Assessment of Risks and Impacts:

In jurisdictions where national and/or local environmental regulations require an E&S impact assessment (ESIA) report to be undertaken for a hotel property for environmental permitting purposes, the company commissions such an ESIA to be prepared by a qualified technical institute which is submitted for regulatory approval once finalized. ESIAs include assessment of E&S baseline conditions of the project area; analyses of potential E&S impacts; and stipulation of appropriate management programs and monitoring requirements to address identified risks and impacts.

Policy, Management Systems and Programs, and Reporting and Monitoring:

SLA’s E&S management system at the corporate level comprises the following core elements:

i. An environmental, health, and safety policy;

ii. Standard operating procedures (SOP) applied to all SLA hotels. SOPs include those on life and fire safety (LFS), emergency preparedness and response (EPR), occupational health and safety (OHS), waste management, resource efficiencies, as well as a Supplier Code of Conduct;

iii. Key performance indicators (KPI – in the form of the SLA Balanced Scorecard system which includes E&S related indicators e.g. each hotel is expected to reach a Life & Fire Safety annual audit score) developed at hotel, department, and staff levels;

iv. Data collection, monitoring, and reporting. Assigned personnel and technicians at each hotel collect operational data (e.g. fire pump maintenance data) and use an in-house mobile app to submit data to the SLA Engineering team for consolidation and analysis. In addition, regular internal site-inspections according to standardized checklists, and annual internal and external audits (e.g. on LFS and food safety performance of SLA hotels) are conducted, and where gaps are identified, procedures are in place to ensure timely and targeted corrective actions. The standardization of SOPs, document templates, inspection checklists, and KPIs across SLA hotels, underpinned by regular technical training to staff, enables the company to effectively monitor E&S related performance across a large number of geographically dispersed hotel and residential properties.

v. Certifications: As of 2018, 57 SLA hotels achieved ISO14001 Environmental Management System certification; 53 hotels in China and Hong Kong S.A.R. achieved Marine Stewardship Council Chain of Custody certifications as part of SLA’s sustainable seafood sourcing program (aligned with its corporate-level Sustainable Seafood Policy since 2012); 54 SLA hotels were OHSAS18001 (Occupational Health & Safety) certified including two hotels certified against the ISO45001 standard; and 69 SLA hotels were certified against HACCP (Hazard and Critical Control Point) and/or ISO 22000 Food Safety Management standards. These certifications and their annual internal and external auditing requirements as well as maintenance of control documents are stringently adhered to, and form an integral part of day to day E&S risk management at SLA hotels;

vi. Publishing of an annual Responsible Business report by SLA, the format of which references Global Reporting Initiative standards. The report includes E&S performance related summary information and disclosure of SLA’s climate and water impacts through the Carbon Disclosure Project. The company is also a signatory to the United Nations Global Compact.

Based on its review of SLA’s ESMS information including performance and audit reports at the hotel level, IFC concludes that SLA has a robust ESMS in place commensurate with the nature and extent of its construction and operational E&S risks and impacts.

Organizational Capacity:

Headquarter (HQ) level departments at SLA with E&S related responsibilities (as described in brackets) include:

- Engineering & Security department (LFS, environmental including waste management, indoor air quality, resource efficiencies, and safety and security including occupational health and safety),

- Food Safety department (food safety),

- Projects team (construction and contractor management),

- Procurement (supplier management), and Human Resources department (human resources management).

At each SLA hotel, team members including the head of engineering, health and safety officer, LFS manager, and human resource officers are responsible for day to day E&S operational management, reporting to the hotel General Manager as well as to technical departments at SLA headquarters. Engineering personnel at SLA HQ and SLA regional personnel (e.g. hygiene managers) regularly travel to various SLA hotels to technically support on-site personnel and carry out compliance inspections and internal audits.

At the SLA corporate level, a Risk Management Committee comprising senior managers exercises oversight of and makes high level decisions on all E&S risk matters at SLA, and pertinent E&S risk and performance reports are shared with the corporate enterprise risk management team and the corporate balanced scorecard team.

Technical training and knowledge verification programs (e.g. on LFS) are implemented and staff members can sign up to different programs via SLA’s online learning portal, or through the Shangri-La Academy. SLA also organizes annual skill competitions for staff to participate in, as an additional means of training.

The SLA Engineering & Security team has staff members with strong technical backgrounds in various disciplines (e.g. resource efficiency management) who are deployed to various hotels from time to time to provide technical support and to identify efficiency improvement opportunities in concert with hotel management teams.

Human Resources Policies and Working Conditions:

SLA employs more than 41,200 persons full-time across its operations including at 101 hotels globally. The workforce has a male to female ratio of about 4:6. SLA has a comprehensive human resource (HR) policy, operating procedures, and employee manual in place consistent with host-country HR regulations and IFC PS2 requirements, and SLA hotels adopt the same policy, procedures, and manual.

Employment practices of the company are consistent with principles of non-discrimination, zero tolerance for harassment in the workplace, prohibition of underage labor and forced labor practices, and equal opportunity, and these are written into the company’s HR policy. Salary and benefits levels are determined by referencing prevailing labor market rates. Terms of employment consistent with national labor laws including provisions on minimum wage, working and overtime hours, leave days, etc, are written into all employment contracts.

During the ongoing COVID-19 pandemic, there have been no instances of involuntary staff retrenchment, involuntary pay reduction, or involuntary unpaid leave arrangements at SLA. The company has a set of minimum standards in place on accommodation provided to staff, which are consistent with IFC PS2 requirements in relation to living conditions, privacy, safety, and washing and cleaning facilities.

Grievance Mechanisms and Workers’ Organizations:

IFC’s review of hotel-level documents, including worker grievance mechanism (WGM) documents, indicate that effective measures (anonymous and non-anonymous) are in place at SLA hotels to receive and address worker grievances and these are extended to include contractor workforces. Employee manuals describe WGM procedures and requirements. Key means of workplace communications are dialogue between staff and supervisors during staff meetings, drop boxes throughout hotel working areas, and by email. Where an employee feels an issue remains unresolved, s/he can escalate this to the human resource department or to senior managers at HQ. The company does not restrict staff members from joining or setting up a labor union, or from entering into collective bargaining agreements should they wish to.

Occupational Health and Safety (OHS):

Overall, given the company’s business nature of operating hotels, OHS risks are considered moderate. Operational OHS performance statistics from Shangri-La hotels in which IFC has existing investments, and from several hotels under the scope of this project, indicate that there were no major lost time accidents.

The SLA Group OHS Implementation Manual, based on OHSAS18001 certification and audit requirements, describes detailed requirements on day to day OHS management expected at all SLA hotels, and the records indicate that OHS statistics (e.g. a log of all lost time accidents) are regularly tracked, compiled, and reported to the SLA Engineering & Security Department for further analysis. Each SLA hotel has conducted OHS risk point analysis and used the results to develop concrete OHS risk minimization plans/actions and compliance inspection checklists.

The company, in its procurement process, looks at performance aspects of construction contractors including labor practices and OHS performance, and its site-based project managers and safety officers regularly conduct site inspections during construction to ensure contractor compliance with SLA OHS requirements.

Resource Efficiency and Greenhouse Gas Emissions:

Based on information from the company, the annual greenhouse gas emission of the project is estimated to be about 47,300 tCO2e. Given that this exceeds the annual threshold of 25,000 tCO2e as per PS3, the company will include the estimated GHG emission of the project in the annual monitoring report submitted to IFC, based on an internationally recognized calculation methodology.

Water required for consumption are supplied by municipal water companies, with no adverse impacts expected on other local water users in terms of water availability and quality. Based on SLA data from several project hotels, the water consumption in 2019 was within the Excellent to Satisfactory categories (i.e. within the range of 0.0-1.0 cubic meters water consumed per guest per night) as per Table 1 on p.13-14 of the World Bank Group Environmental Health & Safety Guidelines for Tourism and Hospitality Development (published on April 30, 2007).

Hotel designs and construction, starting at the early contractor proposal tendering stage, fully considers resource efficiency needs and the local climatic conditions where each hotel is located. The choice of equipment including installation of meters and sub-meters throughout the hotel premise are an integral part of the hotel’s design which enables it to precisely monitor energy and water usage, and to adjust its equipment parameters real-time to achieve energy and water efficiency savings, while maintaining a comfortable environment for guests. For example, in certain locations depending on changes in required usage, chiller fan speed and the speed of pumps are adjusted to conserve energy.

Energy and water consumption data is collected/consolidated monthly from all hotels and submitted to the SLA Engineering team for analyses. Based on ongoing analysis results and on results of annual energy modeling performed at SLA hotels (which commenced in 2020), the team regularly communicates with the head of engineering at each hotel to jointly explore practicable ways to achieve further energy and water savings, either through equipment upgrades or day-to-day management measures. For instance, in 2019, energy savings were achieved from: (i) installing variable speed drives in pumps and in the Air Handling Units (AHU) of the heating, ventilating, and air-conditioning (HVAC) system at the Shangri-la Hotel in Colombo, Sri Lanka, and at Shangri-La’s Fijian Resort and Spa in Fiji; and (ii) revising operating hours for mechanical and electrical (M&E) and laundry equipment as well as back-of-house lightings at Hotel Jen Male, Maldives.

Pollution Prevention:

During hotel construction activities, contractors are stipulated by contractual obligations to manage and dispose of all construction wastes as per regulatory requirement through authorized channels, and to take adequate measures to suppress dust, vibration, and noise during construction. This is verified by company project managers through on-site inspections.

During operations, wastewater generated at hotel facilities consist of sanitary and kitchen wastewater, which are treated by an on-site wastewater treatment facility, before being discharged to the municipal sewerage system for secondary treatment (at municipal locations where this is available) in compliance with local regulatory requirements. Wastewater and stormwater systems are set up separately and wastewater is transported in a sealed system to prevent cross-over contamination. Grease traps are put in place at kitchens, and oils and grease are collected and disposed of by licensed external contractors.

Boiler stacks are equipped with appropriate technologies (e.g. electrostatic precipitators) to treat flue gases (not expected to be heavy in sulphur dioxide or nitrogen oxide content) before their discharge to the ambient. Solid wastes generated at hotels are re-used or recycled where feasible (e.g. under SLA’s single use plastic reduction program), of which sludge from septic tanks are collected by licensed contractors to be sent to local authorized landfills or sold to local recyclers as per local regulations. Limited quantities of hazardous materials are stored in access-controlled areas.

Unarmed security guards are deployed at SLA hotel premises. SLA hotel and serviced apartment buildings are designed and constructed to be consistent with principles of universal access. As per SLA corporate policy, scheduled legionella tests are required for hot and cold-water systems at all SLA hotel properties (e.g. in spa sections), and technically and financially feasible design and management measures are adopted (e.g. testing regimes, and the use of air-based cooling systems where feasible) to minimize potential legionella infection risks. Swimming pool water quality at SLA hotels are sampled and tested regularly to comply with SLA corporate and host-country regulatory requirements. Seismic aspects of hotel design fully consider seismic conditions of each hotel location and are based on SLA and GIIP standards (e.g. in the case of Sule Shangri-La Hotel in Yangon Myanmar, referencing International Building Code requirements).

Life and fire safety (LFS):

At the design and construction stages, SLA hotels, as per host-country regulatory requirements, go through a process of LFS schematic design and review, detailed design and review, construction site inspections, and post-construction-audit, before a LFS permit is issued by host-country local fire departments, which is required before notice to proceed is granted for a hotel project.

At SLA, the M&E team, comprising qualified team members with LFS engineering backgrounds, specifies in new project tendering documents the need for prospective M&E consultants/bidders to demonstrate how their proposals will meet host-country LFS requirements, SLA corporate LFS  requirements, as well as U.S. National Fire Protection Association (NFPA) requirements. Once proposals have been reviewed and after a successful bidder has been selected, throughout the subsequent detailed planning and construction of a hotel property, the SLA M&E team, including site-based SLA project managers, work closely with contractors and sub-contractors and conduct regular site inspections as well as post-construction audits to ensure that constructed buildings have indeed fulfilled design specifications, tendering conditions, and all SLA LFS requirements.

The SLA Corporate Fire Life Safety (FLS) Manual dated December 2010 and developed by an in-house SLA team of LFS engineers, is the core corporate level document at the company defining LFS requirements applicable to all SLA hotels, and its development referenced U.S. NFPA as well as host-country requirements. The Manual is updated from time to time to reflect the latest developments in LFS GIIP as well as changes in host-country regulations, which are continually monitored by the SLA Engineering team. Host-country to GIIP comparative LFS requirement studies are also undertaken from time to time by SLA to keep abreast of the latest regulatory developments. The Manual describes day-to-day operational requirements on each hotel and includes detailed working-level instructions on: (i) overall requirements including deviation management, FLS organizational setup, and training requirements; (ii) fire prevention planning including: exit obstruction and storage management, hot work procedures, electrical safety, housekeeping, management of flammables and combustibles, and FLS requirements specific to kitchen/laundry/boiler areas and to banquet operations; (iii) hazard identification, minimization, alarm systems, and compartmentation; (iv) system inspection, maintenance, and testing requirements e.g. on water based fire protection systems, portable fire extinguishers, etc; (v) emergency planning and response including fire drill and evacuation requirements e.g. all SLA hotels are required to undertake not less than 2 fire drills per year; (vi) FLS requirements on contractors and renovations; (vii) FLS auditing requirements including document templates; and (viii) reporting requirements.

In terms of reporting, the FLS Manager of each hotel prepares a monthly FLS report (as well as incident reports if required) for review by the Hotel General Manager, which is then submitted to the SLA Engineering team and regional SLA management. Completed safety checklists and results of preventative maintenance work and fire drills are also regularly submitted online by each hotel to the SLA Engineering team. A monthly FLS summary report is compiled and submitted to the SLA corporate Risk Management Committee, the enterprise risk management team, and the balanced scorecard team. The monthly report template is based on a detailed monthly FLS checklist, which was in turn developed on the basis of hazard identification and minimization study results from each hotel. The monthly report template and inspection checklist is largely standardized across SLA hotels, allowing for effective monitoring across a large number of properties.

Based on the above and on its review of detailed hotel-level FLS audit reports, IFC concludes that SLA has a robust LFS management system in place implemented effectively at all levels.

Food Safety:

SLA’s Food Safety Management System (“SFS”), based on core principles of HACCP (Hazard Analysis and Critical Control Point), defines corporate food safety requirements adhered to by each of its hotel properties. As of 2018, 69 SLA hotels were HACCP and/or ISO 22000 Food Safety Management certified. The SFS includes: (i) training for all F&B staff including for food handlers in SLA kitchens and restaurants; (ii) the use of daily kitchen checklists in internal inspections; (iii) quarterly internal audit visits by SLA regional F&B and hygiene managers; (iv) an assurance program requiring third-party HACCP audits on SLA hotels as well as on food suppliers classified as being of higher risk; and (v) detailed procedures including root-cause-analysis on potential deviations found during audits and timeline requirements on completing corrective actions. Food safety indicators are tracked as part of SLA’s group level KPI and balanced scorecard system, and the SFS is aligned with SLA’s Enterprise Risk Management Framework.

Key internal and external stakeholders for the company are its employees, customers, local community members, suppliers, contractors, and local authorities. The company has put in place Stakeholder Engagement and Grievance Redress Mechanism (GRM) policies and procedures, and customized stakeholder engagement programs at the hotel level, to proactively engage local stakeholders and understand their needs and potential concerns, using results from such engagement to guide and continually adjust SLA’s overall sustainability efforts. In 2012 (with an update in 2016), the company undertook an internal materiality assessment of its business and utilized the results to finetune its stakeholder engagement policy and efforts. During day to day operations, front entrances and receptions and security entry points at each hotel are the key public interfaces to receive external communications including grievances from the public if any; and members of the public can also reach the company and its hotels by phone, email, or by sending messages to the company’s social media accounts to communicate any concerns they may have.

The company publicly reports its E&S performance through its website (https://www.shangri-la-sustainability.com/) and the annual publication of sustainability and other related reports (https://www.shangri-la.com/group/our-story/community-and-social-impact).

Contact Person: Alfred Wu

Title: Vice President – Corporate Finance

Shangri-La Asia Limited

Address: 28/F Kerry Centre, 683 King’s Road, Quarry Bay, Hong Kong, China.

Tel: +852 2599 3000

Email: admin.ir@shangri-la.com

http://www.shangri-la.com