How to keep city transport moving sustainably

Environmental, social and governance (ESG) issues have become important considerations for companies operating and making business decisions. With increasingly stringent regulatory requirements in terms of risk management and disclosure and increasing stakeholder expectations, ESG is no longer optional, but a prerequisite for companies to maintain their social licence to operate.

Governments around the world endeavour to achieve a global sustainability agenda through the United Nations Sustainable Development Goals (UN SDGs) and to fulfil national determined contributions (NDCs) under the Paris Agreement to drive net zero carbon emissions, but businesses also have their part to play.

The International Association of Public Transport (UITP) also encourages the public transport sector to contribute positively to the UN SDGs. Dominant megatrends such as climate change, diversity and inclusion and urban mobility call for businesses to be proactive to mitigate risks and better serve community needs. This requires a strategic approach to ESG.

The transport sector is one of the major contributors to global GHG emissions. Amid the post-pandemic recovery, global CO2 emissions from the transport sector, which includes the use of cars and non-public transport means, grew by 8% year-on-year and rebounded to a 37% share of emissions from end-use sectors in 2021.

On the COP27 Solutions Day, the COP27 Presidency launched the Low Carbon Transport for Urban Sustainability initiative, in which one of the proposed distinct interventions is to improve accessibility and service quality from the perspective of passengers, including ensuring the introduction of the “inclusion” component within urban transport projects. As recommended in Hong Kong’s Climate Action Plan 2050 published by the HKSAR Government, rail remains a backbone of a low-carbon public transport system with a target of carbon neutrality by 2050.

A robust ESG proposition strengthens a company’s reputation with all stakeholders. It provides a competitive edge in areas such as higher business resilience, cost reduction, legal risk minimization, workforce productivity improvement and improved shareholder returns.

A focus on ESG also makes business sense in the longer term. A recent MSCI study suggests that the ESG ratings of companies positively correlate with their financial performance.

In Hong Kong, more than 90% of daily journeys are on public transport, and 47% of these public transport journeys are on our railways. A recent survey ranked Hong Kong as #1 for public transit among 60 cities worldwide and highlighted the way in which train services are integrated into the wider public transport system as a model for other cities around the world.

Under its new corporate strategy, MTR has set three environmental and social objectives to embed ESG principles across its business to create long-term value for its stakeholders and the cities it serves. This is alongside the 10 focus areas and a set of key performance indicators to concentrate its efforts, in line with the principles of stakeholder capitalism as advocated in the World Economic Forum.

Serving as the low-carbon public transport operator in Hong Kong, MTR has committed to setting science-based targets for its railway and property businesses and will strive to achieve carbon neutrality by 2050 to support the government’s decarbonization plan. MTR’s decarbonization plan includes reducing energy usage, enhancing energy efficiency, generating more clean energy, promoting waste management and adopting green and low-carbon designs for future rail and property projects. For instance, regenerative braking technology has been adopted to convert energy collected during train braking to electrical energy for use by other trains.

MTR has also installed different solar photovoltaic systems at its premises, with a short-term goal to generate 1 million kWh of renewable energy by 2023.

MTR’s railway services operate across all 18 districts of Hong Kong, and the company supports social inclusion by committing to providing a safe, affordable, accessible and sustainable transport system for all. Improvement works to stations, and trains can provide fit-for-purpose and easy-access facilities for the elderly, passengers with disabilities and others in need. MTR, for example, has committed to making all future new stations accessible and barrier-free.

MTR has sustainable financing thanks to its Rail Plus Property (R+P) business model. After the company has invested in and built new railway lines, we collect fares from passengers and also develop integrated communities along rail lines that generate diversified revenue streams, including property development and shopping malls. During the planning, design and construction phases of new projects, MTR strives to deliver sustainable infrastructure with increased resource-use efficiency, greater adoption of clean and environmentally sound technologies, and integration of green features into all stages of the project lifecycle. From a social perspective, urban mobility is closely linked with social inclusion.

The European Commission proclaimed 2021 as the European Year of Rail, aiming to promote rail as a smart and green transport mode and enhance connectivity within Europe. In Hong Kong, MTR makes use of innovation and technology as an enabler to foster smart mobility. In June 2022, MTR set up a joint laboratory with a local university to promote the application of innovative technology in railway and other services to further enhance Hong Kong’s research and development capacity in smart-city and sustainable development and contribute to the city’s carbon neutrality goal. MTR has also committed to investing over HK$300 million in startups from 2022 to 2025 to continue to foster innovation and smart mobility.

While the prolonged global pandemic has posed many challenges for us all, ESG is now more critical than ever as a business imperative. Companies need an ESG strategy and need to embed ESG thinking in the different areas of their businesses to create long-term social, environmental and economic value for the communities in which they operate enabling, in MTR’s case, cities to keep moving sustainably.