SUSTAINABLE DEVELOPMENT REPORT for the year 2012 Index 2

Summary Detail / Environment cont. 05 Introduction, Contents, Assurance and Materiality 09 Managing Director’s Message 48 Non-Compliance with Environmental Laws and Regulations 10 Sustainable Development Plan 2013 49 Environmental Impacts of Transporting Goods Sold 19 Organisational and Operational Boundaries of Report 52 Labour 52 Employment Detail 56 Occupational Health and Safety 60 Training, Education and Counselling 23 Sustainable Development Policy 24 Governance 63 Human Rights 63 Total Number of Incidents of Discrimination and Actions Taken 26 Economic 26 Economic Value Generated During 2012 64 Society 27 Risks and Opportunities Due to Climate Change 64 Total Number of Legal Actions for Anti-competitive Behaviour, Anti-trust, and Monopoly 31 Financial Assistance from Government Practices and Their Outcomes 32 Policy, Practices and Proportion of Spending on Locally-based Suppliers at Significant 65 Monetary Value of Significant Fines and Non-monetary Sanctions for Non-compliance with Locations of Operation Laws and Regulations

34 Environment 34 Input materials that are recycled Data 35 Direct and Indirect Energy 36 Biodiversity 69 Fleet Breakdown 37 Scope 1 and 2 GHG Emissions 72 Economic Data and Tables 38 Scope 3 GHG Emissions 73 Environmental Data and Tables 39 Initiatives to Reduce GHG Emissions 77 Labour Data and Tables 40 SOX, NOx and other Emissions 78 Abbreviations 41 Total Waste Disposed 80 Assurance Statement 45 Total Number of Significant Oil Spills 82 Contact 46 Initiatives to Mitigate Environmental Impacts 83 G3.1 Content Index

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com 3

Summary This section gives a summary of what CNCo achieved in 4 2012, where we plan to make progress in 2013 and beyond and the global and local issues that we believe could affect our business and operations going forward.

We also define our Organisational and Operational Boundaries that this report uses herein, in accordance with ISO 14064 and the Greenhouse Gas Guidelines.

In this section:

05 Introduction 09 Managing Director’s Message 10 Sustainable Development Plan 2013 19 Organisational and Operational Boundaries of Report Summary 5 Introduction, Contents, Assurance and Materiality

Welcome to the second externally assured (GRI 3.1 C+) Sustainable Development (“SD”) Report for The China Navigation Company Pte Ltd (“CNCo”) as we continue our journey that began at the beginning of 2012; to progress towards “net zero environmental impact”. As with our 2011 Sustainable Development This report has been externally assured (“SD”) Report, we are continuing to detail in accordance with the most widely used our full performance in the areas covered reporting framework, Global Reporting Initiative by the Social Responsibility standard: ISO (“GRI”), version 3.1, to level C+ to assure our 26000:2010. We have adopted this standard stakeholders and readers that what is reported to help us report all the issues that together is truthful and complete, and in a way that will contribute to making our business more permit comparison to be made between our sustainable in the seven widely accepted performance and that of our peer group who subject areas of: Human Rights, Labour are also open and transparent about the way Practices, The Environment, Fair Operating they operate. Practices, Consumer Issues and Community Involvement and Development. The 2011 Report was the first to be designed from the outset to be read in soft copy. In We do this because we strongly believe that response to feedback we also made it available In 1983 UN Sec-Gen asked Dr. Gro Harlem Brundtland, the former Prime Minister of Norway and D-G transparency and openness is a benefit for our in PDF format shortly after its publication and Emeritus, World Health Organization to chair the UN World Commission on Environment and Development stakeholders, particularly our employees, in we worked hard to ensure the report’s widest (“UNCED”). Its report, “Our Common Future”, issued in April 1987 defined “Sustainable Development” as: “the development that meets the needs of the present without compromising the ability of the future order to show where we have been and where distribution to our stakeholders. generations to meet their own needs.” we are heading in the future.

Note: The data throughout this report refer to the status of our business and operations as at 31 Dec 2012, unless otherwise indicated.

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Summary: Introduction, Contents, Assurance and Materiality 6

To this end we produced a small hard copy The process of identifying and reporting on CNCo was founded in 1872 to operate • Swire Bulk to control, own and operate a brochure detailing our main achievements materiality will be significantly deepened in Mississippi-style paddle-steamers on China’s fleet of modern, eco-efficient geared handy- in 2011 and one of these was sent to every 2013 and beyond as we transition to reporting Yangtze River. Since then the company has size bulkcarriers. employee, at sea and in shore support. This will in accordance with the new GRI 4 standard that expanded globally while its primary operational be repeated with this report. is expected to be formally adopted in 2013. focus remains in the Asia-Pacific region. The customers for all three divisions are any Headquartered today in Singapore, it is one and all third parties who wish to ship their We have also worked closely with a graphic However, if any readers have any immediate of the oldest independent British shipping cargo (as owner or agent for an owner) on one designer to freshen the appearance of the web- comments, please don’t wait for a formal companies managing its own tonnage “in- of our owned or managed ships from one place based report to make it more engaging and meeting but contact the General Manager, house”. to another, in accordance with a pre-published easier and clearer to navigate. Sustainable Development (see page 82 for schedule (with respect to Swire Shipping), or contact details); all feedback, positive or In 2012 CNCo crystalised its internal structure over a route of their determination for Swire With the benefit of having had our first SD negative, is welcome and helps make this into three operating divisions: Bulk, or across the deck for export in the case Report published, we have used this to support document of ever more relevance to our of Swire Bulk Logistics. a wide consultation process to determine stakeholders, for whom it is written. • Swire Shipping charters vessels both from issues that our key stakeholders find material CNCo and third parties. Fleet Management (or not material) to help determine how the The China Navigation Company – more manages CNCo’s owned tonnage of 14 deep- 2012 SD Report should be changed (if at all). familiarly, “CNCo” – is the wholly owned deep- sea ships of multi-purpose, container and sea ship-owning and operating arm – and liner services for the transportation of The SD department has and will continue oldest operational entity – of the Swire group. containerised, break-bulk, heavy lift and to conduct formal stakeholder engagement “Swire” is a multinational conglomerate with project cargoes. This does not include the sessions with Senior Management, Sea Staff interests spanning five continents and with four that were sent for recycling at the and our key customers. From these and a principal areas of operation in the Asia-Pacific beginning of the year or the eight 31,000 dwt review of our Strategic Risk and Opportunity region, centred on Greater China. CNCo’s MPP vessels on order. Registers we identified the most relevant parent company, John Swire and Sons Limited, issues and narrowed these down to a shorter is headquartered in London and controls a • Swire Bulk Logistics holds a 50% list of issues that were material to our key range of wholly-owned businesses in Australia, share in Swire CTM Bulk Logistics Limited, a stakeholders (Employees, Shareholders, Clients, New Zealand, Papua New Guinea (“PNG”), joint venture with C Transport Maritime SAM Regulators and Class Societies and Suppliers). East Africa, Sri Lanka, the USA and UK. registered in Monaco, and operates a term These have been prioritised for action going transhipment contract supporting the Ok forward within a suitable time-frame. Tedi mining project in PNG.

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CNCO WAS FOUNDED IN 1872 TO OPERATE MISSISSIPPI-STYLE PADDLE-STEAMERS ON CHINA’S YANGTZE RIVER. SINCE THEN THE COMPANY HAS EXPANDED GLOBALLY WHILE ITS PRIMARY OPERATIONAL FOCUS REMAINS IN THE ASIA-PACIFIC REGION. HEADQUARTERED TODAY IN SINGAPORE, IT IS ONE OF THE OLDEST INDEPENDENT BRITISH SHIPPING COMPANIES MANAGING ITS OWN TONNAGE “IN-HOUSE”.

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Our corporate motto “Esse Quam Videre”, which means “To be, rather than to seem (to be)”. Another way of putting this is that we will not just act like we are doing something, we will actually do it, and mean it. For CNCo this is put into action by a) taking a leadership role in sustainability within our industry and b) reporting everything we do transparently, specifically within this report. Summary 9 Managing Director’s Message

The China Navigation Company (CNCo) is that, if we continue to put our customers first, professional and skilled workforce at sea and performance. CNCo continues to play an active committed to promoting sustainable development our stakeholders will also benefit, especially if ashore. In support of our commitment to “zero role in supporting the SSI, specifically as a within the shipping industry. The Sustainable they are willing to take the long term view. harm” to colleagues or the Environment the key sponsor of the “Closed Loop Materials Development Report (for the year 2012) has been safety governance structure is now embedded Management” workstream. prepared in accordance with the Global Reporting The Sustainable Development Report (for the and extends to regional third party contractors Initiative’s Sustainability Reporting Guidelines year 2012) highlights the steady progress made and service providers. The challenge for the Established in 1872, CNCo celebrated its 140th in order to provide standardised data for ease over the last 12 months on our improvement next 12 months will be to improve and sustain anniversary in 2012. In 2013, in collaboration of comparison with industry peers. journey towards achieving “net zero” our safety performance on a global basis. with Forum For the Future, CNCo completed environmental impact. We are determined to a multi-stage “Futures Scenario Planning” I would like to thank everyone involved in the reduce harmful emissions through technological We have made some encouraging progress exercise to identify long term strategic risks preparation of this comprehensive report which innovation and we have made substantial in meeting our responsibilities to the and opportunities and to reach consensus on a has been externally assured as C+ against the capital investments in modern, eco-design, Communities in which we operate. Specifically long term strategic plan, Vision 2020. The 2012 criteria set out in the GRI application levels. highly fuel efficient ships for deployment in the establishment of a Centre of Excellence, Report highlights some of the key outcomes our regional liner and global dry bulk operating in partnership with the Maritime College in and their contribution to CNCo’s sustainable China Navigation’s vision is to be the leading divisions. Our bulk logistics division continues Madang, Papua New Guinea, represents a development performance. provider of sustainable shipping solutions to develop highly customised, innovative significant opportunity to raise the standards of and our customers’ partner of choice. With seaborne logistics solutions which represent health, safety and environmental practices in operational excellence as its guiding principle, sustainable alternatives to traditional land the Papua New Guinea marine sector. the Vision sets out clear objectives which, based infrastructure. combined with the values, will help to guide Management regularly review the risks to our the Company and its employees - ashore and I am pleased to report that there was operations from all causes. The main risks are afloat - in all our operational and business no incidence of non-compliance with associated with the vagaries of the weather decisions. Our Vision serves as the framework environmental laws and regulations during the which impact upon the agricultural sector. for our strategy and describes what we need period covered by this report. CNCo remains a signatory to Hong Kong’s Fair to achieve in order to grow and develop our Winds charter as well as a founding member of business along sustainable lines. CNCo’s progress towards the development of the Sustainable Shipping Initiative, founded in a diverse, industry leading workforce continues 2011, to address the three principal challenges We pride ourselves on being original and to build momentum. Significant resources facing our industry: rising oil prices, structural forward-looking – qualities that have guided our have been allocated to provide training and shifts in world trade and growing scrutiny operations for over 140 years. We are confident development opportunities to develop a of the industry’s social and environmental

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Summary 10 Sustainable Development Plan 2013

Our 2013 SD Plan was developed at the end of 2012 to guide our sustainability activities during 2013. In this section we report historically on the progress we achieved against our 2011 targets in 2012 and then look forward to detail the actions we planned to undertake during 2013.

In the few cases in which we missed some targets in 2012, we have carried them forward to remain as targets in 2013.

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Sustainable Development Plan 2013 11

Achievement of SD 2012 Targets and KPIs during 2013 year, and a formal committee will be established at the time of the first SD Stakeholder Engagement meetings in NZ in 2013, after any location- 1 Structural specific issues have been identified.

1.1 CNCo and its stakeholders will operate more sustainably and in a more integrated manner if 2013 TARGET: The establishment of these groups should be extended to CNCo’s office they are working within a clear set of established policies and guidelines. in PNG and Swire Shipping’s offices in New Zealand in 2013. Once established these groups should communicate with each other in order to 2012 TARGET: In addition to established policies, a Supplier Code of Conduct must be maximise SD output for minimum resource input. established and issued. 1.3 For the past five years CNCo has produced an annual Environmental Report. With effect from 2012 RESULT: A Supply Chain Sustainability Code of Conduct was issued. Version this report for the year 2012 we must build upon these and align them with the increased 01/2012 is posted on our web site at http://bit.ly/19wrXaV use of management metrics such that a more detailed Sustainable Development Report that reports issues that are material to our key stakeholders is produced going forward. 1.2 CNCo Head Office in Singapore has established both a top level Sustainable Development (“SD”) Steering Group and implemented a SD Working Group. Similar groups have been 2012 TARGET: A CNCo SD Report is to be produced to GRI level C+ by the end of July established at the Swire Shipping regional offices in Australia and New Zealand. We have 2012. This is to be used as the basis for formal Stakeholder Engagement also established a pan-company operations Shore Safety Committee that meets monthly during the latter half of 2012 (and then annually thereafter) to determine to review Health and Safety issues involved in the onshore port operations of working our whether our stakeholders feel that there are more (or less) material issues ships alongside. that should be reported and thus whether subsequent reports should be to level B+ (or A+) in future years. 2012 TARGET: The establishment of these groups must be extended to all CNCo and Swire Shipping main offices and are recommended for companies in 2012 RESULT: The CNCo 2012 SD Report was published to GRI 3.1 C+, but not until Q1 which CNCo or Swire Shipping have significant interest. Once 2013. established these groups must communicate with each other in order to maximise SD output for minimum resource input. 2013 TARGET: A CNCo SD Report is to be produced to GRI 3.1 level C+ by Jun 2013.

2012 RESULT: This was achieved in Australia, and at the end of the period Swire This is to be used as the basis for formal Stakeholder Engagement during Shipping and John Swire and Sons in Sydney had formed a joint SD and the early half of 2013 (and then annually thereafter) to determine whether HSEQ Committee. There has been liaison between the CNCo Singapore our stakeholders feel that there are more (or less) material issues that SD department and the Swire Shipping office in Auckland during the should be reported.

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Summary: Sustainable Development Plan 2013 12

1.4 CNCo is embarking in 2012 on the planning for a significant fleet rejuvenation programme 1.5 Increasingly we recognise that areas in which we work may not only have potential from 2013, the first after some time. It is thus timely and prudent to review the external Environmental Issues but also potential Human Rights Issues. We wish to exercise the factors, both positive and negative, that may affect our business in the next 20 – 30 years, highest operational standards in both these areas for both from the point of view of the the general lifetime of a well operated ship. general public good and for enlightened self-interest.

2012 TARGET: Undertake a workshop-based Future Scenario Planning initiative, 2013 TARGET: We will work over 2013 to establish a set of guidelines as to when and facilitated by Forum for the Future, involving both internal and external how an Environmental Impact Assessement (“EIA”) and / or a Human stakeholders who are either familiar with our industry or not specifically Rights Impact Assessement (“HRIA”) should be conducted. familiar but recognised “futurologists” during 2012. The results are to be tested against current corporate strategies by the end of 2012, and then formally at annual intervals in the future. 2 Health and Safety

2012 RESULT: This was achieved. The process helped CNCo develop a Strategic Risk This is a mission-critical part of CNCo’s business and whilst logically reporting within the and Opportunity Register that was then to be tested against ongoing Sustainable Development discipline, given its importance it has long had its own dedicated operations, planning and decision-making processes and developments department. The fundamental targets for CNCo are that zero harm shall be suffered by its at the beginning of 2013, at a meeting intended to also develop long term employees, or be caused to the marine environment. This is managed within our Health, goals, plus the metrics to help measure our progress towards achieving Safety and Environmental Management System. these goals. 2012 RESULT: This was partly achieved. There were no oil spills in 2012 and the number

2013 TARGET: Hold a ‘20420’* offsite meeting annually, starting in Jan 2013 to build on of LTIs was more than halved from 9 to 4 during the year. the Future Scenario Planning outputs of the Strategic Risk and Opportunity Registers and develop a Strategic Balanced Scorecard up 2013 TARGET: Achieve Zero LTIs and Zero spills of marine pollutants. Suffer a Total to the year 2020 that will contain shorter term goals up to that year and Recordable Case Frequency (“TRCF”) of no more than 4.0, increase the KPI metrics to determine CNCo’s progress in getting to these goals. number of Near Miss and Toolbox Risk Identification Permits (“TRIP”) These internal goals mesh into the longer term industry-wide “Vision Reports by 10% over the figures for 2012 and reduce the Port State 2040” to which we have signed up with the Sustainable Shipping Inspection Deficiency Rate to < 2.0 in 2013. Initiative; “for a sustainable shipping industry in 2040”.

* The 20420 meetings are annual retreats by the 20 most senior managers to review our business strategy up to the year 2020 as a minimum, and then beyond as far as is practical.

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Summary: Sustainable Development Plan 2013 13

3 Environmental Impact 2013 TARGET: • To have all of our new S class vessels fully compliant on delivery. • To have at least one engine and one deck store on our existing 3.1 CNCo Head Office will undergo modifications in Q1 2012 after having settled into the new Challenger and Miho class fleets fully compliant. Singapore office for 2 years. On completion the opportunity should be taken to revisit general • To have a focus on 5S in the housekeeping training in our in-house office housekeeping. It is also important from both Health and Safety, and operational Safety Awareness Courses. efficiency standpoints that housekeeping standards on ships receive the same attention. • To have a 5S check during all ship managers’ technical inspections. • To achieve a reduction in near misses relating to “defective tools” and 2012 TARGET: The “5S” Methodology (a workplace organization method that describes “poor housekeeping” by 50% from the 2012 baseline. how to organize a work space for efficiency and effectiveness by • To achieve 100% accuracy in 5S store rooms for spare parts against identifying and storing the items used, maintaining the area and items, the Amos inventory. and sustaining the new order that uses a list of five Japanese words: “seiri, seiton, seiso, seiketsu, and shitsuke”. Transliterated or translated 3.2 The Singapore Environment Council runs an Eco-Office Certification scheme that assists into English there are five primary 5S phases: “sorting, set in order, businesses to run their office premises in a more sustainable and environmentally systematic cleaning, standardizing, and sustaining”. These are to be responsible way. It is prestigious, with only 72 premises in Singapore being awarded instituted in CNCo Head Office after the Q1 modification, on all the new accreditation over the seven years up to 2012. ships being built, and on a rolling basis on existing ships. 2012 TARGET: CNCo Head Office will gain Eco-Office certification within 2012. The 2012 RESULT: CNCo Fleet management established a 5S working group to implement specific scheme is not applicable to other countries, but the concepts the 5S housekeeping standard on all existing and new CNCo vessels. It and initiatives are identical. All other CNCo and Swire Shipping offices drew up a project charter stating the objectives and goals and this outside Singapore will be encouraged to adopt the same good practices charter has been signed off by the MD as sponsor. either in or absent a similar scheme locally.

To accommodate and structuralise the initiative, several changes were 2012 RESULT: This was achieved; CNCo Head Office gained Eco-Office certification in made to the Safety Management System. The housekeeping policy has mid-2012. The learning points have been passed to Swire Shipping been updated to incorporate the practices of 5S. A 5S circular was Offices in Australia and New Zealand. produced and released. The 5S working group also produced a change management document that explains how any changes, including those affecting storage and housekeeping are to be handled. This initiative will be continued and built upon in 2013.

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Summary: Sustainable Development Plan 2013 14

3.3 CNCo is under-going a fleet rejuvenation programme. This will entail the retiring ships to be 18 months from April 2012 to Oct 2013. This seeks to “Implement recycled. Conditions in many recycling yards, especially those using the beaching method, systems to trace and increase accountability of ship building materials with respect to both worker safety and responsible disposal of hazardous waste, do not and their sources, with the ultimate aim of having end-to-end meet the standards defined in the Company’s policy for the recycling of ships. responsibility and accountability for these materials”.

2012 TARGET: CNCo will formally adopt a Responsible Recycling Policy. This will require 2012 RESULT: This was achieved. CNCo has been working on the “Closed Loop Material CNCo vessels being recycled to be sent only to yards that are Management” work-stream since Q2 2012, and has arranged for an intern independently certified to the highest international standards. These from Singapore’s Nanyang Technological University to be embedded in will include as a minimum ISO 9001, ISO 14001, OHSAS 18001, the ship building yard for the new “S” Class for the first half of 2013 to run compliance with the HK Ship Recycling Convention whether or not it is a pilot project with a view to all SSI members reporting back at an yet ratified globally and preferably also ISO 30000:2009. industry event in Q3 2013.

2012 RESULT: This was achieved. Four ships were Responsibly Recycled at the beginning 2013 TARGET: The GM SD to give a presentation on the learning points from this process of 2012 - a full report is included in the EN22 Waste Materials Disposal to the Tradewinds Ship Recycling Forum in Dubai in Q1 2013. section. The GM for Sustainability agreed to give a presentation on the learning points from this process to the biennial Tradewinds Ship CNCo and all other SSI members to report back on the various pilot Recycling Forum in Dubai in Q1 2013. workstreams to an industry event in Singapore in September 2013.

2013 TARGET: To continue to observe this policy for any and all CNCo vessels that 3.5 Rightship – an industry body, has established an index to quantify the environmental design are sent for recycling in 2013, and to work with the yards to achieve a performance of existing ships (EVDITM) as the IMO standard (EEDI) only refers to ships higher level of conformance against independent 3rd party auditing by delivered post 01 Jan 2013. IMO also has a standard for measuring the operational efficiency (e.g.) LR than was achieved in 2012. of existing ships (EEOI).

3.4 In addition to 3.3 and looking at the long term future, CNCo is a member of the Sustainable 2013 TARGET: On the principal that what is not measured cannot be managed Shipping Initiative (“SSI”) Steering Group. The SSI has a Vision for a sustainable shipping efficiently, CNCo will develop internal targets for operational efficiency of industry in 2040 that is designed to help the industry make long-term plans for future existing owned and chartered ships plus criteria for selecting ships to success. An industry with long-lived assets needs long-term thinking, and the SSI aims to charter based on the environmental and energy efficiency of their design. help members think beyond the next regulation or design tweak. These targets will be based on 2012 baselines and will be set to become more stringent over time towards 2020. 2012 TARGET: 13 areas for initial action have been identified by SSI and CNCo will work with the “Closed Loop Material Management” work-stream over the

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Summary: Sustainable Development Plan 2013 15

4 Supply Chain Management 5 Corporate Philanthropy

4.1 CNCo recognises that it is not enough for our organisations to internally operate our 5.1 CNCo remains keen to target this as Strategic Community Investment for term projects that businesses responsibly, but that it is critical to our business model to be sustainable that we are sustainable, working with partners on projects that are aligned with our business model, ensure that our suppliers also operate to a minimum set of standards. These are contained in areas where we can leverage the effect of each dollar. in the Supplier Code of Conduct referred to in 1.1 above. 2012 TARGET: The existing Corporate Philanthropy (“CP”) Review Committee will work 2012 TARGET: In addition to issuing a Supplier Code of Conduct, CNCo must audit and with all CNCo offices to identify projects and organisations that are in measure compliance and as required take action to reduce non- accordance with our internal guidelines. compliance. This is likely to be both resource intensive and open-ended and will thus be pursued on an on-going basis and reported on in the These seek to: next annual SD Report. 1) Involve Business Critical Community Engagement (“BCCE”); 2012 RESULT: This was achieved, albeit this is an ongoing process. Our results are 2) Be Strategic; reported in more detail in the Product Responsibility Section (PR1) and 3) Involve a Long-Term Partnership; Community Impact Section (SO1). 4) Be Responsive to Community Needs; 5) Normally avoid “One-Offs”; and 4.2 In addition to CNCo issuing its Supply Chain Sustainability Code of Conduct in 2012, CNCo 6) Involve fewer but larger sums, rather than many small donations, as also took the proactive step of issuing one of the industry’s first “Responsible Carriage of these have an impact multiplier. Cargo Policy” (see http://bit.ly/1gfoNHQ). For more details of this see the Environmental Impact Mitigation Section, EN26. In complying with the above guidelines, corporately we would generally direct our CP towards: 2013 TARGET: CNCo will work with suppliers with whom we have a total annual spend of > USD 1 million to assure ourselves of compliance, and to establish a) Provision of Educational and / or Health Opportunities for Youth; such follow-up action with the suppliers as is required to reduce non- b) Enhancing CNCo’s Presence in our Stakeholder Communities; compliance. c) Environmentally Sustainable issues; whilst as best possible simultaneously: d) Demonstrating a strategic fit with CNCo’s business; and e) Fostering or enhancing a Corporate Partnership with CNCo (rather than being disconnected philanthropy).

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Summary: Sustainable Development Plan 2013 16

These will be supported by a mix of time, resources and money, and we CNCo wishes to ensure that its Corporate Philanthropy delivers the will look at the feasibility of granting paid “Volunteer Days”, as highest levels of social and environmental value for the investment made, appropriate. One area that CNCo sees as potentially being of particular and will begin a project to develop metrics to measure Social Return On interest for more support in 2012 and beyond is a deeper partnership Investment (SROI). This is a very nascent field, on which there is much with the PNG Maritime College in Madang, PNG. ongoing research being undertaken, and this is therefore anticipated to be a long-term project. 2012 RESULT: This is (and will be ongoing) work in progress. A CP Committee has been established and set itself ground rules. A review of what causes our employees to seek support has been undertaken, albeit with a lower take up rate than we would have preferred. Two CNCo teams committed to participating in the Sailors’ Society Mt Kinabalu Fund-raising Challenge to be held in Q1 2013, and this will be reported on in the next annual SD Report.

During the latter half of 2012, CNCo budgeted a very significant amount to support the Maritime College in Madang, Papua New Guinea during 2013, and we hope to leverage both this financial support but more importantly our resources to work with the College to achieve concrete results in 2013.

2013 TARGET: Two CNCo teams have committed to participating in the Sailors’ Society Mt Kinabalu Fund-raising Challenge to be held in Q1 2013.

We began drafting an “Employee CP Paid Volunteer Day Policy” in 2012, and are scheduling to issue this in 2013.

We will leverage both our financial support and our resources to work with the Maritime College in Madang, Papua New Guinea to achieve enhanced alignment in 2013.

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Summary: Sustainable Development Plan 2013 17

6 Employer of Choice 2013 TARGET: CNCo will continue to sponsor a number of both commercial and engineering undergraduates under either the Singapore Maritime 6.1 Singapore is seeking to establish itself as a Maritime Hub, having 26 separate Institutes of Foundation “SMFOne Scheme” and/or the new “MPA Global Internship Higher Education graduating young Singaporeans with learning in a wide range of maritime Award” over the next few years. It is hoped that this can become an entry disciplines. CNCo Head Office is a) under-represented with local managers and b) committed stream for future local managers, provided the material issue of high to support Singapore’s intention of being a Maritime Hub. CNCo already support the supply labour mobility (found in all Singapore employment sub-sectors) can be of short-term internship places to around 6-8 maritime undergraduates each year. successfully addressed.

2012 TARGET: CNCo will sponsor a number of both commercial and engineering CNCo will work with SMU in 2013 to support its new Maritime undergraduates under the Singapore Maritime Foundation “SMFOne Economics Concentration course in areas that are relevant to our Scheme” over the next few years. It is sincerely hoped that this can business, prior to the start of the course in Jan 2014. become an entry stream for future local managers, provided the material issue of high labour mobility (found in all Singapore employment sub- 6.3 We believe that outside our home base of Singapore and particularly in our key stakeholder sectors) can be successfully addressed. communities of the Pacific Islands, there is also a wealth of untapped talent. Over and above our support of time, money and resources to the PNG Maritime College in Madang, PNG 2012 RESULT: This was achieved. CNCo interviewed a number of potential detailed in 5.1 above we seek to establish long-term, mutually beneficial relationships with undergraduates from NTU under the Singapore Maritime Foundation our other partners and stakeholder communities, particularly in the youth and education “SMFOne Scheme” for sponsorship as either Commercial or Engineering areas that are aligned to our business. Management Trainees and selected one Engineering Management Trainee to start after she graduates in mid-2013. CNCo will repeat this 2013 TARGET: CNCo’s HR and Fleet Management departments will work to establish process again in 2013. cadetships for 10% of CNCo’s annual requirement from suitable candidates in key developing communities in Asia Pacific region within 6.2 Singapore Management University (SMU) will be launching a new Maritime Economics 2013 and beyond. Concentration (“MEC”) under the School of Economics in August 2013. Under this concentration, SMU undergraduates will benefit from a structured and rigorous programme, which includes maritime modules, internship opportunities, overseas industry study missions, site visits and talks by industry practitioners. This will help build up the shore- based talent pool for Maritime Singapore.

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Summary: Sustainable Development Plan 2013 18

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Summary / Organisational and Operational Boundaries of Report (as at 31 Dec 2012) 19

The China Navigation Company Ltd

Liner Trades Liner Trades Subsidiaries Head Office CNCo Shipping Agency Offices (Owned) fleet + (Chartered) fleet

CNCo Pte Ltd In: Australia 8 X Challenger Class Tonnage as detailed 50% > Swire CTM Bulk Logistics Singapore India 5 X Mihos in Fleet Profile 25% > Mandarin Hong Kong 8X 31,000 dwt MPP u/c Shipping Ltd (HK) Fleet New Caledonia 67% > Quadrant Pacific Management New Zealand Agencies (NZ) Republic of China, Taiwan Peoples Republic of China Swire Bulk Singapore United Kingdom

Swire Bulk

Organisational Boundaries Logistics

Office Vehicular Office Vehicular Vessel HFC and Vessel HFC and Petrol / Diesel / LPG etc Petrol / Diesel / LPG etc HCFC consumption HCFC consumption

Vessel HFO, MDO and LO consumption Scope 1 GHG

Office Electricity Usage Office Electricity Usage Office Electricity Usage Scope 2 GHG

Management Air Travel Management Air Travel Management Air Travel Operational Boundries

Crew Air Travel Crew Air Travel

Scope 3 GHG

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com

21

Detail In this section we provide more detail on a wide range 22 of areas that, taken as a whole, define our Sustainable Development commitment to People, Planet and Profit. All of these must coalesce to give a positive “Triple Bottom Line” to our Organisation, to the Communities we serve and Environment in which we live and work.

In this section:

23 Sustainable Development Policy 24 Governance 26 Economic 34 Environment 52 Labour 63 Human Rights 64 Society Detail 23 Sustainable Development Policy

In our operations: We adopt this policy because: Making it happen:

We will meet or exceed all legal requirements and: • Sustainable development encompasses • We will exercise industry leadership working our dedication towards health & safety, with others to promote sustainable the environment, employment, business development in the industries in which we • Safeguard the health and safety of all our stakeholders as far as is partnerships and community matters; operate; reasonably practicable in all our operations; • Long-term value creation for our • All of The China Navigation Company’s • Be a good steward of the natural resources and biodiversity under our shareholders depends on the sustainable offices shall apply this policy. We will influence and ensure that all potential adverse impacts of our operations development of our businesses and the encourage other companies in which on the environment are identified, mitigated and appropriately managed; communities in which we operate; we have an interest as a shareholder or through our supply chain to implement • We wish to excel as corporate citizens. similar policies; • Strive to be the employer of choice by providing an environment in which all employees are treated fairly and with respect and can realize • We will encourage and empower our staff to their full potential; be proactive on sustainable development matters both at work and in the community; • Favour suppliers and contractors who promote sustainable development • We will monitor our performance and report it and encourage the responsible use of our products and services by our regularly; customers and consumers; • We will review this policy periodically, having • Promote good relationships with the communities of which we are a regard in particular to stakeholder dialogues. part and enhance their capabilities while respecting people’s culture and heritage.

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Detail 24 Governance

The China Navigation Company Pte Ltd. The China Navigation Company Pte Ltd. The CNCo Board of Directors provides (“CNCo”) is a Singapore registered company organisational oversight and comprises nine (“CNCo”) is a Singapore registered company and a wholly-owned subsidiary of The China members of whom four are non-executive Navigation Company Limited registered in the directors and two are independent. and a wholly owned subsidiary of The China United Kingdom. Neither company is publicly quoted on any stock exchange. As can be CNCo has a high-level Sustainable Navigation Company Limited registered in the seen from the Organisational and Operational Development (SD) Steering Group composed Boundaries diagram (see page 19), The China of the MD, the Fleet Health, Safety, Security United Kingdom. Neither company is publicly Navigation Company Limited is also the parent and Environmental Manager, the GM of company for Swire Shipping branded agency Swire Bulk (Australia) and head of the Shore- quoted on any stock exchange. companies in Australia, PRC, Hong Kong, New side Safety Committee plus the GM for SD. Caledonia, New Zealand and Taiwan. This group meets bi-monthly in the Head Office in Singapore and reviews all strategic CNCo also has a 50% share in Swire CTM aspects of SD, but in particular Health, Safety, Bulk Logistics Limited, a joint venture with C Environment, Social and Governance issues. Transport Maritime SAM registered in Monaco, a 25% share in Mandarin Shipping Limited Immediately below this there are SD Working registered in HK and is a majority shareholder Groups which comprise cross-functional of Quadrant Pacific Ltd., one of New Zealand, representatives also meeting bi-monthly in the Fiji and Norfolk Island’s leading shipping Head Office in Singapore and main regional agency and logistics companies. No material offices of Sydney and Auckland. These seek to operational companies were purchased or sold act operationally on the guidance and strategy during 2012. emanating from the SD Steering Group.

The Company’s Board of Directors is the highest level governance and oversight body and this sets strategy for its subsidiary companies. The Chairman of the Parent Company Board of Directors is Mr. B. N. Swire.

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Detail: Governance 25

The shareholders are directly represented on • satisfactory and sustainable returns are We have included other relevant additional be Customers, Employees, Regulators, the CNCo Board of Directors and use this made to its parent company; information herein which supports the Shareholders and Suppliers. forum to provide governance and direction commitment that our activities and to the company. CNCo has no direct public • the best interests of stakeholders are commitments to Sustainable Development Building on the above, the materiality of the shareholders itself, however it manages and safeguarded; are considered material to the way we run content of our SD report for the year 2013 to operates all its businesses in compliance with our business and as such are an integral our stakeholders will be established through both the John Swire and Sons (UK) and its • overall short and long term business risk is part of our strategic and operational decision a more objective and wider exercise involving own internal Code of Conduct covering ethical understood and managed appropriately; making processes. This is achieved by the review by Senior Leadership of our internal standards which are available here: General Manager SD having direct reporting Enterprise Risk and Opportunity Management http://bit.ly/1cB7r7H • we maintain delivery of high-quality services responsibility to the Managing Director, building Registers planned for the early weeks of to the satisfaction of customers; and on his wide experience within the shipping 2014, together with discussions with our key This compliance is in line with our belief that it industry, both at sea and ashore, plus being external stakeholders Customers, Employees, is imperative to act with probity, transparency • the highest standards of ethics are able to provide input in the early stages of all Regulators, Shareholders and Suppliers. This and accountability in order to achieve our maintained by all our employees and strategic decision-making where SD issues will guide the areas of management focus and long-term objectives. Our Board is committed in all our dealings. may be relevant as he is a full member of the content of the 2013 Report as we move to maintaining and developing robust corporate the Executive Committee that meets at least forward. governance practices and at their behest, the The above are all encapsulated in our Vision weekly to review all existing and planned future senior CNCo management conducts regular Statement, which can be found here: business activities. The responsibility and authority of the internal reviews of current operating practices http://bit.ly/1cB72Ck Designated Person Ashore (“DPA”) includes and, looking to the future, of our Enterprise Risk Internal stakeholder engagement was initially monitoring the safety and pollution prevention Management documentation that ensures that: Our absolute requirement for probity, undertaken in relation to the production of aspects of the operation of each ship and transparency and accountable conduct in all our first full SD report with office staff in ensuring that adequate resources and shore- business affairs is highlighted to all of our new Singapore and Australia, some of our Filipino based support are applied, as required. staff during the induction and is a condition of Officers and Cadets at a forum in Manila. The their employment. This was expanded during purpose of the report was explained to all those All staff within our Organisational Boundaries 2012 to cover all of our Filipino crew at their present together with the definition of the term were sent a summary leaflet of our important pre-departure and orientation briefings before “stakeholder” in conjunction with Sustainability achievements in the SD area during 2012. their departure from Manila and to our PRC Reporting. Based on formal feedback from crews at dedicated training sessions held in those present requested after each session their departure ports. the Key Stakeholders were assessed to

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Detail / Economic 26 Economic Value Generated During 2012

Results adjustment charges. With administration costs under control and some positive returns from CNCo Pte Ltd results for the period 01 Jan to the bunker hedging program, the liner shipping 31 Dec 2012 showed continued improvement. operation delivered improved profitability. This was achieved as a result of continued efforts to improve net freight contribution levels and the cargo mix in the liner shipping Investments business while reducing costs through route optimisation and eco-steaming (reducing For the liner business, operational excellence, speed to the most economical speed for the fleet renewal and capacity management remain hull shape and engine design which will lead the key focus as part of the programme to to reduced consumption/emissions but also continually improve profitability. Eight 31,000 altered schedules). Administration costs were dwt multipurpose vessels were ordered at the also controlled, remaining at less than 10% of end of 2010 (being built at Ouhua shipyard in revenues. Included in the profit were earnings China) and will be delivered during 2013, and derived from joint venture investments in liner further work is being carried out to develop trades which focused on the South Pacific. suitable replacements for the 1990-1 built Miho class vessels. Liner shipping revenues were 11% higher than budget expectations and 6% ahead of Given generally high fuel prices throughout the enter the bulk shipping market and a startup comparative 2011 results. Operating costs period of this report, fuel efficiency continues operation commenced in the handy-size were 7% above budget and container costs to be a particular area of concern both for segment of the dry cargo market. were 7% above budget as a result of increased newbuilds and for the existing fleet. Investment volumes and activity. in existing vessel adaptations is under review An additional eight, highly-efficient 39,500 and slow/eco-steaming delivered some savings tonne B-Delta handy-size bulk carriers were Go to page 72 for an overview of the CNCo Despite bunker cost volatility, actual bunker costs over the period. Work is on-going in this area. ordered in 2012 for delivery in 2013 - 2014, and Charitable Donations in 2012. were only 7% above budget and this excludes In 2011, CNCo embarked on its ambition CNCo holds options to order for a further eight any mitigation from customers paying bunker to diversify earnings over the long term and vessels. We will be targeting in future years to increase our level of corporate philanthropic donations towards 0.5% Attributable Profit After Tax.

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Detail / Economic 27 Risks and Opportunities Due to Climate Change

The senior management body in CNCo lower freeboard at the jetties but these have The senior management body in CNCo considers the various aspects of climate always varied over the diurnal tidal cycle and change and our mitigation of such will continue to be managed operationally by considers the various aspects of climate change anthropogenic drivers that we can impact all the port logistics organisations. current relevant business areas and future and our mitigation of such anthropogenic drivers projects. The most significantly threatened port that CNCo currently serves is Tarawa. This is on that we can impact for all current relevant CNCo senior management seeks to have an an atoll in the central Pacific Ocean, and action plan for identifying any high priority which is the location of the capital of the business areas and future projects. ongoing but negative Sustainable Development Republic of Kiribati, South Tarawa, that may issues, mitigating them where possible and disappear altogether. managing those parts of them that cannot be viably mitigated. Further, when considering any The President, Anote Tong, has said: capital investment CNCo will specifically review the Greenhouse Gas/es (“GHG”) footprint of “Although in most of the world there is some the potential investment and seek to mitigate it time to plan and prepare for climate change, to as low a level as reasonably practical. we are the first to feel its effects as a direct threat to continued life in our country. We are CNCo has committed to moving to a “net zero among the most vulnerable of the vulnerable. environmental impact” and the above will form Even a marginal increase in sea levels will be a critical part of this. disastrous for our country’s future. It is doubtful that any other country feels the effects of We do not currently foresee any material climate change as much as we do. In Kiribati, risks to our core business in the short term the entire nation faces real danger—our own due to physical changes associated with survival is at stake as a people, as a unique and anthropogenic climate change. Such physical vibrant culture and as a sovereign nation”. changes may include: • Acute effects e.g. those due to increased • Changes in sea level. These will not have a frequency and ferocity of weather events material effect on vessels. When our ships as the climate changes. These will be treated are alongside in ports they may experience as at present, as “Acts of God”.

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Detail: Economic - Risks and Opportunities due to Climate Change 28

• Chronic effects such as the sustainability of other things being equal, but this can These established a number of credible but are currently committing to build. Our anual different cash crops as climate bands move. generally be countered by working with stretching scenarios for the world in which meetings (at a minumum) will continue to These may be expected to be broadly shippers to optimise scheduling in the we live and do business up to 2030 (this was monitor trends and ensure we are placed to neutral. As some crop cargoes diminish, we face of any such such increases. selected as a reasonably forseeable time in minimise the downside from the risks and would expect human adaptation to produce the future and the time period when we will maximise the upside fro the opportunities replacement cash crops for shipment by • Any shift in climatic zones will affect global be considering the next fleet replacement presented. sea, albeit maybe on different routes to food chains which, given the cargo volume programme), and from these we developed a supply different end-users. of food and forestry products that we carry Strategic Opportunity Register. As far as our business today is concerned such as rice, coffee and timber, will directly from a regulatory point of view, our vessels With CNCo’s commitment to moving towards impact our business operations and network We plan to convene all (approx. 20) of the emit Oxides of Nitrogen (NOx) and Oxides of having net zero impact on the environment, it is of routes. senior managers of CNCo in Jan 2013 (a 20420 Sulphur (SOx) as a by-product of combustion playing its part to reduce the cause of sea level annual meeting - see p. 12) to review this in the vessels’ engines and the allowable limits rise and its effects on places such as Kiribati. However, hand-in-hand with operational risks to Strategic Opportunity Register, plus our existing of these pollutants are being progressively our business are the operational opportunities Vision, Values and SD Policy for relevance reduced. The level of emissions is a function • Any increase in frequency or severity of for our business. CNCo contracted with Forum against the possible output scenarios. We can of engine design and the fuel specification that weather events may increase downtime, all For the Future (“FFF”) to conduct a series of also identify the direction(s) in which we should each engine uses. Future Scenario Planning workshops in 2012. be investing and any potential downsides that we need to manage. The output from this Our vessels consume 3.5% sulphur content meeting will probably have a slightly shorter grades of Intermediate Fuel Oil (“IFO”) and timescale, helping us to set achiveable goals Heavy Fuel Oil (“HFO”) whilst on passage Far thinking governments, including Singapore’s have Green out to, currently, 2020. at sea, but switch to using Marine Gas Oil (“MGO”) - which typically has a sulphur content Funds that are used to offset some of the port charges Both of these potential scenario outcomes, to less than half that of IFO/MGO and which for vessels that switch to burning low sulphur fuels in their 2020 and 2040, are intimately bound directly can be as low as 0.2-0.5%, both when in HK with climate change issues and then to the port limits because of our membership of the engines, although the offset does not fully cover the current secondary effects of climate change e.g. in “Fair Winds Charter” (this has been voluntarily extra cost of using lower sulphur fuel. the evolution of the patterns of trade that adopted by CNCo and 17 other shipowners our business supports in the Asia Pacific to reduce SOx air pollution in the Pearl River region over the future life of the ships that we Delta) and in local statutory Emission Control

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Detail: Economic - Risks and Opportunities due to Climate Change 29

Areas (“ECA”) such as those that have been We have invested significantly in a Kongsberg established on the West Coast of North America. Vessel Performance System package, which includes “Marorka” software, for all our new This is reported in more detail in the GRI EN18 ships. This gives dynamic real-time fuel section: “Initiatives to reduce GHG Emissions”, performance of the main engine and auxiliaries, and involves a split incentive cost to CNCo at all alarm and monitoring workstations, and other shipowners but with the benefits i.e. the bridge, E/R control room and cargo being borne by the communities close to the office. This then enables us to optimise our port areas in HK, Long Beach and Singapore. fuel consumption by maximising the energy CNCo has supported the call by the Fair Winds efficiency of the ships while minimising any Regrettably none of the United Nations transparency, finance, adaptation and forests Charter secretariat and others for the HK negative environmental impacts. All the new Framework Convention on Climate Change, (REDD+¹); and agreeing on a work plan to Government to legislate our voluntary reduction vessels that will be delivered in 2013 and Conference of the Parties (“UNFCCC CoP”) negotiate a new, legally- binding international into regulation to create a level playing field beyond will have Class-approved Energy meetings over the past four years has climate agreement by 2015. The emissions gap and we expect this to bear fruit in 2013. Efficient Design Indices (“EEDI”) and we achieved sufficient consensus to produce was also front-and-centre to the discussions, have produced Ship Energy Efficiency Plans either a legally-binding or global convention as the new United Nations Environment Far thinking governments, including Singapore’s, (“SEEMP”) for all of our existing ships, prior to for Annex 1 (developed) and non-Annex 1 Programme (“UNEP”) Gap Report showed that have Green Funds that are used to offset some it being required by legislation. (lesser developed) countries to limit their GHG countries are further away than even a year ago of the port charges for vessels that switch emissions to cover the period post Kyoto from the goal of keeping the global average to burning low sulphur fuels in their engines, We also record lubrictaing oil (“LO”) consumed Phase 1 after the end of 2012. temperature rise below two degrees Celsius. although the offset does not in any way cover on our owned and chartered vessels. “LO” the current extra cost of using lower sulphur fuel. covers the complete range of grades of Expectations were low for the UNFCCC In the end, countries were successful in making lubricating oil and 100% by volume of the climate negotiations in Doha, Qatar (CoP progress, but only incrementally. The lack of Levels of NOx and SOx emissions are certified total LO usage we have reported is actually 18). It was scheduled to be a “finalise-the- political will was very disappointing, especially for each vessel by independent Classification consumed in internal combustion engines and rules” type of CoP, rather than one focused in the light of recent extreme weather events. Societies in accordance with limits laid down by converted into GHG which is then emitted to on large, political deals that carry on into UN International Maritime Organisation (“IMO”) the atmosphere. We thus use this figure and an the early hours of the morning. Key issues At COP 17 in Durban, the EU agreed to a under its MARPOL Convention Annex VI. All our average specific gravity of 0.9 across all grades on the table included: finalising the rules for second commitment period for the Kyoto vessels are fully compliant with this. The revised to convert total LO recorded and consumed in the Kyoto Protocol’s second commitment Protocol (“KP2”), but there was no time to

Annex VI came into force on 1 July 2010. litres into GHG emissions in tCO2e. period; concluding a series of decisions on finalise all the rules. In Doha, the rules for that

¹ Reducing Emissions from Deforestation and forest Degradation The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Detail: Economic - Risks and Opportunities due to Climate Change 30

second commitment period were finally agreed Observers and media outlets often question GHG emissions from shipping are already (in A number of legal objections were lodged upon, allowing it to move forward for another the UNFCCC process and its slow-motion Aus and NZ - and a number more are on the by the world’s national airlines to the eight-year period (2013-2020). approach. However, the truth is that the imminent horizon) regulated by such instruments implementation of the EU-ETS scheme as UNFCCC will not stop moving in slow motion as blunt carbon taxes or national “cap and trade” it affected entire flights to/from EU, and to While countries who have joined this second until key countries do. All eyes must now turn Emissions Trading Schemes (“ETS”), though which shipping was to follow a year later. Prior commitment period (including the EU, Australia, to the re-elected President Obama and the the degree of will to enforce these wavers with to this coming to a head, the EU accepted Switzerland and Norway) only contribute 15 new Chinese leadership, amongst others, to the perceived local political imperatives of ICAO’s efforts to resolve the issue and the percent of global emissions, this is an important see when large-scale change is going to come. the hour. This is certainly not the ideal way to implementation was suspended. On the step, in that it maintains the only legally-binding Perhaps they can take some inspiration from the achieve a global reduction in anthropogenic back of this, IMO has achieved the same for instrument under the UNFCCC. new coalition of Latin countries, which is both GHG emissions over the long-term. shipping. driving toward a low-carbon economy at home The meeting in Durban marked an important and bringing fire to the belly of the UNFCCC. The EU had threatened that without agreement CNCo is working on mitigating some of the milestone by agreeing on a comprehensive at IMO by the end of 2011, shipping, which Scope 1 and 2 GHG footprint for its vessels set of guidelines for measurement, reporting With Doha behind us, the stage has now was excluded from the existing EU-ETS at last operationally. With the introduction of ETSs, and verification (“MRV”) of countries’ emission been set both for additional ambition in the review at the end of 2008, will be written back ECAs and Sulphur Emission Control Areas reduction efforts. Doha, on the other hand, near-term and for an ambitious and equitable into their regional/international scheme. (“SECA”) globally, there will be increased resulted in a mixed outcome: While negotiators 2015 agreement. As climate change impacts financial cost implications with compliance. completed some important pieces of work, increase, it’s a firm reminder of why leaders It would be a very significant administrative CNCo will be assisted practically in achieving they failed to resolve a number of outstanding must expend political capital to move climate burden to shipping in all sectors worldwide step-change reductions through its significant issues—especially when it comes to ensuring a action forward and build support nationally and if a patchwork of regional sectoral ETS Capex investment in new vessels of advanced cost-effective, credible verification framework. internationally to avoid catastrophic impacts. schemes was to be introduced, due to designs and the recycling of our older tonnage. MRV however is set to be introduced in the impatience or frustration with an inability to We will detail this in the 2013 report which will EU soon, and though this will not affect most Our belief is that the process may well move agree a transparent, legally enforceable, IMO cover the launch of our new S-class of 31,000 of CNCo’s own tonnage which is at present forward in a bottom-up fashion, and the administered, global sectoral scheme that dwt Multi Purpose (“MPP”) Ships and W-class trading in the Asia Pacific region, it will be seen individual country and company initiatives will drives real and verifiable reductions in GHG 39,000dwt Deltamarin-designed B.Delta37 in these annual SD eports that we are already slowly aggregate to become a global deal; emissions on an urgent basis. handysize bulkcarriers. measuring and reporting and having these the planet simply cannot wait for a top-down figures externally verified. agreement between the 180-odd members of UNFCCC given all the self-interest circles that cannot be squared.

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Detail / Economic 31 Financial Assistance from Government

Two grants were received from CNCo’s host government (Singapore) in 2012:

They were an MPA (Maritime and Port Authority of Singapore) grant of SGD 150,000 and a PIC (Productivity and Innovation tax Credit) of SGD 59,000.

The PIC scheme was introduced in the Singapore Budget 2010 to provide enhanced tax deductions and investments in a broad range of innovation value chain activities. CNCo was granted this for acquisition of new ship management software and other IT equipment upgrades.

ChinaThe China Navigation Navigation Co. – Company Sustainability / Sustainable Report 2012 Development Reportwww.chinanav.com 2012 www.chinanav.com Detail / Economic 32 Policy, Practices and Proportion of Spending on Locally-based Suppliers at Significant Locations of Operation

The senior management of CNCo considers the various aspects of climate change and our mitigation of its anthropogenic drivers that are relevant to our operations when making purchases.

CNCo is registered under Singapore’s and charter hire invoiced by the charterer from The company however does have procedures MARPOL regulations once we are suitably Approved International Shipping Enterprises its base country amounted to 15.85%. If these for vendor selection to ensure control is resourced. In addition, the company follows (“AIS”) Scheme. This aims at building up a three material line items of non-discretionary maintained over the quality of goods and the recommended best practice of the Swire critical mass of shipowners and managers spending are excluded, then CNCo’s more service supplied by vendors. This is primarily group and (re-)evaluates at least the top 100 which will eventually develop Singapore into a discretionary local (non-Fuel, Ship-building, to ensure that goods affecting either the safety most used vendors every 36 months. It is also leading global maritime centre. Under the AIS 3rd Party Charter Hire) spend as a percentage of, or prevention of pollution from, our ships are planned that in 2013 we will start to conduct Scheme, “local spending” is defined as that of the total (non-Fuel, Ship-building, 3rd of suitable quality and are delivered in a timely a business process review of our purchasing invoiced by a Singapore registered entity. This Party Charter Hire) spend decreases slightly manner. The procedures require not only that processes to ensure that it is fit for purpose to is audited by the Singapore Tax Authorities and to 45.12%. This shows that nearly half our the vendor meets the company’s requirements support our expanding business divisions cost this is the definition and source of figures that total annual spend is in the country of our and ISO or equivalent accreditation, but that effectively, responsively and responsibly. are reported herein. operational headquarters. those suppliers who have an environmental policy and show a positive attitude to In 2011 50.26% of CNCo’s total global spend CNCo currently has no explicit policies environmental protection will be preferred was classified as “local”. However this basic directing spending to locally-based suppliers. during the selection process. statistic is a little skewed, as of the company’s This is a practical acceptance of the fact that total spend; fully 43.61% was for fuel and as the consumers of the spending; our ships, We continue to conduct evaluations on all lubricating oil supplied where/when required are continually mobile, so the supply of (non- suppliers seeking to be selected or retained (often outside Singapore, but invoiced in OEM) products will be driven by the supplies’ as primary vendors and will start to undertake Singapore), 8.32% was remitted to shipyards delivery location for the vessel as its particular site audits to examine their environmental as we build new ships to rejuvenate our ships need/s arise. performance and compliance with safety and

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Detail: Economic - Policy, Practices and Proportion of Spending on 33 Locally-based Suppliers at Significant Locations of Operation

Breakdown of Total Expenditure in 2012 Removing from these figures any distortion caused by a global spend of:

43.61% for fuel and lube oil resupply worldwide 8.32% to shipyards for new ships and repairs/maintenance to existing ships 15.84% to charter third party ships to support our liner business

then:

Spent in Singapore Spent outside Singapore Spent in Singapore Spent outside Singapore 50.26% 49.74% 45.12% 54.88%

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Detail / Environment 34 Input Materials That Are Recycled

CNCo as a service provider necessarily processes an insignificant quantity of recycled input materials as a substitute for virgin materials.

We do always however seek to use sustainably resourced material, especially the likes of paper and wood, and to responsibly recycle waste materials such as paper, printer cartridges at the minor level and ships at the macro level (see other sections).

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Detail / Environment 35 Direct and Indirect Energy

Virtually all of CNCo’s significant environmental The Scope 2, indirect energy consumption increased by 22.2% from 2011 to 2012. As this from CNCo’s operations is derived solely from was simultaneous with a near doubling of profit impacts are due to our core business of providing the electricity that was purchased for supply after tax, it means that our employees’ flights to our onshore operational offices, primarily footprint per dollar of profit was more than transportation of goods. These are reported in Singapore, Australia and New Zealand. halved: our people are producing more, more All of the electricity is supplied by the local efficiently and with a lower carbon footprint. A separately in this section (corresponding to GRI national grid and none is purchased directly large portion of this efficiency gain will be due from nuclear, steam, solar, wind, geothermal, to (as was one of the drivers) the organisational indicators EN3, EN4) and more detail in EN29; biomass or hydro suppliers. The total CNCo restructuring of Swire Shipping. consumption is 17.3% less in 2012 than in

“Environmental Impacts of Transporting Goods”. 2011, but this masks parity in Singapore office All the other emission metrics, for NOx, SO2, but a 25% reduction/increase in efficiency in Volatile Organic Compounds (“VOC”) and Australia’s and New Zealand’s offices due to Particulate Matter (“PM”) are reduced by the enhanced economy of scale that came from around 12% for the entire fleet (see table EN16 our office space rationalisation over the last 12 in the data section). This is generally in line Marine fuel consumption is reported by Environmental). Of this footprint, 99.84% is months. with the reduction in activity of 18% when grade (180 / 380 IFO or MGO) and in respect related to emissions due to consumption of measured in vessels operating days. Note: the of owned ships (13 trading plus one trans- IFO, MGO and LO whilst vessels were engaged As can be seen from the Scope 3 data table reductions will not be exactly linear as it will shipment vessel) and chartered-in tonnage (15 in transporting cargo. This is statistically the for CNCo Air Travel, the total climate footprint depend on the changes in trading patterns vessels as at 31 Dec 2012). The same is true same as the figure of 99.87% in 2011. for onshore and offshore staff has increased between the retired and continuing ships. for emissions from consumption of Lubricating slightly, by 6.1% over the year but this masks Oil (LO). See the tables in the Data Section: The 2012 Scope 1 GHG footprint is 88.4% bigger movements of the two between 2011 Environmental (GRI Indicators EN3 & EN4). of that in 2011. This is predominantly due to and 2012. With the recycling of four ships the fact that during 2012 four H class vessels in the first quarter of 2012, our seafaring CNCo had a total, GHG Protocol defined were recycled and thus the total number of compliment has reduced by just over 20%, and (see page 38) Scope 1 and 2, GHG footprint ship-operating days during the year (from both so the sea staff footprint has reduced by 11%. in 2012 of 610,558.199 tCO2e (see tables EN owned and chartered-in tonnage) was reduced The total flight footprint for the whole company,

16, EN 17, EN 19, EN 20 in the Data Section: from 11,118 to 9,090, or by 18.2%. however expressed as tCO2e per person

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Detail / Environment 36 Biodiversity

As part of its commitment to making We require full compliance with relevant contamination by invasive species, all vessels environmental laws and regulations at all times. moving internationally into US, Canadian, its business ethically, socially and However, special attention has been given in Australian, New Zealand and Russian our operating procedures to the periods when Federation waters practice good Ballast Water environmentally responsible and sustainable, our ships are transiting designated Marine Management (“BWM”), even prior to the Protected Areas (“MPAs”). The only MPA our full entry into force of the IMO International CNCo seeks to minimise the impacts of its trading pattern in 2012 took our ships through Convention for the Control and Management of was the Great Barrier Reef. Ships’ Ballast Water and Sediments. services on biodiversity in regions it operates. In 2012 the fleet made 61 transits of the Great As at 12 Sep 2012, 36 IMO member states had Barrier Reef Marine Park which was created in ratified the BWM convention (not including HK, 1975 by the Government of Australia and was Singapore, UK or USA), equating to 29.07% selected as a World Heritage Site in 1981. An of the gross tonnage of the world’s merchant International Union for Nature Conservation fleet, up from 22 states in the previous year. (“IUCN”) category VI (protected area with The convention will come into effect 12 months sustainable use of natural resources), the Great after 30 countries representing a combined Barrier Reef World Heritage Area has been total gross tonnage of more than 35% of the divided into 70 bioregions, of which 30 are reef world’s merchant fleet have ratified it. There bioregions, and 40 are non-reef bioregions. are still issues with type approval of some of Fishing and the removal of artefacts or wildlife the technical equipment required under this (fish, coral, sea shells, etc.) is strictly regulated, convention. and commercial shipping traffic must stick to certain specific defined shipping routes that The design of all of our new “S” and “W” class avoid the most sensitive areas of the park. ships under construction are “BWM-system ready”. The only reason for not fitting the The 61 transits took a total of 96.6 ship-days’ equipment at this time is to ensure that the duration with an average transit time of 10.8 equipment fitted is technically type-approved days each, and there were no infringements to meet both the IMO BWM Convention and recorded or observed. Further to preserve the US Coast Guard BWM requirements that indigenous marine biodiversity and avoid are due to come into force by Jan 2016.

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Detail / Environment 37 Scope 1 and 2 GHG Emissions

Note: The GreenHouse Gas Protocol defines direct and The GHG Protocol further categorizes these direct and indirect emissions as follows: indirect emissions into three broad scopes:

• Direct GHG emissions are emissions from sources that are • Scope 1: All direct GHG emissions - this would include all owned or controlled by the reporting entity. emissions from fuel consumed in the engines of ships under CNCo’s Operational Control. • Indirect GHG emissions are emissions that are a consequence of the activities of the reporting entity, but • Scope 2: Indirect GHG emissions from consumption of occur at sources owned or controlled by another entity. purchased electricity, heat or steam - in CNCo’s case this refers solely to the electricity consumed in our offices as we do not purchase steam or heat.

• Scope 3: Other indirect emissions, such as the extraction and production of purchased materials and fuels, transport- related activities in vehicles not owned or controlled by the reporting entity, electricity-related activities (such as Transmission and Distribution losses) not covered in Scope 2, outsourced activities, waste disposal, etc. This would include air travel by management and by our seafarers as they fly to join or leave our ships.

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Detail / Environment 38 Scope 3 GHG Emissions

Carbon footprint from CNCo air travel Management/ Seaman Total y-o-y Shore Staff Change 2011

tCO2e 1,487 2,797 4,284 Percentage (%) 34.7% 65.8% 100.0%

Number of People 338 487 825

Owned Vessels Operating Days 6,205 -

2012

tCO2e 2,059 2,488 4,547 Percentage (%) 48.1% 54.7% 100.0%

Number of People 331 385 716 79.1%*

Owned Vessels Operating Days 4,733 - 76.3%

2011 > 2012

Change y-o-y tCO2e (total) 138.4% 89.0% 106.1%

Change y-o-y tCO2e (per person) 141.2% 112.5% 122.2%

*Seafarers only see also Page 51

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Detail / Environment 39 Initiatives to Reduce GHG Emissions

CNCo measures its CO2 and other GHG emissions. It then seeks to mitigate these through eco-steaming and route optimisation as detailed on page 27. CNCo is also investing heavily in fuel-efficient tonnage and the most emission-efficient engines.

A long term solution to much of our GHG emissions’ footprint may well be a switch to LNG fuel. There is the key issue of the price / kW delivered to be addressed together with issues of availability, endurance but these latter two are increasingly being considered and provided in many bunkering ports. Our GHG emissions are reported in tables EN16 and EN17 (see page 73).

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Detail / Environment 40 SOx, NOx and Other Emissions

CNCo not only measures and seeks to mitigate its CO2 and other GHG emissions, it also tracks other potentially harmful emissions such as SOx, NOx, Particulate Matter (“PM”) and Volatile Organic Compounds (“VOC”), see tables EN20.1, EN20.2, EN20.3 in the data section (see page 74).

We have worked voluntarily for some years with the HK shipping industry as a member of the Fair Winds Charter (described in more detail on page 49) to switch to low sulphur MGO when in Hong Kong port limits to reduce the deleterious effects of SOx on the population living near berths and channels.

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Detail / Environment 41 Total Waste Disposed

CNCo monitors waste generation both ashore and aboard. CNCo’s owned and chartered tonnage follow the IMO MARPOL Waste categorising system.

It was designed to control waste management on board vessels and define the ways in which different materials can be handled, either through The following categories are defined and As a company determined to emphasise the disposal ashore, to sea, or disposal through included in the reportnig from our ships under importance of sustainable development and MARPOL: reduce its impact on the environment, CNCo incineration on board. also monitors the following from its own ships, Cat. 1 Plastic (discharge to shore only) in addition to the categories above: Cat. 2 Biodegradable timber and paper materials • Batteries sent ashore Cat. 3 Ground biodegradable rags, glass or • Drums sent ashore metal • Waste oil sent ashore Cat. 4 Paper products, rags, glass, metal, • Scrap metal recycled ashore bottles, cargo residue etc. Cat. 5 Food waste In our offices, CNCo endeavours to reduce Cat. 6 Incinerator ash (non-plastic) paper and printer cartridge usage and wastage by recycling both.

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Detail - Environment: Total Waste Disposed 42

The China Navigation Company (“CNCo”) This has not gone unnoticed by the yards we 2012 Case Study: CNCo’s decision to seek and use voluntarily adopted a Recycling Policy in have used and they, and others, have seized responsible, “Green and Safe” ship recycling yards when January 2012 as it started its fleet rejuvenation on this as a differentiating business opportunity programme that “It would only send vessels that can deliver them a higher margin in a recycling the four “D class” ships. for recycling to yards that have valid and keenly cost-driven global commodity market. verified certification issued by a reputable independent third party against all standards: It is also simultaneously a way for the yards ISO 9001:2008, ISO 14001:2004, OHSAS to both maintain and enhance their ‘local 18001:1999 and particularly ISO 30000:2009, licence to operate’ by the provision of a and preferably be an “A” member of the safer workplace for their employees, a less International Ship Recycling Association”. polluted environment and thus lead to a more harmonious society for the key stakeholder It is widely reported that a large number of ship communities. recycling yards globally using the beaching method have poor (or very poor) health, safety Already around 19% of ships to be recycled and environmental standards and are often are reported to be routed to “Green and Safe” found using child labour along with violating yards. labour and human rights. This evasion (or “leakage”) of the costs of responsible recycling by some shipowners is causing wholly avoidable harm to both the beaching yards’ workers and the nearby communities.

Our corporate recycling policy will not permit us to support this and so we have taken the decision, at an acknowledged small cost premium, to go beyond the existing legislation and to positively promote the use of, and in so doing hopefully encourage the expansion of, more responsible “Green and Safe” ship recycling yards.

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Detail - Environment: Total Waste Disposed 43

24 years ago, the then Chairman of the Swire The key decision requires the adoption of a Managers plus Lloyds Register (“LR”) which group exhorted all companies to “always seek completely new view of the way the company was engaged as our independent process to be ahead of legislation rather than reacting to defines the boundaries of its operations. monitor. Close out payments were dependent it: that even if the environmentally “clean” way of Historically, responsibility for an asset has on the production of a satisfactory recycling doing something is more expensive and therefore ceased on completing the sale transaction. completion report by LR. on the face of it uneconomic, we should always, In the new paradigm, the prior owner now regardless of mandatory legislation, have a close continues to take some responsibility for its The yards were clean, and importantly look at the overall feasibility of adopting such a asset, (in this case – its responsible recycling) injury-free, whilst ‘our’ ships were there, and practice”. CNCo and all other group companies after all liabilities and responsibilities would any hazardous waste was all disposed of still follow this today. hitherto have been passed to a third party: the appropriately. willing and aligned buyer. Even if only a percentage of the publicity is Working closely with the yards to achieve correct, and the ship recycling yards that There are a number of yards that have been successful recycling was an iterative process. practice beaching do cause harm to workers externally and independently audited by the LR audited and issued non-conformances and the environment in their surrounding EU and awarded “Green and Safe AA” status. during the recycling, but the yard took these communities, this can be mitigated by a Already around 19% ships to be recycled are in the spirit of continuous improvement and commitment from shipowners to not support reported to be routed to yards rated / operating closed them all out prior to the completion of those yards commercially. this way. This is a start, but our industry has the recycling. a long way to go still. For CNCo’s ships being There are a number of yards that have In 2012, as we commenced our fleet recycled in 2012 a brokerage commission was This shows that the yards are willing to improve been externally and independently rejuvenation programme, and recognising paid to ensure that the recycling process was their practices in a market where they receive audited by the EU and awarded that many of the old ships would be sent for carefully managed. financial incentive and are not squeezed out recycling, we discussed and adopted the policy financially. It also shows that a joint commitment “Green and Safe AA” status. detailed in the summary on the previous page. Recycling Plans in accordance with the still not will lead to better outcomes for all parties. We did this in the knowledge that in the early adopted HK Convention were produced before CNCo has committed to using yards years this may cost us a small premium but work started. The Green and Safe yards chosen like these for all future ship recycling. senior management decided that responsible were subject to on-site Superintendency and recycling was the most sustainable option. number of detailed audits from both our Fleet

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Detail - Environment: Total Waste Disposed 44

1 The cost to CNCo of exercising this decrease turnover costs within the The owner of the ship to be recycled must decide to exercise leadership by voluntarily but proactively company). It will also be reconised by our using more responsible, “Green and customers, finaciers and business partners leadership in the industry, even in the absence of legislation. Safe” ship recycling yards over the that we are striving to be an industry This involves the paradigm shift of taking responsibility for an yards with poorer standards was a leader in operating sustainably, as loss of around 8.0% the potential net further evidenced by our membership of asset even after it has been transferred to a new owner. profit from the disposal of the ships the Sustainable Shipping Initiative. (53,906 light deadweight tons total). 3 Further, detailed research in this area 2 The driver behind the decision was would permit either the evaluative or 5 However boycotting those yards not on What are the first steps an organisation can CNCo’s adoption of a recycling policy predictive Social Return On Investment the “Green and Safe” list must only be the take to replicate this idea/initiative? that required us to avoid supporting (“SROI”) to be quantitatively calculated, first step; it is clearly recognised that a facilities reported to have poor safety and based on the inputs (leakage of recycling close second intent must be that the pan- 1 The owner of the ship to be recycled environmental practices. We were work, and better commercial returns, industry organisations and industry leaders must decide to exercise leadership in mandated to preferentially use recycling from yards with poorer, to those with better must forge a partnership with those yards the industry, even in the absence of facilities where workers had standards), outputs (reduced fatalities, that have the commitment (driven by legislation. This involves the paradigm comprehensive externally audited safety injuries and environmental harm) and market forces) and to help them raise their shift of taking some continuing training, a good safety record and impacts on the communities and the standards. responsibility for an asset even after it has proactive safety practices and observed businesses. been transferred to a new owner. the appropriate environmental disposal of hazardous materials. 4 As taking a more extended responsibility 2 The owner of the ship to be recycled for the ‘Life Of Asset’ and for those must establish an internal policy However, we believe that this voluntary workers associated with it when it is up- to accept the need to pay a reasonable taking of additional responsibility will be cycled, becomes more widely accepted in premium to support safer working recognised by our employees, who will see our industry, evidence of the increased practices and better protection of the us as an Employer of Choice - and we use of “Green and Safe” yards will be environment in key stakeholder have evidence that this is in fact the case demonstrated commercially to the communities that the shipping industry (and so increase our retention/ yards with poorer standards. has historically relied on, but have been under the radar for many in the past.

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Detail / Environment 45 Total Number of Significant Oil Spills

Our target for spills of oil or other materials hazardous to the environment (“MHE”) of any size from our fleet is ZERO.

There were no spills of any kind in calendar year 2012.

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Detail / Environment 46 Initiatives to Mitigate Environmental Impacts

We are proud to have had commitment from The SSI is a four-stage initiative designed to the Board of Directors and senior management help the industry make long-term plans for through to the Fleet Operations department future success. Its membership comprises a to continue to be able “to do the right thing”. cross-industry grouping bringing together 16 We believe that by showing leadership and other leading companies from across the entire being transparent in this area we can begin global shipping value chain, together with two to convince our peers to help enhance the NGOs: Forum for the Future and the World environment, the social conditions of ship Wildlife Fund, the latter acting as “robust in- recycling yard workers and their families, and house challenger”. the reputation of the industry. The SSI Members are, by sector: Hand in hand with responsible recycling goes responsible shipbuilding. This enables us to • Ship owners, charterers and operators: BP “close the loop”, whereby we aim to track the Shipping, Bunge, Cargill, Carnival material that goes into a ship. Then, when it Corporation, China Navigation Company, comes time to recycle it we know where both Gearbulk, Maersk Line, Rio Tinto Marine and the more hazardous and the more valuable U-Ming. materials are and the ship can be dismantled more safely and cost-effectively. This enables • Shipbuilders, engineers and service the old asset to be up-cycled and the steel and providers: Daewoo Shipbuilding & Marine other materials more efficiently used to build Engineering; Wärtsilä. the next new asset. A report on what we are doing follows below. • Banks and insurers: ABN Amro, RSA.

In mid-2011, CNCo committed to work with • Classification societies (setting technical other industry leaders to reduce shipping’s standards): DNV and Lloyd’s Register negative effects on the environment and joined the Steering Group of the Sustainable Shipping • Representing shipping customers: Akzo Initiative (“SSI”): http://ssi2040.org Nobel and Unilever

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Detail - Environment: Initiatives to Mitigate Environmental Impacts 47

In the first stage in May 2011 the SSI members The goal is to achieve full transparency and The CLMM challenge was to look at how ships Our findings will be reported in our 2013 SD launched a Case for Action in which we stated: accountability for the social and environmental could be better designed, built, operated Report, and at an industry-sharing event in “Our goal is to transform the global shipping impacts of all materials, from construction and dismantled to drive higher value and Singapore in Sep 2013, but we firmly believe industry and the wider maritime sector, through to recycling of ships (“Life of Asset”). more efficient recycling of materials and that if scaled up the impact could be: establishing a new, sustainable approach as This goes significantly beyond the concept of components. The aim was to understand the the norm.” It analyses the social, environmental a “Green Passport” or Inventory of Hazardous feasibility and value of tracing and tracking the • Safer, cleaner, healthier and more profitable and economic challenges shipping faces and Material (“IHM”) as foreseen in the HK Ship materials used in ship construction through to ship recycling through helping owners realise how best to react to them and it calls on the Recycling Convention for ships as these only recycling. Our target is to collect data of about the true value of ships during and at the end industry to take far-reaching action. cover hazardous materials. CLMM looks at ALL 98% by weight of all the materials used in the of their lives. materials that have gone into the construction construction of two new vessels and a cruise

This analysis is a call to action for the of a particular ship. ship cabin. • Significant CO2 savings from more effective worldwide shipping industry. The SSI members recycling in the wider ‘steel loop’ and believe that, with far-sighted leadership, The ship can then be much more safely and The 2040 goal of the CLMM is to achieve full establishing ways to further reduce the use businesses can weather the storm and emerge efficiently recycled at the end of its life, giving transparency and accountability for the social of finite resources in future shipbuilding. stronger and more sustainable. And we believe a higher return in final (and intermediate) sale and environmental impacts from construction that the industry has a vital role to play in value to the last (and interim) owner/s. This in through to recycling of ships. • Potential CO2 and financial benefits from helping create a sustainable, low-carbon turn will assist in making the earth’s resources ‘design for remanufacture and reuse’. economy. last longer. Consider: the energy required to manufacture a tonne of steel from iron ore (in In 2012 CNCo joined the SSI “Closed itself a finite resource) is 60 times more than that Loop Material Management” (“CLMM”) required to recycle a tonne of “scrap” steel! workstream. The fourmembers of the CLMM work stream (Carnival Cruises, CNCo, DSME This concept is already in wide usage in the The CLMM challenge was to look at how ships could be better and Maersk) worked on three pilot projects European and US automobile industry, so we designed, built, operated and dismantled to drive higher value and a stakeholder consultation process to are seeking to adapt it to the marine sphere investigate the feasibility and added-value of and in the process avoid “reinventing the and more efficient recycling of materials and components. using a database system to track shipbuilding wheel”. materials from building to recycling.

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Detail / Environment 48 Non-Compliance with Environmental Laws and Regulations

A California Air Resources Board (“CARB”) specific and numerous communications that CNCo regrets that in 2012 it had one representative visited the MV Chenan on 28 it had sent detailing the two new regulations December 2012 and found it to be burning over the 9 months prior to their implementation incidence of non-compliance by oversight 1% sulphur HFO instead of the permited 1% had not been fully acted upon. Despite this a DMA or 0.5% DMB in violation of their fuel number of staff on board this ship were clearly with environmental laws and regulations switch requirement (for the reasons behind confused between the slightly differing intent this see EN29: Environmental Impacts of and requirements of the new SECA and CARB on one vessel. These include regulations Transporting Products). Further investigation regulations coming into force at the same time revealed that the vessel had also not switched and which concerned related but separate relating to prohibited discharges of oil or other over during the previous 2 port calls since technical issues. the implementation of the new regulations noxious substances (solids, liquids or gases) on 1 August 2012. The vessel was fined The staff had obviously attempted to meet their USD166,500. understanding of the requirements of both rule into the environment (seas, rivers, harbours, changes but had failed to fully comprehend the The background to this is that on 1 August minutiae of certain differences in detail. ports or the environment). 2012, a change in the CARB regulations came into effect. Up until that date, Chenan had The staff on the sister ship engaged in the been changing over to 1.5% marine diesel oil same trade in contrast however received the at the 24 nm Californian base line as per the very same information on the fuel requirements then CARB requirement. On 1 August 2012, over the same period and provided precise the permissable sulphur content was lowered and accurate instructions to their relief to 1% sulphur for Marine Gas Oil (DMA) or staff, resulting in that ship conforming fully 0.5% sulphur for Marine Diesel Oil (DMB). On with the CARB and SECA rules after their the very same date, the North America Sulphur implementation on 1 August 2012. Emissions Control Area came into force whereby all vessels were required to change As a measure to avoid any future confusion, we over to 1% HFO at the 200 nm limit. have now included the explicit requirements for present and future fuel switch as per IMO, EU, CNCo Fleet Management conducted a CARB and CNCo requirements in the Safety thorough investigation into why the very Management System (“SMS”).

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Detail / Environment 49 Environmental Impacts of Transporting Goods Sold

We report on the significant environmental impacts of transporting products and other goods and materials used for the organisation’s operations.

CNCo’s operations involve carrying cargo for SOx and Particulate Matter (PM) from ships The effect of this approach mirrors the The intent of this is that the shipping sector third parties in ships that consume HFO/IFO/ burning 3.5% sulphur residual fuels in port (the voluntary one that CNCo has been is playing its part to help reduce the bad MGO. Historically the physical operational biggest on the west coast of the USA). championing in HK as one of the 17 signatories air pollution that HK suffers on many days boundaries for CNCo’s fleet have been at of the Fair Winds Charter (“FWC”) since its throughout the year. This pollution is from the quayside. We have thus previously taken The Port and California Air Resources Board inception. (see http://bit.ly/1cgznJD) multiple causes that include upwind industrial responsibility for our impact on communities (“CARB”) which is tasked with “attaining and sites in the Pearl River Delta, vehicular traffic on and the environment from our operations to maintaining healthy air quality; protecting the The four FWC 2013 supporting organizations HK roads and ships in its port. Companies may seaward of the quay as we have little or no public from exposure to toxic air contaminants; are: The Hong Kong Liner Shipping also voluntarily extend this to pilotage in and control over the distance or mode or transport and providing innovative approaches for Association, Hong Kong Shipowners’ out of HK waters. involved in getting the many cargoes to the complying with air pollution rules and Association, Civic Exchange, and Wallem quayside. regulations” has thus introduced regulations and the Charter is an industry-led, voluntary, CNCo is pleased to note that the HK which came into effect in 2012 requiring ships at-berth fuel-switching programme for ocean- Government has taken this initiative on board However this paradigm is changing in two within certain distances of the coast and in going vessels calling at Hong Kong. It is the after some lobbying by the HK Ship Owners significant areas. port to use certain grades of fuel that are first initiative of its kind in Asia, and the only Association, Civic Exchange and others, and have low or ultra-low sulphur content AND are shipping-industry led fuel switching initiative in is poised to introduce legislation to mandate It has been proven to the satisfaction of the distillate, such as MGO, with much reduced the world. Participating vessels switch to low compliance by all ocean going vessels, thus Port of Long Beach Authority in Califirnia that PM emissions than Marine Diesel Oil (MDO), sulphur fuel (0.5% sulphur content or less), at creating a level playing field with the Fair Wind the incidence of lung ailments decreases as IFO and HFO. Compliance issues with this are significant unrecoverable cost, while at berth or Charter signatories. one moves perpendicularly inland from the reported in Section EN 28. working mid-stream in Hong Kong. quay and that this is due to the emissions of

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Detail - Environment: Environmental Impacts of Transporting Goods 50

The other significant area in which CNCo is 2. Air transportation of shore staff as they championing this paradigm shift is to take travel to manage the business. more social and environmental responsibility for ships being recycled after their onward 3. Air transportation of sea staff as they sale. This is the point historically at which any travel to join and leave the ships on which asset owner has considered itself relived of any they work. surviving liabilities. Our initiative in this area is detailed more fully in Section EN22, Waste Disposal. 1. Surface transportation of shore staff

Both of these areas are notably split incentives, We have had a general vehicle policy since or a “transaction where the benefits do 2011 that all new company vehicles should be not accrue to the person who pays for the hybrid/energy-efficient or diesel. transaction”. These are usually best overcome by leaders, showing that they are willing to work collaboratively for the common good, and 2. Air transportation of shore staff (see also be prepared to see an indirect return (if any) in page 39) the long term. Every sector flown by shore staff is individually Other areas, of less impact, but all contributing recorded and then its GHG footprint calculated to the whole, of which we have some using the calculator at www.atmosfair.de. In Another area, of less impact, but also control and thus can take responsibility is 2012 we had a management air travel footprint the transportation of the members of our of 2,059 tCO2e (2011: 1,487 tCO2e). contributing to the whole, over which we workforce. We are mitigating this by structural have some control and responsibility, is the reorganisation that requires reduced This has three components: management travel, and by the use of video transportation of our workforce. conferencing where practicable between our 1. Surface transportation of shore staff main offices (though it recognised that in some in vehicles provided by the company. of CNCo’s core businesses “face-time” with clients is critical to maintain the level of service

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Detail - Environment: Environmental Impacts of Transporting Goods 51

for which CNCo is known). Where we must two to three years as up to 20 new vessels are travel and we have a choice of carrier, we seek delivered. to use airlines with a better safety record and those that use more modern, fuel-efficient Pacific Ocean Monitoring System aircraft. CNCo has worked with the National 3. Air transportation of sea staff Oceanography Centre Southampton (“NOCS”) under the SNOMS (Swire NOCS Ocean This is an inherent requirement of operating Monitoring System) Project since 2006. During manned vessels trading internationally, this time the data collection package was on however we seek to manage crew changes so Pacific Celebes which provided an invaluable that they are more efficient e.g. to/from ports platform as it was transitting many little visited closer to the home port of crews wherever parts of the South Pacific, especially in areas possible. where El Niño / La Niña are prevalent and the data collected was thus able to help give early Every sector flown by sea staff is individually warning of an increase or decrease in activity. recorded and then its GHG footprint calculated using the calculator at www.atmosfair.de Both these circulations significantly affect The total flight footprint for the company management, weather patterns worldwide and can thus expressed as tCO e per person increased by 38.4% in total In 2012 we had a sea staff total air travel have large impacts on the vital production of 2 footprint of 2,488 tCO2e (2011: 2,797 tCO2e) foodstocks. As the Pacific Celebeswas sent / 41.2% on a per person basis from 2011 to 2012, but as -see data Section: GRI Table EN 29 and page for recycling at the beginning of 2012 the 39 – a decrease of 11%. This corresponds with opportunity was taken to return the data box this was simultaneous with a near doubling of our profit after a decrease of 20% in our sea staff numbers to its base for recalibration and upgrading. It and of 24% in the number in operating days is envisaged that it will be returned to a vessel tax, it means that our employees’ footprint per dollar of profit for owned tonnage, year-on-year, as we sent on a suitable trade for data collection in 2013, was more than halved: our people are producing more, four older ships for recycling as part of the fleet and CNCo has agreed to continue to fund the renewal programme. We expect that this will operating cost of the SNOMS research activity more efficiently and with a lower carbon footprint. then increase in absolute terms over the next at this time.

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Detail / Labour 52 Employment

Details of the breakdown of CNCo’s seagoing workforce as at 31 Dec 2012 are shown in the tables in the Data Section.

This shows the numbers of sea staff (who are found to split almost exactly 50:50, officers: We employ people in a total of 372 positioons At the support staff level the gender disparity in the offices ashore in our three significant has increased by 4.0% with males dropping to crew), working on full-time and “fixed-term” employment locations: Singapore (Head Office) 38.6% and females increasing to 61.4% from – 48.1%, Australia – 33.2% and New Zealand 2011 levels. contracts, and their nationalities. – 18.8%. In the process of recruiting new personnel we This is an increase of around 10% over emphasise that CNCo is an equal opportunities 2011 and primarily reflects a) additional employer. We welcome diversity in the None of our employees worldwide would be Superintendency for our new significant workplace, believing that it adds material building programmes and b) the establishment value to an organisation by helping workers to regarded as self-employed. of Swire Bulk. approach their jobs from different perspectives.

Of these onshore employees, 54.0% of the For new employees, CNCo has had total is male and 46.0% female, a swing away discussions both internally and with our from parity of around 1.6%. However at the external consultants to ensure that Persons management level by the end of 2012, 77.6% With Disability (PWD) with the right skill set are were male and 22.4% female, a move of 1.5% including when seeking any new employees. towards higher female representation.

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Detail - Labour: Employment 53

In 2012 CNCo published and promulgated a Only eight employees (2.1%) of our shore staff AMMA and ABS statistics on labour mobility We continued with our in-house monthly revised Corporate Code of Conduct however were temporary, as we actively seek to offer and for the maritime sector reports an average rate magazine, “NiuSwire”, which first came out in this continues to explicitly state, inter alia: maintain long-term employment. This is not a of around 11%, twice the rate of 2010, so in Nov 2011, and which has grown bigger and material change from 2011. The average length both locations the CNCo attrition rate is half to more professional looking with each edition. Respect in the Workplace of service in New Zealand has increased year- two thirds of applicable benchmarks, which is This serves as a valuable way of keeping all on-year from 5.05 to 5.29 years, in Australia pleasing, but still not yet good enough. the widely geographically spaced parts of the CNCo is committed to providing an inclusive from 6.50 to 7.05 years but dropped slightly in company “glued together”. work culture and appreciates and recognises Singapore from 3.3 to 3.2 years. In Singapore the turnover rate at 14.19% was that all people are unique and valuable and marginally higher than the 2011 rate of 13.8% However, the major HR initiative in 2012 should be respected for their individual abilities. The lower absolute figure for Singapore with the great majority of these voluntarily was the commissioning of an Alignment and compared to Australia and New Zealand is departing employees left “seeking better terms Engagement (“A&E”) survey that was circulated CNCo will not tolerate harassment or largely a function of the Head Office relocation and conditions elsewhere”. This compares to ALL shore and sea staff in July 2012. We discrimination on the basis of gender, religion, and start-up in Q3 2009. favourably (being 15% lower) with our used an independent company experienced race, nationality or ethnic origin, cultural Singapore benchmark rate of the published in this field to ensure it was competently done background, social group, disability, sexual Staff turnover or attrition in New Zealand in 2012 annualised monthly resignation rate figures for and fully respected the confidentially of all the orientation, marital status, family status, age or was 6.61%. Benchmarking data are hard to find, the Administrative and Support Services sector respondents. political opinion. The Code requires all Relevant but New Zealand Government Statistics Office from Singapore Ministry of Manpower of 16.6% Persons to behave with courtesy and respect and third-party studies do refer to the country but it is still too high and reducing this was the The purpose of the A&E survey was to allow all towards everyone encountered in the course of as “a nation of job hoppers” with a common subject of extra effort in 2012. employees to be able to totally confidentially business. turnover rate of around 14% annually. contribute their opinions as to what CNCo In particular we recognise that whilst we have was doing right, and wrong, to collect ideas In the larger job market of Australia in 2012 an excellent cadre of employees, the physical for improving all work areas, to measure how the rate was a comparable 7.4%. The local separation between the onshore support connected we are as a company, and obviously staff and the seagoing operational staff that how aligned and engaged all our employees is peculiar to the shipping industry means are with the company’s vision and values. that we must spend more time and resources The response was significantly higher than The major initiative in 2012 was the commissioning of an than many other industries in ensuring and the survey company had experienced in Alignment and Engagement (A&E) survey that was circulated maintaining good lines of dialogue between the other sectors. This was especially pleasing two working environments. considering the logistics of getting responses to ALL shore and sea staff in July 2012. from the physically more remote ships.

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Detail - Labour: Employment 54

The results were presented to senior are rotated through internal postings to gain management in late 2012 and have prompted wide sectorial experience throughout the group the need for more detailed “focus groups” as they progress during their career. during the first half of 2013 to get deeper into some of the comment areas to allow us to We employed a total of 385 seafarers to fill determine in detail what should be done (stop/ positions at sea as at 31 Dec 2012. However, start/continue) to rectify/enhance/change the given that some officers will be on paid leave issues raised. earned on prior voyages at sea and that, as noted below, all of our Filipino seafarers Given the wide variety of our nationality and are employed through Anscor Swire Ship work locations, we do not herein give a detailed Management, a Swire JV manning agency, on breakdown of types of employment contracts single trip contracts as required by national law, or remuneration / pension entitlements as this there will be a variable number ashore whose would a) be of little material value to anyone in employment can be regarded as linked to the a different region, b) not justify the resources company, but is not be counted herein. required to produce the detail. Suffice to say, ALL of our contracts are in accordance with Of these 385, 34.5% or 133 are Filipino, our local employment law as a minimum and biggest provider of seafarers, 28.8% or 111 are blind to gender identity or age, whilst are from Peoples’ Republic of China (“PRC”) recognising experience and competence/ and 78 or 20.3% are from PNG, see Table qualifications. LA 1.1. For long term “cabotage trades” we would always seek to employ local staff. Worldwide, 93.3% of our staff are classed as However despite this, we seek to run all of our “local”, slightly higher than in 2011. (“local” is operations to a single “international” standard. defined as a national or permanent resident in the country of employment). The balance of These employment figures are materially lower 6.7% are classed as expatriate. This apparently than in 2011, as we recycled four of our older high number of expatriates is a function of 80% ships in early 2012. We strenuously sought, of them being parent company managers who with some success, to retain as many of the

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Detail - Labour: Employment 55

displaced seafarers as possible, recognising With respect to the ratio of sea staff on The China Navigation Company employs seafarers from more that they were intimately familiar with our permanent / fixed term contracts, we strongly Safety Management System (“SMS”), ethos, seek to have all sea staff on permanent than 10 different nationalities covering more than 5 different vision and values, and that we would need to contracts of employment. recruit/re-employ more than this as our new religious faiths within its global marine operations ships will be delivered in 2013 and beyond. This gives the seafarer security of employment, enables our operations and service to benefit In interpreting these figures it should be from familiarity with company equipment, and borne in mind that it would be meaningless reduces the resources required by the company Philippines Overseas Employment Agency on changing this to 100% during 2012 in order to state which country or region the sea inculcating the company vision, mission and “POEA”. This is the government body that we can have this in place well prior to staff (the majority) are working, as due to the ethos to new employees. regulating employment and minimum terms the adoption of Maritime Labour Convention trans-border nature of working at sea the and conditions and generally safeguarding (“MLC”) 2006 convention, expected to be in geographical distribution is very dynamic and However, employment of seafarers (and all their working conditions abroad, however the Q3 2013, but negotiations with some of the fluid and thus would only be a snapshot at a other Overseas Filipino Workers (“OFW”) in administration of this demands single tour- requisite (non-Filipino, non-PNG) parties have moment in time. the Philippines is strictly controlled by the of-duty contracts strictly following the POEA been more protracted than we expected or format. We believe this single-trip contract hoped. (though not the other employment provisions) are against the best interests of both our The China Navigation Company employs seafarers and the company and its business. seafarers from more than ten different nationalities covering more than five different Unfortunately, at the current time, it is illegal religious faiths within its global marine to employ a Filipino seafarer under a direct operations which involves 14 owned ships contract with an overseas company but we plus 15 chartered ships (as at 31 Dec 2012). continue to actively engage the relevant They currently call at many ports worldwide authorities in discussions to change this, whilst but are predominantly working within the Asia in no way reducing their legal employment Pacific region, demarcated by Vladivostok in protection. the north, Port Klang in the west, Lyttleton on New Zealand’s South Island in the south Currently only our seafarers employed in and Vancouver, Canada in the east, with a Papua New Guinea are covered by a Collective significant presence in trades to and from Bargaining Agreement. We have been working Papua New Guinea.

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Detail - Labour 56 Occupational Health & Safety

Health and Safety Injuries CNCo has made considerable improvements in safety TRCF per 1 mill MANHOURS LTIF 1 mill MANHOURS TRCF per 1 mill MANHOURS TRCF per 1 mill MANHOURS performance during 2012 which saw the leading indicators (near miss reports / TRIPs) for safety having a positive effect on the lagging indicators (LTI/RWC/MTC). 12.00 The drive for zero harm for all its employees and 10.00 contractors remains paramount and is headlined at every opportunity during training sessions, meetings and in in-

8.00 house publications.

6.00

4.00

2.00 note: Personal Injuries / 1 million man hours worked Personal LTI Lost Time Injury 0.00 TRCF Total Recordable Case Frequency 1 Q10 2 Q10 3 Q10 4 Q10 1 Q11 2 Q11 3 Q11 4 Q11 1 Q12 2 Q12 3 Q12 4 Q12 1 Q13 RWC Restricted Work Case Quarter MTC Medical Treatment Case TRIP Toolbox Risk Identification Permit

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Detail - Labour: Occupational Health & Safety 57

The key to ensuring that safety is prioritised as the main commitment for Governance Overview the Company was the adoption of a bottom-up style of management in which everyone is empowered to take action to affect safety directly or indirectly, whether on board or ashore and where positive reporting of safety related matters is encouraged and recognised. Sustainable Development Steering Committee

The governance to drive this commitment comes from CNCo’s > Engagement with Head, Liner and Agency Offices Sustainable Development Steering Group which maintains a balance > Produce the annual SD report of representation between Seniormost Management, Sustainable Development, Fleet Safety and Shore Safety and is structured so that each is interlinked with each other.

Fleet Safety Steering Committee Shoreside Safety Committee

> Engagement with Fleet > Engagement with Shippers > HR and Training Institutions > Contractors and Suppliers > Flag > Port Authorities > Class > Port State

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Detail - Labour: Occupational Health & Safety 58

The following proactive and predominatly leading safety tools were in effect during 2012 to drive our commitment to Zero Harm:

Near Miss Reporting Digital Safety Counters Near Miss Reports (“NMR”) are actively encouraged as they Installed on every ship and office: both real time and visual highlight opportunities for improvement. behavioural based safety prompts.

General Permit to Work Implementation of 5S Toolbox Risk Identification Permit (“TRIP”) – these identify Sort, Straighten, Sweep, Standardise & Sustain. possible risks and hazards, enabling control management and the development of the required shared ownership for the 4-Box Alerts work activity. These are high-impact, visual alerts of high-potential incidents that create a strong visual message that are quickly circulated Take 5 Concept around the entire organisation and seen by everyone. This is a personal safety tool that provides a conscious and subconscious “on the job” message to work more safely.

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Detail - Labour: Occupational Health & Safety 59

Safety Pyramid

9 < LTI < 4

20 < RWC / MTC < 9 562 < NEAR MISS < 984

12,076 < TRIP < 21,609

2011 2012

Further initiatives to strengthen the wider Transparency in reporting safety KPIs is crucial Each indicator shown improved between 2011 The Lloyd’s List Global Award 2012 process have been introduced, including to ensure that everyone understands that and 2012, as we seek fewer LTI and RWC/MTC Amver Assisted Rescue at Sea Award - vessel inspection protocol for both CNCo and CNCo takes safety seriously. but more Near Miss Reports and TRIPs. MV Kwangtung for search and rescue of 3rd Party ships and an auditing and training Rabaul Queen programme for stevedoring operations within The safety tools mentioned above as well as CNCo was recognised for its achievements in our sphere of operations. considerable investment in safety awareness improving its safety performance as well as its The Lloyd’s List Asia 2012 training (looking at the softer elements of safety safety culture during 2012 with two awards: Safety Award – The China Navigation Company For vessel vetting, this has resulted in a management) have provide the framework for standardized vessel inspection format with tangible improvements in safety management emphasis on the Human Element as well as as can be shown in the comparison for CNCo’s technical matters. safety pyramids for 2011 and 2012.

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Detail / Labour 60 Training, Education and Counselling

Due to local regulations for Overseas Filipino Health and Hygiene issues for the entire fleet and Certification of Watchkeepers (“STCW”) wide AIDS/HIV policy, we have regrettably not Workers, all of our seafarers employed through are covered in a dedicated section in the fleet Code and the Oil Companies International managed to progress this in 2012. This is still Anscor Swire Ship Management (“ASSM”) are SMS that governs the marine operations of Marine Forum (“OCIMF”) with respect to work in progress and its importance in many of engaged on a contract-by-contract basis. This the company and is available to all seafarers. consumption, working under the influence, our stakeholder communities is recognised. We means that these 133 seamen, from our total of The latter also includes information of and random testing for Drug, Alcohol and now hope to address this in the future. 385 (34.5%), all receive a briefing at the ASSM contagious diseases, smoking, drug, alcohol Substance abuse. office in Manila before each departure. Each and substance abuse, and obtaining medical CNCo’s 373 shore staff received a total of 530 briefing includes education on communicable attention. All staff are screened for contagious man-days of generally discretionary training disease issues. and communicable diseases during pre- at a total cost of almost USD 171,730 during Policies concerning (No) Smoking and Drug, employment and pre-contract medicals, and the year. This is 3.3 times the amount spent In 2012 we additionally instituted this for our Alcohol and Substance Abuse are included at the industry medicals required at prescribed in the previous year, for fewer man-hours and PRC seamen and thus this captured another in the SMS, and are posted in conspicuous intervals during a seafarer’s professional represents more targeted and in-depth training. 111 seamen, or 28.2%, meaning that nearly places on all company vessels and at all other service. We do not currently provide education 63% received this important safety and health company work sites. CNCo has adopted the and training, or counseling on a general basis The managerial level staff received an average briefing prior to their departure to join their guidance of both the Standards for Training to employees families or their community of 8.57 hours each over the year, at a cost of ships. members, as working globally at sea precludes USD 455 per staff member, whereas the “junior there being any geographically local workplace and support staff” received an average of 13.22 communities. man-hours / USD 464 per employee (5% more hours, but at 50% more cost, than in 2012). After our initial discussions in 2011 with the CNCo’s 487 (during the year; 385 is the figure Singapore Business Coalition for Aids (“BCAS”) for 31 Dec) sea staff received a total of 1,063 to investigate the establishment of a company– man-days of discretionary training at a total cost of almost USD 1,634,363 during the year.

CNCo’s 373 shore staff received a total of 530 man-days of generally discretionary training at a total cost of almost USD 171,730 during the year.

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Detail - Labour: Training, Education and Counselling 61

This is a reduction in cost of 38%, due mainly The above work flow ensures that all to a reduction in seafarer numbers of 21% on performance reviews are sighted by a y-o-y basis. It equates to USD 4,245 for each management. It also ensures that a record is seafarer over the year, and is nearly 10 times kept that will highlight trends in comments on greater than the shore staff figure. reportees, (and importantly also by reporters).

This is predominantly because nearly all All managers and local onshore support staff the sea staff training will involve flights and also receive a personal performance review by accommodation, which is not generally the their line manager annually. case for shore staff. CNCo started the roll-out of a new HR software We do not maintain a database of mandatory, package across the company in 2012 that STCW required professional training. Given will help establish “SMART personal goals”, that many courses are 3 or 6 months long, but facilitate a gap analysis and identify the general for which not all attendees are fully sponsored and specific competence training needs for by CNCo, the average figure quoted is not each person. This will assist management to representative of the total training commitment more clearly define employees career paths of all the company to its employees. within the overall needs of the company. This is a multi-year project. ALL seafarers receive a Personal Evaluation Report (PER), generally by their immediately ranking senior and/or the Master/Chief Engineer at the end of every tour of duty. They may thus receive up to a maximum of three reviews per year. Every evaluation it is sent for review to All managers and local onshore support staff receive a the General Manager, Fleet. After his review, it personal performance review by their line manager annually is sent to the HR Manager for final review and soft-filing.

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Detail - Labour: Training, Education and Counselling 62

Training Costs and Time

Training Position Staff members Training Hours Training Hours Training Costs Training costs (US$) Total Avg per staff member Total (US$) Avg per staff member

Seafarers - 385 8,510.00 22.10 1,634,362.82 4,245.10

Shore Staff Managerial 147.00 1,259.50 66,898.78 8.57 455.09 Non - Managerial 225.50 2,981.50 104,830.74 13.22 464.88

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Detail / Human Rights 63 Total Number of Incidents of Discrimination and Actions Taken

The CNCo Code of Conduct was re-advised to It also includes “harassment”, defined as Respect in the Workplace • Upholding all applicable legal and corporate all onshore and offshore personnel at the end “a course of comments or actions that are occupational health and safety standards; of 2011. unwelcome, or should reasonably be known to CNCo is committed to providing an inclusive be unwelcome, to the person towards whom work culture and appreciates and recognises • Not permitting any breaches of employment We are pleased to advise that there were zero they are addressed.” that all people are unique and valuable and law or the use of child (defined as being acts of discrimination or harassment reported should be respected for their individual abilities. under the age of 16, or local minimum age, on any grounds to, or by, any CNCo personnel The CNCo Code of Conduct was revised at the whichever is the higher) or forced labour; during the calendar year 2012. beginning of 2013 to ‘Rev 4’ but the provisions CNCo will not tolerate harassment or with respect to discrimination and harassment discrimination on the basis of gender, religion, • Reporting unacceptable conduct to line Discrimination is defined under ILO Convention are unchanged (except that a “child” in “child race, nationality or ethnic origin, cultural management or the business unit head; No. 111 as any distinction, exclusion or labour” is now defined as“being under the age background, social group, disability, sexual preference involving internal and/or external of 16, or local minimum age, whichever is the orientation, marital status, family status, age or • Not condoning bullying and harassment; stakeholders made on the basis of race, higher”). political opinion. The Code requires all Relevant colour, sex, religion, political opinion, national Persons to behave with courtesy and respect • Complying with any legal requirements extraction or social origin (among other It can also be found at http://bit.ly/1cB7r7H towards everyone encountered in the course of concerning the collection, holding, characteristics), “which has the effect of business. processing, disclosure and use of personal nullifying or impairing equality of opportunity It contains these following explicit provisions: data; and treatment in employment or occupation”. The Code promotes the following principles: • Respecting intellectual property rights, including copyright, belonging to others.

CNCo is committed to providing an inclusive work culture and appreciates and recognises that all people are unique and valuable and should be respected for their individual abilities.

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Detail / Society 64 Total Number of Legal Actions for Anti-competitive Behaviour, Anti-trust, and Monopoly Practices and their Outcomes

CNCo takes all these behaviours and practices examples/explanations were significantly very seriously and requires both its employees more detailed and expanded to ensure ease of and its contractors the highest ethical comprehension by all employees. standards, as described in its Corporate Code of Conduct (“CCoC”). This necessitated re-writing the bank of questions to be randomly selected by the web- We are pleased to report that CNCo was not based survey programme, and re-looking at involved in any legal actions for anticompetitive the process of promulgating the revised code behaviour, anti-trust, and monopoly practices before our employees could undertake the during the calendar year 2012. survey.

In Q4 we were establishing a more rigorous The planned promulgation, awareness raising, regime for making employees aware of our training and testing of the CCoC rev 4. was Code of Conduct and its contents. This would thus postponed to Q1 2013. have (will) demonstrated quantitatively and formally that all employees were aware of all the CNCo also plans to enhance its auditing of its provisions of CCoC. suppliers to ensure their compliance with the Supply Chain Sustainability SCoC in 2013. However during this process it was decided to materially expand the CCoC. Whilst this process did not change a single one of CNCo takes all these behaviours and practices very seriously our underlying principles, it was felt that it and requires both its employees and its contractors the would be helpful if the supporting data and highest ethical standards, as described in its Corporate Code of Conduct (“CCoC”).

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Detail / Society 65 Monetary Value of Significant Fines and Non-monetary Sanctions for Non-compliance with Laws and Regulations

In 2012, CNCo received no fines for non- During 2012, the fleet of 19 ships including( the metric to zero. The statistics are circulated the 4 to-be-recycled Pacific Celebes, Pacific around the fleet and crews are rewarded compliance with non-environmental laws Flores, Pacific Java & Hangchow) were for good performance (i.e. a result of zero inspected on a total of 52 separate occasions. deficiencies during a PSI). and regulations. The only non-monetary In the first half of the year the ships received clean bills of health with only 41 non-detainable It should be noted that there whilst nearly sanctions that were received by CNCo during deficiencies against any shipping industry all port inspectors are rigorous and efficient regulation being found. In the second half, a in application of the rules and indeed this is 2012 related to the results of Port State total of 31 deficiencies were found, giving an heartily supported by CNCo as a means of average of 1.38 Deficiencies per Port State moving towards safer seafaring and cleaner Inspections (“PSI”) of ships in the owned fleet Inspection (PSI), (DpI). seas, there may be a very small minority in some ports who occasionally may be a little (as detentions in chartered in tonnage are the Of the total 72 deficiencies over the calendar over-zealous in their personal interpretation year, 69 (95.8%) were minor and/or rectified of the rules as understood by experienced primary responsibility of the relevant owners). prior to the scheduled departure of the vessel. industry professionals. Regrettably two vessels received the balance of three deficiencies that were deemed serious In these cases CNCo has followed the enough that the vessel was delayed from established and correct formal procedure sailing as scheduled whilst the defect was of seeking the opinion of independent rectified. Our target Port State Compliance classification surveyors and where our Index rate for 2012 is <2.0 DpI. objections to deficiency findings have been supported we have appealed these to Flag This is disappointing given that there were State Authorities. zero Port State Detentions the previous year, but the vessels’ increasing age has meant that increasing effort and resources have been applied to turning this trend round and returning

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com

67

Data This section reports all the supporting data that is used to 68 provide the narrative in the Detail section.

The data is aggregated from many sources - primarily the owned and managed fleet and our offices worldwide, that are contained within CNCo’s Organisational and Operational as shown in the Summary section on page 19.

We review both the boundaries and which data is material for reporting to our stakeholders annually.

In this section:

69 Fleet Breakdown 72 Economic Data & Tables 73 Environmental Data & Tables 77 Labour Data & Tables 78 Abbreviations 80 Verification and Assurance Statement 82 Contact 83 G3.1 Content Index Data 69 Fleet Breakdown

Owned Vessels In Operation as at 31 Dec 2012

Vessel Name Year IMO Service FO Cons at Grade FO DWT Gross Net LOA Max Capacity Hold Hold Cargo Gear (t) Flag Vessel’s Vessel’s EVDI Built No. Speed this speed in ME (SSW Tonnage Tonnage (m) Breadth Nominal Capacity - Capacity - Class Type (Knots) (mt/day) - mts) (m) (TEU) Bale (m3) Grain (m3)

Coral Chief 1990 8809191 15.5 24.0 IFO 180cst 13,387 10,352 5,804 158.06 22.0 981 N/A N/A 3 x 45t Hong Kong Lloyds 981 TEU, Geared, MPP D Register

Highland Chief 1990 8809189 15.5 24.0 IFO 180cst 13,669 10,357 5,804 158.06 22.0 876 N/A N/A 3 x 60 Hong Kong Lloyds 981 TEU, Geared, MPP D Register

Island Chief 1990 8810449 15.5 24.0 IFO 180cst 13,387 10,352 5,804 158.06 22.0 981 N/A N/A 3 X45t Hong Kong Lloyds 981 TEU, Geared, MPP D Register

Kokopo Chief 1991 8907412 15.5 24.0 IFO 180cst 13,387 10,352 5,804 158.06 22.0 981 N/A N/A 3 X45t Hong Kong Lloyds 981 TEU, Geared, MPP B Register

Papuan Chief 1991 8901705 15.5 24.0 IFO 180cst 13,387 10,352 5,802 158.06 22.0 981 N/A N/A 3 X45t Hong Kong Lloyds 981 TEU, Geared, MPP B Register

Changsha 1991 9003847 18.5 48.0 IFO 380cst 25,561 18,391 9,229 184.90 27.6 1,123 32,114 34,103 3 X26t, 2 x 31t, 1x20t Hong Kong Lloyds 1,123 TEU, Geared, MPP G Register

Chekiang 1991 9003835 18.0 48.0 IFO 380cst 25,561 18,391 9,229 184.90 27.60 1,123 32,114 34,103 3 X26t, 2 x 31t, 1x20t Hong Kong Lloyds 1,123 TEU, Geared, MPP G Register

Chenan 1992 9007374 18.0 48.0 IFO 380cst 25,561 18,391 9,229 184.90 27.60 1,123 32,114 34,103 3 X26t, 2 x 31t, 1x20t Hong Kong Lloyds 1,123 TEU, Geared, MPP F Register

Chengtu 1991 9007362 18.5 48.0 IFO 380cst 25,561 18,391 9,229 184.90 27.60 1,123 32,114 34,103 3 X26t, 2 x 31t, 1x20t Hong Kong Lloyds 1,123 TEU, Geared, MPP F Register

Kwangsi 1995 9103116 18.5 48.0 IFO 380cst 25,607 18,468 9,253 184.90 27.60 1,193 32,114 34,103 3 X26t, 2 x 31t, 1x20t Hong Kong Lloyds 1,193 TEU, Geared, MPP F Register

Kwangtung 1994 9070709 18.5 48.0 IFO 380cst 25,607 18,451 8,250 184.90 27.60 1,193 31,472 29,819 2 X26t, 3x 35t Hong Kong Lloyds 1,241 TEU, Geared, MPP F Register

Kweichow 1994 9070694 18.5 48.0 IFO 380cst 25,524 18,451 8,250 184.90 27.60 1,241 28,831 29,820 2 X26t, 3x 35t HongKong Lloyds 1,241 TEU, Geared, MPP F Register

Kweilin 1994 9103104 18.5 48.0 IFO 380cst 25,410 18,468 9,201 184.90 27.60 1,193 32,608 33,756 2 X26t, 3x 35t HongKong Lloyds 1,193 TEU, Geared, MPP F Register

Erawan 1982 8100997 9.0 18.0 LSMGO 64,643 35,716 20,830 225,00 32.20 N/A 71,246 74,996 3 x30t Grab I.O.M. Lloyds Panamax Bulk Carrier, N/A Register Silo Vessel

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Data 70 Fleet Breakdown

Owned Vessels Under Construction/On Order as at 31 Dec 2012

Vessel Name Year IMO Service FO Cons at Grade FO DWT Gross Net LOA Max Capacity Hold Hold Cargo Gear (t) Flag Vessel’s Vessel’s Forecast Built No. Speed this speed in ME (SSW Tonnage Tonnage (m) Breadth Nominal Capacity - Capacity - Class Type EVDI (Knots) (mt/day) - mts) (m) (TEU) Bale (m3) Grain (m3)

Shansi 2013 9614476 15.5 29.0 IFO/MDO/LSMDO 30,699 25,483 11,814 190.50 28.20 2,082 41,881 44,807 4 x 60 / 50 / 40t Singapore Lloyds 2,118 TEU, Geared, MPV31 F+ Register Shantung 2013 9614488 15.5 29.0 IFO/MDO/LSMDO 30,699 25,483 11,814 190.50 28.20 2,082 41,881 44,807 4 x 60 / 50 / 40t Singapore Lloyds 2,118 TEU, Geared, MPV31 F+ Register Shaoshing 2013 9614490 15.5 29.0 IFO/MDO/LSMDO 30,699 25,483 11,814 190.50 28.20 2,082 41,881 44,807 4 x 60 / 50 / 40t Singapore Lloyds 2,118 TEU, Geared, MPV31 F+ Register Shengking 2013 9614505 15.5 29.0 IFO/MDO/LSMDO 30,699 25,483 11,814 190.50 28.20 2,082 41,881 44,807 4 x 60 / 50 / 40t Singapore Lloyds 2,118 TEU, Geared, MPV31 F+ Register Shuntien 2013 9614517 15.5 29.0 IFO/MDO/LSMDO 30,699 25,483 11,814 190.50 28.20 2,082 41,881 44,807 4 x 60 / 50 / 40t Singapore Lloyds 2,118 TEU, Geared, MPV31 F+ Register Siangtan 2013 9614529 15.5 29.0 IFO/MDO/LSMDO 30,699 25,483 11,814 190.50 28.20 2,082 41,881 44,807 4 x 60 / 50 / 40t Singapore Lloyds 2,118 TEU, Geared, MPV31 F+ Register Soochow 2013 9614531 15.5 29.0 IFO/MDO/LSMDO 30,699 11,814 11,814 190.50 28.20 2,082 41,881 44,807 4 x 60 / 50 / 40t Singapore Lloyds 2,118 TEU, Geared, MPV31 F+ Register Szechuan 2013 9614543 15.5 29.0 IFO/MDO/LSMDO 30,699 11,814 11,814 190.50 28.20 2,082 41,881 44,807 4 x 60 / 50 / 40t Singapore Lloyds 2,118 TEU, Geared, MPV31 F+ Register Wuchang 2014 9657844 18.3 14.0 IFO/MDO/LSMDO 39,500 N/A N/A 179.90 30.00 N/A N/A N/A 4 X 30t Singapore Lloyds Bdelta Handysize Eco Bulk/ B Register Timber Geared Bulk Carrier Wuchow 2014 9657856 18.3 14.0 IFO/MDO/LSMDO 39,500 N/A N/A 179.90 30.0 N/A N/A N/A 4 X 30t Singapore Lloyds Bdelta Handysize Eco Bulk/ B Register Timber Geared Bulk Carrier Wuhu 2014 9657868 18.3 14.0 IFO/MDO/LSMDO 39,500 N/A N/A 179.90 30.00 N/A N/A N/A 4 X 30t Singapore Lloyds Bdelta Handysize Eco Bulk/ B Register Timber Geared Bulk Carrier Wulin 2014 9657870 18.3 14.0 IFO/MDO/LSMDO 39,500 N/A N/A 179.90 30.00 N/A N/A N/A 4 X 30t Singapore Lloyds Bdelta Handysize Eco Bulk/ B Register Timber Geared Bulk Carrier Wantung 2014 9681871 18.3 14.0 IFO/MDO/LSMDO 39,500 N/A N/A 179.90 30.00 N/A N/A N/A 4 X 30t Singapore Lloyds Bdelta Handysize Eco Bulk/ B Register Timber Geared Bulk Carrier Wanlui 2014 9681883 18.3 14.0 IFO/MDO/LSMDO 39,500 N/A N/A 179.90 30.00 N/A N/A N/A 4 X 30t Singapore Lloyds Bdelta Handysize Eco Bulk/ B Register Timber Geared Bulk Carrier Wanyuan 2014 9681895 18.3 14.0 IFO/MDO/LSMDO 39,500 N/A N/A 179.90 30.00 N/A N/A N/A 4 X 30t Singapore Lloyds Bdelta Handysize Eco Bulk/ B Register Timber Geared Bulk Carrier Wanyi 2015 9681900 18.3 14.0 IFO/MDO/LSMDO 39,500 N/A N/A 179.90 30.00 N/A N/A N/A 4 X 30t Singapore Lloyds Bdelta Handysize Eco Bulk/ B Register Timber Geared Bulk Carrier

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Data 71 Fleet Breakdown

Managed / Operated Vessels as at 31 Dec 2012

Vessel Name Year IMO Service FO Cons at Grade FO DWT Gross Net LOA Max Capacity Hold Hold Cargo Gear (t) Flag Vessel’s Vessel’s EVDI Built No. Speed this speed in ME (SSW Tonnage Tonnage (m) Breadth Nominal Capacity - Capacity - Class Type (Knots) (mt/day) - mts) (m) (TEU) Bale (m3) Grain (m3)

Pine 1 2011 9438377 14.0 29 IFO 380cst 34,037 22,998 12,319 182.9 28.4 960 41,166 44,746 2 x 40t , 3x 35t Panama Lloyds MPP E

Pine 3 2011 9438389 14.0 29 IFO 380cst 34,065 22,998 12,319 182.9 28.4 960 41,166 44,746 2 x 40t , 3x 35t Panama Lloyds MPP E

Pine 6 2010 9438365 14.0 29 IFO 380cst 34,022 22,998 12,308 182.8 28.4 960 41,166 44,746 2 x 40t , 3x 35t Panama Lloyds MPP E

Anhui 2003 9231145 15.0 36.5 IFO 380cst 30,346 23,132 9,375 192.9 27.8 1,831 34,793 34,793 2 x 100t , 2x 50t Liberia Gemanischer MPP F Lloyds Anking 1990 8918241 18.0 28 IFO 380cst 22,568 17,331 8,142 176.7 27.0 917 29,511 30,833 4 x 25t , 1x 35t Marshall NKK MPP E

Ningpo 1997 9134658 19.5 36.5 IFO 380cst 22,900 16,800 8,662 183.9 25.3 1,728 29,668 29,817 3 x 40t Germany Gemanischer B170 (reclassified as F Lloyds general cargo vessel) Ninghai 2003 9236444 19.6 36.5 IFO 380cst 23,067 16,802 8,672 184.0 25.3 1,728 29,668 29,817 3 x 40t Marshall Gemanischer B170 (reclassified as D Lloyds general cargo vessel) Nanchang 1995 9102514 19.5 36.5 IFO 380cst 22,900 16,175 8,801 184.7 25.0 1,728 N/A N/A 3 x 40t Liberia Gemanischer B170 (reclassified as D Lloyds general cargo vessel) Yunnan 2002 9255529 19.5 30.5 IFO 380cst 16,794 13,764 5,157 154.0 23.3 1,078 N/A N/A 2 x 40t Singapore ABS Container Carrier F

Yingchow 2008 9499010 19.4 13.6 IFO 380cst 13,760 9,954 5,117 148.0 23.3 1,022 N/A N/A 2 x 45t Antigua & Gemanischer CV1100 (reclassified as E Barbuda Lloyds MPP vessel) Tasman Star 1990 8821802 13.0 18 IFO 380cst 12,200 7,950 4,160 129.6 18.9 678 14,870 14,870 3 x 40t Dutch Lloyds MPP (A Type) D

Tasman Sky 1991 9014872 13.0 18 IFO 380cst 12,150 7,949 4,157 129.5 19.1 678 14,870 14,870 3 x 40t Dutch Lloyds MPP (A Type) D

Micronesian Pride 2008 9383481 15.0 20 IFO 380cst / MDO 7,665 5,338 2,309 117.0 19.7 618 9,422 9,602 2 x 40t Cyprus China General Cargo F Classification Antung 2007 9371957 15.0 20 IFO 380cst / MDO 7,702 5,316 2,309 117.0 19.7 618 9,523 9,522 2 x 40t Malta China General Cargo F Classification

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Data 72 Economic Data & Tables

CNCo Charitable Donations 2012 Environment Education 0.3% 94.7%

Youth (non-Education) 0.1%

Health & Welfare 5.2%

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Data 73 Environmental Data & Tables

Consumption Table EN3.1

180 IFO 380 IFO MGO LO Petrol Diesel Boat Days Boat Days y-o-y (m3) (m3) (m3) (m3) (litres) (litres) 2012 2011 Owned 23,621.13 63,891.28 1,766.17 1,345.23 5,866.39 - 4,732.75 6,205.00 76.3% Chartered - 94,428.17 2,661.42 1,238.43 5,518.24 161,077 4,357.00 4,913.00 88.7% Total 23,621.13 158,319.44 4,427.59 2,583.66 48,818 10,461 171,538 11,118.00 81.8%

Scope 1 & 2 GHG Emissions (tCO2e) Table EN16 180 IFO 380 IFO MGO LO Petrol Diesel Totals (2012) Totals (2011) y-o-y

Factor 3.2281 3.2281 3.4926 3.1815 0.0022320 0.0026720 292,519.190 366,487.287 79.8% Owned 76.251.38 206,247.43 6,168.52 3,851.86 NIL NIL 317,664,894 323,136.343 98.3% Chartered NIL 304,823.56 9,295.28 3,546.05 NIL NIL 610,320.988 690,241.520 88.4% Total 23,621.13 511,070.99 15,463.80 7,397.91 108.96 27.95 610,558.199 690,527.982) 88.4%

Scope 3 GHG Emissions (tCO2e) Table EN17 180 IFO 380 IFO MGO LO (m3) Petrol litres Diesel litres Totals (2012) Totals (2011) y-o-y

Management travel NIL NIL NIL NIL NIL NIL 2,059.114 1,487.350 138.4% Crew Travel NIL NIL NIL NIL NIL NIL 2,488.27 2,796.786 89.0% Total 4,547.384 4,284.136 106.1%

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Data 74 Environmental Data & Tables

NOx emissions (metric tonnes) Table EN20.1

180 IFO 380 IFO MGO LO Totals Totals y-o-y (mt) (mt) (mt) (mt) (2012) (2011) Factor 81.767 81.767 40.687 40.687 Factor 82.777 82.777 43.507 43.507 Owned 1,931.438 5,224.221 71.860 49.260 7,277 9,046 80.4% Chartered NIL 7,816.454 115.791 48.492 7,981 8,206 97.3% Total 2,014 13,123 231 141 15,510 17,506 88.6%

Factor from paper: US EPA (1995) ‘Compilation of Air Pollutant Emission factors: Volume 1: Stationart Point and. Area sources’ AP-42 Fifth Edition, January 1995. Table C.5 on page 30: http://bit.ly/1jYLEML

SOx emissions (metric tonnes) Table EN20.2

180 IFO 380 IFO MGO LO (m3) Totals Totals y-o-y (mt) (mt) (mt) (mt) (2012) (2011) Factor 70 70 70 20 Owned 1,653.479 4,472.389 35.323 24.214 6,185 7,744 79.9% Chartered NIL 6,609.972 53.228 22.292 6,685 6,842 97.7% Total 1,723 11,152 109 67 13,051 14,766 88.4%

Factor from paper: US EPA (1995) ‘Compilation of Air Pollutant Emission factors: Volume 1: Stationart Point and. Area sources’ AP-42 Fifth Edition, January 1995. Table C.5 on page 30: http://bit.ly/1jYLEML

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Data 75 Environmental Data & Tables

Particulate Matter (“PM”) emissions (metric tonnes) Table EN20.3

180 IFO 380 IFO MGO LO Totals Totals y-o-y (mt) (mt) (mt) (mt) (2012) (2011) Factor 6.648 6.648 1.200 1.200 Owned 157.033 424.749 2.119 1.453 585 733 79.9% Chartered NIL 627.758 3.194 1.338 632 648 97.6% Total 164 13,123 7 4 1,233 1,396 88.3%

Factor from paper: Eyring, V., et., al., Transport impacts on atmosphere and Climate: Shipping, Atmospheric Environment (2009), doi: 10.1016/j.atmosenv.2009.04.059 Average of 5 in Table 2 at http://bit.ly/1jYM1XM

Volatile Organic Compounds (“VOC”) emissions (metric tonnes) Table EN20.4

180 IFO 380 IFO MGO LO Totals Totals y-o-y (mt) (mt) (mt) (mt) (2012) (2011) Factor 1.20 1.20 1.20 1.20 Owned 28.345 76.670 2.119 1.453 109 136 79.8% Chartered NIL 113.314 3.194 1.338 118 120 98.2% Total 164 13,123 7 4 231 261 88.7%

Factor from paper: Representative emissions factors for use in “Quantification of emissions from ships associated with ship movements between port in the EC” Average in Table VII at http://bit.ly/1d2cTNt

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Data 76 Environmental Data & Tables

Scope 1 Energy Consumption (GJ) Table EN3

180 IFO 380IFO MGO LO Petrol Diesel Totals Totals y-o-y (2012) (2011) Factor 40.19 40.19 43.33 51.72 0.027533 0.30396 NIL NIL Owned 949,333 2,567,790 76,528 62,620 NIL NIL 3,656,272 4,580,107 79.8% Chartered (GJ) NIL 3,795,068 115,319 57,649 NIL NIL 3,968,036 4,036,767 98.3% Total 949,374 6,362,899 191,891 120,320 1,344 318 7,626,145 (GJ) 8,624,206 (GJ) 88.4%

Scope 2 Energy Consumption Table EN3

SIN 2012 AUS 2012 NZE 2012 Electricity Totals Totals y-o-y (2012) (2011) Grid Factor 0.00055965 0.00095677 0.00022411 0.003600 Electricity (kWhr) 139,795 137,770 121,148 NIL 398,713 482,351 82.7%

Electricity (tCO2e) 78.24 131.81 27.15 NIL 237.20 286 82.8% GJ 503.26 495.97 436.13 1,435 NIL NIL NIL Total 1,435 1,435.37 1,736.46 82.7%

Factor from URL: Dera Coversations Factors: http://bit.ly/JoyyrJ Table 10c, Rolling 5 year advantage for Overseas Electricity CONSUMED (i.e. after Transmission and Distribution (“T&D”) losses) at May 2012)

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Data 77 Labour Data & Tables

Breakdown of Nationality of Sea Staff Positions 2012 Commonwealth Other 4.2% 1.0%

Hong Kong SAR Filipino Total Nationality % 4.7% 34.5%

133 Filipino 34.5% Ukraine 111 PRC 28.8% 6.5%

78 Papua New Guinea (PNG) 20.3% PNG 25 Ukraine 6.5% 20.3% Total 18 Hong Kong SAR 4.7% 16 Commonwealth 4.2% 385 4 Other 1.0%

385 Total 100%

PRC 28.8%

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Data 78 Abbreviations

AMSA Australian Marine Safety Authority HHV Higher Heating Value, also known as gross calorific value, of a fuel is defined as the ASA Australian Shipping Association amount of heat released by combusting a specified quantity and returning the ASSM Anscor Swire Ship Management manning agency temperature of the combustion products to 150°C. LHV assumes all the water BHP Brake Horse Power component is in liquid state at the end of combustion CAR Audit-driven Corrective Action Report HOF Head Office (in Singapore) CBA Collective Bargaining Agreement HSE Health, Safety and the Environment CCoC Corporate Code of Conduct ICAO Inter Civil Aviation Organisation CFC Chloro-fluoro-carbon/s IFO Intermediate Fuel Oil - residual fuel. Usually 180 or 380 CST viscousity. CNCo The China Navigation Company Pte Ltd See http://intertek.ch/schwerol CoC Certificate of Competency CSR Corporate Social Responsibility IHM Inventory of Hazardous Material, per the HK Ship Recycling Convention DCC Australian government: Department of Climate Change ILO (UN) International Labour Organisation DECC UK government: Department of Energy and Climate Change IMO (UN) International Maritime Organisation DEFRA UK government: Department for Environment, Food and Rural Affairs ISM International Management Code for the Safe Operation of Ships and for Pollution DPA ISM Code Designated Person Ashore Prevention, (International Safety Management (ISM) Code) as chapter XI of SOLAS ECA Emission Control Area IUCN International Union for Conservation of Nature and Natural Resources EEOI Energy Efficiency Operational Index KBA Key Biodiversity Area EPA US government Environmental Protection Agency KPI Key Performance Indicator ETS Emission Trading Scheme kW hr (unit) Kilo Watt hour, is a unit of energy equal to 1,000 Watt hours or 3.6 mega Joules GEDO Australian government DCC Greenhouse and Energy Data Officer LHV Lower Heating Value, also known as net calorific value, of a fuel is defined as the GHG Greenhouse Gas/es amount of heat released by combusting a specified quantity and returning the GJ (unit) Giga-Joule, 1 billion joules of energy temperature of the combustion products to 150°C. LHV assumes all the water GRI Global Reporting Initiative component is in vapour state at the end of combustion HCFC Hydro-chloro-fluoro-carbon/s LO Lubricating Oil HCV High Conservation Value LTI Lost Time Injury HFO Heavy Fuel Oil – a residual fuel LTIFR Lost Time Injury Frequency Rate

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Data: Abbreviations 79

MARPOL IMO International Convention for the Prevention of Pollution from Ships, 1973, SEEMP Ship Energy Efficiency Management Plan as modified by the Protocol of 1978 and later SIN Singapore MCA (UK) Maritime and Coastguard Agency SMS Safety Management System MDO Marine Diesel Oil – a distillate fuel SMTC Swire Marine Training Centre, located in Loyang, Singapore MGO Marine Gas Oil – a distillate fuel SOLAS IMO International Convention for the Safety of Life at Sea, 1974, as amended MHE Material Hazardous to the Environment in 1980 and later

MLC ILO Maritime Labour Convention, 2006 SOX Oxides of Sulphur MTC Medical Treatment Case STCW IMO International Convention on Standards of Training, Certification and NGER Australian National Greenhouse Gas and Energy Reporting Act Watch-keeping for Seafarers, 1978, as amended in 1995 and later NI Nautical Institute tCO2 Tonnes of Carbon Dioxide

NOX Oxides of Nitrogen tCO2e Tonnes of Carbon Dioxide equivalent. This is CO2 plus the other four “natural GHG OFW Overseas Filipino Workers of CH4, N2O and the two industrial GHG of SF6 and HydroFluroCarbonsGHG PM Particulate Matter TRCF Total Recordable Case Frequency PO Purchase Order/s TRIP Toolbox Risk Identification Permit POEA Philippines Overseas Employment Agency ULS Ultra Low Sulphur content PSI Port State Inspection, DPl: Deficiencies per Port State Inspection, CARB: California UNFCCC United Nations Framework Convention on Climate Change Air Resources Board, PSCI: Port State Inspection Compliance Index, TRCF: Total VOC Volatile Organic Compound/s Recordable Case Frequency Rate y-o-y Year on Year change QHSE Quality, Health, Safety and Environment 5S “Seiri, Seiton, Seiso, Seiketsu, and Shitsuke” or “Sorting, Set in order, Systematic RFQ Request For a Quote cleaning, Standardizing, and Sustaining” RWC Restricted Work Case SD Sustainable Development SECA Sulphur Emission Control Area/s

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Anne Copeland
T +852 9833 5979 [email protected] 3B, Block 1, Victoria Garden, 301 Victoria Road, Pokfulam, Hong Kong, PRC
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!

! Data 82 Contact

Request for feedback

In order that we may continually improve our reporting, we would be grateful for your views and comments on any aspects of this report via e-mail to the address below.

Contact Details

Thank you for reading this report

Simon Bennett General Manager Sustainable Development 300 Beach Road, #27-03 The Concourse, Singapore 199555

Tel +65 6309 3632 [email protected] [email protected] www.chinanav.com

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Data 83 G3.1 Content Index - GRI Application Level C

STANDARD DISCLOSURES PART 1: Profile Disclosures

Application Level C assured by Copeland & Partners Limited Report fully on the below selection of profile disclosures or provide a reason for omission

1. Strategy and Analysis

Profile Description Reported Cross-reference Reason for Explanation Disclosure / Direct answer omission

1.1 Statement from the most senior decision-maker of the organization. Fully Summary - MD’s Message

2. Organizational Profile

Profile Description Reported Cross-reference Reason for Explanation Disclosure / Direct answer omission

2.1 Name of the organisation. Fully Summary - Introduction

2.2 Primary brands, products, and/or services. Fully Summary - Introduction

2.3 Operational structure of the organization, including main divisions, Fully operating companies, subsidiaries, and joint ventures. Data section - Governance

2.4 Location of organization’s headquarters. Fully Summary - Introduction

2.5 Number of countries where the organization operates, and names Fully Data section - Governance of countries with either major operations or that are specifically relevant to the substainability issues covered in the report.

2.6 Nature of ownership and legal form. Fully Data section - Governance

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Data: G3.1 Content Index - GRI Application Level C 84

Organization Profile cont.

2.7 Markets served (including geographic breakdown, sectors served, Fully Summary - Introduction and types of customers/beneficiaries).

2.8 Scale of the reporting organization. Partially Summary - Introduction As CNCo is a private company, financial Net sales, capitalization omitted on purpose and performance data is confidential

2.9 Significant changes during the reporting period regarding size, Fully Summary - Introduction structure, or ownership.

2.10 Awards received in the reporting period. Fully Achievement of SD 2012 Targets and KPIs during 2013 Head Office certified EcoOffice, Lloyd’s List awards

3. Report Parameters

Profile Description Reported Cross-reference Reason for Explanation Disclosure / Direct answer omission

3.1 Reporting period (e.g. fiscal/calendar year) for information provided. Fully Summary - Introduction

3.2 Date of most recent previous report (if any). Fully Summary - Introduction

3.3 Reporting cycle (annual, biennial, etc.) Fully Summary - Introduction

3.4 Contact point for questions regarding the report or its contents. Fully Data- Contacts

3.5 Process for defining report content. Fully Summary - Introduction

3.6 Boundary of report (e.g. countries, divisions, subsidiaries, leased Fully Summary - Introduction facilities, joint ventures, suppilers). See GRI Boundary Protocol for further guidance.

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Data: G3.1 Content Index - GRI Application Level C 85

Report Parameters cont.

3.7 State any specific limitations on the scope or boundary of the report Fully Summary - Introduction (see completeness principle for explanation of scope).

3.8 Basis for reporting on joint ventures, subsidiaries, leased facilities, Fully Summary - Introduction outsourced operations, and other entities that can significantly affect comparability from period to period and/or between organizations.

3.9 Data measurement techniques and the basis of calculations, including Fully Summary - Introduction assumptions and techniques underlying estimations applied to the compilation of the indicators and other information in the report.

3.10 Explanation of the effect of any re-statements of information Fully Summary - Introduction provided in earlier reports, and the reasons for such re-statement (eg. mergers/acquisitions, change of base years/periods, nature of business, measurement methods).

3.11 Significant changes from previous reporting periods in the scope Fully Summary - Introduction boundary, or measurement methods applied in the report.

3.12 Table identifying the location of the Standard Disclosures in Fully This table the report.

3.13 Policy and current practice with regard to seeking external Fully This table, Summary - Introduction and MD’s message assurance for the report.

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Data: G3.1 Content Index - GRI Application Level C 86

4. Governance, Commitments, and Engagement

Profile Description Reported Cross-reference Reason for Explanation Disclosure / Direct answer omission

4.1 Governance structure of the organization, including committees Partially Data Section - Governance under the highest governance body responsible for specific tasks, Not by age or diversity such as setting strategy or organizational oversight.

4.2 Indicate whether the Chair of the highest governance body is also Fully Data Section - Governance an executive officer.

4.3 For organizations that have a unitary board structure, state the Fully Data Section - Governance

number and gender of members of the highest governance body that are independent and/or non-executive members.

4.4 Mechanisms for shareholders and employees to provide Fully Data Section - Governance recommendations or direction to the highest governance body.

4.14 Stakeholders are not identified in the Governance section so Fully Data Section - Governance this is not fully addressed.

4.15 Basis for identification of full of stakeholders needs to be addressed Fully Data Section - Governance in the Governance section to fully comply.

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Data: G3.1 Content Index - GRI Application Level C 87

STANDARD DISCLOSURES PART 3: Performance Indicators

Report fully on 10 core or additional Performance Indicators - At least 1 from each Indicator Dimension (Economic, Environmental and Social)

Economic

Economic Performance

Indicator Description Reported Cross reference

EC1 Direct economic value generated and distributed, including revenues, operating costs, Partially Data Section - Economic Performance Summary / Revenues and employee compensation, donations and other community investments, retained earnings, operating costs disclosed as percentages and philanthropic activities and payments to capital providers and governments. disclosed qualitatively. Recognised that financial reporting limited as CNCo is a private company.

EC2 Financial implications and other risks and opportunities for the organization’s activities due to climate change. Fully Detail Section - Economic/Risks & Opportunities due to climate change

EC3 Coverage of the organisation’s defined benefit plan obligations. Not

EC4 Significant financial assistance received from government. Fully Detail Section - Economic/Local Purchasing Policy

Market Presence

Indicator Description Reported Cross reference

EC5 Range of ratios of standard entry level wage by gender compared to local minimum wage at significant Not locations of operation.

EC6 Policy, practices and proportion of spending on locally based suppliers at significant locations of operation. Fully Detail Section - Policy, Practices and Proportion of Spending on Locally-based Suppliers at Significant Locations of Operation

EC7 Procedures for local hiring and proportion of senior management hired from the local community at Not significant locations of operation.

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Data: G3.1 Content Index - GRI Application Level C 88

Indirect Economic Impacts

Indicator Description Reported Cross reference

EC8 Development and impact of infrastructure investments and services provided primarily for public benefit Not through commercial, in-kind, or pro bono engagement.

EC9 Understanding and describing significant indirect economic impacts, including the extent of impacts. Not

Environmental

Materials

Indicator Description Reported Cross reference

EN1 Materials used by weight or volume. Not

EN2 Percentage of materials used that are recycled input materials. Not

Energy

EN3 Direct energy consumption by primary energy source. Fully Detail Section - Environment - Direct and Indirect Energy and Data - Scope 1 Energy Consumption

EN4 Indirect energy consumption by primary source. Fully Detail Section - Environment - Direct and Indirect Energy and Data - Scope 2 Energy Consumption

EN5 Energy saved due to conservation and efficiency improvements. Partially Detail Section - Environment - Direct and Indirect Energy

EN6 Initiatives to provide energy-efficient or renewable energy based products and services, and Not reductions in energy requirements as a result of these initiatives.

EN7 Initiatives to reduce indirect energy consumption and reductions achieved. Not

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Data: G3.1 Content Index - GRI Application Level C 89

Water

Indicator Description Reported Cross reference

EN8 Total water withdrawal by source. Not

EN9 Water sources significantly affected by withdrawal of water. Not

EN10 Percentage and total volume of water recycled and reused. Not

Biodiversity

EN11 Location and size of land owned, leased, or managed in, or adjacent to, protected areas Not and areas of high biodiversity value outside protected areas.

EN12 Description of significant impacts of activities, products, and services on biodiversity in Fully Detail Section - Environment - Biodiversity protected areas and areas of high biodiversity value outside protected areas.

EN13 Habitats protected or restored. Not

EN14 Strategies, current actions, and future plans for managing impacts on biodiversity. Partially Detail Section - Environment - Biodiversity

EN15 Number of IUCN Red List species and national conservation list species with habitats in Not areas affected by operations, by level of extinction risk.

Emissions, Effluents and Waste

EN16 Total direct and indirect greenhouse gas emissions by weight. Fully Detail Section - Environment - Scope 1 & 2 GHG Emissions

EN17 Other relevant indirect greenhouse gas emissions by weight. Fully Detail Section - Environment - Scope 3 GHG Emissions

EN18 Initiatives to reduce greenhouse gas emissions and reductions achieved. Fully Detail Section - Environmental Initiatives to reduce GHG Emissions

EN19 Emissions of ozone-depleting substances by weight. Fully Detail Section - Environment - Initiatives to reduce GHG Emissions

EN20 NOx, SOx, and other significant air emissions by type and weight. Fully Detail Section - SOX, NOx, and other emissions and Data Section

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Data: G3.1 Content Index - GRI Application Level C 90

Emissions, Effluents and Waste cont.

Indicator Description Reported Cross reference

EN21 Total water discharge by quality and destination. Not

EN22 Total weight of waste by type and disposal method. Partially Detail - Environment - Total Waste Disposed

EN23 Total number and volume of significant spills. Fully Detail Section - Environment - Total Number of Significant Spills

EN24 Weight of transported, imported, exported, or treated waste deemed hazardous under Not the terms of the Basel Convention Annex I, II, III, and VIII, and percentage of transported waste shipped internationally.

EN25 Identity, size, protected status, and biodiversity value of water bodies and related habitats Not significantly affected by the reporting organization’s discharges of water and runoff.

Products and Services EN26 Initiatives to mitigate environmental impacts of products and services, and extent Fully Detail - Environment - Initiatives to Mitigate Environmental Impacts of impact mitigation.

EN27 Percentage of products sold and their packaging materials that are reclaimed by category. Not

Compliance EN28 Monetary value of significant fines and total number of non-monetary sanctions for Fully Detail - Environment - Non-Compliance with Environmental Laws non-compliance with environmental laws and regulations. and Regulations

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Data: G3.1 Content Index - GRI Application Level C 91

Transport EN29 Significant environmental impacts of transporting products and other goods and materials Fully Detail - Environment - Environmental Impacts of Transporting used for the organizations’s operations, and transporting members of the workforce. Goods Sold

Overall EN30 Total environmental protection expenditures and investments by type. Not

Social: Labor Pratices and Decent Work

Employment

Profle Description Reported Cross reference

LA1 Total workforce by employment type, employment contract, and region, broken down by gender. Fully Detail - Labour - Employment

LA2 Total number and rate of new employee hires and employee turnover by age group, Partially Detail - Labour - Employment gender and region.

LA3 Benefits provided to full-time employees that are not provided to temporary or part-time Not employees, by major operations.

LA15 Return to work and retention rates after parental leave, by gender. Not

Labor / Management Relations

Profle Description Reported Cross reference

LA4 Percentage of employees covered by collective bargaining agreements. Partially Detail - Labour - Employment

LA5 Minimum notice period(s) regarding significant operational changes, including whether Not it is specified in collective agreements.

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Occupational Health and Safety LA6 Percentage of total workforce represented in formal joint management-worker health and Not safety committees that help monitor and advise on occupational health and safety programs.

LA7 Rates of injury, occupational diseases, lost days, and absenteeism, and number of Partially Detail Section - Labour - Occupational Health and Safety work-related fatalities by region and by gender. Partial data only is supplied

LA8 Education, training, consulting, prevention, and risk-control programs in place to assist Partially Detail - Labour - Training, Education and Counselling workforce members, their families, or community members regarding serious diseases.

LA9 Health and safety topics covered in formal agreements with trade unions. Not

Training and Education Profle Description Reported Cross reference

LA10 Average hours of training per year per employee by gender, and by employee category. Partially Detail - Labour - Training, Education and Counselling. Training hours by gender not disclosed

LA11 Programs for skills management and lifelong learning that support the continued employability Not of employees and assist them in managing career endings.

LA12 Percentage of employees receiving regular performance and career development reviews, Partially Detail - Labour - Training, Education and Counselling by gender.

Diversity and Equal Opportunity LA13 Composition of governance bodies and breakdown of employees per employee category Partially Detail - Labour - Employment according to gender, age, group, minority group membership, and other indicators of diversity.

Equal Remuneration for Women and Men LA14 Ratio of basic salary and remuneration of women to men by employee category, by Not significant locations of operation.

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com Data: G3.1 Content Index - GRI Application Level C 93

Social: Human Rights

Investment and Procurement Practices

Profle Description Reported Cross reference

HR1 Percentage and total number of significant investment agreements and contracts that include Not clauses incorporating human rights concerns, or that have undergone human rights screening.

HR2 Percentage of significant suppliers, contractors and other business partners that have Not undergone human rights screening and actions taken.

HR3 Total hours of employee training on policies and procedures concerning aspects of human Not rights that are relevant to operations, including the percentage of employees trained.

Non - Discrimination

Profle Description Reported Cross reference

HR4 Total number of incidents of discrimination and actions taken. Fully Detail - Human Rights - Total Number of Incidents of Discrimination and Actions Taken

Freedom of Association and Collective Bargaining

Profle Description Reported Cross reference

HR5 Operations and significant suppliers identified in which the right to exercise freedom of Not association and collective bargaining may be violated or at significant risk, and actions taken to support these rights.

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Child Labor

Profle Description Reported Cross reference

HR6 Operations and significant suppliers identified as having significant risk for incidents of child Not labor, and measures taken to contribute to the abolition of child labor.

Forced and Compulsory Labor

HR7 Operations and significant suppliers identified as having significant risk for incidents of forced Not or compulsory labor, and measures to contribute to the elimination of all forms of forced or compulsory labor.

Security Practices

HR8 Percentage of security personnel trained in the organization’s policies or procedures concerning Not aspects of human rights that are relevant to operations.

Indigenous Rights

HR9 Total number of incidents of violations involving rights of indigenous people and actions taken. Not

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Assessment

HR10 Percentage and total number of operations that have been subject to human rights reviews Not and/or impact assessments.

Remediation

HR11 Number of grievances related to human rights filed, addressed and resolved through formal Not grievance mechanisms.

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Social: Society

Local Communities SO1 Percentage of operations with implemented local community engagement, impact Not assessments, and development programs.

SO9 Operations with significant potential or actual negative impacts on local communities. Not

S10 Prevention and mitigation measures implemented in operations with significant potential Not or actual negative impacts on local communities.

Corruption SO2 Percentage and total number of business units analyzed for risks related to corruption. Not

SO3 Percentage of employees trained in organization’s anti-corruption policies and procedures. Not

SO4 Actions taken in response to incidents of corruption. Not

Public Policy SO5 Public policy positions and participation in public policy development and lobbying. Not

SO6 Total value of financial and in-kind contributions to political parties, politicians, and related Not institutions by country.

Anti-Competitive Behavior SO7 Total number of legal actions for anti-competitive behavior, anti-trust and monopoly Fully Detail - Society - Monetary Value of Significant Fines and Non- practices and their outcomes. monetary Sanctions for Non-compliance with Laws and Regulations

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Social: Product Responsibility

Compliance SO8 Monetary value of significant fines and total number of non-monetary sanctions for Fully Detail - Society - Total Number of Legal Actions for Anti-competitive non-compliance with laws and regulations. Behaviour, Anti-trust, and Monopoly Practices and their Outcomes

Customer Health and Safety PR1 Life cycle stages in which health and safety impacts of products and services are assessed Not for improvement, and percentage of significant products and services categories subject to such procedures.

PR2 Total number of incidents of non-compliance with regulations and voluntary codes concerning Not health and safety impacts of products and services during their lifecycle, by types of outcomes.

Product and Service Labelling PR3 Type of product and service information required by procedures, and percentage of Not significant products and services subject to such information requirements.

PR4 Total number of incidents of non-compliance with regulations and voluntary codes Not concerning product and service information and labeling, by type of outcomes.

PR5 Practices related to customer satisfaction, including results of surveys measuring customer Not satisfaction.

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Marketing Communications PR6 Programs for adherance to laws, standards, and voluntary codes related to marketing Not communications, including advertising, promotion, and sponsorship.

PR7 Total number of incidents of non-compliance with regulations and voluntary codes concerning Not marketing communications, including advertising, promotion, and sponsorship by type of outcomes.

Customer Privacy PR8 Total number of substantiated complaints regarding breaches of customer privacy and losses Not of customer data.

Compliance PR9 Monetary value of significant fines for non-compliance with laws and regulations Not concerning the provision and use of products and services.

The China Navigation Company / Sustainable Development Report 2012 www.chinanav.com