MANAGING SUSTAINABILITY
At Sembcorp, we believe in building sustainable
businesses that deliver long-term shareholder
value and growth. We believe that a truly
sustainable business not only creates economic
value, but does so in a way that creates benefit
for its stakeholders.
Environmental, social and governance (ESG)
considerations are embedded in our business
decisions and processes. We believe that taking ESG
considerations into account helps us to understand
our risks and responsibilities in a holistic manner,
and that when our strategy and business decisions
are informed by ESG concerns, we are better
prepared to respond to the challenges we face.
Sembcorp’s management of its sustainability
issues is centred on five focus areas (see
Focus Areas and Material Issues table). Sembcorp’s
key sustainability principles are set out in our Sustainability Policy. These principles are applied
through the management systems and processes
of Sembcorp’s operations. We aim for continuous
improvement of our sustainability management
systems, and evaluate our management approach
by benchmarking it against industry best practice.
We adopt a precautionary approach to avoid or
minimise negative impacts through preventive
measures and tracking of leading indicators. A list of our
policies,
certified facilities as well
as
memberships and participation in external
initiatives is available in the Sustainability section
of our website.
Sembcorp’s Board of Directors oversees the
business affairs of the Group and is collectively
responsible for the long-term success of the
company. The principal duties of the board include
providing leadership on the Group’s overall strategy,
taking into consideration sustainability issues. The
board also ensures the adequacy of the Group’s
framework for risk management and internal
controls, including ethical standards.
Sembcorp’s Sustainability Steering Committee
(SSC) provides strategic direction for the
management of sustainability-related risks and
opportunities and guides the development and
improvement of frameworks, policies, guidelines
and processes for the effective management of
sustainability issues. The SSC is a high-level
committee chaired by the Group Chief Financial
Officer, and comprises senior executives across
various functions, including asset management,
human resources, health, safety and environment
(HSE) and corporate relations.
At the business unit level, economic, operational,
as well as health and safety issues and other risks
are reviewed by the operations head at bi-monthly
business unit management meetings, and
performance in these areas is evaluated against
internal targets.
Sustainability contact
Sembcorp welcomes feedback on our sustainability
issues and reporting at
[email protected]
Sustainability Performance Snapshot
The table below shows quantitative data that reflects
our performance in areas that have been identified
as material to our businesses and stakeholders.
More performance data, including qualitative data,
is available in the individual sections for each focus
area in this report, as well as in the
Sustainability
section of our website.
Materiality
Materiality analysis is a key process enabling
Sembcorp to define the sustainability issues that
are of greatest significance to our businesses and
our stakeholders over the long term. We believe
our focus on materiality is vital as we seek to
make progress on our sustainability journey,
drive performance and transparency, and embed
sustainability into the Group’s culture.
Sembcorp focuses our reporting on 11 material
issues, grouped into five focus areas. Each focus
area is owned by an appointed SSC member.
The
five focus areas and 11 material issues
are recognised by both internal and external
stakeholders. For each material issue, we report the sustainability context,
the relevance to Sembcorp, and our management
approach and performance.
Sembcorp conducted a materiality review
in 2013, building on our first formal materiality
assessment in 2011. Sustainability issues were
identified in line with Global Reporting Initiative
(GRI) guidelines. The materiality review took into
account GRI’s Electric Utilities Sector Supplement,
the Dow Jones Sustainability Index and other
relevant frameworks and peer reviews. These issues
were prioritised using a materiality matrix,
charting their level of significance to Sembcorp
and our stakeholders according to clearly defined
criteria based on the AA1000AS five-part
materiality process.
The materiality assessment and review were
conducted with input from an independent
sustainability consultant. To enhance the robustness
of our materiality assessment, feedback from our
stakeholders, including shareholders, financial
institutions, the investment community, regulators,
customers, suppliers and non-governmental
organisations, was incorporated. The survey,
commissioned in 2012, was conducted by an
independent firm to ensure anonymity for
respondents. Respondents agreed on the whole
with the issues identified as material for Sembcorp.
Survey responses also helped to refine aspects of
the material issues that our key stakeholders were
interested in, and gave us input on how we could
better communicate the issues.
In 2014, we integrated sustainability
considerations into our approach to risk
management, in order to create a more robust
materiality and risk assessment process.
Reporting Framework and Scope
This report was prepared in accordance with GRI
G4 Core requirements. Our
GRI content index is
available in the Sustainability section of our website.
Sembcorp operates across six continents. Our
three key businesses comprise Utilities, Marine and
Urban Development. As our Marine business is
separately listed in Singapore and reports its
activities separately, it is excluded from this report.
The period under review pertains to January 1 to
December 31, 2014, and the information provided
in this report relates to subsidiaries of Sembcorp. It
excludes joint ventures, partnerships and associates
for which Sembcorp does not have management
and / or operational control. Data reported in the
Governance, Risk and Compliance, People, HSE
and Community sections is specific to businesses in
operation, and excludes projects in construction.
Environmental data provided is specific to
Sembcorp’s Utilities businesses only. New acquisitions
and subsidiaries are given one year, or more where
required, to integrate their reporting systems with
that of the Group. Thereafter, their sustainability
data will be reported externally upon the collection
of a full calendar year of data. Data pertaining to
entities divested during the year is excluded from
this report. We aim to work towards external
assurance of the report.
Data Measurement and Quality
All data measurements are in line with GRI G4
recommendations for our chosen indicators.
Greenhouse gas (GHG) emission factors are based
on the 2006 Intergovernmental Panel for Climate
Change (IPCC) guidelines, except for those relating to
our operations on Teesside, UK, which use emission
factors adapted from the US Environmental
Protection Agency and the 2013 and 2014
Government Greenhouse Gas Conversion Factors
for Company Reporting issued by the UK’s
Department for Environment, Food & Rural Affairs
and Department of Energy & Climate Change.
While there are inherent limitations to the
accuracy of data, Sembcorp seeks to minimise
errors and irregularities through the strengthening
of internal controls.
Stakeholder Engagement
We recognise the importance of engaging our
stakeholders to encourage open communication
and build relationships, and employ a range of
platforms to this end. The frequency of ongoing
engagement with our stakeholders varies with
their concerns and needs as well as with the
topics
of engagement.
In 2012, we conducted a stakeholder mapping
exercise to review and define our stakeholder
groups. This was done in accordance with the
AA1000 Stakeholder Engagement Standard by
an independent consultant. Stakeholders were
mapped based on their level of influence and
interest, using a structured approach. The level
of stakeholder interest against each material issue
was also reviewed and a survey was conducted
to invite feedback on our material issues from
selected key stakeholders.
More information on the
platforms we use to
regularly engage our stakeholders can be found
in the Sustainability section of our website.
HIGHLIGHT
Engaging Our Stakeholders
Sembcorp actively participated in Singapore
International Water Week 2014, using this
industry event as a platform to engage peers,
partners, customers and governments through
forum and roundtable discussions. Topics
ranged from water solutions for the chemical
and refining sector and industrial parks, to
approaches to solving the future water
challenges of industries. Sembcorp also hosted
China’s Minister for Water Resources, Chen Lei,
at our facilities on Jurong Island, and discussed
with him the advanced water management
solutions that will support China’s growth and
sustainable development. For more insights on
our participation in Singapore International
Water Week, please go to the
Events section
under News and Multimedia of our website.
MATERIAL ISSUES
We group our material issues into five focus areas,
aligned with how we drive success for the company.
Under each focus area, we discuss our management
approach to the relevant material issues and
our performance against each issue.
A snapshot of Sembcorp’s quantitative sustainability performance data is presented in
Sustainability Performance Snapshot.
Economic
To deliver long-term value and growth
Why this is material
Long-term economic viability is at the core of
Sembcorp’s approach to building sustainable
businesses. The Group drives its economic
sustainability by monitoring and managing the
following key facets of its business: capital and
portfolio management, operational reliability of
assets, innovation and business development
for new income streams.
Capital and portfolio management
Sembcorp’s businesses often involve large-scale,
long-term projects requiring significant initial
capital outlay. Strong financial health and a
disciplined approach to investment are therefore
necessary for us to succeed. At the same time,
as Sembcorp continues to grow, we believe it is
important for us to maintain a balanced portfolio
of businesses across various geographical regions
and business segments with the appropriate level
of risk. Capital allocation, including the
geographical distribution of our investments,
is hence managed from this perspective.
Operational reliability
The reliability of our assets is vital not only for our
reputation, but also for our long-term profitability.
Our Group is heavily invested in the Utilities
business, which involves the sustained operation of
energy and water facilities for prolonged periods.
The business is committed to long-term customer
contracts and its products and services, such as
power, steam, water and wastewater treatment,
are essential to its customers. Proper care and
maintenance of our assets ensure that their useful
life, and therefore their ability to generate stable
recurring income and a reliable supply of products
and services, is sustained throughout our long
investment horizon.
Innovation
We recognise the importance of technology and
innovation in maintaining and enhancing our
relevance, profitability and competitive advantage.
This includes applied research and development
and improvements to optimise our operations and
enhance our efficiency, as well as the adoption of
new technologies and methodologies with wider
sustainability benefits.
New income streams
To deliver long-term growth, the company
continuously explores new business opportunities and
maintains a pipeline of upcoming projects, including
both greenfield and brownfield investments.
HIGHLIGHT
Developing World-class Capabilities
In late 2014, we announced the development of
the Sembcorp Global Asset Management System.
The system will allow Sembcorp to centralise
the management of its energy and water plants
from around the world and will put Sembcorp
at the forefront of using predictive analytics in
the operation of utility plants.
The system will comprise a process
optimisation module, which will benchmark
plant performance data and provide automatic
alerts for any abnormalities; a troubleshooting
module using predictive analytics to help
Sembcorp’s technical experts address operational
issues the minute they occur; and a predictive
maintenance module to identify potential
equipment problems, prevent unexpected
shutdowns and allow for more optimised
scheduling
of maintenance.
The advanced system will allow Sembcorp
to better harness its collective global expertise,
drive operational excellence and optimise asset
performance for enhanced reliability, availability
and cost effectiveness.
Management approach
Capital and portfolio management
The Group has put in place robust frameworks and
processes to ensure our investment and business
decisions take into account long-term
considerations. Since 2003, we have implemented a
system of financial discipline across all subsidiaries,
joint ventures and associates. Potential acquisitions
and growth opportunities are evaluated based on
strict investment guidelines. Depending on criteria
such as project value and country risk, approval for
projects may involve the Senior Management
Committee, the board and / or its Executive
Committee or Risk Committee.
The Group actively manages its risk portfolio.
This includes monitoring balance sheet liquidity
ratios and country risk profiles. For more
information on risk management at Sembcorp,
please refer to the
Risk Management and Internal
Controls chapter.
Operational reliability
Reliability is of foremost importance in the
management of our assets, from the design phase
to the operation and maintenance phases. In the
design and construction phases, consideration is
given to installing sufficient operational flexibility
and selecting quality equipment. In the operation
and maintenance of assets, regulatory and
manufacturers’ standards are adhered to. Efforts are
continually made to optimise use of the equipment.
The reliability of our plants is monitored through
monthly performance indicators for which senior
management has oversight. Technical audits and
checks are also conducted on our plants.
Supply Chain Management
We recognise that our supply chain has a material
impact on the efficiency and effectiveness of our
operations. From our engineering, procurement
and construction contractors to fuel and spare
parts suppliers, Sembcorp’s procurement policy
guides our assessment of suppliers and
contractors to ensure that they are chosen for
their ability to deliver over the long term and
operate in a responsible manner.
Requirements for suppliers
Sembcorp has stringent requirements for its
suppliers. In Singapore for instance, our suppliers
go through an extensive pre-qualification process
which vets their ability to sustain their business.
This includes checks on areas such as their
financial viability, human resource policy and
litigation history. The vendors’ capabilities are also
reviewed, taking into account the qualifications
and experience of their personnel and track
records. Suppliers’ HSE records and processes,
as well as their labour conditions and community
impact, are also considered. We value the
opportunity to positively influence our suppliers
for greater HSE awareness and social responsibility,
and believe that securing a pool of suppliers with
a shared commitment to sustainability will
mitigate operational and reputational risk.
Supplier diversification
Our efforts to ensure supply chain security include
diversifying supply to mitigate concentration risk.
For instance, Sembcorp’s operations in Singapore
maintain at least one primary and one secondary
supplier for key spare parts and consumables
wherever possible.
Fuel procurement
Fuel comprises a significant cost component
for Sembcorp’s power and steam generation operations. Security of fuel supply is also
essential to the sustained performance of our
assets. In view of this, we established a Fuel
Management department to focus on issues such
as security of supply, price fluctuations and fuel
mix. To further diversify our fuel mix and tap
sustainable sources, Sembcorp has increased
our use of alternative fuels and renewables.
For instance, in Singapore, our solid waste
management operations provide a reliable supply
of waste wood for our woodchip boiler plant,
while in our biomass power plant in the UK,
waste wood from sustainably-managed forests,
sawmills and arboricultural residues is used as
fuel. A
case study on how we deliver value across
the energy and water value chain is available in
the
Economic portion in the Sustainability section
of our website.
Innovation
Sembcorp’s Technology Advisory Panel, comprising
our Chairman, Group President & CEO and other
invited experts, provides strategic direction for
Sembcorp’s technology and innovation programmes.
It oversees the application of significant emergent
technologies in the energy and water sectors,
and provides guidance to Sembcorp’s leadership
on technological trends and opportunities.
The panel is supported by an in-house Group
Technology department.
Headed by our Chief Technology Officer,
our Group Technology department oversees our
research and development as well as innovation
efforts. Besides tracking our investment in
innovation and the corresponding returns, we
also track indicators such as number of projects
screened, to ensure that we have a pipeline of
innovation projects for development and
implementation in a timely manner.
To further encourage innovation from the
bottom up, Sembcorp’s !DEA Awards programme
also recognises innovative ideas and efforts across
the Group. Past winning entries have included
process innovations resulting in cost savings and
improved HSE performance, and innovations in
the development of new products and services.
Ongoing engagement with venture capitalists,
technology companies and tertiary research
institutes enables us to keep abreast of the latest
technological advancements. In looking at new
technology, we prioritise innovations for our
operations’ identified needs, while also considering
more general proposals.
New income streams
Sembcorp’s Group Business Development &
Commercial department is structured and resourced
to pursue new business opportunities with agility
and focus. Dedicated teams look into growing our
businesses in both existing as well as new markets.
To provide a platform for future growth,
we identify and develop a healthy pipeline of
projects. We also seek to grow through strategic
partnerships with our customers, by continuously
developing innovative and competitive solutions
to meet their evolving needs.
We actively invest in sustainable and
green business lines which will give us an
edge in an increasingly resource-scarce world.
Applying a disciplined approach, we employ
a stringent evaluation process for all our
projects and investments.
2014 performance
Sembcorp’s financial performance and key economic
indicators can be found in our
Group Financial
Review chapter and
Financial Statements.
We officially opened the Sembcorp Technology
& Innovation Centre in Singapore, which serves as
a focal point for our testing, optimisation and
research and development activities in both energy
and water. We announced the development of the
Sembcorp Global Asset Management System, which
will enhance our management of our global portfolio
of facilities and lead to greater reliability, availability,
optimisation, as well as cost savings. In addition, we
are strengthening our team of technical specialists
who will be employed to troubleshoot technical
issues for our plants worldwide. We expanded our
team to continue the development of Virtual Brain,
the system we are developing for predictive
maintenance and optimisation of our operations.
We successfully implemented equalisation-hydrolysis
(EQ-H), a wastewater treatment technology we
developed in-house, which offers commercial and
environmental benefits through improving effluent
quality while reducing power and chemical
consumption as well as biosludge production. The technology was applied in a full-scale pilot
project at our facilities in Zhangjiagang, China.
Two patents were filed to protect our innovations
in Virtual Brain and EQ-H.
We announced the formation of the Sembcorp-EMA Energy Technology Partnership, a S$10 million
research and development fund by Sembcorp
and Singapore’s Energy Market Authority (EMA)
to support the translation of innovative energy
solutions from laboratory to market, benefitting
the power industry and our operations. We
strengthened and re-launched the !DEA Award to
reward not only implemented solutions, but also
ideas and suggestions that could potentially create
sustainable value for Sembcorp’s businesses and
operations. We also earmarked seven research
and development projects in areas related to our
businesses to be jointly explored with the National
University of Singapore over the next few years.
New projects added to our growth pipeline
in 2014 include the acquisition and upgrade of an
existing wastewater treatment plant in Lianyungang
Lingang Chemical Industrial Park in China’s Jiangsu
Province. Sembcorp was selected by the Jiangsu
Environmental Protection Department to improve
industrial wastewater treatment operations at the
industrial park, with the potential for the project to
serve as a model to be replicated at other industrial
parks in Jiangsu. We also acquired a stake in
NCC Power Projects, which is currently building
a 1,320-megawatt supercritical coal-fired plant in
Andhra Pradesh, India. This project will double our
thermal power generation capacity in India and
increase our footprint in the country’s growing
power market.
Going forward
The Group will continue to maintain a disciplined
approach towards managing its financial position
and portfolio. We will further deepen our asset
management as well as business development and
commercial capabilities, optimise plant performance
and grow our asset portfolio for a greater recurring
income base. We will also review our global supply
chain, and aim to harmonise our procurement
principles globally.
We will continue to identify and develop new
and innovative technologies and build on our
culture of innovation through recognition and
implementation of !DEA Awards projects and other
ad-hoc innovation proposals. In the near future,
we expect to implement further phases of the
Virtual Brain project and develop it for application
in other water treatment processes. We target to
launch the first joint call for proposals seeking
funding under the Sembcorp-EMA Energy
Technology Partnership
in 2015.
Governance, Risk and Compliance
To maintain high standards of behaviour
and integrity and be best in class for governance practices
Why this is material
Governance and ethical business
Responsible business conduct ensures the long-term
viability of our business, and builds trust and
confidence with stakeholders. We commit to high
standards of behaviour and integrity in everything
we do and comply with all laws and regulations
wherever we operate. We believe in conducting
business legally, fairly, honestly and with integrity,
and expect the same of those with whom we do
business. Sembcorp has zero tolerance towards
fraud, bribery and corruption.
Risk and regulatory compliance
Risk management is integral to Sembcorp’s
approach to operating sustainably. We actively
equip our management with tools to manage and
control risks arising from existing business activities
and investment decisions. Risk management helps
to preserve our bottom line by reducing the
likelihood and impact of potential losses, while
providing a common platform for the evaluation
of new business opportunities. In addition, risk
management provides our board and shareholders
the assurance that key enterprise and business risks
faced by the organisation have been identified,
assessed and managed via appropriate risk
mitigation and controls.
Sembcorp is committed to high standards
of regulatory compliance, as non-compliance with
applicable laws and regulations may subject us to
statutory and regulatory fines and even result in
material litigation with severe negative impact on
our reputation, financials and licence to operate.
HIGHLIGHT
Strengthening Governance
In 2014, we formulated a new policy and
manual covering internal controls for the Group
and its businesses. These documents provide
a clear framework for what constitutes an
effective and adequate system of controls.
It also provides guidelines on the appropriate
segregation of duties and a checklist of internal
controls for our business units to put in place.
Management approach
Governance and ethical business
Sembcorp is led by an effective board mainly
comprising independent non-executive directors.
The board is collectively responsible for the long-term
success of the company. Part of its role is to
ensure the adequacy of the Group’s control and risk
framework and standards, including ethical
standards, and that obligations to key stakeholders
are understood and met. Several board committees
have been established with written terms of
reference to assist the board in the efficient
discharge of its responsibilities and provide
independent oversight of management.
Sembcorp complies with the Code of
Corporate Governance 2012 issued by the
Monetary Authority of Singapore and reports
our governance processes and activities with
reference to principles set out in the Code.
Risk and regulatory compliance
Enterprise risk management
The Group has an enterprise risk management
(ERM) framework in place. The Group’s risks are
managed through reviews of major occurrences
and key risk areas at management meetings, risk
assessments at the investment appraisal and due
diligence stages, monitoring of key risks through
a quarterly System of Financial Discipline
submission or as required, and reporting of
departmental and business unit level risks by
all employees via the ERM reporting process
and risk committee meetings.
Governance assurance framework
Sembcorp adopts a governance assurance
framework, which comprises four lines of defence:
i. | Business governance / policy management |
ii. | Management assurance |
iii. | Independent assurance |
iv. | Board oversight |
For more information on Sembcorp’s governance
and risk management systems, please refer to the
Corporate Governance Statement and
Risk
Management and Internal Controls chapter.
Training and performance management
The Group provides awareness training and
workshops on ERM, fraud risk management and
business continuity management on a periodic basis.
Desktop exercises for crisis management, emergency
response drills and business continuity exercises are
also conducted regularly to validate and fine-tune
our procedures and plans, so as to ensure that
the Group can respond effectively to crises and emergencies.
Remuneration for senior management is tied
to risk management and governance performance
indicators relevant to their roles. More details on
senior management remuneration and reward can
be found in the
Corporate Governance Statement.
2014 performance
This year, we continued to make progress in
the global implementation of our fraud risk
management framework. All our subsidiaries
have completed fraud risk assessments for their
respective cash-handling and procurement
processes where applicable. We also continued
to communicate our policy of zero tolerance
towards bribery and corruption through our
fraud awareness sessions for employees.
In 2014, we continued to roll out our group-wide
governance assurance framework to promote
a consistent approach and understanding with
regard to our risk and controls assessment process
and methodology. This aims to strengthen the
risk and controls assessment process and also
provides a framework for self assessment of
risk-based controls.
In addition, a policy and manual governing
internal controls were developed to provide our
business units guidance in implementing,
strengthening and maintaining an effective and
adequate system of internal controls. We also
continued to use forensic data analytics as a tool to
uncover red flags and identify any gaps in internal
controls to be addressed.
In 2014, a total of two significant fines
amounting to S$214,000 were incurred by our
operations in Chile and China. We have looked into
these incidents to ensure a non-recurrence.
With the increased threat of disease epidemics,
we strengthened our readiness to respond to
pandemic outbreaks through table-top exercises
and emergency response drills in Singapore, the
Middle East and South Africa. This included
simulating a World Health Organisation declaration
that an infectious disease had reached pandemic
phase, and the activation of response measures
such as isolation and contact tracing procedures.
As part of our continuous review of policies,
Sembcorp introduced a business continuity
management (BCM) policy which defines the BCM
governance and implementation framework, and
provides guidance to our operations in their
business continuity planning activities.
As a testament to our ongoing commitment
to excellence in corporate governance, financial
reporting and disclosure, Sembcorp was ranked third
on The Business Times Governance & Transparency
Index in Singapore. We also won top awards in
three out of five categories at the 2014 Singapore
Corporate Awards. These included gold awards for
Best Managed Board and Best Annual Report for
companies with S$1 billion and above in market
capitalisation, as well as the gold award for Best
Chief Executive Officer in the same category,
which was awarded to Sembcorp Industries’ Group
President & CEO Tang Kin Fei. In addition, we were
also named runner-up for the Singapore Corporate
Governance Award under the category of companies
with S$1 billion and above in market capitalisation at
the 15
th Securities Investors Association (Singapore)
Investors’ Choice Award 2014.
Going forward
Sembcorp will continue to improve our risk
management, governance and compliance
processes. As part of building the right risk
management culture, regular risk awareness
refresher training and risk assessment workshops
will be conducted.
People
To provide a fair, diverse and inclusive
workplace, and continually improve
our human resource management and
people development
Why this is material
People development
Employees play a vital role in achieving our business
strategy and goals. To be a high performance
organisation, it is crucial to develop a competent,
capable and motivated workforce that can meet
the business challenges of today and tomorrow.
The nature of our business is such that we
require specialist technical expertise. Some of the
markets in which we operate lack a qualified labour
force with the necessary technical skill sets that our
business requires. In other markets, these skill sets
are highly sought after across other industries.
Additionally, the commercial and regulatory
environment in which we operate is growing in
complexity. Therefore, there is a critical need to
attract, retain and develop competent employees
who possess a deep understanding of the
company and industry.
We believe that the career opportunities and
structured development framework we offer are
key to attracting, motivating and retaining talent.
We continually stay abreast of latest
developments and industry best practice through
our memberships and participation in external
organisations such as the Singapore National
Employers Federation, the Temasek Human
Resource Council and The Conference Board,
as well as numerous local roundtable groups.
Further details of our
approach and initiatives on labour relations, remuneration and employee welfare and engagement can be found in the
People portion in the Sustainability section of our website.
HIGHLIGHT
Investing in People
In 2014, we focused our efforts on
implementing our competency framework,
with the aim of improving competencies of
managers and employees across the different
functions of the organisation. We launched
company-wide training programmes to equip
our employees in aspects of functional and
core competencies, such as coaching skills,
performance management, presentation and
writing skills. This training is ongoing across
our organisation.
Sembcorp's Core Competency Framework
Management approach
Human resource policies and structure
Our human resource management approach is
based on the key aspects of strategic workforce
planning, our competency framework and creating
development journeys for our employees.
The Senior Management Committee, supported
by the Group Human Resources department,
is responsible for setting key policies relating to
our employees.
The Group is committed to preserving and
respecting human rights in our operating locations.
Sembcorp fully supports basic principles of fairness
and opportunity as well as dignity, respect and
non-discrimination. With our headquarters based
in Singapore, we abide by the approach to human
rights taken by the Singapore government, and
endorse the Employers’ Pledge of Fair Employment
Practices under Singapore’s Tripartite Alliance for
Fair and Progressive Employment Practices. We do
not hire forced or child labour, and comply with
local regulations restricting forced or child labour
wherever we operate. While our operations span
six continents where labour laws, regulations and
practices differ widely, we are committed to high
standards of human resource management globally.
We abide by local laws wherever we operate,
including abiding by and exceeding minimum wage
requirements where such laws exist. Examples of
other diverse regulations our global operations
comply with include the Broad-based Black
Economic Empowerment Amendment Act 2013
in South Africa, and localisation requirements for
our operations in Oman and the UAE.
For the convenience of our employees, our
local human resource policies, as well as all other
company policies and guidelines, are readily
available and accessible on our intranet.
Five Key Principles of Fair Employment
Practices Endorsed by Sembcorp
|
Recruit and select employees on the basis
of merit (such as skills, experience or ability
to perform the job), and regardless of age,
race, gender, religion, marital status and
family responsibilities, or disability
|
|
|
|
Treat employees fairly and with respect
and implement progressive human resource
management systems
|
|
|
|
Provide employees with equal opportunity
to be considered for training and
development based on their strengths
and needs to help them achieve their
full potential
|
|
|
|
Reward employees fairly based on their ability,
performance, contribution and experience
|
|
|
|
Abide by labour laws and adopt the Tripartite
Guidelines on Fair Employment Practices
|
|
|
People development
People development is a key focus of our company’s
strategy, and is driven at the board level by the
Executive Resource & Compensation Committee.
Sembcorp developed the My Career Journey @
Sembcorp framework to identify, develop and deploy
employees to take up roles across the organisation.
The framework encompasses three aspects:
i.
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Strategic workforce planning
Precise growth areas within Sembcorp are
mapped, giving us a clear picture of skills and
capabilities required. This helps us ensure that
the right people are in the right jobs, and
can be deployed in the right locations.
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ii.
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Competency framework
The competency framework spells out the
competencies and behaviours expected of
a Sembcorp employee. The framework is
deployed through recruitment, assessment,
development and career progression. This
framework is also an evaluative tool that
highlights areas of developmental need,
not only for the individual, but also for the
organisation as a whole to address.
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iii.
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Development journeys
Employees are developed through on-the-job
learning, exposure and formal training
as well as a mentorship programme for
high-potential employees.
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The framework aligns the development of the
organisation and individuals, addressing both
organisational needs and employee aspirations.
Performance appraisals
All employees undergo half-yearly performance
appraisals, where performance against expectations,
training needs and targets for the coming year are
discussed and agreed upon by employee and
supervisor. As an assessment of core competencies
and areas for improvement is embedded in the
appraisal format, going through the appraisal process
also helps to inculcate our core values in every
employee, and provides clarity on the competencies
and functional skills needed for their development.
Employee learning and development
To promote learning and development throughout
the organisation, all supervisors are given the
mandate to oversee and drive the development
of their employees.
Our engineers and technicians receive up-to-date
technical training by experts. All employees
are also encouraged to attend professional courses
relevant to their roles.
We offer employees the opportunity to develop
their careers and gain international exposure
through job rotations and attachments in different
cultural and operational settings. We currently have
more than 50 employees of different nationalities
seconded from our Singapore offices to various
overseas operations. We also provide internships
and industrial attachments which offer students
and Sembcorp scholars practical experience and
exposure to our operations while they undergo
their studies.
We support our employees in their pursuit of
continuous improvement and higher qualifications
and also sponsor selected employees who wish to
pursue higher qualifications in fields of study
relevant to their work. To develop our leaders, the
company sponsors senior executives to undergo
programmes at leading institutes such as Harvard
Business School, The University of Pennsylvania
Wharton School, INSEAD and Temasek’s Business
Leadership Centre. Sembcorp scholarships are also
offered to promising students at various tertiary
institutions, following which a comprehensive
development plan is mapped out to groom them
for management positions.
As an industry leader in various sectors,
Sembcorp encourages our employees to share
and exchange best practices through platforms
such as seminars, roadshows and local and international conferences.
Developing local capability
We believe in recruiting and retaining local talent
as a long-term investment and strategy for our
operations. This leads to knowledge transfer and
capability development for the local community.
Localisation plans play an important part in our
strategy for the sustainable growth of our overseas
projects. Targets are set to progressively localise our
overseas operations’ workforce across all positions,
including management positions, in line with each
jurisdiction’s regulatory and operating environment.
Where operations commence in a new market,
employees who are seconded from our head
office to start up the operations are given a clear
responsibility to develop local talent. Capability
development plans are designed for local employees
hired and with the gradual localisation of the team,
the number of expatriates seconded from head
office is then progressively reduced.
All employees are given the same development
opportunities across the Group, and at our overseas
operations, local employees are also encouraged
to develop their professional and managerial skills
through international exposure, such as on-the-job
training in Singapore or at other Sembcorp
operations around the world.
2014 performance
The continued implementation of our
competency framework and the enhancement
of our learning and development framework
were our main areas of focus in 2014.
We remain committed to meeting our localisation
targets. In 2014, three Omani employees underwent
a customised training programme in Singapore.
The programme consisted of on-site training at our
operations, as well as workshop sessions.
Going forward
In 2015, we will focus on implementing the learning and development framework for employees. The framework will be guided by a learning strategy, and lays out a model to chart the most efficient and relevant way to execute learning needs.
Health, Safety and Environment
To instil sound and practical health and
safety management as part of our workplace
culture, and protect the environment in the
conduct of our business activities and
generation of our products and services
through good environmental practices
Why this is material
Occupational health and safety
Effective occupational health and safety management
prevents and mitigates health and safety-related
incidents, protects our workforce and helps to
reduce disruption to our operations. It also ensures
compliance with applicable laws and regulatory
requirements in all the countries we operate in.
We regard the health and safety of our people
as top priority, and seek to provide a working
environment that exceeds regulatory obligations for
our employees and others who work on or visit our
premises. We are also committed to enforcing safe
working practices within our sphere
of influence.
Climate change
Our businesses are exposed to potential regulatory,
physical and supply risks related to climate change,
and as a company we also recognise the threat that
climate change presents to the planet. We adhere
to and support common policy positions adopted
by governments on climate change, whilst keeping
abreast of the wider body of academic and
institutional research related to the subject.
We believe that our businesses can leverage
innovative technology and renewable resources
to provide competitive and reliable energy and
water solutions to customers and communities,
while mitigating the impact of climate change.
Environmental protection
Sembcorp recognises its duty to conserve
the natural environment and resources whilst
going about its businesses. Our businesses
consume primary resources and it is in these
areas that our responsible stewardship can
have the greatest impact.
HIGHLIGHT
Strengthening the Management
and Governance of HSE
Excellence in HSE is a journey which requires
constant vigilance and striving for continuous
improvement. In 2014, we reviewed our
frameworks for health and safety management
and formulated a plan to enhance and
strengthen them. The plan, which was
endorsed by our board’s Risk Committee and
spearheaded by our Group President & CEO,
aims to encourage a greater level of behavioural
observation and intervention by employees and
contractors, so as to prevent accidents and
near-misses. Key elements of the plan include
the formulation of Sembcorp Life Saving Rules,
as well as the setting up of Safe Operation
Committees at our operational and project
sites to strengthen the management of HSE.
Management approach
HSE management is embedded alongside
compliance with legal and regulatory requirements
in work processes applicable to all phases of
Sembcorp’s business – from business development
and project development, to asset management.
We strive for continuous improvement in our
HSE performance, and apply an integrated
management approach in accordance with
the Plan-Do-Check-Act methodology:
HSE policy and guidelines
Sembcorp’s
Group HSE Policy articulates our
commitment to our stakeholders with respect
to HSE.
The Group’s HSE guidelines outline the roles
and responsibilities of the relevant departments
and business units, in line with the Group HSE
Policy. The guidelines are endorsed by the board’s
Risk Committee. Business units under the
management and operational control of Sembcorp
must comply with the requirements set out in the
HSE guidelines, and must monitor performance
relating to standardised key HSE indicators based
on our 4/0 targets. The 4/0 targets refer to: zero
harm to people, zero damage to the environment,
zero damage to assets and zero non-compliance
with legal and regulatory requirements.
The Group HSE department coordinates our
global HSE efforts across our business units and
establishes HSE reporting structures. It works closely
with regional HSE coordinators to ensure the
effective and timely management of HSE issues
across the Group.
Sembcorp encourages the implementation of
internationally recognised HSE management systems
across our operations. For detailed disclosure of
certifications achieved by Sembcorp’s businesses,
please refer to
Awards, Memberships and
Certifications.
Training and audits
Adequate and relevant training is key to
improving our HSE performance. Training
needs arise from various situations, including
new appointments, legal and / or regulatory
requirements, as well as risk control and business
needs. These needs are identified and the
appropriate training implemented.
The Group HSE department also organises an
annual global workshop. The workshop updates
business units on our HSE priorities and facilitates
the sharing of best practice case studies across a
range of topics, including technical performance
and cross-cultural HSE management. This helps
our business units to learn from one another and
improve their HSE performance, and supports their
planning of the following year’s goals and initiatives.
Periodic HSE cross-audits are also conducted for
our overseas operations to ensure compliance and
promote continuous improvement.
Occupational health and safety
We are committed to preventing and reducing
workplace injuries and occupational illnesses
through active management of risks associated
with our activities and services. The Group HSE
Management System requires our business units to
have programmes in place to manage occupational
health hazards and the risk of occupational illnesses.
For example, it is a requisite for every operating site
to appoint a dedicated HSE officer to support the
management of HSE issues in accordance with our
requirements and procedures. Monthly safety
inspections are conducted, and findings are
recorded, analysed and tabled for discussions.
Examples of safe practices in operating units
include mandatory precautions, such as permits to
work, to ensure that our employees and contractors
are equipped with the right training and equipment
when performing potentially hazardous work.
Identifying critical risk and safety elements for high
risk activities, such as work at height and lifting
operations, and ensuring strict adherence to safety
requirements are also key controls enforced on
our sites.
Project and asset life cycle risk assessment
and prevention
As risk assessment is the cornerstone of effective
health and safety management, we seek to ensure
that all hazards have been identified and their risks
assessed at all relevant stages of the project and
asset life cycle: from pre-bid due diligence study,
to design, construction, operation and
decommissioning phases.
We implement suitable control systems,
such as engineering safeguards (including guards,
interlocks and local exhaust ventilation) and
procedural safeguards (including permits to work,
adequate training and supervision) to prevent harm
to people and equipment at the point of risk.
We emphasise the importance of providing and
maintaining adequate workplace controls
throughout the entire
operation process.
Climate change
As a global energy player, we recognise that
investing in energy-efficient, renewable and
low-carbon technologies not only helps manage
emissions, but also makes business sense. We are
committed to setting achievable energy efficiency
and renewable energy targets, and developing
strategies to mitigate the impact of our operations
on the environment.
We adopt a four-pronged approach to
climate change:
Maintaining a diversified generation portfolio
Growing our renewable energy business
as part of a balanced portfolio
Energy-efficient power and water facilities
Active stakeholder engagement
Further details on Sembcorp’s
approach to
climate change can be found in the
HSE portion in the Sustainability section of our website.
Environmental protection
At Sembcorp, we aim to ensure adequate resources
are allocated to maintain environmental quality
where we operate.
Environmental studies are carried out in
accordance with national and / or international
standards and methodologies for new major
projects and expansions. These studies include
environmental impact assessments, environmental
baseline studies and pollution control studies. All
recommendations put forth from the assessments
form part of our management of HSE risks and are
incorporated in the planning, design, construction
and commissioning of new plants.
Atmospheric emissions
Our management approach to reduce fuel
consumption and increase energy efficiency also
helps to reduce atmospheric emissions. In addition,
we minimise atmospheric emissions through various
technologies, including catalytic convertors and
adjusting combustion temperatures for nitrogen
oxide (NO
x) and carbon dioxide (CO
2) control.
Emission levels are monitored at our energy plants,
where emissions are significant.
Water
Sembcorp’s facilities are able to effectively treat
multiple streams of industrial wastewater to meet
effluent discharge standards, including effluent
with a wide-ranging chemical oxygen demand
and salinity. Our comprehensive water sampling
and testing regime ensures consistent compliance
with such standards.
In designing our various wastewater treatment
facilities, we employ a specialised configuration of
treatment processes targeted at the expected
feedwater profile, in order to treat the wastewater
in the most effective and energy-efficient manner.
Treatment processes applied include mechanical,
chemical, biological or membrane technologies,
or a combination of a number of these.
Furthermore, we are able to use treated effluent
from our wastewater treatment facilities to produce
high-purity water for industrial use, such as high
grade industrial water and demineralised water.
By integrating wastewater treatment, water
reclamation and water supply in a closed loop,
Sembcorp helps its customers reduce their
environmental impact and conserve water resources.
Sembcorp also owns and operates large-scale
water reuse and seawater desalination facilities,
which offer a sustainably-sourced, high-quality
water supply for industries and households in water-scarce areas.
Waste and spills
Sembcorp actively develops capabilities to recover
energy from waste. An example is our Sembcorp
Woodchip Boiler Plant in Singapore, which uses
woodchip processed from waste wood collected
by our solid waste management arm to produce
economical and renewable steam. This demonstrates
our capability to manage the entire energy-from-waste
value chain and leverages synergies between
our energy and solid waste management businesses.
In addition, all hazardous waste generated by
our operations or collected by us on behalf of our
customers is disposed of in accordance with local
regulations. In the instance of an emergency arising
from major spillage or hazards at our industrial
facilities, emergency response plans will be activated.
2014 performance
It is of utmost importance to us that our operations
do not pose a risk to the safety of our employees,
contractors or local community. It is therefore with
deep regret that we report that our company
vehicles were involved in three fatal road traffic
accidents, two in Singapore and one in South
Africa. In Singapore, the first accident involved a
waste truck colliding with a cyclist while reversing
into a bin centre. The second took place while one
of our company’s waste trucks was travelling on a
highway, when a motorcyclist in an adjacent lane
skidded under our truck. In the first case, the driver
was found to be at fault and dismissed from his
employment with us. In the second case, the driver
was cleared of wrongdoing and subsequently
returned to work. In South Africa, our company
vehicle collided with a pedestrian on a public road,
and investigations are still ongoing. In all three
cases, the drivers were immediately suspended
from work while investigations were ongoing.
The company and these employees fully cooperated
with authorities conducting investigations into the
incidents. Assistance was also rendered to families
of the deceased, our drivers and their families.
Drivers who returned to work underwent counselling
beforehand to ascertain their ability to resume
their duties. Corrective measures were put in place
where necessary to prevent recurrence, and the
lessons learnt were shared with other drivers and
crew members through briefings.
This year, with the endorsement of our board’s
Risk Committee, we developed a group-wide health
and safety improvement plan. Adherence to the
plan is mandatory for all our subsidiaries, including
projects in development. Key elements of this
plan include the formation of Safe Operation
Committees on our sites, as well as the Sembcorp
Life Saving Rules. The rules, which apply to all
employees and contractors working on our
premises, set out clear and simple “dos” and
“don’ts” for high risk activities. These rules aim
to bring about a greater level of awareness,
observation and intervention among our employees
and contractors, so as to prevent accidents and
near-misses.
Non-adherence to these rules may
result in the immediate removal of the employee or
contractor from site as well as disciplinary action,
depending on the severity of the infraction.
A workshop spearheaded by our Group President
& CEO and attended by the heads of key business
units was held in December to launch and
communicate this initiative.
We recognise that adherence to plans and
procedures is the first line of defence against
incidents, and aim to tighten our validation and
verification process to ensure these plans and
procedures are implemented properly.
We remain committed to ensuring the
efficiency of our operations while optimising
our use of resources. In 2014, we finalised our
plans for two energy efficiency initiatives for
our operations in Singapore. We re-designed
an existing boiler to use our customers’ process
by-product as fuel, thereby eliminating the need
for natural gas as fuel for steam production.
We also developed the Sembcorp Energy Optimiser.
This online tool selects the most efficient and
reliable mix of assets and fuel inputs to use based
on energy demand and prices, in order to achieve
higher reliability and efficiency.
Our NO
x emissions were 3,162 tonnes and our
sulphur oxide (SO
x) emissions were 732 tonnes in
2014. Water discharged in 2014 amounted to
1,089 million cubic metres.
More information on our
HSE performance can be found in the
HSE portion in the Sustainability section of our website.
Going forward
While we have made improvements to our
management of HSE, we recognise that there is
much more to do. In the area of health and safety
management, we are determined to strive for
continuous improvement and instil a stronger, more
pervasive safety culture. Ensuring responsible and
safe operations remains our top priority. We will
focus on establishing Safe Operation Committees
in our global operations, as well as implementing
and enforcing the Sembcorp Life Saving Rules.
In our solid waste management operations, we
plan to implement a mandatory defensive driving
refresher course for drivers to improve their safety
awareness. Real-time digital recording cameras
have been installed on most of our vehicles and
monthly driver briefings using footage taken
from vehicular recordings will be held to share
lessons learnt, and further promote safe driving.
A driver’s handbook with safe driving tips which
is currently available in English will be translated
into Chinese and Malay languages.
We plan to implement our zero natural gas
boiler project and Sembcorp Energy Optimiser at
our Singapore operations after necessary regulatory
approvals have been received.
Community
To be a responsible business, making a
positive contribution to our communities
Why this is material
Community integration
Sembcorp provides solutions that are essential to
everyday life. We view our support and contribution
to our host communities as a part of our licence to
operate. We are therefore committed to assessing
and responsibly managing our impact, as well as
investing in our local communities.
HIGHLIGHT
Inspiring the Next Generation
of Energy Leaders
In 2014, we announced a partnership with
Singapore’s EMA to launch the Sembcorp-EMA Energy Challenge. This national annual
competition aims to nurture and inspire
youths in Singapore to become future energy
professionals. Participants will take part in
sharing sessions by industry experts and
plant visits, and will then get to apply their
knowledge to real-life challenges faced by
power professionals in an exciting game. This
initiative will complement what the students
learn in school, show them what the life of
a power engineer is like, and support the
government’s drive to attract more young
people into the local energy industry.
Management approach
The needs of one community can be very different
from another’s, and it is our belief that our local
operations will be in the best position to understand
those needs and partner local stakeholders to help
address them. Therefore, while the Group provides
the strategic framework, tools and guidelines to
ensure consistency and acceptable standards,
community integration is managed at the local level.
Sembcorp’s global corporate social responsibility
(CSR) framework establishes a strategic and
consistent approach for our charitable contributions
and community investments. We focus on fostering
environmental stewardship as well as improving the
living standards and quality of life of the
communities we are in.
Our CSR framework also aligns the tracking
and reporting of our community contributions with
guidelines set by the London Benchmarking Group.
This allows us to account for our total community
giving using standard definitions and valuations, while
ensuring that contributions recorded are meaningfully
spent on community investment activities.
Assessing and responsibly managing our impact
on local communities is key to successful community
integration and acceptance. Environmental impact
studies are carried out in accordance with national
and / or international standards and methodologies
for new major projects and expansions. Some of
these studies include social impact assessments
and social management plans which are
implemented through the various stages of
the site’s development.
We seek to nurture open communication in
the communities we operate in. At our local sites,
various communication platforms including
community liaison panels and meetings, and
telephone and email exchanges are utilised to
connect with our communities.
2014 performance
In 2014, Sembcorp and Sembcorp Marine contributed
S$5.7 million across our global operations in
terms of charitable contributions and community
investments. Excluding Sembcorp Marine’s
contribution, S$2.4 million in cash, time and in-kind
donations were contributed by Sembcorp. The
contribution supported initiatives in aid of causes
including youth development, environmental
and water conservation education, as well as
apprenticeships and job training programmes.
During the year, we presented the Festival of
Biodiversity in partnership with Singapore’s National
Parks Board (NParks). The event engaged more than
15,000 members of the public on Singapore’s
environment heritage and conservation. We received
recognition for our support of environmental
conservation with NParks naming a 100-year-old
heritage tree in the Singapore Botanic Gardens
after our company. This is a rare honour only
given to a handful of companies who have
made significant contributions over the years
to the greening of Singapore.
73% of our operations had local community
engagement and / or development programmes. We continue to be committed to creating economic
and social benefit for the communities in which
we operate. Our products and services such as the
provision of energy and water contribute to thriving
local economies and healthy local communities.
For more information on our community
initiatives, please refer to
Sembcorp in Our Communities.
Going forward
We will continue to enhance our Group’s frameworks
and guidelines, including the integration of impact
assessments into our investment approval process.
CASE STUDY
Making a positive impact in Salalah, Oman
The accessibility of potable water is a key
concern in the Middle East. Historically,
groundwater formed the main source of
water for the community, resulting in issues
such as the risk of over-extraction.
With the opening of Sembcorp’s Salalah
independent water and power plant (IWPP),
the first large-scale seawater desalination facility
in the Salalah system, today 85% of the water
needs in the Dhofar governorate are instead met
through the plant’s 69,000 cubic metres per day
capacity. The plant currently supplies water to
approximately 170,000 people.
The reliable provision of good quality
desalinated water has enabled the region to
reduce its withdrawal of groundwater. At the
same time, this has helped to meet the rapidly
increasing demand for water in the area.
The local population has benefitted from the
marked improvement in the quality of water.
In the past, Dhofar’s groundwater was at
risk of contamination from factors such as
saline intrusion and surface pollution. Filtered
groundwater used by residents also had a high
concentration of calcium and other minerals,
resulting in health impacts from consumption,
a chalky residue left on the skin after a bath,
as well as sediment collection on washed crockery
and utensils. With the supply of desalinated water
from Sembcorp’s Salalah IWPP, residents now enjoy
a supply of good quality drinking water from a
safe source and an improved quality of life.
Furthermore, the development of Sembcorp’s
Salalah IWPP has led to a significant contribution
to the local economy. During the construction
and development phase of the plant, monies paid
to local businesses amounted to OMR45 million,
or approximately S$150 million.