sustainable development report report_2013/pdf/cnco...4 the china navigation company / sustainable...

SUSTAINABLE DEVELOPMENT REPORTfor the year2013

Index

03 Organisational and Operational Boundaries of Report

Summary

05 Introduction07 Managing Director’s Message08 Agenda and KPIs achieved in 2013 and set for 2014

Detail 16 Sustainable Development Policy 17 Governance19 Materiality Matrix

Economic Performance Summary 20 2013 Financial Summary

Economic 21 Risks and Opportunities Due to Climate Change 24 Financial Assistance from Government 25 Local Purchasing Policy Environment 26 2013 Environmental Summary 39 Other Environmental Indicators

Labour 40 Employment 43 Occupational Health and Safety 46 Training and Education 47 Diversity and Equal Opportunity

Human Rights 48 Non-Discrimination

Society 49 Anti-Competitive Behaviour 50 Compliance

Data

52 Reporting Philosophy, Methodology and Scope53 Fleet Breakdown 55 Labour Data and Tables 56 Abbreviations58 GRI Assurance Statement60 G3.1 Content Index GRI Application Level C71 Contact

The China Navigation Company / Sustainable Development Report 2013

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Organisational and Operational Boundaries of Report (as at 31 Dec 2013)

THE CHINA NAVIGATION COMPANY LTD

Scope 1 GHG

Scope 2 GHG

Scope 3 GHG

Org

anis

atio

nal B

oun

dar

ies

Op

erat

iona

l Bo

und

ries

HEAD OFFICE

Management Air Travel

Office VehicularPetrol / Diesel / LPG etc

Office Electricity Usage

Vessel HFC and HCFC consumption

Vessel HFO, MDO andLO consumption

Crew Air Travel

SWIRE SHIPPING(owned fleet)

8 X Challenger Class

5 X Mihos

6 X S 31 Class

3 X N Class, B170

Tonnage as detailed in Fleet Profile

see page 53

SWIRE SHIPPING(chartered fleet)

2 X B.Delta 39 Handysize

SWIRE BULK(owned fleet)

includes:

Swire BulkSwire Bulk LogisticsSwire Shipping

and

Swire Shipping Agencies (HK)Swire Shipping Agencies (PRC)Swire Shipping Agencies (Taiwan)Polynesia Line Limited

CNCo Pte LtdSingapore

25% - Mandarin Shipping Group Limited50% - Swire CTM Bulk Logistics Limited50% - Tradco Shipping Limited60% - Swire Shipping Agencies New Caledonia67% - Quadrant Pacific Limited60% - Guadalcanal Travel Services

MAJOR JV and ASSOCIATES

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Summary

This section gives a summary of what CNCo achieved in 2013, where we plan to make progress in 2014 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

07 Managing Director’s Message

08 Sustainable Development Plan 2014

4

5


SummaryIntroduction

Summary of 2013 Highlights

In the area of the Health and Safety of our employees and stakeholders, the safety initiatives introduced in 2011 and 2012 have started to show a sustained improvement for personnel safety in 2013. There were 3 LTI’s for 2013, one fewer than in 2012. This decrease is especially welcome given that CNCo’s fleet expanded by 6 new ships.

4-Box Alert: The 4-Box concept has proven a significantly powerful tool in helping to deliver a very strong safety message to the Fleet in a very short time frame. A Number of NGO’s have asked to use CNCo’s 4-Box concept, and this permission has of course been freely given.

We are also pleased to be able to report that we have made some big strides in 2013 to meet our commitment to progress towards CNCo having “net zero environmental impact”.

We have taken delivery of 6 “S” Class 31,000dwt MPV (S-Class). Very significant resources have been devoted to ensuring that these S-Class ships are the most fuel and operationally efficient designs for the trade routes for which they are planned, and their replacing our older D-Class ships allows us to make a step change in the GHG footprint for the cargo moved on these vessels. The RightShip’s Existing Vessel Design Index (EVDI) rating for S-Class vessels was reassigned from initial “D” rating to “A+” or “B+” following the review of their actual performance and taking into account consideration of the enhancements and class measurements of Energy Efficiency Design Index (EEDI). More details on this class can be found on page 53.

The same level of attention to “eco-design” and then testing and retesting of models prior to approval for construction being signed has also resulted in our “W” Class B.Delta

Welcome to the second externally assured (GRI C+) Sustainable Development Report for The China Navigation Company Pte Ltd. (“CNCo”). CNCo has continued its commitment to detail its full performance in the areas covered by the Social Responsibility Standard: ISO 26000:2010, viz. Governance, Human Rights, Labour Practices, the Environment, Fair Operating Practices, Consumer Issues and Community Involvement and Development.

We are having this report externally assured in accordance with the most widely used reporting framework, GRI, version 3.1, to level C+ to assure our stakeholders and readers that what is reported is truthful and complete, and in a way that will permit comparison to be made between our performance and those of our peer group who are also open and transparent about the way they operate.

About this reportThis SD Report has been designed from the outset to be read in soft copy (although as with any web site, the pages can of course be printed if required). It is in three sections: Summary, Detail and Data. All the content can be accessed through the three relevant drop-down menus, and as hyperlinks within each section. It is not intended that our stakeholders might start at page 1 and read all the way through to the end (however this is obviously possible if required), rather that the areas of particular interest to our wide range of stakeholders are each accessible with the fewest number of mouse clicks.

If any readers have any comments, please contact the General Manager, Sustainable Development. All feedback, positive and negative, is welcome and helps make this document of ever more relevance to our stakeholders. (see page 60 for contact details)

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We are pleased to advise that there were zero acts of discrimination or harassment reported on any grounds to, or by, any CNCo personnel during the calendar year 2013. CNCo also made a positive move between 2013 and 2012 in closing the gender gap at both the management and support level.

The largest Community Investment / Corporate Philanthropy issue in 2013 involved Category 5 Super Typhoon Yolanda / Haiyan that struck the Visayas region in the central Philippines on Fri 08th November. The strongest typhoon ever to make landfall with gusts reaching 235mph, resulted in the loss of over 7,300 people, the injury of nearly 30,000 and the destruction of most of the buildings and infrastructure over a wide area.

Around 130 of CNCo’s seafarers and their families live in this area, and the Anscor Swire Ship Management Dependents’ Association provided immediate aid and assistance.

CNCo immediately sent USD 12,500 to support ASSMDA’s purchase of aid and transport. The entire workforce of CNCo ashore and at sea also pledged support raising USD 10,000 which was matched by the Company. Once the need for immediate aid support had subsided, ASSMDA began working with the Sailors Society to build/rebuild much need community infrastructure in the Tacloban area.

We are pleased to advise that there were zero acts of discrimination or harassment reported on any grounds to, or by, any CNCo personnel during the calendar year 2013

39,000dwt (W-Class) Bulk Carriers being very energy efficient with EEDI of 4.71 to 4.77 (with EVDI assessed at B+). The first two of the eight ordered were delivered within 2013, and the balance will be delivered in 2014.

The introduction of the new S-Class to replace D-Class resulted in a lower GHG footprint per tonne of cargo carried. We have set ourselves a number of short and medium term targets in this area so that a) all in the company have ownership of this crucial strategic target and b) we can monitor our progress towards it, and make “mid-course corrections” if we begin to fall short. In particular we aim to reduce our Fleet Energy Operating Efficiency (the average energy we expend moving one tonne of cargo, one nautical mile) to 20% below our baseline by the end of 2016 and 50% below our baseline by the end of 2020. This is a key goal to help us reach “Net Zero Environmental Impact”.

We reported in our 2012 report that our 4 D-Class ships were recycled at a Green and Safe recycling yard in China. Our Panamax trans-shipper in PNG, MV Erawan, also reached the end of her operating life in 2013, and she too was sent to a yard that practices auditably “Green and Safe” operations. All of these are in accordance with our Sustainable Ship Recycling policy:

CNCo will “only send vessels for recycling to yards that have valid and verified accreditation issued by a reputable, independent, third party against all standards: ISO 9001:2008, ISO 14001:2004, OHSAS 18001:1999 (or alternately ISO 30000:2009) and fully meet the relevant provisions of both the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships and the EU Ship Recycling Regulations (notwithstanding that we understand that neither of these are adopted / in place yet) and preferably be an “A” member of International Ship Recycling Association”.

CNCo is working with the Sustainable Shipping Initiative to assist the industry where possible to raise the standards of its operations, as we see this as a more proactive route to reduce negative health, safety and environmental issues than black-listing and walking away from specific ship recycling facilities. This will be a journey, and we will be continuing this in 2014 and beyond.

In the area of Fair Operating Practices, we issued a new Code of Conduct at the beginning of the year and commenced coaching our employees to ensure that they are all familiar with the contents, their meaning, the reasoning behind having the code and the (internal and external) sanctions for contravening the requirements of the Code of Conduct. This coaching will continue going forward, to ensure that familiarity is maintained, and we will be measuring progress in this area.

Summary: Introduction

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SummaryManaging Director’s Message

specifically designed with CNCo’s long term sustainability objectives in mind. These ships represent the most fuel efficient designs currently on the water, fitted with systems to optimise speed and consumption ratios to minimise their environmental impact.

We continue to contribute to our communities. In Madang, Papua New Guinea, we cooperate closely with the Maritime College to raise the standards of health, safety and environmental practices in the marine sector. In the Philippines, following Typhoon Haiyan which struck the Visayas region on 8th November 2013, CNCo worked closely with Anscor Swire Ship Management Dependents’ Association (ASSMDA) to raise funds to provide emergency aid and to rebuild much needed basic infrastructure.

CNCo remains a signatory to Hong Kong’s Fair Winds charter as well as a founding member of the Sustainable Shipping Initiative (SSI). The SSI was founded in 2011 to address three principal challenges facing our industry: volatile oil prices, structural shifts in world trade and the growing scrutiny of the industry’s social and environmental performance. CNCo continues to play an active role in supporting the SSI and is a key sponsor of the “Closed Loop Materials Management” workstream.

Established in 1872, we recognise the value of long term thinking. In collaboration with Forum For the Future, CNCo continues to conduct regular “Futures Scenario Planning” exercises to identify long term strategic risks and opportunities which will have a significant impact on our strategic plans. The Report for the year 2013 highlights some of the key outcomes and their contribution to CNCo’s sustainable development performance.

I would like to recognise the significant contribution of the team involved in preparing this comprehensive report. On behalf of The China Navigation Company thank you for your interest in our journey towards sustainability.

I am pleased to report that there was no incidence of non-compliance with environmental laws and regulations during the period covered by this report.

Our vision is to be the “leading provider of sustainable shipping solutions and our customers’ partner of choice”. With operational excellence as its guiding principle, the vision sets out clear objectives which, combined with our values, will help to guide the Company and our employees in all our operational and business activities. Our vision serves as the framework for our strategy and describes what we need to achieve in order to grow and develop our business along sustainable lines.

The 2013 Sustainable Development Report highlights the progress we have made over the last 12 months towards achieving “Net Zero” environmental impact. We are determined to reduce harmful emissions through technological innovation and we have made substantial capital investments in modern, highly fuel efficient ships for deployment in our regional liner and global dry bulk divisions. Our bulk logistics division continues to develop customised and innovative seaborne logistics solutions for customers in the Asia-Pacific region.

CNCo’s progress towards the development of a diverse, industry leading workforce continues to build momentum. Significant resources have been allocated to provide training and development opportunities to develop a professional and skilled workforce at sea and ashore. While our safety performance continues to improve (25% year on year), it is regrettable that 3 loss time injuries (LTIs) were reported in 2013. As the fleet expands, we will continue to develop a just culture to support our long term commitment to the principles of “Zero Harm”.

We pride ourselves on being original and forward-looking. We continue to seek innovative ways to minimise the impact of our business on the environment. In 2013 we took delivery of six S31-Class (31,000dwt) multipurpose vessels and two B.Delta39 (39,000dwt) handysize bulk carriers. Our newbuilding programme now extends to over 40 ships, including 12 multipurpose and 28 handysize vessels, which have been

The China Navigation Company (CNCo) is committed to promoting sustainable development within the shipping industry. This Sustainable Development Report for the year 2013 has been prepared in accordance with the Global Reporting Initiative’s Sustainability Reporting Guidelines (GRI 3.1 C+), with standardised data for ease of comparison with industry peers.

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SummarySustainable Development Plan 2014

STRUCTURAL

CNCo and its stakeholders will operate more sustainably and in a more integrated manner if they are working within a clear set of established policies and guidelines. In 2012, CNCo issued a Supply Chain Sustainability Code of Conduct. This is posted on our web site at: http://bit.ly/1GDKoJt

2013 TARGET: see Supply Chain Management below

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 / will be established in Australia and New Zealand. We have also established a pan-company operations Shore Safety Committee that meets monthly to review Health and Safety issues involved in onshore port operations.

2013 TARGET: The establishment of these groups will be extended to CNCo’s office in PNG and in New Zealand in 2013.

2013 RESULT: The establishment of these groups in New Zealand and PNG will be undertaken in 2015.

2014 TARGET: Increased support will be provided to Sustainable Development Steering Groups in our outports, following findings of our Alignment and Engagement Report, which found that SD initiatives may be overly focussed around Singapore.

For the past 5 years prior to 2013, CNCo produced an annual Environmental Report. With effect from 2013 report, we will build upon these and align them with the increased use of management metrics to produce a more detailed Sustainable Development Report that reports issues material to our key stakeholders.

2013 TARGET: A CNCo SD Report is to be produced to GRI 3.1 level C+ by June 2014.

This is to be used as the basis for formal Stakeholder Engagement during the early half of 2014 (and then annually thereafter) to determine whether our stakeholders feel that there are more (or less) material issues that should be reported, and thus whether subsequent reports should produced be to level B+ (or A+) in future years.

This is to be used as the basis for formal Stakeholder Engagement during the early half of 2014 (and then annually thereafter) to determine whether our stakeholders feel that there are more (or less) material issues that should be reported.

2013 RESULT: The CNCo 2013 SD Report has been produced according to GRI3 C+.

The 2012 report was used to inform internal stakeholder engagement. 2014 TARGET: CNCo’s SD Report detailing 2014 performance will be produced to GRI 4 (Core) by mid 2015.

Formal engagement with external stakeholders will be undertaken in 2015, in accordance with our Stakeholder Communications Plan, to inform the scope of our 2015 reporting.

In 2012, CNCo undertook a workshop-based Future Scenario Planning initiative, facilitated by Forum for the Future, to review a wide range of external factors that might influence our business going forward and our fleet renewal programme in particular. This process was designed to form the basis of an ongoing annual review of corporate strategies against sustainability risks and opportunities.

1

1.1

1.2

1.3

1.4

Agenda and KPIs achieved in 2013 and set for 2014

Our 2014 SD Plan was developed at the end of 2013 to guide our sustainability activities during 2014. In this section we report both historically on the RESULTS we achieved against our 2013 TARGETS, and then look forward to detail the TARGETS we planned to undertake during 2014. In the few cases in which we missed some targets in 2013, we carried them forward to remain as targets in 2014.

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2013 TARGET: Hold a “20420” offsite meeting annually, inviting the 20 managers who will be responsible for the delivery of our 2020 strategic objectives. This will start in January 2013, to build on the Future Scenario Planning outputs of the Strategic Risk and Opportunity Registers and develop a Strategic Balanced Scorecard up to the year 2020 that will contain shorter term goals up to the year 2016 and KPI metrics to determine CNCo’s progress in getting to these goals. These internal goals mesh into the longer term industry-wide Vision 2040 to which we have signed up with the Sustainable Shipping Initiative; “for a sustainable shipping industry in 2040”.

2013 RESULT: A strategic balanced scorecard was developed by CNCo management during the “20420” Strategic Offsite meeting in January 2013.

2014 TARGET: To continue the programme of strategic review offsite meetings in January 2015 and beyond, with a view to maintaining a sustainable path and focus for the business.

Increasingly we recognise that areas in which we work may have potential Environmental Issues and Human Rights Issues. We wish to exercise the highest operational standards in these areas both from the point of view of the general public good and for enlightened self-interest.

2013 TARGET: We will work over 2013 to establish a set of guidelines as to when an Environmental Impact Assessment (“EIA”) and / or a Human Rights Impact Assessment (“HRIA”) should be conducted.

2013 RESULT: Guidelines were not developed in 2013 as CNCo did not enter into any new areas or localities where this might be required. This target will be carried forward to 2015.

2014 TARGET: By end of 2015, we will establish a set of guidelines as to when an Environmental Impact Assessment (“EIA”) and / or a Human Rights Impact Assessment (“HRIA”) should be conducted and a broad structure for the assessments.

Summary: Agenda and KPIs achieved in 2013 and set for 2014

1.5

In 2012, CNCo implemented a “5S” methodology to improve health and safety and general housekeeping in our offices and on our ships, The “5S” Methodology is a workplace organisation methodology that defines how to organise a work space for safety, efficiency and effectiveness by identifying and storing the items used, maintaining the area and items, and sustaining the new order that uses a list of five Japanese words: “seiri, seiton, seiso, seiketsu, and shitsuke”. Translated into English, 5S phases are: “sort, sweep, set in order, standardise and sustain”.

2013 TARGETS: • 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 Challenger and Miho class fleets fully compliant. • To have a focus on 5S included in our in house Safety Awareness Courses. • To have a 5S check during all ship managers’ technical inspections. • To achieve a reduction in near misses relating to “defective tools” and “poor housekeeping” by 50 % from the 2012 baseline • To achieve 100% accuracy in 5S store rooms for spare parts against the Amos inventory

2013 RESULT: We made good progress towards these stretching targets in 2013, with all new S-Class vessels fully compliant on delivery, and achieving a reduction in near misses relating to “defective tools” and “poor housekeeping” by 50% from the 2012 baseline.

Progress on other 5S targets has been more difficult than first anticipated. A Computer Based Training (CBT) programme was produced and sent to every ship to clarify the importance of the 5S imitative. The time line for implementation was extended to the end of 2014 and further extended to the end of 1 Quarter 2015 for the Miho ships.

1.6

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ENVIRONMENTAL IMPACT

CNCo has committed to taking action to move its operations towards having a net zero environmental impact. CNCo is also mindful of the harm pollutants can do to the marine environment. It is thus critical that CNCo does all it can, technically and operationally, to observe all the requirements of MARPOL regulations and to prevent the release of substances that are deemed harmful and hazardous to the marine environment.

2013 TARGETS: Achieve Zero spills of pollutants hazardous to the marine environment.

2013 RESULT: 2 spills occurred in 2013, resulting in 1 litre of hydraulic oil and 20 litres of sludge entering the sea. The more significant of these, a spill of 20 litres of sludge occurred during a transfer of sludge to shore from Highland Chief at Honiara port on 5th May 2013. The relevant authorities were duly notified. Any harmful effects of the spill were successfully mitigated through absorption of the spilled sludge by the ship’s staff and the 3rd party sludge collectors. As a result of this incident, we modified our safety management system to ensure that a thorough checking of 3rd party oil or waste hoses is carried out before and during every hydrocarbon transfer, as well as asking for the temperature limitations for the hose.


2

3

3.1

LTI

RWC / MTC

NEAR MISS

TRIP

0.012 / Per Ship / Per Month



103 / Per Ship / Per Month

Safety Pyramid

25,956

1,187

6

3

2013 Jan 2013 - Dec 2013 / 21 Ships

HEALTH AND SAFETY

CNCo is commited to Zero harm. Whilst logically reported within the Sustainable Development discipline, given its “mission-critical” importance it has its own dedicated department. The fundamental target for CNCo is that no harm shall be suffered by its employees or the marine environment. This is managed within our Health, Safety and Environmental Management System.

2013 TARGET: Incur a Total Recordable Case Frequency (“TRCF”) of no more than 4.0

Increase the number of Near Miss and Toolbox Risk Identification Permits (“TRIP”) Reports by 10% over the figures for 2012

Reduce the Port State Inspection Deficiency Rate to < 2.0 in 2013.

2013 RESULT: 3 LTIs occurred on 2013, which exceeded our target of Zero. However, this maintains the improvement from 9, to 4 achieved in 2012.

We achieved our target of a Total Recordable Case Frequency of no more than 4, with a TRCF of 2.47 per million in 2013. This also marks an improvement over 2012 (3.5 per million). We increased (improved) our TRIP report by 20.1%, from 21,609 in 2012, to 25,956 in 2013 against our target of 10% increase.

Our Port State Inspection Deficiency Rate of 1.78 remained below 2.0 our target for 2013, although it showed a slight increase from 2012 (1.38).

2014 TARGET: Achieve Zero LTIs,

Suffer a Total Recordable Case Frequency (“TRCF”) of no more than 4.0,

Increase the number of Near Miss and Toolbox Risk Identification Permits (“TRIP”) Reports by 10% over the figures for 2012

Reduce the Port State Inspection Deficiency Rate to < 1.80 in 2013.

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2014 TARGET: Achieve Zero spills of pollutants hazardous to the marine environment.

The Singapore Environment Council runs an Eco-Office Certification scheme that assists businesses to run their office premises in a more sustainable and environmentally responsible way. CNCo successfully achieved EcoOffice in 2012. EcoOffice is currently only available in Singapore, however, other schemes are available globally, such as BEAM (Management and Operation) and LEED for Existing Buildings.

2013 TARGET: CNCo Head Office will retain Eco-Office certification through 2013 (ongoing). All other CNCo offices outside Singapore will be encouraged to adopt the same good practices using a similar scheme locally or without formal certification where this is not appropriate.

2013 RESULT: CNCo’s head office Eco-Office certification is valid until 2014. No other offices have certified to EcoOffice or similar.

2014 TARGET: CNCo Head Office will retain Eco-Office certification on an ongoing basis.

All other CNCo and Swire Shipping offices in New Zealand and Australia will be encouraged to adopt the same good practices using a similar scheme locally or demonstrate compliance with the principles of Eco-office or similar without formal certification where this is not appropriate. We will report on this in our 2015 report.

CNCo is under-going a fleet renewal programme. This will entail the retiring ships to be recycled. Conditions in many recycling yards, with respect to both worker safety and responsible disposal of hazardous waste, are considered unacceptable and not in accordance with the highest, fully achievable, international standards. In 2012, CNCo adopted a Responsible Recycling Policy that requires CNCo vessels being recycled to be sent only to yards that are independently certified to. These will include as a minimum ISO 9001, ISO 14001, OHSAS 18001 (or alternately ISO 30000), and compliance with the principles underlying both the EU Recycling Guidelines and the HK Ship Recycling Convention (whether or not either is yet ratified). 4 ships were Responsibly Recycled at the beginning of 2012.

2013 TARGET: To continue to observe this policy for any and all CNCo vessels that are sent for recycling in 2013, and to work with the yards to achieve a higher level of conformance against independent 3rd party auditing by LR than was achieved in 2012.

2013 RESULT: MV Erawan – see page 31

2014 TARGET: To continue to work with the SSI working group to establish the gaps that exist at selected beaching yards in South Asia and thus identify what must be done to bring them up to an acceptable standards.

In addition to 3.3 and looking at the long term future, CNCo is a member of the Sustainable Shipping Initiative (“SSI”) Steering Group. The SSI has a Vision for a sustainable shipping industry in 2040 that is designed to help the industry make long-term plans for future success. An industry with long-lived assets needs long-term thinking, and the SSI aims to help members think beyond the next regulation or design tweak.

Over the 18 months from April 2012 to Oct 2013, CNCo worked with the SSI’s “Closed Loop Material Management” (CLMM) work-stream. This sought to “Implement systems to trace and increase accountability of ship building materials and their sources, with the ultimate aim of having end-to-end responsibility and accountability for these materials”.

2013 TARGET: CNCo to present on the learning points from the CLMM project, to the Tradewinds Ship Recycling Forum in Dubai in Q1 2013.

CNCo and all other SSI members to report back on the various pilot workstreams to an industry event in Singapore in September 2013.

2013 RESULT: CNCo presented the results of the CLMM work in Dubai in Q1 2013, and the presentation was well received.

2014 TARGET: Following the completion of the CLMM work, in 2014-15 CNCo will use the results of the study to inform a Natural Capital Valuation of ship recycling. Data will be used to assess future ship recycling options and policies and presenting opportunities feed-back into ship design.


3.2

3.3

3.4

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Rightship – an industry body, has established an index to quantify the environmental design performance of existing ships (EVDI™) as the IMO standard (EEDI) only refers to ships delivered post 01 Jan 2013. IMO also has a standard for measuring the operational efficiency of existing ships (EEOI).

2013 TARGET: On the principal that what is not measured cannot be managed efficiently, CNCo will develop internal targets for operational efficiency of existing owned and chartered ships plus criteria for selecting ships to charter based on the environmental and energy efficiency of their design. These targets will be based on 2012 baselines and will be set to become more stringent over time towards 2020.

2013 RESULT: CNCo has adopted “EEOI” as our standard measure of ship operational performance, and have established a baseline EEOI of 31 as an average across our Liner fleet (2013) and 6.76 for our bulk fleet (2013).

CNCo has adopted EEDI and EVDI (where the latter is possible; it has some inherent inaccuracies for some ships in our niche sectors) as our standard measures of the design performance of our ships.

We are pleased to have adopted stretching targets against these metrics, meeting our 2012 commitment.

2014 TARGET: We commit to demonstrating progress towards achieving a consolidated annual EEOI index at >=50% better than the baseline by 2020, with an interim target of >=80% by 2016.

We are aiming to achieve, for all relevant liner and bulk vessels:

- EEDI compliance index at <=80% better than the IMO baseline delivery to CNCo - EVDI rating >= ‘C’

SUPPLY CHAIN MANAGEMENT

CNCo recognises that it is not enough for organisations to conduct their own business responsibly, but that it is critical that we ensure that our suppliers also operate to a minimum set of standards. In 2012, CNCo adopted a Supplier Code of Conduct, referred to in 1.1 above.

In addition to CNCo issuing its Supply Chain Sustainability Code of Conduct the company also took the proactive step of issuing one of the industry’s first “Responsible Carriage of Cargo Policy” (For more details on this see the Environmental Impact Mitigation Section, EN26).

2013 TARGET: CNCo will work with suppliers with whom we have a total annual spend of > USD 1 million who are assessed as presenting a higher risk of non- compliance, to assure ourselves of the level of compliance and to establish such follow-up action with the suppliers as is required to reduce non-compliance.

2013 RESULT: No audits or other supplier engagement was undertaken in 2013 to ensure compliance with our Supply Chain Sustainability Code of Conduct or “Responsible Carriage of Cargo Policy”, due to prioritisation of resources.

2014 TARGET: In 2015, CNCo will work with suppliers with whom we have a total annual spend of > USD 1 million and who are assessed to have a potentially higher risk of non-compliance to assure ourselves of the level of compliance, and to establish such follow-up action with the suppliers as is required to reduce non-compliance.

CORPORATE PHILANTHROPY

CNCo is committed to target this as Strategic Community Investment for term projects that are sustainable, working with partners on projects that are aligned with our business, in communities where we can leverage the effect of our investment.

Our existing Corporate Philanthropy (“CP”) Committee will continue to work with all CNCo offices to identify projects or partner organisations that meet our internal guidelines.


3.5 4

4.1

4.2

5

5.1

13


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 greater alignment in 2013.

CNCo wishes to ensure that its Corporate Philanthropy delivers the highest levels of social and environmental impact for the investment made, and will begin a project to develop metrics to measure Social Return On Investment (SROI). This is a nascent field, on which there is much ongoing research being undertaken, and this is therefore anticipated to be a long-term project.

2013 RESULT: CNCo developed a Social Return on Investment methodology, which was used in the assessment of our philanthropic funding to Papua New Guinea Maritime College.

The publication of our “Employee CP Paid Volunteer Day Policy” has been delayed to 2014.

We are delighted to report that two CNCo teams completed the Sailors’ Society Mt Kinabalu Fund-raising Challenge 2013, and we plan to continue support our staff who wish to participate in this event in future years.

We continued to support the Maritime College in Madang, Papua New Guinea. However we recognise that more management support is required to optimise positive impacts, which was not available due to management changes in 2013-14. This will be pursued in 2015.

2014 TARGET: We will continue to assess our relevant Corporate Philanthropy projects against SRoI criteria, and will update and improve our methodology for doing this as we learn lessons from its use. We will publish our Employee CP Paid Volunteer Day Policy” in 2014.


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We believe that outside our home base of Singapore and particularly in our key stakeholder communities of the Pacific Islands, there is also a wealth of potential talent. Over and above our support of time, money and resources to the Maritime College in Madang, PNG detailed in 5.1 above we seek to establish long-term, mutually beneficial relationships with our other partners and stakeholder communities, particularly in the youth and education areas that are aligned to our business.

2013 TARGET: CNCo’s HR and Fleet Management departments will work to establish cadetships for 15% of CNCo’s annual requirement from suitable candidates in key developing communities in Asia Pacific region by the end of 2016, increasing to 25% by the end of 2020.

2013 RESULT: Recruitment ongoing to meet the target by the end of 2016.

2014 TARGET: CNCo’s HR and Fleet Management departments will continue to work to establish cadetships for 15% of CNCo’s annual requirement from suitable candidates in key developing communities in Asia Pacific region by the end of 2016, increasing to 25% by the end of 2020.


6.2EMPLOYER OF CHOICE

Singapore is seeking to establish itself as a Maritime Hub, with 26 separate Institutes of Higher Education offering young Singaporeans courses in a wide range of maritime disciplines. CNCo Head Office is a) under-represented with local managers and b) committed to support Singapore’s intention of being a Maritime Hub. CNCo already supports the supply of short-term internship places to between 6-8 maritime undergraduates each year.

In 2012, CNCo interviewed a number of potential undergraduates from NTU under the “SMFOne Scheme” and selected one Engineering Management Trainee who started with us after she graduated in mid-2013. It is hoped that this can become an entry stream for future local managers.

2013 TARGET: CNCo will sponsor a number of both commercial and engineering undergraduates under the Singapore Maritime Foundation “SMFOne Scheme”.

2013 RESULT: One Singaporean undergraduate studying at Newcastle University was found suitable for recruitment from the Singapore Maritime Foundation “SMFOne Scheme” for sponsorship in 2013 and joined CNCo at the start of 2014.

2014 TARGET: In 2015, CNCo will seek to sponsor a number of both commercial and engineering undergraduates under the Singapore Maritime Foundation “SMFOne Scheme”.

6

6.1

15


Detail

In this section we provide more detail on a wide range 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:

16 Sustainable Development Policy

17 Governance

20 2013 Financial Summary

21 Economic

26 Environment

40 Labour

48 Human Rights

49 Society

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16


DetailSustainable Development Policy

New Sustainable Development Policyhttp://bit.ly/1GDKIYs

OUR POLICY

Industry leadership: We aim to be leaders in sustainable development in the industries in which we operate.

In our operations: We will:

• Be a good steward of the natural resources and biodiversity under our influence and ensure that all potential adverse impacts of our operations on the environment are identified, mitigated where possible and appropriately managed.

• Do our best to safeguard the health and safety of all our stakeholders.

• Provide an environment in which all employees are treated fairly and with respect and can realise their full potential.

• Encourage suppliers and contractors to promote sustainable development.

• Encourage the responsible use of our products and services by our customers and consumers.

• Bring value to the communities of which we are a part and enhance their capabilities while respecting people’s culture and heritage.

Making it happen:

• All companies in which The China Navigation Company has a controlling interest will have action plans for applying this policy in a way which is relevant to their business. We will encourage other companies in which we have an interest as a shareholder or through our supply chain to implement similar policies.

• We will encourage and empower our staff to be proactive on sustainable development matters both at work and in the community.

• We will monitor our performance and report regularly.

• We will review this policy periodically, having regards in particular to stakeholder dialogues.

We adopt this policy because:

We aim to create long term value for our shareholders. Achieving this depends on the sustainable development of our businesses and the communities in which we operate.

To achieve sustainable development, we aim:

• To achieve net zero impact on the environment;

• To cause zero harm to our stakeholder communities and assets under our stewardship;

• To excel as corporate citizens.

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DetailGovernance

The China Navigation Company Pte Ltd. (“CNCo”) is a Singapore registered company that is a wholly owned subsidiary of The China Navigation Company Limited registered in London. Neither company is publicly quoted on any stock exchange. As can be seen from the Organisational and Operational Boundaries diagram (see page 3), The China Navigation Company Limited is also the parent company for Swire Shipping branded agency companies in Australia, PRC, Hong Kong, New Caledonia, New Zealand and Taiwan. It also has a 50% share in Swire CTM Bulk Logistics Limited, a joint venture with C Transport Maritime SAM registered in Monaco, a 25% share in Mandarin Shipping Limited registered in HK and is the managing shareholder of Quadrant Pacific Ltd., one of New Zealand and Fiji’s leading shipping agency and logistics companies.

The parent company’s Board of Directors is the highest level governance and oversight body and this sets strategy for its subsidiary companies. The (Non-Executive) Chairman of

the Parent Company Board of Directors is Mr. Barnaby Swire. The CNCo Board of Directors provides organisational oversight and comprises 8 members of whom 4 are non-executive directors and of these 2 are independent.

CNCo has a high level Sustainable Development (SD) Steering Group composed of the MD, the Fleet Health, Safety, Security and Environmental Manager, the Global Operations Manager for Swire Shipping (and head of the Shore-side Safety Committee) and the GM for SD. This committee meets quarterly in Head Office in Singapore and reviews all strategic aspects of SD, in particular Health, Safety, Environment, Social and Governance issues. Below this there are SD Working Groups which comprise cross-functional representatives also meeting quarterly (between the SD WG meetings) in the Head Office in Singapore and main regional offices of Sydney and Auckland. These seek to act operationally on the guidance and strategy emanating from the SD Steering Group.

The shareholders are directly represented on the CNCo Board of Directors and they use this forum to give governance direction to the company. Whilst CNCo has no direct public shareholders, it seeks to comply with the relevant sections of the Codes on Corporate Governance Practices issued by the London and HK Stock Exchanges and has its own internal Code of Conduct covering ethical standards which are available here http://bit.ly/18vDFT7

This compliance is in line with our belief that it is imperative to act with probity, transparency and accountability in order to achieve our long-term objectives. Our Board is committed to maintaining and developing robust corporate governance practices and conducting regular internal reviews that ensure:

• satisfactory and sustainable returns to its parent company;• the interests of stakeholders are safeguarded;• that overall business risk is understood and managed appropriately;• delivery of high-quality services to the satisfaction of customers; • and that the highest standards of ethics are maintained.

The above are all encapsulated in our Vision Statement, which can be found here:http://bit.ly/1NHYV90

Our absolute requirement for probity, transparency and accountable conduct in all business affairs is highlighted to all of our new onshore staff on joining. A hard copy of our Code of Conduct detailing the ethical and responsible way we expect all of our staff to conduct themselves is given to each new employee within their induction in the first week. Once every two years they will then be sent a link to a web based Code of Conduct video, FAQ and then an awareness test in which they are coached to get 100% if they fail to score this at their first pass. We are planning to produce a company specific video explaining our Code of Conduct during 2014.

The DPA has been an internationally legally required position since 1993, peculiar to the shipping industry under the ISM code, wherein every Company must designate a person or persons ashore having direct access to the highest level of management. The responsibility and authority of the designated person or persons includes monitoring the safety and pollution prevention aspects of the operation of each ship and ensuring that adequate resources and shore-based support are applied, as required.

CNCo has a high level Sustainable Development (SD) Steering Group composed of the MD, the Fleet Health, Safety, Security and Environmental Manager, the Global Operations Manager for Swire Shipping (and head of the Shore-side Safety Committee) and the GM for SD.

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We have included other relevant additional information herein which supports the commitment that our activities and commitments to Sustainable Development are considered material to the way we run our business and as such are an integral part of our strategic and operational decision making processes.

This is achieved by the General Manager SD having direct reporting responsibility to the Managing Director, building on his wide experience within the shipping industry, both at sea and onshore, plus being able to provide input in the early stages of all strategic decision-making where SD issues may be relevant as he is a full member of the Executive Committee that meets weekly to review all existing and planned future business operations.

This is further enhanced by five annual off-site meetings (one detailed below and one held two weeks after each board meeting) in which strategic issues that have sustainable impacts are fully and freely discussed by the entire Executive Management Team.

No specific stakeholder engagement was undertaken in relation to the production of this document, our second full SD report, although we obviously do conduct formal service quality reviews with all our major customers on a regular basis throughout the year.

In early 2013 we established a materiality matrix (see page 19) at our annual Sustainability and Strategy meeting and this has been partially used for this report as we transition from GRI 3.1 compliance to full GRI 4 compliance for the 2014 report. We are also constructing a Key Stakeholder Communication matrix and will use this to engage with our key stakeholders on the subject of issues that are material to them.

Detail: Governance

Our activities and commitments to Sustainable Development are considered material to the way we run our business and as such are an integral part of our strategic and operational decision making processes.

19


DetailMateriality Matrix

1 2 3 4 5 5.5

Importance to Business

6 7 8 9 10

1

2

3

4

5

5.5

6

7

8

9

10

Imp

ort

ance

to

Sta

keh

old

ers

Whale Strikes

Wages & Benefits

GHG & Air Pollution

0.5% Sulphur Fuel Cost

Customer Compliance

Corporate Philanthropy

(SROI)

Human Rights

Tax

Tier 3 NOx Fuel Issue

Ship Recycling

Labour & Living Conditions

Vessel Discharge & Ballast Water

Lobbying

Weather Events

Indonesia Development Opportunities

Business Structure

Impact of Global MLOs on our Region

Regulations

CSR Governance & Maintenance

System

Industry Collaboration & Partnership

Energy & Fuel Efficiency

Infrastructure Development Network

Optimization (Shipping Logistics)

Talent Management

Diversity & Inclusivity

Labour & Living Conditions,

Wages & Benefits

System Optimization

Entry of Low Cost Operators Stakeholders

Engagement

Ship & Personnel Security

Potential for Growth in China &

Other Regions

Major Oil Spill

H & S

Communication

Spill & Leakage Prevention &

Response

Anti Corruption Bribery & Government Payment Disclosure

Corporate Governance CSR Local

Hiring

Counter Party

Community Involvement

Political Stability

PNG & PI Export Opportunities

Affecting / mitigating / building on this factor is > 66% within the control of CNCo. Generally driven by CNCo.

Affecting / mitigating / building on this factor is > 33% and < 66% within the control of CNCo. Requires input from both parties.

Affecting / mitigating / building on this factor is < 33% within the control of CNCo. Generally driven by 3rd parties.

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Detail / Economic2013 Financial Summary

Financial CommentaryCNCo Pte Ltd reported a profit for the period 01 Jan to 31 Dec 2013. During 2013 the majority of revenue was derived from the liner shipping division that operates under the Swire Shipping brand. The liner business performed better than budgeted but continued to work under a very challenging environment and continuously seeks to improve freight rates/ cargo mix and route optimisation. Swire Shipping operates its fleet in its traditional core trading area within the Pacific Ocean, but offers a full shipping service, linking over 130 ports across Asia, the Pacific Islands, Australia, New Zealand, North America, Europe, the Middle East and the Indian Sub-Continent.

CNCo set up Swire Bulk, a new division concentrating on eco-efficient handysize dry bulk carriers in late 2012 to develop long term relationships with cargo charterers and industrial shippers who ascribe value to sustainable shipping and with whom the economic and environmental advantages can be shared.

In 2013 Swire Bulk operated out of offices in Singapore and Australia, with plans to expand its network to Japan, UK and USA in 2014. Swire Bulk covers both the Pacific and Atlantic basins focusing on bulk cargoes such as grains, fertilisers, steel, forest products, sugar, concentrates etc. In its first year the Swire Bulk division contributed to approximately 3% of the CNCo group’s total revenue.

In 2013, CNCo also generated revenue from Swire Bulk Logistics through the operation of

the panamax trans-shipper, MV Erawan, in Papua New Guinea.

Total administrative costs remained in the area of 10% of revenue.

InvestmentFleet renewal and capacity management remained the company’s key focus as part of the continuous programme to improve customer service and profitability. Since the commencement of the fleet renewal plan in 2010, the Company has ordered 8 x 31,000dwt multipurpose vessels, 4 x 22,000dwt multi-purpose vessels, 24 x 39,000dwt B.Delta handysize bulk carriers and 4 x 38,000dwt Imabari handysize bulk carriers.

In 2013, CNCo took delivery of six 31,000 dwt multipurpose vessels (S-Class) specifically built for deployment within Swire Shipping’s Asia Pacific network of trades, with the final two due for delivery in early 2014. During the year, CNCo also acquired 3 second-hand B170 container-feeder vessels in support of its liner shipping business. All of these vessels are deployed across Swire Shipping’s network of 11 liner trades and are supplemented by a chartered fleet of a further 10 vessels at any one time.

CNCo also took delivery of two B.Delta39 bulk carriers in 2013 as part of its planned expansion to a complementary fleet of approximately 24 owned vessels within a total controlled fleet of 50 owned and long-term chartered ships by 2018.

CNCo Pte Ltd reported a profit for the period 01 Jan to 31 Dec 2013. During 2013 the majority of revenue was derived from the liner shipping division that operates under the Swire Shipping brand.

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Detail / EconomicRisks and Opportunities Due to Climate Change

However going hand-in-hand with the above operational risks to our business are the operational opportunities for our business. CNCo contracted with Forum For the Future (FFF) to conduct a series of Future Scenario Planning workshops in 2012. These established a number of credible but stretching scenarios for the world in which we live and do business up to 2030, and from these we developed a Strategic Opportunity Register.

We convene 20 of the senior managers of CNCo each year to review this Strategic Opportunity Register, our Vision, Values and SD Policy for relevance against the possible output scenarios and to identify the direction/s we should be investing in and any potential downsides that we need to manage.

Both of the scenarios that were developed at the workshop in 2012 were bound directly with climate change issues and indirectly with the effects of climate change in the patterns of trade that our business supports in the Asia Pacific region over the future life of the ships that we have delivered in 2013 and others that we will be committing to build in future years.

As far as our business today is concerned from a regulatory point of view, our vessels emit NOx and SOx as a by-product of combustion in the vessels’ engines and the allowable limits of these pollutants are being progressively reduced under the governing legislation in MARPOL Annex VI. The level of emissions is a function of engine design and the fuel specification they use. Our vessels generally consume 3.5% sulphur content

The senior management body in CNCo considers the various aspects of climate change and our mitigation of the anthropogenic drivers on which we have a handle on a continuing basis and for future new projects and business areas where relevant. CNCo senior management seeks a) to have an action plan for both identifying high priority Sustainable Development issues, mitigating them where possible and managing those parts that cannot be viably mitigated and b) when considering any capital investment to review the GHG footprint of the investment and how this can be mitigated to as low a level as reasonably practical. CNCO has committed to moving to a “net zero environmental impact” and the above will form a critical part of this.

We do not currently foresee many risks to our core business due to physical changes associated with anthropogenic climate change.

Changes in sea level do not have a net effect on vessels floating on the surface. When ships are alongside in port they may experience lower freeboard at the jetties but these have always varied over the diurnal tidal cycle, and will continue to be managed operationally. The most significantly threatened port that CNCo currently serves is Tarawa, an atoll in the central Pacific Ocean, and which is the location of the capital of the Republic of Kiribati, South Tarawa. The President, Anote Tong has said:

“Although in most of the world there is some time to plan and prepare for climate change, we are the first to feel its effects as a direct threat to continued life in our country. We are among the most vulnerable of the vulnerable. Even a marginal increase in sea levels will be disastrous for our country’s future. It is doubtful that any other country feels the effects of climate change as much as we do. In Kiribati, the entire nation faces real danger—our own survival is at stake as a people, as a unique and vibrant culture and as a sovereign nation”.

With CNCo’s commitment to moving towards having Net Zero Environmental Impact, we are playing our part to reduce the cause of sea level rise and its effects on places such as Kiribati.

Any increase in severe weather events may increase downtime on a like-for-like basis, but this can generally be countered by working with shippers to optimise scheduling in the face of such frequency increase.

Any shift in climatic zones will affect global food chains which, given the cargo volume of food and forestry products that we carry such as rice, coffee and timber, will directly impact our business operations and network of routes.

•

•

•

22


grades of residual fuels such as Intermediate Fuel Oil (IFO) and Heavy Fuel Oil (HFO) whilst in transit at sea, but switch to using distillate Marine Gas Oil (MGO) - which typically has a sulphur content less than half that of IFO/MGO, and which can be as low as 0.2-0.5%, both when in Hong Kong port limits because of our membership of the “Fair Winds Charter” (this has been voluntarily adopted by around 17 shipowners to reduce SOx air pollution in the Pearl River Delta) and in the local statutory Emission Control Areas (ECAs) such as those that have been established on the West Coast of North America.

This involves a classic split incentive issue, with a cost of using the lighter fraction, lower sulphur distillate fuel to CNCo with the benefits being borne by the communities close to the port areas in Hong Kong, Long Beach and Singapore. CNCo has supported the call by the Fair Winds Charter secretariat and others for the HK Government to legislate our voluntary reduction into regulation to create a level playing field and this has borne fruit. The Hong Kong government announced in late 2013 that it will make switching to low sulphur fuel mandatory for vessels at berth from 2015 — the first Asian port to do so. A draft Bill that requires sulphur content to be no more than 0.5% will be tabled at the Legislative Council for a vote in mid-2014. Far thinking governments, including Singapore’s have Green Funds that are used to offset some of the port charges for vessels that switch to burning low sulphur fuels in their engines, although the offset does not in any way cover the current extra cost of using lower sulphur fuel.

Levels of NOx and SOx emissions are certified for each vessel by independent Classification Societies in accordance with limits laid down by UN International Maritime Organisation (IMO) under MARPOL Convention Annex VI. All our vessels are fully compliant with this. The revised Annex VI came into force on 1 July 2010.

We have invested significantly in a Kongsberg Vessel Performance System package, which includes “Marorka” software, for all our new ships. This gives dynamic real-time fuel performance of the main engine and auxiliaries, at all alarm and monitoring workstations, i.e. the bridge, E/R control room and cargo office. This then enables us to optimise our fuel consumption by maximising the energy efficiency of the ships while minimising their negative environmental impact. All the new vessels delivered in 2013 and beyond have Class-approved Energy Efficient Design Indices (EEDI) and we have produced Ship Energy Efficiency Plans (SEEMP) for all of our existing ships, prior to it being required by legislation.

We also record LO consumed on our owned and chartered vessels. “LO” covers the complete range of grades of lubricating oil and 100% by volume of the total LO usage we have reported is actually consumed in internal combustion engines and converted into GHG which is emitted to atmosphere. We thus use this figure and an average specific gravity of 0.9 across all grades to convert total LO recorded and consumed in litres into GHG emissions in tCO2e.

Detail: Economic − Risks and Opportunities Due to Climate Change

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Detail: Economic − Risks and Opportunities Due to Climate Change

Regrettably none of the UNFCCC CoP meetings over the past 5 years has achieved sufficient consensus to produce either a legally-binding or global convention for Annex 1 (developed) and non-Annex 1 (lesser developed) countries to achieve limitation of GHG emissions to cover the period post Kyoto Phase 1 after the end of 2012. We continue to move forward incrementally towards what we hope will be an ambitious and equitable 2015 agreement at UNFCC CoP 21 in Paris to cover the Kyoto Phase 3 post 2020.

GHG emissions from shipping are already (in Australia and New Zealand) regulated by national “cap and trade” Emissions Trading Schemes (ETSs), though the degree of will to enforce these wavers with the perceived local political imperatives of the hour, which is certainly not the ideal way to achieve a global reduction in anthropogenic GHG emissions over the long-term. The Labour opposition in Australia has said it will repeal the ETS if it achieves a majority at the next general election.

After the EC threats to impose an EU-ETS on shipping unless there was agreement at IMO by the end of 2011, which were then put on hold whilst all parties watched to see if aviation could achieve a global emission reduction scheme at ICAO, the clock has been stopped, but not put away. Sectoral regional schemes such as an EU-ETS in the absence of an IMO governed global scheme will introduce unnecessary unwanted and additional costs and complexity. However we firmly believe that the solution is to accept that every party has a liability for external costs, which has been historically

ignored, and not to support and favour a procrastinating compromise as the world witnesses clear evidence that anthropogenic global warming is real, and becoming more and more to halt and reverse. This evidence has been accepted by an overwhelming body of scientific experts in the field.

CNCo is working on reducing as much of the Scope 1 and 2 GHG footprint for its vessels operationally as possible, as with the introduction of ETSs, ECAs and SECAs globally there will be increased financial cost implications with compliance. Our journey towards Net Zero Environmental Impact will be assisted practically however by our achievement of step-change reductions in our footprint through our significant capital investment in new vessels of advanced designs and the sustainable recycling of our older tonnage.

CNCo is working on reducing as much of the Scope 1 and 2 GHG footprint for its vessels operationally as possible

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Detail / EconomicFinancial Assistance from Government

Only one instance of financial assistance was received from CNCo’s host government (Singapore) in 2013:

This was a PIC (Productivity and Innovation tax Credit) that was introduced in the Singapore Budget 2010 to provide enhanced tax deductions and investments in broad range of innovation value chain activities of SGD 75,000. This assistance related to our investment in server equipment and licenses for our corporate intranet system.

No assistance was received from MPA under the MINT scheme for enhancing performance of new ships.

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Detail / EconomicLocal Purchasing Policy

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 from our headquarters in Singapore when making purchases.

CNCo is registered under the Approved International Shipping Enterprises (“AIS”) Scheme, which is aimed at building up a critical mass of shipowners and managers which will eventually develop Singapore into a maritime centre. Under the AIS Scheme, “local spending” is defined as that invoiced by a Singapore registered entity. This is audited by the Singapore Tax Authorities and this is the basic definition and source of figures that are reported herein.

However because the basic data are skewed by the company’s spend on:

1 fuel and lubricating oil, supplied where/when required (often outside Singapore, but invoiced in Singapore)

2 for material amounts of charter hire invoiced by charterers or brokers who may have offices here, and

3 the total funds remitted to shipyards as we build new ships to renew our fleet is very significant

We have followed herein the local spending reporting methodology reported in previous years and these three line items of effectively non-discretionary spending are excluded, then CNCo’s more “discretionary”, true local (non-Fuel, Ship-building, 3rd Party Charter Hire) spend as a percentage of the total (non-Fuel, Ship-building, 3rd Party Charter Hire) is 21.24%.

This shows that over a fifth of our total annual spend is from suppliers in the country of our operational headquarters. This all adds value to Singapore’s economy, whilst simultaneously allowing us to foster a close working, and hopefully long-term, relationship with our key suppliers.

CNCo currently has no explicit policies directing spending to locally-based suppliers. This is in large part a practical acceptance of the fact that as the consumers of the goods and services - the ships, are continually mobile, so the supply of (non-OEM) products will be driven by the imminent location of a vessel as its particular need/s arise. As our Bulk Division increases in size and trades globally, we would expect the local purchase percentage to decline slightly over the next few years before plateauing out again.

The company however certainly does have procedures for vendor selection to ensure control is maintained over the quality of goods and service supplied by vendors. This is primarily to ensure that goods affecting either the safety of or prevention of pollution from our ships are of the correct quality and are delivered in a timely manner. The procedures require not only that the vendor meets the company’s requirements and ISO or equivalent accreditation, but that those who have an environmental policy and show a positive attitude to environmental protection will be preferred during the selection process.

We continue to conduct evaluations on all suppliers seeking to be selected or retained as a primary vendor and will start to undertake site audits to examine their environmental performance and compliance with safety and MARPOL regulations once we are suitably resourced. In addition, the company follows the recommended best practice of the Swire group and (re-)evaluates at least the top 100 most used vendors every 36 months. In 2013 we started to conduct a business process review of our purchasing processes to ensure that they are fit for purpose to support our expanding business divisions cost effectively, responsively and responsibly.

We plan to employ a dedicated CNCo Group Purchasing Manager in 2014 and devote significantly more resources to this important area. This will help to ensure that a) our shareholders get more value for money and b) we can reduce our core supplier base to those who strongly support our corporate sustainability objectives.

In 2013 we started to conduct a business process review of our purchasing processes to ensure that they are fit for purpose to support our expanding business divisions cost effectively, responsively and responsibly.

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Detail2013 Environmental Summary

Virtually all of CNCo’s significant environmental impacts are due to transportation used for logistical purposes and these are reported separately in this section (corresponding to GRI indicators EN3, EN4) and in more details in EN29, “Environmental Impacts of Transporting Goods”.

2010 2011 2012 2013

Total vessels (owned and managed/operated) as at 31 Dec 34 35 15 (plus 16 u/c) 24 (plus 26 u/c)

Scope 1 & 2 GHG emissions (tCO2e) (iaw GHG Reporting Guide)

661,041 690,242 610,558 625,426

Emissions from marine fuel (99.8% marine fuels) (99.8% marine fuels) (99.8% marine fuels) (99.9% marine fuels)

EEOI - liner fleet 31 30

EEOI - bulk fleet n/a n/a n/a Not a full year

Electricity (tCO2e) 286 237 241

Business flights (tCO2e) 4284 4,547 3,098

SOx emissions (mT) 11,767 14,776 13,051 13,858

NOx emissions (mT) 17,506 15,510 16,259

Particulate Matter emissions (mT) 1,396 1,233 1,313

VOC emissions (mT) 261 231 241

Spills of oil and other materials hazardous to the marine environment

35 litres of rusty water released

1 (20 litres oil, with 3 litres entering the sea)

Nil 2 (21 litres in total of hydraulic oil or sludge being transferred entered the sea)

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CO2 Emissions - Fleet

CNCo had a total GHG footprint in 2013 of 625,426tCO2e¹² - As with previous years, over 99.8% of this footprint is related to marine fuels consumed in transporting cargo, shown in the table below.

380 IFO tonnes 193,977

Liner 181,528.79

Bulk 12,448.00

180 IFO tonnes 2,807

Liner 2,475.32

Bulk 332

MGO (t) tonnes 2,907

Liner 2,819.54

Bulk 87.00

LO (L) litres 1,381,358

Liner 1,381,358

Bulk n/a

Variation in CNCo’s overall CO2 emissions have historically been reflective of the changing size of our fleet – for example, an 18% reduction in emissions in 2012, corresponded to an 18% reduction in tonnage; However in 2013 Scope 1 and 2 emissions rose by only 2.4% despite significantly a higher fleet expansion as the newer vessels are designed to have a step change in higher fuel efficiency and thus a consequent lower environmental footprint.

¹ - (see tables EN 16, EN 17, EN 19, EN 20 in the Data Section: Environmental)² - ISO 14064 Scope 1 and 2

Detail: 2013 Environmental Summary

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Measures to reduce emissions

Efficient NewbuildingsAs part of a major expansion and renewal programme, CNCo took delivery of six S-Class vessels and two B.Delta39 bulk carrier vessels (W-Class) in 2013. Fuel efficiency is a key element in the design and specification of both the S-Class and B.Delta39 Class, which include a number of features including:

• Main engines with maximum efficiency at 70% and 60% MCR for the new W and S type respectively, as the vessels are specifically designed for the draft and load to be expected on each trade on which the vessels are scheduled to be deployed;

• Electric cargo cranes using approximately 40-50% less power and have zero potential to leak hydraulic oil to the environment compared to similar electro-hydraulic cranes;

• Reduced auxiliary power, through enhanced heat recovery, vessel energy management system, low energy lighting and forced draft fans;

• Advanced hull design, especially around the aft end and propeller area;

• Fuel reducing trim-optimisation software being placed on board.

While expansion of our fleet will inevitably lead to increased emissions, we anticipate the acquisition of these new, highly energy efficient vessels will yield tangible and lasting CO2 emission reductions per tonne/km, above and beyond those attributable to market fluctuations.

We see this as a first step in eventually de-coupling the growth of our business from increase carbon emissions, in line with our ambition to be Net Zero with respect to carbon.

It is currently too early to report on the actual performance of these vessels and their impact on our overall emissions, and we look forward to doing so in 2014.

Slow SteamingIn 2011 we commenced our programme to systematically evaluate slow steaming alternatives across all of our trades, estimating annual savings of 16,678 tCO2e (-2.4% of our total emissions) or 207,650 GJ energy. After a successful pilot involving fitting slide valves in the main engines that permit slow steaming on one of our trades without affecting the engine we expanded the initiative to all the ships on that trade.

This initiative was undertaken through the generous sponsorship of our parent company’s Sustainability Fund and this has assisted in further moving CNCo towards its goal of having net zero environmental impact.

Lower Carbon FuelsIn 2011 we committed to investigating using alternative, lower carbon fuels such as LNG or Bio-Diesel.

• The Swire group purchased Argent Energy, registered in UK, in 2013. This company has successfully overcome the obstacles of manufacturing bio fuel (IFO and MGO) from waste vegetable oil and fats (of which 500,000 tonnes are produced annually in the UK alone), and their bio-fuel has been used by a number of bus companies in the UK for some years. We started investigating the use of fuel derived from waste fats, to power ships in the CNCo fleet, working with Wärtsilä to investigate the technical feasibility of this in their marine engines.

• Increasingly biodiesel is being used in conventional marine fuel blends, with quantities of up to 7% not requiring reporting. We are now working with our Bunker suppliers to investigate the implications for our CO2 reporting, and the potential for increasing the blends, and will report further in this area in 2014.


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Cold IroningWe sought initial discussions with various port authorities on the feasibility of cold-ironing to mitigate the environmental impact of FO consumption of our vessels on long-term charters during 2013. This is certainly technically feasible, but the capital costs are very high for both ship and port facilities, and modifying the ship-side fittings and equipment to take this reduces the economic flexibility of re-programming ships to work on other trades in our liner network. Until cold-ironing is more widely available in ports it is almost impossible to economically justify fitting this equipment on our tramping B.Delta39 handysize class bulk carriers.

Average energy performance of CNCo’s fleet, normalised by distance and cargo carried is expressed by the EEOI figure, which in 2013 was 30 for our liner fleet. This does not represent a significant change from previous years, but it must be borne in mind that as trade patterns change, so does our scheduling of differently sized vessels on different trade routes, so we are not comparing our fleet usage /operations on a like-for-like basis, year on year.

We certainly are however closely monitoring individual ship, and collective trade-fleet EEOI metrics and are seeing a general downward trend in our footprint as the newer more energy efficient ships replace the older ones.


Average energy performance of CNCo’s fleet, normalised by distance and cargo carried is expressed by the EEOI figure, which in 2013 was 30 for our liner fleet.

30


2011 2012 2013

SOx metric Tonnes (mT) 14,776 13,051 13,858

NOx (mT) 17,506 15,510 16,259

Particulates (mT) 1,396 1,233 1,313

VOC (mT) 261 231 241

As with our overall GHG emissions from our fleet, changes in our onshore electricity use (primarily in Singapore, Australia and New Zealand) reflect changes in occupancy and business growth, rather than underlying changes in efficiency; Electricity consumption (470,229kWh) and corresponding CO2 emissions (241 tonnes) rose by 1.74% in 2013, reflecting renewed growth following office space rationalisation in 2012 which resulted in a reduction of 17.3% in 2012.

All of the electricity used by CNCo is supplied by the local national grids.

CO2 emissions associated with onshore and offshore staff air-travel, decreased from 4,547 tCO2e in 2012 to 3,098tCO2e in 2013 (-31.9%). This is despite our total workforce increasing by 31.54%. This is explained primarily by reduced business travel as the (anticipated) result of a number of causes:

• the rationalisation of the Swire Shipping Liner Trades business model in which, as reported last year, we ensured that we had local managers closer to our key customers, resulting in a reduced need for air travel,

• where internal meetings across the company locations were required, we extensively used our now fully commissioned teleconferencing facilities, and

• a good proportion of the increase in personnel was due to the absorption of functions and services requiring little or no travel, and which were previously carried out by third or allied parties, back into the CNCo group.

Other emissions All the other 2013 emission metrics, for NOx, SOx, VOC and PM increased slightly (by between 4.4 to 6.4%) and the major metric, of our Scope 1 and 2 CO2 footprint, increased by only 2.4% over our figures for 2012. This is despite an increase in fleet activity (measured as Vessel Operating Days) of 23.1%, from 9,089 to 11,187 days.

This represents a reduction of a material 16.8% in normalised Scope 1 and 2 CO2 footprint per unit of activity and is in small part due to the increasing legislative requirements to use lower sulphur fuel: by California Air Resources Board (“CARB”) regulation off California, and voluntarily within HK Port Limits (by members of Fairwinds Charter group, including CNCo), to be regulated soon in HK and expected to be expanded to the entire Pearl River Delta in subsequent years. In the main however, it is substantive evidence of the very real step change in environmental impact and fuel efficiency that has been achieved in our programme of replacement of older tonnage with new, eco-designed, ships operated to the maximum efficiency using the latest technology, as detailed on page 28.


CO2 emissions – electricity and staff travel

31


Waste Management

CNCo monitors waste generation both ashore and aboard. CNCo’s owned vessels 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 disposal ashore, to sea, or disposal through incineration onboard.

The following categories are defined and included in our analysis:

• Cat. 1 Plastic (discharge to shore only)• Cat. 2 Biodegradable timber and paper materials• Cat. 3 Ground biodegradable rags, glass or metal• Cat. 4 Paper products, rags, glass, metal, bottles, cargo residue etc.• Cat. 5 Food waste• Cat. 6 Incinerator ash (non-plastic)

As a company determined to emphasise the importance of sustainable development and reduce its impact on environment, CNCo also monitors the following in addition to the categories above:

• Batteries sent ashore• Drums sent ashore• Waste oil sent ashore• Scrap metal recycled ashore

In our operating offices, CNCo endeavours to reduce paper usage and wastage by using only FSC certified paper and utilising paper recycling for all waste paper, including confidential waste for which a dedicated “confi-waste” recycling contract is in place.

EN22A

CNCo’s decision to use responsible, “Green and Safe” ship recycling yards when recycling its ships the end of their economic lives continued through 2013. Our trans-shipper, MV Erawan came to the end of its contract in mid-2013 and was sold to be recycled at the same green and safe yard that was used in 2012 for the 4 D-Class ships.

This is in accordance with CNCo’s voluntarily adopted policy that

“It would only send vessels for recycling to yards that have valid and verified accreditation issued by a reputable independent third party against all standards: ISO 9001:2008, ISO 14001:2004, OHSAS 18001:1999 and particularly ISO 30000:2009, and preferably be an “A” member of International Ship Recycling Association”.


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Context & Objectives

It is widely reported that a large number of ship recycling yards globally using the beaching method have poor (or very poor) health, safety and environmental standards and are often found using child labour along with violating labour and human rights. This evasion of the costs of responsible recycling by some shipowners is causing avoidable harm to both the beaching yards’ workers and the nearby communities. Our corporate conscience will not permit us to support this and so we have taken the decision, at an acknowledged cost premium, to go beyond legislation and positively promote the use of, and in so doing

encourage the expansion of, more responsible “Green and Safe” ship recycling yards.

This has not gone unnoticed by some yards globally and is a way for the yards to both maintain and enhance their ‘local licence to operate’ by the provision of a safer workspace for their employees, a less polluted environment and more harmonious society for the key stake-holder communities in the vicinity of their yards.

Even if only a small percentage of the publicity is correct, and the ship recycling yards that practice beaching cause harm to workers and the environment in the surrounding communities, this can be avoided by the

willpower and commitment from the shipowners to not support those yards commercially.

The key decision is to adopt a completely new view of the way the company defines the boundaries of its operations. Historically, responsibility for an asset has ceased on completing the sale transaction. In the new paradigm, the prior owner now continues to take some responsibility for its asset, (in this case – its responsible recycling) after all usual liabilities and responsibilities would have passed to a third party: the willing and aligned buyer.

There are a number of yards that have been externally and independently audited by the EU and awarded “Green and Safe” AA status*. Already around 19% ships to be recycled are reported to be routed to yards rated / operating this way. For our ships being recycled in 2012 our S&P broker charged a small premium to intimately manage the recycling process and Recycling Plans were produced before work started.


The Green and Safe yards chosen were subject to on-site Superintendency and number of detailed audits from both our Fleet Managers and Lloyds Register (LR) which was engaged as our independent process monitor. Close out payments were dependent on the production of a satisfactory recycling completion report by LR.

The yards were clean, and importantly injury-free, whilst we were there, and any hazardous waste was all disposed of appropriately. The yards we used were of course not perfect; LR audited and issued non-conformances during the recycling, but the yard took these in the spirit of continuous improvement and closed them all out prior to the completion of the recycling. This shows that the yards are willing to improve their practices in the market where they receive financial incentive and are not squeezed out financially. It also shows that a joint commitment will lead to better outcomes for both parties.

For further information:http://bit.ly/1osumph

The Green and Safe yards chosen were subject to on-site Superintendency and number of detailed audits from both our Fleet Managers and Lloyds Register (LR) which was engaged as our independent process monitor.

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Outcomes


The cost to CNCo of exercising leadership by voluntarily but proactively using more responsible, “Green and Safe” ship recycling yards over the yards with poorer standards has been a (not-insignificant) loss of around 8.0% of the potential net profit from the disposal of the ships.

The driver behind the decision was simply that CNCo decided that it was morally unacceptable to support parts of the industry with such poor practices where workers were being killed or injured unnecessarily (as evidenced by the better safety records in “clean and green” yards). However we believe that this voluntary taking of additional responsibility will be recognised by not only our employees, who will see us as an Employer of Choice (and so increase retention/decrease turnover costs within the company), but also our clients, customers and analysts (especially those servicing Socially Responsible Investors – an increasing band these days) that we are striving to be an industry leader on Sustainability as further evidenced by our membership of SSI.

Further detailed research in this area would permit the Social Return On Investment (SROI) to be quantitatively calculated, based on the inputs (leakage of recycling work, and better commercial returns, from yards with poorer, to those with better standards), outputs (reduced fatalities, injuries and environmental harm) and impact on the communities and the businesses.

As taking more extended responsibility for ‘Life Of Asset’ and for those workers associated with it when it is up-cycled, becomes more widely accepted in our industry, evidence of the increased use of “Green and Safe” yards will be demonstrated commercially to the laggard yards with poorer standards.

However boycotting “bad” yards must only be the first step; it is clearly recognised that a close second intent is that the pan-industry organisations and industry leaders must forge a partnership with those laggard yards that have the commitment (borne of natural market forces) to help them raise their standards. Market pressures will help them see that running clean and green yards is the sustainable future for their workforce, the local environment, and their own bottom lines.

1

2

3

4

5

Market pressures will help them see that running clean and green yards is the sustainable future for their workforce, the local environment, and their own bottom lines.

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What are the first steps an organisation can take to replicate this idea/initiative?

1 The owner of the ship to be recycled must decide to exercise leadership in the industry, even in the absence of legislation. This involves the paradigm shift of taking responsibility for an asset even after it has been transferred to a new owner.

2 The owner of the ship to be recycled must establish an internal policy to accept the need to pay a reasonable premium to support safer working practices and

better protection of the environment in key stakeholder communities that the shipping industry has historically relied on, but have been under the radar for many in the past.

We are proud to have commitment from senior management through to the Fleet Operations department to be able “to do the right thing”. We believe that by showing leadership and being transparent in this area we can begin to convince our peers to help enhance the environment, the social conditions of ship recycling yard workers and their families, and the reputation of the industry.

EN 22B

Hand in hand with responsible recycling goes responsible shipbuilding. This enables us to “close the loop”, such that if we can track the material that goes into a ship then when it comes time to recycle it we know where the more hazardous and more valuable materials are and the ship can be dismantled more safely and cost-effectively so the old asset is UP-cycled and the steel and other materials more efficiently used to build the next new asset. The story of what we are doing follows below.

In mid-2011, CNCo committed to work with other industry leaders to reduce shipping’s negative effects on the environment and joined the Steering Group of the Sustainable Shipping Initiative (SSI).

The SSI is a four-stage initiative designed to help the industry make long-term plans for future success. Its membership comprises a cross-industry grouping bringing together 16 leading companies from across the industry and around the world with NGO’s Forum for the Future and acting as “robust in-house challenger”, the World Wildlife Fund:

• Ship owners, charterers and operators: BP Shipping, Bunge, Cargill, Carnival Corporation, China Navigation Company, Gearbulk, Maersk Line, Rio Tinto Marine and Tsakos Energy Navigation. • Shipbuilders, engineers and service providers: Daewoo Shipbuilding & Marine Engineering; Wärtsilä. • Banks and insurers: ABN Amro, RSA. • Classification societies (setting technical standards): DNV and Lloyd’s Register • Representing shipping customers: Unilever


Hand in hand with responsible recycling goes responsible shipbuilding. This enables us to “close the loop”, such that if we can track the material that goes into a ship then when it comes time to recycle it we know where the more hazardous and more valuable materials are and the ship can be dismantled more safely and cost-effectively

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In the first stage, members launched a Case for Action in May 2011 in which we stated:

“Our goal is to transform the global shipping industry and the wider maritime sector, establishing a new, sustainable approach as the norm.”

It analyses the social, environmental and economic challenges shipping faces and how best to react to them and it calls on the industry to take far-reaching action. This analysis is a call to action for the worldwide shipping industry. The SSI members believe that, with far-sighted leadership, businesses can weather the storm and emerge stronger and more sustainable. And we believe that the industry has a vital role to play in helping create a sustainable, low-carbon economy.

In 2012 CNCo joined the SSI “Closed Loop Material Management” (CLMM) workstream. The three members of the CLMM work stream (Carnival Cruises, Maersk and CNCo) worked on three pilot projects and a stakeholder consultation process to investigate the feasibility and added-value of using a database system to track shipbuilding materials from building to recycling.

The goal is to achieve full transparency and accountability for the social and environmental impacts of all materials, from construction through to recycling of ships (“Life of Asset”). This goes significantly beyond the concept of a “Green Passport” for ships that only covers hazardous materials and looks at ALL materials that have gone into the construction of a particular ship. That ship can then be much more safely and efficiently recycled at the end of its life, giving a higher return in final sale value to

the last owner, and making the earth’s resources last longer. Consider: the energy required to manufacture a tonne of steel from iron ore (in itself a finite resource) is 60 times less than that required to recycle a tonne of “scrap” steel!

This concept is already in wide usage in the European and US automobile industry, so we are seeking to adapt it to the marine sphere and avoid “reinventing the wheel.

The CLMM challenge was to look at how ships could be better designed, built, operated and dismantled to drive higher value and more efficient recycling of materials and components. The aim was to understand the feasibility and value of tracing and tracking the materials used in ship construction through to recycling. Our target is to collect data of about 98% by weight of all the materials used in the construction of two new vessels and a cruise ship cabin.

The 2040 goal of the CLMM is to achieve full transparency and accountability for the social and environmental impacts from construction through to recycling of ships.

Our findings will be reported in our 2013 SD Report, and at an industry-sharing event in Singapore in Sep 2013, but we firmly believe that if scaled up the impact could be …

• Safer, cleaner, healthier and more profitable ship recycling by helping owners realise the true value of ships at the end of their life• Significant CO2 savings from more effective recycling in the wider ‘steel loop’ and establishing ways to further reduce the use of finite resources in future shipbuilding • Potential CO2 and financial benefits from ‘design for remanufacture and reuse’.


The CLMM (“Closed Loop Material Management”) challenge was to look at how ships could be better designed, built, operated and dismantled to drive higher value and more efficient recycling of materials and components.

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A commitment to building green, sustainable vessels that save energy and perform efficiently was at the forefront of CNCo’s plans for the 8 new S-Class 31,000dwt MPVs, designed to carry containers, bulk and break-bulk cargo, that were built at Zhejiang Ouhua Shipyard, Zhoushan, PRC, and launched in 2013.

CNCo has a strategic vision “to be the leading provider of sustainable shipping solutions and our customers’ partner of choice”. To meet this vision we have defined 5 strategic objectives, including that of Operational Excellence: promoting innovation, operational excellence and providing a safe, healthy and secure working environment. Underlying this are defined goals to help us achieve this, including, significantly, one of halving our Net Environmental Impact.

CNCo is also working with the other members of the industry leadership group, the Sustainable Shipping Initiative¹, to meet its vision for 2040. This vision states that “Shipping plays a critical role in the global economy. Recognising that the challenges of the future demand significant change, SSI members have developed a shared Vision for 2040 – a vision in which sustainability equals success”. The SSI understands that this means, inter alia,

“Changing to a diverse mix of energy sources, using resources more efficiently and responsibly, and dramatically reducing greenhouse gas intensity”.

Major capital expenditure events such as committing to building a new class of ships are the classic times to seize the opportunity to make a step change in technology with a commensurate increase in efficiency and decrease in negative environmental impacts.

CNCo’s new S-Class vessels are designed to have “best-in-class” environmental features, including fuel efficiency and emission reductions to deliver the lowest carbon footprint possible from operations.

All areas of the ships have been designed to achieve energy savings and reliability by considering such factors as the likely trade routes together with the speeds that will probably be required to maintain the schedules, the potential load factors and thus draft, etc.

A list of energy efficiency initiatives include:

• Reusing exhaust gases from the main engine and generators to make steam to heat the fuel

• Using a hull form that optimises cargo capacity for low fuel consumption

• Wake ducts to improve fuel efficient

• Cargo cranes that consume only 40-50% power of traditional cranes, and are electric rather than hydraulic to mitigate all chances of oil spills to the environment

• Adoption of a newly designed Sea Water Cooling System (“SWCS”) for the main engines and generators on board.

CNCo has a strategic vision “to be the leading provider of sustainable shipping solutions and our customers’ partner of choice”.


Energy Saving Initiatives – A Case Study

¹For further information on the Sustainable Shipping Initiative visit:http://bit.ly/1Af6ue2

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The latter initiative involves a critical component with huge potential for energy savings as well as operational and maintenance savings. Controlled by centrifugal pumps and AC motors, the SWCS is a key component on ships. The system pumps ambient sea water into a circulating loop. This loop provides a heat exchange with the vessel’s fresh water cooling system, which works to cool the shipboard energy consumers, including the main engines, generators and auxiliary equipment. Once the sea water has taken on heat from the fresh water, it is pumped back into the ocean as cooler ambient sea water is drawn in and introduced into the system.

The sea water cooling pumps on the new S Class vessels are arranged in 2 x 100% configuration, which means that one pump is always active and, in a traditional system, would operate at 100% flow with the second pump being redundant in normal service.

However based on cooling level requirements, the operating pump does not always need to run at 100% flow (a worst case scenario is 32 °C at full flow). Depending on the area of the world in which the vessel is operating, sea water temperatures may be low enough that a lesser flow would provide the sufficient cooling to the fresh water cooling system.

Given its commitment to operating sustainably, CNCo investigated methods of controlling the pump’s flow rather than running it at 100% to save energy. We selected a new system: “Colfax Fluid Handling Smart Technology CM-100 Series” to provide variable speed operation for the pumps, giving a potential energy saving of 80% per ship, significantly reducing the energy expended and thus lowering each vessel’s carbon footprint.

There are additional advantages in terms of sustainability: by running the pumps at only the level needed to provide pre-set cooling levels, the effective lifetime of the pumps, motors and related equipment is extended. This then results in less frequent need for replacement, and fewer items that require scrapping/recycling.

CNCo expected savings of around 50% annually for repairs and maintenance. The CM-1000 equipment selected provides 24/7 intelligent monitoring to detect component failure, misalignment, wear, damage or leakage. Monitoring is constant, which permits faster, more targeted, maintenance intervention than spot / regular checking by engineering staff. If auto-monitoring detects the need, the pump will switch the system from the operating pump to the stand-by pump to ensure continuity of operation whilst repairs can be effected. After a year of operation CNCo found that the new system works effectively and saves significant amounts of power, with a commercial payback of about 6 months simultaneously with the environmental benefits this upgrade provides.

“Sustainability is about having the least negative impact on the environment. We are confident this system will work well to deliver more sustainable operations, and that support and spares for the pumps will continue to be available for 30 years, the expected lifetime of this class of ships”.


Jerry Chen, CNCo’s Product Manager said at the beginning of the S-Class operations:

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Total Number of Significant Oil Spills

As would be expected, the prevention of spills and leakage of oil and other hazardous marine pollutants, and our effective response should there be an incident is assessed as having the highest materiality to all of our stakeholder groups and to ourselves internally as a major impactor on our business.

In recognition of this, our target for any oil spills of any size from our fleet continues to be ZERO.

The lowlights of 2013 were two very minor, but avoidable, spills of hydrocarbons (1litre of hydraulic and 20 litres of sludge). Procedures have been tightened to prevent a recurrence.

However they were still below both our target rate for 2013 and a very healthy 42% below the Tokyo MoU industry average rate of 3.07 for Dec 2013 (and 36% below the Paris MoU rate of 2.77). We believe this is in part due to the bedding in of many brand new ships and we are working to resume a decline in the DpI rate in 2014.

Our target for any oil spills of any size from our fleet continues to be ZERO.


39


Detail / EnvironmentOther Environmental Indicators

We do not report herein any GRI water indicators (EN8, EN9, or EN10), as these are a) not material to the provision of shipping services and b) we actually produce potable water from sea water on our ships, using waste heat from the main engines and / or reverse osmosis machines. All waste water is then treated and returned to the sea, so this activity has a net zero effect on the use of natural resources.

We will seek to report Ozone Depleting Substances (EN 19) in the next report, not because we have material ODS emissions post the Montreal Convention coming into force, but because even Zero Ozone Depleting Potential (“ODP”) substances often have a high positive Global Warming Potential (“GWP”) which remains increasingly important.

40


Detail / LabourEmployment

Total workforce by employment type, employment contract, and region, broken down by gender.

Total number and rate of new employee hires and employee turnover by age group, gender, and region.

Composition of governance bodies and breakdown of employees per employee category according to gender, age group, minority group membership, and other indicators of diversity.

In 2013 the CNCO Group employed 1,437 people, split between seastaff on our ships (872) and shore staff (565). Out of the total shore staff, 51 were based in shipyards supervising our large programme of ship newbuildings and 514 positions were based in our four significant employment locations: Singapore (Head Office) – 29.91%, Australia – 19.47% and New Zealand –14.87% and PNG – 22.48%.

This is an increase of 31.54% over 2012 (in those four locations) and reflects establishment of CNCo office in PNG and growing the number of employees across Swire Shipping and Swire Bulk Divisions in their locations.

Of the onshore employees, 48.5% were male (from 54.0% in 2012) and 51.5 were female (from 46.0% in 2012). However at the management level by the end of 2013, 72.9%

were male (from 77.6% in 2012) and 27.1% female (from 22.4%), a welcome move of 9.4% towards more equal female representation. Also at the support staff level the gender disparity has decreased further by 4.6% with males dropping to 36.3% (from 38.6%) and females increasing to 63.7% (from 61.4%) from 2012 levels.

During the recruitment process we always stress CNCo’s commitment to being an equal opportunities employer. We welcome diversity in the workplace, believing that it adds material value to an organisation by helping workers to approach their jobs from different perspectives. All our offices are significantly, and happily, multicultural and the nature of working with different parties around the world adds another positive dimension to the cross-cultural working environment.

When seeking new employees, CNCo has discussions both internally and with any external placement consultants to ensure that Persons With Disability (PWD) with the skill set matching our requirements are included in the process.

Respect in the Workplace

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.

CNCo will not tolerate harassment or discrimination on the basis of age, cultural

background, disability, family status, gender identity, marital status, nationality or ethnic origin, political opinion, race, religion, sexual orientation or social group. Our Corporate Code of Conduct requires all employees to behave with courtesy and respect towards everyone encountered in the course of business.

Only five employees (0.88%) of our shore staff were temporary, as we actively seek to offer and maintain long-term employment. This is a 50% decrease from 2012. The average length of service in New Zealand has decreased slightly year-on-year from 5.29 to 5 years, in Australia from 7.05 to 6.9 years but increased in Singapore from 3.2 to 4.3 years.

Staff turnover or attrition in New Zealand in 2013 was 7.81%. Benchmarking data are hard to find, but New Zealand Government Statistics Office and third-party studies do refer to the country as “a nation of job hoppers” with a common turnover rate of around 14% annually, so this is positive compared to the national figures, but still materially higher than we would ideally like.

In the larger job market of Australia in 2013 the rate was a comparable 6.78%. The local AMMA and ABS statistics on labour mobility for the maritime sector reports an average rate of around 11%, twice the rate of 2010, so in both locations the CNCo attrition rate is a welcome half to two thirds of applicable benchmarks.

41


In Singapore the turnover rate continues to remain high, at 15.12% in 2013. Whilst this is much higher than our other major office locations, it is still lower than the Singapore benchmark rate (the published annualised monthly resignation rate figures for the Administrative and Support Services sector from Singapore Ministry of Manpower) of 16.6% but it is still too high, and efforts are continuing to be made to reduce it through increased alignment, engagement, mentoring, communication and ensuring that our remuneration packages are properly aligned with the relevant sectors and skills of our employees.

In PNG the turnover rate was 12.88%. We were unable to find a reliable and authoritative average local turnover rate against which to benchmark. Further given that CNCo only re-established an office in PNG in 2013 these figures will continue to be monitored in an effort to establish a credible benchmark.

Overall staff retention in 2013 for shore staff was 89.14% and 97% for sea staff (officers). Shore staff retention was slightly below internally set target of >91% and is an on-going area of focus for the company, especially in Singapore (see above). However sea staff retention is much higher than targeted at >90% and is believed to be significantly higher than our peer group. Efforts will be made to benchmark this in the next report.

In particular we recognise that whilst we have an excellent cadre of employees, the physical separation between the onshore support staff and the seagoing operational staff that is peculiar to the shipping industry means that we must spend more time and resources than many other industries in ensuring that we communicate what we are doing and where we are going corporately, and that the communication is a dialogue not a monologue.

To help maintain and enhance these lines of communication between the sea and shore staff across the various countries where we have stakeholders, we continued to use our in-house monthly magazine, “NiuSwire”, to announce any important companywide initiatives and bring everyone closer together

through this medium. NiuSwire is sent out to all our offices and sea staff monthly.

In 2013, as a follow up on the Alignment and Engagement (“A&E”) survey conducted in July 2012, the HR team ran a series of focus groups (workshops) in Singapore, Australia and NZ to further understand staff engagement and alignment issues. The results from those workshops were fed into HR strategy for 2014 and served to continuously improve how the company communicates its core strategy and objectives and how all employees have a part to play in reaching these objectives.

Given the wide variety of our nationality and work locations, we do not herein give a detailed breakdown of types of employment contracts or remuneration / pension entitlements as this would a) be of little material value to anyone in a different region, b) not justify the resources required to produce the detail.

Suffice to say, all of our contracts are in accordance with local employment law as a minimum and are blind to gender identity or age, whilst recognising experience and competence/qualifications.

Detail: Labour − Employment

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Worldwide, 93.81% of our staff are classed as “local”, slightly less than in 2013. (“local” is defined as a national or permanent resident in the country of employment). The balance of 6.19% is classed as expatriate. About 13% out of the total number of expatriate staff are parent company managers who are rotated through internal postings to gain wide sectorial experience throughout the group as they progress during their career. The rest are employed as industry experts and have long term careers with the company worldwide.

We employed a total of 530 seafarers to fill positions at sea (does not include 342 seafarers being on leave) as at 31 Dec 2013. This is a significant increase of 27.4% from 2012 (385). This number will continue to increase over the next 2 years as CNCo introduces new vessels to the fleet under its fleet renewal and Bulk division establishment plans.

Out of the total number of seafarers, 305 or 34.98% are from the Philippines, our biggest provider of seafarers, followed closely by 33.03% or 288 are from Peoples’ Republic of China (“PRC”)/ HK and Myanmar and 87 or 9.98% are from PNG, see Table LA 1.1. We seek to run all of our operations to a single “international” standard.

We do not report in which country or region the sea staff (the majority) are working. Due to the trans-border nature of working at sea the geographical distribution is very dynamic and thus would only be a snapshot at a moment in time.

With respect to the ratio of sea staff on permanent / fixed term contracts, we strongly seek to have all sea staff on permanent contracts of employment.

The historic issue of the employment of seafarers (and all other Overseas Filipino Workers (“OFW”) in the Philippines being strictly controlled by the Philippines Overseas Employment Agency “POEA” meant that it was illegal to employ a Filipino seafarer under a direct contract with an overseas company but this has now been resolved as all seafarers employed worldwide are now required to be covered by a Collective Bargaining Agreement post the adoption of Maritime Labour Convention (“MLC”) 2006 convention. We believe this delivers much more security for our seafarers, and in increasing our retention rates will deliver additional value to our bottom line, considering the level of discretionary training that our seafarers undertake.

CNCo employs seafarers from more than eleven different nationalities covering more than five different religious faiths within its global marine operations, involving 24 owned ships plus 4 chartered ships (as at 31 Dec 2013). They currently call at many ports worldwide but are predominantly working within the Asia Pacific region, demarcated by Vladivostok in the north, Port Klang in the west, Lyttleton on New Zealand’s South Island in the south and Vancouver, Canada in the east, with a significant presence in trades to and from Papua New Guinea.

Detail: Labour − Employment

The China Navigation Company employs seafarers from more than eleven different nationalities covering more than five different religious faiths within its global marine operations, involving 24 owned ships plus 4 chartered ships (as at 31 Dec 2013).

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Detail - LabourOccupational Health & Safety

Rates of Injury, Lost Days and Absenteeism and Total Number of Work-related Fatalities by region

The safety initiatives introduced in 2011 and 2012 have started to show a sustained improvement for personal safety in 2013. There were 3 LTIs for 2013, one fewer than in 2012. The reporting of leading indicators (e.g. near misses) fell by 7.2% for the period 2013 compared to 2012 as six (6) new ships were added to the Fleet. (At the end of 2012 there were 15 owned and managed ships whereas at the end of 2013 there were 24 owned ships in the Fleet of which 3 were managed by a third party). (It is not CNCo policy to prescribe a number of near misses to report each month; we rely on the integrity of our staff to report quality near misses which are then shared with the Fleet in the monthly Safety and Quality report). With a large number of new joiners to the Company it takes time to adapt to the reporting culture.

Near Miss Reporting – Instruction in the understanding of near miss reporting is carried out at all internal Safety Awareness training

sessions to ensure that the driver of near miss reporting as a proactive safety tool is clearly understood by all.

The General Permit to Work or Tool Box Risk Identification Permit (TRIP) has continued to create greater focus on safety for all work activities carried out on board. This enables potential hazards to be identified and control measures implemented before commencing any work.

Similarly with TRIPs being reported there has been fall of 25.6% for the same period as it takes time to adapt to the TRIP requirement. The number of TRIPs reported during 2013 stands at 103 per ship per month, from the 135 for the year 2012 and it is envisaged that as the TRIP concept becomes more firmly embedded with our sea staff, the number of near misses will start to reduce year on year. This is because identifying hazards and implementing controls should eliminate opportunities for near misses to occur.

Training in the use of the TRIP is carried out during all safety awareness courses in order

to demonstrate its use and benefit for safety for all work related activities. Notwithstanding that it is a legal document; its intrinsic purpose is to allow a considered and measured risk management process to take place before starting every work activity. As a consequence of slightly retarding the commencement of work it allows more time for work to be planned safely.

4-Box Alert: The 4-Box concept has proven a significantly powerful tool in helping to deliver a very strong safety message to the Fleet in a very short time frame. The 4-Box is used for a variety of different incidents, not only for

LTIs but also for severe near misses where the potential for injury and damage are assessed as significant. The 4-Box register is reviewed at every Safety Awareness Course (SAC) so that the learning outcomes are not forgotten and feedback from the incidents reviewed. A Number of NGO’s have asked to use CNCo’s 4-Box concept, and this permission has of course been freely given.

The full CNCO Safety Statistics for sea staff can be found in data table LA7 on page 44.

There was no work-related fatality in CNCo in 2013.

The safety initiatives introduced in 2011 and 2012 have started to show a sustained improvement for personal safety in 2013.

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Detail: Labour − Occupational Health & Safety

Quarter

Per

sona

l Inj

urie

s / 1

mill

ion

man

hou

rs w

orke

d

0

2

4

6

8

1

3

5

7

2012 2013 2014

4Q 1Q 2Q 3Q 4Q 2Q 3Q 4Q1Q 2Q 3Q 4Q1Q

TRCF per 1 mill MANHOURS

LTIF per 1 mill MANHOURS

4 per. Mov. Avg. (TRCF per 1 mill MANHOURS)

4 per. Mov. Avg. (LTIF per 1 mill MANHOURS)

Injuries

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Detail: Labour − Occupational Health & Safety

Quarter

No.

of N

ear

Mis

s R

epor

ts

0

100

200

300

400

50

150

250

350

2012 2013 20142011

4Q 1Q 2Q 3Q 4Q 2Q 3Q 4Q1Q 1Q

Near Misses

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Detail / LabourTraining and Education

Governance Training

CNCo expects all its employees to comply with the Code of Conduct and in 2013, the company introduced Code of Conduct training for its shore employees. The training was initially conducted in Singapore and the training material was prepared for wider company roll out in 2014. This was also considered advisable as we seek to meet the provisions of the UK Bribery Act 2010 and the US Foreign Corrupt Practices Act (FCPA).

To ensure that employees understood the Code, an on-line ethics test was introduced. The exercise comprise viewing an FAQ video, reading the Code and then answering five randomly chosen questions from a question bank. All employees are expected to obtain 100% score in the on-line quiz with those who initially don’t, being mentored through until they do. The test is repeated biennially to ensure the employees refresh their awareness with the content of the Code.

Training and development

Shore Staff

CNCo continues to invest in the training, learning and development of all employees. The focus of shore employees’ training had been on soft skills development, such as negotiation skills, people management, interpersonal skills and leadership skills training.

In Singapore, shore staff attended 1,086 hours of training with the total cost of SGD 77,533.

In Australia, training for shore staff covered 2,085 hours with the total cost of AUD 122,967.

In New Zealand, shore staff employees received 983 of training hours with the total training cost of NZD 24,188.

Sea Staff

Statutory Training – International Convention on Standards of Training, Certification and Watchkeeping for Seafarers (STCW): 2010 (as amended in Manila) will come into force on 01 Jan 2017. In 2013, officers and crew were undertaking the relevant courses required to revalidate their Certificate of Competency and prepared our seastaff cadre to be ready for this implementation.

CNCo puts a lot of focus on Safety Training. With the addition of the new S- and W-Class

vessels to the fleet, there was a need to ensure that all our engineers and electrical officers attend main engine and crane operation courses conducted by the equipment manufacturers. Prior to the vessels’ delivery, safety familiarisation was completed for each vessel by way of on-site training. CNCo also committed to reinstating the Safety Awareness Courses in Singapore in 2014 for our officers.

The Cadetship Programme was on-going with cadets from PRC, HK and from the South Pacific Islands. As a strategic sustainability

objective, CNCo has committed to recruit 15% of its required cadet intake from the key and core stakeholder communities in the South Pacific Islands by the end of 2016 (which has been met) and 25% by the end of 2020.

Details of the breakdown of CNCo’s seagoing workforce as at 31 Dec 2013 are shown in the tables in the Data Section.

47


Detail / LabourDiversity and Equal Opportunity

CNCo is “gender blind”; employing, developing and advancing its employees on the basis of their ability. Remuneration is based on role; there is no differential in employment terms based on gender identity, (except where local legislation prescribes different conditions, such as maternity/paternity leave).

With respect to gender balance on governing bodies, there was one female, our Finance Director, on the CNCo Board of Directors and on the Executive Committee during 2013.

Of the onshore employees, 48.5% were male (from 54.0% in 2012) and 51.5 were female (from 46.0% in 2012).

However at the management level by the end of 2013, 72.9% were male (from 77.6% in 2012) and 27.1% female (from 22.4%), a welcome move of 9.4% towards more equal female representation. Also at the support staff level the gender disparity has decreased further by 4.6% with males dropping to 36.3% (from 38.6%) and females increasing to 63.7% (from 61.4%) from 2012 levels.

Within the seastaff only 4 of the 530 were female. This is obviously a significant gender imbalance, but (whilst not accepted or condoned) is simply reflective of the state of the global shipping industry (excluding the leisure sector).

IHS Fairplay reported in Jan 2013¹ Shipping has traditionally been a male-dominated industry, but the increasing use of technology at all levels and across all sectors is an incentive for the brightest talent to be attracted to maritime as a career.

Employers are much better at offering flexible working arrangements than they used to be, but there is still a way to go on transparency regarding remuneration. It can no longer be said that shipping’s future depends on male seafarers coming ashore to run male-dominated companies in an industry still hindered by gender imbalance. But the numbers are far from equal.

The IMO World Maritime University in Malmo has been concerned about this imbalance since 2008², but positive change is still glacially slow.

We reiterate that CNCo is gender-blind when employing new seafarers, and certainly when considering their development and advancement. This is an area that will require a long term strategy to be developed over the next few years.

CNCo is “gender blind”; employing, developing and

advancing its employees on the basis of their ability alone.

¹http://bit.ly/1GDMIQu²http://bit.ly/1F9Ol6W

48


Detail / Human RightsNon-Discrimination

Human Rights (and Diversity and Inclusion) are both issues that are in the upper right quadrant of the CNCo Materiality Matrix – as being of high importance to our stakeholders and for the sustainability of our business. Accordingly we have a robust and clear policy on harassment, discrimination and bullying, whether physical, verbal or non-verbal.

“Discrimination” encompasses “incidents on grounds of race, colour, sex, religion, political opinion, national extraction, or social origin as defined by the International Labour Organisation (ILO), or other relevant forms of discrimination involving internal and/or external stakeholders across operations in the reporting period”, and includes “harassment”, defined as “a course of comments or actions that are unwelcome, or should reasonably be known to be unwelcome, to the person towards whom they are addressed”.

There were zero acts of discrimination or harassment reported on any grounds to, or by, any CNCo personnel during the calendar year 2013.

The CNCo Code of Conduct was revised at the beginning of 2013 to ‘rev 4’ but the provisions with respect to discrimination and harassment are unchanged (except that a “child” in “child labour” is now defined as “being under the age of 16, or local minimum age, whichever is the higher”).

It can also be found at http://bit.ly/18vDFT7. It contains these following explicit provisions:

Respect in the Workplace CNCo is committed to providing an inclusive work culture and appreciates and recognises that everyone is unique and valuable and should be respected for individual abilities. CNCo will not tolerate harassment or discrimination on the basis of gender, religion, race, nationality or ethnic origin, cultural

background, social group, disability, sexual orientation, marital status, family status, age or political opinion. The Code requires all Relevant Persons to behave with courtesy and respect towards everyone encountered in the course of business. The Code promotes the following principles: • Upholding all applicable legal and corporate occupational health and safety standards; • Not permitting any breaches of employment law or the use of child (defined as being under the age of 16, or local minimum age, whichever is the higher) or forced labour; • Reporting unacceptable conduct to line management or the business unit head; • Not condoning bullying and harassment; • Complying with any legal requirements concerning the collection, holding, processing, disclosure and use of personal data; • Respecting intellectual property rights, including copyright, belonging to others;

Total number of incidents of discrimination and actions taken

There were zero acts of discrimination or harassment reported on any grounds to, or by, any CNCo personnel during the calendar year 2013.

49


Detail / SocietyAnti-Competitive Behaviour

Total number of legal action for anti-competitive behaviour, anti-trust, and monopoly practices and their outcomes.

CNCo takes all these practices very seriously and requires both its employees and its contractors the highest ethical standards, as described in its Code of Conduct (“CoC”). We are pleased to report that, as in 2012, in 2013, CNCo was not involved in any legal actions for anticompetitive behaviour, anti-trust, and monopoly practices.

Details of our rigorous internal regime for making employees aware of our Code of Conduct and its contents are contained in section SO8: Compliance.

Whilst CNCo planned in 2013 to enhance its auditing of its suppliers to ensure their compliance with the Supply Chain Sustainability CoC, this target was not achieved. We expect this to be developed into a more robust and formal system in 2014.

One area where we have been especially particular to avoid any possibility of accusations of anti-trust type commercial collusion is at the biannual meetings of the members of the Sustainable Shipping Initiative. Whilst the meetings are not convened to discuss any issues of commercial relevance to any of the members whatsoever, the text of an anti-trust statement is formally read to all members at the beginning of every meeting as a reminder.

The anti-trust statement reads:

ABN AMRO, ABS, AkzoNobel, Bunge, Cargill, Carnival, China Navigation Co/SWIRE, DNV (Det Norske Veritas), Gearbulk, IMC, Lloyd’s Register, Maersk Line, Namura Shipbuilding Corporation, Rio Tinto, U-Ming Marine Transport Corporation, Unilever, Wartsila, WWF and Forum for the Future are members of the Sustainable Shipping Initiative, working towards the Vision 2040, and intend to cooperate in full compliance with the antitrust and competition laws of the United Kingdom, the European Union, and other applicable jurisdictions. The companies recognise that these laws are intended to promote and protect free and open competition and agree that their conduct in furtherance of the Vision 2040 will be consistent at all times with this objective.

In adherence to this principle, the companies acknowledge and agree that in any meetings or other discussions between or among members of the group, the following subjects will not be discussed:

• Current or future prices charged by a company

• Current of future costs of products or services to a company

• Price-related data or practices of individual companies, including but not limited to discounts, advertising terms, terms of payment or credit, marketing practices, sales practices, bids or bid practices, warranty terms, profitability or other profit- related information

• Individual company production plans, costs, timelines, levels or quantities of production

• Refusal to deal with any competitor, supplier, or customer

• Allocation of markets, territories or customers between or among the companies

• Endorsements of individual companies, products or services

50


Detail / SocietyCompliance

Monetary value of significant fines and non-monetary sanctions for non-compliance with laws and regulations

In 2013, CNCo received no fines for non-compliance with non-environmental laws and regulations.

We have previously reported as non-monetary sanctions received by CNCo any detentions related to the results of Port State Inspections (“PSI”) of ships in the (owned) fleet (as detentions in chartered in tonnage are the primary responsibility of the relevant owners). We are pleased to report that in 2013 there were NIL detentions of any owned (or chartered in) tonnage.

During 2013, the fleet of 24 owned ships were inspected on a total of 58 separate occasions (approximately 9% fewer inspections per vessel than the previous year). 43% of these inspections led to a totally clean bill of health, with the remainder leading to a total of 105 deficiencies being found, giving an average of 1.78 Deficiencies per PSI (DpI).

This is slightly higher than the previous year, but still below both our target PSCI rate for 2013 (<2.0 DpI) and a full 42% below the Tokyo MoU industry average rate of 3.07 for Dec 2013 (and 36% below the Paris MoU rate of 2.77). We believe this is in part due to the bedding in of many brand new ships and we are working to resume a decline in the DpI rate in 2014.

The older vessels’ increasing age profile has meant that increasing effort and resources have been applied to turning this trend round and greatly reducing the DpI rate towards zero. We expect that their replacement with our newer tonnage this year and in the future will greatly assist us on this journey. All these statistics are circulated around the fleet, and crew are recognised for good performance when a Port State Inspection has resulted in zero deficiencies.

In 2013, CNCo received no fines for non-compliance with non-environmental laws and regulations.

51


Data

This section reports all the supporting data that is used to 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 Boundaries as shown in the Summary section on page 4.

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

In this section:

52 Reporting Philosophy, Methodology and Scope

53 Fleet Breakdown

55 Labour Data and Tables

56 Abbreviations

58 GRI Assurance Statement

60 G3.1 Content Index GRI Application Level C

71 Contact

51

52


DataReporting Philosophy, Methodology and Scope

The CNCo SD report on the year 2012 was published at the end of 2013. At the beginning of 2014, the senior management of CNCo met to review the company’s progress against its strategic targets and goals for 2016 and 2020, and to map the path ahead towards meeting both the CNCo Vision: “to be the leading provider of sustainable shipping solutions and our Customer’s partner of choice” and the SSI Vision 2040, where shipping plays a critical role in the global economy and in which “sustainability equals success”.

At this meeting the management developed a materiality matrix of issues that have importance to our business and to our

stakeholders. The degree of importance of each has been plotted against these two axes, and the resultant matrix is shown on page 19.

The slightly more than 40 issues were then divided into those over which >66% control as to their outcome lies with CNCo, e.g. Health and Safety of our operations, those over which CNCo can only exercise <33%, e.g. weather and political stability in our stakeholder areas, and those in between which we can exercise a reasonable measure of control in conjunction with third parties.

Within this report we have sought to prioritise and emphasise reporting on all the core and

additional GRI indicators that are relevant to those areas over which we have great control and are in the upper right quadrant of the Materiality Matrix e.g. Corporate Governance, Oil Spill Prevention and Health and Safety, and graduating down to a lesser degree for those issues in the bottom left hand corner of the matrix, and/or over which we have little control (aside from noting our mitigation strategies).

Over time we will continue to verify the placement of the issues on the matrix in discussion with our key stakeholders, in accordance with our Stakeholder Communication Plan that will be developed in 2014.

53


DataFleet Breakdown

Island Chief

Highland Chief

Coral Chief

Papuan Chief

Kokopo Chief

Chenan

Chengtu

Chekiang

Changsha

Kweichow

Kwangtung

Kweilin

Kwangsi

Ningpo

Nanchang

Ngankin

Shansi

Shantung

Shaoshing

Shengking

Shuntien

Siangtan

Wuchang

Wuchow

24.732

24.371

24.888

19.630

19.040

14.519

14.458

15.637

15.634

15.710

15.297

15.734

15.320

14.168

21.214

21.291

18.858

18.788

18.788

18.789

18.765

18.675

4.504

5.119

D

D

D

B

B

G

G

F

F

F

F

F

F

F

D

D

D+

D

D

D

D

D

A

B

1990

1990

1990

1991

1991

1992

1991

1991

1991

1994

1994

1994

1995

1997

1995

1996

2013

2013

2013

2013

2013

2013

2013

2013

8810449

8809189

8809191

8901705

8907412

9007374

9007362

9003835

9003847

9070694

9070709

9103104

9103116

9134658

9082805

9105994

9614476

9614488

9614490

9614505

9614517

9614529

9657844

9657856

15.5

15.5

15.5

15.5

15.5

15.0

15.0

15.0

15.0

15.0

15.0

15.0

15.0

19.5

19.8

19.7

15.5

15.5

15.5

15.5

15.5

15.5

14.0

14.0

13387

13668

13387

13557

13387

25561

25561

25561

25561

25524

25524

25410

25607

22900

23016

23064

30700

30814

30769

30814

30814

30756

39127

39090

10352

10357

10352

10350

10352

18391

18391

18391

18391

18451

18451

18468

18468

16800

16800

16801

25483

25483

25483

25483

25483

25483

24785

24785

5804

5802

5804

5802

5804

9229

9229

9229

9229

8250

8250

9201

9253

8662

8662

8672

11814

11819

11808

11813

11810

11805

12537

12537

158.1

158.1

158.1

158.1

158.1

184.9

184.9

184.9

184.9

184.9

184.9

184.9

184.9

183.9

181.1

184.1

199.9

199.9

199.9

199.9

199.9

199.9

180.0

180.0

22.0

22.0

22.0

22.0

22.0

27.6

27.6

27.6

27.6

27.6

27.6

27.6

27.6

25.3

25.3

25.3

28.2

28.2

28.2

28.2

28.2

28.2

30.0

30.0

981

876

981

981

981

1123

1123

1123

1123

1257

1257

1257

1257

1728

1728

1730

2118

2118

2118

2118

2118

2118

N/A

N/A

N/A

N/A

N/A

N/A

N/A

32114

32114

32114

32114

28831

28831

32608

31472

N/A

N/A

N/A

41881

41881

41881

41881

41881

41881

47661

47661

N/A

N/A

N/A

N/A

N/A

34103

34103

34103

34103

29819

29819

33756

33077

N/A

N/A

N/A

44807

44807

44807

44807

44807

44807

48908

48908

3 x 45T

3 x 60T

3 x 45 T

3 x 45T

3 x 45T

3 x 26T, 2 x 31T, 1 x 20T

3 x 26T, 2 x 31T, 1 x 20T

3 x 26T, 2 x 31T, 1 x 20T

3 x 26T, 2 x 31T, 1 x 20T

2 x 26T, 3 x 35T

2 x 26T, 3 x 35T

2 x 26T, 3 x 35T

2 x 26T, 3 x 35T

3 x 40T

3 x 40T

3 x 40T

4 x 60T

4 x 60T

4 x 60T

4 x 60T

4 x 60T

4 x 60T

4 x 30T

4 x 30T

Hong Kong

Hong Kong

Hong Kong

Hong Kong

Hong Kong

Hong Kong

Hong Kong

Hong Kong

Hong Kong

Hong Kong

Hong Kong

Hong Kong

Hong Kong

Hong Kong

Hong Kong

Hong Kong

Singapore

Singapore

Singapore

Singapore

Singapore

Singapore

Singapore

Singapore

Mihos

Mihos

Mihos

Mihos

Mihos

Challengers

Challengers

Challengers

Challengers

Challengers

Challengers

Challengers

Challengers

B170*

B170**

B170**

S-Class (MPV31)

S-Class (MPV31)

S-Class (MPV31)

S-Class (MPV31)

S-Class (MPV31)

S-Class (MPV31)

Bulk Carrier

Bulk Carrier

*Reclassified as general cargo vessel **Container Ship

Owned Vessels: In Operation as at 31 Dec 2013

Vessel Name Specific Emissionin grm

EVDI Emissions’Rating

YearBuilt

IMO No. Speed (Knots)

DWT (SSW MTs)

GT NT LOA(m)

Max Breadth (m)

Capacity Nominal (TEU)

Hold Capacity - Bale (m³)

Hold Capacity - Grain (m³)

Cargo Gear (T) Country of Registration

Vessel’s Type

54


Owned Vessels: Under Construction as at 31 Dec 2013

Vessel Name Specific Emissionin grm

EVDI Emissions’Rating

YearBuilt

IMO No. Speed (Knots)

DWT (SSW MTs)

GT NT LOA(m)

Max Breadth (m)

Capacity Nominal (TEU)

Hold Capacity - Bale (m³)

Hold Capacity - Grain (m³)

Cargo Gear (T) Country of Registration

Vessel’s Type

Soochow

Szechuen

Wuhu

Wulin

Eredine

Erradale

Erisort

Eriskay

Coral Chief

Highland Chief

2014

2014

2014

2014

2014

2014

2014

2015

2015

2015

9614531

9614543

9657868

9657870

9681871

9681883

9681895

9681900

9689938

9689940

15.5

15.5

14.0

14.0

14.0

14.0

14.0

14.0

15.0

15.0

30721

30688

39179

39047

39855

39757

39860

39810

21980

21980

25483

25483

24785

24785

24785

24785

24785

24785

18598

18598

11817

11813

12545

12538

13019

13019

13019

13021

7656

7656

199.9

199.9

180.0

180.0

180.0

180.0

180.0

180.0

175.2

175.2

28.2

28.2

30.0

30.0

30.0

30.0

30.0

30.0

27.6

27.6

2118

2118

N/A

N/A

N/A

N/A

N/A

N/A

1617

1617

41881

41881

47661

47661

47661

47661

47661

47661

32000

32000

44807

44807

48908

48908

48908

48908

48908

48908

4 x 60T

4 x 60T

4 x 30T + 4 x 12cbm Grabs

4 x 30T + 4 x 12cbmGrabs

4 x 36T

4 x 36T

4 x 36T

4 x 36T

3 x 60T

3 x 60T

Singapore

Singapore

Singapore

Singapore

Singapore

Singapore

Singapore

Singapore

Hong Kong

Hong Kong

S-Class (MPV31)Container Ship

S-Class (MPV31)Container Ship

Handysize Bulk CarrierGrabs Fitted

Handysize Bulk CarrierGrabs Fitted

Handysize Bulk CarrierLogs Fitted




Chief-Class (MPV22)MPP Ship

Chief-Class (MPV22)MPP Ship

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

Data: Fleet Breakdown

55


Labour Data & TablesBreakdown of Nationality of Sea Staff Positions 2013

*5 females in 31-45 age group and 1 female in Below 31 age groupTotal number of seafarers in 2013 – 872 (of whom 6 were female).Officers – 479, Ratings – 393

The data on this page shows the numbers of sea staff (the numbers split 55%:45%, officers:crew), working on full-time and “fixed-term” contracts, and their nationalities.

None of our employees worldwide would be regarded as self-employed.

87Papua New Guinea10%

305Filipino35%

46Sri Lanka5.3%

81UK/Aus/NZ

9.3%

65Ukraine/Croatia

7.5%

288PRC/HKG/Myanmar33%

Nationality Age Range

Below 31*300 staff

31-45*407 staff

46-55133 staff

56-6028 staff

Over 604 staff

56


DataAbbreviations

AMSA Australian Marine Safety AuthorityASA Australian Shipping AssociationASSM Anscor Swire Ship Management manning agencyBHP Brake Horse PowerCAR Audit-driven Corrective Action ReportCBA Collective Bargaining AgreementCCoC Corporate Code of ConductCFC Chloro-fluoro-carbon/sCNCo The China Navigation Company Pte LtdCoC Certificate of CompetencyCSR Corporate Social ResponsibilityDCC Australian government: Department of Climate ChangeDECC UK government: Department of Energy and Climate ChangeDEFRA UK government: Department for Environment, Food and Rural AffairsDPA ISM Code Designated Person AshoreECA Emission Control AreaEEOI Energy Efficiency Operational IndexEPA US government Environmental Protection AgencyETS Emission Trading SchemeGEDO Australian government DCC Greenhouse and Energy Data OfficerGHG Greenhouse Gas/esGJ (unit) Giga-Joule, 1 billion joules of energyGRI Global Reporting InitiativeHCFC Hydro-chloro-fluoro-carbon/sHCV High Conservation ValueHFO Heavy Fuel Oil – a residual fuel

HHV Higher Heating Value, also known as gross calorific value, of a fuel is defined as the amount of heat released by combusting a specified quantity and returning the temperature of the combustion products to 150°C. LHV assumes all the water component is in liquid state at the end of combustionHOF Head Office (in Singapore)HSE Health, Safety and the EnvironmentICAO Inter Civil Aviation Organisation IFO Intermediate Fuel Oil - residual fuel. Usually 180 or 380 CST viscousity. See http://intertek.ch/schwerol

IHM Inventory of Hazardous Material, per the HK Ship Recycling Convention ILO (UN) International Labour OrganisationIMO (UN) International Maritime Organisation ISM International Management Code for the Safe Operation of Ships and for Pollution Prevention, (International Safety Management (ISM) Code) as chapter XI of SOLASIUCN International Union for Conservation of Nature and Natural ResourcesKBA Key Biodiversity AreaKPI Key Performance IndicatorkW hr (unit) Kilo Watt hour, is a unit of energy equal to 1,000 Watt hours or 3.6 mega Joules LHV Lower Heating Value, also known as net calorific value, of a fuel is defined as the amount of heat released by combusting a specified quantity and returning the temperature of the combustion products to 150°C. LHV assumes all the water component is in vapour state at the end of combustionLO Lubricating OilLTI Lost Time InjuryLTIFR Lost Time Injury Frequency Rate

57


Data: Abbreviations

MARPOL IMO International Convention for the Prevention of Pollution from Ships, 1973, as modified by the Protocol of 1978 and laterMCA (UK) Maritime and Coastguard AgencyMDO Marine Diesel Oil – a distillate fuelMGO Marine Gas Oil – a distillate fuel MHE Material Hazardous to the EnvironmentMLC ILO Maritime Labour Convention, 2006MTC Medical Treatment CaseNGER Australian National Greenhouse Gas and Energy Reporting ActNI Nautical InstituteNOX Oxides of NitrogenOFW Overseas Filipino WorkersPM Particulate MatterPO Purchase Order/sPOEA Philippines Overseas Employment Agency PSI Port State Inspection, DPl: Deficiencies per Port State Inspection, CARB: California Air Resources Board, PSCI: Port State Inspection Compliance Index, TRCF: Total Recordable Case Frequency RateQHSE Quality, Health, Safety and EnvironmentRFQ Request For a QuoteRWC Restricted Work CaseSD Sustainable DevelopmentSECA Sulphur Emission Control Area/s

SEEMP Ship Energy Efficiency Management PlanSIN SingaporeSMS Safety Management SystemSMTC Swire Marine Training Centre, located in Loyang, Singapore SOLAS IMO International Convention for the Safety of Life at Sea, 1974, as amended in 1980 and laterSOX Oxides of Sulphur STCW IMO International Convention on Standards of Training, Certification and Watch-keeping for Seafarers, 1978, as amended in 1995 and latertCO2 Tonnes of Carbon Dioxide tCO2e Tonnes of Carbon Dioxide equivalent. This is CO2 plus the other four “natural GHG of CH4, N2O and the two industrial GHG of SF6 and HydroFluroCarbonsGHGTRCF Total Recordable Case FrequencyTRIP Toolbox Risk Identification PermitULS Ultra Low Sulphur contentUNFCCC United Nations Framework Convention on Climate ChangeVOC Volatile Organic Compound/sy-o-y Year on Year change 5S “Seiri, Seiton, Seiso, Seiketsu, and Shitsuke” or “Sorting, Set in order, Systematic cleaning, Standardizing, and Sustaining”

58


GRI Assurance Statement

Copeland & Partners Limited

Anne Copeland 柯安娜 T +852 9833 5979 [email protected] http://www.anne-copeland.com/ 3B, Block 1, Victoria Garden, 301 Victoria Road, Pokfulam, Hong Kong, PRC 香港域多利道 301號域多利花園 1座 3B

Page1of2

AssuranceStatementTheChinaNavigationCompanyPteLimited(CNCo)commissionedCopeland&PartnersLimitedtoconductindependentassuranceofits2013SustainableDevelopment(SD)Report,inaccordancewiththescopebelow.

ObjectiveandScopeTheobjectiveoftheassuranceprocesswastoverifyarepresentativesamplingoftheinformationincludedinCNCo’s2013SDReportandtodetermineconformanceofthe report contents with the requirements of the Global Reporting Initiative (GRI)’s Sustainability Reporting Guidelines (version 3.1) for Application Level C. Anassessmentofthecompany’sSDinitiativeswasalsoconductedandrecommendationswereprovidedtomanagementonthecompany’soverallperformance.

MethodologyTheassuranceprocess,whichwasconductedfromDecember2016toMarch2017,involvedadesktopreviewofCNCo’sSDReporttoidentifyarepresentativesamplingofdataand information,aswell as claims regardingmanagement systems,performanceandcorporate strategies, foronsiteverification.DiscussionswereheldwithCNCo’sGeneralManagerforSustainableDevelopmentandteam,aswellasrepresentativesofthecompanyresponsibleforriskmanagement,humanresources,trainingand development, health and safety, the environment and procurement to confirm a representative sampling of data included in the report, to review the reportcontentsandstrategiesformanagingCNCo’ssustainabilityissuesandtoidentifygapsorareasforimprovement.Basedonthisprocess,observationsweremadewhichresultedinCNComakingminoramendmentstotheGRIContentIndex.

FindingsBasedontheclaimsanddatasampled,CNCo’s2013SDReportincludesaccurateandrobustinformationtosupportthecompany’scommitmentto,andperformancein,implementingitsSDPolicyanditsself-declarationofthereportmeetingtherequirementsofGRI’sApplicationLevelCintermsof itscoverageoftherequiredprofiledisclosuresandmaterialindicators.Thisreport,whichcontinuestoevolvewithCNCo’scontinuousimprovementinitssustainabilityperformance,disclosesinformationonthecompany’sapproachto,andperformancein,addressingtheelementsof ISO26000:2010-GuidanceonSocialResponsibility.Thereportformatandcontentisweb-basedandthematerialityof itscontentevolves inresponsetostakeholderfeedbackasthecompanyengages itsstakeholdersonsustainability.CNCo’smaterialsustainability issues are substantively covered and the report also addresses challenges CNCo faces. These challenges range from further reducing itsenvironmental/greenhousegasfootprintasaresponsibleplayerinanindustrythatoperatesunderaglobalframework,toenhancingitsworkingenvironmentandsafetymanagementsystemandtraining.

59


GRI Assurance Statement

Copeland & Partners Limited

Anne Copeland 柯安娜 T +852 9833 5979 [email protected] http://www.anne-copeland.com/ 3B, Block 1, Victoria Garden, 301 Victoria Road, Pokfulam, Hong Kong, PRC 香港域多利道 301號域多利花園 1座 3B

Page2of2

ThetransparentdisclosureofCNCo’sapproachtosustainabilityandof itsprioritiesandperformance, iswelcomed. It isalsonoteworthy to recognise thecompany’sinitiativesto:

• Implementitsstrategicframeworkformanagingrisks,planningfuturescenarios,exploringopportunitiesandassessingmaterialitythatisrootedinthecompany’sEnterpriseandStrategicRiskRegister,BusinessUnitRiskRegistersandthecorporateSDPlanwithTargetsandKeyPerformanceIndicators,whicharereviewedmonthlytodriveimprovementactionsacrossoperations,withregularreportingtotheManagingDirectorandtheBoard.

• Maintainitscomprehensiveapproachtoprovidingsafetyawareness,resources,toolsandtraininganditscommitmenttoachieveZeroharminsafetyperformance.

• Providetraining,developmentandsupportforemployeesandforseafarersglobally,andtheircommunities.• DisclosediversitymetricsandCNCo’sinitiativestorespectandenhancediversity.• Continueprogressiveimprovementsintheeco-efficiencyoftheshippingfleet,GHGandpollutantemissionreductionandsustainableshipbuildingand

recycling,andinfluencingtheglobalshippingindustry.• EstablishaResponsibleCargoCarriagePolicyandimplementitsrequirementsfornottransportingendangeredspecies.• ContinuedcertificationtotheEco-officeinitiative.• Maintainstringentanti-corruptionpractices,transparentreportingoftheindustrychallenges.

RecommendationsforFutureSDStrategyandReportingThe commitment and resources that CNCo has dedicated to integrating sustainability into its business processes, tomanaging and planning for potential risks andopportunities, andmaking progress in addressing the recommendations of the previous assurance process is commendable. Going forward, CNCo is encouraged toenhanceitsexistingeffortsto:

• BuildonitssubstantivematerialitymatrixandsharedetailsofCNCo’sstakeholderidentificationandissuemapping,andengagementprocesses.• EngageandsupportotherstakeholdersintheindustryandinCNCo’svaluechaintofurtherthesustainabledesign,operationandrecyclingofshipsandthe

responsiblecarriageofcargo.• DiversifytheBoardandmanagementandreportonitsoversightofhowsustainabilityisintegratedintothebusiness,riskmanagementandperformanceresults

andcompliance.• Engageemployeestoenhanceunderstandingofthewayssustainabilityissuesarerelevanttotheirwork,receiveupdatesonthecompany’ssustainability

performanceandshareideasandfeedback.

AnneCopelandManagingDirector&SustainabilityAdvisor,Copeland&PartnersLtdApril13,2017

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G3.1 Content Index GRI Application Level C

1. Strategy and Analysis

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

1.1 Statement from the most senior decision-maker of the organization. Partially Summary - MD's message, p.7


2.1 Name of the organization. Fully Cover page2.2 Primary brands, products, and/or services. Fully Organisational and Operational Boundaries of Report, page 3

2.3 Operational structure of the organization, including main divisions, operating companies, subsidiaries, and joint ventures.

Fully Organisational and Operational Boundaries of Report, page 3

2.4 Location of organization's headquarters. Fully Organisational and Operational Boundaries of Report, page 3

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

Fully Detail section - Governance, page 17

2.6 Nature of ownership and legal form. Fully Organisational and Operational Boundaries of Report, page 3 and Detail - Governance, page 17

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

Customers include manufacturing, agricultural and resource processing companies, freight and logistics companies, global forwarding companies, personal effects movers, bulk shippers, P&I clubs, Marine consultants/ surveyors

2.8 Scale of the reporting organization. Partially Net sales, capitalisation omitted on purpose

2.9 Significant changes during the reporting period regarding size, structure, or ownership.

Fully Summary of 2013 Highlights, pages 5-6

2.10 Awards received in the reporting period. Fully Head office certified as an Eco-office, page 11


3.1 Reporting period (e.g., fiscal/calendar year) for information provided.

Fully Cover and Summary-Introduction, pages 4-5 and Reporting Philosophy, page 52

3.2 Date of most recent previous report (if any). Fully Cover and Summary-Introduction, pages 4-5 and Reporting Philosophy, page 52

3.3 Reporting cycle (annual, biennial, etc.) Fully Reporting Philosophy, page 52

3.4 Contact point for questions regarding the report or its contents. Fully Pages 5 and 603.5 Process for defining report content. Fully Page 5 and Materiality Matrix, pages 18-19 and Reporting Philosophy, page 52

3. Report Parameters

2. Organizational Profile

STANDARD DISCLOSURES PART I: Profile Disclosures

61



3.6Boundary of the report (e.g., countries, divisions, subsidiaries, leased facilities, joint ventures, suppliers). See GRI Boundary Protocol for further guidance.


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


3.8

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


3.10

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

Fully Summary-Introduction, pages 5 and 6

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

Fully Summary-Introduction, pages 3, 5 and 6

3.12 Table identifying the location of the Standard Disclosures in the report.

Fully This table


4.1Governance structure of the organization, including committees under the highest governance body responsible for specific tasks, such as setting strategy or organisational oversight.

Partially Not by age or diversityAs a private company, CNCo doesn't disclose detail on governance

4.2 Indicate whether the Chair of the highest governance body is also an executive officer.

Fully Governance, page 17

4.3For organizations that have a unitary board structure, state the number and gender of members of the highest governance body that are independent and/or non-executive members.

Fully Governance, page 17

4.4 Mechanisms for shareholders and employees to provide recommendations or direction to the highest governance body. Fully Governance, page 17

4.14 List of stakeholder groups engaged by the organization. Fully

Key stakeholder groups are: Investors and their advisors/ Subsidiary Companies / Employees/ Suppliers / Customers / Business partners / Government and Regulators / Communities. Formal engagement was undertaked internally with subsidiaries, employees on-shore and offshore.

4. Governance, Commitments, and Engagement

62



4.15 Basis for identification and selection of stakeholders with whom to engage.

FullyStakeholders were indentified based on their ability to impact our business's achievement of its strategy. The materiality was addressed from the point of view of the various types of stakeholders (as per inidicator 4.14).

Performance Indicator Description Reported Cross-reference/Direct answer

EC1

Direct economic value generated and distributed, including revenues, operating costs, employee compensation, donations and other community investments, retained earnings, and payments to capital providers and governments.

PartiallyLimited information on contriubtion of divisions to revenues and administrative costs disclosed as percentages, finanical assistance from government and support to ASSMDA. Financial reporting is limited as CNCo is a private company.

EC2 Financial implications and other risks and opportunities for the organization's activities due to climate change.

Partially Risks and Opportunities Due to Climate Change pages 21-23

EC3 Coverage of the organization's defined benefit plan obligations. Not

EC4 Significant financial assistance received from government. Fully Financial Assistance from Government, page 24

EC5Range of ratios of standard entry level wage by gender compared to local minimum wage at significant locations of operation. Not

EC6 Policy, practices, and proportion of spending on locally-based suppliers at significant locations of operation. Not

As a global shipping company our procurement is done when and as requried (centralised and decentralised).

EC7 Procedures for local hiring and proportion of senior management hired from the local community at significant locations of operation.

Not

EC8Development and impact of infrastructure investments and services provided primarily for public benefit through commercial, in-kind, or pro bono engagement.

Not

EC9 Understanding and describing significant indirect economic impacts, including the extent of impacts.

Not

Indirect economic impacts

Market presence

Economic

Economic performance

STANDARD DISCLOSURES PART III: Performance Indicators

63




EN1 Materials used by weight or volume. Not

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

EN3 Direct energy consumption by primary energy source. Fully Detail Section - Environment - CO2 emissions, page 26

EN4 Indirect energy consumption by primary source. Fully Detail - Environment - CO2 emisisons, page 26

EN5 Energy saved due to conservation and efficiency improvements. PartiallyDetail - Environment - Measures to reduce emssions and energy-saving initiatives - a case study, page 36

EN6Initiatives to provide energy-efficient or renewable energy based products and services, and reductions in energy requirements as a result of these initiatives.

Not

EN7 Initiatives to reduce indirect energy consumption and reductions achieved.

Not

EN8 Total water withdrawal by source. Not Not material

EN9 Water sources significantly affected by withdrawal of water. Not Not materialEN10 Percentage and total volume of water recycled and reused. Not Not material

EN11Location and size of land owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas.

Not

EN12Description of significant impacts of activities, products, and services on biodiversity in protected areas and areas of high biodiversity value outside protected areas.

Not

EN13 Habitats protected or restored. Not

EN14 Strategies, current actions, and future plans for managing impacts on biodiversity.

Not

EN15Number of IUCN Red List species and national conservation list species with habitats in areas affected by operations, by level of extinction risk.

Not

EN16 Total direct and indirect greenhouse gas emissions by weight. Fully Detail - Environment - CO2 emissions, page 26

Emissions, effluents and waste

Biodiversity

Water

Energy

Environmental

Materials

64



EN17 Other relevant indirect greenhouse gas emissions by weight. Fully Detail - Environment - CO2 emissions, page 26

EN18 Initiatives to reduce greenhouse gas emissions and reductions achieved.

Fully Detail - Environment - measures to reduce emissions page 28

EN19 Emissions of ozone-depleting substances by weight. NotEN20 NOx, SOx, and other significant air emissions by type and weight. Fully Detail - Environment - environmental summary page 26EN21 Total water discharge by quality and destination. Not Not materialEN22 Total weight of waste by type and disposal method. Partially Detail - Environment - Waste Management, page 34EN23 Total number and volume of significant spills. Fully Detail - Environmental Summary - Total number of significant oil spills

EN24

Weight of transported, imported, exported, or treated waste deemed hazardous under the terms of the Basel Convention Annex I, II, III, and VIII, and percentage of transported waste shipped internationally.

Not

EN25Identity, size, protected status, and biodiversity value of water bodies and related habitats significantly affected by the reporting organization's discharges of water and runoff.

Not

EN26 Initiatives to mitigate environmental impacts of products and services, and extent of impact mitigation. Partially Detail - Environment, page 29-31

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

EN28Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with environmental laws and regulations.

Fully Detail - Social - Compliance, page 50

EN29Significant environmental impacts of transporting products and other goods and materials used for the organization's operations, and transporting members of the workforce.

Fully Detail - Environment, page 26

EN30Total environmental protection expenditures and investments by type. Not


LA1 Total workforce by employment type, employment contract, and region, broken down by gender. Fully Detail - Labour, pages 40-42

Overall

Social: Labor Practices and Decent Work

Employment

Compliance

Transport

Products and services

65



LA2 Total number and rate of new employee hires and employee turnover by age group, gender, and region. Partially Detail - Labour, pages 40-41

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

Not

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

LA4 Percentage of employees covered by collective bargaining agreements. Partially Detail - Labour - Employment - for seafarers, page 42

LA5 Minimum notice period(s) regarding significant operational changes, including whether it is specified in collective agreements.

Not

LA6Percentage of total workforce represented in formal joint management-worker health and safety committees that help monitor and advise on occupational health and safety programs.

Not

LA7 Rates of injury, occupational diseases, lost days, and absenteeism, and number of work-related fatalities by region and by gender. Partially No occupational diseases. Pages 42-45

LA8Education, training, counseling, prevention, and risk-control programs in place to assist workforce members, their families, or community members regarding serious diseases.

Partially Detail - Labour - Training and Education, no counselling. Page 46

LA9 Health and safety topics covered in formal agreements with trade unions.

Not

LA10 Average hours of training per year per employee by gender, and by employee category.

Partially Detail - Labour - Training, Education. Training hours by gender not disclose, page 46

LA11Programs for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings.

Not

LA12 Percentage of employees receiving regular performance and career development reviews, by gender.

Partially Detail - Labour - Training, Education, pages 40-41

Occupational health and safety

Training and education

Labor/management relations

66



LA13Composition of governance bodies and breakdown of employees per employee category according to gender, age group, minority group membership, and other indicators of diversity.

Partially Detial - Labour - Employment, page 47

LA14 Ratio of basic salary and remuneration of women to men by employee category, by significant locations of operation.

Not


HR1Percentage and total number of significant investment agreements and contracts that include clauses incorporating human rights concerns, or that have undergone human rights screening.

Not

HR2Percentage of significant suppliers, contractors and other business partners that have undergone human rights screening, and actions taken.

Not

HR3Total hours of employee training on policies and procedures concerning aspects of human rights that are relevant to operations, including the percentage of employees trained.

Not

HR4 Total number of incidents of discrimination and actions taken. Fully Detail - Human Rights - Total Number of Incidents of Discrimination and Actions Taken, page 48

HR5

Operations and significant suppliers 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.

Not

Non-discrimination

Freedom of association and collective bargaining

Social: Human Rights

Investment and procurement practices

Diversity and equal opportunity

Equal remuneration for women and men

67



HR6Operations and significant suppliers identified as having significant risk for incidents of child labor, and measures taken to contribute to the effective abolition of child labor.

Not

HR7

Operations and significant suppliers identified as having significant risk for incidents of forced or compulsory labor, and measures to contribute to the elimination of all forms of forced or compulsory labor.

Not

HR8Percentage of security personnel trained in the organization's policies or procedures concerning aspects of human rights that are relevant to operations.

Not

HR9Total number of incidents of violations involving rights of indigenous people and actions taken. Not

HR10 Percentage and total number of operations that have been subject to human rights reviews and/or impact assessments.

Not

Assessment

Forced and compulsory labor

Security practices

Indigenous rights

Child labor

68



HR11Number of grievances related to human rights filed, addressed and resolved through formalgrievance mechanisms.

Not


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

SO9 Operations with significant potential or actual negative impacts on local communities.

Not

SO10Prevention and mitigation measures implemented in operations with significant potential or actual negative impacts on local communities.

Not

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

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 institutions by country.

Not

Public policy

Local communities

Corruption

Remediation

Social: Society

69



SO7 Total number of legal actions for anti-competitive behavior, anti-trust, and monopoly practices and their outcomes.

Fully Detail - Society - Compliance, page 49

SO8 Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with laws and regulations.

Fully Detail - Society - Compliance, page 50


PR1

Life cycle stages in which health and safety impacts of products and services are assessed for improvement, and percentage of significant products and services categories subject to such procedures.

Not

PR2Total number of incidents of non-compliance with regulations and voluntary codes concerning health and safety impacts of products and services during their life cycle, by type of outcomes.

Not

PR3Type of product and service information required by procedures, and percentage of significant products and services subject to such information requirements.

Not

PR4Total number of incidents of non-compliance with regulations and voluntary codes concerning product and service information and labeling, by type of outcomes.

Not

PR5 Practices related to customer satisfaction, including results of surveys measuring customer satisfaction.

Not Alignment and Engagement (“A&E”) survey for employees

Customer health and safety

Product and service labelling

Anti-competitive behavior

Compliance

Social: Product Responsibility

70



PR6Programs for adherence to laws, standards, and voluntary codes related to marketing communications, including advertising, promotion, and sponsorship.

Not

PR7Total number of incidents of non-compliance with regulations and voluntary codes concerning marketing communications, including advertising, promotion, and sponsorship by type of outcomes.

Not

PR8Total number of substantiated complaints regarding breaches of customer privacy and losses of customer data. Not

PR9Monetary value of significant fines for non-compliance with laws and regulations concerning the provision and use of products and services.

Not

Compliance

Marketing communications

Customer privacy

71


DataContact

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 BennettGeneral ManagerSustainable Development The China Navigation Company300 Beach Road, #27-03 The Concourse, Singapore 199555

Tel +65 6309 3632

[email protected]

www.chinanav.com

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