NEPTUNE ORIENT LINES LIMITED SUSTAINABIILTY REPORT 2013 Purpose of report This report shares the activities and performance of the NOL Group’s environmental, safety, security and social programmes with customers, shareholders and communities at large. This report is available online at www..com.sg.

CONTENTS Letter to Our Stakeholders 01 Corporate Profile 02 Promoting Responsible Business Practices 03 Fostering a Safe and Healthy Workplace 04 Securing Supply Chains 07 Protecting the Environment 09 Supporting Communities 17 Neptune Orient Lines Limited Sustainability Report 2013 01

LETTER TO OUR STAKEHOLDERS

Welcome to the NOL Group’s 2013 Sustainability Report. We also provide details on community initiatives by our offices This report is an opportunity to reaffirm our commitment to around the world, which mainly focus on delivering aid, empowering sustainable development. children and supporting education. At NOL, we strive to implement high standards of environmental Sustainability is an ongoing journey. We are in it for the performance, improve supply chain security, ensure safe operations long haul, and my team and I will continue to work to live up and support the communities to which we are globally connected. to our commitments through vigilance, ethical conduct and NOL emphasises efficiency in our operations. I am therefore corporate responsibility, while mitigating risks and strengthening happy to report that NOL’s liner business has already reached its our businesses. carbon dioxide (CO2) reduction goal, two years ahead of the 2015 target. In 2013, APL cut CO2 emissions by 33.8% from the 2009 level. It did this through improvements in operational efficiency, voyage optimisation and technical improvements, as well as the injection of fuel-efficient and environmentally-friendly tonnage into its global fleet. NOL places strong focus on responsible business practices, security, safety and health. In this report, we present the measures and initiatives implemented that help us ensure ethical business conduct, safeguard our assets and operations, as well as enhance employee wellness both onboard our vessels and within the NG YAT CHUNG corporate environment. Group President and CEO 02 Neptune Orient Lines Limited Sustainability Report 2013

Corporate Profile

Our Operating Brands Over More than 110 13,000 countries employees

EMPLOYEE DISTRIBUTION By geography By gender By age  Americas  Europe & Middle East  Male  Female  29 & below  40 - 49  Asia Pacific  Greater China  30 - 39  50 & above

25% 17% 54% 37% 30%

9% 21% 46% 29% 32%

FINANCIAL PERFORMANCE REVENUE NET ASSET VALUE PER SHARE1 NET (LOSS)/PROFIT1 (US$M) (US$) (US$M)

9,422 9,211 9,512 461 8,831 1.25 6,516 1.08 0.98 0.83 0.80 (741) (474) (412) (76) 09 10 11 12 13 09 10 11 12 13 09 10 11 12 13

RETURN ON EQUITY1 CORE EBIT1,2 BASIC (LOSS) /EARNINGS PER SHARE1 (%) (US$M) (US¢) 578 16 17.88

(28) (16) (18) (4) (642) (355) (183) (167) (36.12) (18.38) (15.98) (2.95) 09 10 11 12 13 09 10 11 12 13 09 10 11 12 13

1 2011 and 2012 figures have been restated for comparative purposes due to retrospective application of Amendments to FRS 19: Employee Benefits (Revised), which is effective from financial year 2013. 2 With effect from 2013, in addition to interest expense, the definition of Core EBIT has changed to exclude other finance expense and income. Core EBIT from 2009 to 2012 have been restated accordingly. Neptune Orient Lines Limited Sustainability Report 2013 03

Promoting Responsible Business Practices

Integrity and respect underpin the NOL oversees the development, adoption and New and renewal contracts with vendors Group’s interactions with its stakeholders. compliance with the Company’s ethical contain a contractual clause which places The Group believes ethical interactions with framework, policies and procedures. The an obligation on vendors to comply with shareholders, customers, suppliers, business Committee also designs the framework to the VCOC. partners and among employees must investigate ethics matters, and recommends The Group’s VCOC is available on always be upheld. Employees at all levels are disciplinary actions. http://www.nol.com.sg/wps/portal/ expected to contribute towards providing a An ethics hotline, managed by an nol/vcoc in English, Simplified Chinese safe and healthy work environment. independent third party provider, is and Spanish. As the Group navigates through a accessible to NOL Group employees round difficult business environment, it remains the clock. Any ethics concern or incident PROCUREMENT PRACTICES committed to a corporate culture of may be reported through the hotline, which Forging long-term procurement compliance. Achieving high standards of complements other available channels partnerships, developing cooperation ethics, integrity and business practices in for reporting ethics matters, including the beyond vendor relationships and aligning accordance with all applicable laws is the Group President and Chief Executive Officer, objectives with stakeholders are vital in the responsibility of every employee. or the Chairman of the Audit Committee of pursuit of procurement excellence in NOL. the NOL Board. An online tool is used by Global sourcing, purchase of CORPORATE CODE OF CONDUCT the Group to track and monitor reported equipment and fuel as well as managing NOL’s Corporate Code of Conduct covers incidents or concerns for informed decisions the expenditure for vessel and landside property, people and conduct, and finance. to be made in areas of ethics compliance. operations are important factors towards The Code is available on the NOL website at: achieving business competitiveness and http://www.nol.com.sg/wps/portal/nol/gcoc. VENDOR CODE OF CONDUCT meeting customer expectations. Employees are required to uphold Vendors and suppliers to the NOL Group The Group strives to implement the Group’s standards of ethics and are also expected to conduct their procurement best practices and achieve integrity in all their business activities business activities in full compliance with cost leadership in the industry. It evaluates and interactions. Access to the Corporate applicable laws of the country and location suppliers and contracts, and reviews Code of Conduct is readily available in of their operations as well as international purchasing processes on bunkers, three languages – English, Simplified regulations. NOL’s Vendor Code of Conduct equipment, terminals, vessel spares, vessel Chinese and Spanish. Acknowledgment of (VCOC) articulates legal, ethical and moral slot costs and land. Vendors are reviewed compliance is required every year. In 2013, standards expected of its vendors and on an ongoing basis to ensure compliance the Group attained near 100% compliance. external partners. towards company practices. In 2013, the first phase of the Group’s ETHICS COMPLIANCE VCOC was launched. Over the rest of the The Ethics Committee, which comprises year, NOL, APL and APL Logistics notified senior executives of the NOL Group, their main vendors worldwide of the VCOC. 04 Neptune Orient Lines Limited Sustainability Report 2013

Fostering a Safe and Healthy Workplace

The NOL Group’s employees are its greatest requirements for all its vessels and terminals. APL’s Lost Time assets, and ensuring their safety and health This includes the Pacific Coast Marine Safety Injury Frequency remains a top priority. Code (PCMSC), which covers employee and The Group’s businesses, APL and supervisor responsibilities, shipboard and continues to APL Logistics, maintain strict operational terminal safety rules, as well as equipment decrease as a result standards to prevent accidents and injuries. handling rules. Policies and programmes are also in place For its exceptional safety record, APL’s of its efforts in to maintain and enhance the physical and terminal currently holds dual mental well-being of employees. certification from the Occupational ensuring safety Safety & Health Management System and SAFETY AT WORK Occupational Health & Safety Assessment APL’s Lost Time Injury Frequency continues System (OHSAS) 18001: 2007. to decrease as a result of its efforts in At APL Logistics, as a result of the ensuring safety. APL is especially committed company’s relentless focus on safety, to meeting local and international safety its Occupational Safety & Health

APL LOST TIME INJURY FREQUENCY1 APL LOGISTICS OSHA FREQUENCY (per one million manhours) (North America)

4 2.0 1.7 3.19 3 1.5 1.5 1.4 2.30 2 1.94 1.0

1 0.5

0 0 11 12 13 11 12 13 1 2011 and 2012 figures have been restated to include both U.S. and - flagged ships. Neptune Orient Lines Limited Sustainability Report 2013 05

Administration (OSHA) frequency rating in to conduct safety related training during • Recognising safety threats and taking North America continued to outperform voyages, and determine areas where actions to mitigate or avoid them; the national average recorded by the U.S. improvements could be pursued to ensure • Communicating effectively throughout Bureau of Labor Statistics, scoring 1.4 in safe and smooth ship operation. all types of situations. the ratio of recordable injuries to the At the corporate level, a Crisis number of hours worked in 2013. Management procedure is firmly in place. All Deck Officers are required to The Group adopts safety programmes Ship masters receive immediate support undergo mandatory BTM training, which and initiatives to maintain a high safety from relevant departments and functions includes the use of a simulator. In 2013, standard at work for its employees. in any situation. SAS auditors sailed on board eight vessels for a minimum of three port calls each to Safety and Environmental Management Bridge Team Management (BTM) ensure every bridge team operated safely System (SEMS) Modern equipment, organisation and and effectively during actual port arrivals, APL developed the Safety and Environmental management on the bridge are important departures and passages. Management System (SEMS), which is a set in preventing marine casualties. Effective With increased vessel size and of response measures that enables shore Bridge Team Management (BTM) requires complexity, more collaboration is required based and shipboard personnel to react the Master, pilot(s) and other bridge team among the teams on board to ensure promptly to any emergency situation, members to fulfil their responsibilities and safe and efficient ship operation. Bridge including one that may impact the work seamlessly as a team to anticipate and Resource Management, Engine Resource environment. These measures are carried respond to their ship’s changing situation Management and Marine Resource in contingency plans and checklists in each to protect themselves from such risks. An Management have been introduced to the ship’s Vessel Emergency Manual. essential component of APL’s Safety at Sea fleet to share the same concept with all Every year, the crew undergo training, (SAS) program, which establishes sound shipboard officers involved. drills, and response preparation under the navigational procedures and policies, To prevent marine incidents from human SEMS training program, which is certified BTM includes: error, APL will continue to monitor, evaluate by the American Bureau of Shipping. APL • Making full use of every member’s and improve on its team and resource regularly reviews and improves on the competencies and ensuring that all management practices – including adoption SEMS training for it to remain relevant members are aware of and carrying out of best industry practices – to ensure all its in a continuously evolving operating their responsibilities; ships and crew return to the ports safely. environment. • Having a detailed passage plan and Since late 2013, a Safety Mentoring maintaining it throughout the ship’s Behaviour-Based Safety (BBS) program has also been introduced to course; The Behaviour-Based Safety (BBS) enhance safety awareness. Senior Captains • Having contingency plans in high risk programme empowers all employees to are deployed on board as safety mentors areas; take personal responsibility for safety, 06 Neptune Orient Lines Limited Sustainability Report 2013

Fostering a Safe and Healthy Workplace

and to proactively provide feedback from Indicators such as Lost Time Injury (LTI) EMPLOYEE WELLNESS workplace observations. Employees also frequency, incidents and near misses, Across the Group, employee wellness use a Risk Assessment (RA) methodology audit findings, inspection deficiencies, programmes are implemented to foster to categorise risk by level or degree of and port state interventions. Incidents healthy lifestyle choices, with the aim to seriousness and its probability, as well as list and near misses are investigated reduce health risk factors and maintain a the corresponding preventive and control for the appropriate corrective and productive and active workforce. measures, which they apply when the preventative actions to be taken. In 2012, NOL received the biennial need arises. Any lessons to be learned are extracted and Singapore Health Award (Silver) from the To encourage employees to participate communicated with the fleet. This system Singapore Health Promotion Board for its actively in safety discussions, tool box enables setting of performance targets efforts in keeping employees healthy. These meetings – which are short, informal that drive continuous improvement. include regular lunchtime health talks, discussions that emphasise a certain aspect Illnesses aboard ships are monitored by leisure activities and health screenings. of safety – among ship staff have been the fleet’s Safety Department. All APL vessels comply with the introduced. This is on top of the monthly Data is used by APL Logistics to Maritime Labour Convention (MLC), which meetings conducted by a Vessel Safety prioritise and drive safety programmes. sets requirements for crew health such Committee (VSC) on every ship to provide Each month, statistics are drawn with the as necessary nutrition, noise abatement updates and discuss issues concerning purpose of analysing the frequency and and more. Recreational facilities are safety. The ultimate purpose is for safety severity of safety incidents by location also provided to support a healthy work precautions to become an intuitive part of and cause. This is followed by a Pareto life balance. daily operations for all employees. analysis, which identifies the top causes In addition, the vessels are equipped At APL Logistics, monthly topical for the majority of the incidents, and thus with WIFI and broadband internet access safety meetings are conducted by frontline the area APL Logistics needs to focus on for crew members to stay in touch with supervisors to reinforce the message to determine the most effective solutions. their family members. Also, with Voice Over that the frontline has ownership of their This may take the form of custom training, Internet Protocol (VOIP) technology, the own safety. Frontline supervisors are also management intervention, site reviews or crew can make phone calls at affordable rates encouraged to form their own teams to work re-engineering. Implementation is while at sea and when off duty. These are but tackle localised safety concerns, and this then scheduled, drawing on both internal some of APL’s efforts to take care of its crew has proven to be very successful. and external resources. and their physical and mental well-being Once a top area of concern has been while at sea. Monitoring and analysing performance addressed, it falls from the Pareto analysis. APL uses a comprehensive incident Another issue that calls for attention rises reporting system to monitor and to the top, so resources can be channeled measure safety and environmental to resolve it. The improvement cycle performance, tracking Key Performance continues in this manner indefinitely. Neptune Orient Lines Limited Sustainability Report 2013 07

Securing Supply Chains

The NOL Group leaves nothing to chance effectively, and they are equipped with the supply chains. BMP involves carrying out in ensuring the security of its supply chains necessary skills in managing risks. risk assessments, building and maintaining worldwide. communication channels with naval The Group’s businesses, APL and APL SECURITY EXERCISES AND TRAINING authorities, implementing self-protective Logistics, have in place policies, processes Every NOL employee plays a crucial role measures, as well as increasing vigilance and and procedures that either comply with in the Group’s security efforts. As such, all enhancing piracy response through training or exceed industry security regulations, of them undergo a mandatory general and drills. Additionally, APL regularly in order to maintain the highest security security awareness training on basic supply reviews and updates these practices to standards possible at all times. To stay chain security processes and procedures. reflect evolving piracy situations, including ahead of evolving threats, the Group Training information is updated regularly to targets or high risk areas that might have continues to identify and invest in security keep employees abreast of the most recent changed with time. enhancements, and participate in initiatives relevant security issues and regulations. to develop new security technologies. The In addition, as part of NOL Group’s INFORMATION SECURITY Group also communicates the importance continuing efforts to review and enhance The NOL Group’s information security of security to all its stakeholders through port and vessel security, APL conducts program is modelled after the ISO 27001 constant education, outreach and annual maritime security exercises involving standard, which contains best practices in collaboration. APL security personnel, law enforcement areas of information security management. agencies and first responders. Exercises have To safeguard information and processes SECURITY COMPLIANCE been held in Singapore, , Oakland, concerning the Group’s assets, stakeholders In compliance with the International Ship , Kaohsiung and . and vital businesses, all personnel with and Port Facility Security (ISPS) code – a set In December 2013, a joint security access to NOL computer systems and of mandatory and recommended measures exercise was successfully held in Kaohsiung, facilities – from employees, commercial to enhance security for ships and port Taiwan, and involved the Kaohsiung Harbour agents to external contractors – must facilities involved in international trade Police, the Criminal Investigation Bureau, the comply with the Group’s information – APL has developed and implemented Kaohsiung Harbour Fire Brigade and the security policies. Regular internal audits are security plans based on threat assessments, Taiwan International Ports Corporation. conducted to help ensure compliance to as well as appointed security officers for established policies and standards. the company, and all its ships and marine ANTI-PIRACY MEASURES terminals. APL subsequently carries out APL vessels adopt industry-led Best GLOBAL SUPPLY CHAIN SECURITY training, internal audits, drills and annual Management Practices (BMP) against piracy, PROGRAMMES security exercises to ensure that employees as it represents a serious threat to the safety APL and APL Logistics are certified under have implemented the security plans of seafarers, and the integrity of global three key global supply chain security 08 Neptune Orient Lines Limited Sustainability Report 2013

Securing Supply Chains

programmes for implementing security An enhanced version of STP, called STP • World Shipping Council’s Security measures according to the programmes’ Plus, stipulates more robust security Advisory Committee guidelines. In addition to strengthening criteria. APL has been STP certified since • BIMCO Maritime Security Committee supply chain security, voluntary 2007 and STP Plus certified since 2009, • Singapore Shipping Association’s participation in these programmes has and APL Logistics has been STP certified Maritime Security Sub-committee come with additional trade facilitation since 2010. • U.S. Department of State Overseas benefits for APL and APL Logistics, including Security Advisory Council access to customs simplification and greater (III) European Union Authorised Economic • U.S. Coast Guard’s Area Maritime market competitiveness. Operator Security Advisory Committee The European Commission (EC) has (I) Customs-Trade Partnership Against granted the Authorised Economic In August 2013, APL security officers Terrorism Operator (AEO) status to APL and APL in the U.S. attended a counter piracy Since 2003, APL and APL Logistics Logistics since 2009 in recognition of workshop co-sponsored by the Office of have been members of U.S. Customs the companies’ reliable operations Commercial vessel Compliance, U.S. Coast and Border Protection’s (CBP) security and security measures in compliance Guard, and the Office of Security, Maritime initiative, Customs-Trade Partnership with customs regulations within the Administration. They discussed piracy Against Terrorism (C-TPAT), which European Union. Specifically, the EC is issues, as well as local and international recognises many of our security efforts satisfied that APL and APL Logistics have policies that are changing with the levels as best practices. APL and APL Logistics carried out thorough risk assessments in of threat in high risk waters. also provide support where possible to relation to their businesses in the region, help their customers in the industry to and taken steps to mitigate the risks revalidate their C-TPAT status. identified through internal procedures and appropriate control measures. (II) Singapore’s Secure Trade Partnership The Secure Trade Partnership (STP) INDUSTRY PARTICIPATION Programme, administered by Singapore APL participates actively in the following Customs, provides a framework to guide maritime groups to receive updates supply chain stakeholders to develop, and provide feedback on government implement, and improve their supply legislation, initiatives and issues affecting chain security measures and practices. the maritime transportation industry. Neptune Orient Lines Limited Sustainability Report 2013 09

Protecting the environment

As a global company with business Organisation (IMO), as well as flag states APL reaches 2015 presence in more than 110 countries and and port states. CO2 reduction vessels plying major shipping trade lanes, In addition, APL makes use of metrics the Group is cognizant of its responsibility tools provided by ISO 14001 to maintain target two years in protecting the environment it an effective Environmental Management early operates in. System (EMS). These tools enable APL to measure and analyse the impact of its ADHERING TO INTERNATIONAL business on the environment, in order to STANDARDS identify and work on areas for improvement, The NOL Group ensures that all its vessels from lowering its carbon footprint, using low adhere to the International Convention sulphur fuel, to adopting technologically for the Prevention of Pollution from advanced systems. Ships (MARPOL 73/78), which is the main international convention covering REDUCING ITS CARBON FOOTPRINT prevention of marine pollution from ship In 2013, two years ahead of its 2015 target, operations or accidents. The Group also APL reduced carbon emissions to 30% follows closely guidelines and standards below the 2009 level. APL successfully

set by the International Maritime reduced CO2 emissions associated with

GROUP FUEL CONSUMPTION APL CO2 EMISSIONS REDUCTION AGAINST 2009 LEVEL (Million Metric Tons) (%)

4 40 33.8 3.1 3 2.9 30 2.4 21.9 2 20 14.3 11.4 1 10

0 0 11 12 13 10 11 12 13 10 Neptune Orient Lines Limited Sustainability Report 2013

Protecting the environment

cargo transportation and handling by environmentally-friendly way of moving The 10,700-TEU 33.8% in 2013. their shipments, and make environmentally- APL Yangshan The following are some of the conscious choices. measures adopted by the NOL Group and APL Logistics has developed carbon was named Green its businesses to reduce its carbon footprint. calculators to measure CO2 emissions Ship of the Year in the warehouse, as well as compare Calculating its carbon footprint various modes of transport for the most at the Singapore To identify areas of improvement, the Group environmentally-friendly logistics solutions measures and analyses data collected to be made. This contributes data to a International from as many aspects of its operations as carbon footprint dashboard introduced by Maritime Awards, possible. APL’s carbon reduction initiative the company to measure and manage its began with a review conducted in 2010 on carbon footprint and that of its customers. 2013 APL’s corporate-wide fuel consumption from 2009, covering any fossil fuel directly Improving its Energy Efficiency Design purchased for and consumed by ships, Index (EEDI) terminal cargo handling equipment, and From 2012 to 2013, APL received delivery warehouse material handling equipment. of 24 out of 34 new ships ordered under To ensure the accuracy of its the Group’s fleet renewal programme, calculations, APL’s 2013 carbon data was which injects technologically-advanced, independently verified by Lloyd’s Register fuel-efficient and environmentally-friendly Group, a third-party class society verifier. tonnage into the Group’s global container

CO2 and CO2e emissions were reported fleet. Energy efficient and cold-iron in accordance with ISO 14064-1:2006 and capable, they produce lower carbon and the World Business Council for Sustainable criteria pollutant emissions than previous Development/World Resources Institute designs. In fact, the improved Energy GHG Protocol, and the World Ports Climate Efficiency Design Index (EEDI) of these Initiative “Carbon Foot Printing for Ports” ships is 33.4% below the International Guidance Document, June 2010. Maritime Organization’s (IMO) required

APL also provides CO2 emission numbers base line for the same type and size of for cargo movement over a particular trade container vessels. lane upon customer request. Calculated The Group’s efforts were recognised using the Clean Cargo Working Group when APL clinched the inaugural Green Ship (CCWG) methodology, customers can use of the Year award at the 2013 International these numbers to determine the most Maritime Awards organised by the Maritime Neptune Orient Lines Limited Sustainability Report 2013 11

and Port Authority (MPA) of Singapore. footprint per TEU. This is made possible by Following these measures, it has The APL Yangshan, a 10,700-TEU ship built its advanced route optimisation systems, been recording a steady decrease in fuel in 2012, was singled out for its outstanding which aid in planning the most fuel consumption, which translates to lower energy efficiency and performance. efficient and on-time voyages. carbon emissions. The Group will continue All APL newbuildings have received these efforts and identify more ways to certification under the MPA’s Green Ship APL also improves its vessel operations make operations more fuel efficient. Programme, which recognises Singapore- through the following: flagged vessels that adopt energy-efficient • and propeller polishing Greening terminal facilities ship designs in order to reduce fuel • Application of environmentally-friendly All APL terminals worldwide employ consumption and CO2 emissions. hull coatings electric gantry cranes to load and discharge • Weather routing and real time vessel cargo from vessels. This reduces diesel Improving vessel operations controls emissions by eliminating emissions per APL has been implementing operational • Trim optimisation crane. Also, all U.S. based tractors used by measures to improve its ships’ • Optimisation of vessel utilisation APL since 1997 meet all on-road emission environmental performance, of which, • Optimisation of vessel load through specifications stipulated by the U.S. slow steaming has made the largest consolidation and alliances Environmental Protection Agency and contribution to reducing its carbon • Electronic engine controls the California Air Resources Board (CARB),

APL LOGISTICS CARBON EMISSION (BY REGION) APL LOGISTICS CO2 EMISSIONS SAVINGS (FOR CUSTOMERS) (%) (‘000 Tons)  Asia  Americas  Europe

500 15 458 415 400 27 368 300

200 58 100

0 2013 11 12 13 12 Neptune Orient Lines Limited Sustainability Report 2013

Protecting the environment

and exceed standards for operation helping customers manage and “green” APL Logistics in terminals. their supply chains. identified more In Los Angeles, APL’s terminal was the To help customers reduce the carbon first in the U.S. to have a full-service on-dock footprint in their supply chains, APL than 1.2 million tons rail facility, which ensures greater service Logistics identified more than 1.2 million in carbon emissions reliability and reduced carbon emissions tons in carbon emissions savings from 2011 compared to trucking. It is also the only one to 2013 through various products, services savings from 2011 installed with electric rail-mounted cranes and diagnostic tools. for loading rail cars. There are eight loading to 2013 and nine storage rail tracks, which hold They are: the equivalent of nearly three trains worth • OceanGuaranteed® - the industry’s first of cargo. time-definite less-than-containerload In 2013, APL’s Global Gateway South service offering an alternative solution terminal loaded 319,000 containers via on- to airfreight for trans-Pacific shipments. dock rail lifts. This saved 3.6 million miles of • Indialinx™ - the first dedicated container truck transit which would have produced freight rail service in India as an

nearly 9,400 metric tons of CO2. alternative to truck. At its Seattle terminal, the on-dock • ShipmentOptimizer™ - a proprietary rail system has enough room for the decision support tool capable of equivalent of two complete trains of automatically generating the best cargo with an adjacent storage facility of shipment plan – such as reducing the same size. In 2013, 85,000 containers unnecessary air freight and optimising were moved via on dock rail, which transportation routes – against saved 850,000 miles of truck transit and multiple objectives. eliminated nearly 2,200 metric tons of

CO2 emission. Improving warehouse operations Throughout North America, APL Logistics Offering sustainable logistics solutions continues to make use of LEAN and Customers are placing increasing six sigma principles to create value for emphasis on logistics solutions that create customers, reduce operational waste and the least impact on the environment. improve processes. As an asset-light third party logistics As a result, many LEAN initiatives have provider, APL Logistics’ primary focus is been implemented to reduce energy and Neptune Orient Lines Limited Sustainability Report 2013 13

water consumption, including the use of PM, and 153,000 pounds of SOx emissions MINIMISING ENVIRONMENTAL IMPACT more energy-efficient lighting and natural annually from ships berthed in Oakland Many aspects of a ship can adversely lighting, installing motion sensor light since 2011. affect the environment, ranging from switches, and powering down non-critical In 2013, APL finished the installation its construction material, container office equipment after regular business of its cold iron system at its terminal in performance, operational discharge, to hours. Cost savings have also been realised Los Angeles and began preparing for the recycling process. It is imperative to consider in the process. cold ironing of over 50% of its vessels each all possible environmental impacts a To reduce waste, offices and facilities year for the next three years. vessel could create and implement worldwide are encouraged to recycle used preventive or mitigative measures to ensure materials, replace printed documents with Installing seawater scrubber sustainability. digital ones and improve freight packaging. The APL England was the first vessel to install and test the “seawater scrubber” Managing ballast water LOWERING EXHAUST GAS EMISSIONS technology, which uses seawater to filter Ballast water discharged by ships can

Besides CO2, fuel combustion produces pollutants from the ship’s auxiliary engines contain invasive species that have the criteria pollutants in the exhaust gas and boilers. potential to cause extensive damage to emissions – including nitrogen oxide (NOX), The seawater scrubber successfully aquatic ecosystems. sulphur oxide (SOX), particulate matter (PM), reduced NOx emissions by 10%, PM Each of APL’s new vessels is and others – that may be detrimental to the emissions by approximately 80%, volatile equipped with the latest ballast water environment and to health. The NOL Group organic compounds (VOC) by more than treatment technology to protect ocean adopts measures to reduce these emissions, 90% and SOx pollutants by almost 100%. biodiversity from the introduction of such and conduct trials on new technologies in The black carbon testing partnership invasive species. This is in line with the our continuous pursuit to minimise our began in August 2013, and ran until to framework provided in the IMO Ballast environmental impact. June 2014 after an extension. Water Management Convention. APL is For its contribution to cleaner air in also a member of the Global Industry Practising cold-Ironing the greater Los Angeles area, in October Alliance for the GloBallast Programme, When APL’s cold-iron capable vessels call 2013, at the 25th Annual Clean Air Awards a joint initiative of IMO, United Nations at terminals that have the ability to provide hosted by the South Coast Air Quality Development Programme (UNDP) and shore side electrical power, they switch Management District (SCAQMD), APL Global Environment Facility (GEF) that aims off their diesel-powered generators and won the Advancement of Air Pollution to assist developing countries to reduce “plug in”, eliminating the need to burn Technology Award for installing and marine bioinvasions. fuel during their stay in port. This measure testing an innovative seawater scrubber For older vessels without the treatment has allowed APL to cut more than 50,000 exhaust-gas cleaning system on the technology, APL actively performs mid- pounds of NOx emissions, 1,500 pounds of APL England. ocean ballast water exchanges. 14 Neptune Orient Lines Limited Sustainability Report 2013

Protecting the environment

In 2013, APL registered From 1992 until 2011, APL’s fleet potential health risks for people who come achieved its goal of zero ballast water into contact with polluted water during incidents. In 2012, APL received two recreational activities or who consume zero citations for Ballast Water Management contaminated seafood. ballast water incidents non-compliance. It has since undertaken APL complies with MARPOL Annex IV comprehensive corrective action and through our Safety Management System & achieved the annual goal of zero ballast that is audited by classification societies water incidents in 2013. for compliance. Due to stringent controls, zero quality management, and training, APL has accidental sewage Keeping Green Passports updated eliminated this risk of incidental sewage discharge All APL line-haul vessels have a Green discharge and achieved its annual goal of Passport, which documents the hazardous zero accidental discharge in 2013. materials used in construction of the ships. The Passport accompanies the ships Improving container performance throughout their operating lives and is APL requires all container floorboard updated during equipment changes. suppliers to be accredited by the Forest Its ultimate owner will then deliver the Green Stewardship Council and to use only Passport with the vessel to the recycling renewable sources of wood supplies. In facility to allow for proper processing of addition, new containers use water-based the materials, in order to minimise any sealants that do not contain any volatile unnecessary risks to the environment and organic compounds, as well as eco-friendly human health during the recycling process. water-based paint which does not release harmful vapours during the drying process. Regulating sewage discharge To maintain refrigerated cargo at the With limited capacity to store sewage in necessary temperature, APL has 2,248 holding tanks, proper planning is critical electrical plugs in all of its container yards to reduce the risk of untreated sewage on the U.S. West Coast. This results in the discharge into the sea. Environmental reduction of about 20 million tons of carbon impact resulting from sewage discharge per year and a corresponding reduction in from ships includes the introduction of generator fuel, compared to when diesel nutrients, which causes algal blooms and generators were used in port to supply reduced oxygen levels, in addition to power to refrigerated containers. Neptune Orient Lines Limited Sustainability Report 2013 15

ENGAGING STAKEHOLDERS hazardous materials handling. There To mark the event, a tree planting Communication, education and is also a computer-based training was also held, bringing together local involvement are key to gaining the programme aboard every vessel that all management, customers, local partners, understanding, support and participation crew members must complete. employees and their children. Funds of our stakeholders on our journey towards collected through the sale of waste for environmental sustainability. Initiating green activities recycling was used to purchase school APL encourages employees to “go green” materials for children. Providing information and training by volunteering in environmentally- The NOL Group keeps our employees friendly initiatives. Two notable initiatives SUSTAINING PARTNERSHIPS worldwide informed on global in 2013 are projects in Indonesia and Chile. In this interconnected world, it is environmental issues and developments, To reduce air pollution, the government impossible to do anything alone. Forming as well as the Group’s environmental of Semarang, Indonesia, launched a partnerships with industry groups allow efforts. This is done through the intranet, campaign in 2013 to encourage all citizens all members within the groups to combine emails and direct communication from to leave their cars home when they go to their attributes and efforts in order to department heads. the city centre on Sunday mornings. In achieve more. In addition, APL conducts support of the government programme, environmental seminars for staff APL Semarang organised a bicycle event Clean Cargo Working Group (CCWG) worldwide on a regular basis, as part of involving employees and customers. The The CCWG is a global, business-to-business a systematic series of outreach initiatives 20km journey started from Semarang’s city initiative dedicated to improving the since 2009 to engage employees on a centre and passed through several villages, environmental performance of marine more personal level. By helping employees before culminating at a sports field in container transport. APL has been a understand the significance of operational downtown Semarang. member of CCWG since 2004. APL makes impact on the environment, the Group Over in Chile, APL Logistics launched use of practical tools developed by the motivates them to proactively contribute to a recycling campaign in June 2013 called group to measure, evaluate, and report the the Group’s continuous efforts in ensuring “APLícate con el Reciclaje”, or “Get on environmental impacts of our global goods environmental sustainability. board with Recycling”. For two months, transportation. APL uses the tools to track APL also conducts mandatory the team collected more than 78 tons of and benchmark its performance, and report practical training for its crew members operational waste – plastic film, paper, to customers using consistent, industry- aboard ships, covering a wide array of carton and aluminium cans – and sent them approved methodology and tools. subjects that range from company policies for recycling. This equates to a reduction of CCWG is made up of 40 member and procedures, flag state requirements, 50 tons of CO2 and saved approximately a companies, including the top 15 world Vessel General Permit inspections to thousand trees from logging. liner fleet operators and around a dozen 16 Neptune Orient Lines Limited Sustainability Report 2013

Protecting the environment

global shippers. As an active member the importance of the world’s oceans and APL’s newbuilds of the group and a Steering Committee the maritime industry’s role and actions to have an Energy member, APL helps to oversee the CCWG’s preserve it. approach in driving improvements in global Efficiency Design goods transport, namely performance RECEIVING RECOGNITION Index that is 33.4% measurement and reporting, as well as The Group’s environmental commitment promotion of environmentally responsible has garnered significant attention. In below IMO’s practices. 2012, APL became the first container shipping company to receive the biennial required base line Coalition for Responsible Transportation Osprey Award – the U.S. Coast Guard’s (CRT) highest environmental accolade. Its The CRT is a coalition of importers, environmental performance in 2013 exporters, trucking companies, clean truck continued to be recognised through the manufacturers, and ocean carriers formed following awards: to facilitate the implementation of practical • Air Quality Leadership Award – Port of and sustainable solutions to reduce port Los Angeles truck pollution at U.S. ports, in a manner • Advancement of Air Pollution that balances the environmental needs of Technology Award - South Coast Air port communities with the efficient flow of Quality Management District commerce. APL has been a member since • Blue Circle Award - Port Metro 2011 and was elected to CRT’s Board of Vancouver Directors in 2012. • Green Gateway Partner Award – Port of Seattle North American Marine Environment • Earth Day Award – U.S. Federal Maritime Protection Association (NAMEPA) Commission As a board member since 2008, APL • Green Ship Award – Maritime and Port supports NAMEPA in its efforts to increase Authority of Singapore environmental awareness and educate the • Clean Air Action Plan – Port of Los wider public and school communities on Angeles and Long Beach Neptune Orient Lines Limited Sustainability Report 2013 17

SUPPORTING COMMUNITIES

NOL Group employees have been Typhoon Haiyan, one of the worst storms on APL shipped participating in a wide range of community record in the country. containers initiatives and the Group continued its APL also helped MedShare, a nonprofit support to provide aid and improve lives organisation, ship disaster relief containers with over around the world. to help Typhoon Haiyan victims. From US$5.9 million December 2013 through March 2014, DELIVERING AID within weeks after the typhoon hit, APL of medical aid In May 2013, following the collapse of provided free port-to-port shipping from garment factories in Bangladesh, APL the U.S., for Medshare to deliver medical to Bangladesh, provided logistics support by delivering supplies to the Provincial Government Cambodia and medical supplies and other humanitarian of Cebu and Missionaries of the Poor, aid from U.S.-based nonprofit organisation as well as healthcare facilities such as the the Philippines AmeriCares to the National Institute for Iloilo Provincial Hospital and ORMOC Trauma and Orthopedic Rehabilitation in District Hospital. Dhaka. Later in June 2013, APL extended its This is in addition to more than community partnership with AmeriCares S$100,000 in donation contributed by NOL to Cambodia and the Philippines. employees worldwide to Typhoon Haiyan From October 2013 to June 2014, the relief efforts by the Red Cross, realised APL-AmeriCares partnership brought more through a global donation drive and a than US$5.9 million worth of medication dollar-for-dollar staff matching grant by and supplies to Bangladesh, Cambodia and the Group. the Philippines. The medical aid is used by AmeriCares’ qualified health care partners CONTRIBUTING TO SOCIAL CAUSES to address the needs of local patients. In Europe, APL Sweden employees For instance, Arimidex, an anti- participated in the annual Blodomloppet hormonal therapy, was delivered to the race to raise awareness on regular blood Sihanouk Hospital Center of Hope in donation; employees from the UK and Cambodia to support a breast cancer Estonia participated in “Movember” initiative; Vitamins were sent to Bangladesh and raised funds in support of men’s and Cambodia to prevent and treat health issues; and employees in Germany potentially life-threatening Vitamin A contributed towards local hospices, deficiency; and emergency relief aid was the International Seamen’s Club and delivered to the Philippines in the wake of organisations that support the disabled. 18 Neptune Orient Lines Limited Sustainability Report 2013

SUPPORTING COMMUNITIES

Donation of APL was a sponsor for the Eisenhower In Sydney, the NOL Group was US$ Fellowships, a non-government the official logistics partner of Singapore 20,000 organisation that identifies, empowers Day 2013, organised by the Prime Minister’s to the Eisenhower and links outstanding leaders from Office of Singapore to engage its overseas Fellowships around the world, helping them to citizens. APL’s on-time delivery of containers achieve consequential outcomes across from Singapore to Sydney and the sectors and borders. In 2013, APL donated meticulous coordination by APL Logistics’ US$20,000 to the Fellowship. customer service and operations teams In Scottsdale, Arizona, employees in Sydney and Singapore made the event participated in community projects such involving more than 6,000 participants as volunteering at St Mary’s Food Bank to possible. The Group also sponsored Endowment of fill and assemble boxes for the hungry; containers for the Republic of Singapore’s cleaning and painting the exterior of a national day celebrations. S$ 400,000 house for a low income, elderly or disabled to set up the person; and a holiday charitable programme EMPOWERING CHILDREN NOL Lua Cheng Eng Memorial that ensured needy families had food and In China, the NOL Group helped improve Scholarship at the Singapore gifts over the year-end holiday season. the learning and living conditions of Management University APL also donated cargo containers to underprivileged children. Contributions the Boy Scouts of America, Marin Council include: for use at their camp in the Sierra Nevada • Thirty sets of used desktop computers Mountains in California, to help prevent with LED monitors to Jinlei Primary equipment damage during winter. School in Lipu County of Guangxi In , about 1,000 high school and Province. university students participated in a road • Basic necessities – rice, oil, stationery, Donation of safety awareness programme spearheaded cotton quilts and winter wear – to more than by APL, in collaboration with Vietnam’s 163 children of two primary schools S$ Ministry of Education and TAG International, from impoverished families in 100,000 a non-government organisation dedicated Liannan Yao County, Guangdong to Typhoon Haiyan to public health education. Classes were Province. These were purchased with relief efforts held at schools with assistance from student donations from and South volunteers and employees. China employees, who have been Neptune Orient Lines Limited Sustainability Report 2013 19

supporting this community project underprivileged children from the Boys and Marine Academies, which produce future for three years. With a dollar-for- Girls Club in Scottsdale, Arizona. Bicycles ship officers and international maritime dollar match from the Group, the total were selected because they are a symbol of business graduates. For three months, contribution amounted to US$7,400 independence and empowerment. the interns participate in every aspect of in 2013. fleet operations under the mentorship of • School bags with stationery to 48 SUPPORTING EDUCATION individually assigned senior managers. underprivileged students at Ming The NOL Group provides scholarships Some of them have joined APL upon De Primary School located in Xing and internship opportunities to motivate graduation and have become valuable Long town, Feng Jie district near promising students to join the maritime employees of the company. Chongqing. The Group’s Global industry. APL is also working with a group of Shared Service Centre (GSSC) in In Singapore, the NOL Lua Cheng Eng high school students from the Montgomery the city has been sponsoring the Memorial Scholarship – which includes a County School District in the U.S. to create school since 2010. The GSSC team S$12,000 grant and internship opportunity an interactive software that will be available also conducted English lessons for at NOL – is given to two outstanding free of charge to area elementary schools. the students. business students at the Singapore While a partner vendor provides free • Cash donations and daily necessities Management University (SMU) every year. software programming and graphic art, APL to Tongxin Orphanage located in the The S$400,000 scholarship programme employees provide project management coastal city of Xiamen, from employees was endowed at SMU in February 2011 in and subject matter expertise. of the Xiamen and Fuzhou branch the name of the late Lua Cheng Eng, former Slated to be completed in 2015, the offices. The orphange is a safe shelter Chairman and CEO of the NOL Group. software is designed to teach school for orphans and children whose parents NOL also gives out the NOL Best Final children between the ages of eight and 12 or next-of-kin are unable to fulfill their Year Business Student Award – which about the ocean environment as they play guardianship. includes a certificate and cash prize of computer games with embedded learning S$2,000 – to business students who have objectives and activities. In the Philippines, APL donated excelled academically and participated refurbished computers to Ateneo Casa actively in community service. A total of Famiglia, a nonprofit organisation, 11 SMU students have received this award established to care for abandoned, since its launch in 2000. orphaned and underprivileged children. In the U.S., APL provides internship In the U.S., the APL Logistics service opportunities throughout the year for excellence team assembled bicycles for students from the American Merchant Neptune Orient Lines Limited 9 North Buona Vista Drive #14-01 The Metropolis Tower 1 Singapore 138588 Tel: +65 6278 9000 Fax: +65 6278 4900 www.nol.com.sg Co. Reg. No.: 196800632D