Anti-Corruption

Communication on Progress 2019 Report

STATEMENT OF CONTINUED SUPPORT

Hinopak Motors Limited has been maintaining its commitment for the past thirteen years and yet promises to reflect it in it principles, standards and policies in future as well.

With great pleasure I present our twelfth, comprehensive Communication on Progress (COP). Although Hinopak is facing severe challenges in business activities due to economic crises, yet trying to fulfill its commitment of giving back to society.

This report endorses Hinopak’s commitment towards UNGC principles of Human Rights, Labour, Environment and Anti-corruption.

I sincerely thank our employees and stakeholders for their contribution towards company’s sustainable development and request them to continue their efforts with more zeal and patience in supporting our initiatives.

YOSHIHIKO NANAMI President & CEO

May 31, 2019

Hinopak Motors Limited Human Rights Hinopak Motors Limited UNGC Communication on Progress 2019

Organizational Profile

GRI Ref. No.

2.1 Name of the Organization Hinopak Motors Limited

Assembly, manufacturing and sales of Hino Trucks and 2.2 Primary brands, products, and/or services. Buses and Sales of Hino Genuine Parts.

Operational structure of the organization, Hinopak is a subsidiary concern of Hino Motors Limited 2.3 including main divisions, operating Japan and Toyota Tsusho Corporation. companies, subsidiaries, and joint ventures.

2.4 Location of organization’s headquarters. Karachi, Pakistan

Number of countries where the organization operates, and names of countries with either 2.5 major operations or that are specifically One (Pakistan) relevant to the sustainability issues covered in the report.

2.6 Nature of ownership and legal form. Public Limited Company

The company serves markets of Pakistan and some of the Middle East & African countries. Markets served (including geographic 2.7 breakdown, sectors served, and types of Types of customers include: customers/beneficiaries). 1. Institutional customers 2. Commercial customers

Number of Employees as on March 31, 2019 = 376 (978 including contract and contractor’s employees)

For following refer to Annual Report 2018-19 available at: http://www.hinopak.com/finance.htm Scale of the organization 2.8  Net sales (2018-19)= Rs. 19.1 billion  Total capitalization = Rs. 3.6 billion (0% Debt, Surplus funds)  Quantity of Products Produced (2018-19) - Hino Chassis: 2,850 - Bus and other specialized bodies: 822 - Hilux Frame: 10,377 Significant changes during the reporting 2.9 None period regarding size, structure, or ownership.

1. Certificate of Excellence award in Automotive Sector 2019 by Management Association of Pakistan (MAP) Awards / citations received during the 2.10 reporting period 2. EFP Best Practices Award in Occupational Health and Safety 2019 (OSH)

3. Horticultural Society of Pakistan /Annual Award 2019

ISO 14001:2004 Certified Management Systems ISO 9001:2008 Certified OHSAS 18001:2007 Certified

Hinopak Motors Limited Human Rights Hinopak Motors Limited UNGC Communication on Progress 2019

- Employers’ Federation of Pakistan (EFP) - Overseas Investors Chamber of Commerce & Industry (OICCI) - Federation of Pakistan Chamber of Commerce and Industry (FPCCI) Affiliations / Memberships - Management Association of Pakistan (MAP) - Pakistan Automotive Manufacturers Association (PAMA) - S.I.T.E. Association - Pakistan Japan Business Forum (PJBF) - Pakistan Society for Training & Development (PSTD) - Marketing Association of Pakistan Report Parameters

3.1 Reporting period for information provided 1 June 2018 ~ 31 May 2019

1. UNGC Communication on Progress (COP): 09 June 2018 3.2 Date of most recent previous report/s 2. Annual Report 2018-19

3.3 Reporting cycle Annual

Ahsan Waseem Akhtar General Manager HR, Admin & HSE [email protected]

Contact point for questions regarding the Nabila Mujahid Faisal 3.4 Section Manager Health, Safety & Environment report or its contents [email protected]

Sabira Agha Associate HRD & OD [email protected]

Governance, Commitments and Engagement

Board of Directors (Highest Governance Body)

Board Committees:

The Audit Committee is responsible for:

a. Determination of appropriate measures to safeguard company’s assets;

Governance structure of the organization, b. Review of quarterly, half-yearly and annual including committees under the highest financial statements of the Company, prior to the 4.1 governance body responsible for specific approval of the Board of Directors; tasks, such as setting strategy or organizational oversight. c. Review of management letter issued by external auditors and management’s response thereto and monitor the action plan to improve the control environment;

d. Review of the scope and extent of internal audit and ensuring that the internal audit function has adequate resources and is appropriately placed within the Company;

e. Ascertaining that the internal control system

Hinopak Motors Limited Human Rights Hinopak Motors Limited UNGC Communication on Progress 2019

including financial and operational controls, accounting system and reporting structure are adequate and effective;

f. Instituting special projects, other investigations on any matter specified by the Board of Directors, and to refer any matter to the external auditors or to any other external body;

g. Monitoring compliance with relevant statutes and best practices of corporate governance.

The Human Resource & Remuneration Committee is responsible for:

a. Recommending human resource management policies to the board;

b. Recommending to the board the selection, evaluation, compensation (including retirement benefits) and succession planning of the CEO;

c. Recommending to the board the selection, evaluation, compensation (including retirement benefits) of CFO, Company Secretary and Head of Internal Audit; and

d. Considering and approving on recommendations of CEO on such matters for key management positions who report directly to CEO.

Refer to performance indicator ref. no. LA13 for details on the BOD and the Audit Committee.

4.2 Chair of the highest governance body Chairman (Non-Executive Director)

For organizations that have a unitary board Refer to performance indicator ref. no. LA13 structure, state the number and gender of 4.3 members of the highest governance body that The Board of Directors has 9 members; where 6 are non- are independent and/or non-executive executive directors. members.

Shareholders: Mechanisms for shareholders and employees - Annual General Meeting (AGM) 4.4 to provide recommendations or direction to the highest governance body. Employees: - Suggestion Boxes (located at conspicuous places around the company premises)

Hinopak Motors Limited Human Rights

Principle 1: Businesses should support and respect the protection of internationally Human Rights proclaimed human rights; and Commitment: Hinopak Motors Limited is committed to Principle 2: make sure that they are not complicit in human rights abuses. respecting and protecting the dignity of people in all its areas of operations. All stakeholders are assured of sincere efforts to uplift conditions with regard to health and safety, provide sound

labour-management relations and participate in human resource/community development.

Furthermore, Hinopak is committed to avoiding complicity of human rights abuses in all its areas of operation.

Policies, Systems, Processes and Programs Besides the policies and processes detailed in previous COP documents (published since 2006) the following actions were initiated/emphasized on during the reporting year under each process/system with respect to the Human Rights principles:

A. HEALTH & SAFETY SYSTEMS

. Healthy & Safe Working Environment - 5,708 training man-hours achieved under staff training Picture 1: Health test camp for skin diseases. on occupational HSE. - Health awareness session on “Skin diseases” was conducted in which 80 employees participated. - Hinopak arranged medical test camp for skin diseases in October 2019 for employees. Total 132 employees were checked (ref picture 1 ) - Health awareness session on “Influenza, its cause, prevention & control” was conducted in September 2019 in which 120 employees participated. - 9th Safety Conference was held in May 2019 in order to enhance safety culture in the company. (ref picture 2) Picture 2: Group Photo on 9th Health & Safety - Announced mock drills held for both manufacturing Conference facilities and the head office staff to assess organizational readiness to cope with emergencies. ERP teams include rescue, firefighting, spill etc (ref picture 3) - As per our OHSAS Policy, every year, both Canteen staff and drivers go through medical checkups to ensure they are fit for the job. This year, 24 drivers, and 18 Canteen staff went through these tests, which includes CBC, Urine DR, Anti HCV, Eye Test, Chest PA, HBs Ag & HIV to name some. - To raise knowledge, awareness and skills amongst school students about road safety issues, road safety Picture 3: Picture taken during mock drill activity awareness sessions titled ‘Hino Aagahi’ were

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conducted in several government schools in Karachi, educating 100 children (ref picture 4)

. Monitoring & Awareness - Monthly Safety Patrolling by Top Management, in order to visually check safety issues of both the plants and to show their seriousness towards implementation of safety policies. - Daily safety monitoring/patrolling around the assembly and manufacturing facilities being done through the Safety Administration Team (SAT). - This year, a total of 402, Workers Feedback Cards were Picture 4: A group photograph of “Hino Aagahi” team and participants received and 508 have been rectified. - No major accident and 1 minor accident were reported from Apr 2018 to Mar 2019 (ref. picture 5). - New concept of Yokoten is introduced in the company. This is a new Japanese concept, which means Sharing of Safety Best practices. Safety incident reports received from affiliates are verified to identify similar situations, against which appropriate measures are taken.

B. TOTAL QUALITY MANAGEMENT

. Continuous Improvement - Kaizen initiatives, involving manufacturing and non- manufacturing functions, being implemented and

Picture 5: Occupational Accidental Trend monitored and are also participated by top management. - Kaizen meetings are held periodically. - Recertification of Quality Management System ISO 9001:2008 successfully completed in May 2019.

C. EMPLOYEES

. Labour-Management Relations - 9 laptops were distributed amongst permanent workers through lucky draw in order to serve the commitment of continual computer literacy of workers and their children. (ref picture 6) - Nine employees (7 workers and 2 officers) were sponsored ($1,742/- each; 90% of the total amount) for their religious pilgrimage (Hajj) and 5 workers along with spouse were sponsored Umrah ($717/- each; 100% of the total amount) in 2019. Identification of the recipient workmen and officers under this scheme

Picture 6 : Laptop Distribution was also through lucky draw.

Hinopak Motors Limited Human Rights

- No strike or cessation in work or loss of work hours due to strike, go-slow or lockout reported during the reporting year.

. Security & Safety - Security measures within & around the company (for all local and foreign employees) tightened owing to the security concerns confronting the city. (ref pictures 7/8) - A complete ‘Security Guidelines’ document has been prepared detailing step by step guidance on security Picture 7: Road blockers installed at security gates management.

- On the directives of our principal, a policy on data

security / confidentiality management has been prepared along with a detailed guide book for day to day reference for employees. - To ensure and promote road safety among our employees, use of seat belts in cars and safety helmets / side-view mirrors for motorbikes is being encouraged.

D. STAKEHOLDER PARTICIPATION & ENGAGEMENT

Picture 8: CCTV cameras installed within & around the company . Supplier/Contractor/Vendor Engagement rd - Hinopak Vendor’s Convention was held on 3 December 2018. The event was attended by 108 participants mainly belonging to 88 vendors and suppliers. The overall theme of the event was “Achieving Global Standards” to stress the importance of subject for continuity and sustainability of both Hinopak and its vendors’ business (ref picture 9).

. Education / Community Development & Welfare - This year 174 workers’ children were recognized for

Picture 9: Vendor’s Convention 2018-19 their academic achievement through scholarships. The children ranged from grade three to graduation level. - 10 NED University engineering scholars (belonging to Mechanical, Industrial & Manufacturing and Automotive technologies) were given scholarships this year as tuition fee. - This year again medical expenses of Darul Sukun were born by Hinopak Motors throughout the year. - On the occasion of Independence Day of Pakistan, Hinopak organized an event dedicated to special children (physically and mentally disabled) at Dewa Institute for Special Children. (ref pictures 10)

- Three days summer camp was organized by Hinopak Picture 10: Independence Day celebrations at Dewa employees’ children. This year 250 children

Hinopak Motors Limited Human Rights

participated in the camp which included games, painting, storytelling, character building, safety sessions, plant visit and other activities. (ref picture 11) - Free dental clinic was arranged for children at SITE Model School. - E. CODE OF CONDUCT

. Code of Conduct Adherence - The Whistle Blowing Committee regularly meets to Picture 11: A group photo of employees’ children check compliance to the code of conduct through the during Summer Camp. whistle blowing procedure.

- The J-SOX Audit was successfully completed for this year ensuring fair and transparent corporate governance. - Newly inducted employees oriented to the code of conduct during the company-wide orientation program.

. Credo, Mission, Values, Practice - Training on company’s values – The Hino Spirit – is conducted for newly hired employees.

Planned Initiatives for the Coming Years (under principles 1 and 2):

. Kaizen, Quality Circle, Housekeeping trophies and challenges; . Review of the Code of Conduct to make it more detailed and comprehensive. . Awareness sessions on Human Rights protection for Hinopak Vendors.

Hinopak Motors Limited Labour

Principle 3: Businesses should uphold the freedom of Labour association and the effective recognition of the right to collective bargaining; Commitment: . We uphold freedom of association and the right of workers Principle 4: the elimination to collective bargaining. of all forms of forced and compulsory labour; . We are committed to the elimination of all forms of forced or compulsory labour in all areas of our or business Principle 5: the effective partners' operations. abolition of child labour; and . We prohibit engagement, in any form, of child labour in all Principle 6: the elimination of discrimination areas of our business operations or our business partners' in respect of employment and occupation. operations. . We advocate equal employment opportunities, diversity and inclusion in employment and occupation and prohibit any form of discrimination in employment terms and conditions.

A. INDUSTRIAL & EMPLOYEE RELATIONS

. Freedom of Association - Hinopak workers are represented by a registered Labor Union, namely Hinopak Motors Limited Employees Union, existing since the company's pre-Japanese ownership from 1969. Current membership to-date is 155, represented by the Collective Bargaining Agent. - 17th Labour Agreement was successfully reached and signed between CBA officials and Hinopak Management Picture 12: Labour Agreement Signing Ceremony (ref picture 12) 2018-19

. Collective Bargaining as a Tool for Addressing Working Conditions, Terms and Employment and Relations - Five trust building meetings were held during the reporting year which was attended by representatives from the labour union (mostly CBA officials) and representatives from the management.

. Engagement & Participation - During the reporting year 14,918 training man-hours were achieved for training and awareness activities of workers (technical & non-technical courses – including th Picture 13: 9 Hinopak Inter-Department training of apprentices). Tournament 2018-19. - This year Hinopak arranged 9th Hinopak Inter-

Hinopak Motors Limited Labour

department Hardball Cricket Tournament. All teams made great efforts to win but the winner was Hino Green Dolphin from Chassis Assembly Plant and runner up team was Finance Eagles (ref picture 13) - Hinopak celebrated its 33rd anniversary on 1st February, 2019 at Chassis Assembly Plant. All Management and non-management employees were invited in cake cutting ceremony to celebrate the occasion.(ref picture 14)

B. ERADICATION OF CHILD LABOUR Picture 14: Hinopak 33rd Anniversary celebrations

. Underage Hiring Prevention Process - We continue to follow the under-age employment clause of the Factories Act 1934 for our workers and apprentices. - We have no record of underage employee/apprentice; youngest apprentice on board is 18 years old (minimum age is 14 years old according to Apprenticeship Rules 1966 (Sindh).

. Vendor / Contractor Evaluation and Engagement - Non-employment of child labor is ensured/checked through our ‘Internal Vendor Evaluation Report’ (refer pictures 15-A/15-B). - Hinopak employees interacting with Picture 15-A: Front Page of the Vendor Evaluation vendors/contractors and visiting their premises are to Report report any observation of engaging child labor.

C. EMPLOYEES

. Workforce Diversity - Refer to GRI Indicator LA1 for Workforce profile (including workers).

. Gender Harassment Program - Gender Harassment Program under act “The Protection against Harassment of Women at the Workplace Act 2010” has been implemented successfully. Committee of 3 members has been formed for catering to harassment cases.

Picture 15-B: Page 5 of the Vendor Evaluation Report including the area of 'Welfare / Environment'

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Principle 7: Business should support a precautionary approach to environmental challenges; Environment

Principle 8: Business should undertake initiatives to promote greater environmental responsibility; and Commitment: . We take precautionary approach in meeting Principle 9: Business should encourage the environmental challenges in all areas of development and diffusion of environmentally friendly technologies. operations; we are committed to avoiding and mitigating negative impact of all our activities on the environment. . Guided by our mission and social responsibility principles, we are committed to promoting environmentally responsible thinking within the Hinopak family, marked by sincere demonstration of better environmental-friendly practices. We strive to increase our sphere of influence beyond our company by including all other stakeholders and ensure greater positive impact. . We are committed to the adoption of environment-friendly technologies that reduce environment impact from our products and day- to-day operations. We ensure effective environment risk management and compliance across all our business activities, from product design/development to product sale.

A. Environment Management Systems

. Leadership Guidance & Legal Compliance - Top management defines policy and ensures its compliance. They also ensure availability of resources essential to established EMS system in the company. EMS Objectives are set on annual basis and progress reviewed regularly. Both Int. and External audits are held yearly. MCM are held in there, decisions are taken to improve and enhance our management systems. - We are complying with the following regulations under No ‘THE SINDH ENVIRONMENTAL PROTECTION ACT, 2014’. EPA/TECH/739/2014 (Sind Environmental

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Quality Standards (Self Monitoring and Reporting by Industry) Rules-2014), S.R.O. 72 (KE) 2009 (NEQS for Motor Vehicles Exhaust and Noise), S.R.O. 1062(I)/2010 (NEQS for Ambient Air), S.R.O. 1063(1)/2010 (NEQS for drinking Water Quality), S.R.O. 1064(1)/2010 (NEQS For Noise), S.R.O 549(I)/2000 (NEQS for Municipal & Liquid Industrial Effluents)/ (NEQS for Industrial Gaseous Emissions.),EPA/TECH/739/2014 (Initial environmental examination & Env. Impact Assessment), EPA/TECH/739/2014 (Handling of Hazardous substances). - Other than the above mentioned legislations, we are also abiding to The Petroleum Act 1934 and The Boilers and Pressure Vessels Ordinance, 2002. - Key parameters (energy consumption, material discard, and water conservation) were reported to Hino Motors, Japan every month. - Compliance in all aspects has ensured a clean, green record (no warnings, no penalties) for Hinopak. Water release and air release were both within compliance levels. - Our local and international legal compliance have enabled us to enter the export market.

. Maintenance & Monitoring - A comprehensive study is conducted on yearly basis to identify and evaluate Environmental & Safety Risks involved in our business processes, products and services. Based on the scientific method, their severity is then calculated and appropriate action programs are set to control these high risks through ERIC-P approach. - Analysis of Air Emissions from combustion stacks, generators, engines, exhaust emissions, noise monitoring and ambient air are done on predefined intervals. - Safety Gemba has been conducted in both CAP and BMP plant in which 303 observations were highlighted out of which 259 observations has been rectified.

. Auditing, Certifications & Awards - Surveillance audits conducted against ISO 14001 & OHSAS 18001. - Every year, Employers Federation of Pakistan

Hinopak Motors Limited Anti-Corruption

(in Collaboration with ILO) held OHS&E Award competition among its member companies. This year, we have achieved 2nd position in processing & allied sector category 2018. (ref picture 16) - We have received ACCA-WWF Best Environmental Reporting Award.

. Hazardous Substance Control - All hazardous substances/ waste are disposed Picture 16: EFP –ILO OHS&E Award off in environmental friendly manner according to EPA/TECH/739/2014 (Handling of Hazardous substances). Hazardous substance include Asbestos, Hazardous waste include Degreasing Sludge, Paint Sludge, Batteries, Hazardous Material Effective Gloves, Paint Booth Filter, FRP Waste, Printer Cartridge, infectious Material Disposal, WWTP Sludge, Transformer oil and Used E/G Oil - New Chemical passes through Chlorinated Organic Compound (COC) assessment before entering Hinopak premises. Any chemical Picture 17: A group photograph during tree plantation containing this substance is carcinogenic in activity at Karwan-e-Hayat Hospital nature and is included in TOYOTA Banned

Material List.

. Communication, Awareness, Training - The environmental performance of our plants is reported on an annual basis through our annual report. - We celebrate June as Environment Month and submit comprehensive report to Hino Motors Limited, Environmental Division in mid July. Key parameters are monitored and reported to Hino Motors Ltd., Japan Environmental Division Picture 18: Photograph taken during cleaning activity at on monthly basis. government school - Tree plantation activities were arranged in different schools and hospitals the month of October 2018. Total 250 trees were planted (ref picture 17) - Cleaning activity was arranged in government school in which 50 students participated (ref picture 18) - Keeping our pledge for “Zero Sai”, ‘Safety Dojo Center’ has been established. ‘Dojo’ is a Japanese name for a training center. This

Picture 19: Safety Dojo Center training center is equipped with 10 Safety Simulators which were fabricated in-house.

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Employees can learn about hazards and importance of obeying safe working rules via simulators on ‘Usage of Hard Helmet, Safety Shoes, Importance of Earthing, Slip/Trip hazards, Use of Hand Rails, Protection against Rotating Machines, Fall from Height hazards, to name some. (ref picture 19) - A new Safety DOJO Training Center is set up at Body Manufacturing Plant, comprising of simulators like Machine Safety, Welding Safety, Importance of using right personal protective equipment, Slip Trip Hazard to name some. The center also provides first- hand information about the past accidents. This was formally inaugurated by top management in Feb. 2019. - Environmental Posters and Banners were displayed throughout HPML. - Safety education is promoted among interested parties by providing safety awareness to 363 employees of dealers, Vendors, Contactors & University Students in Safety Dojo Center. This year 444 hours of training has been given to all stakeholders. - A Vendor Safety Corner is established at plant entrance. All the vendors/ suppliers going inside are given safety awareness and basic PPEs for their safety in the workplace. - In order to promote safety culture among vendors, Safety patrolling activities were conducted at 20 vendors’ site. Along with the Safety Gemba, Shop Floor Awareness sessions were also provided.

. Stop Global Warming - Hinopak has taken appropriate measures to reduce CO2 Emission (- 27%) based on FY 2014. We are continuously decreasing our energy usage by adopting several strategies regarding energy conservation. These include: > Installation of LED Lights in Offices. > To maintain temperature up to 26ºC for air conditioners. > To utilize sunlight where possible to maintain the appropriate light levels. > To switch off the LCDs / monitors when not on seat. >To minimize the energy consumption of

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compressor by removing air leakages. > To minimize gas & electricity consumption by placing third frame on IMV frame trolley. > To minimize electricity consumption by placing of control switch at PTED Facility. > Controlling of unnecessary light at offices and plants. > Louvers replaced with glass window (Energy saving FRP and window shop Ongoing project). > Minimization of energy consumption of compressor by removing air leakages. > Installation of energy meters to monitor the energy consumption reading in different areas of plant. - Every year, we conduct air and water leakage inspections to identify seepages and take appropriate actions to mitigate the problems. Moreover, equipment and machineries are constantly checked / maintained via preventive maintenance to ensure efficiency. - Our active involvement in the upkeep and maintenance of our gardens has resulted in Hinopak winning 1st prize in office industrial gardens competition in February 2019.(ref st Picture 20: Hinopak won 1 prize in Horticultural picture 20) Competition

B. Environmental Responsibility Guidelines

. Hino Credo – Corporate Mission, CSR Charter,

Hino Spirit - Hino Motors' mission statement explicitly indicates environmental responsibility: "To make the world a better place to live in by helping people and goods get where they need to go- safely, economically and with environmental responsibility- while focusing on sustainable development." - Hino's CSR Chapter reiterates this commitment… "we strive to provide products that are safe and environmentally-friendly, pursuing a responsible balance with the environment in all of our corporate activities." - Hino Spirit enjoins all employees to practice the "Spirit of Contribution" – where it further elaborates that "With a deep respect for all people, we approach our work with openness and honesty, and a true dedication to fulfilling

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our social responsibilities." - Our employees are trained on the Hino Spirit principles.(ref picture 21)

C. Environment-friendly Technology

. Manufacturing Vehicles that Burn Cleaner Fuels and Emit Less Fuel - Euro-II engine technology fitted in some Hino products, despite the absence of local regulations on the same mainly because of Picture 21: Hino Credo absence of clean fuel.

. Use of Environment-Friendly Parts / Raw

Material

- Use of environment-friendly gas R-134a & R-

404a for air conditioning of buses and

refrigeration of trucks is ensured.

- We monitored and reduced use of diesel in our

generator sets and other machinery used for

production processes.

- Quality of fuel, lubricants and other

components are being checked by standard

specification.

. Environmental-friendly Processes

- Production/Manufacturing processes reviewed

regularly.

- For proper maintenance of vehicles, Hinopak

provides authorized service

stations/workshops.

- Paint sludge, FRP and glass wool incineration

are done by third party to reduce hazardous

waste.

D. Disaster Recovery Management and Capability

Enhancement

. Disaster Management and Recovery

- A complete risk assessment was performed this

year to assess human and capital risks associated

natural calamities especially earthquake followed

by a comprehensive emergency response plan in

case of natural disaster.

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E. Stakeholder Engagement

. Promotion of Vehicle Maintenance for Environmental Preservation - Through free service and tune-up camps Hinopak promoted culture of vehicle maintenance among Hino customers and users. Proper and timely maintenance of vehicles ensures fewer emissions of harmful gases (ref picture 22).

Figure 22: A picture from free service camp

=60

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Principle 10: Business should work against Anti-Corruption corruption in all its forms, including extortion and bribery. Commitment: . We support the anti-corruption principle and are committed to continue our 'no-tolerance' policy to any corruption practice.

A. Ethical Guidelines

. UNGC Subscription - Hinopak is very vocal about its UNGC subscription and commitment to all 10 principles. This commitment is communicated through publications, press releases, presentations, displays, annual report, COP report etc.

. Hinopak Code of Conduct - Our basic Code of Conduct is still under revision to make it more comprehensive and explicit, as per the

Picture 23: Whistle Blowing Procedure observation of the board of directors. However, Principles 2, 3, 8 and 11 are clear on our pledge to work against anti-corruption practices. - The Code of Conduct was circulated again among all management employees to reiterate the standards of ethics presented in the Code. - Orientation of new hires includes briefing on basic Code of Conduct, Whistle Blowing procedure and the UNGC's principles. - The code of conduct is displayed on conspicuous places (e.g. notice boards) for our non-management staff. Same has been translated in Urdu for better comprehension and understanding of workers.

. Hinopak Whistle Blowing System Picture 24: Whistle Blowing Form - The Whistle Blowing Committee (WBC), leading in the oversight of our anti-corruption commitment, meets monthly as minimum requirement (ref. pictures 23/24/25).

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- Similar to the previous years, during 2016-17 employees sent in their suggestions/grievances through the Whistle Blowing procedure and/or suggestion box. Accordingly, our MD/Chairman Whistle Blowing Committee addressed our employees' concerns.

- Hino Credo, Mission, CSR Charter

- "Trust" is invoked twice in the Hino Credo containing overall company mission, core principle and CSR charter, whereby complying with laws and regulations and maintaining high ethical standards is a major focus. - As indicated by our CSR charter which forms a part of the Hino Credo reflects on our commitment to good corporate citizenship, comply with laws and regulations and maintain high ethical standards.

Picture 25: Suggestion box located at the Head Office . Hino Spirit entrance - Hino Spirit is a set of 6 key corporate values emanated from our principal Hino Motors, Japan.

B. Risk Assessment System

. J-SOX - Internal Control Framework guides Hinopak in following the J-SOX (Japan's version of Sarbanes-Oxley Act). - During the reporting year fourteen (14) reportings were done on J-SOX covering areas on financial reporting, ITGC, and control environment. - Three (3) internal audits were conducted within period April 2018 to March 2019 as compared to three audits conducted in the previous corresponding period. - For this reporting year, internal controls / value additions were provided in the following areas:  Review on HR Manual  Selection & Evaluation of vendors/suppliers in progress  Controls over inventory (stock check twice a year) - For the reporting year, Hinopak's MD/CEO again declared compliance with the J-SOX requirements in a report sent to our principal in Japan.

. Audit Committee - An independent Audit Committee ensures monitoring of compliance activities. All five out of five members of the Committee are non-executive directors. - Newly appointed chairman of the Audit Committee in

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an independent member of the board of directors. - The independent audit committee reports directly to the Board of Directors.

. Corporate Governance / Compliance - External auditors publicly attested Hinopak's financial reporting integrity as contained in our Annual Report 2018-191. - Hinopak's MD/CEO publicly affirmed compliance with corporate governance regulations as indicated in our Annual Report for the year ended March 31, 2019. - Other compliances: SECP’s Code of Corporate Governance, Stock Exchange regulations, International Accounting Standards, International Financial Reporting Standards, Companies Ordinance 1984 and other taxation laws, etc.

. Process Improvement - Continuous process improvement activity is underway through ‘Business Process Reengineering’ objective mostly driven by automation of various processes to minimize human error and risks. - Improvements underway through the implementation of Oracle R12 (replaced with previous version R11i).

. Vendor Pre-qualification - Our vendors are subjected to a pre-qualification assessment through the Initial Vendor Evaluation Report before they are inducted as business partners. - Tender bids are opened in the presence of internal auditor to make the process transparent.

1 Available on our website http://www.hinopak.com/finance.htm

Hinopak Motors Limited GRI Performance Indicators

GRI G3.1 Performance Indicators

Human Rights Ref. Number Performance Indicator Performance HR2 Percentage of significant suppliers, All significant vendors and contractors undergo contractors and other business partners that Human Rights screening (both at the time of induction have undergone human rights screening, and during the service tenure) and actions taken. HR4 Total number of incidents of discrimination None and corrective actions taken. HR5 Operations and significant suppliers None identified in which the right to exercise freedom of association and collective bargaining may be violated or at significant risk, and actions taken to support these rights. HR6 Operations and significant suppliers Suppliers: None* identified as having significant risk for Vendors: 100%** incidents of child labor, and measures taken to contribute to the effective abolition of * Due to the nature of the procurement process child labor. through suppliers currently in effect ** Vendors are assessed through the ‘vendor evaluation report’; ensuring no significant risks for incidents of child labour which is evaluated / ensured by regular visits by our team to the vendor’s premises. HR9 Total number of incidents of violations None involving rights of indigenous people and actions taken. HR10 Percentage and total number of operations 100% company processes confirm with the human that have been subject to human rights rights requirements and the standards set forth by The reviews and/or impact assessments. Universal Declaration of Human Rights.

Note: Comprehensive internal and third party external audits of company systems (e.g. J-SOX, ISO 14001, ISO 9001, OHSAS 18001 etc.) all endorse compliance with the set standards, including human rights. HR11 Number of grievances related to human None rights filed, addressed and resolved through formal grievance mechanisms. Note: The grievances reported / filed through the formal grievance mechanism relate to other areas of operations but not human rights. Labour LA6 Percentage of total workforce represented Health, Safety & Environment Systems Steering in formal joint management–worker health Committee: and safety committees that help monitor and advise on occupational health and General Secretary of CBA is a member of this safety programs. committee and the General Secretary represents 100% workers (contractor’s workers/permanent workers) to review compliance with the company policies relating to occupational HSE.

Hinopak Motors Limited GRI Performance Indicators

LA8 Education, training, counseling, prevention, 5,708 OHS training man-hours were achieved during and risk-control programs in place to assist the reporting year. workforce members, their families, or community members regarding serious Training and education of the workforce on risks diseases. associated with their concerned section/ shops. Moreover, different health programs held to identify medical issues associated with employees. Some of the programs include: - Comprehensive Medical Tests of Chemical Handlers and their appropriate treatments. - Medical Tests of Plant/ Admin Drivers, including Eye Testing, ECG, and CPC. - Medical tests are conducted for Food Handlers to identify whether they are suffering from any contiguous disease.

LA1 Total workforce by employment type, and Total workforce: 978* employment contract, broken down by Non-management contract / contractor’s employees: gender 522 (all males) Non-management permanent: 163 (all males) Apprentices: 28 (0 females, 28 males) Management contract: 52 (males= 50, females= 2) Management permanent**: 213 (males= 203, females= 10)

Pakistani Nationals: 978 (females= 10, males= 968) Japanese Expats: 6 (all males)

* As on March 31, 2019 ** Including top management

LA2 Total number and rate of new employee 2012-13 * hires and employee turnover by age group, Total Hires: 01 where females= 0, male= 1 gender, and region. Total Separations: 21 where female= 2, males= 15

2013-14 * Total Hires: 09 where females= 0, males= 9 Total Separations: 15 where female= 1, males= 14

2014-15 * Total Hires: 20 where females= 0, males= 20 Total Separations: 17 where female=0, males= 17

2015-16 * Total Hires: 8 where females= 0, males=8 Total Separations: 10 where female=3, males= 7

2016-17 * Total Hires: 8 where females= 0, males=8 Total Separations: 9 where female=0, males= 9

Hinopak Motors Limited GRI Performance Indicators

2017-18 * Total Hires: 12 where females= 0, males=12 Total Separations: 7 where female=0, males= 7

2018-19 * Total Hires: 22 where females= 0, males= 22 Total Separations: 15 where female=0, males=15

*Data for management staff only.

LA15 Return to work and retention rates after Males*= 100%, Females*= 100% parental leave, by gender.

*Reporting period: June 2018 ~ May 2019

LA4 Percentage of employees covered by 15% collective bargaining agreements.

LA5 Minimum notice period(s) regarding Followed as per the requirement of applicable laws and operational changes, including whether it is terms of employment specified in collective agreements. LA10 Average hours of training per year per Management Employees: 62 (males and females) employee by gender, and by employee Non-management Employees: 35 (all males) category. LA13 Composition of governance bodies and Board of Directors: All males; 5 Japanese, 2 Pakistani breakdown of employees per employee national. category according to gender, age group, minority group membership, and other indicators of diversity. Product Responsibility PR5 Practices related to customer satisfaction, The following practices relating to customer satisfaction including results of surveys measuring are in place: customer satisfaction. 1. Customer Satisfaction Index (CSI) Survey; done annually. 2. “Knocking the Door Project”; done monthly to visit customers at their door step. 3. Routine service camps 4. Training of Hino customers and drivers Economic EC4 Significant financial assistance received from None government. EC8 Development and impact of infrastructure The following amount was expanded by the Company investments and services provided primarily (since 2008) for public benefit: for public benefit through commercial, inkind, or probono engagement. Year Actual Spending (PKR) 2008-09 7,164,000 2009-10 1,024,000 2010-11 838,000 2011-12 1,023,000 2012-13 2,855,000 2013-14 1,597,250 2014-15 24,766,000 2015-16 3,936,000

Hinopak Motors Limited GRI Performance Indicators

2016-17 5,696,000 2017-18 1,864,000 2018-19 1,300,000 Details on impact assessment mentioned in Human Rights-Stakeholders Participation & Engagement.

Environmental EN1 Materials used by weight or volume. 8900 kg approx. per unit (for our standard bus model)

EN3 Direct energy consumption by primary 1971 kg energy consumption during for production energy source. process.

Society SO2 Percentage and total number of business 100% Divisions (currently nine) have been assessed for units analyzed for risks related to risks related to corruption. corruption. The Audit Committee, headed by the BOD chairman, is responsible for periodic reporting on such risks to the Board of Directors.

SO4 Actions taken in response to incidents of No incidents of corruption have been reported to date. corruption.

SO8 Monetary values of significant fines and None total number of non-monetary sanctions for noncompliance with laws and regulations.