HKUST Sustainability Annual Report 2021-2022

HKUST Sustainability 40 Environment Social and Governance Report 2021-22 Overview Materiality Contents Environment Social/People GOVERNANCE/ DRIVER Sustainability Initiatives ESG Frameworks Adopt a Public Commitment to Ethical Conduct Over the past few years, Hong Kong has faced challenges from health crisis, fractures, and conflicts. Despite these obstacles, HKUST had strived to uphold our apolitical principle and concentrate on our basic principles that include academic freedom, diversity, inclusivity, and mutual respect. These values all serve as the cornerstones of our academic environment. Since the inception of HKUST, we have been staunch supporters of such openness and we commit to holding to that position in the future. As part of HKUST strategic plan from 2021 to 2028, the University is committed to continuing to protect our core principles and values by exercising individual and institutional integrity. HKUST will provide for financial and human resources to address all these issues and needs. Establish Internal Controls to Ensure It Lives Up to that Commitment HKUST is dedicated to upholding high ethical standards and operational integrity. Improper acts, behaviors, or practices that are illegal, unethical, or against our core principles could affect the University and our stakeholders and negatively impact our reputation. To uphold the highest standards of professionalism and integrity, the University has published the Employee Handbook, which outlines the standards of professional conduct, such as acceptance and use of donations, and avoidance of corruption and bribery, and conflict of interest in procurement duties, to which all employees are expected to adhere. Seminars or training on Personal Data Privacy are organized periodically to provide staff members with the knowledge and skills they needed to handle personal data. Students’ Union Students actively participate in the governance of the University through various means, from serving as a member of a university body to conveying suggestions to staff members formally or informally. One of the methods is through a Students’ Union which is an unincorporated association formed by HKUST students who choose to register as its members and is independent of the University. This Senate Committee is established through an election from the student body, electing the President of the Students’ Union and the student representatives. It has over 100 student societies that meet the diverse interests of students in sports, community service, arts, and culture as well as academic affairs. Business is Conducted Ethically Financial Assets Safeguard the Pursuit of Future-Fitness As HKUST is committed to the Sustainability and Net-Zero carbon commitment, the University is adopting an ESG statement for our investment portfolio which include ESG factors into considerations in the decision-making process. We believe that material ESG-related risks and opportunities directly impact the assets in which we invest. Some of ESG factors that can be, but are not limited to, climate change, supply chain, human rights, fair pay, diversity, and global health. Currently, HKUST’s portfolio is invested via third party investment managers, and we will reflect our ESG policy through our choice of investment managers. HKUST maintains three clear goals for its investment strategy: • To ensure the risk and opportunities arising from a low carbon transition are reflected in the way investments are chosen for the portfolio • To seek out investments whose activities can profitably accelerate or otherwise support the low carbon transition • To support and encourage all businesses to adopt business plans and strategies consistent with the goals of the Paris 2015 aggreement. All three goals above help define the University’s general basis for its investment strategy. However, the University is acutely aware that there is no one right approach for investment and therefore, we aim to be pragmatic and move forward immediately in the clearest path. We require that investment managers provide a well-explained, well-documented, and evidenced-based process of how ESG is integrated into their investment process. Managers whose strategy clearly hinders climate goals will be ineligible for the portfolio. HKUST also pledges to not invest in fossil fuel-reliant businesses. In order to further commit to our sustainability goals, HKUST will organize annual review for all investments. This annual review will help identify managers who do not provide holdings transparency or do not explain the negatives to our satisfaction, and further undertaken actions to those managers.