities in the Asia Pacific region. APUG is part of a Global Net\NOrk of 180 buying organisations and over 16,000 suppliers to the utility industry worldw'ide. The APUG Net\NOrk and Project Working Groups enable the utilities to assess their current procurement practices, exchange knowledge and share in the development of solutions to common issues facing the industry. Working together on these initiatives through APUG helps companies to identify and introduce performance improvements and drive greater efficiencies in their procurement processes. Hong Kong Institution of Engineers Many of our ClP Power Hong Kong colleagues are Members or Fellows of the Hong Kong Institution of Engineers (HKIE). Many of them are active participants in various divisions and committees including the Environmental, Civil and Gas and Energy Divisions. The HKIE's mission is: Q To promote the advancement of engineering and to facilitate the exchange of knowledge and ideas. Q To provide a broad range of services to members, to assist them in developing their careers and to play their full role in contributing to SOCiety. Q To maintain a high standard ofthe profession, and to raise the standing and visibility of engineers. Hong Kong General Chamber of Commerce CLP's CEO has been the chairman of the Hong Kong General Chamber of Commerce since The chamber is politically neutral and has a broad representation for multi- national, Hong Kong, and Chinese Mainland companies. The chamber is an influential voice representing the business community of Hong Kong on issues that affect Hong Kong's economic environment. Project Partici pation ClP engages stakeholders substantively to provide timely and open communications and to listen to public views on our infrastructure development projects. Through honest and frank discussions with ou r stakeholders, we seek to build understanding which leads to mutual trust and respect. This high degree of transparency allows different views to be heard and fully considered. Hong Kong Offshore Wind Farm ClP is actively studying the feasibility of an offshore wind farm project located in the Hong Kong southeastern waters, approximately 9 km and 5km east of the Clearwater Bay peninsula and Ninepin Island, respectively. Project proponent, together with ClP, has conducted extensive consultations with project stakeholders, including individuals, organisations, Government departments and many others. This has included visits to the site by boat, presentations and meetings. Prior to the commencement ofthe Environmental Impact Assessment (EIA), a group of over 80 people representing interested companies, community leaders, green groups and Government District Councils attended an introductory workshop hosted by a local policy think- tank, Civic Exchange. This was followed by the statutory 30- day consultation process for the EIA. We have successfully obtained the Environmental Permit through the EIA Ordinance process. Our dedicated bi- lingual project stakeholder consultation website details the proposed project and major findings of the E1A in a format which is easy to view and understand. This includes the use of 3D models where appropriate that can be accessed through the use of Go ogle Earth. Consultation has been a vital part ofthe project development process, and we are continuing this process as we progress with the feasibility study. 4 7 Chapter4 Chapter4 48

26 Emission Conrrol Project In order to further enhance the environmental performance of our coal- fired pov.<er plant in Hong Kong, ClP is undertaking one of Hong Kong's largest engineering projects in recent years. We have begun to retrofit the existing Castle Peak Power Station with Boosted Over Fire Air (SOFA) systems, Flue Gas Desulphurisation (FGD) facilities and Selective Catalytic Reduction (SCR) equipment. These are proven technologies that will considerably reduce sulphur dioxide (502) and nitrogen oxide (NOx) in the nue gas and are part of ClP's programme to meet its 2010 emissions reduction targets. The challenge involves relocating six operating facilities and retrofitting four generating units without disrupting the supply of these facilities that represent one- third of all the electricity generated by ClP Power in Hong Kong. This initiative complements other emissions reduction initiatives that have been adopted at the Castle Peak Power Station, namely the increasing use of ultra- low sulphur coal, the installation of low NOx burners and electrostatic precipitators, and the use of more natural gas. Since the inception of the project in 2007, the facilities have been visited by a diverse range of external stakeholders, including academics, shareholders, local and provincial government officials, students, engineers and other professionals as 'Nell as representatives from environmental groups, community and the media. The majority of visitors expressed their enhanced understanding of the project's complexity, and its environmental and job creation benefits. ClP also sought overseas expertise for knowledge transfer: specialised welding engineers from the United Kingdom provided a three- week training to local welders regarding internationally recognised standards and practices in high pressure welding, stack lining and project management. Stakeholder activities continued in 2009lNith briefings and visits arranged for institutions such as The British Chamber of Commerce, The French Chamber of Commerce & Industry, Hong Kong Environmental Protection Association. Hong Kong Construction Industry Council, academia from different disciplines, students from secondary and tertiary institutions and venture scouts' environmental programme. We have arranged on-site visits for media to report on the project and its progress. Tallawarra Gas-fired Power Station TRUenergy underlines community consultation as a key deliverable of every major project it undertakes. Recognis ing that the success of the Tallawarra project depends upon the quality of its relationship INith the local communities, the Tallawarra project team engaged stakeholders consistently through a Community liaison Group. We maintained this liaison group throughout the construction period. We conducted public Information and feedback sessions covering a wide scope of issues regarding Tallawarra lands. Feedback from stakeholders was taken Into consideration by our planning process and INiIi continue to inform our plans for the Tallawarra lands site. jiangbian Hydropower Station Developmenr Care for people and care for the community are part of the core values of ClP. Prior to the commencement ofthejiangbian hydropower project, we conducted consultation INith all villagers potentially affected by the cons truction of the project. Our consultation process received a 9996 response rate. The Environmental Impact Assessment report contained details of the cons ultation process and results. We take great care of and attach Importance to the lives of the resettled villagers, and we treat them with respect and honesty. Where local resources are tapped, ClP Sichuan will make sure that the villagers wtlo have contributed to the project development are the first to benefit during the construction process and beyond. In terms of providing employment, we are grateful for the villagers' "";sh to take part in the construction work and their support for We also took forward the aboriginal cultural assessments as part of the local Environmental Study process through site reviews with the local Aboriginal community. We enhance community access to information and opportunities for input through regular community information channels, including community information sessions, media reports in local papers, community partnerships and sponsorships, and newsletters to residents INithin the vicinity of the Tallawarra site. The Tallawarra Power Station was successfully constructed and commenced operations in January. It is one of Australia's most environmentally efficient, large- scale gas - fired polner station. Our stakeholder engagement activities will continue in the operational phase. the project. We INiIi fully support the government's policy on resolving unemployment, compensate the resettled villagers in compliance with government standards, and collaborate with the government on ways of creating employment opportunities to facilitate villagers ' integration. Under the government's administrative arrangement, we will recommend qualified villagers to contractors with due regard to safety of workers. Jiilngbian Hydropower Station conslruction site 49 Chapter 4 Chapter 4 SO

27 Policy Advocacy At CLP, one of our commitments under the Value Framework is to support the development of sound policies relating to our business. lnhile effective governance is a priority in all areas, we see evident gaps in environmental policy- maki ng where industry awareness and action, particularly In developing Asia, are generally lagging although the policy landscape has been changing rapidly in the las t few years. The need fo r an equitable climate regime is pressing as we approach the end of the first "Kyoto Protocol" period ( ). Through our relations INith local governments, civil society, industry peers and international organisations, we participate in public policy development and debates on matters of public interest ClP recognis es that to meet our Climate Vision 2050, support from government policies is essential. Beyond Co penhagen - Powering Asia Responsibly, publis hed in late 2009, reiterates our key messages to policy makers: Q We need clear and stable regulatory frameworks that incentivise investors for developing low- emission power generation; Q Policy must account for the costs and benefits of emissions reductions, sending a clear price signal; Q Funding is vital for the development and demonstration of large scale low-emiss ion technologies, in addition to supportive policies and price signals; Q The burden of climate change adaptation will fall most heavily on the developing world, including Asia, which requires urgent, effective financial and technical support from the international commu nity; aod Q To ensure a smooth transition to a sustainable low-carbon economy, people with low incomes and developing countries need ass istance, and t he role offossil- fuel power generators in ensuring accessi bility to power supply needs to be recognised. Our CEO and sen ior executives have been invited to speak at numerous conferences from Asia to Europe prior to and after CO Pl S. Through discussions with G20 representatives as well as climate and Industry experts around the world, we continue to urge decision makers to formulate policies inducive to a low-carbon economy. ClP has investments In many countries across Asia. With a corporate commitment of reducing the greenhouse gas intens ity of the group's generat ion fleet to 0.2 kg of C02 per kwh by 20S0, what government policy settings will be required to support this goal? Terry Kallis, Managing Dir~ctor of Petratherm and Richard Mcindoe, Managing Director of TRUenergy, with Australian Federal Energy Minister, Mr. Martin Ferguson, and South Australian Premier, Mr. Michael RaM. \\11at happened at the UNFCCC Climate Summit in Copenhagen reinforces our belief that national policies, not international ones, will have a greater impact on achieving carbon emissions reduction. As governments develop their Nationally Appropriate Mitigation Action (NAMA) plans, they should have a direct tine of sight between policy and investors' returns if they want to mobilise investments in low-carbon solutions. In our view, NAMAs and any other national or domestic level policies should be simple, definitive, meaningful and mindful of the long- term nature of investments. Definitive targets combined with simple policy measures, such as tariff subsidy, will reduce ambiguity for investors. Mean ingful measures will also help in bridging the parity gap between coal and clean energy as the latter may remain an uneconomic form of generation without them. Since investments in the power sector are held for many years, it is important to note that if there are changes to a policy after it has been in place, investments made under the old scheme should be exempted from the changes - otherwise investor confidence will be undermined. But above all, governments should recognise that existing power players are well- placed to help their economies transition to a low-carbon future and that there is no point in wiping them out with ill-devlsed policies. Mitigation and adaptation objectives that allow for a s moolh trans ition are likely to be more cost- effective and efficient, and should not lead to a sudden elimination of Indusnies.Jobs will also be preserved with the re- tralnlng of talent that currently exists within the power Industry to take up new roles in a low-carbon pov.oer sector. ClP will certainly be looking at these factors in NAMAs, and other national and domestic development policies and plans, as we identify opportunities to decarbonise our generation. Beyond Copenhag~n - Powering Asia Responsibly Mr.Brad Page Chief Execu tive Officer Energy Su pply Association of Australia Andrew Brandler Chief Executive Officer 51 Chapter 4 Chapt~r 4 52

28 Regionally, highlights as of 30 June 2010 included the decision to delay the Australian Carbon Pollution Reduction Scheme, as well as Carbon Pollution Reduction Scheme, Au stralia Air Quality and Water Quality Objectives, Hong Kong renewable energy. Since transport plays a role in the quality of the air we breathe, CLP is striving to provide the necessary infrastructure our participation in the HKSAR government On 27 April 2010, the Australian Government CLP continues to work cohesively with the for electric vehicles that facilitates community consultations for the Air and Water Quality announced that it would defer its emissions government and consult stakeholder groups to adoption. We also continue to pursue and Objectives. trading scheme, known as the Carbon Pollution support the development of appropriate and promote energy efficiency and conservation Reduction Scheme (CPRS), until after the necessary policies for the sustainable both in our operations and among our end - use conclusion of the current Kyoto commitment development of the energy sector. Through our customers. period, at the end of participation and presentations in public forums, we aim to generate an informed The success of all these initiatives requires On 24 June 2010 the Australian Prime Minister, discussion about important issues such as air constant dialogue with our stakeholders that Kevin Rudd, called a Labor Party leadership quality amongst the public. These engagement galvanises public and policy interest, demand contest. The Deputy Prime Minister,Julia Gillard, activities also provide an excellent platform for and action. We welcome governments' was elected unopposed as the new leader and exchange and collection of opinions. consultation efforts and will continue to engage subsequently sworn in as Prime Minister. with policy makers in an open, transparent and Air Quality Objectives responsible manner. Prime Min ister Gillard annou nced that an election would be held before the end of2010. The new We are fully supportive of Hong Kong moving Water Quality Objectives Prime Minister also stated that the Government towards higher air quality standards in remains committed to a price on carbon. Ms. accordance with World Health Organisation The Hong Kong government is in the early Gillard stated that community consensus would (IN'HO) guidelines and are confident to build on stages of reviewing Hong Kong 's Marine Water need to be reached on emissions trading before our experience in contributing to meeting this Quality Objectives. CLP participated in the first implementation. On 7 July 2010, the Prime goal. We continue to participate in public rou nd of pu blic engagement in 2009, and will Minister reaffirmed the 2012 timeframe for consultations called by the HKSAR government continue to actively monitor and participate in consideration of the CPRS.ln the interim period from an early stage and offered our view's on this important initiative. the Government is likely to focus on renewable the proposed measures in November energy and energy efficiency measures to CLP participates as a member of the steering support emission reduct ions. committee of the new air quality objectives development process. TRUenergy will continue to 'NOrk with the Federal Government, the Opposition and other Reducing our absolute emissions requires us to stakeholders to achieve a smooth transition to a move away from relying almost exclusively on lower emissions generation mix. coal to a diversified fuel mix. We continue to engage stakeholders in understanding the benefits of a balanced fuel strategy, including supply reliability and reduced fuel price volatility. Nuclear polner and natural gas are critical for CLP to support the HKSAR government's objective for a cleaner Hong Kong whilst the proposed offshore wind farm will contribute to the government's goal of achieving 1-2% local generation through 53 Chapter4 Chapter 4 54

29 l ocal Envi ronmental Plan, Tallawarra, New South Wales, Austra lia In 2009, the Wollongong City Cou ncil adopted the Wollongong Local Environmental Plan (LEP) International Industry Gro ups Internationally, YJe are involved in a number of business-related, professional and civic organisations, such as the World Business Council for Sustainable Development and the World Energy Council The World Energy Council (INEC) is an international UN -accredited non-government organisation with member committees in nearly 100 countries, including most of the largest... 'I"'... ~ ~~~ in response to extensive public feedback. World Energy Council. energy producing and energy cons uming This plan incorporates the Tal1awarra Lands site and guides its future use in terms of employment, housing, recreation and World Business Council (or Sustainable Developm ent countries. For over 80 years,lnec aims to promote the sustainable use and supply of energy through research, policy and conservation. technological development in the energy sector. As part of the LEP public consultation process, TRUenergy provided feedback, recommending CLP has been an active member of the World Business Council for Sustainable Development (WBCSD) since Through this international Our CEO has been the Chairman of the INEC Member Committee of Hong Kong (the Committee) since The Committee Andrew Brandler, CEO of CLP Holdings, at the Financial TImes/World Energy Council's Energy Leaders Summit In London, United Kingdom an increase in the amount of green space surrounding its power generation site. business organisation, CLP has strengthened its network among different member companies members participate in regional and international events organised by WEC, and We suggested that additional land be set aside and energy sector players, and has participated contribute to studies on diverse energy topics. to provide a suitable buffer around the power in UNFCCC side events, including those at the station and to reduce any possible impacts on neighbouring properties. TRUenergy's proposed amendment was accepted by the Council. As a result, the total area of Tallawarra Land s currently zoned for open space, environmental, and recreational purposes will increase by about 40 hectares, to around half of the entire Tallawarra Lands site (which is approximately 555 hectares). most recent COP IS in Copenhagen, Denmark in December We are one of the nine compan ies in the Electricity Utilities Sector Project. Our participation enables us to contribute to international policy debates by delivering to policy makers a sound business perspective on the electricity ulility sector. The Energy and Climate Focus Area ofwbcsd has over 70 participants across industries. As a Core Team member, CLP continues to play an active role in identifying an d sponsoring the development of research reports relevant to International Emissions Trading Association ClP is a member of the International Emissions Trading Association (leta) since leta is a non-profit business organisation 'Nhich aims at putting forward the business perspective to facilitate the establishment of a functional international framework for trading in greenhouse gas emission reductions. leta's membership includes over 160 leading international companies. Further Reading : Q Q 2009 Annual Report c:t Sustainability Report - Safety and Health - Collaborating With Contractors Ii- Q ClPOnline c:t. Q Q Hong Kong Offshore Wind Farm- Stakeholder Consultation Website Ii- TRUenergy Go Green 1+ and Planet Neutral Ii- our business. Q ClP's latest submission to Carbon Disclosure Project Ci- Q Hong Kong Green PurchaSing Charter '+ Q CLP/Castle Peak PoYJer Company, Limited's submission to the Hong Kong Legislative Council on Air Quality Objectives Public Consultation 1+ Local New South Wales State Member of Parliament, Lylea Mc.Mahon, and other guests including Sheryl Fulc.her, Spokesperson for the Wodl Wodl Elders Counc.H, to plant a Moreton Bay Fig, valued by local Aboriginals as a 'birthing Hee' 55 Chapter 4 Chapter4 56

30 risks and our risk management practices are generators and supply into the electricity grid disclosed in our Annual Report. according to government requirements. Our End Use Efficiency section ct. has more Market Presence details. ClP is present in both the developed and developing countries in the Asia Pacific region. Research and Development CLP is proud to have a strong presence in Asia, and be recognised as one of Asia's leading Economic Context The main socio-economic benefit of CLP's market presence is electric power and gas CLP Research Institute supports our company's tradition oftechnological innovation, energy companies consistently delivering CLP operates in both the developed and infrastructure that is properly maintained in environmental stewardship and customer strong and sustainable financial performance developing economies in the Asia Pacific INOrking order. In Hong Kong and Australia service. It serves as the main research function and with due regard for the environment. We Region. We face a fundamental dilemma of how where we operate a retail arm, we offer within CLP. Other functional units in ClP also had the honour to be ranked as the No.1 Asian to provide energy needed for economic growth tailor-made so lutions to our retail, institutional, put research resources on topics relevant to performer in the Electric Utilities Category in the and social progress in developing countries small and large commercial customers. their INOrk scopes, such as smart metering 2009 Platts 1 Top 2S0 Global Energy Company, without devastating impact on the global Our Hong Kong business is vertically integrated under ClP Power Metering Department and as well as one of the Top IS Energy Companies climate. and offers one ofthe most reliable electricity energy efficiency under CLP POlNer Energy for overall performance in Asia. This year, we services in the INOrid. All of our Customer Services. were also included in the Global Dow Index. Management Approach Financial Goals and Performance Each CLP business unit has goals to deliver results within allocated budget, and larger operating units and businesses also have revenue and profit goals. CLP's performance Service Centres and Business Centres are conveniently located and accessible to the public. Indirect Economic Impacts Plant Decommissioning like the way we approach any issue, decommissioning our power plant takes into account the triple bottom line - on the ClP delivers affordable energy for economic and trends in operating expenditures, capital ClP's investment can represent a significant environment, the community, and our growth and social development, while investments, income and profits are disclosed boost to the local economy, especially in remote economic bottom line. Comprehensive maintaining a fair balance of staff compensation in our Annual Report in accordance with good regions of developing countries. assessments including environmental and and return on investmentto shareholders. We accounting practice and the requirements of We have a preference for INOrking with local social aspects are required under most invest primarily in energy infrastructure the Hong Kong Securities and Futures partners, and our facilities are primarily staffed jurisdictions which INe operate prior to the necessary to assure quality of life, economic Commission for publicly listed companies. by INOrkers from the same country. decommissioning work. Moreover, we engage growth and social development. The impact is We purchase fuel and equipment either locally our stakeholders throughout the project right most striking in developing countries, particularly in remote regions where our Financial Control Policy and Practice or from the international market. from the planning phase. investment represents a significant boost to the local economy. The value of electricity far ClP's Company Management Authority Manual Demand Side Management exceeds its cost today. (CMAM) controls the expenditure of funds We are monitoring the INOrldwide development according to the level of management's on demand response to evaluate the business accountability. CLP's fiscal discipline effectiveness and applicability of such 1 The Platts Top 250 ranks energy companies' financial performance globally, regionally and by industry seclor based on four key metrics: asset wonh, revenue, profit and return on inve sted capital. also includes management for cash flow, liquidity ri sks, credit risks, interest rate risks, foreign exchange risks, fuel price variability, under-funded pension obligations, counterparty risks and the financial consequences of emerging environmental technologies. Under the new Scheme of Control, CLP Power Hong Kong has to offer interest free loan to help customers save energy. In Australia, TRUenergy offers free home energy audits to help customers identify efficiency improvement measures. In other regulations. More information about these countries, we mainly operate as polner 57 Economic Value Chapter 5 58

31 Key Financial Data ~ ClP's financial data is covered extensively in our 2009 Annual Report 1+ our 2010 Interim Report Ii-. Our financial highlights as of 30June 2010 include: Group's total earnings in first half of 2010 HK$ 5,921* million (up by 83%from same period in 2009) 1654 Earnings from our bu';;,,'; ;:'" outside Hong Kong and other earnings HK$, million Electricity sales to the Chinese Mainland 1,433GWh Total assets as of 30June 2010 HK$ 160,302 million (up from HKS156,531 as of 31 December 2009) (up by 82.6% from same period in 2009) Consolidated revenue (down by 13.3%from the same period in 2009) Earnings from our electricity business in Hong Kong HK$ 3,014 million (up by 3.O%from same period in 2009) HK$ 27,6:!11! (up by 17.5% from same period in 2009) including a tax consolidation benefit of HK S989 million from Aus tralia and the gain on sale of our shareholding in CLP Power China (Anshun) 2 ANNUAL REPORT 59 Chapter 5 Chapter 5 60

32 Tariff In December 2009, CLP Hong Kong announced that its average net tariff would be raised by 2.6%effective from I January This is the first time CLP has increased its basic tariff in more than 10 years - a period which we had offered over HKS4 billion in rebates to our customers. The tariff adjustment is necessary in funding projects that 'Nill help the environment of Hong Kong, securing new gas supplies to Hong Kong and alleviating the rising cost pressure from imported materials. " When faced with the need to raise our tariff to help support these initiatives, our focus has been to keep the adjustment to a minimum and soften the impact on our customers as much as possible. CLP has not increased its Basic Tariff in more than 10 years and has offered over HK$4 billion in rebates for its customers through stringent cost control and improvements in operational efficiency. The Basic Tariff, after this adjustment, is still lower than it was 10 years ago and remains the lowest in Hong Kong. It is highly competitive with other major cities, many of which have seen significant price rises over the last few years. " said Mr. Richard Lancaster, Managing Director, elp Power Hong Kong Limited. Our tariffs are reasonable, affordable, and are among the lowest compared to other major world cities, despite the variety in their tariff structu res. Tariff levels must also be judged by reference to supply reliability. In this regard, CLP has succeeded in offering world- class reliability at reasonable tariff levels, CLP manages our long- term investments in a prudent and responsible manner, providing regular returns to shareholders for many years largely 'Nithout receiving direct or indirect government subsidies. Our Flue Gas Desulphurisation upgrade projects in the Chinese Mainland receive subsidies from the Chinese Mainland Government. ~n Australia, CLP is investing through a farm- in arrangement into Petratherm's advanced Paralana project. The Australian Government awarded the project an A$ million (approximately USS54.44 million) Renewable Energy Demonstration Program (REDP) grant in late The latest progress on the Petratherm project can be found in the Climate Change If,. chapter of this report. In 2009, TRUenergy entered into a Memorandum of Understanding (MoU) with Ignite Energy Resources (IER) to develop a commercial demonstration plant that utilises new technology for drying high moisture lignite. The feasibility testing will be using brown coal from our Yattourn power station mine and the demonstration plant witt be built on land provided by TRUenergy. TRUenergy is also involved in several pre- feasibility Carbon Capture and Storage projects that have received government support. Details of these studies can be found in the Other Technologies If,. section of this report. Although solar energy cost is still high compared to conventional generation, some opportunities in the solar photovoltaic area are slowly appearing. A substantial price reduction due to oversupply, combined with an emergence of national policies supporting solar generation projects, are gradually creating a viable environment for solar project development. Examples of these policies, not restricted to solar power, include: China Thanks to these supportive policies, CLP is now one ofthe largest external investors in the renewable energy sectors of India and China. 61 Chapter 5 Chapter 5 6 2

33 Assets and Management Systems The table below gives an overview of some of the investments we have made over the years in each operational controlled facility on various environmental an d safety aspects. These include air, water, waste management, environmental acc reditation and voluntary safety management systems. elp Gro up supports and encou rages fac ilities to make provisions for, in both financial and human capacity terms, in the development and implementation of these sustainability systems. Und er Deve lopment - System being set up with resources and staff support in place. Und er Planning - System being planned with resources being allocated. NiI - Not required by ope rating license. NA - Not applicable to operation. Yollourn Hollett To ll owarra lono Fangchenggang Huaiji Biomass Castle Peak Penny's Boy GPEC BlCP Power Go, Pawer Generation Storage Generation Pawer Power Marketing & Power Generation Systems Customer Generotion Services Power Generation Cool Go, NA Cool Hydro Biomoss Go, Cool Oil NA Go, Cool l,4bo NA 1, ,lOB 300 NA 655 1, % 70% B4.9% 100% 79% 40% 100% 100% 61../ Under Plann ing../../ Under Under Under Under Under Deveklpment Development Plonning Planning Planning../../../../../ Nil../ NA../ NA NA../../../ Nil NA NA../../ Nil Nil NA NA NA Nil Nil NA NA Nil Nil NA NA NA NA Nil NA NA Nil Nil Nil NA NA NA NA Nil Nil NA NA Nil NA NA NA Cha pter 5 64

34 " Regardless of the outcome at Copenhagen. we're moving ahead to meet our intermediate target of having 20 percent of our generating capacity coming from non- carbon emitting sources by " Andrew Brandler CEO ofclp Holdings Umited Group Generation Capacity Mix by equity O.83k,co.1kWh C02 Emissions Intensity - ClP Group 11.3%,1,494"" (generation portfolio, on equity basis) Total Renewable Energy (generation capacity on equity basis) 15.0%,1,986"", Non-Carbon Emitting C02 Emissions Intensity - CLP Power HK ( generation capacity on equity basis ) (per kwh electricity sold including Imported nuclear power 1 * All figures are as of 31 December 2009 Chapter 6 66

35 " Regardless of the outcome at Copenhagen. we're moving ahead to meet our intermediate target of having 20 percent of our generating capacity coming from non- carbon emitting sources by " Andrew Brandler CEO ofclp Holdings Umited Group Generation Capacity Mix by equity Non- Carbon Emitting O.83k,co.1kWh C02 Emissions Intensity - ClP Group 11.3%,1,494"" (generation portfolio, on equity basis) Total Renewable Energy (generation capacity on equity basis) 15.0%,1,986"", Non-Carbon Emitting C02 Emissions Intensity - ClP Power HK ( generation capacity on equity basis ) (per kwh electricity sold including Imported nuclear power) * All figures are as of 31 December 2009 Chapter 6 66

36 Our Values Drivers for Change CLP is committed to responsibly playing our part in combating climate change. As a lead ing energy company in Asia- Pacific, we serve many communities that are in urgent need for more power to susta in economic and social development. Yet, the effects of climate change in this region continue to escalate. We are going to face these challenges squarely by meeting the growth in power demand in a responsi ble and sustainable manner, starting with generating electricity from a cleaner and more balanced portfolio. Within our Cl P's Valu e Frame'NOrk, we have made specific co mmitments to address renewable resources and global climate change as key issues for the energy sector. CLP Cares for the Environment " We responsibly manage the short-term and long-term impact of our business on the environment. " 67 Chapter6 Extract fro m CLP's Value Framework, 2009 Revised Version The focus on climate change has now percolated from science to policies and regu lation s as the majority of governments around the world accept climate change as a reality. The power sector, like most infrastructure industries, is a highly regu lated business. Being one of the larg est greenhouse gas emitters, the power sector is one ofthe most exposed sectors to climate ris ks and opportunities, and is experiencing an impending market shift. For CLP, new climate-related regulations could result in' Decrease in competitiveness and/or early retirement of coal- fired power plants Increase in capital and/or operating costs for emission reduction projects such as fuel switching Disputes and potential litigation over liabilities for emissions or regarding allocation or ownership of emissions permits or credits Loss of revenue due to reductions in demand for electricity arising from climate regulations applicable to our customers Improved certainty and clarity to long- term investment decisions, depending on policy design More investments in low- emission energy and consideration given to those most adversely affected by the new regulations Regulatory Risks Climate change represents a commercial risk to our company because of potential exposure to, and un certainty about, future regulations on greenhouse gas emissions from the combustion of foss il fuels to generate electricity marked heightened awareness and increasi ng activities relat ing to cl imate change amongst policy-makers at the International, national to state, as well as city and municipal levels. Clear policies can help reduce regu latory uncertainty and strengthen the bu siness cas e for low carbon energy investments. Regu lations and incentives complement one another in promoting low carbon energy. Within the markets in wh ich ClP operate s, most benefit from renewable energy policies with incentives. Recent and pending renewable energy targets in China, Australia and India create opportunities for our local business es. Au stralia, Ch ina and India all provide good policy su pport for wind energy, whereas Thailand and Ind ia presently offer attractive regimes for solar power. The existence of feed-in tariff arrangements provide incremental revenue above the normal tariff wh ich could facilitate our investment decision. Furthermore, under the Kyoto Protocol, Ch ina (including Hong Kong), India and Thailand are eligible for Clean Development Mech anism (COM) through COM proj ects could generate extra revenue through the sale of Certified Emiss ion Reduction cred its, creating an extra impetu s for co mpanies looking to diversify their portfolios into low-carbon ene rgy sources. Chapter 6 68

37 Operational Risks The vulnerability of our assets to climate change continued to intensify in In the past years, damages to our facilities were mostly inflicted by independent incidents, such as typhoon damages on our coal domes and Risks arising from changes in weather conditions can result in huge costs if assets are not insured. Even when they are insured, premiums for vulnerable areas continue to trend upwards. We conduct insurance coverage reviews, and have in place hedging strategies and energy trading risk management to help PHYSICAL RISKS IMPLICATIONS TOCLP's OPERATIONS transmission lines at Ho- Ping, Taiwan in manage these risks. Hong Kong, where (LP's and 2008 respectively: severe head office is located, has been projected to be flooding in our Yallourn coal mine in 2007: one of the top ten global cities that are most snow storms in China in 2008 that caused widespread electricity outages. Now, we are experiencing risks from multiple stressors, such as rising temperature and drought vulnerable in terms of assets exposed to sea- level rise. It is for th is reason that we must continue to collaborate with and urge others to act on the climate science that is available to us Higher ambient temperature... Increased cooling Reduced energy conversion and transmission efficiency conditions that reinforce each other, today, and focus on improving adaptive heightening the challenge of water availability. capacity and societal resilience. Increased cooling Higher operating temperature Increased maintenance Reduced maximum output and asset life Possible structural damages New and strengthened coal domes at Ho-Ping, Taiwan We have plans and strategies that assess our risks, opportunities and limitations on Over the longer term, our entire business will be at greater risk to the physical impacts of climate change. Increased intensity of weather events Reduced asset life Increased insurance cost Risk of power outage ~.... Reduced maximum output adaptation, which is important since some climatic changes are inevitable no matter how the international negotiation unfolds. This may include: Water stress Reduced operating efficiency Ou r structu ral designs now take into consideration climate conditions that are beyond the usual norm. For instance, Ho- Ping 's coal domes' strengthened infrastructure sustained several typhoons and eleven earthquakes in its area in 2009 with no injury or Weather- induced variance between peak and base load Sub-optimal operation plant damage. We are also now more vigilant in strengthening ou r crisis management capacity. 69 Chapter 6 Chapter 6 70

38 Opportunities Govern ment policies and international agreemems on climate change could create new bus ines s opportun ities for CLP becau se of our expertise in energy efficiency, nuclear power, small hydro and wind power, and more recently, in med ium-size hydro. The Carbon Ventures business unit InJune 2008, ClP established a specialised unit, Carbon Ventures (CV), to focus on low carbon related businesses. 01 supports other business units in three areas: sourcing of commercially sustainable low carbon technologies, re search and evaluation of these technologies via the CLP Research Institute, and carbon market- related areas. 01 has strengthened ClP's knowledge base of low carbon technologie s and carbon credit markets. We consistently share this knowledge base with all business units directly or indirectly involved in renewable or alternative energy. 01 also works closely with these business units in creating or supporting business opportunities in this area. One example is the build up of a proprietary knowledge base on the solar sector to support the se units' pursuit of solar-related projects. Emerging Technologies We believe that clean coal technology will make an important contribution to management of greenhouse gas emissions, particularly in the Chinese Mainland, India and Australia, where there are vast re serves of coal. Given the role of coal in the region and in our portfolio, CLP aims to help bring cleaner coal systems to markets in which we are active, as they become more commercially viable. CLP will continue to explore opportunities to participate in coal gasification projects, such as under Victorian and/or Australian government sponsorship as well as through partnership, at our existing facilities. We are also investing or involved in a number of emerging technologies, such as geothermal energy and coal- to- oil technology. The Other Technologies q. section of the climate change chapter has more details on these emerging technologies. Changing Consumer Behaviour Opportunities may also stem from increased customer awareness of the impact of energy use. Australian State Governments have introduced laws requiring retailers to pay customers a premium feed - in tariff rate paid for electricity put back into the electricity grid from a designated renewable electricity generation source such as a rooftop solar PV system. In support of the State Governments' solar initiatives, TRUenergy offers customers an additional top up feed - in rate and around 5,000 customers have taken advantage of the solar feed - in tariff. 71 Chapter 6 Chapte r 6 72

39 CLP's Climate Strategy CLP recognises its responsibility to play its part in the collective response needed to address the threat of serious global climate change. Our fully owned Australian subsidiary TRUenergy also launched its Climate Change Strategy injuly TRUenergy's climate strategy and emission reduction targets VoIiIl contribute to the overall success of CLP's Group targets. We published our long-term "Climate Vision Our manifesto on climate change ~ Iiin December The centre ofthis Manifesto is our commitment to reduce the C02 intensity of our generating portfolio from O.84kg COl/kWh (as of30june 2007) to O.2kg C02/ kwh by To realise this vis ion requires a fundamental shift in the way we conduct our business, which means moving away from traditional ~~''''' '-... coal - fired generation and aggressively pursuing non -carbon emitting generation. We have signed and committed to t he following climate change related charters: Q Prince of Wales ' Corporate Leaders Group on Climate Change - Copenhagen Communique (International, since 2009) Q World Business Council for Sustainable Development - Manifesto for Energy Efficiency in Buildings (International, since '009) Q Carbon Reduction Charter (Hong Kong, since 200B) Q Energy Conservation Charter (Hong Kong, since 2006) IC O. 2~g CO, /kwh 73 Chapter :1 - Chapter6 74

40 -... _----'L..::L_--'=--L-----' -.. You have a target of reducing your carbon emissions intensity by 75% by However, given that most of your incremental generation over last few years will be from coal (l,320mwjhajjar project) and that you may bid for more coal projects, your carbon intensity may rise in the near to medium term. Is that a fair assessment? If yes, th is will make the target reductions even steeper. Howdo you plan to achieve s uch steep targets? Yes, OUf carbon intensity is under upward pressure in the near term. We were mindful of it when we developed the Climate Vision 2050 pathway. We established a modest but challenging reduction goal for 2010 (to 0.8 from O.84kg C02/kWh in 2007), as we had anticipated carbon intensity to peak before then. As we bring more gas, nuclear and renewable energy projects online, our emissions intensity will move in a downward trajectory to reach our intensity target for 2020 (O.7kg COl/kWh), When carbon capture and storage (CC5) or similar technology becomes available in the next decade, we will be able to take an even further step in reductions. As a power company, what is your strategy for managing your carbon footprint? The CLP Group is com mined to lowering emissions and promoting sustainable development in all markets it operates in. In order to tie this vision with our business goals, in 2007 we published the CLP Climate Vision where we have commined to reducing the emissions intensity of our generating portfolio by 75%to 0.2kg C02/kWh by The vision has a number of intermediate milestones whose role is to reinforce the credibility of our Climate Vision 2050, establish goals which are relevant to the CLP Group management and stakeholders ofclp and which will allow ourselves and others to track our progress towards Climate Vision Further detail on this are available at our publications: Climate Vision 2050 C; and Beyond Copenhagen C;. Mr. Rajesh Panjwani Head of As ia- Pacific Power Research CtSA Research Limited Andrew Brandler Chief Executive Officer Dr. Rajiv Lall Managing Director and Chief Executive Officer Infrastructure Development Finance Company Limited, India Raj iv Mis hra Managing Director - India 75 Chapter6 Chapter 6 76

41 Enablers for Action metrics as well as on our capacity to meet our Climate Vision 2050 carbon intensity reduction.- With strategy comes a string of actions that serve to realise it. We have developed and implemented systems and processes at both the operational and management levels to help us INOrk towards the targets we have set for ourselves. ~ limate Change Policies and Regulations Research In 2009, we commissioned a comprehensive update of environmental and climate change policies, regulations and emerging trends in our operating region. A majority of ClP's operating jurisdictions had established national climate change plans or strategies 'Nith specific targets on emissions reductions. Some governments have mandated the targets with action plans while some others have yet to substantiate policy aspirations with implementation details. Given the proposed Carbon Pollution Reduction Scheme in Australia is postponed to after 2012, policies that can potentially affect our operations in the Asia Pacific region significantly would be a carbon tax on electricity generation at a local country level, especially in operating nations where rising fuel cost is not allowed. targets. The aim of the assessment is to evaluate our climate exposure at the beginning of a project proposal development cycle, and aggregate our capital investment decisions with climate risks management responses. For instance, capital providers may consider a particular proposed investment risky due to its expected high greenhouse gas emissions, despite it operates in a relatively financially low- risk jurisdiction, thus affecting the financing resources available to that investment. The results of a proposal's climate risk assessment, and mitigation plan if applicable, are therefore incorporated into the formal business plans presented to the Investment Committee, Finance and General Committee (F&GC) and the CLP Board for budget approval. Given the recent conclusion ofcqp15 meeting, are there any changes made to CLP's Climate Vision? What do you antic ipate for your investments in TRUenergy (especially Yallourn) and other coal- fired generation plants (s uch as CAPCO)? ~ ny impact on the Yallourn Power Station will depend on the final form of any government policies to reduce carbon emissions. Following her appointment as the new Prime Minister,Julia Gillard stated that the Australian Government remains committed to a price on carbon, but that it would not be in place until the end of 2012 and that community consensus would need to be reached on emissions trading before implementation. On 7 July 2010, the new Prime Minister reaffirmed the 2012 timeframe for consideration of the Carbon Pollution Reduction Scheme. We would hope that any future proposal will not impact on the asset value of existing generators, which would make it difficult for us to invest in new, cleaner technology to effect the necessary transition to a cleaner generation fleet. In 2009 we published the new Energy Vision for CLP PO'Ner in Hong Kong. Looking ahead towards a greener Pearl River Delta region over the next ten years, this sets out a range of initiatives to strengthen infrastructure integration with the Chinese Mainland, securing additional supplies of natural gas for local electricity generation and importing more nuclear energy to meet our baseload requirements. This will allow us to reduce our reliance on coal and, coupled with the promotion of local renewable energy sources and encouraging more awareness of energy efficiency and conservation, will help us reduce emissions in the long run. Good progress has been made in the last few months - for example in the renewal for another 20 years from 2014 of the Daya Bay contract to supply nuclear energy to Hong Kong, and with the approval of the Environmental Impact Assessment for the proposed offshore wind farm in August Construction has also begun on ClP's first standalone renewable energy project in Hong Kong, to supply customers on Town Island offsai Kung, using solar and wind turbine technology. Pre- Investment Climate Ris k Assessment Since 2006, CLP has been conducting climate risk assessments in addition to the more established environmental impact assessments (EIA) for proposed acquisitions or development of power generation facilities. The pre- investment climate risk assessment looks at the potential impact of the proposed project on our internal Group climate risk 77 Chapter 6 Ms. Elizabeth Pang Vice President Asian Equity Research J.P. Morgan Asset Management (Singapore) Limited Group Director Managing Director Australia Group Director Managing Director Hong Kong Chapter 6 78

42 Climate Policy Advocacy Energy and environmental policies are critical to stabilising global greenhouse gas emissions, and to the development of (LP's low carbon business. National energy decisions must balance environmental, economic and social considerations to ensure the continuing secu rity of energy supply, investment in low emissions technology and a smooth transition to a low carbon economy. ClP engages regularly with stakeholders, policy makers and government advisors on the need for a supportive policy environment in order to achieve these aims. Public Engagement CLP engages with a diverse range of interest groups - environmental and non- government organisations - both internationally and locally. We hold briefings, meetings, workshops and facility visits to enable our stakeholders to have a better understanding of our business and operations, while allowing us to understand and take into consideration their concerns. Our key engagement topic in 2009 through 2010 was very much focused on climate change and its related issues. Our Portfolio Performance CLP is committed to decreasing our carbon emissions intensity and increasing the non- carbon emitting generation capacity of our portfolio. Non-carbon emitting generation includes renewable energy, large hydropower stations, and nuclear po...er. We see it as an important component of our future business. The stakeho lder engagement chaptercio has more detailed coverage on our policy advocacy and stakeholder engagement activities on climate change. Renewable Energy Our CEO spoke at the 2nd International Conference on Climate Change 2009 in Hong Kong A key message was that adaptation requires a concerted effort of government and civi l society to plan, finance and improve infrastructural development, disaster management and predictive technologies to bu ild resilience and adaptive capacity. We work with a number of organisations both in Hong Kong and abroad, including the Climate Change Business Forum under the Business Environment Council in Hong Kong and in the Energy and Climate Focus Area work stream of the World Business Council for Sustainable Development. Total renewable energy generation capacity in We continue to make good progress in renewable energy development in As of 31 December 2009, our total renewable energy generation capacity has increased to 1,494MW on equity basis, which is equivalent to of our total equity based generation capacity /0 of our total equity based ge neration capacity 79 Chapter 6

43 81 Chapter 6 Chapter 6 82

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46 Zelian - Hau iji, Ch ina hu ixia - Hu aiji, China Xiazhu - Huaiji, Ch ina Longzho ngtan - Huaiji, Ch ina Yutiao - Huaiji, China Caotang - Hu aiji, China Changdiao - Hauiji, China Xinwan - Huaiji, Ch ina Machi - Huaiji, China Yulong - Huaiji, China Niuqi - Huaiji, China Jiangbian, China Nam Theun 2 - ECCO, Laos Chapter6 Chapter 6 82

47 Renewable Energy Investments Biomass & Solar Roi-Et Green - EGCO, Thailand GulfYala Green - EGCO, Thailand Hong Kong Town Island -Solar, Hong Kong Chapter6 Chapter 6 82

48 CD Key Renewable Energy Development as of 30 June 2010 Chinese Mainland Hong Kong India In March 2010, CLP completed the acquisition of a 32%shareholdingln (GN Wind Power Co. ltd. (CGN Wind), a strategic joint venture with CGNPC to develop CGN Wind as a major platform for our future expansion in wind power projects in China. Construction ofthejiangbian Hydro 3 x llomin project in Sichuan is proceeding generally to plan, though we continue to face difficulties with poor rock quality in the extensive tunneling works that are required. Adverse weather and the remote location are also significant factors. We hope to have the plant in service in 20ll. Our priority for this project is, and will continue to be, construction safety. We have acquired the remaining 35%equlty Interest of ClP Sichuan Uiangbian) Power Company limited from the local partner, Sichuan Basic Power Company limited. Construction of ClP's first wholly-owned wind farm in China, Phase I of Qian'an wind farm (49.5MVv') injilin Province, is proceeding as planned. The erection of all 33 wind turbines was completed in April 2010, and preliminary testing was completed injune The project Is expected to begin commercial operation in October We are also commencing construction of our second wholly-owned wind project, a 48M'Nwind farm at Penglai, Shandong Province. The scheduled commissioning date for the project is second quarter of2011. ClP and the international wind energy developer Wind Prospect, is exploring the feasibility of developing a commercial scale offshore wind farm of up to 200MW In the south-eastern waters of Hong Kong. We are presenting this renewable energy opportunity to Hong Kong in response to the Hong Kong Government's 1-2% renewable energy target, China's recently announced emissions intensity reduction target, and the community's desire for renewable energy. The benefits of the project include providing clean energy for approximately 80,000 households, while offsetting over 300,000 tonnes of carbon dioxide emissions every year. The project obtained its Environmental Permit in August 2009 and now continues the feasibility study with collection of site data as well as liaison and exchanges 'With various stakeholders. The formation of a stakeholder liaison group also continues. To find out more about this proposal, please refer to Thailand Natural Energy Development Co., Ltd., the joint venture company equally owned by CLP, Mitsubishi Corporation and Electricity Generating Public Company Limited (EGCO), has signed the construction and supply contract and financing documents for a S5MW solar project located in Central Thailand. Construction will start in July 2010 and commissioning will be carried out in phases from 2011 to In June 2009, CLP acquired from Roaring 40s* a 100% stake in the SO.4M'N Khandke wind farm in Maharashtra, India. In September 2009, CLP India, which is currently the largest foreign investor in the country's wind power sector, expanded its portfolio with a 99 MWwind farm in the State of Tamil Nadu. This new development has been encouraged by the pos itive policy implemented by the State, the Tamil Nadu Electricity Regulatory Commission and the Tamil Nadu Electricity Board and the 'Renewable Purchase Obligation' targets that greatly enhance the investment certainty for independent power producers such as CLP India. Australia In Australia, Roaring 40s* will continue to operate as a joint venture between CLP and Hydro Tasmania and develop wind projects in that country, with CLP's interest managed through its subsidiary, TRUenergy. Roaring 40s currently owns 50%0fthe 66MWCathedrai Rocks wind farm in South Australia, 1Q0%0fthe 65MWWooinorth Bluff Point wind farm and the 75MWWooinorth Studland Bay wind farm in Tasmania as well as the III MWWaterloo wind farm, which is currently under construction in South Australia. Roaring 40s also holds the rights to a number of other development sites in Australia and NewZealand. Roaring 40s is a SO:SOjoint venture between CLP and Austra lian- based Hydro Tasmania Town Island Solar Energy Power System CLP Power has commissioned stage 1 of Hong Kong's first commercial standalone solar energy power system on Town Island offsai Kung to provide electricity for the Operation Dawn drug treatment and rehabilitation centre. The 2- stage project will comprise 900 solar panels and some small wind turbines of total installed capacity of just below 200 kilowatts to supply the whole island. The construction was started in 2009 and scheduled for completion In 2011.The capital investment was funded by CLP, while Operation Dawn only needs to pay the regular electricity rates. To promote a better understanding of the project, CLP Power launched an interactive websitecf. injune 2010 detailing project challenges and renewable energy used. Operation Dawn is Hong Kong's first Christian drug rehabilitation center, providing treatment for 50 to 70 programme participants. The centre was originally powered by Its own three diesel generators. 83 Chapter 6 Chapte r 6 84

49 Nuclear Power Guangdong Daya Bay Nuclear Power Station (Daya Bay) was commissioned in Annual generation is about I S billion kilowatt- hours of electricity, 70%0fwhich is supplied to Hong Kong. The electricity produced by Daya Bay saves some 7.S million tonnes of carbon dioxide, some ten thousands tonnes of sulphur dioxide, and nitrogen oxides, as well as hundreds of tonnes of airborne particulates that would otherwise be released into the atmosphere by fossil fuel generation. This calculation is based on comparison to the baseline of CLP Power HK fuel mix over the period. ClP welcomes the HKSAR Government's approval in 2009, for an extension of the existing nuclear electricity supply contract. The approval will enable Hong Kong to enjoy not only the continued supply from a reliable, secure and clean fuel source for another 20 years, but also electricity at a competitive and stable price. It reinforces our ongoing commitment to use more clean energy and effectively support the government's plan for a cleaner Hong Kong. CLP will continue to explore nuclear power opportunities in Southern China and other countries where there is policy support. India received an approval from the International Atomic Energy Agency regarding the safeguards agreement in 2008, followed by an endorsement from 4S member nations of the Nuclear Suppliers Group (NSG) that allows India to commence civilian nuclear trade. This will allow India to access civilian nuclear technology and fuel from other countries. ClP India is looking forward to opportunities that may become available in this sector. Extension of nuclear electricity supply contract signing ceremony Natural Gas Natural gas can help reduce greenhouse gas (GHG) emissions because its combustion generates about half as much carbon dioxide (C02) as coal, on a per kilowatt hour basis. As part of our overall effort to reduce our carbon emissions across the Group, we will continue to invest in gas - fired power generation as a substitute for coal. To date, we already operate gas -fired power generation facilities in Hong Kong, Australia and India. Secure Natural Gas Supply to Hong Ko ng We are continuing to secure natural gas supply for Ho ng Kong as stated in the Memorandum of Understanding (MOU) on cross border energy supply signed in August 2008 between the Government of Hong Kong SAR and the Central People's Government. These include: Q New gas fields in the South China Sea Q The second West- to- East Gas Pipeline, bringing gas from Turkmenistan Q An LNG terminal in the Chinese Mainland These new gas supplies will allow us not only to ensure a smooth transition when the current supply from Yacheng gas field in Hainan Island, China runs out, but also to increase gas usage to S0960f our fuel mix in Hong Kong. Work is now focused on constructing the submarine natural gas pipelines connecting the Black Point Power Station with gas export facilities on the Mainland and associated gas receiving facilities at Black Point Power Station. This is ajoint commercial venture between Castle Peak Power Company Lmited (CAPCD) and PetroChina. CAPCO completed an Environmental Impact Assessment (EIA) for the pipelines in Hong Kong waters based upon a study brief issued by the Hong Kong Environmental Protection Department in mid July The EIA was approved on 27 April 2010 and the Environmental Permit was issued on 2S May Other regulatory approvals are anticipated to be completed by the end of 2010 with construction commencing in 201l. The necessary environmental approvals from Mainland government for the project are handled by our Mainland partners. 85 Chapter6 Chapter 6 86

50 Other Technologies There are lowcarbon technologies that may not be economically competitive today. However, with further research, development and demonstration, coupled with appropriate policy support, new technologies could provide practical means of energy generation, including using coal without increasing greenhouse gas emissions. Further to our Memorandum of Understanding (MaU) with Atlantis Resources Corporation signed in December 2008, we continued to deepen our evaluation of marine tidal technology and explored opportunities for deploying it at a commercial- scale across Asia- Pacific. At present, we are not aware of any specific marine energy policy in the Asia-Pacific In Australia, TRUenergy entered into a MoU with Ignite Energy Resources (IER) in IER's proprietary supercritical water technology transforms bro'ml coal directly into high-valued oil and coal products. A study commissioned by IER predicts that C02 emissions could be reduced by more than 40% by using IER's upgraded coal for power generation, compared to brown coal. The initial module is expected to be in operation 2010, and TRUenergy and IER will discuss the commercialisation of the technology once it has been demonstrated at our Yallourn plant. On the geothermal energy front, the Petratherm project, in wilich TRUenergy is one of the joint venture partners, reached a major milestone in 2009 with the successful casing and cementing of a deep well to a depth of 3,725 metres, markets in which ClP operates. We will keep a exceeding the planned minimum depth of 3,600 close track of enabling government. policies in metres. Temperature logging was conducted in the region.. - February 2010 and a programme of fracture stimulation is expected in the third quarter of.' TRUenergy expects to conduct a full ~L-,, ~ ~ Study on Evolving Wind Technologies The CLP Research Institute is CLP's research arm. One of its tasks is to seek out sustainable upcoming technologies and provide enhanced intelligence on areas that can potentially be applied to commercial projects. In 2009, it completed a detailed study for internal dissemination on the latest trends and developments in wind power technologies relevant to CLP. The scope of this study covered all segments of the wind electricity generation process. The study concluded that despite wind energy being relatively mature compared to other renewables, there is much technological sophistication at component as 'Nell as system levels to drive do'ml the wind generation costs and facilitate higher wind penetration in the power grids. 87 Chapter 6 Demand-side Load Inrelligence Research Programme CLP Research Institute has been pursuing load signature studies, or the study of consumption behaviour of electricity appliances, since 2006 as a basis for demand-side management. Under the Load Intelligence Research programme, we have developed a detailed analytical framework with computational tools to track the use of appliances. Trial results indicate accu rate tracking of a significant portion of daily electricity consu mption. The programme could facilitate more smart metering applications and services such as energy audit, smart home and equipment health monitoring. technical and commercial review by the end of the year, before making further commitments towards the project. Petratherm projec.t In South Australia In 2009, we decided to make a provision for our investment in Solar Systems in Australia. Solar Systems is a solar technology development company in Australia in wilich CLP held a 20% equity stake. Although we believe that Solar Systems' technology shows technical promise, its fundraising efforts have taken place in a very challenging financial market, particularly for start-up solar companies facing the difficulties of obtaining financing for large scale projects, uncertain valuations and increased competition from established solar companies, who have reduced their margins in response to the recent demand slowdo'ml. Given the general uncertainty on the availability of financing for solar investments in the current market, and our Company's fundamental strengths as an investor and operator of projects, we do not believe that it is justifiable for CLP to continue funding a technology business without an additional strategic or financial partner to share the ongoing development risks. Notwithstanding this provision, we remain confident that good solar project opportunities will be realised when appropriate government policies are in place. Currently, TRUenergy is leading a proposal to build a solar plant of up to 180MW in Victoria using commercially proven thin-film photovoltaic (PV) modules developed by a US company, First Solar. In May 2010, the Australian Government has short- listed four solar thermal and four PV-based projects which include TRUenergy's proposal under its Solar Flagships programme. The Government intends to announce rwo final projects - one solar thermal and one solar PV - that will share the programme's funding in earty TRUenergy is also involved in several pre- feasibility Carbon Capture & Storage projects that have received government support. These are: Q Yallourn Integrated Gasification Combined Cycle (lgcc) and Loy Yang post-combustion capture (PCC) projects. Q A project to assess the viability of a multi-user carbon storage and transport system. The project is awaiting the outcome of a carbon storage tenement application lodged in March The four- year work programme has been planned to commence in early Q A 10MWCaieracarbon mineralisation demonstration plant at Yallourn. Negotiations for a hosting agreement are in progress. Chapte r 6 88

51 Coal is currently used for 45%of electricity generation INOrldwide and is responsible for large quantities of carbon dioxide (C02) emission. Clean coal technology generally refers to several methods by which up to 90% of the C02 could be captured and stored indefinitely underground, thereby enabling coal use to continue with a much reduced impact on atmospheric C02 concentration and climate change. Some forms of carbon capture could be retrofitted to existing power plants, thereby reducing carbon emissions more quickly than could be achieved by other means. Clean coal technology is already well understood, but proven only at small scales. There are issues still to be resolved on its long- term performance and on the security of C02 storage, but use on a commercial scale could be feasible from 2020 onwards. We maintain close contact with the leading companies involved in this field and we are exploring a number of opportunities to participate in feasibility studies. Clean Development Mechanism Some of ClP's investments in renewable energy qualify to generate Certified Emission Reduction credits (CERs) under the Clean Development Mechanism (COM) of the Kyoto Protocol. CERs represent the avoided emissions relative to business as usual in developing countries. Sale of CERs adds to the revenue from power sales, allowing a reasonable rate of return on what mi9ht otherwise be an unattractive investment. We are also in the process of applying for CDM approval for a number of renewable projects in the Chinese Mainland, India and Thailand. ClP will continue to bring forward CDM projects with our partners in these countries and comply with UN procedural requirements. We also welcome the recent Arrangements for the Implementation of Clean Development Mechanism Projects in the Hong Kong Special Administrative Region by the HKSAR Government and the Supplementary Notes issued in December It provides an opportunity for ClP to factor this mechanism into our future majority owned projects in the Chinese Mainland. In the longer term, ClP awaits the outcome of the deliberations of the United Nations FramelNOrk Convention on Climate Change regarding the future of COM post As of end of 2009, ClP and its subsidiaries were not allocated any C02e emissions allowances or equivalent under any carbon trading frame'nork. This situation might change in Australia should the Carbon Pollution Reduction Scheme be approved and come into force. To see where t hese proj ects are located, click here I±J. lnhat is ClP's view on the use of clean coal? Will ClP be willing to participate in any clean coal project or the relevant technology development? Clean coal use is, however, very expensive and the energy markets do not currently provide an environment to encourage investment. Installing carbon capture today represents a cost with no return. If, however, there was a value of, say, US$SO per tonne of C02 that was sustainable and widely applicable, the position could change dramatically. In that scenario clean coal technology could reach its tipping point and progress rapidly. Costs lnould come down and by the 2020s, there could startto be significant reductions in carbon emissions. W;nd (45.05MW) W;nd (49.3MW) W;nd (27.2MW) W;nd (69MW) Hydro (49.8MW) 08-Aug % 09-Apr % 2 1-Jon % 27 Feb % 20 WIOr % W;nd (48.75MW) 23 Feb % W;nd (49.5MW) 04-Jun % W;nd (49.5MW) 13-Jun % Mr. Wang Shum in Vice Pres ident Shen hua Group Beijing Guohua Electric Power Corporation Peter Littlewood Group Director - Operations W;nd (49.5MW) W;nd (5 0.4MW) 03-Jul % 13-Feb % 89 Chapter 6 W;nd (49.5 MW) 03-WIOr %

52 Coal is currently used for 45%of electricity generation INOrldwide and is responsible for large quantities of carbon dioxide (C02) emission. Clean coal technology generally refers to several methods by which up to 90% of the C02 could be captured and stored indefinitely underground, thereby enabling coal use to continue with a much reduced impact on atmospheric C02 concentration and climate change. Some forms of carbon capture could be retrofitted to existing power plants, thereby reducing carbon emissions more quickly than could be achieved by other means. Clean Development Mec hanism Some of ClP's Implementation or,r,o,. Mechani sm Pcoj ects Administrative aod th', S'ppl" m,mla' It p'""'e th is m,,:h"tl, Clean coal technology is already well understood, but proven only at small scales. There are issues still to be resolved on its long- term performance and on the security of C02 storage, but use on a commercial scale could be feasible from 2020 onwards. We maintain close contact with the leading companies involved in this field and we are exploring a number of opportunities to participate in feasibility studies. lnhat is ClP's view on the use of clean coal? Will ClP be willing to participate in any clean coal project or the relevant technology development? Clean coal use is, however, very expensive and the energy markets do not currently provide an environment to encourage investment. Installing carbon capture today represents a cost with no return. If, however, there was a value of, say, US$SO per tonne of C02 that was sustainable and widely applicable, the position could change dramatically. In that scenario clean coal technology could reach its tipping point and progress rapidly. Costs lnould come down and by the 2020s, there could startto be significant reductions in carbon emissions. 08-Aug Apr Jan-2008 CLP Ownership 25% 49% 45% 45% 100% Rongcheng I 49% 49% J3-Jun % Mr. Wang Shum in Vice President Shenhua Group Beijing Guohua Electric Power Corporation Group Director - Operations 03 Jul FeblOJO 49% Chapter 6 W;nd (49.5 MW\ 03-,oV,or-20J 0 49

53

54 Our Greenhouse Gas Performance Our Emissions in 2009 Historical Trend target, we would have to peak our Group's C02 intensity before 2010, and also achieve a discernible reduction by We only allowed ourselves 3 years (ie to 2010) to Greenhouse Gas Reporting Approach Ou r greenhouse gas emissions inventory reporting guideline made reference to the following international standards: CLP Group's total C02 em iss ions have increased significantly since the late 1990s due to our acquisitions and development of power generation facilities outside Hong Kong. complete the full cycle of searching, bidding/ negotiating, build and start operating new lower carbon power generating assets, which often take years to build. Hence, timely Reporting Scope From 1993 to 1999, there had been a general contract and project completions, and Our greenhouse gas inventory includes carbon dioxide (C02), methane (CH4), nitrous oxide (N20 ) and sulphur hexafluoride (SF6). We do not include HFCs and PFCs on a systematic basis because the quantities emitted are relatively insignificant compared to the other Q The Green house Gas Protocol: A Corporate Accounting and Reporting Standard (Revised Edition), March 2004, Wo rld Resources Institute (WRI) and World Business Cou ncil for Sustainable Development (WBCSD) decreasing trend in total emissions due to the introduction of nuclear and natural gas supply to Hong Kong. Since 1999, however, there has been an increasing trend in CLP's total emiss ions due to the addition of new fossil generation capacity in Australia, India, Taiwan and Thailand. Changes in equity ownership and commissioning of all new low carbon assets currently in the pipeline, will be critical for achieving our 2010 target. We had expected an increase or peak in our Group C02 emissions intensity in 2008 or 2009 compared to It appears that our Group four, but we will be including them by commissioning of new facilities continue to be C02 emissions intensity peaked between 2008 the main driver of our total C02 emissions, and 2009, since in 2009 our Group C02 Reporting Approach whilst the performance of our plants remain emissions intensity decreased to 0.83kg ClP has developed a Group- wide greenhouse gas emissions inventory reporting guideline as a part of our Group Climate Strategy. The cu rrent version of our inventory follows the "Decentralised Approach ~ to reporting as Q 2006 IPeC GUidelines for National Green house Gas Inventories, Intergovernmental Panel on Climate Change (IPeC) relatively stable from year to year. Group- Wide Emissions We are striving towards our first intermediate target of reducing our Group C02 emissions C02/ k\-vh compared to 0.84k9 C02/k\-Vh in 2008 and In terms oftotal emissions, the Group C02 emissions of our facilities under operational control in 2009 were 49,631 kilotonnes defined by the "The Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard", Revised Edition. Th is approach Our generation facilities in Hong Kong and Taiwan further verify thei r greenhouse gas intensity from 0.84kg C02 / k\-vh in 2007 to 0.8kg C02/k\-Vh by the end of Atfirst glance, 0.04kg C02/ kwh might seem a modest compared to 44,251 kilotonnes in This was mainly a consequence ofthe inclusion of data from Fangchenggang Power Station for the means that each facility will calculate its own emiss ions in accordance with the most emission data in accordance to the ISO standard. reduction. But slowing and reversing the increase in the carbon intensity of our first time, an increased use of coal for electricity generation in Castle Peak Pov.-er Station, and appropriate calculation methodology as generating portfolio is, in itself, a challenging increased outputs at Yallourn Power Station and outlined in the CLP Group "Guide To step given that conventional coal- fired GPEC Power Station. Greenhouse Gas Calculations & Reporting", generation remains the dominant means of seek independent verification of these data and providing new generating capacity to meet the report the calculations and emissions to the growing regional demand for electricity. CLP Group Environmental Affairs Department on a regular basis. We are now monitoring all CLP's goal is to reduce our C02 emissions in Scope 1 and Scope 2 emissions from our power the long run. However, our C02 em issions are generation, gas storage, transmission and expected to rise before they fall due to our distribution facilities, and our retail businesses. continued business expansion in the Asia- Pacific region, where coal is still the most affordable and available fuel of choice and clean coal technology has yet to become commercially viable. In order to meet our 93 Chapter 6 Chapte r 6 94

55 't, CaS[le Peak (CoaHired) Published C02 Emissions Intensity Target in CLP's Climate \ Vision 2050 I Introduction of nuclear (Daya Bay) \!} Introduction of gas (Black POint) ~ AcqUISition of fossil fuel plants In China

56 Hong Kong Emiss ions Scenario In 2009 in Hong Kong, due mainly to the decreased use of gas and increased use of coal, as well as an increase in electricity sales, total C02 emissions in Hong Kong increased by 6%,...mich INere approximately 8% above the 1990 level. CLP Hong Kong's emissions of C02 per kilowatt hour (kwh) electricity sold (including imported nuclear polner) increased from 0.S4kg C02/klNh in 2008 to 0.S6kg C02/kWh in 2009 as shown on graph "C02 Emissions Intensity of CLP Power Hong Kong ( )" on the next page. CLP Hong Kong's C02 equivalent emissions per kilowatt hour electricity sold including imported nuclear polner is also at 0.56kg C02e/kWh for ,000 C02 Equivalent Emissions (kn C02 Emissions (kn Total Sales (GWh) 20,000 15,000

57 C02 Emissions Intensity - ClP Power HK as of 31 December 2009 : Q 0.56kg CO,/ kwh Q 0.56kg CO, e/ kwh,. Per kwh electricity sold including nuclear power C02 Equivalent Emissions Intensity C02 Emissions Intensity Creatin There are two notions to ~sustainability ~: for society, it means preserving the environment so that future generations are not adversely affected; for a company, it means long- term economic survival so that it may contribute to the sustainable development of society. Dealing with climate change and Its impacts highlights the need to satisfy both notions - often a challenging balancing act. ClP's Climate Change Strategy to decarbonise our generating portfolio tries to strike this balance whilst bringing value to our stakeholders. To our community, 'We have a duty to manage responsibly our use of resources and the environmental impacts incurred from our operations. Our climate change strategy leads us down a pathway that will reduce our carbon intensity and encourages us to support others in their climate change mitigation and adaptation endeavours. Potential carbon- related liabilities resu lting from regulatory changes on greenhouse gas emissions is generally accepted as one of the main drivers on climate mitigation and adaptation activities. CLP needs to be in a position to manage th is potential cost as part of our business strategy. The low to zero carbon emitting generation portfolio 'We build up will partially offset the potential liability, and contribute to our competitive edge in the Asia Pacific region by reducing our exposure to financial and regulatory risks. To our customers, 'We need to provide reliable and affordable electricity. Ou r strategy to diversify into low carbon generation takes this into consideration as 'We assess the commercial viability and tariff impacts of new technologies and acquisitions. One of the reasons why vve believe coal will remain a part of our portfolio for a while is that this is still one of the most affordable forms of energy for developing Asia. To our shareholders, prolecting and growing the business is our responsibility. Having a climate change strategy helps to mitigate regulatory, physical, and financial risks that stem from climate change, as 'Well as to motivate us earlier to seek new business opportunities for the low carbon future ahead. The increasing interest in our environmental and climate change performance shown not only by the community, but also by a growing number of investors, seems to indicate that these issues are now beyond being perceived as intangible benefits. Internationally, 'He are seeing companies ' perceived value affected by their performance in environmental and climate change issues. CLP's climate strategy and our associated initiatives have received great support from our stakeholders, and vve shall continue down the decarbonising pathway 'We have set ourselves. Chapter 6 100

58 Future Outlook important role in enhancing the penetration of the intermittent wind and solar generations, as \"Iell as incorporating demand- side capabilities (lp's operating jurisdictions have witnessed in accordance with the increasing interest in changes in climate change related policies over end- use energy efficiency. the recent years. A new global momentum is fueled by the change in leadership in the U.S., ClP 'Nill continue to grow and sustain our Australia and Japan, and nationally proposed business in the region while seeking out targets and legislations prior to the UNFCCC's Roadmap in 2008 to highlight those that are of opportunities that support our Climate Vision. CQP 15 meeting in Copenhagen. the highest relevance and potential to our With a presence largely in developing countries, However, uncertainty in the international business. This is an ongoing effort that will help we recog nise that energy capabilities, climate arena is here to stay. The lack of a firm us maintain our leadership position in bringing technological development and consumer and comprehensive deal from COPlS low carbon technologies into the Asia Pacific demand vary from nation to nation. We will undermines the expectations that the common region. continue to de- carbonise ou r generation but differentiated responsibilities in emission reductions between developed and developing In the near term, \"Ie believe that wind po\"ler will portfolio with investment decisions that are both balanced and sustainable. Further Reading: countries are yet to be resolved. Su bseq uently, we expect to see continual turbulent carbon continue to grow an d be one of the dominant renewable energy sources along with Our regional initiatives in reducing greenhouse gas emissions have been covered in this markets coupled with weak price signals for hydropo\"ler. Onshore wind is becoming chapter. For more details regarding the carbon offsets. increasingly competitive with conventional emissions of specific facilities, please see generation in areas with good wind resources Facilities Performance Statistics Ci>- on our In the short term, a bottom- up approach led while offshore wind is still expensive. With Grou p v.oebsite. domestically is likely to ensue. We anticipate strong regulatory support such as technology more government intervention both in the form of legislation and public I public-private investment schemes to mobalise funds. specific feed - in- tariff in both developed and developing countries, megawatt-scale solar projects using photovoltaic technologies are Q 2009 Sustalnability Report - Sustainable Development Case StudY:Jhajjar Ci>- Australia, for instance, is pushing for a national emission trading scheme, whilst China has emerging rapidly. Yet, additional cost reduction from technology improvement and market Beyond Copenhagen - PO\"lering Asia Responsibly Ci>- already announced the setting up of platforms in at least three exchanges for carbon trading, in addition to its nation-wide carbon intensity targets. China, India, Taiwan and Thailand are maturity are still needed to make photovoltaic technologies competitive. Nuclear power is a mature technology that has experienced evolutionary improvements in safety and Q ClP's latest submission to Carbon Disclosure Project ti- Q ClP's Climate Vision 20S0 ti- mulling over carbon I green tax initiatives. All these will have direct implications to CLP's proliferation- resistance. Future techn ical improvements will lead to Generation IV nuclear Q TRUenergy's Climate Change Strategy Ci>- investment strategies. technologies with further enhanced safety On the technology side, options for generating climate- friendly electricity are available but at various stages of reaching commercial viability. features, reduction in cost, and better fuel- use efficiency. Although various pilot-scale carbon capture and carbon storage projects are underway in different parts of the 'NOrld, o Gold Awards for Climate Vision Our Manifesto on Climate Change (Brochure), Mercury Awards We track a portfolio of emerging low carbon including China and Australia, with the help of technologies ranging from generation to end- use to help us understand when and how these innovations can help our business. government and public money, their commercial deployment is still at least a decade away. Smart grid technologies will p lay an El Gold Awards for ClP Technology Roadmap (Brochure), Mercury Awards We already published a ClP Technology 101 Chapte r 6 Chapter 6 102

59 " Nature will impact upon humans with the same regard (or disregard) and intensity that humans have afforded nature. And judging from the current state of the earth, with effects such as those of global climate change, it is extremely important that we are serious about respecting the Earth.,, Air Emissions Jeanne Ng Director - Group Environmental Affairs Water Retrofit of new emissions control For power generation From power ge neration Waste Noilural9oiS

60 Our Values for Change CLP is committed to the responsible use of resources and management of the impact on the environment throughout our operations. We monitor and mitigate these two areas diligently to ensure continuous improvement in our environmental performance. ( LP Cares for the Environment " We use fuel, water and other resources efficiently and productively In our business operations and projects. " Extract from CLP's Value Framework, 2009 Revised version Clean Air Charter (Hong Kong and Guangdong, China, since 2005) As a sponsor and one of the first signatories, we commit to: At CLP, our work is ultimately driven by what we believe to be right and responsible as a business. Over the years, the orientation for corporate environmental management has evolved significantly. Global companies have advanced from environmental philanthropy and end- of- pipe so lutions to operational improvement, risk assessments, eco- strategic planning an d building environmental competitive advantage. For CLP, not only have we internalised environmental considerations into our daily operations, we seek to go beyond regulatory compliance by being environmentally vigilant and engaging with a diverse range of stakeholders as early as possible in each project cycle. We believe it is for the benefit of our shareholders and the long- term sustainability of our company and the communities we serve to do so. Climate change was identified as a priority for our company over a decade ago. Although it remains a key issue, we continue to monitor and manage all our environmental risks, including possible emerging environmental issues. New environmental regulations could result in: Increase in capital and / or operating costs for emission reduction projects such as installing and operating pollution control equipment Decrease in competitiveness and /or early retirement of coal- fired power plants Disputes and potential litigation over liabilities for emissions, effluent or waste Restricted / difficult access to natural resources and/ or disposal sites, underm ining operational optimisation Increase in licensing fees Loss of revenue due to reductions in demand for electricity arising from enviro nmental regulations applicable to our customers 1m proved certainty and clarity to long- term investment decisions, depending on policy design Use continuous emissions monitors at our significant plants Operate our facilities to a recognised world class standard or standards established by the Hong Kong/Guangdong governments on emissions of air pollutants beyond legal requirements Publish information on our energy and fuel use and total air pollutant emissions if significant New regulatory requirements and voluntary practices also help increase demand for end-use energy efficiency and low carbon energy. Th is demand in turn creates market opportunities for relevant services. While higher energy efficiency at our customers' end can potentially reduce electricity sales or sales growth in the short-term, this is outweighed by the long- term benefits - saving resources and alleviating the need for new energy infrastructure. More investments in low-emission energy and consideration given to those most adversely affected by the new regulations. -I 105 Chapte r 7 '. Chapte r 7 106

61 Environmental Policy and Management CLP's Group- level Environmental Policy Statement forms a key part of the CLP Value Framework and addresses environmental monitoring, compliance and reporting as 'Nell as environmental education and continuous improvement. Individual facilities may use the Group- level policy as a baseline for generating their own, more detailed environmental policies as relevant to their particular jurisdictions and circumstances. We take the fo llowing management approaches on ou r environmental issues: Energy For any business, it is in its interestto reduce the use of energy. At CLP, not only do...e take measures to reduce our energy consumption within our own operations, but we also provide advisory services to our customers on how they can reduce their electricity consumption as well. Electricity products and services have very low environmental impact at the point of use. HOVolever, the use of electricity by consumers witt determine how much power needs to be generated. CLP manages the impacts at the point of use primarity through the promotion of energy saving measures to our customers in accordance with our Environmental Policy Statement. Energy efficiency helps us keep energy affordable to our customers, and maintain our competitiveness and our profitability under both fixed and flexible tariff regimes. In line with our contribution to better regional air quality, we envision integration of energy markets between Hong Kong and South China as a key strategy to secure clean energy. Our Energy Vision, articulated in a primer published in mid 2009 entitled Towards a Greener Pearl River Delta (PRO) - A Roadmap for Clean Energy Generation for \.:- Hong Kong tt.,outlines our three steps forward: Q Strengthening energy infrastructure integration to support the development of the PRO ' s energy industry; Q Shifting to using more clean energy sources for CLP's power generation; and Supporting energy efficiency and conservation both within our own business and in the community as a whole. To support development of the PRO and strengthen infrastructure integration, CLP will continue to build on our existing transmission netvyork linked to Guangdong, as well as to secure new gas sources from Phase 2 of the Chinese Mainland's West- to- East Pipeline Project, a new liquefied Natural Gas (LNG) terminal in Shenzhen, and other offshore gas supplies from the South China Sea. We are also committed to adopting a cleaner fuel mix through increasing the proportions of gas and nuclear power, reducing reliance on coal, while promoting microgeneration of renewable energy by our customers. -~.~ '~-:::::--- Towards a Greener Pearl River De lta - A Roadmap for Clean Energy Generation for Hong Kong Within our business, we will continue to pursue energy efficiency options...milst extending our services to the companies in PRO on cleaner production and energy efficiency. To our communities, we will continue to promote energy efficiency through dedicated energy conservation services and public education. Fuel Resources At CLP, Vole are committed to the responsible use of resources by using, as much as is feasible, resources that have less potential environmental impacts and reducing the quantity of resources used. Hence when it comes to fuel, where possible, Vole try to use 10Voler emitting types offuels such as ultra low sulphur coal and renewable energy, and less quantities of it through improvements in our operational efficiency or the use of new technologies. Air Emissions Air emissions contribute to both air quality and climate change issues. CLP's facilities maintain operations within regulatory and permit limit conditions. We continuously keep track of air emissions at facility level through an online data management system developed in - house. Where regulations are lacking, we apply best avaitable technologies and international best practices wherever possible. At the same time, we try to use lower emitting types of fuels and continue to diversify our fuel mix towards cleaner fuel and renewable energy sources. Water In the electricity sector, water is essential in many power generation applications. In our hydropower stations, we manage water resources to maintain our ability to generate povoler, and release flows...men necessary to maintain downstream river flow. For our baseload facilities, CLP uses seawater for cooling thermal power plants where possible. In a few facilities where we rely on freshwater for cooling, we implement water conservation measures for the cooling systems. We also manage water effluents in compliance with regulatory and permit limit conditions, and recycle our water as much as is practical. 107 Chapter 7 Chapter 7 108

62 Waste and Materials Transport Biodivers ity Organisational Responsibility for the Environment Amongst all the waste generated by our operations, fly ash from our coal- fi red facilities represents the largest volume. We vvork with local authorities, businesses and organisations to encourage its reuse or to manage its inevitable disposal. We manage chemical and hazardous waste according to regulatory requirements, and recycle other non-hazardous waste where practical. In the use of materials, CLP considers environmental impacts of purchasing decisions along with quality, fitness for purpose, and cost. A large portion of CLP maintains a vehicle fleet, including a small number of specialty vehicles, to meet its business and operational needs. With safety as our first consideration, we provide training and education, and restrict the use of vehicles to those company drivers who are properly qualified. Environmental performance is also one of the important cr iteria for ou r vehicle procurement. We advocate the use of environmentally friendly vehicles. CLP has been the pioneer in Hong Kong in using not only hybrid vehicles (including plug-in) but also electric vehicles. We actively support Hong Kong Through the process of environmental impact assessment, CLP facilities are designed to respect biodiversity, and to mitigate the impacts of our facilities and their operations on natural systems. Our management of emissions, effluents and waste help maintain the natural habitats for indigenous wildlife. In addition, we have designed and implemented special measures to help maintain fish and bird populations...mere they might be affected, for example by hydropower plants and wind farms respectively. Many of these measures become conditions for our operating permits for the facilities and are Our CEO is responsible to the Board for environmental performance of the company. The CEO and the Sustainability Committee of the Board of Directors oversee CLP's environmental performance. Compliance and environmental performance are responsibilities for each facility manager as well as the head of each business. The facilities maintain constant dialogue with the Director and team at Group Environmental Affairs, who provide environmental expertise support to the facilities and are responsible for reporting environmental compliance to the Board of Directors at least five times per year. materials used by CLP are installed in Government in promoting the use of subject to ongoing monitoring and long- lived facilities and infrastructure. electric vehicles by drivers at large. demonstration of compliance. Through an active programme of maintenance and upgrade, we work to preserve the value ofthe physical assets. We conduct remaining life assessments and make investments to extend the operating life...mere this is feasible and cost-effective. Our waste disposal section has details regarding our management approach on nuclear and polychlorinated biphenyls (PCB) waste. 109 Chapter 7 Chapter 7 110

63 Enablers for Action Environmental Management Systems Ou r operations adopt certified environmental management systems (EMS) to systematically measure and improve our environmental performances. It is a requirement at CLP that all facilities in which we have operational control must develop and achieve certification of an EMS within two years following acquisition or commencement of operation, This is to ensure integration of EMS at the early stage of business planning. A list of our operational controlled facilities and their environmental and safety management systems can be found under the Assets and Management Systems section of this Report. Group Information Reporting System Apart from the EMS systems at facility level, we have also built a Group- """;de information system called the Group Information Reporting System (GIRS). It is a custom made online platform developed in - house to centralise collection of performance data across the portfolio. It can also benchmark specific performance area amongst facilities. GIRS facilitates internal performance tracking and data consolidation for our Sustain ability Report, as welt as other internal and external reporting functions. Data captured in GIRS include environmental, safety and operational data at both facility and Group level. GIRS applies a robust workflow to ensure data integrity and quality. All data collected is reviewed and approved by facility management against relevant data processing and management procedures. At the Group level, relevant functional teams conduct quality control procedures, such as ensuring that the data verification process has been properly executed and reflected in the GIRS before the data is used for internal and external reporting. Environmental Investment CLP's largest expenditure on environmental protection is ongoing investment in capital infrastructure. These include major retrofits of power plants """;th emissions controls and construction of new renewab le and other low-emission energy facilities. When CLP considers a new investment, we evaluate its environmental implications, as well as operational carbon emissions and ris ks as part of the overall decision- making process. As the lifespan of our assets is likely to be over 40 years, it is imperative that we integrate long term sustainable solutions into our decision- making. In some cases, it could mean incorporating retrofitting capabilities into the overall design at the early stages of construction. Further to our existing pre- investment environmental assessment criteria, in 2006 we introduced an additional climate risk assessment to examine the carbon intensity of new proposals prior to investment approval. This serves to reduce our business risk in light of possible new climate change regulations as well as new technology that may become available and mandated within the lifetime of the asset. Human Resources In addition, CLP's annual operating expenditures include salaries for full- time environmental management staff; environmental training; supplies and materials necessary to operate emissions controls; and environmental services including report validation and data verification. CLP also maintains budget and staff for environmental outreach and sponsorship of public conferences and research. Training and Awareness on Environment CLP has an extensive programme of education and training on environmental subjects for both staff and customer s. Staff programmes, such as Go Green, promote energy conservation at work and at home. In addition to formal training, we also provide our staff """;th a wide selection of online educational resources and reports about the environment. For instance, we have several monthly and bi- monthly internal online bulletins that monitor global environmental- r elated policy trends, carbon markets and technology development, """;th a _fir"... focus on areas pertinent to CLP's business. CLP also strongly supports environmental Cl.pOIJl education for the community, such as schools and univers ities in more formal programmes, and speaking in seminars as more ad-hoc engagements. II!l AJ~r:r.Jf{,;;C '...,-,..., - ",, ~ ~ ~ - An example of staff engagement is the Personal Environmental Commitment (PEC) programme Initiated in 2008 in Hong Kong. PEC encourages colleagues to set personal commitments and eventually turn them Into habits that benefit the workplace, their home and the environment. Around 60% of our employees In the Power Systems BUSiness Group have volunteered tojoln this programme. 111 Chapter 7 Chapter 7 112

64 Our Performance Air Quality Total emissions of sulphur dioxide (502), nitrogen oxides (NO~) and total particulates at Yallourn Power Station this year. Our Fangchenggang Power Station took a major from CLP's po'ner stations across the Group, step forward in having their air emissions data CLP manages and mitigates the various impacts Air quality is largely determined by inputs (fuel for W'hich we have operational control, were at independently verified, and was included this our operations may have on the environment We regularly set goals, assess and report type and quality) and the technologies employed. To maintain a balanced fuel mix, we 44.2,44.0 and 6.8 kilotonnes respectively in 2009, compared with 55.3, 46.9 and 6.8 year for the first time, while our Boxing Biomass Power Station also managed to provide progress on our environmental performance, continued to use ultra- low sulphur coal and kilotonnes in independently verified data after its first full including managing the direct inputs to our natural gas in Hong Kong in 2009, and will year of operation for inclusion in our report - a business such as fuel and water, and our continue to look for opportunities to diversify The reduction in Group 502 and NO x emissions commendable achievement. The increase in the outputs such as air emissions, effluent and into more natural gas and renewable energy and insignificant change in total particulates use of coal at Castle Peak Power Station this waste, as well as their effects on ecosystems generation ac ross our Group portfolio. The emissions v.oere due mainly to the unavailability year contributed to the increase of emissions. and biodiver sity. integration of Hong Kong - South China energy of independently verified BLCP Power Station However this increase, as well as the impact of markets will facilitate attaining these objectives. emissions data in time for publication, and the the additional facilities, were eclipsed by the much lower sulphur content of the coal used exclusion of BLCP's performance data. Total Nuclear at Daya Bay Boller Optimisation Il3 Chapter 7 Chapter 7 Il4

65 CLP Power Hong Kong Fuel Mix (2009 Figures) scheduled to be available. Using less gas meant we had to use more coal and so our emissions ~ missions Control completion. As part of the commissioning activities, extensive testing of this first u nit was of 502, NOx and total particulates did increase CLP Power Hong Kong is undertaking a carried out. The test results indicated that its by approximately 20%, 6% and 30% respectively large- scale Emission Control (EC) Project which emission reduction capabilities were over the 2008 levels. aims to retrofit the largest four coal- fired units functioning as according to the equipment of the Castle Peak Power Station with further design. It is planned that the first FGD unit will Looking ahead, the timely completion of the emissions reduction facilities. This EC project is be put into full operation in August. Emission Con no I Project at Castle Peak B Power instrumental to CLP in achieving the Hong Station will be critical to achieving the drastic Kong- Guangdong 2010 emissions reduction The installation and construction activities for reductions in emissions needed to meet the objectives. The retrofitted technologies are: the other three generating units are also 0 " = In Hong Kong, emissions of 502, NOx and total particulates from all three power stations were 2010 targets jointly set by the Hong Kong sar Government and the Guangdong Government. Given the current solid progress ofthe project, we believe we are well on track to meeting these targets (see section on Emissions Control). Mean...mile, we are also 'NOrking diligently with Hong Kong Government, Mainland gas suppliers and various stakeholders to develop the infrastructure needed to bring replacement gas to the existing dwindling supply. The earlier Q Boosted Over Fire Air (BOFA) technology that optimises the combustion condition of the boiler and helps curb NOx production at the start of the generation process. These are in addition to the existing low NOx burners which were installed in the early 1990s. Q Selective Catalytic Reduction (SCR) technology that helps to further reduce NOx. It is estimated the combined efforts of both SOFA and SCR will enable the removal of NOx by over S096. progressing satisfactorily. For the second generating unit, the commissioning 'NOrk for the emission control facilities has started in June, a few weeks ahead of schedule. For the third and fourth units, the emission control facilities are planned to be in operation by end of 2010 and early 2011 respectively. Castle Peak Power Station is believed to be one of the few facilities in the 'NOrld to retrofit all three technologies simultaneously while all below the regulated base caps in Nevertheless, ou r emissions did increase compared to 2008 as a result of our depleting gas reserves. Since 1990, CLP Power has achieved significant reductions of key air emissions in the range of we can secure sufficient gas supply, the earlier we are able to increase the usage of cleaner energy and contribute to better air quality for Hong Kong. Q Flue Gas Desulphurisation (FGD), a proven and widely established technology that can remove over go% of the 502 in flue gas. The FGD will also help further reduce particulate emissions on top of the reductions by the existing electrostatic precipitators. maintaining its operations. CLP is also one of the first power plants in Asia to employ BOFA technology for NOx reduction. These combined technologies will help remove pollutants before they leave the stacks. Emissions performance of Castle Peak B Station about 65% to nearly 8096, despite an increase of The first BOFA u nit was in operation three Is expected to be comparable to EU standards total electricity sales of 83%. However, since 2003, we have had to step up our efforts in managing ou r existing gas reserves which are due to deplete in the early 2010s. Although we have managed to control our emissions towards a general downward trend, managing our diminishing gas supply has led to fluctuations in our emissions over the last few years. The situation in 2009 was no exception. We continued our efforts to stretch out and sustain The small amount of ozone depleting substances in our power generation portfolio is mainly found in fire-fighting equipment, air conditioners and HVAC chiller plants. By 1 January 2010, all products containing ozone depleting substances are banned from being imported into Hong Kong. CLP Power Hong Kong's Generation Business Group has a hydrochlorofluorocarbon (HCFC) phase out plan...mich will be completed by months ahead of schedule in September The commissioning ofthe first Flue Gas Desulphurisation (FGD) unit is near its when all EC facilities are in operation. At a wider Group context, we have made a commitment since 10 March 2004 to incorporate FGD equipment or equivalent 502 emissions reduction capability into the planning of all new greenfield coal- fired projects in which we have a controlling interest. For example, the Jhajjar Power Station in India will be equipped with mitigation capabilities to fu Ity comply with statutory emissions requirements, as well as non- statutorily the depleting Yacheng gas supply to last up to 2013, which is...men the replacement gas is Emission Control (ECl Project at Castle Peak Power Station, Hong Kong required FGD equipment. 115 Chapte r 7 Chapter 7 116

66 ~ Iectric Vehicles ClP strongly supports the introduction and In conjunction with Hong Kong Science and The first Tallawarra Power Station, kno'ml as Tallawarra A, became fully operational in January 2009 and is Australia's most efficient wide adoption of electric vehicles (EV) in Hong Kong. We took the lead in pioneering the Technology Parks, we established an EV Consortium comprised of representatives from Operational Efficiency natural gas power station. In 2009, the station, at full load, produced approximately 8 to g infrastructure needed to support and promote government, corporations, academics and CLP's greatest opportunity to save energy lies parts per million of nitrogen oxide (NO x), well EVs to corporations and the wider community. NGOs to accelerate the adoption of EVs into in improving the performance of our power below the Environment Protection Agency limit Through INOrking with Hong Kong Polytechnic corporate fleets and the wider community. plants. Our focus is mainly on improving the of2s parts per million ofnox. University, our team developed a user- friendly thermal efficiency of ou r facilities through the EV charging solution which was designed to use of technology and good maintenance SupercriticaJ Plants leverage on the existing parking environment & practices. In Hong Kong, our transmission and Octopus payment system in Hong Kong. distribution losses are kept at below 5%, an optimal level considering the engineering and CLP launched the EV Charging net'nork trial cost constraints. programme in May 2009 in conjunction with various local carpark operators and partners. Combined Cycle Gas Turbine The first two charging stations were unveiled on 9 November As of30june 2010, EV charging stations have been energised in all the Combined Cycle Gas Turbine (CCGD technology is recognised as being safe, efficient targeted 21 public carparks across Kowloon, and clean. Energy in the gas turbine exhaust is New Territories and Lantau Island. CLP is transferred to a steam cycle producing continuing to work with various partners to extend the EV charging network to other strategic locations as well as address the need for EV charging in carparks of private users. In Q1 2010, CLP also installed the very first Quick CLP's first two electric vehicle (EV) charging stations were unveiled In November with the remainln9 scheduled to come online in 2010, amounting to a total of 21 stations. For more information on EV, please visit CLPOnllne. additional electricity. The thermal efficiency of CCGT (42 - SO%) is significantly higher than that of conventional pulverised coal power plants (32-37%J. CLP was a pioneer in bringing CCGT to our Black Point Power Station in Hong Kong, Charger in Hong Kong to test its suitability for and has extended the application to GPEC in Hong Kong 's EV users. India and Tallawarra Power Station in Australia. Furthermore, CLP has acquired 10 Mitsubishi imievelectric cars for our company fleet in Supercritical coal-fired Fangchenggang Power Station In the Chinese Mainland March 2010 and has also successfully We are using high- efficiency supercritical steam converted six standard Toyota hybrid vehicles technology for our coal-fired power station at to the even more environmental-friendly Fangchenggang in the Chinese Mainland and plug-in hybrid version. Going forward, CLP is Jhajjar in India, which is under construction. committed to introducing & trialing more EVs as The technology utilises advanced materials to they become available in Hong Kong. withstand the higher supercritical temperature, which results in higher plant efficiency. In other CLP is also a member ofthe Steering Committee words, less fuel will be needed for the same on the Promotion of Electric Vehicles organised units of electricity produced. by the Environmental Bureau of the Hong Kong SAR Government. Mr Richard lancaster, Managing Director of CLP Powe r. launched the first EV charging stations on 9 November Chapter 7 Chapter 7 118

67 TRUenergy, Australia In 2009, both Yallourn and lona sites received approval for their Environment and Resource Efficiency Plans (EREPs) from the Victorian Environment Protection Authority (EPA). EREP is a Victorian Government programme that requires large Victorian businesses to develop individual site plans that outline business opportunities from us ing energy and/or water resources more efficiently. Examples of the actio ns in the Vallourn and lo na EREP programmes for 2009 include: Q Installation of new gas off take seals at Vallourn that will improve boiler efficiency. Q Installation of a heat recovery unit on the lona low Pressure Delivery Service Project (lops) gas compressor saving up to 55,000 Q of energy per year. Q Reducing the number of cleanouts to remove Mono Ethylene Glycol (MEG) at lona resulting in around 25 kilolitres of liquid waste savings each year. Improvement of Tallawarra's output efficiency is planned in 2010 with studies to be conducted to determine the most efficient use of large electric drives during periods of low load operation. This study...,;11 determine v.rhether the drives can reduce the power needed to run the plant, v.rhich would reduce the plant's emissions and allow more power to be put into the electricity grid. TRUenergy's 180 MW Hallett Power Station, built in 2001, is located at Canowie, approximately 210 km north of Adelaide. The power station operates as a peaking station and can provide up to S%ofSouth Australia's electricity needs during a hot South Australian day. Currently, all 11 gas turbines are being fitted with a fogging system to the air intake. This will allow an increase in generation of about 25 MW with a minimal increase in fuel gas. GPfe, India GPEC conducted an energy audit in 2009 by an independent external service provider to identify potential areas of energy saving. The recommendations on energy savings meas ures included: Q Minor measures requiring tuning of process controls; Q Medium term measures requiring small investment; Q long term measures requiring major capital investment. ClP India addressed the minor recommendations immediately. The medium investment projects are being planned for implementation. The major capital intensive projects require careful engineering and process review, and are subject to such review. For the gas turbines, GPEC will evaluate and selectively carry out modifications and technology upgrades recommended by the Original Equipment Manufacturer (OEM) to improve their reliability, increase availability and performance. Building Energy Efficiency We are supportive of the mandatory implementation of Bu ilding Energy Codes in Hong Kong as early as feasible. ClP has adopted the Su ilding Energy Codes v.rhenever possible within its own buildings. We have already completed 29 registrations for 11 ClP buildings under the Hong Kong Energy Efficiency Registration Scheme for lighting, air conditioning, lift and escalators, and electrical installations. December 2009, ClP signed the World Business Council for Sustainable Development's (INBCSD) Manifesto for Energy Efficiency in Buildings 1+ along with over 40 other member companies around the world. The Manifesto calls for the implementation ofthe actions outlined in the Manifesto within three years of signing. These actions include: creating a baseline, setting reduction targets, conducting an audit programme, publishing an energy policy as well as performance data against targets, and promoting building energy efficiency amongst our staff, supply chain and the community at large. A Group-""";de implementation timeline has been set out in the first half of 2010 and preliminary baseline inventory is scheduled to commence around Q Chapte r 7 Chapter 7 120

68 End- use Efficiency Green Studio Eco Home Seeing end- use energy efficiency as a vital contributor to energy security, CLP offers energy efficiency services to our customers in Hong Kong and Australia where we have a retail arm. Our service was further extended to Shenzhen, Guangdong in Hong Kong CLP promotes energy efficiency in two main ways : providing advisory services to our residential and commercial customers and su pporting public education. One of the direct ways to improve energy consumption behaviour is through energy audits. CLP provides free energy audit and advisory service to our business customers in Hong Kong. We have provided about 1,000 energy audits to our customers in the last 10 years. We also support our small to medium enterprises business customers in energy efficiency initiatives through our Business Centre. ClP has developed and conducted a year- round Energy Efficiency & Conservation (EE&C) campaign through both print and online advertising. By the end of 2009, market research has shown that over 30% of Hong Kong people are aware ofthese EE&C messages.. - Since its launch in March 2009, the mobile Green Studio (GS) has accommodated over 10,000 visitors (mainly primary school students). GS combines fun with information on energy efficiency and conservation through interactive presentations such as an imaginative 3D movie. GS will continue its mission in 2010 to educate children and communities on climate care messages. Energy Efficiency Centre We renovated our Energy Efficiency Centre which was reopened in This exhibition centre occupies a floor area of 2,000 sq ft, displaying and promoting the latest energy efficiency products and technologies for the commercial and industrial sector. CLP's Eco Home, Hong Kong's first green living experience centre, celebrates its first anniversary in November It has reached several milestones in promoting energy efficiency and conservation: Q Rec.eived more than 70, 000 visitors Q Conducted over 40 green living workshops Q Introduced more than 6, 000 energy efficient applianc.es and smart plugs I panels to cu sto mers O~ EJ Eco Home 0i~-- {. L J [ZJ [ZJ i. Smart plug & panel, which automatically turn off equipments from standby mode.---:=.:- I CLPOniine - We launched the completely revamped ClPOnline in 2009 to serve our customers better. Apart from giving customers the convenience of managing their accounts online, \Ne also took the opportunity to further raise their environmental awareness. The new CLPOnline contains an Energy and Carbon Calculator, as \Nell as an Energy Management section to assist businesses to be more energy efficient. 121 Chapter 7 Chapter 7 122

69 Australia Furthermore in 2009, TRUenergy Yallourn has actively managed 24 conservation sites, Musselroe Wind Farm sire vegetatio n Fending and weed control programme TRUenergy continued to work "";th as part of its Conservation Management Conservation Volunteers Australia (eva) on Plan. The plan aims to offset the native Roaring 40s is currently involved In tvv'o a new programme called the 'Big Backyard' to rejuvenate and restore important natural habitats near our energy sites. Three Big vegetation losses associated with approved coat mine development. The 10 years programme is expected to be completed by significant projects in the northeast of Tasmania, protect ing valuable coastal vegetation communities and habitats and eradicating a Backyard projects that look place during 2014 and new areas will be added when a Weed of National Significance - Gorse (Ulex 2009 were: new mine plan variation is approved. europaeus) - from the Musselroe Wind Farm site. The James Whyte Island Reserve, Victoria In partnership with TRUenergy, eva is working to restore the degraded is land to its We completed swathe planting of 10,605 trees across 12 different sites in Of these, 410 nationally threatened Str zelecki Gu ms species were planted along the TRUenergy staff planting trees, shrubs and grasses on the Duck Creek Rehabilitation project at Taliawarra The projects have conducted extensive su rveys and evaluation of the natural values of the habitats. They will result in the protect ion of 2,500ha of vegetation through SOkm of native state. Over the next five years, Morwell River. Weed control and vegetation Eagle protection projects permanent fencing and the eradication of 100ha TRUenergy employees will work alongside work has also commenced along almost of Gorse. commu nity volunteers to plant over 75,000 seven kilometres of the Morwell River. The Roaring 40s Renewable Energy Pty Ltd. (Roaring t rees at the Site, helping to improve habitat return of significant bird populations has 40s) has been implementing a range of offset and increasing biodiversity in the region. indicated success within the wetland areas projects to benefit the threatened Tasmania adjacent to the river as aquatic habitat has Wedge- tailed Eagle and lm'iite-bellied Sea Eagle Duck Creek Tallawarra. New South Wales improved through the weed control populations. The programme is part ofthe programmes. We have recorded numerous operating requirements of R40's Wool north wind TRUenergy staff and local community rare and threatened animal species farm and the Musselroe wind farm in Tasmania volunteers are working on a programme to throughout the conservation areas and the both of which are currently under construction, restore Duck Creek. an important riparian on-going maintenance of their habitats and is aligned with the species Recovery Plans. corridor. The programme has successfully continues. We have also installed a variety of planted around 900 grasses, shrubs and nest boxes within remnant bush areas of the The four main elements of the programme are: a trees, and re- vegetated an area of 3,634 Morwell River to help attract birds. Tasmanian wide nest protection programme; an square metres. Volunteers are also repairing eagle nest searching package; provision of funds and restoring around 1,400 meters of to specific eagle studies; and an education and walking track to improve access to this awareness programme including a natural site. comprehensive Eag le Education Kit. Great Ocean Road, Victoria The project is marked by several milestones. They include the long term protection of 340 Along with Heytesbury Landcare and Parks hectar es (ha) of eagle breeding habitat Victoria, TRUenergy and eva are working to containing 9 wedge- tailed eagle nests and 8 preserve the environmental value of this white-bellied sea eagle nests; Improved species pristine area and will enhance visitor experience through improvement works on the iconic Great Ocean Walk. The James Whyte Island Reserve, Victoria - TRUenergy staff volunteering their time to assist with the planting over 75,000 Irees over the next three years management which is scientifically supponed; and education package and articles for distribution to all Tasmanian schools. 131 Chapter 7 Chapter 7 132

70 Chinese Mainland Australia CLP extended its energy efficiency and cleaner production services to the Pearl River Delta with the establishment of ClP Energy Services and Technology (Shenzhen) Co. ltd. (ClP Sn in August More than 150 customers, many ofvvnich are located in Guangdong and have strong ties with Hong Kong including hotels, factories (textile, electronics, plastic, printing, metal) and office buildings. Shangri- La Hotel, Shenz hen Partnering wit h the Shenzhen Shangri-l a Hotel, ClP helped to install a new heat pu mp system to replace the less environmentally friendly gas and oil based hot water system. The cold water is then fed directly to the air conditioning system, thus improving the overall efficiencies of both systems. The project saved over 50960fthe energy cost, which translates to about RMB700,000 per annum. The payback period is within 3 years which is cost effective. TRUenergy offers energy saving tips on its public -website and via customer bills. We also offer energy efficiency advice to low-income households and customers experiencing financial hardship, TRUenergy's Customer Welfare Program in Australia aims to provide these customers with a range of options to get their energy payments back on track. On average, behavioural changes make up 40 to 5096 of the overall recommendations, highlighting the potential opportunity for low-income households to reduce their consumption through low or no cos t adjust ments. In 2009, TRUenergy provided a popular free service for residents in Victoria whereby Vv'I! retrofitted customer homes with energy efficient light bu lbs and sho'ner heads. In South Australia, 'Ne offered a similar service to households under the SA Residential Energy Efficiency Scheme. This scheme also includes energy efficiency audits for customers experiencing financial difficulties in paying their bills. Water is an essential resource (0 po'ner (he generation of ele<tricity. Yet its availability is increasingly tied to consequences of climate change, demand expansion and regulations. in Australia, our po'ner plant and coal mine at Yallourn had been affected by too little water (drought, leading to scarcity of water for generation cooling), and too much water (flooding, leading to partial collapse ofthe coal mine). These fluctuating conditions may also affect our hydropower facilities which rely heavily on water availability. Cl P continues to monitor, treat and recycle our effluents and seeks to minimise the appropriation of water and implement efficiency measures whenever possible. Water Use and Management Thermal power generation requires water for cooling. Most of our cooling systems are the Monce through" type because of the readily available source of seawater or other water sources. These systems return water in a liquid state to their sources. We also have cycled cooling systems that re-circulate the same water repeatedly through our plant. These use less water, but still require water to make up for losses through evaporation and to maintain acceptable chemistry. Coal and combined-cycled gas po'ner plants also use water as steam to drive the turbines. The water in the steam cycle is re<ycled, but requires fresh make-up water to prevent the build- up of impurities that could damage the plant. Kowloon Shangri-La Hotel in Hong Kong underwent a similar retrofit some years ago. Hydropower stations utilise water in an entirely different way. They usually create a reservoir to deliver water to the power station at a lower elevation so as to create significant water pressure, which spins a turbine to generate electricity. Water is returned to the river system do'm1stream ofthe power station with no loss of water. However, it is important for the implications of hydro operations on water quality and aquatic biodiversity to be well addressed. 123 Chapter 7 Chapter 7 124

71 Regional Water Management Initiatives: Q TRUenergy, Australia The Hallett and Tallawarra power stations installed rain water tanks during Hallett, which uses open cycle turbines, does not use water for steam in the generation process, but used the rain water for general plant water needs. Tallawarra captured rain water for use as make- up water, wash-down water and to water surrounding landscaped areas. The Yallourn PO'over Station also saved a substantial amount of water in 2009 through its own water saving initiatives. Q Boxing, Chinese Mainland Boxing currently relies on groundwater as a cooling source for its operation. All cooling water Is recycled, while all wastewater is sent to a sewage treatment plant close by. Upon treatment, water is then sent to a nearby paper- manufacturing plant that reuses the resource. Q epfe, India GPEC draws raw water from the river Narmada, situated about 2Skm from the po'over plant. The water is clarified and used for the purpose of cooling tower make-up, demineralisation, potability and other domestic uses in plants, facilities & township. The water used in the condenser cooling water system is recycled to optimise the make-up water requirement. An integrated water management study is currently in progress. We will study the recommendations and plan for implementation in Water discharge is directty linked to ecological impact and operational costs. At CLP, it is common practice to reuse treated wastewater for watering the grounds and plants on our facility sites. Unintentional discharges from the power stations into the surrounding environment can have varying degrees of impacts on the surrounding environment. It is therefore important that we try to prevent and mitigate such discharges if they should occur. - DeSPite the growth in our generation portfolio, wastewater discharge from facilities which we have operational control has generally decreased in past few years as a result of water recycling and conservation initiatives. However, we noted an increase in the overall volume of wastewater discharge by about 10% in 2009 compared with The increase was due to the cessation of coal mine water recycling at the Yallourn Power Station because the mine water was not suitable for reuse, as wejl as additional water required for scheduled plant equipment maintenance at the Castle Peak Power Station. The elevated wastewater discharge from these t'no facilities outweighed the general reductions achieved In other facilities. In 2009, there was one environmental incident concerning discharge at Tallawarra Power Station, Australia where three breaches of licence occurred. Boiler blowdown water was found to have overflowed into Lake IIlawarra on 30 October 2009 due to multiple pump failure. The Department of Environment, Climate Change and Water (DECCW) issued a warning letter to Tallawarra regarding this incident. Tallawarra submitted a remedial action plan with an implementation schedule to DECCWand no penalty was imposed. The remedial actions have been completed in Q and DECCW has verified the work on site. Discharged cooling and wastewater can contain heat, water treatment chemicals and contaminants. At CLP, we manage our aqueous emiss ions responsibly by ensuring that: Please refer to the Facilities Performance Statistics on our Group website for information on water discharges by individual facilities. Site runoff is collected, recycled and reused \. whenever practical ". 125 Chapte r 7

72 India Other Environmental Issues Electromagnetic Fields The potential health effects of electromagnetic GPEe India has published a book entitled ~Power of Nature - Biodiversity at GPEC. capturing the rich biodiversity being supported on the GPEe estate in plant and township. A 2- year follow-up study was launched in mid- 200B 'Nith the focus on further capturing behavioural images of species, discovering new nocturnal species and extending the coverage to selected areas of surrounding villages. The study will conclude by mid- 20lD and the updated inventory will be published as a book in early There are a suite of environmental issues associated with the construction and operation of our facilities such as noise and electromagnetic fields. We manage these issues responsibly through dedicated teams at fac ility levels. Noise Electricity transmission and distribution are more prone to noise issues than power stations as our substations are often located nearer to commercial and residential areas. For new substations, our first priority is to configure the layout so that any potential noise is reduced to a practicable minimum. 'M1erever appropriate. we incorporate additional mitigation measures such as low-noise transformers, noise barriers, fields (EMF) can be a concern for those located near power transmission and distribution lines. We have adopted best practices to ensure that our povver systems meet international standards relating to EMF. Our supply system and substations in Hong Kong operate in full compliance with the guidelines issued by the International Commission on Non-Ionising Radiation Protection - the same guidelines adopted by the HKSAR Government. CLP monitors scientific studies on the health effects of EMF. Based on international data*, at normal distance, the EMF produced by overhead lines is actually lower when compared with ordinary household appliances such as vacuum cleaners and hair dryers. However, CLP is mindful of public concern and we continue to shielding and acoustic absorption. be vigilant in monitoring the progress of research in th is area. Since 1998, we have been implementing a noise surveillan ce programme at all primary substations in Hong Kong. This initiative aims to identify any noise- related issues at an early Innovat ions to reduce visual and landscape impacts stage so that appropriate measures can be adopted quickly. For new substations, we specify the use of low-noise type transformers Fruit Bat Bronze - winged Jacana and conduct noise impact assessments during the design stage. In sensitive areas such as those around hospitals and schools, CLP takes extra 133 Chapter 7 I I I I I measures to reduce noise. During trench excavation, we use an acoustic enclosure to reduce the noise nuisance by approximately 10dB(A). The transparent barrier also serves to confine the spray of dust. The same measures are applied at other locations where there are sensitive receivers in close proximity. References: 1. National Institute of Environmental Hea lth Sl::iences and U.S. Department of Energy 2. Energy Networks Association, Australia In Hong Kong, we have introduced the 'Package Substation' which is only one-quarter of the size of a regular substation. Package substations are already in use across the territory, thus reducing land use and the impact on the surrounding landscape. In rural areas, we often plant trees and shrubs to screen our substations or break up their outlines so that they blend in more easily.

73 Materials & Waste Material Usage and Recycling OUf operations generate waste including process oil, ash, spent nuclear fuel, chemical waste and food waste. Through reuse and recycling, we continually seek to reduce material consumption and avoid waste. We recycle our coal ash, chemicals, paper, rechargeable batteries, computers, plas tics, food waste, wood and metal. We separate waste into recyclable components and engage recycling services where they are available. Regional Waste Management Initiatives: Q GPEe. India ~x~ "" GPEe recycles waste plastic fills generated from cooling to..ver to produce benches for use in the township la'ml. Equipment recycling Ii :fljj has proven effective in both plant and office settings. We recycle valves through refurbishment by an external agency. Printer cartridges were sent for refilling and reuse, and some back to the supplier for recycling. Used chemical drums were also sent back to the supplier ofthe chemicals. Food wastes from our plant and township canteens were recycled in the Vermi-farm and packaging materials were reused in the stores. Q CAPCO. Hong Kong ~/"~"'.=" 1J!~ Our fuel supply contains coal with low ash content, which helps reduce the amount of ash generated. In Hong Kong, most of the coal ash produced is recycled into useful building material such as concrete. In our transmission and distribution activities, we work towards reducing the disposal of old transformer oil. We introduced a mobile insulating oil regeneration plant to re- condition old transformer oil to the same quality as newoll for reuse. The plant can be deployed on- site to improve performance and extend operating life of large power transformers. Q BLep, ThaI/and ~... ~... BLCP recycles fly ash and bottom ash. The fly ash is sold to the cement industry and bottom ash is donated to local communities to make cement blocks as part of our community programme. We further support the utilisation of bottom ash by first donating some to surrounding local schools to enhance soil condition, and then buy it back for our nursery. We are cooperating with researchers at Kasetsart University to study the suitability of bottom ash for constructing the sub-base of roads. Q TRUenergy, Australia _ " Since 2008, Yallourn Power Station implemented a waste contract which enabled the identification and separation of materials that previously were co- disposed. These wastes are now returned to manufacturers for reuse, reconditioning and composting rather than disposed directly to landfill or as contaminated waste. Examples of recycled materials include conveyor belt and conveyor poly rollers. lena Gas plant has been actively encouraging its suppliers from 2008 to minimise external packaging/ internal filler accompanying goods shipped to our plant through smarter use of recyclable materials and environmentally-friendly products. Suppliers have embraced lona's request to reduce waste and unsuitable packaging materials. As a result, lona's waste output from the warehouse has been much reduced. Waste Disposal Hazardous Waste Hazardous waste, including chemicals such as oils, solvents, acids, alkalis and paints, are properly handled in accordance with regulatory definitions and requirements. We appoint authorised contractors for waste collection. We recycle oil for transformers, compressors and other equipment used in our operations. Oil that cannot be recycled will be collected by licensed contractors. The quantity of waste oil produced in 2009 by our facilities of operating control is given under Facilities Performance Statistics on our Group Website's Sustainability report page. Historically, Polychlorinated Biphenyls (PCBs) were commonly used in the industry as heat exchange fluids in transformers, electrical capacitors and for cable insulation. At CLP, we have been phasing out PCBs in our facilities' major operations. Although a small amount of PCBs may still exist in some of our equipment and products we use, the PCBs are contained in the equipment and would not be released to the environment under normal operation. 127 Chapter 7 Chapter 7 128

74 Spent Nuclear Fuel Guangdong Daya Bay Nuclear Power Station (Daya Bay)'s operations are run in accordance with international best practice as recommended by the International Atomic Energy Agency and World Association of Nuclear Op",,"o,,_ Since the start of its operation in 1994, the station has attained world class standards of reliability and safety. It also compares favou rably with other 'NOrld- class nuclear power-generating units in safety and operational performance. CLP is not the operator but has a 2S%ownership in Daya Bay. In accordance with international practices, Daya Bay stores all spent fuel on- site in a dedicated storage pool for a number of years before reprocessing. China's policy on reprocessing spent nuclear fuel is similar to that of European countries. Spent fuel is reprocessed by a licensed service provider. The operation ofthe service provider is supervised by the National Nuclear Safety Administration and its environmental impact is monitored by the Ministry of Environmental Protection. In 2009, a total of 39.7 tonnes of spent nuclear fuel was produced, which will be transferred to a licensed contractor for reprocessing. Highly radioactive waste is disposed of safely by the Chinese government in deep repositories of stable geological formations. Intermediate to low radioactive level ones will use shallow burial method, commonly adopted in the United States, France and the United Kingdom. We are not in a position to report mass and inventory of high level waste (HLW). Under the service contract, the licensed service provider of Daya Bay is responsible for the reprocessing work and the associated responsibility of the waste produced at Daya Bay once removed from the power station. Thejoint venture company that owns Daya Bay, of which CLP has 2S%ownership, is obliged to make provisions for the expenses associated with decommissioning ofthe plant under the joint venture contract. The amou nt of provision is commercially sensitive. Placement of Compos ted Material 1 month after Placement of Composted Material Biodiversity and Ecosystems CLP fully recognises different projects, from construction, operation to decommissioning, can affectthe surrounding ecosystem and its biodiversity. Biodiversity impacts, such as fragmentation of habitat by transmiss ion lines, are assessed for new projects as part ofthe Environmental Impact Assessments, and are subject to the approval of the relevant Regional Initiatives Hong Kong CLP Power Hong Kong owns a number of transmission and distribution overhead lines which span across extensive rural areas. We actively carry out Vegetation Management in these areas with the objectives of enhancing supply reliability, preserving the environment, and reducing tree hazards to the public. Tree ~recyc/ing~ CLP Power Hong Kong initiated an 9 months after Placement of Composted Material government authorities. For our operating facilities where applicable, biodiversity issues are addressed through their respective Environmental Management Plans. Some of our facilities have more biodiversity programmes due to their location and surrou ndings. None of CLP's facilities of operational control are within or adjacent to areas designated by local authorities for protection due to their high biodiversity values. environmentally friendly project to recycle the trees felled in construction projects to mulched and composted materials. Our first priority is to minimise felling, and then for trees that will inevitably be felled, we extend their contribution to the environment through recycling. The mulched and composted materials have found good use in Housing Society's estates as well as in our own nursery. The compos ted material has been an effective soil conditioner and fertiliser. Benefits of this initiative include reduction in transportation and landfill requirements, enhanced landscape maintenance, savings on peat moss replacement, and reduced C02 emission from transportation and/or burning of the felled trees. It also serves as good educational material for school children and a platform for university undergraduates to study the environmental value of the recycled materials. 129 Chapter 7 Chapter 7 130

75 The success of environmental management is measured by both the reduction in environmental harm and by the contribution to societal benefits. Good environmental management creates and enhances value for our stakeholders, including our staff, customers and the community. Shareholder value is an important subset of the broader stakeholder category because environmental protection cannot be sustained unless it is brought into harmony with the interests of investors. Societal expectations on corporations have moved beyond mere capital contribution. In Hong Kong, the public demand for better air quality has been increasingly reflected in the policy agenda. From CLP's perspective, reducing emissions from our power generation facilities in Hong Kong has certainly been a priority. In this report, we have comprehensively described our work on protecting the environment. Environment is a vast subject which covers many aspects, some of which attract more attention than others. We manage each material issue seriously since we believe such attention and care is necessary to cultivate customer trust and conduct a business that is financially strong and ethical. Corporate environmental responsibility is increasingly regarded as an indicator of management excellence. CLP is in a good position against regional competitors because the fundamental values of our company have allo...ed us to pursue environmental excellence, often ahead of statutory requirements. As CLP looks to expand its energy portfolio, the changing environmental laws and increasing litigation cases on environmental grounds can have significant impacts on project execution. For instance, approval for new power plants can be withheld because of perceived environmental impacts. Planning reforms are under way in Australia whilst China has already tightened its rules on environmental impact assessment. We have constantly positioned ourselves according to emerging policies and regulatory trends, and have been actively monitoring technology developments that are relevant to our operations. We are prepared to continue to tackle the environmental challenges ahead under all the jurisdictions in which...e operate. Our one major challenge, particularly in the Asia-Pacific region, is to achieve a successful balance of maintaining environmentally acceptable business practices in the communities we serve, whilst maximising customer and shareholder values. The success of our business is based not only upon our careful stewardship of the environmental resources and ecosystem services that our operations touch, but also on deeper engagement with our stakeholders to enhance mutual understanding of expectations and possible solutions to a more environmentally- friendly world. Further Reading : Q 2009 Sustainability Report Stakeholder Engagement - Project Participation t+ Climate Change t+ Sustainable Development Case Study:Jhajjar t+ Key Performance Indicators t+ Q ClPONLINE ~ Q Facilities Performance Statistics [i. o Prime Awards for Eco Business 2009, Prime Magazine and Business Environment Council (third consecutive year) o FTSE Group (an independent index company owned by the Financial Times and the London Stock Exchange), (LP Holdings is among the 12 Hong Kong-listed companies included in the me Environmental Opportunities All-Share Index. 135 Chapter 7 Chapter 7 136

76 " We believe that all injuries can be avoided, and that nobody should be injured in the course of their work on our sites, and we have zero tolerance for unsafe practices or rules not being followed. " Peter Littlewood Group Director - Operations Safety is our foremost priority. We demand the strongest and sustained commitment from our management, who must understand their role and emphasise to everyone, including our business partners, contractors, and front- line staff, our commitment towards securing a safe workplace for all. -NIv-----,------Nlv-- Figure as of 8July 2010 Note Due to the signifkarlce of the fatal accident Orl 8July this date has been exterlded beyond the rlormal scope of this report to cover Issues up to 30June e. 137 Safety and Health e

77 Our Values The construction, maintenance, and operation of power plants and electricity transmission and distribution facilities involve risks that can be reduced but not eliminated completely. The office environment, on the other hand, presents a whole different set of challenges to OUf colleagues' health and safety. We must establish good practices across the Group to create a safe and healthy working environment for everyone working within CLP premises. Delivering these results requires both management leadership and active participation by everyone including staff, contractors and others who may be involved or affected by our activities. ClP Cares for People " We provide a safe, healthy and fulfilling work environment for our employees, with fair remuneration, fair management and opportunities for learning and professional development. " Extract from CLP's Value Framework, 2009 Revised version Our values and practices include encouragement of others, including joint venture partners, associated companies and contractors, to abide by the principles of ou r Code of Conduct, the Environmental Policy Statement, and the Occupational Safety and Health Policy Statement, Hence "employees ~ is taken to encompass everyone IMlrking on our premises. Safety and health performance is one of the key indicators in assessing the sustainability performance of a company, It measures how ~II ~ can continuously improve and secure long-term, effective safe and healthy IMlrkplaces, where quality and productivity are higher, mistakes are fe~r, and lives are treasured. Life is priceless. As a caring company, ~ want our colleagues, including contractors and everyone who work on our premises, to be safe and healthy. This is because a safe and healthy working environment will result in a workforce that is happy, loyal, cooperative, and committed, enabling them to perform to their highest potential. A company Vvith a good safety and health track record also earns a good reputation and attracts talents. That is why we strive to go beyond the minimum regulatory requirements, and have put in voluntary initiatives to share and adopt best practices across the Group. You Vvilt learn about our efforts in the rest ofthis chapter. We have consistently put zero injuries as our ultimate goal. We report on our progress regularly, whether it is success or failure. so that our stakeholders can monitor our progress. 139 Chapte r 8 Chapter 8 140

78 SafelY and health issues involve our whole value chain - requiring all of us to contribute to and embrace the same safely culture of zero injuries. Our corporate brochure entitled Safery Comes First at CLF has provided management guidelines across the Group to develop skills and tools. SafelY training is provided to everyone working in our facilities to emphasise its importance and to ingrain ou r value into every level of ou r organisation. Setting overall direction on S&H for CLP Group and achieving sustainable and continuous S&H performance improvement Responsible for Group-wide S&H support and alignment on standards Country Heads: Accountable for S&H performa nce of respective region Ch inese Hong Mainland Kong Q Making safety a part of everyone's responsibilities Q Ensuring that managers lead the drive for higher safety performance Q Applying consistent safety objectives and governance to both employees and contractors Q Enhancing ex isting strengths and systems that have been working effectively Q Benchmarking against our international peers and setting new standards of excellence Q Setting targets and measuring our safety performance Q Pursuing continuous Improvement by adopting best practices and safety procedures Sub -Committee lead S&H programmes relating to specific functi ons ond capability developme nt across CLP Group Auot Hoods: Accouotable for S&H perform ance of respective assets and implementation of gap analysis, developm ent a nd implementation of plans, audits and documentation Q Adopting zero tolerance for any unsafe practices and rules not followed c.... Q Cultivating a sustainable safely culture in which we all support each other to achieve zero injuries, continuous improvement, accountability and open communication Q Implementing suitable systems and control to manage and monitor our compliance with safely policies, as well as our performance and risks Q Manag ing and improving the impact of safety and health on our business throughout the life-cycle of our facilities and equipment ~ * Chapt~r 8 142

79 Our country heads are accountable for the Our Group Initiatives on enhancing leadership safety performance of all assets and operations under their responsibility, and are charged with the overall responsibilily for implementing the Group's Safety Policy. Our Group Director - Operations, is the Chairman of the Group SafelY & Health Committee. He is the steering head of our safety initiatives, and reports directly to the CEO. Safety performance is reported to the include: Q Safety Leadership Workshops that emphasise safely culture and leadership capabilities ; Q Incident Management Workshops that provide training on leading incident investigation and prevention; Group- wide Safety and Health Management Framework In 2009, we an nou nced our plan to enhance our Board of Directors on a monthly basis. The five sub- committees under the Group Safety & Health Committee are responsible for reviewing best safely practices across our Q Process Safety Management Workshops that provide staff with the kno'niedge to implement process safety and risk management. Group-wide Safety and Health Management Framework based on the es tablis hed world best practices. Our Management Framework consists of 10 different elements. This defines the basis of the standards, procedures and portfolio as well as throughout the power industry. Our safety management will continue to develop according to changing world- class safety requirements. Management Leadership Furthermore, a Safety Leadership Perception Survey for executives and managers was conducted in August and September 2009 as a way to assess current competencies and leadership behaviour in safety. Improvement actions were developed in the Safety Leadership guidelines in order to ensure consistency at all our facilities,...nile offering flex ibility to manage safety and health risks specific to each location. This framework is complemented by a suite of standards and guidelines developed at the Group level. These standards and guidelines, I Management of Change Workshops and are to be implemented across such as Incidem Management Standard an d Safety and health hazards may emerge over time. Their mitigation and prevention require operations. Process Safety Management Standard. are available to our facilities who may adapt these I constant review, communication and innovat ion locally. amongst front- line staff and senior management. In ali instances, leadership is an important driving force in ensuring vigilance is exercised and Improvements are made. Facility Level Management Systems VY'h ile fu lfilling the expectations under Group's Management Framework, ou r operations can choose to apply for certification to international standards such as OHSAS 18001, AS4801 and NOSA to gain recog nition of its safely performance. The Assets and Management Systems Ii- section of this report provides our facilities' implementation status of safety and health systems. Group Safety and Health rr I'tatform The Group safety IT management system went live on IJune wuh two modules. online incident reporting and corrective action process, satisfactorily tested at GPEC Power Station. followed by Fangchenggang Power Station. The system aims to support the Implementation of our safety plan. We adopted a cemrally hosted web based platform In viewofthe ben efits that can be brought to the Group In terms of economy of scale, cross sharing of information and the availability of common solutions to all existing and future new assets. It Is bein g extended to all operations. The Group Safety Portal also provides a platform for dissemination and sharing of safety and health information among employees. 143 Chapter 8 Chapter 8 144

80 Incident Prevention Our priority is always prevention. We recognise that risks cannot be completely eliminated, and incidents may happen due to human errors and hazards may emerge from a change of environment over time. Therefore, we need a double-pronged approach that comprises prevention and investigation. A substantial part of our effort is to educate and train our staff to behave in a way to reduce incidents from happening in the first place. When incidents do happen, we perform a detailed evaluation of each incident. Learning from these investigations can significantly help limit injuries and prevent risk offuture incidents. For system issues, improvement plans that comprise of better monitoring practice and additional education may be necessary. Trend Analysis Incidents are captured from all assets at Group level where overall performance are reported and monitored on a monthly basis. Lessons learnt from all incident investigations are put into simple incident notes and uploaded onto the Group Safety Portal for sharing across the Group. We organise these notes into different categories and include illustrations to better capture the incidents. Summaries of incidents are further analysed on a quarterly basis for identifying key problem areas and foreseeable trends. Improvement plans and new initiatives are then determined to address the key problem areas as well as to tackle any rising trends. Incident Investigation It is a requirement at CLP to implement the procedu re of incident investigation to reveal root causes of incidents to prevent their recurrences. For instance, Huaiji Hydropoo,.ver plant has been documenting and analysing the direct, indirect and systematic reasons that contribute to incidents, drawing up improvement plans as well as monitoring the implementation of improvement activities. In addition, we have standing instruction in place at Group level for independent investigation of serious incidents. Reporting Culture A true reflection of our overall safety performance relies on a Group effort. Employees are encouraged to be proactive and report on irregularities, minor incidents and all possible unsafe conditions and unsafe acts in order to eliminate risks at source. We train our asset managers to cultivate a reporting culture at their respective facilities that aims to establish mutual trust between the management team and the 'NOrkforce. To encourage staff to report 'near misses' incidents that could have potentially inflict injuries - BLCP in Thailand distribute 'near miss' pocket books to staff and contractors at the site induction stage. BLCP also awards the 'best near misses' reported. Since the Introduction of these 'Near Miss' pocket book to both staff and contractors, the number of cases reported has almost been double In 2009 compared to Incident Prevention Review TRUene rgy's Yallourn Power Station undertook significant safety initiatives in One of them was the development of Basis of Safety (BaS) Programme for Operations which enables peer review within the operations team to ensure that the appropriate controls are in place for the safe completion of tasks. The BOS Programme in 2009 covered 12 higher injury potential tasks. Another initiative undertaken was a review of the incident investigation process to strengthen capacity for seriou s and high potential incidents. Yallourn has pursued review recommendations by opting to extrapolate the globally recognised 'Apollo Root Cause Analysis' that was successfully applied to improving the analysis ofthe root causes of engineering- re lated issues, to safety issues. " It's essential that we act swiftly to identify and address any unsafe situations. If we observe an unsafe act or condition, it's our duty, a duty we all share, to take action immediately to correct it. Nobody will get into trouble for reporting an incident or an irregularity. What we cannot accept is that incidents are covered up or that safety rules are ignored. " Peter Littlewood Croup Director - Operations ~ ' 145 Chapter 8 Chapter 8 146

81 " Preparation for Emergency and Crisis Group Crisis Managemenr Drill As CLP's business extends across the Asia Pacific region with a growing portfolio of assets in operation and under construction, Group conducted a super-typhoon drill in April In China, Fangchenggang Power Station in Guangxi organised monthly emergency drills covering various aspects, including fire fighting, first- aid, personal rescue, and site security. Fire fighting drills are conducted by a trained fire specialist team, while first- aid drills Health Swine Flu Management In response to the global HlNl influenza pandemic, also known as the Swine Flu, we formed a Group level steering committee to oversee the possible outbreak of a flu pandemic Improvement actions were initiated swiftly on- site by raising the hygiene standards as well as treating the water supply with osmosis technology that stopped the spread of the Cholera outbreak. Other Health Initiatives In Hong Kong, work place health assessments emergency response and crisis management are paramount to the (LP Group. To verify our ability to deal with major crises, we conducted a are collaborated with the Guangxi Red Cross which provides emergency training courses to our personnel through the city's People at all assets and regions in which CLP has assets. The team is also responsible for sharing of precautionary measures and contingency and programmes, such as stress management are organised regularly. In 2009, we continued to participate in a Work- Life Balance Day' Group level crisis management drill in October Crisis Management Teams (CMTs) of CLP Holdings, CLP su bs idiaries and joint ventures Hospital. Boxing Biomass Plant in Shandong also ran frequent drills to address the fire risk at its highly combustible cotton stalk fuel responses across the Group. We also established a newwebpage to facilitate timely sharing of epidemic- related information within organised by Community Business to raise further awareness of work- life balance. We also launched smoking cessation and weight were involved to cope with the multiple scenarios drill over a three- day period. This is our first Grou p-wide crisis management drill which spans across the entire operational region. The objectives vvere to reinforce managers' skills and test CLP's capabilities, the drill was also effective in encouraging team building across the regions and promoting unified best practices in crisis management. Crisis Managemenr Committee Subsequent to the successful completion of the Group crisis management drill, a series of high level improvement actions were determined for implementation at Group level as well as respective regions. A Crisis Management Committee was established to oversee the implementation of the improvement actions. The Committee reports to the CEO and is chaired by our Group Director - Operations. Facility Level Activities Each facility organises its own emergency drills at regular intervals to strengthen site-specific emergency responsiveness. In Hong Kong, our Power Systems Business 147 Chapter 8 stockyard. In India, GPEC conducted mock emergency drills to uphold its high safety standards. In Australia, Hallett conducted a full-fledged emergency exercise that included the deployment of emergency services to the site. Also in Australia, Yallourn Power Station underwent an annual statutory exercise on 18 June 2010, aiming at assessing the station's ability to manage and recover from an act of terrorism. The exercise involved the State Government, State Police and Country Fire Authority, and Incident Management Team and Crisis Management Team at Yallourn. The exercise was also witnessed by some of our peer companies. Through this interchange we experienced how other companies manage these types of events and, in so doing, obtained fresh ideas. Both the IMT and CMT responded well to the event scenario, showing a continuous improvement over past trials. :1- ~.:.' the Group. In Hong Kong, CLP has maintained an action plan in case of an emergency outbreak. Apart CLP Flu Vaccination Programme from upgrading access control and hygiene measures at CLP premises, employees are regularly encouraged to be vigilant in personal hygiene and precautionary measures are extended to visitors, such as measuring their body temperature. The same practice has been adopted by all other CLP assets. CLP Hong Kong rolled out voluntary vaccination programme for all employees in Hong Kong in accordance with guidelines issued by the World Health Organisation. TRUenergy also had a similar vaccination programme. Health Challenges at Construction Sites In August 2009, cases of cholera were reported at thejhajjar project site where small number of contractor workers has contracted the illness. The source of the disease was the contaminated water supply on site. management programmes for staff. In Australia, our power stations at Yallourn and Tallawarra piloted a Drug and Alcohol programme...mere an independent service provider performed drug and alcohol testing by random selection among contractors and TRUenergy personnel. Furthermore, presentations on healthy lifestyle, eating and exercise, and reducing manual handling injuries for operational staff were delivered. In addition to occupational health checks for personnel, Yallourn has obtained the services of a professional occupational health nurse...mo will be launching a more comprehensive health checks programme in In India, GPEC organ ises medical diagnostic camps for the poor and needy patients each year. The programme engages general Over 280 people from the local community benefitted physicians, gynecologists, child specialists and dermatologists to give service to local patients. Chapter 8 148

82 Developing Safety and Health Culture Knowledge Sharing CLP Safety and Health Synergy Forum Behaviour-Based Safety Observation Programme The CLP Safety and Health Synergy Forum enables In 2008, ClP established the Behaviour- Based members to share Safety Observation (8BSO) guidelines for experience and practices. application across the Group, an initiative that We conduct regular aims to promote our safety culture through telephone/video observations of work behaviour. The BBSO programme is in place at ClP Hong Kong, CPEC, India and BLCP, Thailand. Hong Kong held two Representatives of the Charity Bodies, who were receiving donations from the Chairman of CLP Power, Mr. William Mocatta conference on a quarterly basis to discuss relevant issues to strengthen communication between CLP Croup BBSa forums with over 100 observers and facilitators, and a reinforcement training dedication in promoting safety on the Safety, and facilities. Topics of discussion included exchange of best practices, sharing learning session for nearly 200 observers. GPEe and Health and Environment day held in November from incidents, and reporting of progress of BLCP organised training to enhance employees' and contractors' observational skills towards safety and health initiatives at Croup and facilities levels. safe performance. Collaboration for Safety Solutions Peer Review and Education Audit Human factors and work habits have a significant impact upon the safe operations of power systems. CLP Power Hong Kong introduced a human performance promotional As a facility that received NOSA S-star grading by the end of 2009, CPEe constantly attains the highest standards in health and safety. A new initiative in 2009 was the 'Special Task Force' We have a Safety, Health and Environment (SHE) Peer Review Audit protocol which comprises of 12 audit checklists covering a comprehensive CLP's employees having a discussion with a wind turbine supplier at the Safety, Health and Environment (SHE) Lead Auditor Training In Hong Kong scheme in The programme, known as (STF). STF consists of a cross- functional team array of SHE issues from design to From these mutual audits, member facilities are 'Dirty Dozen', aims to raise awareness against of person nel with different expertise who implementation, covering both employee and able to transfer best practices to others. for the 12 common pitfalls that can potentially lead gather to brainstorm, analyse, evaluate and contractor. This programme takes on an those facilities which have gone through more to human errors. suggest recommendations on significant safety auditing format, but is an education- based than one round of audits, we observed or technical areas. The focus area of each STF information sharing initiative which is not improvement and enhancement of health and Safety Incent;ve Scheme was often small, allowing the team members to geared towards certification of safety safety practices which benefited all those who come up with targeted solutions. There were standards. Under this protocol, we have already work there. The Safety Incentive Scheme (SIS) is a seven STFs in 2009, some ofthem included completed two 3- year cycles of peer review promotional scheme to encourage and experts from external organisations. The audits at our operating facilities. and were onto Benchmarking for Continuous Improvement recognise outstanding safety efforts by cross-functional nature ofstf helps reduce the the third cycle in employees. Employees who contribute to possibility of oversight and create synergies To raise our culture above the local norm, we existing safety programmes or undertake new amongst various expert groups. In order to enhance the quality ofthe SHE Peer are introducing international safety initiatives are awarded a sum to be donated to Review audits, CLP Croup Operations organises benchmarking to all majority o'mled assets in charity on their behalf. From this scheme, we t raining courses annually, including field audit the Chinese Mainland, with a benchmarking have made donations to 16 charitable Hong exercises, to develop a pool oftrained auditors. protocol developed for both construction and Kong and international organisations selected The course strengthens the participants' operation sites. In 2009, we completed baseline by employees in different functional units. auditing skills as well as the concept of the CLP assessments at four facilities in the Chinese Many safety leaders and their family members Safety and Health Management System. Mainland based on the protocol. We also were also complimented for their commendable 149 Chapter 8 Chapter 8 150

83 continued annual grading audit at facilities in India and Taiwan. Knowledge tran sfer, review of safety performance and managerial coaching were further enhanced through frequent visits to assets in the Ch inese Mainland by Group personnel. For example, Daya Bay Nuclear Power Station participated in the Human Error Prevention Seminar in September 2009 to share experience on human error prevention with peers in the nuclear industry, research institutes, engineering companies, etc. They also held a seminar with Electricite de France (EDF) to share mutual experience on human performance, and how it facilitates overall safety performance. Internal Safety and Health Website The Group Safety Portal, an internal website, was enhanced to improve communication of safety and health informatio n between Group and reg io ns/facilities. Group safety and health system documentation including procedures and guidelines, reference document, communication presentation materials and videos can be downloaded from this portal for use by facilities. This website is accessible either thro ugh intranet by all CLP employees or extranet by our overseas employees and partners after prior regishation. 151 Chapte r 8 8 "j" Windfarm Seminar In view of unprecedented growth in the global windfarm industry, CLP Group organised a Windfarm Safety Seminar In 2009 that covered safety practices and experience in windfarm constructio n, operation and maintenance. Windfarm investors, operators and contractors from Hong Kong, Chinese Mainland, Australia, India, Thailand and Singapore participated in the seminar.! Collaborating with Contractors Safety awareness and actio ns of our conhactors are ess ential components of our overall safety performance. We as sist our contractors to attain the same level of occupational health and safety as CLP. For instance, CLP Group organised a Contractor Safety Management Seminar for as set operators and contractors to Introduce the Group's Contractor Safety Management Standard in December We also made a commitment beyond compliance for 2010 to work jointly with our contractors to ensure their safety. Below are highlights of som e regional initiatives undertaken in 2009 : Hong Kong Contractors' CEO Forum - Contractors' CEO... Syw-... :-~~~~~:~~ Top executives of CLP's contractors met with our senior management In the annual Contractor's CEO forum In Hong Kong The yearly forum brings together CLP's senior management and top executives of contractors to discuss and share their views on safety issues and their strategic plans for the year. This is complemented by separate forums scheduled by the Generation and Power Systems Business Groups to engage their respective contractors. These forums are useful tools in advancing management commitment, strategy and SHEQ standards wt'iilst strengthening relationship with our partners. India GPEC, India focused on building the institutional arrangements on Safety, Health and Environment (SHE) in It created a SHE Contractor Forum Committee that organises regular meetings as a platform for communication: prepared SHE Contractor Guidelines that were circulated to all contractors; introduced SHE key performance indicators to the contract awarding process, thus effectively promoting the value of SHE considerations at the early stage of service procurement; encouraged contractors to report near miss incidents and SHE defects; and awarded the best SHE performing contractor of the year. More importantly, it provided training to contractors with regard to Five Star SHE Management systems, covering First Aid, Breathing Apparatus, Basic Fire Fighting, Personal Protective Equipment, on- site and off-site SHE, Defensive driving training. Each department also organised 'Tool Box Talks ' and "Pre-work Tool Box Talks' to their major contractors to ensure they are equipped with the necessary knowledge and skills to achieve their work safely. Chapter 8 152

84 Chinese Mainland Since April 2009, Fangchenggang Power Station in the Chinese Mainland has implemented a Contractor Performance Assessment Programme to evaluate contractors' safety performance on a monthly basis. In view of the Group's Contractor Safety Standards issued in December 2009, FCG plans to draw up facility- specific management standards to be implemented in the latter half of In constructing thejiangbian project of Chinese Mainland, the cost of implementing safety and health initiatives was separated from construction cost to ensure that the budget was spent adequately on improving site safety. An employee- contractor joint safety leadership workshop was organised to align with safety cuttu re th roughout the site. Cross contractors audits were also conducted for learning and sharing of experience among contractors. Recognising outstanding safety performance of zero lost time injury over four million man hours work, BLCP awarded all staff and major contractors with a portable fire extinguisher. The photo above shows a safety officer of a scaffolding contractor receiving her prize from BLCP. Safety Resource Centre in Hong Kong Established in 2006, our Safety Resources Center continues to provide our contractors and sub-contractors with access to various types of learning resources in order to motivate and improve their overall level of safety awareness and performance. Group discussion in the Contractor Safety Management Seminar held in Chengdu in December 2009 The Centre offers educational and promotional safety materials, safety induction training, safe systems at work training, safety communication forums, and safety talks on specific theme topics. 153 Chapter 8 Chapter 8 154

85 implementing additional controls to reduce risk these tragedies happened off work, they In Hong Kong, we promoted contractor safety during construction and, on the ground, we reinforced the need to continually improve management by establishing a taskforce to continue to promote the message as strongly safety performance associated with our assets, help deliver high contractor safety Safety performance is an essential indicator of as possible that safety is our highest priority. and encourage all our employees and working performance. We also organised a SHE Quiz CLP's sustainability, alongside environmental, partners to extend our safety effort to cover off 2010 to reinforce SHE knowledge. During the climate change, financial, and social issues. There was also a tragic fatality in May 2010 to job safety. Despite these being off work Safety Performance Award Ceremony on 19 one of our Hong Kong meter readers...mo fell incidents, we have nevertheless set up an May 2010, a new safety theme 'Total Safety Thejhaliar Project in India and thejiangbian into a lift shaft near the meter room of a independent Accident Investigation Panel to Culture - Starts with Me" was officially Hydro project in China are our most high- rise residential block during the course of conduct root cause analysis and liaise with the launched. challenging projects in respect of safety his work. An investigation by the local authority contractor to give assis tance to the family of management. Despite all efforts made, there is underway, while necessary measures are the workers. For the first time this year, we also report on were two fatalities at jhaliar involving being taken within CLP to strengthen the DIIR regarding contractors employed at our su bcontractor workers. The first incident awareness of safety risks in buildings owned Construction sites are still of the highest safety operational facilities : occurred in March 2010 during the and managed by others. risk. We cannot completely eliminate risks but reconfiguration of a construction crane and a we strive hard to raise safety standard s detailed investigation has since been In 2009, there were two off-job road incidents substantially above the local prevailing norms. completed. The second happened injuly 2010 (Samana in India and Rongcheng in Chinese jiangbian has been recognised as a model site during energisation of a temporary light fixtu re Mainland) resulting in three fatalities regarding in Sichuan. However, we are well aware that and a detailed investigation is underway. We are two employees and a contractor. Although significant risks remain due to working at height and with rock bursts. Disabling Injury Incidence Rate (DIIR*) for Employees We will continue to apply Group and Regional level resources to support all those working with us and to provide the necessary management tools and skills to create a culture of zero inju ries. We will require our partners and contractors to demonstrate a clear commitment to the same goal. As part of our continuing safety initiatives across the Group we conducted a safety workshop to review the progress against the original safety objectives, the implementation effectiveness and the need for any changes. RevielNS of this nature help to maintain the focus on safety and to refresh our approach. We held a workshop to initiate our contractor safety standard in India, and to explain the details to our sites and their contractors. This standard was developed to provide guidance on the minimum requirements to be incorporated in site management. We held a similar workshop in PRC last year. Note: Data include operational facilities only. Improvements were implemented at the three sites where fatal accidents (Fangchenggang and Yang_Er in Chinese Mainland and Ho- Ping in Taiwan ) occurred in Appropriate safety systems are in place for controlling the residual risk at these assets...- Chapter 8 156

86 Cas tle Peak Fire Incidents.~aya Bay Nuclear Power Station Incident T>NO fire incidents occurred in Castle Peak Power Station in Hong Kong in December The first one occurred at the conveyor of a coal unloader at the pier due to cable fault. The other one occurred at a trash screen of a coal conveyor in ajunction house due to rubbing of a broken belt. There was no impact to the overall operation ofthe coal conveying system in the power station and the root causes are being identified. A number of divisions have achieved outstanding performance, which we are striving to continue. Some of these achievements include: Since 1994, the Daya Bay Nuclear Power Station has been supplying electricity to Hong Kong safely and reliably, establishing itself as a key player in supplying (LP's customers with reliable energy at virtually no emissions and on accou nt of its impressive operational environmental and safety records. A minor operational matter occurred on 23 May 2010 at the Daya Bay Nuclear POlNer Station, which was unfortunately inaccurately reported by a number of media services. CLP, our partner CGNPC at Daya Bay, the operator of the power station and the Ministry of Environmental Protection of China have all confirmed that th is case had no impact on public safety, public health or the environment. An investigation into the matter is in progress but preliminary assessment indicates that there may be an imperfect sealing of one fuel rod (out of over 40,000 in the reactor core) in Unit 2. The investigation findings will be shared with the Hong Kong Government in line with established processes. This minor matter did not require classifying or reporting under the International Atomic Energy Agency's (IAEA) zero-to-seven scale for reporting nuclear safety incidents. Despite this, the matter was reported to the National Nuclear Safety Administration at a regular meeting on 25 May. Daya Bay retains its good safety record and there are many levels of safeguards to ensure secure operations at the Station. In addition, there are robust and vigorous national and international requirements for the monitoring, reporting and disclosure of nuclear- related incidents and CLP will continue to explore with the Hong Kong Government and our Daya Bay partner with a view to enhance local communication. 157 Chapter 8 Chapter 8 158

87 Creating Value for Stakeholders At ClP, Msafety is our foremost priority. ~ In achieving our belief, we have taken an integrated, forward- looking and process- oriented approach to manage all key business risks and improvement opportunities on health and safety issues - not just financially related ones - with the intent to maximise stakeholder value as a whole. Working towards our ultimate goal of zero inj uries, we shall continue to be vigilant and we also need to adapt constantly to new challenges, both planned and unplanned. The recent outbreak of swine flu demonstrates how we have effectively managed an unplanned health epidemic. Construction Challenges We must tackle safety and health risks by recognising and managing them within changing contexts. The nature of health and safety issues also varies amongst stakeholders. To our employees, a safe working environment means that they can perform with an ease of mind: to families of our employees, safety means they are able to enjoy quality time together off- work; to our shareholders, a company with a good safety record can enhance the way we operate, minimise unnecessary exposure and contribute to our business success ; to our contractors, partnering with a company which takes safety first would be more appealing and strengthen overall performance; and to our partners, we collaborate with them in creating and applying the same safety values. Safety is a prerequisite for success, because it means decisions are not made recklessly, 'understanding food labels', are all enablers for our staff to adopt a healthy lifestyle. To ClP, achieving zero injuries is a tremendously challenging task, particularly when we operate under such diverse cultures in the developing 'NOrid. Yet we continue to strive towards this ambitious goal as we believe there is no compromise when it comes to safety and health. Our construction activities present vastly different challenges due to a string of reasons such as site conditions, cultural differences, as well as project complexity. The following are a few examples of our current construction projects and our plan to address each construction safety issue. On the health front, we uphold similar stakeholder value, The only difference is that although we can make our workplace safe, we can only help promote healthier lifestyles among our workers. Our lifestyle programmes, such as fitness/health challenges, work place stretching exercises, 'giving up smoking' and CD More generally, the initiative to improve safety management and performance across the CLP Group has continued. We believe that we are gradually increasing safety awareness and providing the necessary standards and controls for a safe 'NOrking environment. 159 Chapte r 8 Chapter 8 160

88 In the pas t few years, the majority of ou r most serious incidents were with our contractors. Contractors' safety and health are equally important to us, as our values and standards apply to everyone working on our premises. This year, we have added contractor safety to our commitments, further discussion of which is included in the Commitments beyond Compliance chapter. looking ahead, we will continue to collaborate with our employees, contractors and partners to drive for higher safety and health standards. By working together, we can be a leader in best safety practices and an organisation that demonstrates true commitment to a safe workplace. Emission Control (EC) Project Safety related challenges of Castle Peak Power Station's EC project stem from the large number and diverse range of workers (over 2,500) who have to work in a small defined area with a tight commissioning schedule. Multiple languages and cultures amongst employees from Hong Kong, the Chinese Mainland, Europe, and USA also can create challenges in communication. Consequently, to minimise risks of miscommunication, regular communication and coordination channels have been established. Further Reading : Q CLP Publication: Safety Comes First at CLPti- Q 2009 Sustalnabltity Report: Community Investment ti- Commitments Beyond Compliance ct. Q ClP Power Hong Kong Power Systems Business Group: CLP was awarded the 2nd Runner- Up under the Client/Developer Category in the Safety leadership Awards 2010, which was organised by the Ughthouse Club, Hong Kong. Gold Award under the Work Safe Behaviour Promotion category organised by Occupational Safety and Health Council, 2oo9. Gold Award (Civil Engineering Sites) in Construction Industry Safety Award Scheme 2oo8/2oo9 by the Hong Kong Labour Department with 12 other professional /statutory bodies for Castle Peak Cable Tunnel Project; Gold Award in Considerate Contractors Site Award by the Hong Kong Development Bureau; Bronze Award in the Hong Kong Award for Environmental Excellence 2008 for North Region. 0. CLP Power Hong Kong Marketing and Customer Services (MACS): Gold Award under the Safety Enhancement Programme category organised by Occupational Safety and Health Council, o ClP Sichuan: One of the best Enterprises (out of 3 in total in Ganzi Prefecture) for safety management in 2008, awarded April 09. Q GPEC, India: Graded NOSA S-Star with an overall score of 94.85%. President's Award for 11 consecutive Gold Awards by the Royal Society for the Prevention of Accidentsm UK SHE Runner- up Awards by Confederation of Indian Industries Cl Ho Ping, Taiwan- graded NOSA 4- Star IAlith an overall score of 84% 161 Chapter 8 Chapter 8 162

89 Envlronmenta_ t" Care Education Community Health Sponsor ships &0 Donations " At CLP, we firmly believe we have a crucial role to play in serving our communities. " Vol unteerlsm Jane Lau Director - Group Public Affairs CLP's community investment is a demonstration of our caring culture. We play our part as a responsible corporate citizen by helping the less-fortunate and contributing to the INeIl- being of society. To enhance the effectiveness of our community efforts, INe partner with other organisations and actively engage our employees. 163 Community Investment." Chapter 9 164

90 ClP recognises the importance of being a good corporate citizen. We are committed to making a positive impact in the communities where we have operations. Our corporate values as stipulated under "ClP Cares for the Community" and ~ClP Cares for People" in ClP's Value Framework underpin our community investment initiatives. We support the social and economic development of local communities through providing affordable and reliable electricity. We also contribute to the well - being of societies through a range of self- initiated corporate citizenship programmes, partnerships with community organisations and sponsorships of various programmes across the region. As a leading independent power company in the Asia- Pacific region, we are aware that our business interests are interdependent with the well- being of local communities. We hold our investments for many years and our staff and operations are deeply embedded in the communities we serve. These factors drive us to work in partnership with the communities to enhance the growth and development of their people and the society. Catering to the needs and expectations of different stakeholder groups, our community initiatives across the Group are centered on three key pillars - "Youth & Education ft, "EnvironmenC, and "Community Health ft. To achieve meaningful results, we engage the community widely in all these initiatives to address such social needs and identify ways where ClP can make a valuable contribution. Employee involvement is another key component of our community investment strategy. Through their active participation and that of their families, we enjoy a multitude of support and resources that help enrich the quality and impact of our programmes immensely. Our community initiatives also receive strong management support, as demonstrated by their personal involvement, and it goes a long way to reinforce our culture of being a socially responsible company. " We are good corporate citizens and take pride in making significant contributions to programmes that have a positive impaa on community development. " Extract from CLP's Value Framework, 2009 Revised Version The strong partnership between staff and the company is also reflected in the ClP Voluntary Services Matching Donation Programme in Hong Kong. "ClP Volunteer Teams ft spread throughout the region have been serving local communities through a variety of activities. Recognising their efforts, ClP donates HK$20* to the Community Chest of Hong Kong for every hour of voluntary service contributed by staff and their families to registered community and service groups. *CLP's total donation amount will be ca pped at HK S200,OOO per annum. 165 Chapte r 9 Chapter 9 166

91 Enablers for Action Within CLP, one of our key enablers is the Sustainability Committee,...mich sits at the Board level. The Committee oversees our community investment initiatives by providing direction and ensuring that all community programmes are in line with world's best practices. Members ofthe Committee monitor the status of the Group's social and environmental goals while making sure that our stakeholders are engaged in the process to enhance our shared commitments with the society. Gaining our employees' support is also vital to the success of our community investment initiatives. In addition to in- person briefing sessions, we encourage participation through broadcasting our initiatives on a company- wide intranet. We created an electronic portal to enable staff to learn more about the Group's community initiatives, make donations, and find out about progress. Outside of the Group, our community partners play an important role in our initiatives. Their know- how, net'norks and experiences often enable us to implement ideas and scale up our programmes. We are able to reach out to a wider audience through them and benefit from their insights as we design our programmes. Our partnership with the Hong Kong Council of Social Service, for instance, is one example of how both parties leverage their unique strengths to raise awareness about dementia and empower practitioners to assist the elderly. In 2009, we supported or initiated over 550 community projects across the markets where we operate. The initiatives we supported are multi- faceted, and we achieved them through volunteerism, knowledge sharing, in-kind services, sponsorships and donations, and self- administered projects. To evaluate and further improve our corporate community investment performance, we applied the London Benchmarking Group (LBG) methodology to assess the outcomes and impacts of five of our flagship projects in Hong Kong, the Chinese Mainland and India. Using results produced from the benchmarking exercise, CLP has been evaluating its community initiatives so that we can identify areas of improvement. Our goal is to see that our initiatives make a meaningful contribution and that our staff and all related parties are engaged in the process. 167 Chapte r 9 Chapter 9 168

92 The London Benchmarking Croup (LBG) Scoring We partner with various local forestry and tree Methodology expert groups in ensuring that our We wanted a way to visually track our programmes are compatible with the local The LBG is des igned to help businesses progress and show our results. We engaged 5- Year Regional Tree Planting Programme natural ecology. In addition to planting trees, measure their corporate community activities. CSR Asia, a certified fac ilitator of the LBG we organised activities such as eco- tours and a The model helps businesses understand their model, to develop a 3- point scale to assess In early 2008, CLP pledged to plant one million forum on affores tation to enhance ou r key contribution to the community, including ou r achievements and progress according to trees across Hong Kong. the Ch inese Mainland. stakeholders' environmental knowledge and cash, time and In- kind donations, as well as the different programme objectives. The India, Thailand and Australia under the "S- Year provide them with a hands-on experience. management costs, and capture the ou tputs scored results agains t the five most relevant Regional Tree Planting Program me ~. The Moreover, tree audits and maintenance INOrks and longer-term impacts of each community benchmarking criteria respective to each programme supports our Climate Vision 20S0 are arranged regularly to ensure the trees grow investment project on the society. CLP programme are illustrated as a ~spider map ~. to raise awareness among the public on the healthily. adopted this approach to bener assess, impacts of climate change. The trees planted in manage, measure and report the efficiency these areas have been contributing to the and effectiveness of our community improvement of local ecosystems. So far, our investments. efforts have contributed to: Featured cases in this report Programmes selected for the benchmarking exercise reflect the focus areas of ou r community Initiatives - Youth & Education, Environment, and Community Health. A number ofthem are regional programmes that we want to ensure we are achieving their intended impact in an efficient manner. We also applied the LBG model to some country- level programmes to evaluate their effectiveness and efficiency. With each programme the first step was to review the objectives and key indicators along with any data that had already been collected. An assessment framelnork, Community Investment Scorecard, incorporating the LBG Q the restoration of landscapes destroyed by hill fires in Hong Kong ; Q the maintenance of environmental integrity in Guangdong, Ch ina, and the preservation of water quality of Dongjiang, the source of 7096 of Hong Kong' s freshwater: Q the reduction of soli erosion in Sichuan, China; Q the provision of a green learning environment for students in GuJarat, India; and, Q the restoration of the natural habitat for aquatic life in Khano m, Thailand. ~ :,:.f. -:: Benchmarking criteria model was developed for each project to track key performance data and coliect feedback While the LBG serves as an overarching framelnork for our community inves tment, different programmes have different from stakeholders. The data was then processed by a group of Tree planting activities In Hong Kong and Australia objectives and they bring different types of benefits. We will not try to fit all our projects into only one results frame-work. Ou r students from the Hong Kong University of Science and Technology under the supervision of Professor Veronique A. '.:"" """'. Continuous Education Evening Class Lafon - Vinais. Adjunct As sociate Professor, Programme in India is about interpersonal Department of Finance and then reviewed by skills, literacy and building confidence while CSR Asia. The scores were ass igned by CSR the success of our Five- Year Regional Tree Asia in relation to our success In reaching the Planting Programme is mostly measured in programme's objectives. terms of contribution towards local environmental and development goals. Chapter g 170

93 Impact Financial Leverage Public Education The programme sought to enhance t he environmental knowledge of over 800 participants involved in the tree planti ng days a nd ot her fringe activities. CLP donated HKSSO to the Hong Kong Community Chest fo r every seedling planted in t he CLP Tre e Plant ing Programme in Hong Kong. A total of HK$lSO,OOO was donated in Partnership We work closely with the Fore stry Administration of Cua ngdong Province in t he Chine se Mainland, Forestry Administration of Sichuan Province in the Chinese Mainland, Ministry of Natural Resources and Environment in Thailand, Conservation Volu nteers Australia, other green groups and tree experts to develop t he tree pla nt ing plan and t he associated mainte nance work in Hong Kon g, the Chinese Main land, Thailand, India and Aust ralia. We started the S- Year Regional Tree Planting Programme in 2008 to reinforce our Group's commitment to the environment as stated in the Climate Vision 20S0 manifesto. Through this initiative, we ai m to raise awareness on the importance of caring for the environment, which is a core value ofthe company; and engage the community with tree planting activities so that they can make a direct contribution to a greener and cleaner environment. Since the launch ofthe programme, we have planted over 430,000 trees in Hong Kong, Guangdong and Sichuan in the Mainland, Thailand, India and Au stralia with a survival rate of over 80%. Add itionally. we engaged community groups to participate in tree education forums as well as planting and auditing activities, The programme is well on track to meet our target of planting one million trees in the reg ion and nurturing them to good health. Staff Volunteerism Ove r 400 staff and fa mil ies across the region part ici pated in the tree planting activities and contributed ove r 2,000 service hours. Environment In 2009, a total of 181,100 trees were planted with a survival rate of over Over 40 business leaders, acade mics and green advocates parti Cipated in an afforestation forum in Hong Kong to exchange views and experiences on afforestation in Guangdong Provi nce. CLP will move into the third year of its S- Year Regional Tree Planting Programme ( ). How VoIOU Id you bring the programme to the next level in the coming years? Wh ile the result has been encouraging, we will take the programme to the next level by sharing our experience with the wider community. We are aiming to identify the benefits that our trees are creating in tangible soc ial. economic and ecological terms. With the help of tree experts, we have been tracking the wel lness of the growth and will report the results as soon as they are available. Our experience will playa role in the collective efforts in promoting a low- carbon economy and creating a healthier living environment. Professor Billy Hau Assistant Professor Sc hool of Bio logical Sc iences The University of Hong Kong Zoe Lee Group Public Affairs Manager Representative of the Environmental Protection Department, HKSAR Government.'.: Chapter 9 172

94 Youth & Education - Hong Kong. Chinese Mainland and India Young Power Programme (YPPJ Since its launch in ClP's Young Power Programme (YPp) has been equipping future leaders with the skills to address complex challenges. Designed to encourage creative thinking and strengthen teamwork and leadership skill s, participants are offered the opportunity to embark on ajourney that deepens their understanding of the power enables them to broaden their technical understanding as welt as to engage with students from other cu ltures. Students of the ClP's Young Power Programme The regional programme was conducted in three phases so that more students could participate in it. In Phase 1, students formed teams offive and submitted ideas on how they would tackle climate change via an online platform. Based on students' input, our judging panel shortlisted 24 teams - location - programme. 173 Chapter 9 eight from each to participate in Phase 2 ofthe Under the guidance of 47 ClP young engineers, students embarked on a three- week activity- based learning experience which introduced concepts such as sustainable development, corporate citizenship, teamwork and leader ship. Students also gained a better understanding of electrical engineering by job shadowing their mentor s. One outstanding team from each location was then selected for Phase 3 of the project - eig ht-day cultural exchange in Hong Kong and an the Chinese Mainland. Through cross-cultural leadership forums, visitations and lectures, the industry, the impacts of climate change and the young leaders exchanged their views on importance of sustainable development. In leadership and climate change. 2009, we extended the programme from Hong Kong to include the Chinese Mainland and India. In 2010, ClP Young Power Programme (YPP) For our students, this geographical expansion was kicked off with a 3- week expedition in Antarctica. Five of our young engineers from Hong Kong, Australia and India were sent to Antarctica for a 3- week Expedition. They have successfully set up renewable energy- powered devices for an education centre there and learnt about the impacts of climate change fir sthand. Being the YPP ambassadors, they will share their experiences and learnings with YPP students and other organisations in their O'Mllocales. We also apply the lbg model to measure its community impact, and the result will be available in 2010 Sustainability Report. Five CLP engineers successfully help repairing broken down wind turbine and install soiar panels for the Education Base in Anarctica.1. ';1: Impact Staff Volunteerism 47 CLP young engineers volunteered to be stude nts' mentors who helped enrich the learning process of the students. Youth Education 270 students from 31 schools in three locations partici pated in the programme In which they gained hands- on experience and knowledge on engineering and environmental sustainability. Over 2,700 students participated in the "Climate Change Online Game ' through which they discussed environmental issues in an int eractive way. Partnership In 2009, CLP partnered with Junior Achievement Hong Kong (IA), the education authorities in Nanning, Chinese Mainland, and the local school bodies in Gujarat, India. Capitalising on their strong network with local schools, the programme messages were well spread around. leadership Development Over 80% of the participants Indicated that the programme improved their leadership skills. Environment 9O'Jr6 of the students felt that the programme enhanced their knowledge on envi ronmental issues. Young Power Programme Student

95 One of CLP's core values is ucare for People". We adhere to this value closely and practise it in everything we do, Including community initiatives. In 2007, CLP established a target of reducing the carbon emissions of our generation portfolio by 7596 by 2050 as outlined in our Climate Vision 2050 manifesto. To succeed in delivering that goal, not only do we need strong commitment from our current management, but also from a new generation of leaders who share the same vision and 'Nill commit to taking the business forward in a climate- friendly manner. Continuing Education: Evening CIil5s Programme Through the Paguthan Po...-er Plant Social Development Trust (PPSDn, CLP India engages in a number of community investment initiatives to meet the educational, health and environmental needs of the community in Gujarat. The Evening Class Programme is an example of how...-e partner with the local community to improve access to education. Students of the Evening Class Programme, India *.'.: '---"'---'---~ Why does CLP invest in youth development? Within that context, CLP believes in investing in developing future global leaders. The CLP Young Power Programme is a platform that allows us to engage young people in a meaningful manner. The programme offers them a chance to develop their leadership skills and to gain a better understanding of social and environmental responsibility. Through this programme,...-e encourage them to explore new technologies that are needed to create a sustainable future and prepare them for a career in the future. We also provide our young engineers from across the region the opportunity to develop their leadership skills by mentoring the students, building a team and harnessing their potentials to take on climate and environmental challenges. The ClP Young Po...-er Programme has been a successful community investment project since For more details, please refer to the session of"clp Young Po...-er Programme". CLP India launched the Evening Class Programme in 2001 to provide informal education for drop- out and non- schooling children in villages in India. One of the objectives is to encourage and motivate young children to return to mainstream schooling. This is achieved mainly through parental counselling and providing support for the school admissions process. The programme also targets adolescents, who are undergoing drastic changes in physical, psychological, emotional and socia- cultural aspects. Since its launch, the programme has been providing support and education to help these adolescents to reduce behavioural problems. The programme provides training and teaching materials developed by experts to enable extension volunteers (EVs), recruited from the local community, to conduct informal evening classes for children and adolescents. Students are encouraged to freely express their feelings, clear their doubts and learn through a variety of educational events such as group discussion, drawing competition and outings. These outings cover topics such as interpersonal skills, health and hygiene and social customs. The programme is well- received by the local communities. Ms. Rushna Vistas p Ginwalla Amity School Bharuch, Gujarat, India Jane lau Director - Group Public Affairs 175 Chapter 9..'.: -.:

96 Youth & Education - India Impact Financial leverage CLP aims to secure additional suppon hom OUf starr and othe r external parties to further enhance the community programmes that are currently being managed and supported by the Paguthan Power Plant Social Development Trust (PPSOD in India. Partnership CLP worked closely with the leaders of the local villages and local schools to promote the programme to the parents and children. leadership Development 12 Extension Volunteers (EVs) recruited from local community were provided with teaching materials developed by experts and were trained to conduct informal evening classes for children and adolescents. School Reconstruction in Sichuan CLP has been playing an active role in nurturing students in the Chinese Mainland. Since 2001, we have contributed to the establishment of 11 Hope Schools and in 2009, and have scaled up our support by introducing the ~Su pport-a -Student Programme ~ to five Hope Schools. In addition to these ongoing efforts, we also support disaster relief and community rebuilding efforts, such as the reconstruction Games Day organised by elf volunteers The schools were completed in good order to meet the rules, regulations and guidelines of schools in Sichuan province. established by the International Red Cross and the Chinese Red Cross and in compliance with the earthquake resistance building standard issued by the Chinese Government. They began operation in january To sustain our support to the schools, IS ClP staff and families from Hong Kong took time out of work to ins pect the quality of the sc hool buildings. CLP colleagues also donated 600 books, helped the students set up a library and participated in a Games Day organised for the Personal Development All the interviewed students found that the evening classes had a positive influence on their mora lity and integrity. About 90% of the interviewed students found that the evening classes enhanced their confidence in expressing themselves. Youth Education 337 students from 13 schools across g villages are currently enrolled in the evening classes. 125 students have resumed schooling after participating In the programme as of end of 2oo9. School visit for Sichuan quake- hit students In response to the earthquake that struck Sichuan on 12 May 2008, CLP su pponed the relief efforts by launching a group-wide donation matching programme, where the Group matched funds donated by our staff students and the faculty members orthe schools. Nearly all (96.4%) interviewed students found that the evening classes enhanced their understanding of health and hygiene. members on a dollar- to- dollar basis. HKS6.7 million was raised and donated through the Red Cross operations In the region for the relief efforts, including HKSS.4 million to the Hong Kong Red Cross for the reconstruction of 2 primary schools and 1 nursery in two of the most devastated areas in Sichuan province Fengshun and Xiushui. Village Leader 178

97 Youth & Education - Chinese Mainland Impact Financial Leverage Th rough the joint contribution between CLP and staff, HKS5.4 million was donated through the Hong Kong Red Cross for rebuilding schools in earthquake - hit regions to enable ch ildren to continue the ir education. Staff Volunteerism 16 CLP staff and fami lies from Hong Kong and Sichuan voluntee red the ir time and took part in the "Visit to Sichuan Quake- hit Stude nts" and extended our care to the children in Sichuan. Community 5ustainability All the reconstruction works are in compliance with the "Standard for Classification of Seismic Protection of Building Construction" and "Code for Se ismic Design of Bui lding" issue d by the Chinese Government. The newly constructed schools can withstand an earthqua ke of magnitude 8 on the Richter sca le. Employees are our most important asset. We value their support and we engage them in all community initiatives. Equally, our staff see the importance of CLP being a good corporate citizen and are willing to invest their own time, resources, knowledge and skills in our projects to make a positive impact on the communities we serve. Their enthusiastic support is evident in all community investment initiatives- from r eg ional programmes such as CLP Young Power Programme and the 5- Year Regional Tree Planting Programme, to every local community and charitable event. For instance, in the CLP Young Power Programme, around 50 engineers volunteered their time to mentor 120 students in 2009 across the reg ion. Over 4,000 hours of service were given to a variety of community services by our CLP Volunteering Team in Hong Kong. Partnership The programme relied on the combined effort of CLP, the Red Cross and local officials to operate. Youth Education The two pri mary schools and the nursery can accommodate 570 stude nts and provide them with a learning opportunity. How does CLP engage its staff on community investment initiatives? Our staff volunteers also go beyond their own working location to serve a wider community. They vis ited the schools that were rebuilt with funding from both the company and our staff after the Sichuan earthquake through the Red Cross and helped students put their libraries in order. Eager to see their assistance making a lasting impact, through our Support- a- Student Programme, they provided financial support for students in the rural area of the Mainland so that they can continue their primary education. Over 330 students were funded in the programme since its launch in Ms. Bonnie 50 Head of Communications and Res ou n::e Development Hong Kong Red Cross Jane Lau Director - Group Pu bl ic Affairs School Vi sit Vol unteer * ~: Chapter 9 180

98 Community Health Care for the Elderly - Active Mind CLP jointly initiated the "Care for the Elderlyft Programme with the Hong Kong Council of Impact Public Health 4,499 elderly people received cognitive impairment assessment while another 1,449 senior citizens attended the memory training classes with 95" of them completed the course. Since the launch of the Active Mind Programme, 9,846 elderly people benefited from the assessments and 3,370 senior citizens attended the memory classes. Social Service (HKCSS) in In 2007, having identified the most immediate needs within the elderly community, the t'wo parties launched the Financial leverage "Care for the Elderly - Programme - Active Mind" the first community programme in Hong Kong that brought together non- government organisations (NGOs), the busines s community and the public to fundraise for elderly who have earty symptons of dementia and to fos ter greater awareness of the illness. This programme continues to benefit the elderly in There are three components to this initiative: Elderly citizens panicipating In the MCare for the Elderly - Active Mind Programme In addition to the HK$400,OOO matching donation from CLP, the programme successfully raised HKS420,200 from the public and around HKS550,OOO from the Government's "Partnership Fund for the Disadvantaged", Empowerment 68 frontline practitioners from the social welfare sector were trained and provided with teaching tool kits to conduct memory training for the elderly. Since the launch of the programme, over 210 frontline practitioners were trained. cognitive asses sment, memory training classes and community education activities. The MActive Mind ~ Programme raised funds in order to provide the elderly in need with free cognitive assessment and memory training classes. Our support contributed to the development of a diagnostic test. This test is currently being used by over 30 social welfare organisations to assess elderly under their care and refer those with signs of dementia to the appropriate medical professional. CLP staff are also involved in running the Partnership It is the first community programme in Hong Kong that brings together NGOs, the business community and the public to raise funds for the elderly to combat the threat of dementia. Public Education In 2009, 16,243 elderly learned about dementia through 196 promotional activities. Since the launch of the programme, 359 public awareness activities including roadshows, carnivals, health days have been held. memory training workshop, where they learn about ways to communicate with the elderly and to run the memory training kit. In addition In 2009, 87 elderly service centres were involved in the programme. In 2008, the programme reached out to 78 centres. to learning, the CLP Volunteers Team also engages in ~ train -the-trainer " activities by conducting classes in elderly centres so that elderly care profess ionals could run the tr aining kits too. 181 Chapter 9.' ' *.'.: Frontline Practit ioner

99 Future Outlook Looking ahead, we expect our stakeholders and the communities where we operate to maintain their high expectations of our community investment projects. We will continue to play our part towards good corporate citizenship by enhancing our efforts, refining and improving our programmes in response to the community needs, and further promoting the caring cu lture within ClP. We are committed to investing in our communities and are confident that our stakeholders will recognise our efforts in contri buting towards a sustainable future. Further Reading : Q 2009 Sustainability Report Stakeholder Engagement l Q Overall winner by public voting, Sing Tao Excellent Services Brand 2008 (~Outstanding Services for Community" category), Sing Tao Daily o 2nd highest scores in a corporate social responsibility (CSR) - CSR survey, Oxfam Hong Kong (on Hang Seng Index constituent companies) 0. Caring Company logo for seven consecutive years, Hong Kong Council of Social Service 183 Chapter 9 Chapter 9 184

100 As a leading energy company in the Asia- Pacific reg ion, ClP fa ces a grave dilemma - how to serve communities that urgently need affordable power for economic growth and social development, when such affordable power comes in the form of (oal, one of the highest greenhouse gas emitting forms of energy. In 2009, we embarked on a new investment, thejhaliar Thermal Power Project (thejhaliar Project) in India - an example that clearly illustrates this dilemma. Thejhaliar project, being a coal-fired po'her facility, prompted much consideration from our part because it brought into question...nether the environmental impacts outweighed the obvious social and economic benefits of this project enough for us to walk away from bid ding. In the end, after considering the triple bottom lines of sustainability, 'He believed that we have the expertise, know- how and the right values to bring much needed power to this society in an environmentally responsible way. TheJhaliar Project Is a 1,320 MW domestic coal-fired power plant Another Coal- fired Power Plant? For most of developing Asia, when considering energy supply alternatives, the economic cost as \.\'ell as the urgent need for social development, are major considerations for national and local governments. In India, in 2005, about 4296 lived on less than US $1.25 a day and over 35960f the population still did not have access (0 electricity, which is cleaner at point of use compared to on- site burning or wood, dung or other fuels. For countries which still need access to energy to develop their econom ies, coal-fired plants are a popular choice for providing base load electricity, since they are economically affordable and both the fuel and technology are available today. From a social perspective, a power plant of over 1,000MW could help create employment for hundreds to thousands of people. Unfortunately, coal- fired generation results in more environmental impacts than other types of generation, particularly air pollutant and greenhouse gas emissions, all of wh ich must be addressed and managed if a coal- fired power plant is to be built. located at Village Khanpur,jhaljar, Haryana state in northern India. The first unit Is scheduled to be commissioned by December 2011 and the second unit by May On 30th.o\-1ay 2006, the Haryana State Covernment announced that a 1,320 MlA/ domestic coal- fired jhajjar Project located in Ha ryana state in northern India, was to be awarded on the basis of a competitive bidding process. 185 Sustainabl@ D!Y@lopmentCas@ Study: Jhajjar Chapter

101 To Bid or Not to Bid? CLP is currently expanding its operations. Typically, the types of investments available to us for acquisition or for bidding are pre-determined by the national and/or local governments in accordance with their energy policy, strategy or security needs. Since CLP operates only in the Asia Pacific region, our choice of investment is therefore limited to 'W'hatever is available to us. As a part of our business ris k mitigation strategy, we try to maintain a diversified portfolio of generating assets, albeit moving towards a lower carbon intensity one. In India, at the time of bidding, we already had a natural gas- fired power station in Gujarat state in western India as well as several wind farms scattered across India. From an economic perspective, coal-fired power generation is currently the most affordable form of baseload generation and developing markets often offer attractive and predictable returns on such investments. There are also a number of social- related benefits. If we were to invest in Jhajjar, our responsibility to our shareholders to ensure good returns on investments would of course be fulfilled. A new plant such as Jhajjar would also provide new jobs and some of our existing staff could have the opportunity of expanding their experience and skills, and even advancing their career if they were to be posted at the new station. We could also bring in and transfer to the local workforce our best practices in the construction and operation of a power station. However, again the environmental aspects prove to be negative, given the higher air pollutant and greenhouse gas emissions. Air pollutant emissions can be significantly reduced using existing emissions control technologies, such as Flue Gas Desulphurisation (FGD). But there is currently no commercially viable mitigation measure for the large amounts of carbon dioxide (C02) emissions generated from coal- fired generation. Adding coal- fired generation to our portfolio would make it more difficult to meet our carbon intensity reduction commitments under our Climate Vision 2050 and we would need to develop more low carbon generating capacity to offset the carbon intensity of this project. Winning by Their Standards or LOSing by Ours? The tender required the use of conventional technology is not a contractual requirement su bcritical technology with no requirements for for the Jhajjar project and investing in such Flue Gas Desulphurisation (FGD). technology increases the economic cost of the asset, using such technology could At ClP, we have a practice of using the most render our bid less competitive in terms of current, efficient, proven, and commercially initial investment. viable technology for power generation. Unfortunately, this often means that the initial In addition, one of our environmental- related investment cost would be higher than the most policies is to install FGD to lower sulphur common technology being used at the time. For emissions from all new coal-fired plants we example, the supercritical coal - fired technology build after For this bid, our proposal ~ have chosen for this project requires less to use FGD would also contribute to our bid fuel per unit of electricity produced compared being much less economically competitive to subcritical technology, leading to fuel cost since the FGD costs more in terms of both savings as well as environmental benefits in the asset itself and in its operation. lowering emissions intensities. However, since supercritical After much deliberation, \Ve believed at that point in time, the value and importance of the economic and social contributions ofthejhaiiar project to both our business and to the people of Haryana state, justified the difficult decision to move ahead with the bid. To ensure \Ve would still be able to meet our reduction targets, l4'e would pursue the development of even more IOl4'er carbon generation projects such as wind, nuclear and natural gas. Since the only down side to thejhaiiar project was in the environmental area, we believed it was even more important to uphold our commitment to higher environmental standards to minimise the impacts, despite a greater risk of losing the bid because l4'e l4'ere less cost competitive. 187 Chapter 10 Chapter

102 Maybe We Can Still Win by Our Standards? The question was how to incorporate the above additional environmental meas ures,...mile making this a sound economic investment for our shareholders as a part of our social responsi bility, despite the capital increase and achieving it at a competitive price. To meet this challenge, our team set out to source the most cost effective eq uipment, leveraging on our international network, and yet st ill en suring that the quality was not compromised. We have first hand experience with supercritical technology at our Fangchenggang power station in the Chinese Mainland, and so o ur knowledge and ex perience with th is technology could be leveraged to reduce foreseeable challenges and to be more efficient in completing its construction. Our team in Group Operation s also came up with an engineering solution to build in a large- scale greenbelt development for eventual carbon capture and storage, accounting for about 30% 0f plant area (about 137 hectares). This is also beyond contractual and statutory requ ire ments and allows for carbon capture technology to be retrofitted efficiently once it becomes commercially viable. However, more importantly, in order for CLP's bid to be competitively priced, whilst incorporat ing the considerable capital and operating expense of FGD (costs wh ic h would not be faced by our competitors who 'M:)uld not be planning to install FGD), the Board decided to accept a reduced rate of return compared to that wh ic h wou ld have been earned had CLP secured the proj ect on the tender terms without On 23 July 2008, the Haryana State Goverment announced that elp had been awarded thejharj ar project We are nowin the process of constructing thejhajjar power station, which will be one of the first supercritical power stations in India. FGD. CLP has been devoting increasing efforts to sustainable development over the last decade. How could CLP ensure an optimal balance of economic, social and environmental interests in our investment portfolio? How could CLP engage and even earn support from all different stakeholders (e.g. shareholders, lenders and communities) to our long- term commitment to sustainable development? Mr. Raymond Yuen Retail Support & Development Manager CLP Power Hong Kong Limited When CLP considers new investments, it will undertake certain pre-investment requirements that look at environmental and social aspects as well as economic viability. More specifically, prior to being presented before the Investment Committee (IC) for approval (or pre- approval), all our potential new investment projects are assessed for social and environmental risks in addition to the typical business risks, with input from a number of functional units including Group Human Resources, Group Public Affairs and Group Environmental Affairs. At the IC meeting, relevant members of Sen ior Management, have the opportunity to further query or elaborate on the asses sment. To earn support from our stakeholders, we need to earn their trust. Trying to balance the economic, social and environmental aspects is already a challenge. However, trying to communicate our decisions - when we have different types of projects ranging from renewable energy projects to base load fossil- fuelled power plants, spanning over different markets in both regulated and de- regulated but mostly developing ones, under various political and regulatory regimes - is even more challenging. It is easy to appear inconsistent when 'one size does not fit au'. The only solution is to be honest and transparent. Hence, to earn the trust of our stakeholders, we must communicate with them in an open and honest manner as well as on a regular basis. Sharing of expectations, challenges and experience is essential for fostering the mutual understanding and capacity for arriving at solutions that help strike the balance necessary for the sustainable development of both the community and our business. Towards this end, this year we have presented a case study on the newcoal- firedjharliar Power Station in India, in this report. In the case study, we summarise our key decision- making challenges so that our stakeholders can feedback to us their concerns and views on our process and decisions made. Jeanne Ng Directo r - Group Environmental Affairs 189 Chapter 10 Chapter

103 In the past, ClP had set goals and reported on progress. Comments from stakeholders have highlig hted the importance of setting key performance indicators that are material and reflective of the prog ress and improvements made, rather than project milestones that are 'busi ness - as - usual'. In 2009, we reviewed the previous goals set, and revised them as Group level commitments that are beyond regulatory compliance. These commitments encompass our efforts In the environmental, safety and community areas. We trust that these commitments will more clearly reflect our Group direction and enable our readers to further evaluate our performance. We will review these commitments periodically to ensure they represent key cu rrent issues. We Environmental 1. Implement the Group Climate Strategy - Climate Vision 2050 Q A reduction in the C02 intensity of our generation portfolio from O.84kg C02/klMl to: - 0.8kg C02/kWh by kg C02/kWh by kg C02/kWh by kg C02/kWh by 2050 Q Increasing the share of non- carbon emitting generation capacity in our portfolio to 2096 by Ensure the capacity of reneo.vable energy in ClP's power generation portfolio is at least 5% (equity basis) by 2010 Why the commitment? will start reporting our progress on these commitments in the next Sustainability Report, Climate change is a critical issue for the v.orld, the electricity business and CLP, because of our use of fossil fuel s. We expect new policies, new technologies. and new customer preferences to lead towards a less greenhouse gas intensive energy future. Though these are not yet in place, CLP recognises the need for decisive action to limit emissions of greenhouse gases. Our Climate Strategy FrameoM:)rk was adopted by our Board of Dire<tors on 12 December 2005 and 'Ne began the implementation in although some aspects of our strategy, such as our renewable energy business, started earlier. We released ClP's Climate Vision 2050 on 7 December In this Manifesto, we commit ourselves to playing our role In the collective response to the threat of global warming by setting specific targets and commitments to reduce the C02 intensity of our generating portfolio. The 5% renewable energy target was an earlier commitment wtlich preceded the Climate Vision 2050 targets. Although we met this target in 2007, 3 years ahead of schedule, we will report on this commitment until the original target year of This is because the target was set as a percentage, and any substantial changes In our portfolio towards non-renewable generation types could result in us missing this target. 191 Commitments Beyond Compliance Safety 3. Achieve a continuing and sustainable Improvement in safety performance each year that will take us to the obj ective of zero inj uries Q Reinforcing the visible leadership commitment to safety from our managers Q Enhancing our management sys tems wnere necessary Q Joining hands with our contractors to keep all their workers safe wnen working with us Q Eliminating hazards related to human error Q Reinforcing safety reviews to monitor progress and transfer experience across the Group Q Building a culture wtlere people support eac h other to work safely Why the commitment? Our objective is to provide a safe environment for our employees, our contractors and all others working with us on all our sites regardless of project complexity and cultural considerations. We want everybody to go home safely to their families when they finish their work.. We cannot completely eliminate risks but we strive hard to raise safety standards substantially above the local prevailing norms. We will continue to apply Group and regional level resources to support all those working with us and to provide the necessary management tools and skills to create a culture of zero Injuries. We will require our partners and contractors to demonstrate a clear commitment to the same Community 4. Community- related Commitments Q To review and articulate our stakeholder engagement model in 2010 Q To plant no fewer than 180,000 trees in 2010 in our operating areas so as to raise environmental awareness In the res pective communities Q To engage no fewer than 4,500 students in Hong Kong, Chinese Mainland and India in the regional Young Po...er Programme Q To promote a better understanding of the power indust ry and environmental awarenes s by opening our power plants and other educational facilities in Hong Kong, the Chinese Mainland and India for visits by students and members of the public Why the commitment? We produce electricity to support the social and economic development of the Asia- Pacific region. We hold our investments for many years and our staff and operations are often deeply embedded in the communities...e serve. These drive us to work in partnership with the communities we serve to ensure that our operations create positive social impact and enhance their quality of life. ClP supports programmes that reflect the needs and expectations of local communities. We partner with local people, local organisations and all those involved to see that results could be sustained in the long run. We build the capacity of local communities so that they can improve on results over time. Through this approach,...e build strong and enduring relationships with our stakeholders and ensure that our initiatives will bring a positive impact. Chapter

104 Progress 2009 'Mlile...e issue newgroup commitments this year, we would like to report progress of our previously set goals. These goals will be replaced by the Group level commitments presented in the beginning o f this chapter. AU figures are as of 31 December Implement the Group Climate Strategy - Climate Vision 2050 Goal for 2009 crd beyond Reducing the equity C02 intensity of our power generation portfolio towards 0.2 kg C02 / kvy11 by 2050 Progress Q Equity C02 intensity decreased to 0.83 kg C02/ kwh (down from 0.84 kg C02/kWh in 2008) Raise the environmental performance of our coal-fired plant in Hong Kong, including the installation of Flue Gas Desulphurlsation (FGD) and NOli reduction facilities Gool for 2009 and beyond Obtain permit approvals from government departments Meet target dates of phased commissioning in 2010 and 2011 Progress Q Permits obtained Q Relocated all targeted fa cilities and completed Phase I upgrade three months ahead of schedule Ensure the capacity of renewable energy in CLP's power generation portfolio Is at least 5% (equity basis) by 2010 Take further steps towards assuring the availability of natural gas in Hong Kong by early next decade 193 Chapter 11 Increase our non-carbon emitting generation capacity (by equity) to 20% by 2020 Continue to reduce reliance on conventional coal- fired generation Continue to develop renewable energy projects Continue to invest in the development of renewable energy technologies Goal for 2009 and beyond Continue to work towards securing sufficient gas supply through the MOU by 2013, when our gas supply from the Yacheng gas field is predicted to deplete Q Increased non- carbon emitting generation capacity (by equity) to 15.0% (u p from in 2008) Q Coal took up of our generation capacity (by equity) as of 31 December 2009 (down from in 2008) Q Extended our contract for clean power to Hong Kong from Guangdong Daya Bay Nuclear Power Station for another 20 years from 2014 Progress Q Increased renewable energy (excluding hydro plants larger than 100MW') to of generation capacity (by equity) (up from in 2008) Q Increased total renewable energy to of generation capacity (by equity) (up from in 2008) Q Commenced Hong Kong's fir st stand alone renewable energy supply for Town Island Q Continued evaluation of marine tidal technology of commercial deployment Q Achieved casing and cementing of a deep well for TRUenergy's Petratherm geothermal project Complete the environmental Q Obtained Environmental Permit from feasibility assessment for HKSAR Government in August 2009 the offshore wind farm Q Continued feasibility study and study in Hong Kong stakeholder engagement Progress Q Continued to secure gas su pply through provisions made in the MOU with relevant parties in the Chinese Mainland Operate our business with zero injuries and extend the disabling injury incident- free period beyond the existing best record for each facility and business unit o o \J Achieve a 5096 improvement over 2007 safety performance by 2010 Continue the safety plan initiatives including new standards implementation, Q capability development Continue the rolling internal peer reviews and audits at our majority owned and/or operational control facilities Establish a safety and health IT platform to support regional safety management Implement Group Crisis Management Policy including Group-wide drills Progress Q For employees, lost Time Injury Incidence Rate (ltiir) dropped from 0.22 in 2008 to 0.14 in 2009 Q For employees and contractors, the combined ltiir remained the same at 0.18 for both 2008 and 2009 Q The ltiir for employees in 2009 improved significantly as compared to year 2008 (approx Improvement). However, the combined ltiir for employees and contractor personnel remained stagnant. Consequently, in 2009, we commited to assis t our contractors to improve their performance Q New standards published in the Group Safety Manual Four capability development workshops conducted Q Results and recommendations from first management safety leadership survey implemented Q Commenced third cycle of peer revie'ns Q Tv.Q lead auditor trainings provided Q Four safety compliance audits completed Q International safety benchmarking introduced to t'no operational and two construction sites Q Safety management IT system developed and rolled out Q A Group crisis management drill conducted Q Areas for improvement identified and will be followed up as part of the safety commitment for 2010 and beyond

105 Economic Performance GRI Reference Perfonnance Inclicalors Units EO Total revenue HKS million 50,668 54,297 50,789 Total ea rnings HKS million 8,196 10,423 10,608 Total assets, including leased assets (as at 31 December) HKS million 156, , ,277 Shareholders' funds (as at 31 December) HK S million 70,761 63,017 63,901 Dividends pe r share HKS 2,48 2,48 2,48 Environmental Performance (I) EN3 Coal consumed power gene ration) 1) 469, ,211 (2) 413,188 (2) CLP's Sustainability Report (SR) includes elements and Gas consumed (for powe r generation) 1) 102, ,821 93,763 indicators recommended in the Global Reporting Initiative's Oil consumed (for powe r gene ration) TJ 7,185 6,452 (3) 868 (GRI) G3 5ustainabi1ity Reporting Guidelines, an international Biomass consumed (for powe r generation) TJ 1,012 (4) framework on sustainability reporting. We selected key EN16 Carbon dioxide equivalent (C02e) emissions kt 49,761 (4) Carbon dioxide (C021 emissions (5) kt 49,631 44,251 (6) 34,148 m indicators as fisted below from the GRI G3 Guidelines and EN20 Nitrogen oxides emissions (NOx) kt 44.0 m 46.9 (6) 56.4 other key performance data to provide readers with a quick Sulphur dioxide emissions (S02) kt 44.2 (7) 55.3 (6) 70.4 overview of our performance. The rest of the content in this Total particulates emissions kt 6.8 en 6.8 (6) 6.3 online SR provides full GRI A+ level coverage as per the G3 EN8 Total wate r withdrawal (for powe r generation) Mm' (4) Guidelines and the Electric Utility Sector Supplement. EN2l Total water discha rge (from power ge neration) Mm' (8) Independently verified performance data for each of our EN22 Hazardous Waste Produced (9) T (solid)/kl (liquid) 771/1.011(4) facilities within the scope of reporting are available in the Hazardous Waste Recycled (9) T (solid)/kl (liquid) 57/636 (4) Facilities Performance Statistics section Ci.. Data listed Non-Hazardous Waste Produced (9) T (solid)/kl (liquid) 5.160/0 (4) below are Group data consolidated from individual facilities Non- Hazardous Waste (9) T (solid)/kl Ii 2, (4).. and they may not equal to the sum of individual facilities ' EN6 Re newable energy ge neration capacity % (MW) 9.4 (1,243) 6.5 (817) 5.6 (584) Climate Vision (equity basis) (10) (II) (l~ data due to rounding Target Total renewable ene rgy generation capacity % (MW) 11.3 (1,494) 8.4 (1,066) Performance (equity basis) (10) Non-carbon emitting gene ration capacity % (MW) 15.0 (1,986) 12.3 (1,558) Notes: (equity basis) (10) (1) Includes operating entities which CLP has operational control for EN16 Carbon dioxide emissions intensity of CLP Group's kgc 2/kWh the full calendar year with the exception of Huaiji, as ge neration portfolio (equity basis) (IO) independently verified data were not available and 2008 LA1 Total Employees (based on geographical location) number 5, ,695 data revised to align with t he scope of reporting to operational Social control facilities. - Hong Kong number 4,164 4,165 4,238 Performance (2) Auxiliary fuel oil used at Yallourn included. - Chinese Mainland number (3) Distillate consumed at Hallett not included. - Australia number (4) Reporting started since India numbe r (5) C02e data for Yallourn and Hallett included. - Other locations (Southeast ASia & Macau) number (6) Fangchenggan9 was not included because independently verified data were not available. EU15 Employees eligi ble to retire wit hin t he next f ive ~ars 10.3% 8.8% 7.6% (7) BLCP was not included because independently verified data were (based on employi ng entity) (13) not available. - Hong Kong 11.4% 9.9% 8.1% (8) Quantity of cooling water discharged ( Mm3) not included. - Chinese Mainland 5.7% 1.8% (9) Waste categorisation is in accordance with local regulations. - Australia 10.1% 8.6% 9.5% "" BLCP liquid waste not included due to the difference in measurement unit. - India 1.5% 1.4% 1.7% (10) "Equity basis" includes all majority and minority share facilities in - Other locations (Macau) the CLP Group portfolio. LA2 Voluntary staff turnover rate 2.7% "" 5.8% "" 6.1% "" (11) Hydro plants with capacity larger than loomw excluded. (12) Revised to align with current reportin9 definition. LA7 Fatality (employees only) (1) number 0 0 O(n (13) Employees on fixed-term contract not included. Ca ses of disabling injuries (employe es only) (l) number 3 9 4m Days lost I cha rged (employees only) (1) number m These data were mdependently verined by ERM~Hong Kong, Urnlted. A copy of the verification lener is available on request. LAlO Training pe r employee average man clays Convicte d case of corruption case Key Performance Indicators

106 Global Reporting Initiative (GRI)'s G3 Guidelines constitute a set of universal sustainability reporting indicators. The framework presents reponing areas and principles for organisations to evaluate on sustainability issues and performance. In 2009, GRllaunched the Electric Utility Sector Supplement (EUSS) to provide specific content guidelines relevant to the sector. All G3 and EUSS recommended report indicators are presented below alongside with the relevant sections in the SR or our Annual Report (AR). SpeCifically, our performance has been mapped to correspond to the indicators defined by G3 as Economic (Ee), Environmental (EN), Labour (LA), Human Rights (HR), Society (SO), Product Responsibility (PR) and Electric Utility Sector Supplement (EU). Several "additional" indicators are also included: 2009 SR Section GRI lodlcatol'5 + Electric Utility Sector Supplement 2.8 No. of employees, net sales, total capitalisation broken down into debt and equity, and quantity of products or services provided. Also total assets, beneficial ownership, breakdowns by country/ region of (i) sales/revenues by countries/ regions that make up S% or more of total revenues, (ii) Costs by countries/regions that make up S% or more of total rellenues, and (iii) Employees. 2.9 Significant changes during the reporting period regarding size, structure, or ownership including: (i) the location of, or changes in operations, including facility openings, closings, and expansions, and (ii) changes in the share capital structure and other capital formation, maintenance, and alteration operations Awards received in the reporting period 2009 SR Section Name/2009 Annual Report (AR) Economic Value - Key Financial Data Key Performance Indicators AR - Assets AR - The CLP Group's Structure & Partnerships AR - Relationships - Employees AR - CLP at a Glance AR - Performance At the end of the following chapters: - Our Sustamability Report - Corporate Responsibility - Our Company at a Glance - Climate Change - Environment - Safety and Health - Community Investment 1.1 Statement from the senior decision-maker of CLP Holdings (CLPH) about the relevance of sustainability to CLP and its strategy. 1.2 Description of key impacts, risks and opportunities. Our Sustainability Report - Chairman and CEO's Statement Our Company at a Glance - Business Risks and Opportunities AR - Risk Management Report EU1: Installed capacity. broken down by primary energy source and by regulatory regime EU2: Net energy output broken down by primary energy source and by regulatory regime EU3: Number of residential, industrial, institutional and commercial customer accounts AR - Assets Facilities Performance Statistics AR - Assets Our Company at a Glance - BUSiness Performance and Development AR - Relationships - Customers 2.1 NameofCLP Our Company at a Glance EU4: length of above and underground transmission and distribution lines by regulatory regime. AR - Assets FaCilities Performance Statistics 2.2 Primary brands, products and/ or services. 2.3 Operational structure of CLPH and its main divisions, operating companies, subsidiaries, and joint ventures. AR - CLP at a Glance AR - Assets EUS: Allocation of C02e emissions allowances or equivalent, broken down by carbon!fading framework. Climate Change - Clean Development Mechanism 2.4 Location of CLP's headquarters. Our Company at a Glance 3.1 Reporting period (e.g. fiscal/calender year) Our Sustainability Report - Scope of Report 2.S Countries where CLP operates, with either major operations or that are specifically relevant to sustainability issues. Our Company at a Glance Our Sustainability Report - Scope of Report 3.2 Date of most recent previous report (if any) 3.3 Reporting cycle (annual, biennial, etc.) Our Sustainability Report - Scope of Report Our Sustainability Report - Scope of Report 2.6 Nature of ownership and legal form 2.7 Markets served (including geographic breakdown, sectors served, types of customers/beneficiaries) AR - Assets AR - Assets 3.4 Contact point for questions 3.S Process for defining report content, including (i) determining materiality, (ii) prioritising topics within the report, and (iii) identifying stakeholders CLP expects to use the report. How Can You Contact Us? Our Sustainability Report - Materiality 197 GRI Content Index Chapter

107 CRI Indicators + Electric Utility Sedor Supplement 2009 SR Section Name/2009 Annual Report (AR) GRI IndicatOl'5 + Electric Utility Sector Supplemenl 2009 SR Section Name/2009 Annual Report (AR) 3.6 Boundary of the report (e.g., countries, divisions, subsidiaries, leased facilities, joint ventures, suppliers). 3.7 Specific limitations Our Sustainability Report - Scope of Report Our Sustainability Report - Scope of Report 4.5 Unkage between compensation for members of the highest governance body, senior managers, and executives (including departure arrangements) and CLP's performance (including social and environmental performance). AR - Corporate Governance Report AR - Remuneration Report 3.8 Basis for reporting on joint ventures, subsidiaries, leased facilities, outsourced operations, and other situations that can significantly affect comparability from period to period and/or between reporting organisations. 3.9 Data measurement techniques and the bases of calculations, including assumptions and techniques underlying estimations applied to the compilation of the indicators and other information in the report Explanation of the effect of any re-statements of information provided in earlier reports, and the reasons for such re-statement (e.g., mergers/acquisitions, change of base years/periods, nature of business, measurement methods) Significant changes from previous reporting periods in the scope, boundary, or measurement methods applied in the report Table identifying the location of the standard disclosures in the report. Our Sustainability Report - Scope of Report Our Sustainability Report - Scope of Report Climate Change - Our Greenhouse Gas Performance Our Sustainability Report - Scope of Report Kev Performance Indicators Our 5ustainability Report - Scope of Report GRJ Content Index 4.6 Processes in place for the highest governance body to ensure conflicts of interest are avoided. 4.7 Process for determining the qualifications and expertise of the members of the highest governance body for guiding CLP's strategy economic, environmental, and social topics. 4.8 Internally developed statements of mission or values, codes of conduct, and principles relevant to economic, environmental, and social performance and the status of their implementation. 4.9 Procedures of the highest governance body for overseeing CLP's identification and management of economic, environmental, and social performance, including relevant risks and opportunities, and adherence or compliance with internationally agreed standards, codes of conduct, and principles Processes for evaluating the highest governance body's own performance, particularly with respect to economic, environmental, and social performance. AR - Corporate Governance Report AR - Corporate Governance Report AR - Corporate Governance Report AR - Corporate Governance Report Corporate Responsibility AR - Corporate Governance Report 3.13 Independent assurance policy and current practice. Assurance and VeriflCation 4.11 Explanation of whether and how the precautionary approach or principle is addressed. Climate Change - Drivers for Change AR - Risk Management Report 4.1 Governance structure ofclp, including committees under the highest governance body responsible for specific tasks, such as setting strategy or organisational oversight. 4.2 Indicate if the Chair of the highest governance body is also an executive officer (and, if so, their function within CLP's managemem and the reasons for this arrangement). 4.3 For organisations that have a unitary board structure, state the number of members of the highest governance body that are independent and/or non-executive members. AR - Corporate Governance Report AR - Corporate Governance Report AR - Corporate Governance Report 4.12 Externally developed, voluntary economic, environmental, and social charters, principles, or other initiatives to which CLP subscribes to/endorses Memberships in associations (such as industry associations), and/or national / international advocacy organisations in which CLP: (i) has positions in governance bodies; (ii) participates in projects or committees; (iii) Provides substantive funding beyond routine membership dues; or (iv) view membership as strategic Ust of stakeholder groups engaged. Stakeholder Engagement - ProfeSSional and Industry Bodies 1+ ; Policy Advocacy Stakeholder Engagement - Professional and Industry Bodies 1+ ; Policy Advocacy Stakeholder Engagement - Engaging our Key Stakeholders 4.4 Mechanisms for shareholders and employees to provide recommendations or direction to the highest governance body. Stakeholder Engagement 4.1S Basis for identification and selection of stakeholders with whom to engage. Stakeholder Engagement - Engaging our Key Stakeholders Our Sustainability Report - Materiality 199 Chapter 13 Chapter

108 GRI Indicators + Electric Utility Sedor Supplement 2009 SR Section Name/2009 Annual Report (AR) GRI IndicatOl'5 + Electric Utility Sector Supplement 2009 SR Section Name/2009 Annual Report (AR) 4.16 Approaches to stakeholder engagement, including frequency of engagement by type and by stakeholder group. Stakeholder Engagement - Engaging our Key Stakeholders EUIQ: Planned capacity against projected electricity demand over the long term, broken down by energy source and regulatory regime. Our Company al a Clance - BUSiness Performance and Development AR - Outlook 4.17 Key topics and concerns that have been raised through stake holder engagement and responses. Stakeholde r Engagement - Project Participation; PoliCY Advocacy EUll: Average generation efficiency of the rmal plants by ene rgy source and by regulatory regime. Facilities Performance Statistics Disdosure of Management Approach Economic Va lue - Management Approach EU12 : Transmission and distribution losses as a percentage of total energy Facilities Performance Statistics EC 1. Direct economic value generated and distributed, including revenues, operating costs, employee compensation, donations and ot he r community investments, retained earnings, and payme nts to capital providers and to gove rnments (core) EC2. Financial implications and other risks and opportunities for CLP's activities due to climate change (core) EC3. Coverage of CLP's defined benefit plan obligations (core) Economic Value - Key FinanCial Data Key Performance Indicators AR - Financial Statements Climate Change - Drivers for Change AR - Financial Statements Disclosure of Management Approach ENl. Materials used by weight or volume (core) EN2. Percentage of materials used that are recycled Input materials (core) Environment- Environmental Policy and Management Environment - Our Performance - Materials and Waste Facilities Performance StatistiCS Environment - Our Performance - Materials and Waste Facilities Performance Statistl(.5 EC4. Significant financial assistance received from government (core) Economic Value - Government Subsidies EN3. Direct ene rgy consumption by primary energy source (core) Key Performance Indicators Facilities Performance Statistics EC6. EC7. Policy, practices and proportion of spending on locally-based suppliers at significant locations of operation (core) Procedures for local hiring, and proportion of senior management hired from the local community at locations of significant operation (core) ECB. Description of infrastructure investme nts and services provided primarily for public benefit through commercial, in-kind, or pro bono engageme nt. (core) EC9. Understanding and describing significant indirect economic impacts, including the extent of impacts (additiona l) Stakeholder Engagement - Engaging Key Stakeholders - Suppliers AR - Relationships - Employees Economic Value - Management Approach Our Company at a Clance - Business Performance and Development Community Investment Economic Value - Management Approach Climate Change - Drivers for Change EN4. Indirect energy consumption by primary source (core) ENS. Total water withdrawal by source (core) ENll.location and size of land owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas. (core) EN12. Description of significant impacts of activities, products, and services on biodiversity in protected areas and areas of high biodiversity value outside protected areas. (core) Facilities Performance Statistl(.5 Environment - Performance at a Glance Key Performance Indicators Facilities Performance Statistics Envi ronment - Our Performance - Biodiversity and Ecosystem Envi ronment - Our Performance - Biodiversity and Ecosystem EU6: Management approach to ensure short and long- term electricity availability and reliability. economic Value - Management Approach AR - Outlook EUB. Biodiversity of offset habitats compared to the biodiversity of the affected areas. Envi ronment - Our Performance - Biodiversity and Ecosystems EU7: Demand-side management programs including residential, commercial, institutional and industrial programs. Environment - Our Performance - Energy Efficiency Economic Value- Management Approach ENI6. Total direct and indirect greenhouse gas emissions by weight (core) Climate Change - Our Greenhouse Cas Performance Key Performance Indicators Facilities Performance StatIstics EUB: Research and development activity and expenditure aimed at providing reliable electricity and promoting sustainable development. Economic Value - Management Approach Climate Change - Our Portfolio Performance - Other Technologies ENI7. 0ther releva nt indirect greenhouse gas emissions byweight (core) Climate Change - Our Creenhouse Gas Performance EU9: Provisions for decommissioning of nuclear power sites. Environment - Our Performance - Materials & Waste - Spent Nuclear Fuel EN I B. lnitiatives to reduce greenhouse gas emissions and reductions achieved (additional) Climate Change - Our Portfolio Performance 201 Chapter 13 Chapter

109 GRI Indicators + Electric Utility Sedor Supplement 2009 SR Section Name/2009 Annual Report (AR) GRI IndicatOl'5 + Electric Utility Sector Supplemenl 2009 SR Section Name/2009 Annual Report (AR) EN19. Emissions of ozone-depleting substances (core) EN20. NOx, SOx, and other significant air emissions by type and by weight (core) EN21. Total water discharge by quality and destination (core) EN22. Total weight of waste by type and disposal method. (core) EN23. Total number and volume of significant spills (core) EN26. Initiatives to mitigate the environmental impacts of products and services and extent of impact mitigation (core) Envi ronment - Our Pe rformance - Air Quality Environment - Our Performance - Air Quality Key Pe rformance Indicators Facilities Performance StallSIlCS Environment - Our Performance - Water Key Pe rformance Indicators Facilit ies Performance Statistics Environment - Our Performance - Materials and Waste Key Performance Indicators Facilities Performance Statistics Environment - Our Performance - Water Envi ronment - Our Performance EU18: Percentage of contractor and subcontractor employees that have undergone relevant health and safety training LA7 LA8 Rates of injury. occupationa l diseases, lost days, and abse nteei sm and number of work-related fatalit ies by region (core) Education, t rai ning, counseling, prevention and risk-control programs in place for assisting workforce membe rs, their fami lies or community members regarding serious diseases (core) LAW Average hours of training per year per employee broken down by employee category (core) LAll Programs for skills management and lifelong learni ng that support the continued employability of employees and assist them in managing ca reer endings (additional) Safe ty and Health - Safety Strategy and Leadership Safety and Health - Our Performance Key Performance Indicators Safety and Health - Enablers for Action Health AR - Relationships - Employees Key Performance Indicators AR - Relationships - Employees EN27. Percentage of products sold and their packaging materials that are recla imed by ca tegory (core) EN28. Monetary value of significant fines and total number of non- monetary sanctions for non-compliance with environmental laws and regulations (core) EN30. Total environmental protection expenditures and inve stments by type (additional) Environment - Our Performance - Matenals and Waste Environment - Our Performance - Wa ter Environment - Enablers for Action environmental Investment LA12 Percentage of employees receivi ng regula r performance and ca reer development review (additional) LAB Composition of governance bodies and breakdown of employees per category according to gender. age group. minority group membe rship, and other indicators of diversity (core) AR - Relationships - Employees AR - Relationships - Employees LA14 Ratio of basic sa lary of men and women by employee category (core) Corporate Responsibility - Value Framework - Human Rights Disdosure of Management Approach Our Company at a Glance - Our Employees LA l Total workforce by employme nt type, employment contract, and region (core) AR - Relationships - Employees Key Performance Indicators Disdosure of Management Approach Corporate Responsibility - Value Framework - Human Rights LA2 Total number and rate of employee turnove r broken down by age group, gender and region. (core) AR - Relationships - Employees Key Performance Indicators HR2 Percentage of significant major suppliers and contractors t hat underwent screening on human rights and actions ta ken. (core) Stake holder Engagement - Engaging our Key Stake holde rs - Suppliers EU 14: Programs and processes 10 ensure the availability of a skilled workforce. EUlS : Percentage of employees eligible 10 retire in the next Sand 10 years broken down by job category and by region. EU16: Policies and requirements regarding health and safety of employees and employees of contractors and subcontractors. AR - Relationships - Employees Ke y Performance Indicators AR - Relationships - Employees Safety and Health - Our Values t; : Safety Strategy and leadership AR - Relationships - Employees HR4 HR6 Total number of incidents of discrimination and actions taken (core) Operations identified as having signifi ca nt risk for incidents of child labor, and measures taken to contribute to the elimination of child labor. (core) Corporate Responsibility - Va lue Framework - Human Rights AR - Relationships - Employees Corporate Responsibility - Value Framework Human RIghts 203 Chapter 13 Chapter

110 CRI Indicators + Electric Utility Sedor Supplement 2009 SR Section Name/2009 Annual Report (AR) GRI IndicatOl'5 + Electric Utility Sector Supplement 2009 SR Section Name/2009 Annual Report (AR) Disdosure of Management Approach SOl Nature, scope, and effectiveness of programs and practices for assessing and managing the impacts of operations on communities, induding entering, operating and exiting (core) EU19: Stakeholder participation in the decision making process related to energy planning and infrastructure development. EU20: Approach to managing the impacts of displacement, Corporate Responsibility - Code of Conduct Community Investment - Performance and Creating Stakeholder Value Stakeholder Engagement Corporate Responsibility - Value Framework Human Rights Stakeholder Engagement - Project Participation PR9 Monetary value of significant fines for non- compliance with laws and regulations concerning the provision and use of product s and services (core) EU23: Programs, including those in partnership with government, to improve or maintain access to electricity and customer support services, EU24: Practices to address language, cultural,low literacy and disability related barriers to accessing and safely using electricity and customer support services, Corporate Responsibility - Code of Conduct Stakeholder Engagement - Project Participation Climate Change - Our Portfolio Performance - Renewable Energy - Town Island Solar Energy Power System Stakeholder Engagement - Customers EU21 : Contingency planning measures, disaster/emergency management plan and training programs, and recovery/restoration plans, Safety and Health - Enablers for Action Preparation for Emergency and Crisis EU2S : Number of injuries and fatalities to the public involving company assets, including legal judgments, settlements and pending legal cases of diseases Safety and Health - Our Performance Corporate Responsibility - Code of Conduct EU22 : Number of people physically or economically displaced and compensation, broken downby type of project. Stakeholde r Engagement - Project Participation EU26: Percentage of population unserved in licensed distribution or service areas. Our Company at a Glance - Business Performance and Development 502 Percenlage and total number of business units analyzed for risks re lated to corruption. (core) AR - Corporate Governance Report Key Performance Indicators EU27: Number of residential disconnections for non-payment, broken down by duration of disconnection and by regulatory regime. Our Company at a Glance - Responsibility to Our Customers 503 Percentage of employees trained in CLP's anti- corruption policies and procedures. (core) AR - Corporate Governance Report EU28: Power outage frequency. AR - Relationships - Customers 504 Actions taken in response to incidents of corruption (core) AR - Corporate Governance Report EU29: Average power outage duration. AR - Relationships - Customers 505 Public policy positions and participation in public policy development and lobbying (core) Stakeholder Engagement - Policy Advocacy EU30: Average plant availability factor by energy source and by regulatory regime. Facilities Performance Statistics 508 Monetary value of Significant fines and total number of non- monetary sanctions for non- compliance with laws and regulations (core) Corporate Responsibility - Code of Conduct Key Performance Indicators 10, Product Responsibility (PR) Disdosure of Management Approach Our Company at a Glance - Responsibility to Our Customers PRI Ufe cycle stages in which health and safety impacts of products and services are assessed for improvement, and percentage of significant products and services categories subject to such procedures (core) Our Company at a Glance - Responsibility to our Customers Safety & Health 205 Chapter 13 Chapter

111 We strive to provide material information as close to G3 recommended guidelines as possible, and provide additional information when deemed important. HO'Never, a number of core indicators are not reported as explained below: COI'e and EUSS Indicators Not Reported PR3 Type of product and service information required by procedures, and percentage of significant products and services subject to such information requirements (core) Explanation The "product"' of our company is electricity and gas. The sustainability impacts of our operations are covered in other parts of this Sustainability Report. The only other information to disclose on product labeling relates to use of an accreditation logo for green power, as described in the renewable energy section of the Climate Change chapter. We invite you to give feedback on our report and performance. You may choose your own format, use our online feedback form, or simply drop us an . PR6 Procedures and programs for adherence to laws, standards, and voluntary codes related to marketing communications including advertising, promotion and sponsorship (core) CLP is a utility company. The marketing mechanism as described in this indicator bears little relevance to our line of "producls". In Hong Kong and Australia, we also operate as a retailer. Our marketing communications in these countries follow local regulations with full compliance. We are keeping in view the situation and may consider adopting voluntary codes in the long-term. An electronic version ofthe printed ~2009 Sustainability Report - In Essence H, and related CLP publications, can be downloaded from our Group website. We encourage you to save paper by viewing the electronic vers ions of our reports where practical. If you would like a copy of our printed reports, or related CLP publications, kindly send a wrinen request to Simeon Cheng by , fax or post. LA4 Percentage of employees covered by collective bargaining agreements (core) The wide geographical coverage of our facilities and the different levels in ownership prohibits us from collecting meaningful information on trade unions membership. We do not impose restriction on trade union membership, and may consider collecting such information in a long-term. We pledge to donate HKS60 to this year's chosen charitable organisation for each shareholder who opts for receiving corporate communications electronically. and for each feedback that we receive on the Sustainability Report. A total donation amounting to HKB43,040 was made in 2009 to the Hong Kong Breast Cancer Foundation (HKBCF) in LAS HRI Minimum notice period(s) regarding operational changes. including whether it is specified in collective agreements. (core) Percentage and total number of significant investment agreements that include human rights clauses or that undergone human rights screening (core) CLP informs I consults employees of major operational changes as soon as practicable but does not have a defined minimum period, We currently do not include explicit human right clauses in investment agreements. In 2007 we started to include human right clauses in some major contracts. We are firmly committed to a set of business principles and ethics through our corporate Value Framework that cover all aspects of our business. Our revised Value Framework, released in early has included a specific reference to human rights. support of their free mammogram screening for around 400 low-income women aged between 40 and 59 in Hon9 Kong. Q Feedback Form ct. HRS Operations identified in which the right to exercise freedom of association and collective bargaining may be at significant risk, and actions taken to support these rights. (core) We have not identified any of our operations in which the right to exercise freedom of association and collective bargaining may be at significant risk. HR7 Operations identified as having significant risk for incidents of forced or compulsory labor and measures taken to contribute to the elimination of forced or compulsory labor. (core) We have not identified any of our operations to have significant risk for incidents of forced or compulsory labour. CLP had no citation or conviction relating to forced or compulsory labour in EUl7 Days worked by contractor and subcontractor employees involved in construction, operation & maintenance activities. The wide geographical coverage of our facilities. the different levels in ownership. and the large variety of contracts of various sizes prohibit us from collecting accurate information. 207 Chapter 13 How Can You Contact Us? 208

112 The assurance and verification process for our Sustainability Report is multi- fold. We independently verify both facilities' performance data and qualitative information wt'lich appear in this $ustainability Report. Independently verified data includes Group C02 emissions intensity, renewable energy and non- carbon emitting generation capacities in our power generation portfolio, and all the figures documented on the 'Key Performance Indicators' page. A copy of the verification statements for each facility can be made available upon written request. The qualitative information in this Sustainability Report is verified by an independent third party, SustainAsia. The verification statement is shown on the next page. Sustaln A.sla Lid 3905 Two Exchange Square. Suite NI,) Connaugtlt Place Centrat, HONG KONG IN" - sia T (852) F (852) E intq@s\lst3in3sia.eom Company Registration No Assurance and Verification SustainAsia Ltd has been commissiqned by CLP HQldings (CLP) tq provide Independent verificatiqn Qf its 2009 Online SustainaOility RepQrt (2009SR) published in March as well as its Interim Update in August Scope of verification The verification process was performed Qver Jan-Feb 2010 period fer the March 2010 Issue and Qver the Jut-Aug 2010 period for the Interim Update. The Qbjectives Qf the verification exercise were to prqvide an independent opiniqn Qn the materiality and Qverall quality of 2009SA, as well as the accuracy and robustness of the inlontlation presented therein, SustainAsia's scope Qf verification was limited te the qualitative information presented in 2009SA, and excluded the quantitative indicatqrs and financial information. Methodology SustainAsia selected a representative sample 1,11 qualitative statements in the draft report (English versiqn) fqr verificatiqn. thrqugh applying AccountAbility's Five Part Materiality Test. The verification was conducted thrqugh desktop review of report content. Qnline questionnaires, documentatiqn review and interviews Qf designated CLP personnel. As a result Qf this verificatiqn process. SustainAsia made some Qbservations and suggested minor adjustments and amendments to the draft report. We have also made recommendatiqns to imprqve CLP's suslainability management and reporting system. Conclusion Within the scope Qf our assignment. we have assessed the qualitative statements sampted frqm CLP's 2009SA and Interim Update. and verified their accuracy. We consider this report a balanced. comprehensive and accurate presentation Qf CLP's sustainability perfqntlance in 2009 and key issues fqr the first half Qf year Christophe Bongars Chief E.J::ecutive Officer, SustainAsia Ltd Hong Kong. 9 AugusI Assurance and VerificatiQn Chapter

113 Related Publications and Websites CLP Holdings 2009 Annual Report ct. TRUenergy E+ CLP's Value Framewon: Beyond Copenhagen Powering Asia Responsib ly elp's Climate Vision Our Maniresto on Climate Change ClP Technology Roadmap ~o