SUSTAINABLE DEVELOPMENT REPORT · 2018. 12. 5. · 1x CV1100 Bulk Division (chartered fleet) Tonnage as detailed in Fleet Profile Bulk Logistics Division (owned fleet) 1x Cement Carrier

SUSTAINABLE DEVELOPMENT REPORTfor the year2017

Index

The China Navigation Company / Sustainable Development Report 2017

Page

Managing Director’s Message 3

Introduction 5

Organisational and Operational Boundaries 6

Organisational Profile and Governance 7

Safety 25

Our People 33

Our Communities 45

Carbon / Environment 52

Abbreviations 64

Data 69

Global Reporting Initiative (GRI) Standards Content Index 86

Contact 102

GRI Assurance Statement 103

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Managing Director’s Message

Behaving safely

Our most important goal is to work without causing any harm to people and the environment. 2017 saw a significant improvement in CNCo’s safety records with 10 Lost Time Injuries (LTIs). Safety excellence ashore and at sea is our top priority.

At the end of 2017, CNCo appointed Green-Jakobsen, a consultancy highly experienced in safety in the maritime industry to conduct a global safety maturity assessment. We want to build an industry-leading safety culture and this assessment will help us improve our safety programmes and advance towards Zero Harm.

Our people

With the expansion of our business and global footprint, in 2017, we employed 3,076 people in 49 countries. This represented an increase of 26% for seagoing employees and 34% for shore-based employees compared to 2016.

Our people are at the core of CNCo’s business operations and our people goal is to be an Employer of Choice. We recognise the contributions and hard work of our employees through long service awards and reward and recognition programmes. The quality of our people is key to the success of the Company. We work to maintain a productive, safe and healthy organisation, employ the right talent and enhance employee performance.

Dear friends of CNCo, Welcome to the seventh externally assured Sustainable Development Report for The China Navigation Company (CNCo).

In 2017, CNCo continued to work hard on achieving our organisational goals, seeking efficiencies, improving safety practices and enhancing customer experiences. Over the 2017 calendar year, CNCo:

• Owned and operated over 120 vessels.• Shipped 21 million metric tonnes of commodities.• Made 2,600 port calls across 105 countries.• Employed 3,076 employees in 49 countries.• Embarked on our first safety maturity assessment.

Sustainability at CNCo means respecting people, their safety and the environment; helping the communities in which we operate in to thrive and helping to create a resilient environment through decarbonisation and optimising energy efficiency. Our sustainability strategy is aligned with the Swire group’s environmental strategy, “SwireTHRIVE”.

CNCo’s core values of continuity, endeavour, excellence, integrity and teamwork underpin our approach. These principles, together with our sustainable development objectives and CNCo’s Code of Conduct, apply to the way we do business and collaborate with the communities where we operate.

Sustainability at CNCo means respecting people, their safety and the environment; helping the communities in which we operate in to thrive and helping to create a resilient environment through decarbonisation and optimising energy efficiency.

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Our communities

We believe in doing right by our communities. From supporting the seafaring community to developing cricket talent in Papua New Guinea and supporting environmental research programmes, we invest in worthy causes and are committed to building long-term, rewarding relationships with our partners and our communities.

One of our key markets, the Pacific Islands, face an immense waste management challenge. In 2017, CNCo entered into a Memorandum of Understanding with the Secretariat of the Pacific Regional Environment Programme (SPREP) to ship recyclable waste from eligible Pacific Island ports to be sustainably treated and recycled in suitable ports in Asia Pacific.

Thriving environment

CNCo is committed to decarbonising our business. We build and operate a fleet of modern and fuel-efficient vessels to optimise energy efficiency and reduce our environmental footprint. We measure and monitor the energy consumption and emissions of our operations and set challenging targets to improve every year.

In 2017, CNCo oversaw the successful sustainable recycling of two vessels at the end of their working life. This was done at a ship recycling facility in Alang, India, in compliance

with the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships (HKC). Our commitment to safety ensured that there were zero injuries and pollution incidents and led to better working conditions for the workers.

Industry leadership

CNCo is an active member of the Sustainable Shipping Initiative (SSI). We are also a leading company on the Ship Recycling Transparency Initiative (SRTI) creating a paradigm shift on how vessels are recycled at the end of their working life.

Our annual Sustainable Development Reports keep our stakeholders informed of our sustainability progress in an open and transparent manner. We will continue working with our customers, peers, suppliers and communities towards a thriving future and to be the leading provider of sustainable shipping solutions and our customers’ partner of choice.

James WoodrowManaging Director

Managing Director’s Message cont.

CNCo is committed to decarbonising our business. We build and operate a fleet of modern and fuel-efficient vessels to optimise energy efficiency and reduce our environmental footprint.

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Introduction

This Sustainable Development (SD) Annual Report covers the operations of The China Navigation Company Pte Ltd and its associated group companies (CNCo) from 1 January to 31 December 2017, with any point data being as at 31 December 2017.

For this 2017 annual report, we transitioned from the Global Reporting Initiative (GRI) “G4 Guidelines” to the “GRI Standards” as the basis for disclosure. This report has been prepared in accordance with the “GRI Standards: Core” option.

CNCo reports its full performance in all 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. These are reported under the broad headings of ‘Health and Safety’, ‘Carbon and Environment’, and ‘Our People’ and ‘Communities’ throughout this report.

CNCo reports its full performance in all the areas covered by the Social Responsibility Standard: ISO 26000:2010 and in accordance with the “GRI Standards: Core” option.

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Organisational and Operational Boundaries (as at 31 December 2017)

THE CHINA NAVIGATION COMPANY

Scope 1 GHG

Scope 2 GHG

Scope 3 GHG

Organisational Boundaries

Operational Boundaries

Vessel HFC and HCFC consumption / emissions

Vessel HFO, MDO, GHG emissionsand LO consumption

Vessel NOx, SOx, PMand VOC emissions

Crew Air Travel

67%Quadrant Pacific Ltd

60%Guadalcanal Travel Services

50%Swire CTM Bulk Logistics Ltd

50%Tradco Shipping Limited

25%Mandarin Shipping Group Ltd

25%PT Mitrabahtera Segara SejatiTbk (MBSS)

JV and Associates

Pacifica Shipping

Polynesia Line Ltd

CNCo Pte LtdSingapore

includes:

Swire Bulk

Swire Bulk Logistics

Swire Shipping

Ship Owners and Managers

Management Air Travel

Office VehicularPetrol / Diesel / LPG / Electricity etc

Office Electricity Usage

Bulk Division(owned fleet)

4x Swire B.Delta39 handysize (grabbers)

20x Swire B.Delta39 handysize (loggers)

4x Imabari38 handysize (loggers)

3 x Green Dolphins handysize

Tonnage as detailed in Fleet Profile

see page 53


see page 71

Liner Trades(chartered fleet)

Liner Trades(owned fleet)

AustraliaCanadaFijiHong KongIndiaIndonesiaNew CaledoniaNew ZealandPapua New GuineaPeople’s Republic of China (PRC)Republic of China (ROC)SamoaSingaporeUnited KingdomUnited States of America

Agencies, Branches and Regional offices in:

4x Challenger Class

5x Mihos

8x S Class, MPV31

1x N Class, B170

4x Chief Class MPV22

1x CV1100

Bulk Division(chartered fleet)


see page 69

Bulk Logistics Division(owned fleet)

1x Cement Carrier

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Organisational profile

The China Navigation Company Pte Ltd (CNCo) is the wholly owned deep-sea ship-owning and operating arm – and oldest operational entity – of the Swire group. CNCo was founded in 1872 to operate Mississippi-style paddle-steamers on China’s Yangtze River. Since then the Company has expanded globally. CNCo is one of the oldest independent British shipping companies still managing its own tonnage in-house.

CNCo is a Singapore-registered company and 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 6), The China Navigation Company Limited is also the parent company for a number of agencies and has branches and regional offices in Australia, Canada, China, Fiji, Hong Kong, India, Indonesia, New Caledonia, New Zealand, Papua New Guinea, Samoa, American Samoa, Taiwan, United Kingdom and United States of America.

Organisational Profile & Governance

CNCo also owns:

• 50% shares in Swire CTM Bulk Logistics Limited, a joint venture with C Transport Maritime SAM registered in Monaco; • 25% shares in Mandarin Shipping Limited registered in Hong Kong; • 67% shares in Quadrant Pacific Ltd, a joint managing shareholdership with Ahrenkiel Shipping; • 25% shares in Mitrabahtera Segara Sejati (MBSS) in Indonesia; • 60% of Guadalcanal Travel Services; and • 50% of TradCo Shipping in Solomon Islands.

Pacifica Shipping (Pacifica) is an operating division of The China Navigation Company New Zealand (NZ) Limited. Pacifica operates MV Spirit of Canterbury, a New Zealand-flagged coastal container ship. CNCo also owns the New Zealand coastal cement carrier MV Aotearoa Chief; this is operated by The China Navigation Company NZ Limited.

Polynesia Line Ltd. (Polynesia Line) is owned by CNCo. Polynesia Line operates a shipping network from the United States to the Pacific Islands, offering a fortnightly service from Los Angeles and Oakland to Tahiti, Tonga, Samoa and American Samoa and the wider Pacific. Polynesia Line operates two chartered-in vessels: MV Polynesia and MV Cap Taputapu.

The China Navigation Company Pte Ltd (CNCo) is the wholly owned deep-sea ship-owning and operating arm – and oldest operational entity – of the Swire group.

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CNCo at a glance

>120owned & operated vessels in3 Operating Divisions

233Commodities21 million mt per annum

3.4m Dwt fleet capacity

2,652port calls

105countries serviced

16 Global offices

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CNCo's shipping coverage

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3 Operating DivisionsOver 120 Owned & Managed Vessels

Swire Bulk Logistics1 Cement Carrier and 2 Transloaders

Swire Bulk90 Handysize Bulk Carriers

Swire Shipping30 Multipurpose Liners

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The Company operates a global network of multipurpose liner, dry bulk and bulk logistics services through its three business divisions: Swire Bulk, Swire Bulk Logistics and Swire Shipping.

Swire Shipping

As a multipurpose liner shipping specialist, Swire Shipping has an unrivalled reputation for service, operational excellence and reliability, and is equipped to handle breakbulk, containerised, refrigerated and bulk cargoes, connecting over 400 ports globally.

It maintains a worldwide agency network in addition to its own representative offices across Asia Pacific, the Pacific Islands, North America and Europe, providing its customers with dedicated service and expert market knowledge. At the end of 2017, Swire Shipping owned 23 multipurpose vessels and had chartered-in tonnage with a total of 30 vessels supporting our liner trades.

Divisional update: Swire Shipping

In an increasingly competitive market, Swire Shipping focused on optimising its network in 2017 to ensure customers continue to receive the highest possible service levels and schedule integrity.

Major service enhancements were launched on routes from North Asia to South Pacific, as well as the Trans-Tasman trade between Australia and New Zealand. Swire Shipping also launched a weekly service connecting Asia with Guam and Saipan.

Preparations were also made in 2017 for the commencement of a new office in American Samoa (Pago Pago) where Swire Shipping and its affiliate company Polynesia Line, have been previously represented by a joint venture agency business. The opening of a new office is in line with Swire Shipping’s business model to operate close to its customer base, which also resulted in new offices opening in Fiji and Samoa in 2016.

As a multipurpose liner shipping specialist, Swire Shipping has an unrivalled reputation for service, operational excellence and reliability, and is equipped to handle breakbulk, containerised, refrigerated and bulk cargoes, connecting over 400 ports globally.

Swire Shipping at a glance

30owned & operated vessels

50Agency network in 50 countries

2,400 port calls

15Offices in 15 countries

5,000customers

1.8 million network miles

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Swire Bulk

Swire Bulk operates a rapidly expanding global fleet. A large, modern fleet provides greater flexibility, the surety of supply and a consistent technical standard to perform large volume freight contracts.

Swire Bulk is represented in seven offices around the world - London, Melbourne, Miami, Shanghai, Singapore, Tokyo and Vancouver. It operates an average fleet size of 90 handysize vessels on the water at any one time. Despite the challenging trading conditions, Swire Bulk continues to expand its footprint and market presence in tandem with a strategic newbuilding programme that will deliver the largest and most eco-friendly handysize fleet trading today. At the end of 2017, Swire Bulk owned 24 modern Swire B.Delta39 handysize bulk carriers, four Imabari38 loggers, three “Green Dolphin38” handysize bulk carriers and had a number of chartered-in vessels. In 2017, Swire Bulk traded an average of 90 vessels.

Divisional update: Swire Bulk

Vessels / Fleet2017 saw the successful completion of negotiations for eight Oshima 37k DWT vessels and two Hakodate 34k DWT vessels.

These are scheduled for delivery in 2020 / 2021. The vessels are a TIER II design and incorporate the new super-eco design features which will expand our fleet and enable them to continue to be the market leader by DWT and efficiency in the handysize sector.

People / PlacesThe shore-based Swire Bulk team increased its headcount by 25% to 62%. This will allow adequate resources to trade a fleet of up to 120 vessels, in line with our strategic forecast by the end of 2020. The regional offices have been bolstered with the introduction of new Chartering Managers in Miami and Melbourne; while the Vancouver office was established at the end of 2017 and has a mix of internally transferred personnel and new hires.

The global presence across seven offices delivers improved coverage of the market and time zones. This in turn generates improved access to our customers and cargo volumes, offering a more robust cargo platform to expand the Swire Bulk fleet.

Customer developmentIn 2017, there was greater diversification across both customer accounts and types of commodity. Logs remain a core component of the Swire Bulk business plan. However, there has also been natural growth in other markets and new trades, on the back of the expanded global footprint across 2017.

Swire Bulk at a glance

90owned & operated vessels

96countries served

650 port calls

16 millionmt carried (per annum)

2.8 milliondwt / fleet capacity

9 global offices

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Swire Bulk Logistics

Swire Bulk Logistics is the industrial shipping division of CNCo. Deploying purpose-built vessels, Swire Bulk Logistics specialises in the handling of dry bulk materials at sea, through floating transhipment vessels, and intermediate supply chain solutions to provide value-added services for our customers in the Asia-Pacific region. Working together with Swire Bulk and Swire Shipping, the division offers horizontally-integrated services and a global network to provide innovative and sustainable marine supply chain solutions for our customers through long-term partnerships.

Swire Bulk Logistics owns and operates a purpose-built cement carrier, MV Aotearoa Chief, in Auckland, New Zealand, in a long-term partnership between CNCo and Golden Bay Cement, a division of Fletcher Building Limited.

Divisional update: Swire Bulk Logistics

MV Aotearoa Chief, the first cement carrier in CNCo’s fleet, on charter to Golden Bay Cement from December 2016, successfully completed her first year of operation in New Zealand in 2017. The vessel has a carrying capacity of 9,000 tonnes, the equivalent of over 350 road tankers being taken off the roads on each voyage and incorporates the latest technology in electronic engine management, providing optimum fuel efficiency and low emissions.

In Indonesia, after a number of challenging years, the recovery in coal prices began in

2017. Indonesian coal producers responded accordingly by increasing the production by 6.2% to 434 million tonnes although these increases have not yet translated to a significant increase in freight rates due to excess logistics capacity in the market. Amidst these conditions, MBSS, in which CNCo has a 25.68% stake, continued to implement various initiatives to improve its safety and operational excellence, implementing cost efficiency and streamlining its organisational and business processes to increase productivity.

In MBSS, safety continues to be the top priority and an on-going journey. MBSS incident statistics have showed a remarkable improvement. Thanks to the ‘boots on deck’ on-board safety training for the crew, the number of incidents reduced by 10% year-on-year (y-o-y) while the Total Recordable Incident rate decreased by 24% y-o-y to 2.62%. MBSS places strong emphasis on protecting the environment and MBSS’s bespoke, on-board training programmes reinforce this message.

Commercially, MBSS acquired several new clients on long-term contracts towards the latter part of the year and also renegotiated some contracts from spot charter to time charter basis. Several assets were deployed to assist a leading global company on salvage projects; and parlayed MBSS’s technical asset management capabilities into asset management services for one of the clients, both of which delivered new revenue streams for the Company.

Swire Bulk Logistics at a glance

3specialised self unloading operations

1,100vessels unloaded

5,000 river vessels unloaded

10,000 more than 10,000 days on hire

35 millionmt handled since inception

Photo credit: Martin Budz

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While CNCo has no direct public shareholders, it manages and operates all its businesses in compliance with both the John Swire and Sons (UK)’s, and CNCo’s Corporate Code of Conduct. We also have in place policies, guidelines and procedures that comprise our organisational governance suite. All policies are regularly reviewed by the CNCo Executive Committee (ExCom) and updated as required.

The General Manager for Sustainable Development (GM SD) reports directly to the Managing Director and is a member of the ExCom, allowing him to provide SD input at a strategic level, and at an early stage of any new project deliberation and planning.

The composition of CNCo’s ExCom is shown in the organogram below.

Organisational Governance

CNCo strongly believes that it is imperative to act with probity, transparency and accountability in order to achieve our long-term objectives.

The parent company’s Board of Directors is the highest-level governance and oversight body and sets the strategy for its subsidiary companies. The Chairman of the Parent Company Board of Directors is Mr. B. N. Swire. The CNCo Board of Directors at 31 December 2017 comprised nine members, of whom four were Independent Executive Directors.

The shareholders are directly represented on the CNCo Board of Directors and use this platform to provide governance direction.

Finance Director Global Head of Human Resources

Barnaby SwireJS&S Chairman

James WoodrowManaging Director

CommerialDirector

Fleet Director GM - Business Excellence

GM - Sustainable Development

GM - Swire Bulk GM - Swire BulkLogistics

GM - SwireShipping

IT Director

There are two women on CNCo’s ExCom representing different nationalities. CNCo is trying to attract more women into management positions and is addressing it through Leadership Development training and succession planning (see Our People section of this report).

The interests of internal and external stakeholders relating to SD are fed back to the ExCom by the GM SD following both stakeholder engagement and surveys / feedback. The “interests” includes both risks and opportunities, and how we manage our economic, environmental and social impacts.

CNCo’s SD Report is reviewed by the Managing Director prior to publication to ensure accuracy and inclusion of all material issues.

CNCo management regularly review the operating practices and the Enterprise Risk Management framework that ensures:

• satisfactory and sustainable returns to its parent company;• the interests of stakeholders are safeguarded;• overall short and long-term business risk is understood and managed appropriately;• the delivery of high-quality services; and• the highest standards of ethics are maintained by our employees in all dealings.


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CNCo has a Corporate Philanthropic (CP) Committee which meets on an ad hoc basis and reviews / approves requests for community investment or CP sponsorships. At the operational level, there are Sustainability Working groups, comprising cross-functional representatives who meet quarterly in Singapore and in the main regional offices of Auckland, Sydney, Port Moresby and Suva. They seek to embed sustainability into our office operations. CNCo’s Welfare Committee has oversight of the social / welfare strategy areas. It plays an important role in creating a more cohesive organisation where the employees are engaged and satisfied, making CNCo their Employer of Choice.

We have in place a formal “Whistleblowing” procedure through which concerns on potential governance, social or environmental issues can be fed back quickly, and anonymously if required, to a senior member of the management team. Reporting of material concerns is formally tracked and addressed.

The Designated Person Ashore (DPA) has been an internationally legally required position since 1993, peculiar to the shipping industry under the International Maritime Organisation (IMO) International Ship Management Code, which provides an international standard for the safe management and operation of ships and for pollution prevention.

The DPA role was instituted in the marine industry to ensure that one named person has direct access to the highest level of management. This legal responsibility and authority of the DPA 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.

CNCo is also a part of the various thematic working groups at the Swire group level and is a part of the Swire group Sustainability Committee responsible for setting targets and sharing best practices among the private and public companies of the Swire group.

The DPA role was instituted in the marine industry to ensure that one named person has direct access to the highest level of management.

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Anti-corruption, anti-trust and monopoly practices

The Company has zero tolerance towards corruption and anti-competitive behaviour. CNCo's Corporate Code of Conduct (CoC) is a comprehensive governance document that defines how employees must behave in the course of their duties. Our anti-corruption and anti-trust governance processes are also covered within this Code.

The CoC, together with internal controls, sets a strong foundation to prevent any corruption and anti-competitive / anti-trust behaviours. The Company carries out training for all employees within the CNCo group, testing their understanding of those principles and how they apply to the daily work / duties.

Any and all incidents of potential or actual non-compliance are reported to the CNCo Audit Committee and investigated. In 2017, as in the previous years, CNCo was not involved in any legal actions for anti-competitive behaviour, anti-trust, or monopolistic practices.

In 2016 we adopted a stand-alone Anti-Trust Policy and launched an on-line anti-trust training for relevant employees to support compliance with this. We now have a governance compliance training programme which includes:

• CNCo's Corporate Code Of Conduct• Global Anti-Bribery Act (Based on UK Act, but applicable to all our businesses globally)• Global Anti-Trust (Based on UK Act, but applicable to all our businesses globally)

• Preventing Harassment in the Global Workplace

In early 2018 we have added two more compliance training modules for specific employees / functions:

• European Union General Data Protection Regulation (GDPR)• UK Modern Slavery Act (Based on UK Act, but applicable to all our businesses globally)

This training is held biennially and is part of the induction programme for new employees.

Like many other shipping companies globally, one of the challenges that CNCo faces is the expectation in some ports for “benefits” for the processing of work that should be undertaken as a matter of course. CNCo has been working hard for over four years now to eliminate these payment demands for “facilitation payments” completely and is continuing to see material success with the average cost per ship in 2017 being half of what it was in 2016.

Facilitation payments risk is covered under CNCo’s Business Unit Risk Register. All ships are required to report all such requests and such reports are reviewed at the quarterly CNCo Risk Review Committee and by the internal and external Audit Committees. CNCo has been a member of the Maritime Anti-Corruption Network (MACN) since 2015 and continues to contribute towards the maritime industry’s vision and aim of being free of corruption. MACN works closely with


the root causes of corruption in the maritime industry. More information about MACN can be found at www.maritime-acn.org

key stakeholders, including governments and international organisations, to identify and mitigate not only the symptoms, but also

Zero tolerance transits

One of the challenges that CNCo, like many other shipping companies globally, faces is the expectation in some ports and canals for “benefits” for the processing of work that should be undertaken as a matter of course. CNCo has Zero tolerance towards corruption and has been a member of the Maritime Anti-Corruption Network (MACN) since 2015 to contribute towards the maritime industry’s vision and aim of being free of corruption. CNCo has been working hard forover two years now to support our senior seafarers and to eliminate demands for “facilitation payments” completely and is now seeing material success.

Incident data from MACN’s incident reporting mechanism also showed that demands in the Suez Canal can be accompanied by threats of retaliation to the Captain and ship if cigarettes are not provided to the authorities. Refusal of pilots to cooperate has led to heavy delays, making timelypassage difficult. MACN launched a “Say No” campaign for the Suez Canal on International Anti-Corruption Day 2015.

The impact of the campaign resulted in: Less Frequent Demands, Improved Operating Environment (duress and threats on-board), companies with few transits are successful in saying “No”.

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Child / Forced & Compulsory Labour / Modern Day Slavery Act

As a business with a history and an ethical framework of good employment practice, CNCo is committed to providing good working conditions for its employees, according to universal international standards, and to protecting their safety and health.

We recognise that modern slavery (which includes child / forced and compulsory labour) as an issue that has become increasingly visible and we must take seriously all moral and legal duties in this regard.

CNCo’s Corporate Code of Conduct (CoC) requires the entire CNCo group of companies to comply with all applicable local, national and international laws and regulations in each of the countries / jurisdictions in which it operates and with all CNCo’s company policies. That requirement includes ensuring that CNCo (and its suppliers) do not engage forced / child / bonded or prison labour, or apply unjustifiable disciplinary measures to our employees.

The CoC is supplemented by our Global Human Resources (HR) procedures which

ensure that pre-employment screening is conducted prior to the offer of employment. Our Supply Chain Sustainability Code of Conduct spells out all principles to which we require our suppliers to adhere covering, inter alia, forbidding forced and child labour.

CNCo’s CoC covers employment “not permitting any breaches of employment law or the use of children (under 16 years of age) or forced labour”. While the Code states the minimum age of a child as being 16 years of age, we ensure that we are aligned with that in the UNICEF / UNESCO Convention on the Rights of the Child (1989), and do not employ anyone of “less than 18 years of age”.

The sole exception to this would be that, in accordance with International Labour Organisation (ILO) Convention 138 (Minimum Age Convention, 1973) Article 6, we exclude from our definition of “labour” and “employment” any applicability to a person between the ages of 16 and 18, who is undergoing “a formal course of education or programme training being undertaken by young persons in schools for general, vocational or technical education or in other training institutions”.


The CNCo group will not tolerate the practice of modern slavery in any form and is committed to continue to work with all of its stakeholders and relevant regulators to combat this issue, wherever it may become aware of it.

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As part of our compliance with the UK Modern Day Slavery Act (MSA) (2015), we carried out a number of self-assessments for our higher risk suppliers in 2017. These assessments gave us an insight into the state of supplier maturity against modern slavery areas and allowed us to propose improvements to strengthen their governance systems.

No serious non-conformities were recorded. These will be supplemented by physical audits in 2018 as required.

We undergo annual internal audit against our modern slavery initiatives and commitments made under our MSA statement. For more information on MSA related actions taken and planned for 2018 please see our Statement on Modern Slavery and Human Trafficking (2017) on our website: https://bit.ly/2xATebz

The CNCo group will not tolerate the practice of modern slavery in any form and is committed to continue to work with all of its stakeholders and relevant regulators to combat this issue, wherever it may become aware of it.

Cybersecurity

At CNCo, we recognise the importance of ensuring the highest standards of cybersecurity for our systems, network and data. There has been an increase in cases of cyberattacks both globally and specifically in the marine sector, with ransomware attacks and email scams for fraudulent transactions now being a common occurrence.

We have put measures in place to defend our Company from potential cyberattacks. CNCo has policies and procedures governing cybersecurity practices and all CNCo employees are required to observe these.

We have a dedicated team of professionals managing cybersecurity risks and prioritising our approach to risk management by focusing on:

• Our people, • Our processes, and • The technologies we employ.

Humans are often the primary target and the weakest link in the security chain for potential cyber breaches, as phishing e-mails are widespread. Our strategy focuses on cybersecurity education and building awareness among our people at sea and ashore.

We hold regular training sessions covering existing and emerging threats: educating our employees on ways to identify potential cyber threats, staying safe on-line, as well as emphasising reporting of any suspicious articles.

Our training involves performing periodic cybersecurity assessments / phishing e-mail simulation tests to identify weaknesses and addressing them through further strengthening our procedures.

We also focus on our network infrastructure which is designed to reduce and contain the risk of a malware outbreak.

At CNCo, we recognise the importance of ensuring the highest standards of cybersecurity for our systems, network and data.

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Sustainable Development Strategy

Our strategy is fully aligned with the Swire group’s environmental strategy, “SwireTHRIVE”, which aims to mitigate operational risks and build long-term resilience by driving higher standards, greater efficiency and increased innovation in key areas.

The aim of SwireTHRIVE is to consider our potential impact on the environment while continuing to prosper in the long term. SwireTHRIVE focuses on environmental sustainability because the success of people, communities and Swire itself depends on a thriving natural environment. The key issue areas of SwireTHRIVE are Carbon, Waste, Water, Sustainable Materials, Biodiversity and Climate Resilience.

The six key environmental issues of the SwireTHRIVE strategy are material to all divisions across the Swire group and all of its operating companies. In addition to those six focus areas of SwireTHRIVE, CNCo’s strategy covers other areas which are material to our Company. We have aligned these CNCoTHRIVE issues under these three pillars:

• Thriving People,• Thriving Environment, and• Thriving Communities.

These commitments are detailed in CNCo’s Sustainable Development strategy (introduced in 2016 - see page 73). All our current and future sustainability initiatives are aligned with these three pillars.

The China Navigation Company has been in business since 1872.

Our business has stood the test of time because we have always looked ahead and made decisions based on long-term sustainability.

We don’t see our business as separate from the world. We depend on it and wish to help shape it positively.

So when we build businesses, we seek to build communities. When we employ people, we help them to fulfil their potential. When we use resources, we seek to protect the environments that provide them.

The world in which we operate is facing some of the most pressing social and environmental challenges of our time. We are committed to being part of the solution.

Because when we help the world in which we operate to thrive, so do we.

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Sustainable Development Goals

Our SD strategy is aligned with the relevant United Nation’s (UN) Sustainable Development Goals (SDGs) that we consider most important to its stakeholders. We have also aligned CNCo’s material issues to demonstrate the linkages between them. We aim to track how our organisational goals and actions contribute to achieving the wider sustainability agenda.

The UN explicitly acknowledged in the past that the achievement of the Millennium Development Goals (MDGs) was simply not possible without the involvement of the private sector, and thus the MDGs evolved into the SDGs. We started tracking our progress towards achieving the relevant SDGs in 2017. Our progress in 2017 is included on page 75 (SDGs and CNCo Thrive strategy with progress).

Our SD strategy is aligned with the relevant United Nation’s (UN) Sustainable Development Goals (SDGs) that we consider most important to its stakeholders.

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Supply chain and Procurement management

CNCo has grown and expanded since 2012 and now operates over 120 vessels worldwide. In 2014, a Central Procurement Department was set up to standardise procurement policies and procedures across the group and to drive continuous business improvement.

The department’s mission is to provide value-added services to derive savings and minimise risks. At the beginning of 2018, the Procurement Department positioned themselves as the Group Procurement office to gain leverage, improve global standards for efficiency, build up competitive advantage and mitigate supply chain risks.

In 2015, we launched the SAP Enterprise Resources Planning system, which established the critical foundation of procurement “procure-to-pay” process and supplier database. Subsequently, the Procurement department collaborated with Swire Shipping and Swire Bulk divisions to launch a bunker procurement transformation programme in 2016. Bunker fuel was the first procurement category to be centralised in our headquarters in Singapore.

The programme covered deployment of supplier performance platform, establishing a formal supplier relationship scheme, as well as bunkering and supplier audit programme. It helped to achieve tangible savings year-on-year and set strict governance system in our global fuel supply chain.

Key projects commenced to create business opportunities were: IT procurement process standardisation, HR and corporate travel services procurement programme, supplier on-boarding project, centralised contract management system and vendor consolidation. In light of the upcoming bunker regulations and the need to manage marine fuel environment holistically, CNCo introduced a robust bunker procurement end-to-end supply chain process and enhanced our data analytics capability.

CNCo works with thousands of diverse suppliers globally, with the majority located in Australia, China, New Zealand, Papua New Guinea and Singapore. Together with our key internal stakeholders, Group Procurement aims to build stronger partnership with suppliers and ensure that they adhere to the same environmental, social and governance standards as CNCo.

To promote the best procurement practices, we learn about the latest industrial developments by participating in professional networks. CNCo's Group Procurement Manager has been a Council member of the International Marine Purchasing Association (IMPA) since 2014, and was also appointed as Honorary Member of Singapore Association of Ship Suppliers & Services (SASS). She is also an Associate of the Chartered Institute of Procurement and Supply (CIPS), a globally-recognised procurement organisation. The first pilot professional procurement training course will be launched in 2018, with eight high-potential employees embarking on a 12-month CIPS diploma programme. This globally recognised qualification will strengthen CNCo’s quality in services delivery. CNCo Supplier Code of Conduct can be found on our website: https://bit.ly/2Dszr3y

CNCo has grown and expanded since 2012 and now operates over 120 vessels worldwide.

Left:Group Procurement and Ship management visited our own vesselMV Shansi for lubricant oil services delivery and stock location review.

22



Awards

The Most Impactful SD Project and The Best Sustainable Development Project

The Sustainable Ship Recycling Project, Swire group Sustainable Development Forum (2017)

CNCo’s sustainable ship recycling efforts win Swire awards

CNCo and Swire Pacific Offshore (SPO) were big winners at the annual Swire SustainableDevelopment (SD) Forum held in Hong Kong in November. Our sustainable ship recycling efforts beat all the sustainability projects within the Swire group to clinch both the Best and the MostImpactful SD awards. For more information please see page 58.

L to R: Carmen Chan, management trainee (MT); Chloe Chua, MT; Simon Bennett, GM Sustainable Development (SD); Lydia Pavlova, Manager SD and Kent Heng, MT.

CNCo and Swire Pacific Offshore (SPO) were big winners at the annual Swire Sustainable Development (SD) Forum held in Hong Kong in November.

23



We conducted an extensive stakeholder engagement exercise in 2016. As a result, we have identified and ranked the importance that our stakeholders give to the various components that make an organisation “Socially Responsible”.

Surveys were conducted by reaching out to 105 external stakeholders, 235 CNCo shore-based employees and 81 seagoing employees to understand what is important to them. For more information on the survey structure itself, please see our 2016 SD report (pages 3-5).

Following the surveys, we developed a Material Issues matrix (see page 72) in consultation with our sustainability partner: Forum for the

Stakeholder Engagement and Materiality

We conduct materiality assessments regularly as a follow-up on the Sustainable Development presentations for shore-based and seagoing employees. Our stakeholder consultation programme for seagoing employees covers office visits, officers and crews’ fora and training programmes during the Safety Awareness Courses in Singapore.

For shore-based employees it is undertaken during the induction programmes and other events (presentations at international and Singapore-based conferences and events), peer group discussions as well as formal surveys (see below) and informal ad hoc feedback.

Future (a not-for-profit organisation which works globally with businesses to address sustainability challenges) and CNCo’s senior leaders.

Material topics also covered those identified through an independent scan for issues of concern to CNCo’s current business and peer group views to ensure we covered a broader view on what is important to our business.

The process considered material issues affecting our Value Chain which is our Build / Operate / Transfer (BOT) framework. This can be found on page 71.

The materiality matrix shows the relative importance of issues we identified to external

Prioritise Internal stakeholders’ expectations

Prioritise External stakeholders’ expectations

Independent scan for issues of concern to CNCo

Peer group review to identify issues of importance to our peers

Internal Materiality Workshop

Materiality Matrix approved by CNCo’s seniorleaders

Materiality Assessment Process

stakeholders and to CNCo. We have identified 13 high priority topics (top quadrant) and this report has been written to address material areas as per GRI requirements.

The materiality matrix shows the relative importance of issues we identified to external stakeholders and to CNCo.

24


Strategic Scorecard

Our strategic scorecard is aligned with a number of areas of importance to our stakeholders and provides direction and sets specific Key Performance Indicators (KPIs).

Our Strategic Scorecard is reviewed each year by CNCo’s senior leaders, facilitated through our partnership with Forum for the

Future. Progress reports and measurements are tracked monthly throughout each year to ensure we remain on track to meet the longer-term nature of the strategic goals.

At the end of 2017, we were on track against the majority of the goals. We also updated a number of KPIs across set strategic objectives to ensure that they remained relevant to our evolving businesses and operations.

Our Strategic Scorecard is reviewed each year by CNCo’s senior leaders, facilitated through our partnership with Forum for the Future.


FOSTER SUSTAINABLEPARTNERSHIPS IN THE KEYCOMMUNITIES IN WHICH WE

OPERATE

CAUSE ZERO HARM ACHIEVE NET ZEROENVIRONMENTAL IMPACT

EMBED “SEA CHANGE” TO OPTIMISE PERFORMANCE ACROSS ALL

BUSINESS UNITS

2030

Goa

ls20

20 K

PIs

Obj

ectiv

es

LTIFR AT ZERO

ZERO HARM

ZERO SPILLS OF MARINEPOLLUTANTS

ACHIEVE GOLD STANDARD FOR PROCESSEXCELLENCE ACROSS ALL BUSINESS UNITS

OPERATIONALEXCELLENCE

Promotee innovation, operational excellence and provide safe, healthyand secure work environments

WINNING CUSTOMERRELATIONSHIPS

Enhance relationships and provide competitive,professional and innovative solutions to our

customers

ACHIEVE ANNUAL STAFF RETENTIONOF ≥ 95%

PROMOTE CADETSHIPS FROM THE PACIFIC ISLANDS TO MEET 25%

OF SWIRE SHIPPING’S ANNUAL REQUIREMENT

DEVELOP 3 HUBS TO PROMOTEFORTRESS PACIFIC

(WEST, CENTRAL, EAST)

IMPLEMENT ANINTEGRATED IT STRATEGY

ACROSS ALL BUSINESS UNITS

IMPLEMENT NETWORK OPTIMISATION TOOL TO DELIVER REDUCTION IN COST BASE BY 5%

(AGAINST 2016 BASE LINE)

REWARDING PARTNERSHIPS

Establish and enhance long-term, mutually beneficial relationships with our stakeholders

KEY CUSTOMERS TO OPERATEACROSS 2 BUSINESS UNITS

KEY CUSTOMERS RATE CNCo ASTHEIR PARTNER OF CHOICE

DEVELOP 2 VALUE-ADDED SERVICESWITH ALL KEY CUSTOMERS

ESTABLISH 3 SUSTAINABLEAGRI-CARGO PROJECTS TO DELIVERSOCIO-ECONOMIC VALUE IN OUR KEY

COMMUNITIES

ENGAGE IN STRATEGICPARTNERSHIPS WITH OUR KEYCUSTOMERS AND SUPPLIERS

ACROSS ALL BUSINESS UNITS

EEDI COMPLIANCE INDEX AT ≤ 80%FOR ALL RELEVANT LINER AND BULK SHIPPING VSLS ON DELIVERY TO CNCo

EXISTING VESSEL DESIGN EFFICIENCY TO BE ≥ 50% BETTER THAN BASELINE

ON DELIVERY TO CNCo

FLEET OPERATING EFFICIENCY TO BE ≥ 50%

BETTER THAN BASELINE

IMPLEMENT 3 PILOT TECH. OR OPS. INNOVATIONS THAT CAN DEMONSTRATE A

50% REDUCTION IN AN ATMOSPHERIC ENVR. IMPACT OF THE LINER, BULK

AND BULK LOGISTICS FLEETS

WINNING TEAMDevelop an industry leading workforce

and provide rewarding careers as an employer of choice

INNOVATIVE SOLUTIONS

Provide value enhancing solutions for our customers

DELIVER MARKET LEADING SERVICES ACROSS

EMPLOY THE RIGHT PEOPLE,IN THE RIGHT JOB, IN THE RIGHT

PLACE, AT THE RIGHT TIME

SECURE A FULLY ALIGNEDAND ENGAGED WORKFORCE

DESIGN 5 COMMODITY- SPECIFICNEW CARGO-HANDLING SOLUTIONS

DEVELOP 1 MARKET-LEADINGLOW COST SHIPPING SOLUTION

DEVELOP 5 SERVICES WHICHCHANGE THE WAY CUSTOMERS DO

BUSINESS/OPERATE MORESUSTAINABLY IAW THE OPPORTUNITY

REGISTER

DEMONSTRATE THAT ALL RELEVANTCOMMUNITY PROJECTS ARE DELIVERING

POSITIVE, AND INCREASING, SROI

SUPPORT DEVELOPMENT OFPROGRESSIVE LEGISLATION AIMED

AT SIGNIFICANTLY IMPROVINGSUSTAINABILITY

ESTABLISH THREE "SWIRE SPORT"PROGRAMME IN OUR PACIFIC ISLAND

COMMUNITIES

DELIVER THE ANNUAL TRAINING PLANS AND ENSURE

ALL STAFF ACTIVELY PARTICIPATEIN THE CNCo LEARNING AND

DEVELOPMENT PROGRAMME

ALL STAFF ALIGNED TO TECHNICAL AND MANAGEMENT

COMPETENCY FRAMEWORK

ALL BUSINESS UNITS ARE IN THE TOP QUARTER OF A&E. AS MEASURED

BY BIENNIAL STAFF SURVEY

ALL STAFF PARTICIPATE IN THE REWARD AND RECOGNITION

PLATFORM

COMMODITY SECTORS

25


Safety

Safety is our top priority in CNCo. We continuously strive to provide a safe and healthy working environment and to cultivate a safe mindset for both our employees and contractors alike. By having a strong safety focus together with robust reporting and learning culture we make safety everyone’s priority. Our goal is to build an industry leading safety culture.

CNCo has a Health and Safety Policy in place which states our commitment to Zero Harm to all personnel and at all our business / operations sites ashore and at sea. We are committed to ensuring that Occupational Health and Safety (OH&S) considerations are an integral part of our decision-making process and culture. CNCo’s philosophy is never to allow business objectives to compromise the health and safety of its employees, customers, visitors, contractors and the wider community. We take responsibility for safety at sea, at port and in our offices. This Policy is available on all our vessels and offices globally and is updated periodically.

2017 saw a significant improvement in CNCo’s safety records. The strong push to

strengthen the Company’s safety culture that we embarked on in the latter part of 2016 had a noticeable effect resulting in a year with zero fatalities and a reduced 10 LTIs. Very importantly, the majority of those 10 LTIs were of a less severe nature than in the previous year.

Even with all the initiatives implemented during the latter part of 2016 and the first half of 2017, it was decided to undertake a Safety Maturity Assessment by a third-party consultancy firm, Green-Jakobsen, a consultancy highly experienced in safety, leadership and human resource management in the maritime industry. In 2017, CNCo conducted a Global Safety Culture Assessment to help improve our safety programmes and to advance the progress towards the Company's goal of a Zero Harm culture.

CNCo conducted a Global Safety Culture Assessment to help improve our safety programmes and to advance the progress towards the Company's goal ofa Zero Harm culture.

26


Safety Excellence - Fleet

>2,000Seafarers

96,000TRIP Risk Assessmentsconducted annually.

350Fleet Risk Assessments availableaboard each vessel database.

37Enhanced Safety Awareness Courses conducted. (3 per month)

560Seafarers trained in CNCo's Safety & Risk Awareness programme annually.

10 Safety culture elements assessed externally.

27


Safety

Global Safety Culture Assessment findings will be used in safety culture programmes in CNCo’s on-going efforts to improve our safety performance with particular emphasis on the areas where we were found lacking compared to industry peers.

The assessment covered ten safety culture areas, namely:

1. Executive Commitment2. Health and Wellbeing3. Risk Management4. Safety Leadership 5. Competence and Performance Management6. Training Programmes 7. Safety Communication 8. Safety Reporting9. Safety Management Systems10. Officers’ and Managers’ Commitment

The result of the assessment was announced in December 2017 and revealed that the overall safety maturity level of the Company was at the level where all necessary safety management systems were in place and there was a general understanding of how to ensure safety performance. However, the efforts towards

safety were inconsistent. Safety initiatives were generally based on reactive learning from actual incidents and industry findings or pushed by customers. Safety initiatives were mostly driven by a few persons in the organisation.

CNCo’s maturity level had significant variations. Two areas stood out positively: “Executive Commitment” and “Training Programmes”, whereas four areas were slightly below the industry average: “Safety Leadership”, “Competence and Performance Management”, “Safety Reporting”, and “Officers’ and Managers’ Commitment”.

These findings will be used in safety culture programmes in CNCo’s on-going efforts to improve our safety performance with particular emphasis on the areas where we were found lacking compared to industry peers. Our goal is for CNCo to become an industry leader in safety.

CNCo’s strong safety culture makes me feel at ease

I joined CNCo as an engine cadet for many reasons, in particular, for the priority given to safety in this company. Since this is my first time on board a ship, all the uneasiness I would have had just disappeared. The safety culture on board and the way the ship’s personnel function regardless of nationality or race make me feel most welcome. In the three months on board, I feel like a part of the crew and not just another worker / trainee.

The seniors always listen to my ideas and give me feedback on what they think is missing and guide me. The seniors on board have shown me that the main goal of this job is get work done with Zero incident and are strict about the safety procedure one follows when doing a job, for example PPE details such as which gloves are most suitable for the task at hand.

All these have enabled me to have a very pleasant learning experience on how to work safely and efficiently and I hope to keep learning.

by Samitha De Silva, engine cadet, MV Kweilin

28


Safety

Among other safety initiatives taken during 2017, the recruitment and promotions procedures for cadets and officers were further strengthened with the introduction of a Safety Recruitment Assessment Tool. All new hire cadets and officers, plus all in-house candidates for promotion to senior officer ranks, must take and pass an on-line safety assessment. The assessments gauge the candidates’ safety profiles and this tool proved to be accurate, providing the crewing department with important information during the interview for recruitment and / or promotion.

A senior officers’ attachment programme was also introduced to ensure that all newly-hired Masters and Chief Engineers, as well as in-house officers promoted to these ranks, spend two full weeks in the head office in Singapore familiarising themselves with office procedures, departmental structure and getting acquainted with the office employees with whom they will have to interact once they join a ship.

All new hire cadets and officers, plus all in-house candidates for promotion to senior officer ranks, must take and pass an on-line safety assessment.

MV Szechuen holds Zero Harm day

Just as CNCo offices organise regular crisis simulation exercises to test our emergency preparedness, it is equally important that our crew are well-versed to handle any emergencies on board the vessels.

On 16 September 2017, the crew and officers of MV Szechuen actively participated in a Zero Harm day. The day started at 8 in the morning with everyone going through the latest safety videos followed by several discussions conducted by the Chief Officer and 2nd Engineer. Hands-on training and drills were conducted after the desktop discussion. The crew started with a fire drill at the incinerator room followed by an abandon ship drill in the afternoon.

29


Swire Shipping – onshore H&S performance

• In 2017 the Swire Shipping shore-side Safety Sub-Committee developed a simple reporting process to encourage ships’ Masters to report on contractor’s safety attitude and compliance with the use of Protective Personal Equipment (PPE) after each port call. Following this introduction, vessels have a reporting compliance with PPE and safety standards consistently recorded at 100% versus a target of 95% on a rolling 6 month and year-to-date basis.

• All serious Near Miss incidents are investigated and the findings jointly reviewed between Swire Shipping and the service provider, then widely promulgated via a “4- box” report. In 2017 we recorded a total of 59 Near Miss reports submitted by our vessels and shore-side operators.

Looking forward, we will focus on the following:

• The Swire Shipping Operations team is to participate actively in CNCo’s safety culture project.

• Leading the way in Zero Harm projects: Enhancing the Safety Culture; and Safety Measurements and Benchmarking.

• While Near Miss reporting has declined, we will continue to encourage all on-board personnel, stevedores and other stakeholders to look for and promulgate these important lead indicator reports as part of our preventative incident avoidance strategy.

• We have changed the way we accept Dangerous Cargo, by centralising the Dangerous Cargo approval process to ensure that IMO-class cargo is vetted throughout the enquiry, booking and shipping process.

• Continually measure, analyse, report and action safety behaviour reports from vessels, agents and other stakeholders to identify gaps in safety awareness and behaviour and to engage with port service providers, particularly in some ports in Asia and the Pacific Islands.

• Introducing health and safety clauses to all new vendor contracts to ensure our partners follow CNCo’s safety philosophy.

Vessels have a reporting compliance with PPE and safety standards consistently recorded at 100% versus a target of 95% on a rolling 6 month and year-to-date basis.

Safety

Port safety inspections

CNCo’s Zero Harm goal applies to all our employees and stakeholders alike. In early April, Swire Shipping’s Operations and Logistics team visited our stevedores in Papua New Guinea’s Port Moresby and Lae ports to carry out safety inspections. During the visit, the team engagedin productive discussions with the stevedoring companies on ways to enhance performance standards and to improve the safety of the stevedores. It is encouraging to see our operations team working proactively with our vendors to drive higher safety standards.

30


Swire Bulk fleet H&S performance

• The Swire Link auto-messaging system has been upgraded by adding the stevedore safety standards reporting to the departure message. This ensures that the reports are received from all port calls by all vessels.

• Safety presentation and lectures will be made on board vessels by shore teams’ representatives whenever logistically convenient and possible to board the vessels.

• All vessel operators will visit at least one ship each annually to deliver CNCo’s safety message and personally impress our safety priority concern to the Master and crew.

• A dry bulk informal forum has been started by engaging eight large shipping companies based in Singapore with Oldendorff, Cargill, Berge Bulk and Western Bulk among them. Senior Operations executives meet bimonthly to discuss dry bulk operating matters related strictly to the non-commercial issues of safety, rule compliance and regulatory matters.

All vessel operators will visit at least one ship each annually to deliver CNCo’s safety message and personally impress our safety priority concern to the Master and crew.

Safety

CNCo Fleet Safety Statistics

31


For stevedores and port workers• Monitoring stevedores’ safety performance• Frequent best practice safety sharing

For ship recycling activities• Working with the management of selected Ship Recycling Facilities that we have or may use in Alang, India, on improving their health and safety standards as well as environmental compliance• Recycled three CNCo vessels (2016 / 17) at approved facilities in Alang under supervision from a monitoring team appointed by CNCo with zero fatalities and LTIs

CNCo’s senior leadership remains strongly committed to improving the Company’s health and safety performance; this topic remains the first item on the agenda at the monthly ExCom Meeting. The results depicting our Lost Time Injury Frequency (LTIF) indicate that we are on track in progressing our safety culture with the goal of achieving an interdependent safety culture over the coming years.

Zero Harm – Stakeholder Engagement

Over the course of the year, efforts were made to re-introduce or reinforce safety within CNCo and with stevedoring companies and Ship Recycling Facilities. Our initiatives and achievements cover the following areas:

For seagoing employees• Cadet Training Programme• Mandatory Safety Awareness Course• Senior Officers’ Attachment Programme• Safety Management System• Safety Campaigns and videos

For shore-based employees• Office training workshops• Every employee has safety SMART goals embedded in their Key Performance Indicators

CNCo’s senior leadership remains strongly committed to improving the Company’s health and safety performance; this topic remains the first item on the agenda at the monthly ExCom Meeting.

Safety

The Heinrich / Bird safety pyramid (2017)

32


With our commitment to developing and sustaining a work environment and culture that supports the safety, security and welfare of our people, we have developed an aligned set of basic standards that are more relevant for our onshore offices.

Fire warden and emergency evacuation representatives who are trained to ensure that employees are safely evacuated to a dedicated meeting point in the event of an emergency.

First aid representatives who are able to attend to minor first aid incidents within the office as and when they may occur. Incident Reporting tools to encourage employees to report any safety concerns if and when the need arises.

We have Office Safety Committees established in all our major offices.

The full list of CNCo Safety Statistics can be found in the data section of the report on page 79.

Office Safety Standards

With our commitment to developing and sustaining a work environment and culture that supports the safety, security and welfare of our people, we have developed an aligned set of basic standards that are more relevant for our onshore offices.

Our basic office safety standards include:

Safety committees that meet on a regular basis to discuss a range of safety concerns and act as safety ambassadors within the business when initiatives are rolled out.

Clear Emergency Evacuation guidelines for employees to understand and adhere to in the event of an emergency.

Safety

33


Our people are at the core of CNCo’s business operations. We are committed to providing a continuous learning environment where employees are empowered to reach their highest potential. We value our multinational workforce and actively promote an inclusive and diverse workplace with a strong focus on safety excellence.

Employment information

As at the end of 2017, the CNCo group employed 3,076 people in various locations around the world. Our employees come from 49 countries.

999 of our employees were shore-based, while the remaining 2,077 (945 Officers and 1,132 crew members) were seafarers. Our seagoing team continued to grow in line with the increase of the size of our fleet; it grew 26% year-on-year from 2016 (note: each full-time employee position on a ship requires more than one person to fill as a proportion of crew are on leave at any time). Our shore-based employee numbers increased by 34% in 2017 as we continued to grow our global operations and established / transitioned new offices in Fiji, New Caledonia and Samoa, resulting an increase of 107 personnel.

Our People

Our business strategy continues to focus on growing our global operations. CNCo’s expansive geographical footprint covers offices across Australia, Canada, China, Fiji, Hong Kong, India, Indonesia, Japan, New Zealand, Papua New Guinea, Samoa and American Samoa, New Caledonia, Taiwan, Singapore, United Kingdom and United States of America.

The geographical breakdown of our office employees by key* (*over 5% of total global employee count) locations:Singapore (Head Office) – 30.5%, Papua New Guinea – 19.6%, Australia – 12.8%, and New Zealand – 12.2%, Fiji – 8.2%, China – 7.1% with the remaining 9.5% based in Canada, Hong Kong, India, Indonesia, Japan, New Caledonia, Samoa, Taiwan, United Kingdom and United States.

As at the end of 2017, the CNCo group employed 3,076 people in various locations around the world. Our employees come from 49 countries.

34


Our seagoing employees come from 30 countries, an increase from 22 in 2016.

Our People

Australia4

Myanmar267

Croatia27

Ukraine135

UK12

Sri Lanka96

China345

Papua New Guinea98

New Zealand80

Tuvalu48

Malaysia6

Hong Kong23

Ireland2

Tonga1

Fiji33

Indonesia2

Samoa2

SolomonIslands

1

Russia14

Singapore1

Philippines864

Bulgaria1

Canada1

El Salvador1

Estonia2

6Montenegro

2Romania

Serbia1

Thailand1

USA1

Total number of sea staff

2,077

35


Our People

97% of our shore-based workforce were employed on a full-time basis. The number of employees who were “contractors” is very low (3%) and most of them are skilled professionals working as consultants on a contract basis to assist with projects such as the implementation of new IT systems.

Note:Some seagoing employees, particularly all our Filipino seafarers, are employed, as required by the Philippine law and managed by the Philippine Oversea Employment Agency (POEA) on a contract by contract basis. We do not classify these as “contractors” as all Overseas Filipinos Workers, be they seamen, doctors, nurses, etc. are employed on this basis.

22% of our shore-based employees were in management roles, with the remaining 78% in support functions.

97% of our shore-based workforce were employed on a full-time basis.

Breakdown of management vs support roles

ManagementSupport

22%

78%

Type of employment

Full-timeTemporary

97%

3%

36


Our People

CNCo seafarers are covered by a collective bargaining agreement (CBA) or equivalent. All contractual conditions are in accordance with the International Labour Organisation (ILO) Maritime Labour Convention (MLC) 2006.

The number and rates of employee hires and employee turnover can be found on pages 84 and 85.

Employee turnover remains a valuable indicator of the Company’s sustainability and is an on-going area of focus for the Company. Overall employee retention in 2017 for shore-based employees was 85% and 93% for seagoing employees (officers and crew). Both shore-based and seagoing employee retention rates remain consistent y-o-y.

We continue to monitor and analyse turnover rates against national average figures and in light of changes within the business and the industry. We conduct exit interviews and seek to rectify any firmly trending reasons for turnover where they are viable and within our control.

94% of our office workforce were classified as “local”, similar to 2016 figures. We define “local” as those who are a national or permanent resident of the country of employment. 4% were classified as “expatriates”.

Around 43% of this expatriate employee percentage are parent company managers who have a centrally-planned rotation through internal postings within the wider Swire group. The rest are employed as industry experts and have long-term careers with the Company worldwide.

Globally, all our contracts comply with the relevant local employment laws. We continue to provide benefits that are additional to local legislations such as medical insurance for shore-based employees. For all seafarers this include private healthcare, life insurance and paid pension arrangements (or cash in lieu). Type of contract

ContractExpatLocal

94%

2% 4%

94% of our office workforce were classified as “local”, similar to 2016 figures. We define “local” as those who are a national or permanent resident of the country of employment.

37


Our People

The CNCo Pte Ltd Board of Directors comprises nine male members. We have two senior female managers who sit on CNCo’s Executive Committee, double the number in 2016. While it is worth noting that gender diversity has historically always been skewed in the shipping sector, we recognise this as a challenge and a potential detriment. The Company, and in particular our HR‘s Learning and Development Department, continues working on strategies to better balance gender diversity at all job levels within the Company. We are planning to focus more on higher Diversity and Inclusion in 2018 / 2019.

There were seven (or 0.3%) female officers among our seagoing employees which almost doubled from four in 2016. The unacceptable

and remarkably low number of women at sea is reflective of the shipping industry (excluding the cruise sector) in general. We seek to encourage more women to join CNCo, having, for many years, a gender-blind employment process supported by the creation of a culture where women feel safe and are supported. In addition to our clear and explicit policies on equal opportunities and anti-harassment, we provide a Confidential Reporting hotline to deal with any issues. We will start supporting a female cadet programme in Papua New Guinea in 2018 aimed at attracting more women seafarers.

We take a strong stance with regards to any form of harassment in the workplace. We have a robust system in place to address such situations in a timely manner. We have in place Equal Opportunities, Diversity, Inclusion and Respect in the Workplace policy which aims to further embed diversity and equality into all our operations to ensure that we benefit from

Diversity in the workplace / Anti-discrimination and anti-harassment

For a multinational shipping company, with employees from 49 countries, having an inclusive, cohesive and supportive culture is key to our continuing sustainability. We create a welcoming, positive, innovative and high performing work environment by promoting equal opportunities, diversity and inclusion and respect in the workplace. This is done through policies, Code of Conduct, induction programmes, forums, seminars and training.

In 2017, 52% of the shore-based employees were males and 48% were females. This split has remained consistent over the past few years.

a welcoming, positive, innovative and out-performing work environment.

A diverse workforce is one whose members are not discriminated against. Accordingly, we require full compliance with applicable employment and other laws and will not tolerate unlawful discrimination*, or harassment or any other breaches of applicable law. Our equal opportunities practices commit us to ensuring there is no unjustified discrimination in the recruitment, retention, skills training and competence development of our employees on the basis of aspects including: age, disability, ethnicity or ancestry, family responsibilities, gender identity, language (while noting that proficiency in the English language is a legal requirement of the marine industry), marital status including civil partnerships, nationality, political views, pregnancy, race, religious beliefs or creeds, or sexual orientation.

Female

483Male

516

*Decisions become a form of unlawful discrimination when race, creed, national origin, ethnicity, or gender cause one person to be treated differently than another. Some states have laws that also protect against discrimination on the basis of marital status or sexual orientation.

These are called protected classes. There are some established cases of “lawful discrimination”, e.g. convicted embezzlers being considered for accounting roles, unfit candidates for fire-fighters, “tall” people as cabin crew on Dornier 328 aircraft, etc.

38


CNCo aims to have a workforce that as far as practical reflects the diversity of the stakeholder communities in which our business units operate worldwide.

As an Equal Opportunity employer, we ensure that there is no instance of men and women with the same competence and / or experience being paid differential rates for performing the same work. Salaries are set by the internal Compensation and Benefits Department, and are in accordance with the local geographical market guidelines so that we can both attract and retain the best talent.

Executive pay is determined after discussions with external consultants, and are combined with the use of benchmarking data from similar organisations. CNCo does not provide performance-based pay, equity or shares as part of its remuneration packages regardless of seniority.

Bonuses are awarded for performance on a discretionary but equitable basis. Pensions are provided as a minimum as per statutory requirements. For seagoing employees, all contractual conditions are, as a minimum, in accordance with the ILO MLC 2006.

Our People

In 2017 as part of CNCo’s annual training programme for all shore-based employees, we conducted the Code of Conduct and Preventing Harassment in the Global Workplace courses. These courses set out CNCo’s values, principles and commitment to compliance with applicable laws and aim to help employees deal with the ethical dilemmas that they may encounter in their everyday work.

CNCo was notified of eight claimed cases of discrimination or harassment in 2017 through our Confide Line or the DPA. All cases were immediately investigated by Senior CNCo Management and treated with utmost confidence. Four cases resulted in immediate dismissal of the discriminator / harasser, with the employees relieved of their duties at the next port of call.

For the rest, matters were resolved with the parties, with a strong emphasis put on CNCo’s zero tolerance towards discrimination and harassment in the workplace. Complainants were offered free counselling sessions. This helps to demonstrate that we have solid systems and processes in place to deal with any alleged and actual situations, leading to a culture which is free of discrimination and harassment.

As an Equal Opportunity employer, we ensure that there is no instance of men and women with the same competence and / or experience being paid differential rates for performing the same work.

MaleFemale

52%

48%

Shore-based employees by gender

39


Our People

CNCo aims to have a workforce that as far as practical reflects the diversity of the stakeholder communities in which our business units operate worldwide.

Total number of permanent employees by employment type and gender

Female

46518

Full time / Permanent contractsTemporary contracts

Male

50511

Full time/Permanent contractsTemporary contracts

50.55%

FemaleMale

46.55%

1.80% 1.10%

40


Australia

Canada

China

Fiji

Hong Kong

India

Indonesia

Japan

New Caledonia

New Zealand

Papua New Guinea

Samoa

Singapore

Taiwan

United Kingdom

United States

Total shore-based employees

10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 160 170 180 190 200 210 2200 230 240 250

73 55

40 42

53 69

118 78

153 152

3 2

2 8

128

82

25 46 71

2 11 13

5

3 2 5

6

2

122

196

305

10

19

10

Male

Female

Male Female Total Staff

15 4

5 5 10

6 9 15

260 270 280 290 300 310

Percentage of shore-based employees by gender and country

Our People

In 2017, 52% of the shore-based employees were males and 48% were females. This split has remained consistent over the past few years.

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Our People

Seagoingemployees

1964200

10 years of service15 years20 years25 years30 years35 years

Shore-basedemployees

3187211

Rewards & Recognition Programme

We believe that it is important to reward and recognise people based on performance, results and behaviours allowing employees to feel valued and appreciated at work. In June 2017 we launched a Global Reward and Recognition Programme to reward and recognise employees for extraordinary efforts.

The programme operates on two platforms: formal and informal. Informal rewards can be as simple as saying “thank you” for a job well done in the form of a “Thank You” card and an optional small token of appreciation. Formal rewards work by nominating a team or individual who has applied themselves and achieved greatness in line with the predetermined framework.

The framework is focused on safety, ideas for improvements (i4i), company values, achievement of strategic or business improvement projects, or significant contribution towards the achievement of business plans linked to CNCo’s strategic objectives.

Employer of Choice

CNCo has been the Employer of Choice for most of our seagoing and shore-based employees. The average length of service has decreased from 2016 figures and is 4.90 years for officers (from 5.76), 5.38 for crew (from 5.94) and 5.4 years for the shore-based employees (from 6.38). This is to be expected as we are in a growth phase and our employee numbers increased by 26% for seafarers and 34% for shore-based employees.

Long service awards

CNCo recognises employees for their long service and ongoing contributions to the business by presenting them with Long Service Awards. In 2017, we issued 81 awards to employees ashore and at sea for lengths of service ranging from 10 to 35 years. When added up, the total length of service amounts to 1,095 years.

CNCo has a number of welfare committees formed of passionate volunteers in various offices around the world. They promote team building, networking and employee bonding in a social and fun setting. A number of social events are held throughout the year and are an important part of the Company’s culture.

Thank you for being a STAR

The reward and recognition initiative has been successfully launched in Papua New Guinea in September 2017. A number of employees have been appreciated for going the extra mile and being great team players.

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Our People

Safety Awareness Courses (SACs) for senior officers and junior officers and ratings, covering 556 sea employees. In addition, six ‘safety induction’ courses and eight ‘engine and electric cranes training’ courses were provided for new seafarers.

All of these are discretionary training courses and are not required under the SOLAS STCW legislation. However, CNCo sees such training as critical to maintaining and enhancing the safety of our seagoing employees and all stakeholders. The goal of the SACs is to emphasise and reinforce the Company’s safety culture and to promote Zero Harm. The SAC emphasises practical safety management skills, explores the benefits of leading safety indicators and looks at accident root cause analysis, proactively recognising hazards and understanding safety control, mitigation and recovery measures.

The total cost of the discretionary training in 2017 was around USD 3.2 million which is double that of the 2016 spend and was a very significant investment given the current shipping market conditions.

The 2017 Employee Alignment and Engagement Survey results showed a significant improvement from the 2014 results in all areas, with CNCo being in the top quartile of both alignment (69%) and engagement (76%).

Employee alignment and engagement survey

1,801 colleagues participated in the 2017 CNCo Employee Alignment and Engagement Survey. The survey measured eight alignment and engagement factors across areas such as long-term direction, senior management leadership and effectiveness, performance and investment in people and systems.

The 2017 results showed a significant improvement from the 2014 results in all areas. Compared with other companies who have used this survey, CNCo is in the top quartile of both alignment (69%) and engagement (76%).CNCo scored the highest in the areas of engagement, team leadership and long-term direction.

Performance management, training and development

Seagoing employeesCNCo puts significant emphasis on safety training for our seafarers. In 2017, we ran 59

Cooks in training

Among the various roles on ships, one of the most important roles is that of the Chief Cook. The Chief Cook is in charge of the Galley (equivalent to our kitchen) and plays a pivotal role in providing nutritious, varied and enjoyable food that fuels the team on-board.

Seven CNCo Cooks from three countries, the Philippines, Sri Lanka and PNG, attended a cateringtraining event held in Manila at the Oceanic Hospitality training centre from 25 to 29 September 2017. The comprehensive five-day training course comprised a three-day Advanced Practical Training and two-day Theoretical Training (which includes the use of the on-board catering software module).

To-date, 58 CNCo cooks have completed Oceanic’s Advanced & Theoretical training course.

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Our People

We continue to run the ”GOALS” programme and “Greenbelt” programme which equip individuals with more advanced skills and training such as Lean Six Sigma methodology in the area of business improvement and excellence. This training is on-going.

We also continued to run Leadership Development Programmes in Singapore for Team and Operational Leaders. These programmes seek to equip leaders and managers with the requisite leadership competencies and skills so that they can lead their teams more effectively. CNCo employees were encouraged to access the extensive selection of on-line learning resources through SwireConnect to learn new skills and acquire new knowledge at their own convenience.

Performance management for office employees is done using the SMART Goals on-line system. Performance assessments include a review of SMART goals, performance against Swire values and job competencies.

Driving performance and developing potential framework

Robust performance and development processes are critical in ensuring a good level of understanding on how employees can contribute to the overall business objectives, how they can reach their full potential and have a long and rewarding career with CNCo.

Our Cadetship Programme is on-going with the recruitment of cadets from China, Hong Kong and the South Pacific Islands. As a sustainability objective, CNCo has committed to recruit 25% of our required cadet intake from our key and core stakeholder communities in the South Pacific Islands by the end of 2020. We are on target to achieve this in three years’ time with the present rate being 15% and trending upwards.

In 2017, 1,460 CNCo seagoing employees received 138,896 hours of training, or an average of 66.87 training hours per seafarer (from 14.23 in 2016).

All CNCo seafarers received a performance evaluation review conducted by the Master or Chief Engineer at least twice a year. The appraisal looks at personal characteristics, team work, aptitude and leadership qualities among other specific skills sets. The process is intended to highlight areas for improvement and training opportunities, and identify individual’s strengths for a robust recognition and promotion programme.

Shore-based employeesCNCo continues to invest in learning and development. Across the group, shore-based employees received 2,996 hours of training, with an average of three training hours per employee. While this was a decrease from prior years, the overall cost of training for shore-based employees in 2017 increased by 54% to USD 187,602.

Leadership training continues in 2017

As part of their career development CNCo organises leadership training courses (Team Leader Development Programme and Operational Leader Development Programme). The development of our employees remains a key element in CNCo’s People Journey (right people, right place, everyone engaged).

As a sustainability objective, CNCo has committed to recruit 25% of our required cadet intake from our key and core stakeholder communities in the South Pacific Islands by the end of 2020.

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The driving performance and developing potential framework aims to support both our people and our business by:

• Creating a culture of high performance, led by our leaders.• Developing the capability of our managers to inspire and drive high performance and manage poor performance.• Developing the capability of our team members to ensure they have the skills and behaviours to proactively develop themselves for now and the future.• Improving our performance policies and processes to deliver value to all employees.

A three-tiered framework has been developed to support managers in driving performance:

• Developing Performance (Basic level);• Performing (Intermediate level); and• High Performance (Advanced level).

The framework was launched at the end of 2017 with materials to be rolled out in phases throughout 2018.

Refreshed Management Trainee Programme

The CNCo Management Trainee programme has been redesigned to be a truly global graduate programme aimed at attracting, engaging and developing local talent within the areas in which we operate and the global shipping industry.

Partnering with local universities and industry bodies, it is a rotational programme that allows graduates to gain a solid understanding of the shipping industry and our business in a hands-on and practical way.

The programme allows trainees to develop their shipping and commercial knowledge, skills and experiences while having access to high quality training programmes on a personal, professional and technical basis. There is also significant exposure to industry networking, senior management and key business leaders with the opportunity to join a vessel trip.

CNCo is proud to offer such a programme and to be contributing to the on-going development of local industry talent.

Emotional support helpline

Since the introduction of “Befrienders Worldwide” email helpline in 2016, CNCo has also established a Befrienders’ e-mail helpline service, available in both English and Chinese languages. In addition, an English voice helpline service is also provided.

Befrienders Worldwide has an international network of over 350 crisis helplines in 36 countries that provides emotional support to those in despair. The inputs and outputs of the enhanced services are strictly confidential in nature.

Management trainee programme commences in PNG

CNCo’s successful management trainee (MT) programme was rolled out to one of our key markets, Papua New Guinea at the end of 2016. I commenced my management trainee programme with the Swire Shipping Coffee Bulking Department (SSCB) on 24 October 2016, based in Lae. I came on board with no experience and knowledge about coffee or the processes involved in exporting it and three months on, I’ve memorised the process from receiving a shipping instruction to the fumigation of a TEU-Bag / Bulk and finally the dispatch of original documents to buyers. From the get-go, the colleagues have all been friendly and helpful. It’s been a hectic and challenging period and I have gained so much from the very hands-on experience and enjoyed every day of it.

Going onto its second year in operation, the SSCB is currently exporting coffee for 11 exporters.All shipments are done in 20ft’ containers. Bag shipments have a maximum of 320 x 60kg bags while bulk shipments have a maximum of 360 bags per container.

CNCo’s business is global in nature. We have experienced employees and the processes are sound. I have nothing but admiration and respect for everyone I have come across thus far.

by Sharmaine Siaguru, Management Trainee, Lae office (left in photo)

Our People

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Our Communities

Supporting seafarers worldwide

We have long-term global partnerships with both The Mission to Seafarers and Sailors’ Society who care for and support seafarers of all races, religions or ranks around the world. This support is provided through fundraising events and other collaborations.

CNCo also provides on-going support to the ASSM Dependents Association (ASSMDA), an independent, not-for-profit association in the Philippines formed by the partners and relatives of our Filipino seafarers. ASSMDA provides voluntary assistance and social support to the seafarers’ families in times of need and aims to improve their livelihoods through organising value-added social activities.

We believe in doing right by our communities and investing in worthy causes. We support charities and community organisations as well as our employees in need. Our support for our communities focuses on Education, Community, Health, Youths, Environment and Biodiversity. We are committed to establishing long-term, mutually rewarding relationships with our partners and our communities.

Asian Challenge conquering Mount Fansipan

From 21 to 24 April 2017, four teams (11 colleagues) from CNCo participated in the Sailors’ Society’s Asian Challenge to scale Vietnam’s Mount Fansipan (Indochina’s highest mountain) to raise funds in support of the charity’s projects around Asia.

The 23 teams who participated in the Asian Challenge have raised more than USD 200,000 so far. Well done to the CNCo teams for successfully conquering Mount Fansipan to support this meaningful cause.

We have long-term global partnerships with both The Mission to Seafarers and Sailors’ Society who care for and support seafarers of all races, religions or ranks around the world.

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Seafarers Drop-in Medical Centres open in Tacloban and Bantayan Island in the Philippines

Donations were made by CNCo, Swire Pacific Offshore (SPO) and our shore-based and seagoing employees for the victims of Typhoon Haiyan in 2013 for the activities managed by ASSMDA. The balance of funds left was pledged to provide long-term, physical, community support by way of Seafarers Drop-in Medical Centres in the region.

Over 18 months period in 2016 / 17, ASSMDA has been working closely with Sailors’ Society, Habitat for Humanity, the Associated Marine Officers’ and Seamen’s Union of the Philippines (AMOSUP) and the local Barangay Mayors and their health authority leaders to bring this plan to fruition.

It was with huge pride therefore that in late June 2017, all the parties involved were able to grace the official opening of these two Seafarers Drop-in Medical Centres; one in Palo near Tacloban in Leyte province and the other on Bantayan Island in Cebu province. The centre in Palo includes a birthing facility and will benefit approximately 1,000 households whilst its counterpart in Bantayan, will help almost 7,000 local families.

As part of the official opening ceremony, key representatives of AMOSUP, ASSMDA, Habitat for Humanity Philippines, Sailors’ Society, SPO and CNCo handed over a bible, candle and ceremonial key to the Barangay Captains, Municipal Mayors, Municipal Health Officers and Midwives.

Donations were made by CNCo, Swire Pacific Offshore (SPO) and our shore-based and seagoing employees for the victims of Typhoon Haiyan in 2013 for the activities managed by ASSMDA.

Our Communities

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Our Communities

Supporting our key stakeholder communities

Swire Shipping Talent ID Programme in PNG – Swire Sport Programme

Cricket Papua New Guinea (CPNG) is the sole organisational body that is a member of the International Cricket Council, covering participation in Papua New Guinea (PNG) from school children to their two international sides for both men and women.

CPNG, in association with Swire Shipping / CNCo has been running the Swire Shipping Talent ID Programme since September 2015, with the aim to find the next Barramundi and Lewas players from around PNG. The programme is conducted by CPNG’s High Performance Department tasked with managing PNG’s 4,000 cricket talent across the country.

In 2017, 195,432 men, women, boys and girls across 10 different provinces participated in cricket ranging from introductory school initiatives right up to representing PNG in international formats. 48% of these participants were females.

The growth of cricket in PNG is indebted to the tireless work of CPNG as well as its sponsors who allow the continual development of young cricket talent. A big part of this development initiative sits with the Swire Shipping Talent ID Programme.

Every player of the U19 PNG’s men’s side squad that reached the Junior World Cup in New Zealand came through the Swire Shipping Talent ID programme.

CPNG, in association with Swire Shipping / CNCo has been running the Swire Shipping Talent ID Programme since September 2015, with the aim to find the next Barramundi and Lewas players from around PNG.

Swire Shipping Talent ID Programme takes flight

Cricket PNG (CPNG), in association with Swire Shipping, launched the Swire Shipping Talent ID Programme in September 2015 with the aim to find the next Barramundi and Lewas players.After the success of the Swire Shipping programme in 2016, CPNG is looking to take the programme to the next level with camps planned in 10 regions targeting Under-15 and Under-17 youths. The 2017 Swire Shipping Talent ID Programme will be divided into three stages, where the CPNG High Performance Department will be targeting different associations throughout the year, with a competition component at each stage.

The first Swire Talent ID Programme in Lae was conducted from 3 to 6 March 2017 and attracted more than 20 players from 12 to 17 years old. The programme included a basic coaching course and talent identification clinic, followed by an exhibition match.

The Swire Shipping Talent ID Programmes include sessions on coaching, strength and conditioning, mental application, elite cricketer’s expectations, theory, training for potential Talent ID coaches in the regions and matches.

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Swire Sport programme

Swire Shipping and PNG Cricket have collaborated on the Talent ID programme across PNG for two years. Swire Shipping are proud sponsors of the youth programme which brings to youths the benefits of sport as well as the chance to one day play for the Barramundis (men’s first team) or the Diamonds (women’s first team). This is part of our Swire SPORT programme in the Pacific.

Helping to rebuild the Hanabuada Village

At least 150 villagers in Papua New Guinea were left homeless (and some of our Swire Shippingcolleagues were also affected) after a fire tore through 18 homes in Hanuabada Village, just five minutes from downtown Port Moresby, on 19 August 2017.

Through a fundraising activity coordinated by the Sydney office, the Swire Shipping team managed to raise AUD5,000 for the villagers. In collaboration with key customers, Brian Bell and KK Kingston, Swire Shipping received fantastic discounts which allowed the donations to go a lot further. With the donation, the team purchased an assortment of household goods from bedding, water storage and kitchenware for the 18 families.

The Swire Shipping team in PNG spent their Saturday to help clean up the village in partnership with World Vision. Over the course of the day, tonnes of rubbish were collected and removed from the village. It was a meaningful day for our colleagues in PNG doing their part for the local community in times of need.

Swire Shipping and PNG Cricket have collaborated on the Talent ID programme across PNG for two years.

Our Communities

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Corporate Philanthropy and Volunteering

In 2017, we ran three events for our Singapore employees:

• Kallang River clean-up in partnership with Waterways Watch Society • Weeding at Sungei Buloh Wetland Reserve• Project ‘Painting Smiles’ in partnership with Central Singapore CDC & Lions Befrienders Senior Activity Centre (Bendemeer)

Our Communities

Our employees in Singapore spent 364 hours doing voluntary work in 2017.

Cleaning up the waters in Singapore

In our journey towards sustainability, we believe in doing right by our communities. One of the focus areas is environment and biodiversity.

On 15 June 2017, 42 CNCo and Swire Pacific Offshore employees in Singapore headed to the Waterways Watch Society’s office where they learned about the overwhelming amount of rubbish that accumulates in Singapore waters daily and what individuals and organisations can do to make a difference to keep the waters clean.

The volunteers spent the afternoon on kayaks and paddleboats, clearing the debris and floating rubbish around the Kallang Basin. Cyclists cycled around the areas from Kallang River to Marina Bay Sands, retrieving rubbish near the waters and nearby coastal areas.

The team collected about 56 kilograms of trash, and more importantly, each of them returnedhome with a heightened sense of environmental consciousness and a deeper sense of appreciation of the clean river we see every day.

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CNCo partners Endangered Species International (ESI) in South Mindanao in the Philippines on mangrove and coastal reef conservation and to both protect the endangered Philippine forest turtles and enhance their biosphere to encourage population growth.

Supporting research programmes

Swire National Oceanographic Centre Ocean Monitoring System (SNOMS)

CNCo continues to support the UK National Oceanography Centre (NOC) through a multi-year SNOMS programme, a part of the ocean monitoring project, by installing monitoring equipment on board one of our liner vessels. CNCo sponsored the upgrading and reinstallation of the SNOMS data collection box and the on-going operational data collection expenses.

The measuring devices were installed on MV Shengking in 2016 to provide vital data on the oceans’ ability to slow the build-up of carbon dioxide in the atmosphere and mitigate ocean acidification leading to coral bleaching and threatening some crustacean species.

Our Communities

Environment and Biodiversity

Partnership with Endangered Species International

CNCo partners Endangered Species International (ESI) in South Mindanao in the Philippines on mangrove and coastal reef conservation and to both protect the endangered Philippine forest turtles and enhance their biosphere to encourage population growth. Under this partnership, ASSM volunteers (who are CNCo seafarers) work in the field alongside the ESI on various conservation and community engagement activities. We had to scale down the number of trips to South Mindanao in 2017 and hope to resume our partnership in 2018.

CNCo seafarers participate in conservation projects

CNCo partners the Endangered Species International (ESI) in South Mindanao in the Philippineson mangove and coastal reef conservation and to protect the endangered Philippine forest turtles.Under this partnership, CNCo seafarers volunteer their time to work in the field alongside the ESI personnel on various conservation and community engagement activities. A total of 22 teams from CNCo and Swire Pacific Offshore participated in this project since its inception. Teams found their involvement in this programme to be very enriching and meaningful.

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Following a fortuitous meeting at a Clean Seas workshop between CNCo’s GM SD, SPREP and United Nations Environment Programme (UNEP) representatives at the UN Environment Assembly 3 in Nairobi in December 2017, CNCo and SPREP have signed a Memorandum of Understanding (MOU) to address critical waste management issues in the Pacific Islands under the project “Moana Taka Partnership”. Under this project, CNCo will provide both containers and ocean freight carriage on a free of charge basis for certain type of recyclable waste from PICT to be sustainably treated and recycled in suitable and competent facilities in Asia Pacific.

This is a win-win situation for CNCo and SPREP as Swire Shipping has a number of empty containers in PICTs that need to be repositioned to other locations at the Pacific rim. This project presents a golden opportunity to move the ever-increasing quantity of recyclable waste out of the Pacific to the countries with competent and sustainable recycling plants. The project started in the beginning of 2018 and we will report progress in our next SD report.

Our Communities

Waste recycling project in the Pacific Islands

Moana Taka Partnership

The 26 Pacific Island Countries and Territories (PICT) represented in the region by the Secretariat of the Pacific Regional Environment Programme (SPREP), the regional coordinating organisation for the protection and sustainable development of the Pacific Islands’ environment, are responsible for managing 10% of the world’s oceans. Their eight million population are almost wholly dependent on imports and have limited land mass and few options to properly process or recycle waste on the islands.

The PICT has amassed a huge amount of waste, much of it hazardous, and includes large amount of plastics collecting in their overflowing landfills. These are being washed into the surrounding seas when typhoons come through. Waste also continually enters the region on ocean currents from fishing vessels and from cruise ships and container ships. It is not commercially viable for the PICT to ship out / locally recycle these waste streams.

Under this project, CNCo will provide both containers and ocean freight carriage on a free of charge basis for certain type of recyclable waste from PICT to be sustainably treated and recycled in suitable and competent facilities in Asia Pacific.

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We will help create a resilient environment that provides for our future by pursuing a long-term goal of decarbonisation and optimising energy efficiency and protecting and, where viable, enhancing the biodiversity of the environment.

Our Environmental Goals and CommitmentsCNCo has in place a number of policies (viz. our Environmental and Sustainable Development Policies) and continues to seek innovative ways to minimise the impact of our business on the environment and biodiversity in the regions in which we operate. Over the years, we have made significant progress towards environmental sustainability by adopting a proactive approach towards sustainable shipping, expanding our fuel-efficient fleet and implementing a number of operational initiatives.

CNCo’s Environmental Policy includes our over-arching commitment to a target of “zero pollution” incidents and our ultimate goal is for our operations to have a “net zero impact” on the environment and its biodiversity. We have set an internal, science-based target, in line with the IMO’s recent commitment to align with the United Nations Framework Convention on Climate Change (UNFCCC) Paris agreement. We are working actively to achieve a KPI

of a reduced Energy Efficiency Operational Index (EEOI) or the energy we expend moving one unit of cargo, per one nautical mile by 22% below our baseline by the end of 2020. This is about 3% more aggressive than the IMO target. This is a key goal to advance our journey towards “net zero environmental impact”.

Our progress for the bulk and liner fleets’ EEOI since 1 January 2014 (using 2013 as a baseline) is shown in the graphs on pages 82 and 83. The EEOI figures for liner fleet show a downward trend from May 2017, but with a slight increase towards the last quarter of the year. Bulk EEOI has also been on the way down over the 12 months period. While we are still 13% above our target we have been making progress by deploying more fuel-efficient ships, rationalising individual trades and focusing on operational efficiency. We will continue to monitor emissions for each ship on a per voyage and an annual basis and use the IMO EEOI metric as our baseline.

Carbon / Environment

Over the years, we have made significant progress towards environmental sustainability by adopting a proactive approach towards sustainable shipping, expanding our fuel-efficient fleet and implementing a number of operational initiatives.

Photo credit: Genevieve Deschenes

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us to reduce our air emissions as well as our operating costs.

We have established a dedicated department with the main objective of collecting and analysing fuel use data across our managed fleet. Our Fleet Efficiency Manager manages implementation of Marorka™ - an on-line reporting and monitoring performance management system across 36 CNCo vessels. We use Marorka™ to optimise hull and propeller performance, voyage execution and fuel accounting on our vessels. MarorkaTM also helps us to monitor and control performance on a real time basis (every 15 minutes).

The initiatives to improve fleet fuel efficiency performance include:

✓ Monitoring voyages on-line and taking actions in case of speed deviation.✓ Optimising and monitoring trim across multipurpose vessels (MPV) and bulk carriers fleets.✓ Using high quality anti-fouling and slime release technology paints for under-water hull areas. ✓ Premature dry-docking of a number of poor performing vessels to clean or renew the under-water paint system to improve fuel efficiency. ✓ Monitoring hull and propeller performance. ✓ Monitoring electrical and boiler consumptions across the fleet.


Other objectives (KPIs) towards achieving net zero environmental impact by 2030 include:

• Ensuring that our Energy Efficiency Design Index (EEDI) compliance index is at ≤ 80% for all relevant liner and bulk vessels on delivery to CNCo (deriving more transport work efficiency from less fuel). Progress by the end of 2017 was EEDI = 76.18%. • Ensuring that our Existing Vessel Design Efficiency (EVDI) to be ≥ 50% better than the baseline upon taking delivery of the vessels.• Implementing three pilot technical or operational initiatives that can lead to a 50% reduction in an atmospheric environmental impact of the liner, bulk and bulk logistics fleet.

Environmental initiatives and achievements

In a challenging and competitive market, CNCo is always looking for innovative ways to manage our operating costs more efficiently and effectively. Over the past few years, CNCo has benefitted from the John Swire and Sons (JS&S) SD Fund to finance investments aimed at improving the environmental efficiency of CNCo’s fleet. They proved to be effective and continue to show emission reduction results.

CNCo has dedicated resources and implemented a number of initiatives to improve fuel efficiency which simultaneously allowed

In a challenging and competitive market, CNCo is always looking for innovative ways to manage our operating costs more efficiently and effectively.

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The following initiatives are carried out regularly as part of our efforts to improve fuel efficiency:

1. Propeller polishing – six-monthly propeller polishing leads to a reduction of fuel consumption by an average of 3%.2. Anti-fouling paint application – all new CNCo vessels, MPV and bulk carriers, are coated with high performance anti-fouling paints that deliver at least 5% of fuel savings. 3. Trim optimisation – we estimate that an average of 1% in fuel savings was achieved by optimally trimming the vessels.

Those efforts translated into USD 6.8 million in fuel savings and the reduction of 60,685 tonnes of CO2 (tCO2) emissions to the environment over the reporting period.

For our industry leading efforts in this area, CNCo won the 2018 Seatrade Maritime Fuel Efficiency Award in April 2018.

CNCo has taken an innovative step in creating an internal fleet efficiency KPI scorecard which tracks monthly fuel performance of the vessels. The scorecard showcases excess consumption of fuel in metric tonnes and its development throughout the year. The scorecard is the basis for decision-making on both operational and technical performance improvements across the fleet.

We brief our Captains and Chief Engineers prior to them joining a vessel on all aspects of fuel efficiency to enable them to contribute effectively. We also run monthly seminars for the senior officers to ensure their full understanding of the Company’s goals and objectives in relation to operating our vessels efficiently. In 2017, CNCo introduced financial incentives for our officers to drive greater fuel efficiency performance. This was done through the annual appraisal process where the officers’ efforts are recognised and rewarded. We also assigned specific fuel-related targets for particular voyages and an award is given to the vessel as an appreciation for achieving the target.

In 2017, CNCo introduced financial incentives for our officers to drive greater fuel efficiency performance.

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(GHG) emissions of 1,445,205 tCO2 from our operations. This is a 23.1% increase on the prior year and is linearly related to the increase our fleet size by 12.7%.

Scope 2 emissions are immaterial in relation to our Scope 1 emissions (0.026%) and contributed 371.8 tCO2 (equivalent to 738,518 kWh of electricity consumption) to the figure above. Scope 3 emissions from shore and crew air travel contributed 5,263 tCO2 which is a low contributor (0.36%) to total GHG footprint.

We also measure SOx / NOx / Particulate Matter (PM) and Volatile Organic Compounds (VOCs). As they are related to Scope 1 emissions, their numbers have been fluctuating accordingly with an average of 24% increase on 2016 figures.

A summary of all these figures are presented in the Environmental Summary on page 81.

Other initiatives

All CNCo ships have bilge and garbage management plans. All the new vessels are fitted with ballast water treatment plants and all new engines are TIER II compliant for NOx emissions. Our new Swire B.Delta39 bulk carriers are equipped with an advanced incinerator and oily water separator plant.

Energy consumption and emissions

Emissions from combusting marine fossil fuels in internal combustion engines in 2017 amounted to 1,444,834 tCO2 (equivalent to 462,497 metric tonnes of energy consumption) representing 98.93% of our Scope 1 emissions (HFO / MGO / LO Marine fuel and refrigerants).

Scope 1 plus Scope 2 (from use of commercial electrical power) gave a total Greenhouse Gas

CNCo receives Blue Circle Award for green efforts

CNCo was a proud recipient of the Vancouver Fraser Port Authority’s (VFPA) Blue Circle Award for our voluntary efforts to reduce air emissions in the Port of Vancouver. We are among twelve shipping lines and two cruise lines to have received the eighth annual Blue Circle Awards, which recognise marine carriers that excel in environmental stewardship and attain the highest participation rates in the port authority’s EcoAction programme.

The EcoAction Programme recognises a variety of fuel, technology and environmental management options that are eligible to receive discounted harbour due rates. Vessels may qualify for one of three levels Gold, Silver or Bronze. Presently, CNCo vessels are of the Silver level and we are working on processes to achieve the Gold level.

Our new Swire B.Delta39 bulk carriers are equipped with an advanced incinerator and oily water separator plant.

L to R: Tom Longworth; Alex Pattison, Country Manager, USA; and Andrew Wong, Trade Manager, at the awards ceremony on 30 May.


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We continue to provide environmental education to our seafarers through the Safety Awareness Courses by including a module on energy efficiency awareness containing in-depth explanation of a Ship Energy Efficiency Management Plan (SEEMP) and other measures.

to this training, monthly Health, Safety and Environment (HSE) meetings are held on all CNCo vessels where relevant environmental topics are raised and discussed.

Responsibility in our supply chain

CNCo has in place a Responsible Cargo Carriage Policy (RCCP). We recognise the importance of conserving species diversity and we have a responsibility not to consume or facilitate trade in any flora or fauna or their produce that may threaten the sustainability of any species. We amended our “Standard Terms and Conditions for Bookings and Quotations” accordingly to include the need to comply with our RCCP.

Biodiversity

At CNCo, we understand that biodiversity is important to maintain a resilient natural environment. There is a need to protect and enhance the ecosystems that we operate in and have an impact on to help nature flourish. Various inputs to our operations such as fuel, paints, ballast water, food and packaging, cargo packing materials, lubricants and chemicals are vital to our operations and help to improve the efficiency of our vessels.

However, these inputs may also result in negative impacts on the biodiversity in the areas in which we operate. To achieve our goal of sustainable development and in line

with global biodiversity regulations, a greater understanding and emphasis of ecosystem resilience is required. There is a need to assess and identify biodiversity issues of concern to eliminate or minimise the adverse impacts on biodiversity. We produced Biodiversity Issues of Concern (BIC) and Biodiversity Action Plan (BAP) for our business to develop understanding of the potential impacts and mitigate them.

Environmental training

We continue to provide environmental education to our seafarers through the Safety Awareness Courses by including a module on energy efficiency awareness containing in-depth explanation of a Ship Energy Efficiency Management Plan (SEEMP) and other measures.

CNCo provides training on the optimum use of the SEEMP to all Ship Managers and seagoing employees via computer-based training, available on all our ships. We provide our seafarers with various environmental awareness modules via our extensive VideotelTM collection. In addition

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Industry Leadership

CNCo is a founding member and an active participant of the Sustainable Shipping Initiative (SSI). The SSI is a coalition of shipping leaders from around the world, formed to take practical steps to tackle some of the sector’s greatest opportunities and challenges. The group is working to achieve a vision “of an industry in which sustainability equals success”. By being an active member of the SSI, CNCo works alongside competitors, regulators, suppliers, financial institutions etc., united by the common goal to show that collaborative action is possible, and to mobilise support across the whole shipping supply chain, demonstrating that shipping can contribute to and (will only) thrive by operating in a sustainable manner.

Going in lock-step with the addition of our new tonnage is the sustainable retirement of tonnage that is being replaced as it reached the end of its economic life. The most environmentally efficient solution to this retirement is the

responsible and environmentally sound recycling of ships through which over 99% of the ship by weight is reused, either ‘as is’ or in re-constituted form. CNCo is a lead company in the SSI Sustainable Ship Recycling Working Group (SSR WG) which evolved during 2017 into the Ship Recycling Transparency Initiative (SRTI). SRTI’s vision is of a world where ships are recycled responsibly – socially, environmentally and economically – meeting and going beyond international conventions and norms. It aims to:

• improve transparency in the ship recycling value chain;• increase disclosure of ship recycling policies and practices;• allow and encourage cargo owners, investors and other stakeholders to make informed decisions when using shipping companies and to incentivise improvements; • create a level playing field for ship owners on ship recycling.


CNCo is a founding member and an active participant of the Sustainable Shipping Initiative (SSI). The SSI is a coalition of shipping leaders from around the world, formed to take practical steps to tackle some of the sector’s greatest opportunities and challenges.

58



Sustainable Ship Recycling

CNCo has a Sustainable Ship Recycling Policy in place stating that all vessels at the end of their working life will be sent for recycling to yards that, as a minimum, adhere to the Hong Kong International Convention for the Safe and Environmental Sound Recycling of Ships (HKC) that was adopted on 15 May 2009 (even prior to its full ratification); and that, are certified by a reputable independent third party to ISO 9001:2015, ISO 14001:2015, OHSAS 18001:1999 and preferably, ISO 30000:2009. This policy ensures that CNCo recycles its assets in a sustainable, safe and in an environmentally responsible manner.

During the year, we oversaw the successful sustainable recycling (zero injuries, zero pollution incidents, increased level of HKC compliance and social commitment at the Ship Recycling Facility (SRF)) of two of our ships, MV Chengtu and MV Chenan, at an HKC compliant SRF in India. All the four SRFs who bid for this work fully accepted our requirement for external independent auditing, visits by our GM SD and the stationing of a three-man HKC Compliance Monitoring Team at the SRF when demolishing work

was taking place (at our additional cost), to ensure that capacity-building continued and that standards and best practices were maintained. The SRF willingly accepted all third-party advice on improving operations from all three parties who were empowered to stop any / all work if it was seen that personnel were in danger of injury, or that there is a risk of an environmental pollution event. This is noteworthy as with the exchange of the bill of sale, CNCo, as prior owners, no longer had any liability or responsibility for the ship. We believe this is a significant paradigm shift in any sector, post-sale of an asset.

CNCo sustainably recycled two vessels at the end of their working life at SRF in Alang, India:

MV Chengtu9,396 tons of recycled material53.73 tons of hazardous waste 28.68 tons of Oil / Bilge water 99.97% recycled, components re-used

MV Chenan9,403 tons of recycled material64.74 tons of hazardous waste 40.23 tons of Oil / Bilge water99.74% recycled, components re-used

During the year, we oversaw the successful sustainable recycling of two of our ships, MV Chengtu and MV Chenan, at an HKC compliant SRF in India.

Leading the way in sustainable recycling

R. L. Kalthia’s Ship Recycling Facility (SRF) in Alang, India, completed the sustainable recycling of two CNCo multipurpose vessels – MV Chenan and MV Chengtu. While the Hong Kong Convention (HKC) has not been ratified by enough states to come into force globally, R. L. Kalthia’s SRF was one of the first four facilities in Alang to proactively raise its game and become, as a minimum, compliant with the HKC.

R. L. Kalthia SRF invested in the redesign of its yard with impermeable floor to prevent hazardous substances from dirty blocks leaking into the sub-soil and polluting the environment. It also established formal and robust management systems to manage the yard generically and to manage the specific demolition of each new ship beached there at the end of its economic life in a safe and environmentally sound way. All its workers are provided with Personal Protective Equipment (PPE) and must undergo training to ensure that they are competent to do both complex and routine tasks. The facility was audited by ClassNK for over a year before it was awarded a Statement of Compliance (SoC).

This HKC SoC was a minimum requirement for CNCo to allow any SRF to tender for the work ofdemolishing our ships. As part of the award of the contract, CNCo engaged an external independent auditor to conduct spot audits during recycling and set up a Compliance Monitoring Team (CMT) of ex-seafarers who were based in the yard throughout the process. The external auditor, the CMT (and the Owner’s Rep) had the responsibility and authority to stop any work at any time that may lead to injury or environmental pollution.

Both vessels were recycled (63,500 man-hours in total) without any Lost Time Injury (LTI) or fatality.

59



Environmental Council Eco-Office Certification since 2012. Our employees have embraced Eco-Office practices together with the approach to environmental sustainability. We continue to educate and engage our employees in environmental activities ranging from corporate volunteering for conservation and environmental causes (see Our Communities section of the report for more information), partnering with NGOs / NPOs and organising “Lunch and Learn” seminars on sustainability-related topics in the Singapore office.

To view the Swire Green Guidelines, please visit: https://bit.ly/2xPfuxY

Eco-Office and Green Guidelines

To help reduce the Company’s carbon footprint, CNCo strongly encourages employees to follow the Swire Pacific group’s Green Guidelines which are based on the Green Office and Eco-Office practices. We look at applications of the Eco-Office principles such as the Reduce-Reuse-Recycle approach, reduced electricity usage, use of FSC certified paper, double-sided printing, more efficient use of the aircon / heating and follow good recycling practices to further reduce our carbon footprint wherever possible.CNCo’s offices have held the Singapore

To help reduce the Company’s carbon footprint, CNCo strongly encourages employees to follow the Swire Pacific group’s Green Guidelines which are based on the Green Office and Eco-Office practices.

60


Sydney Office says goodbye to the wasteful bin

CNCo is a company that is dedicated to providing sustainable solutions. Whether it be supplying customers with green containers to building eco-efficient vessels, the culture of being environmentally responsible is all around us. With this in mind, something stuck out. We live in a wasteful society (as much as we hate to admit it). One time use items are on the rise and because of this, Australia is starting to see big issues with our landfill. We need to do our bit to help the environment we live in and to reduce our footprint on this planet.

In June 2017, CNCo’s Sydney office had a waste bin makeover and the team said goodbye to theirindividual desk bins forever as waste stations were set up around our office. These stations offer recycling facilities for everyone to use and are just a walk away from the desks. So far we are managing to fill waste and paper / cardboard bins most days and working towards filling the glass / plastic and aluminum ones with as much waste as we can generate!

Sustainability efforts in Papua New Guinea - Recycle, Reduce, Reuse

We used to go through a lot of plastic in the PNG Branch offices, from lunch containers, plastic cutlery, water bottles and shopping. So the sustainability team thought there must be something they can do to be more environmental friendly!! At a slight cost but giving a large environmental benefit, all PNG employees are given a “sustainability kit”, which includes:

• their own personal Swire Shipping drinking bottle to assist in reducing the usage of plastic drinking bottles,• a Swire Shipping tote shopping bag to encourage the reduction of one-use plastic shopping bags, and• their own personal Swire Shipping cutlery set which completely removes the need for plastic cutlery.


The Sydney office team have made a fantastic effort in the first few weeks of working towards being an environmentally responsible office.

CNCo’s Sydney office had a waste bin makeover and the team said goodbye to their individual desk bins forever.

61



PNG forms Sustainability Committees

Sustainability committees have been formed in Lae and Port Moresby offices in February 2017 to promote CNCo’s sustainable development initiatives.

Both committees are committed to rolling out some office initiatives such as recycling, reducing paper consumption and saving energy. They will also be working with their communities to organise clean-up projects and to involve CNCo employees in volunteering to raise environmental awareness.

In Port Moresby, a project to clean the Hanuabada Village started in collaboration with Love Your Coast. The project involved Cricket PNG removing the rubbish that has collected over many years in Hanuabada Village and provide a clean platform to implement long-term strategies through education and awareness.

Sustainability committees have been formed in Lae and Port Moresby offices in February 2017 to promote CNCo’s sustainable development initiatives.

62


Climate Change and our business

UNFCCC Paris Agreement and IMO Emission reduction strategy

The UNFCCC Paris Climate Agreement and the UN Sustainable Development Goals urge governments and private sector companies to work together and take urgent action to combat climate change and its negative impact on the world, the people and the environment. Shipping is one of the fastest growing sources of transport Greenhouse Gas (GHG) emissions. Maritime transport emits around 850 million tonnes of CO2 annually and is responsible for about 2.7% of global GHG emissions (Source: IMO report to the IPCC 3rd Greenhouse Gas study).

Shipping emissions are predicted to increase between 50% and 250% by 2050 – depending on future economic and energy developments if no action is taken. This is not compatible with the internationally-agreed goal of keeping global temperature increase to well below 2°C compared to pre-industrial levels, and which requires worldwide emissions to be at least halved from 1990 levels by 2050.

It is believed that under a business-as-usual scenario and if other sectors of the economy reduce emissions to keep global temperature increase below 2°C, the maritime sector could represent a very significant 10% of global GHG emissions by 2050.

Shipping has historically avoided external global binding regulations, as seen in the Kyoto Protocol (Article 2.2 - The Parties included in Annex I shall pursue limitation of emissions of GHG from marine bunker fuels, working through the International Maritime Organisation) and the subsequent Paris Agreement; Shipping and Aviation were explicitly excluded for these agreements due to issues introduced by the transboundary nature of their businesses.

After over a decade of study and discussions, in April 2018, IMO at MEPC-72 finally adopted an emission reduction strategy in line with the UNFCC Paris Agreement of December 2015. This requires that the shipping industry must reduce its total annual GHG emissions. Relevant excerpts from the adopted strategy on the level of ambition set by the IMO are:

Shipping emissions are predicted to increase between50% and 250% by 2050 – depending on future economic and energy developments if no action is taken.


3. GHG emissions from international shipping to peak and decline - to peak GHG emissions from international shipping as soon as possible and to reduce the total annual GHG emissions by at least 50% by 2050 compared to 2008 while pursuing efforts towards phasing them out as called for in the Vision as a point on a pathway for CO2 emissions reduction consistent to the Paris Agreement temperature goals.

It is believed that 40% of the total reduction required can be achieved through enhanced design and operations. The balance will have to be achieved by switching to alternate fuel or offset under a Market Based Measure (MBM) such as an Emissions Trading Scheme (ETS).

1. Carbon Intensity of the ship to decline through implementation of further phases of the Energy Efficiency Design Index (EEDI) for new ships - review with the aim to strengthen the energy efficiency design requirements for ships with the percentage improvement for each phase to be determined for each ship type as appropriate;

2. Carbon intensity of international shipping to decline - to reduce CO2 emissions per transport work unit (EEOI), as an average across international shipping, by at least 40% by 2030, pursuing efforts towards 70% by 2050, compared to 2008; and

63


across the world from climate-related hazards and that such impacts are projected to increase in the years and decades to come.** **https://bit.ly/2OP5A6r

Transition risks: transitioning to a lower-carbon economy may entail extensive policy, legal, technology, and market changes to address mitigation and adaptation requirements related to climate change. Depending on the nature, speed, and focus of these changes, transition risks may pose varying levels of financial and reputational risk to organisations. Supply and demand can shift as climate-related risks and opportunities are increasingly considered.

Future-proofing: navigating decarbonisation also suggests that because of the nature of shipping markets and the ability of owners

to modify vessels to keep them competitive in carbon-constrained markets, catastrophic asset stranding of entire fleets will probably not occur solely due to climate policies. Vessels must be designed for flexibility and ease of modification so they can deliver acceptable cash flow, maintain value, and maintain liquidity both before and after the implementation of GHG policies.

CNCo’s biofuel trial in partnership with Argent Energy in 2016 on CNCo’s bulk carrier MV Wulin was the first attempt to look at the alternative energy sources to decarbonise our business. We are still planning to pursue the use of biofuel from non-food feed stocks in the coming years and look at other alternative energy technology to fuel our fleet. Discussions on this are expected to continue in 2018 and beyond.

Climate Change and our business

CNCo is fully aware of, and understands the concerns of global governments and the public about climate change risks. We recognise that the use of fossil fuels to meet the world’s energy needs contributes to the rising concentration of GHG in the atmosphere, which will result in further increases in global temperatures. We recognise the dangers of inaction and we are committed to reducing CNCo’s environmental impact. There is a growing demand for climate-related information by investors, lenders, insurers and other stakeholders.

The Task Force on Climate-related Financial Disclosures (TCFD)* was released in June 2017 and provides voluntary, consistent climate-related financial risk disclosures for use by companies in information to investors, insurers and other stakeholders. TCFD helps companies understand what financial markets want from disclosure to measure and respond to climate change risks and encourage firms to align their disclosures with investors’ needs. We are aware of TCFD and are in dialogue with the rest of the Swire group of companies to determine which climate change scenarios are most relevant to each operational company.

While the recommendations of the TCFD primarily relate to listed entities and as we transit into a lower-carbon economy, we have, as good business practice, assess climate-related risks and opportunities for CNCo.

This expected internal report on climate-related financial disclosures will help all CNCo’s stakeholders, including its senior management and Board of Directors, better evaluate the risks that are most pertinent to our business and develop adaptation and mitigation plans, plus determine potential opportunities for CNCo.

There are a number of climate change related considerations that our business needs be aware of and we have plans to address them:

Evolving Policy environment: policy actions around climate change continue to evolve. Some examples include implementing carbon-pricing mechanisms to reduce GHG emissions, shifting energy use toward lower emission sources, adopting energy-efficiency solutions, and encouraging greater water efficiency measures. The risk and financial impact of policy changes depend on their nature and timing.

Physical risks: risks resulting from climate change can be event-driven or due to longer-term shifts in climate patterns. Physical risks may have financial implications for organisations, such as direct damage to assets and indirect impacts from supply chain disruption. Organisations' financial performance may also be affected by temperature changes affecting organisations' premises, operations, supply chain, transport needs, and employee safety.

Ports are an important economic actor—at local, national, and international scales—that have been identified as being vulnerable to future climate changes. There has already been major damage and disruption to ports


*Source: https://www.fsb-tcfd.org

64


Abbreviations

AMSA Australian Marine Safety AuthorityASA Australian Shipping AssociationASSM Anscor Swire Ship Management (manning agency)AVL Approved Vendor ListBFO Bio Fuel OilBHP Brake Horse PowerCAD Competence and Assurance DepartmentCAR Audit-driven Corrective Action ReportCARB California Air Resources BoardCBA Collective Bargaining AgreementCCoC Corporate Code of ConductCFC Chlorofluorocarbon/sCNCo The China Navigation Company Pte LtdCoC Certificate of CompetencyCSR Corporate Social ResponsibilityCCBA Climate, Community and Biodiversity AllianceCP Corporate Philanthropy/picDCC Australian government: Department of Climate ChangeDECC UK government: Department of Energy and Climate ChangeDEFRA UK government: Department for Environment, Food and Rural AffairsDP Dynamic PositioningDPA ISM Code: Designated Person AshoreDPl Deficiencies per Port State InspectionE&P Exploration and ProductionECA Emission Control AreaEEOI Energy Efficiency Operational IndexEPA US government: Environmental Protection AgencyESI Endangered Species InternationalETS Emission Trading SchemeFOE Fleet Operational Efficiency

GEDO Australian government DCC Greenhouse and Energy Data OfficerGHG Greenhouse Gas/esGJ (unit) Giga-Joule, 1 billion joules of energyGRI Global Reporting InitiativeH2 HydrogenHCFC Hydrochlorofluorocarbon/sHCV High Conservation ValueHFO Heavy Fuel Oil – a residual fossil 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 combustion HKC Hong Kong Convention for Safe and Responsible Recycling of Ships (2009)HOF Head Office (in Singapore)HSE Health, Safety and the EnvironmentHSSE Health, Safety, Security and the EnvironmentICAO Inter Civil Aviation OrganisationICS International Chamber of ShippingIEA International Energy Agency (UN)IFO Intermediate Fuel Oil - residual fuel. Usually 180 or 380 CST viscosity IHM Inventory of Hazardous Material, per the HK Ship Recycling Convention ILO (UN) International Labour OrganisationIMO (UN) International Maritime OrganisationINED Independent Executive Director ISM International Management Code for the Safe Operation of Ships and for Pollution Prevention, (International Safety Management (ISM) Code) as chapter XI of SOLAS IUCN International Union for Conservation of Nature and Natural ResourcesKBA Key Biodiversity AreaKPI Key Performance Indicator

65


Abbreviations

kW 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 combustion

LMS Learning Management SystemLO Lubricating OilLTI Lost Time InjuryLTIFR Lost Time Injury Frequency Rate MARPOL IMO International Convention for the Prevention of Pollution from Ships, 1973, as modified by the Protocol of 1978 and later

MCA (UK) Maritime and Coastguard AgencyMDO Marine Diesel Oil – a distillate fuelMGO Marine Gas Oil – a distillate fuel (higher fraction than MDO)MHE Material Hazardous to the EnvironmentMLC ILO Maritime Labour Convention, 2006MPA Maritime and Port Authority of SingaporeMSA UK: Modern Slavery Act (2015)MTC Medical Treatment CaseNGER Australian National Greenhouse Gas and Energy Reporting ActNI Nautical InstituteNOX Oxides of NitrogenOFW Overseas Filipino WorkersOPEC Organisation of Petroleum Exporting CountriesPEU Performance Evaluation ReportsPM Particulate MatterPO Purchase Order/sPOEA Philippines Overseas Employment AgencyPSCI Port State Inspection Compliance Index PSI Port State InspectionQHSE Quality, Health, Safety and EnvironmentREDD Reduced Emissions from avoided Deforestation and forest Degradation

RFQ Request For a QuoteRWC Restricted Work CaseSAC Safety Awareness CourseSD Sustainable DevelopmentSDG Sustainable Development GoalsSECA Sulphur Emission Control Area/sSEEMP 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 later

SOX Oxides of SulphurSPO Swire Pacific Offshore (Group)SRF Ship Recycling FacilitySSA Singapore Shipping Association STCW IMO International Convention on Standards of Training, Certification and Watch-keeping for Seafarers, 1978, as amended in 1995 and later

TBT Tributyl Tin (antifouling)tCO2 Tonnes of Carbon Dioxide tCO2e Tonnes of Carbon Dioxide equivalent. This is CO plus the other four “natural GHG of CH4, N2O and the "industrial GHG" of SF6 and Hydroflurocarbons

TRCF Total Recordable Case Frequency RateTRIP Toolbox Risk Identification PermitUKBA (UK) Bribery Act (2010)ULS Ultra Low Sulphur contentUNFCCC United Nations Framework Convention on Climate ChangeVCS Verified Carbon StandardVOC 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”

66


Data

In this section:

67 Fleet Profile

73 Sustainable Development Strategy

75 SDGs and CNCo Thrive strategy with progress

79 Safety Statistics

81 Environmental Summary

82 Energy Efficiency Operational Index

84 New Hires and Staff Turnover

86 Global Reporting Initiative G4 Content Index

102 Contact

103 GRI Assurance Statement

66

67


Eredine

Erradale

Erisort

Eriskay

Fengning

Fengtien

Foochow

Funing

Hanyang

Hoihow

Hunan

Hupeh

Liangchow

Lintan

Luchow

Luenho

Pakhoi

Pekin

Powan

Poyang

Taiyuan

Tientsin

Tsingtao

Tunsin

Wuchang

Wuchow

Wuhu

Wulin

Nanning

Newchang

Ninghai

Bunun Dynasty

4.65

4.68

4.53

4.78

4.66

4.58

4.74

4.63

4.66

4.55

4.70

4.72

4.62

4.72

4.65

4.56

4.61

4.60

4.55

4.58

5.58

5.45

5.46

5.59

4.71

4.77

4.71

4.89

5.39

4.77

5.41

5.91

B+

B+

B+

B+

B+

B+

B+

B+

B+

B+

B+

B+

B+

B+

B+

B+

B+

B+

B+

B+

C+

C+

C+

D

B+

B+

B+

B+

D

B

D

D

2014

2014

2014

2015

2015

2015

2015

2015

2016

2015

2016

2016

2015

2015

2015

2016

2016

2016

2016

2016

2016

2016

2016

2016

2013

2013

2014

2014

2016

2017

2017

2014

9681871

9681883

9681895

9681900

9690884

9690896

9690901

9690913

9714226

9714238

9714252

9714264

9715191

9715206

9715218

9715220

9721554

9721566

9721578

9721580

9768928

9768930

9768942

9768954

9657844

9657856

9657868

9657870

9753272

9753284

9753296

9707821

Owned, Managed

Owned, Managed

Owned, Managed

Owned, Managed

Owned and operated

Owned and operated

Owned and operated

Owned and operated

Owned and operated

Owned and operated

Owned, Managed

Owned, Managed

Owned, Managed

Owned, Managed

Owned, Managed

Owned, Managed

Owned, Managed

Owned, Managed

Owned, Managed

Owned, Managed

Owned, Managed

Owned, Managed

Owned, Managed

Owned, Managed

Owned, Managed

Owned, Managed

Owned, Managed

Owned, Managed

Owned

Owned

Owned

Operated

39855

39757

39763

39810

39836

39782

39758

39784

39802

39721

39100

39772.9

39685

39641

39728

39752

39777

39200

39200

39500

37657

37657

37657

37800

39128

39090

39182

39049

38910

38907

38877

37795

24785

24785

24785

24785

24785

24785

24785

24785

24785

24785

24785

24785

24785

24785

24785

24785

24785

24785

24785

24785

23175

23175

23175

23175

24785

24785

24785

24785

25569

25569

25569

23281

13019

13021

13022

13021

13022

13035

13022

13019

13019

13029

13024

13022

13028

13033

13019

13028

13026

13026

13036

13028

12202

12202

12202

12202

12537

12543

12545

12538

13052

13064

13603

12101

180.0

180.0

180.0

180.0

180.0

180.0

180.0

180.0

180.0

180.0

180.0

180.0

180.0

180.0

180.0

180.0

180.0

180.0

180.0

180.0

180.0

180.0

180.0

180.0

180.0

180.0

180.0

180.0

179.9

179.8

176.9

180.0

30

30

30

30

30

30

30

30

30

30

30

30

30

30

30

30

30

30

30

30

30

30

30

30

30

30

30

30

32

32

32

30

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

47181

47181

47181

47181

47181

47181

47181

47181

47181

47181

47181

47181

47181

47181

47181

47181

47181

47181

47181

47181

45238

45238

45238

45238

47661

47661

47661

47661

48818

48818

48818

45238.33

48908

48908

48908

48908

48908

48908

48908

48908

48908

48908

48908

48908

48908

48908

48908

48908

48908

48908

48908

48908

46995

46995

46995

46995

48908

48908

48908

48908

50852

50852

50852

46994.86

4 x 36T

4 x 36T

4 x 36T

4 x 36T

4 x 36T

4 x 36T

4 x 36T

4 x 36T

4 x 36T

4 x 36T

4 x 36T

4 x 36T

4 x 36T

4 x 36T

4 x 36T

4 x 36T

4x24T Grab / 30.7T Log








4 x 30T + 4 x 12cbm Grabs




4 x 35T - 26M

4 x 35T - 26M

4 x 35T - 26M

4 x 35T

Singapore

Singapore

Singapore

Singapore

Singapore

Singapore

Singapore

Singapore

Singapore

Singapore

Singapore

Singapore

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

Hong Kong

Logs Fitted Handysize Bulk Carrier
























Handysize Bulk Carrier








Vessel Name EVDIor EEDI

RightshipGHGEmissions’Rating

YearBuilt

IMO No. StatusDWT (SSW MTs)

GT NT LOA(m)

Max Breadth (m)

Capacity Nominal (TEU)

Hold Capacity - Bale (m³)

Hold Capacity (m³)

Cargo Gear (T) Country of Registration

Vessel Type

Fleet Profile Bulk - In Operation as at 31 December 2017

33.700

40.900

35.600

18.100

32.000

18.800

43.700

41.300

38.000

39.400

38.700

32.700

37.200

33.600

37.400

42.400

18.500

37.100

19.400

38.200

43.240

37.260

34.060

40.890

35.000

22.000

34.000

35.000

37.430

34.170

26.320

N/A

ESI

68


Bunun Elegence

Daiwan Ace

Daiwan Glory

Daiwan Justice

Daiwan Wisdom

Glengyle

Gold Oak

Greentec

Indigo Silva

IVS Kittiwake

Magpie SW

Mimitsu

New Izumo

Ocean Satoko

Port Philip Bay

Supernova

Uni Harmony

Unicorn Ocean

Union Mark

Union Taylor

Unison Medal

Unison Power

Western Aida

Western Miami

Xing Ning Hai

Xing Zun Hai

Yochow

Yunnan

5.16

5.97

6.57

6.28

7.85

5.93

5.89

6.85

6.76

6.85

5.14

6.02

6.56

7.02

4.99

6.91

5.49

6.82

5.94

5.93

5.90

6.77

6.93

5.34

5.29

4.73

5.72

5.72

C

C

D

D

F

D

D

D

E

D

B

D

C

E

B

E

C

E

D

D

D

E

F

D

B

B

B

B

2013

2014

2015

2016

2010

2015

2017

2008

2013

2007

2015

2012

2010

2011

2015

2012

2016

2011

2016

2014

2014

2011

2012

2015

2014

2015

2015

2015

9659751

9672206

9173832

9709312

9427134

9727285

9806342

9493509

9642162

9310769

9692739

9527958

9496161

9610638

9687148

9610212

9775165

9623659

9775153

9691644

9687150

9579406

9609677

9743215

9728332

9725380

9728394

9728409

Operated

Operated

Operated

Operated

Operated

Operated

Operated

Operated

Operated

Operated

Operated

Operated

Operated

Operated

Operated

Operated

Operated

Operated

Operated

Operated

Operated

Operated

Operated

Operated

Operated

Operated

Operated

Operated

45556

34358

35531

34327

31960

37679

37732

33266

38090

32555

34302

38447

33193

37215

37614

36367

37655

38503

37644

34693

37431

38145

37452

39260

34442

38947

34398

34398

27440

21514

22314

21525

19825

23269

23232

20763

23273

19885

21561

23855

21483

22662

22385

21699

23303

24020

23250

23216

22476

24735

22668

24868

21532

24991

21538

21538

27440

11203

11139

11201

10514

12101

12101

11627

12139

11140

11199

11814

10828

12531

12178

12253

12101

12015

12101

12010

12147

12342

11856

12926

11201

12931

11201

11201

183.0

180.0

177.0

180.0

175.5

180.0

180.0

180.0

180.0

177.0

180.0

184.8

177.0

186.4

180.0

176.5

180.0

183.0

180.0

180.0

180.0

189.0

187.0

179.9

180.0

179.9

180.0

180.0

30

30

30

30

29

30

30

28

30

28

30

31

29

28

30

29

30

30

30

30

30

30

29

30

30

30

30

30

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

53620.5

40510

44199

42911.2

39681

45238

42103.5

40432

45369

40896

42911.2

46315.5

41207

45205

46436

45414.1

45238

47183.3

45238

45238

46436

47629.8

47948.1

48000

42911

48159

42911

42911

56269.5

41753

45626

44146.9

40909

46995

43860

42565

47125

42857

44146.9

47235.9

42630

47899

46834

47089.7

46994

48141.6

46994

46994

46834

49213.3

49687.1

46100

44146

48280

44147

44147

4 X 30T

4 x 30.5T

4 x 30T

4 x 30T

4 x 30T

4 x 30T

4 X 30.5T

4 x 30T

4 x 30.5T

4 x 30.5T

4 x 30T

4 x 30T

4 X 30.5T

4 x 30T

4 x 30T

4 x 30.5T

4 X 30.5T

4 x 30T

4 X 35T

4 x 30.5T

4 x 30.5T

4 x 30T

4 X 30T

4 x 30.5T

4 x 30T

4 x 30.5T

4 x 30T

4 x 30T

Hong Kong

Hong Kong

Hong Kong

Panama

Panama

Hong Kong

Panama

Hong Kong

Marshall Islands

Panama

Panama

Panama

Panama

Panama

Panama

Panama

Hong Kong

Singapore

Marshall Islands

Marshall Islands

Hong Kong

Hong Kong

Cyprus

Philippines

Hong Kong

Hong Kong

Hong Kong

Hong Kong







Log fitted Handysize Bulk Carrier








Bulk Carrier



Box Shaped Type Bulk Carrier





Grab fitted Handysize Bulk Carrier






Fleet Profile Bulk - In Operation as at 31 December 2017 cont.

Vessel TypeVessel Name EVDIor EEDI


YearBuilt


GT NT LOA(m)

Max Breadth (m)



Hold Capacity (m³)


N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

ESI

69


Island Chief

Kiribati Chief

Melanesian Chief

Micronesian Chief

Kokopo Chief

Kweichow

Kwangtung

Kweilin

Kwangsi

Nanchang

Spirit of Canterbury

Shansi

Shantung

Shaoshing

Shengking

Shuntien

Siangtan

Soochow

Szechuen

Coral Chief

Highland Chief

New Guinea Chief

Papuan Chief

Antung (ex MCP Salzburg)

Polynesia (ex Hansa Salzburg)

Queen Esther

Mia Schulte

Max Schulte

20.07

19.78

20.20

20.21

19.60

16.17

15.75

16.20

15.77

21.84

24.83

14.72

14.45

14.71

14.86

14.54

10.41

14.42

14.84

15.16

14.85

14.92

14.98

17.73

23.23

18.67

13.50

13.93

B+

B+

B+

B+

B+

F+

F+

F+

F+

D+

D+

B+

B+

B+

B+

B+

A+

B+

B+

A+

A+

A+

A+

D

D

D

B+

B+

1990

1990

1990

1991

1991

1994

1994

1994

1995

1995

2005

2013

2013

2013

2013

2013

2013

2014

2014

2015

2015

2015

2015

2008

2011

2016

2015

2015

8810449

8809189

8809191

8901705

8907412

9070694

9070709

9103104

9103116

9082805

9319557

9614476

9614488

9614490

9614505

9614517

9614529

9614531

9614543

9689938

9689940

9689952

9689964

9383481

9516753

9700251

9676735

9676711

Owned, Managed

Owned, Managed

Owned, Managed

Owned, Managed

Owned, Managed

Owned, Managed

Owned, Managed

Owned, Managed

Owned, Managed

Owned

Owned, Managed

Owned, Managed

Owned, Managed

Owned, Managed

Owned, Managed

Owned, Managed

Owned, Managed

Owned, Managed

Owned, Managed

Owned, Managed

Owned, Managed

Owned, Managed

Owned, Managed

Operated

Operated

Operated

Operated

Operated

13387

13668

13387

13557

13387

25524

25524

25410

25607

23016

14053

30700

30814

30769

30813

30852

30756

30721

30688

22035

22035

22027

22032

7664

23301

25238

30231

30337.3

10352

10357

10352

10350

10352

18451

18451

18468

18468

16800

9910

25483

25483

25483

25483

25483

25483

25483

25483

18723

18723

18723

18723

5338

18358

24145

27279

27279

5804

5802

5804

5802

5804

8250

8250

9201

9253

8662

5032

11814

11819

11808

11813

11810

11805

11817

11813

7681

7681

7688

7683

2309

10334

8016

10011

10007

158.1

158.1

158.1

158.1

158.1

184.9

184.9

184.9

184.9

184.0

148.0

199.9

199.9

199.9

199.9

199.9

199.9

199.9

199.9

175.2

175.2

175.2

175.2

117.0

175.4

185.0

188.9

188.9

22

22

22

22

22

28

28

28

28

25

23

28

28

28

28

28

28

28

28

28

28

28

28

20

27

30

30

30

981

876

981

981

981

1257

1257

1257

1257

1728

1102

2118

2118

2118

2118

2118

2118

2118

2118

1617

1617

1617

1617

618

1740

2194

2345

2345

N/A

N/A

N/A

N/A

N/A

28831

28831

32608

31472

N/A

N/A

41881

41881

41881

41881

41881

41881

41881

41881

N/A

N/A

N/A

N/A

9601

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

29819

29819

33756

33077

N/A

N/A

44807

44807

44807

44807

44807

44807

44807

44807

12310

12310

12310

12310

9601

N/A

N/A

N/A

N/A

3 x 45T

3 x 60T

3 x 45 T

3 x 45T

3 x 45T

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 40 T

-

4 x 60T

4 x 60T

4 x 60T

4 x 60T

4 x 60T

4 x 60T

4 x 60T

4 x 60T

3 x 60T

3 x 60T

3 x 60T

3 x 60T

2 x 40T

2 x 45T

3 x 45T

3 x 45T

3 x 45T

Hong Kong

Hong Kong

Hong Kong

Hong Kong

Hong Kong

Hong Kong

Hong Kong

Hong Kong

Hong Kong

Hong Kong

New Zealand

Singapore

Singapore

Singapore

Singapore

Singapore

Singapore

Singapore

Singapore

Hong Kong

Hong Kong

Hong Kong

Hong Kong

Cyprus

Germany

Malta

Singapore

Singapore

Liner

Liner

Liner

Liner

Liner

Liner

Liner

Liner

Liner

Liner

CV1100

Liner

Liner

Liner

Liner

Liner

Liner

Liner

Liner

Container Ship

Container Ship

Container Ship

Container Ship

General Cargo

Container Ship

Container Ship

Container Ship

Container Ship



YearBuilt


GT NT LOA(m)

Max Breadth (m)



Hold Capacity (m³)


Vessel Type

Fleet Profile Liner - In Operation as at 31 December 2017

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

26.8

26.4

16.4

46.2

28.3

37.9

28.7

38.8

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

ESI

70


Aotearoa Chief 20.09 D 2016 9764960 Owned, Managed9577.75 8745 2623 124.7 20 N/A N/A 9221.42 2 X 12.5T New Zealand General Cargo



YearBuilt


GT NT LOA(m)

Max Breadth (m)



Hold Capacity (m³)


Vessel Type

Fleet Profile Bulk Logistics - In Operation as at 31 December 2017

N/A

ESI

71


Governance: Strong organisational governance / Leading by example to raise industry standards and further sustainable development across economic, social and environmental areas.

Enviro

nmental

So

cialE

cono

mic

Build*

Local economic development.Ethical governance at ship building site.

Operate

Employment creation.Supply chain value and opportunities.Facilitation of global economy and trade.Global and local economic development.Ethical governance.

Transfer**

Local economic development.Ethical governance at SRF site.Monitoring cost of sustainable ship recycling.

Drive demand for improved standards in the industry.Positive step change in reducing environmental footprint during design phase.Better management of construction phase.R&D/more environmentally-responsible features.Influencing the demand for sustainable products/services.

Drive demand for improved standards in the industry.Improved performance (EEOI, biofuel, reduced emissions through operational efficiencies) during operations.Reduced environmental impact and carbon footprint. Reduced waste to land and sea.Influencing the demand for sustainable products/services.

Drive demand for improved standards in the industry.Reduced environmental impact during recycling.R&D/more environmentally-responsible options for reuse and recycling.Influencing the demand for sustainable ship recycling.

Drive behavioural change and demand for improved standards in the industry.Improved working conditions at ship building yards.Improved H&S practices.Improved human rights and labour practicesEmployment creation. Improved social indicators and positive impact on overall wellbeing of workers.

Drive behavioural change and demand for improved standards in the industry.Improved working conditions.Improved H&S practices.Improved human rights and labour practices.Employment creation and work opportunities.Community development.

Drive behavioural change and demand for improved standards in the industry.Build capacity of Ship Recycling Facilities (SRF) in India.Improved working conditions at SRF.Improved safety standards at SRF.Improved human rights and labour practices.Employment creation. Improved social indicators and positive. impact on overall wellbeing of workers.

Our Value Chain covers the three distinct stages of our operations:

1 Building the vessels

2 Operating the vessels, and then

3 Transferring the ownership of the vessel whether for onward trading or safe and environmentally sound recycling.

We call this our BOT framework (Build/Operate/Transfer). It helps us to understand where our business is having a (positive or negative) impact.

* The Buying phase is omitted due to the negligible value

** The Transfer phase mainly focuses on ship recycling when we demand continuing responsibility post completion of sale rather than sale for onward trading at which point our liability and opportunity to add or destroy value ceases

Data Value Chain analysis

72


Data Consolidated Materiality Matrix

Signi�cance of Impact on the Business

Imp

orta

nce

to s

take

hold

ers

Automation

Big Data & Systems

Integration

Competition from low-cost

carriers

Water pollution

Resource �ows

(Regulation + Tech innovation)

GHG Emissions reduction

Cybersecurity

Climate Change

Geopolitical instabilityChanging

supply chain structures

Ethical and uncorrupted

company

ChangingWorkforce demands

Technological

Economic

Social

Environmental

Political

Labour standards and

relations

Health & Safety

Clear transparent

comms

Community Investment & Development

Diversity & Inclusion

Human Rights and

Modern Slavery

3D Printing

Food security

Marine Biodiversity

Transparency in supply chains

Ship recycling

Customer Expectations

Air pollution

Materials Waste

Extreme weather events

Fuel Price

Specific:- Trade Barriers- Protectionism

- Sanctions

Alternate Fuels

Internal capacity to innovate and

R&D

Shipyard Capacity

Innovation Capacity

Financial Stability

73


Data Sustainable Development Strategy

Thrive

CNCo. has been in business since 1872.

Our business has stood the test of time because we have always looked ahead and made decisions based on long term sustainability.

We don’t see our business as separate from the world. We depend on it, and wish to help shape it positively.

So when we build businesses, we seek to build communities. When we employ people, we help them to fulfil their potential. When we use resources, we seek to protect the environments that provide them.

The world in which we operate is facing some of the most pressing social and environmental challenges of our time. We are committed to being part of the solution.

Because when the world in which we operate thrives, so do we.

Thriving People

We will respect and care for our employees and other stakeholders, unlocking the potential for all of us to grow by:

• Safeguarding the health and safety of all our employees and stakeholders by driving sustained safety excellence;

• Adopting a diverse and inclusive approach to securing the best talent;

• Improving our corporate governance to reflect our stakeholders’ interests;

• Respecting the human rights of all of our employees and other stakeholders.

Relevant SDGs

*The Sustainable Development Goals (SDGs) is a set of seventeen aspirational global goals to end poverty, protect the planet, and ensure prosperity for all. For more information please visit: https://sustainabledevelopment.un.org

74


Thriving Environment

We will help create a resilient environment that provides for our future by:

• Pursuing a long-term goal of de-carbonisation and optimising energy efficiency;

• Turning today’s waste into tomorrow’s resource;

• Using natural resources and systems responsibly and sustainably;

• Protecting and, where viable, enhancing the biodiversity of environments that our operations impact.

Relevant SDGs

Thriving Communities

We will work with communities wherever we operate to improve people’s lives by:

• Connecting with and empowering the local communities that we touch;

• Strengthening our supply chain through responsible and ethical sourcing of services and materials;

• Offering services to enable our stakeholders to live more sustainably.

Relevant SDGs

Data Sustainable Development Strategy cont.

75


Relevant SDG Goals Links to Thrive Strategy Relevance to CNCo's operations

Safeguarding the health and safety of all our employees and stakeholders by driving sustained safety excellence.

Adopting a diverse and inclusiveapproach to securing the best talent.

Respecting the human rights of all of our employees and other stakeholders.

Using natural resources and systems responsibly and sustainably.

See progress in the Safety, Our People, Carbon / Environment and Our Communities sections of the report

Areas covered:Health and Safety Policies and standards / Labour practices / Employee welfare and benefits / D&A Policy / Emotional support helplineEnvironmental Policies and procedures to ensure No Harm to the environment and communitiesLong Service Awards and recognition programmesTraining and developmentWaste disposal and responsible ship recycling in line with international conventions - improved social standardsLivelihood projects for communities in the Philippines (ASSMDA - Corporate Philanthropic projects)Seafarers Drop-in Medical Centres in Tacloban and BantayanSupporting seafarers worldwide in partnership with The Mission to Seafarers and Sailors’ Society

See Our People section of the report

Areas covered:EODIR Policy in placeDiversity in the workplace/Anti-discrimination and anti-harassment Use of gender inclusive language Gender neutral employee attraction and retention polices and proceduresEquality in pay structures and rewardsHRM practices supporting women in the workforceEnsuring that funded activities benefit both gendersLeadership development programmes

See Carbon / Environment and Our Communities sections of the report

Areas covered:Environmental protection of water catchment areas and water resources (Ship recycling and Community projects: Partnership with ESI and Corporate Volunteering events)Environmental policy / “Zero Pollution” incidents and “Net Zero Impact” on the environment and its biodiversityBiodiversity Issues of Concern (BIC) and Biodiversity Action Plan (BAP)Water treatment on vessels and recycling practicesSafe ship recycling practices minimising release of hazardous chemicals into the waterProtection of wetlands and waterways clean up (CP projects), mangroves (SGCT and Partnership with ESI)

SDGs and CNCo Thrive strategy with progress

76


Pursuing a long-term goal of de-carbonisation and optimising energy efficiency.

Adopting a diverse and inclusiveapproach to securing the best talent.


Strengthening our supply chain through responsible and ethical sourcing of services and materials.

Adopting a diverse and inclusiveapproach to securing the best talent;


See Carbon / Environment section of the report

Areas covered:Decarbonisation through exploring alternative fuel options / R&D into alternative energy sources (Biofuel trials)Energy efficiencies (Clean or Clean Design) for owned vessels Initiatives to improve fuel efficiency / Use of Marorka™ Internal fleet efficiency KPI scorecard KPIs for reducing our EEOI Eco-office/green office practices

See Our People and Safety sections of the report

Areas covered:Inclusive labour practices across all countries of operationGood and safe working conditions Equal pay for work of equal valueSound labour rights incorporated into organisational policies and procedures (HR and SPSM Contracts and Manuals)Human rights impact assessments (when required)Equal opportunities and respect in the work place (EODIR Policy)H&S standardsModern Day Slavery assessmentsSupply Chain Sustainability issues / Supplier audits

See Our People section of the report

Areas covered:EODIR Policy and its enforcement ashore and at seaGrievance mechanismSocial protection policies and min. wage in line with National labour lawsEquality in pay structures and rewardsModern Day Slavery assessmentsLocal content hiring policies


SDGs and CNCo Thrive strategy with progress cont.

77


Turning today’s waste into tomorrow’s resource.

Using natural resources and systems responsibly and sustainably.

Strengthening our supply chain through responsible and ethical sourcing of services and materials.

Pursuing a long-term goal of de-carbonisation and optimising energy efficiency.

Protecting and, where viable, enhancing the biodiversity of environments that our operationsimpact.

See The Environment section of the report

Areas covered:Environmental Management policies and practices Hazardous materials management practices and disposalSustainable ship recycling practices (Recycling of MV Chenan and MV Chengtu)Membership of Ship Recycling Transparency InitiativeSD Policies, committees, working groups Transparent SD reporting in accordance with GRI standardsSupply Chain Sustainability working group and CoCSustainable procurement practices and policies

See Carbon / Environment section of the report

Areas covered:Decarbonisation through low carbon technologies and minimising use of fossil fuels / R&D into alternative energy sourcesEnergy efficiencies (Clean or Clean Design) for owned vesselsInitiatives to improve fuel efficiency / Use of Marorka™ Internal fleet efficiency KPI scorecard

See Carbon / Environment and Our Communities section of the report

Areas covered:Going beyond legislative complianceZero Harm Policies / Investment in clean and green technologies/Green guidelinesBiodiversity Issues of Concern (BIC) and Biodiversity Action Plan (BAP)Ballast water regulationsCorporate Philanthropic investments (Partnership with ESI, employee education and volunteering)



78


Improving our corporate governance to reflect our stakeholders’ interests.

Connecting with and empowering the local communities that we touch.

Offering services to enable our stakeholders to live more sustainably.

Working with NGOs on environmental conservation and biodiversity related projects

See Governance and Our People sections of the report

Areas covered:Code of ConductWhistleblowing Policies / Third party due diligenceAntitrust Policies/SanctionsProcurement practices and guidelines / Supply Chain Sustainability Code of ConductAnti-bribery Policy and training for employeesPrivacy Policies, procedures and trainingCybersecurity training

See Our Communities and Carbon / Environment sections of the report

Areas covered:Stakeholder engagement at international foraMembers of Sustainable Shipping InitiativeCorporate Philanthropic investments in our key stakeholder communitiesPartnerships with Universities, Research Institutions and NGOs Working with Governments in the areas of assistance required in LDCs where we operateCivil Society partnerships for SD



79


Safety Statistics

0.00

2.00

4.00

6.00

1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16

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)

2014 2015 2016

Per

sona

l inj

urie

s /

1 m

illio

n m

an h

our

s w

ork

ed

1Q17 2Q17 3Q17 4Q17

2017

Injuries Near Misses

Quarter

No

. of

Nea

r M

iss

Rep

ort

s0

100

200

300

400

50

150

250

350

4502014 2015 2016

372

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

352

305

418

362

414 417 413431

444449

387

2017

1Q 2Q 3Q 4Q

392

359

387407

80


543 621 7 8

Duty EngineerOOW

3/EJunior E/OEle. Cadet

ETOC/O

GP-E / MTM / Wiper3/O5/E

FitterBosun

AB / IR / GP-D

9 10 11 12 543 621 7 8

Arm injuryBack / lumbar injury

Shoulder injuryDizzy / uncomfortable

Hand / finger injuryFoot injury

Head injuryFace injury

Leg / knee injuryEye injury

9 10

Total Recordable Cases*

Rank

543 621 7 8

Swimming during off dutyHandling scupper drain cover

Handling steel plateClosing hatch cleats

Lifting heavy itemsExercising in gymWorking on deck

Securing free fall lifeboatWorking on hatch ram

Working in crew mess roomReading reefer temperature

Moving in cabin / accommodationWorking in ER

Working in cargo holdWorking on crane / crane wire

9

Tasks PerformedType of Accident

*Total Recordable Cases comprises: Lost Time Injuries + Medical Treatment Cases + Restricted Workday Cases

81


2015 2016 2017Total vessels (owned and managed/operated)as at 31 December

54 79 89

Scope 1 emissions (tCO2e) 751,749 1,173,375 1,444,834

Emissions from marine fuel 97.93% 98.77% 98.93%

Scope 1 Energy Consumption (mT) 225,309 352,050 462,497

Scope 1 Fuel Consumption (mT) 223,452 350,028 460,110

Total Energy consumption (kWh) 2,624,859,666 4,104,665,784 5,392,743,430

EEOI - liner fleet (UoM: gCO2e/NRT-nm) 5.18 5.96 5.66

EEOI - bulk fleet (UOM: gCO2e/t-nm) 11.28 13.95 11.81

Electricity consumption (kWh) 584,970 595,839 738,518

Electricity emissions (tCO2) 284.07 291.66 371.79

Flights (tCO2) 5,483 5,135 5,263

SOx emissions (mT) 16,075 25,111 31,186

NOx emissions (mT) 18,866 29,487 36,550

Particulate Matter emissions (mT) 1,517 2,369 2,945

VOC emissions (mT) 288 450 555

Spills MV Ningpo: Oil Spill at Marsden Point 1 December 2015

Nil Nil

Environmental Summary

82


Energy Efficiency Operational Index

3.50

4.50

5.50

6.50

7.50

8.50

Jan-14

Feb-14

Mar-14

Apr-14

May-14

Jun-14

Jul-14

Aug-14

Sep-14

Oct-14

Nov-14

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Aug-15

Sep-15

Oct-15

Nov-15

Dec-15

Jan-16

Feb-16

Mar-16

Apr-16

May-16

Jun-16

Jul-16

Aug-16

Sep-16

Oct-16

Nov-16

Dec-16

Jan-17

Feb-17

Mar-17

Apr-17

May-17

Jun-17

Jul-17

Aug-17

Sep-17

Oct-17

Nov-17

Dec-17

Target 5.34 5.33 5.32 5.30 5.29 5.27 5.26 5.24 5.23 5.21 5.20 5.18 5.17 5.15 5.14 5.12 5.11 5.09 5.08 5.06 5.05 5.03 5.02 5.00 4.99 4.97 4.96 4.94 4.93 4.91 4.90 4.88 4.87 4.85 4.84 4.82 4.81 4.80 4.78 4.77 4.76 4.74 4.73 4.72 4.70 4.69 4.68 4.66

Actual 5.30 5.26 5.22 5.16 5.05 4.92 4.83 4.93 4.81 4.79 4.85 5.04 5.87 6.73 7.13 7.82 7.94 7.88 7.16 6.16 5.94 5.26 5.17 5.18 5.27 5.21 5.15 5.21 5.23 5.37 5.27 5.41 5.57 5.66 5.89 5.96 6.32 6.73 7.30 7.31 6.95 6.73 6.44 5.97 5.31 5.49 5.62 5.66

Target Actual

Liner EEOI (6M Rolling Average)

83


Energy Efficiency Operational Index cont.

8.50

9.50

10.50

11.50

12.50

13.50

14.50

15.50

Jan-14

Feb-14

Mar-14

Apr-14

May-14

Jun-14

Jul-14

Aug-14

Sep-14

Oct-14

Nov-14

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Aug-15

Sep-15

Oct-15

Nov-15

Dec-15

Jan-16

Feb-16

Mar-16

Apr-16

May-16

Jun-16

Jul-16

Aug-16

Sep-16

Oct-16

Nov-16

Dec-16

Jan-17

Feb-17

Mar-17

Apr-17

May-17

Jun-17

Jul-17

Aug-17

Sep-17

Oct-17

Nov-17

Dec-17

Target 12.5 12.5 12.5 12.4 12.4 12.3 12.3 12.3 12.2 12.2 12.2 12.1 12.1 12.1 12.0 12.0 12.0 11.9 11.9 11.9 11.8 11.8 11.8 11.7 11.7 11.6 11.6 11.6 11.5 11.5 11.5 11.4 11.4 11.4 11.3 11.3 11.3 11.2 11.2 11.2 11.1 11.1 11.1 11.0 11.0 11.0 11.0 10.9

Actual 12.6 12.8 12.9 13.3 14.2 14.0 14.3 14.1 13.8 13.2 11.8 11.7 11.5 10.8 10.6 10.6 11.3 11.7 11.2 11.4 11.4 11.4 10.9 11.2 11.8 12.4 12.6 12.8 13.0 12.8 12.7 13.0 13.4 13.7 13.8 13.9 13.7 13.4 12.9 12.7 12.6 12.3 12.7 12.2 12.3 12.0 11.8 11.8

Target Actual

Bulk EEOI (6M Rolling Average)

84


New Hires

Country / Age Group Australia <30 30 to 50 >50 Canada 30 to 50 >50 China <30 30 to 50 >50 Fuji <30 30 to 50 >50 Indonesia 30 to 50 New Caledonia <30 Papua New Guinea <30 30 to 50

Male

6

331

16141

38112163311

1257

Female

9252211

1257

4219212

11514

TOTAL

15285312

186

111

80304283322

176

11

New Hires during 2017 by Country, Age Group and Gender Identity

Male

1

13812188

4411522111

117

Female

211

341019511

112728431

127

TOTAL

312

72223713114411

164939531

244

Country / Age Group Samoa <30 30 to 50 Singapore <30 30 to 50 >50 Taiwan 30 to 50 United Kingdom 30 to 50 United States 30 to 50 New Zealand - China Navigation New Zealand <30 30 to 50 >50 New Zealand - Swire Shipping New Zealand <30 30 to 50 >50

GRAND TOTAL

85


Staff Turnover

Turnover during 2017 by Country, Age Group and Gender Identity

Country / Age Group Australia <30 30 to 50 >50China <30 30 to 50 Fuji <30 30 to 50 Hong Kong 30 to 50 >50 India <30 Indonesia 30 to 50Papua New Guinea <30 30 to 50 Samoa <30

Male

71337343

31

11122

1385

Female

5

41615413

1138

124811

TOTAL

12174

1349716

12391122

25121311

Male

205

132

11113122

11211

63

Female

298

18311

312512233

211

82

TOTAL

49133151111116247133541211

145

Country / Age Group Singapore <30 30 to 50 >50 Taiwan >50 United Kingdom <30 United States <30 New Zealand - China Navigation New Zealand <30 30 to 50 New Zealand - Swire Shipping New Zealand <30 30 to 50 >50 New Zealand - Quadrant Pacific 30 to 50 >50 New Zealand - Pacifica Shipping <30 >50

GRAND TOTAL

86


Global Reporting Initiative (GRI) G4 Content IndexGeneral Standard Disclosures - Core

GRIStandardNumber

GRIStandardsDisclosureNumber

DisclosureTitle Reported Cross-reference/Answers/Notes/Omissions Reportlocation:PageNumber/URL

GRI102 102-1 NameoftheorganizationYes

TheChinaNavigationCompanyPteLtd(CNCo)N/a

GRI102 102-2 Activities,brands,products,andservices

Yes

Fordescriptionofactivitiespleasesee"OrganisationalProfileandGovernance"sectionofthereport.

CNCodoesnotprovideanyservicesthatarebannedincertainmarkets.SimilarlyCNCo'sservicesarenotthesubjectofstakeholderquestionsorpublicdebate.

Page7

GRI102 102-3 LocationofheadquartersYes

HQisinSingaporeN/a

GRI102 102-4 LocationofoperationsYes

Fordescriptionofcountriesofoperationspleasesee"OrganisationalProfileandGovernance"sectionofthereport.Page7

GRI102 102-5 OwnershipandlegalformYes

TheChinaNavigationCompanyPte.Ltd.isaSingaporeregisteredcompanyandisawholly-ownedsubsidiaryofTheChinaNavigationCompanyLimited,registeredinLondon. N/a

GRI102 102-6 MarketsservedYes

Pleasesee"OrganisationalProfileandGovernance"sectionofthereport.Page7

GRI102 102-7 Scaleoftheorganization

Yes

Pleasesee"OrganisationalProfileandGovernance"and"OurPeople"sectionscoveringthesizeofthefleetandlocationsofemployees/officesandnumberofemployees.Pleasealsorefertotheorganisationalboundariesdiagram.Allfinancialstatementsareconfidential. Pages6,7-13and33

GRI102 102-8 Informationonemployeesandotherworkers

Yes

"OurPeople"sectionofthereport:"EmploymentInformation"and"Diversityintheworkplace/Anti-discriminationandanti-harassment"sub-sections.Weconsiderourseafarersasouremployeesdespitethembeingemployedthroughamanningagency.Thereforeallworkisdonebyemployees.

Therewerenoseasonalvariationsinemploymentnumbers.

Pages33-40

GRI102 102-9 SupplychainYes

See"SupplychainandProcurementmanagement"sectionofthereport.Page21

GRI102 102-10 Significantchangestotheorganisationanditssupplychain Yes

CNCoestablishednewofficesinFijiandSamoaattheendof2016,howeverweincludedthemintoourreportingframeworkin2017.

N/a

GeneralDisclosuresOrganisationalProfile

87


Global Reporting Initiative (GRI) G4 Content IndexGeneral Standard Disclosures - Core cont.

GRI102 102-11 PrecautionaryPrincipleorapproach

Yes

CNComanagesallrisksthathavethepotentialtoimpactouroperations.Wearemeasuring,monitoringandreportingourEnvironmentalimpactandhaveanumberofinitiativesinplacetoreduceoutgreenhousegasemissionsandothernegativeenvironmentalimpact.

SeeSectionon"CarbonandEnvironment"formoredetails.WehaveaGroupRiskManagerwhooverseesandmanagescorporaterisks.

Pages52-55

GRI102 102-12 ExternalinitiativesYes

Fairemploymentpractices(TAFEP)SingaporesinceApril2013N/a

GRI102 102-13 Membershipofassociations

Yes

SingaporeShippingAssociationSustainableShippingInitiativeWorldOceanCouncilMaritimeAnti-CorruptionNetwork(MACN)

N/a

GRI102 102-14 Statementfromseniordecision-maker Yes

SeeMD'smessagePages3-4

GRI102 102-16 Values,principles,standards,andnormsofbehaviour

Yes

CNCo'svalues,principles,standardsandnormsofbehaviourareoutlinedinourCodeofConductwhichisavailableoncompany'sintranet.TheCodeisapplicabletoallemployeesashoreoratsea,itsetsthehigheststandardsofbusinessethicswhichisapprovedbytheManagingDirector.Thereison-linetrainingontheCodethatallemployeesmusttakeandanswerquestionswhichconfirmtheirunderstandingofit.

SwireValuesareintroducedduringtheinductionprogrammeandareincludedintheperformancemanagementframeworkforallshorestaff.

CNCo'sCodeofConduct

GRI102 102-18 GovernancestructureYes

See"OrganisationalGovernance"sectionofthereportPages14-15

Strategy

EthicsandIntegrity

Governance

88



GRI102 102-40 Listofstakeholdergroups

Yes

Investors:Shareholders/JS&SBoard/ UKJS&SHeadofficeSubsidiaryCompanies:aspertheOrganisationalboundarieschartEmployees:seastaff,shorestaff,Seniorexecs/midManagers/Managers/other Suppliers:Legal/HR/Auditors/SuppliersofgoodsandservicesCommunities:Localkeys/hcommunities/CorporatePhilanthropicfundsrecipients GovernmentandRegulators:Classificationsocieties/PortsShippingIndustryactors:Peers/SRF

Page23

GRI102 102-41 Collectivebargainingagreements

Yes

CNCoseafarersarecoveredbycollectivebargainingagreements(CBA)orequivalent.AllcontractsarefullycompliantwiththeMaritimeLabourConvention(MLC)2006.Landbasedemployeesarenotcoveredbycollectivebargainingagreements.

N/a

GRI102 102-42 Identifyingandselectingstakeholders Yes

See"StakeholderEngagementandMateriality"sectionofthereport.Keystakeholdersthatareimportanttoouroperationswereengaged. Page23and74

GRI102 102-43 Approachtostakeholderengagement Yes

See"StakeholderEngagementandMateriality"sectionofthereport.Page23

GRI102 102-44 Keytopicsandconcernsraised Yes

See"StakeholderEngagementandMateriality"sectionofthereport.Page23and72

GRI102 102-45 Entitiesincludedintheconsolidatedfinancialstatements

Yes

See"OrganisationalandOperationalboundaries"diagram.

Page6

GRI102 102-46 DefiningreportcontentandtopicBoundaries

Yes

See"Introduction"and"OrganisationalprofileandGovernance"sectionofthereport.

Wehaveundertakenmultiplestakeholderconsultationprocessestodeterminethemostmaterialtopicsforbusinessanddefiningthisreportcontent.SustainabilityContextisdefinedbytheISO26000:2010aswellasourSustainableDevelopmentStrategy.

Page5

Stakeholderengagement

ReportingPractice

89



GRI102 102-47 ListofmaterialtopicsYes

See"MaterialityMatrix"Page74

GRI102 102-48 Restatementsofinformation Yes

Therehavebeennorestatementsofdatahoweverinitiativeswhichstartedinprioryearsandcontinuedduringthereportingperiodarecovered. N/a

GRI102 102-49 Changesinreporting

Yes

WeopenedanewofficeinSuva,FijiandApia,Samoaattheendof2016howevertheyhavebeenofficiallyincludedintoourreportingframeworkfromJan2017.Wehavealsoaddedthenewvesselsandexpandedthescopetocovermoreoffices.Therestoftheboundariesremainedthesame. N/a

GRI102 102-50 ReportingperiodYes

1Januaryto31December2017N/a

GRI102 102-51 Dateofmostrecentreport Yes

Sustainabilityreportfor2016calendaryearN/a

GRI102 102-52 ReportingcycleYes

AnnualN/a

GRI102 102-53 Contactpointforquestionsregardingthereport Yes

Contactsectionofthereport.GM-SustainableDevelopmentisthekeycontact.

Page102

GRI102 102-54 ClaimsofreportinginaccordancewiththeGRIStandards Yes

Reportfortheyear2017hasbeenpreparedinaccordancewiththeGlobalReportingInitiative’sGRIStandards:Coreoption.Itwillbeexternallyassuredwiththeassurancestatementaddedtothereport.

Page103

GRI102 102-55 GRIcontentindexYes

ThistableN/a

GRI102 102-56 Externalassurance

Yes

Thisreportwillbeexternallyassuredwiththeassurancestatementaddedtothereport.TheexternalassurerisindependentfromCNCoandhasanimpartialopinion.

Webelievethattobeclearandtransparentiscriticaltooursuccessincommunicatingwithourstakeholders.TheexternalassuranceofourSDreportvalidatesanystatementsorclaimswemake.

TBA

90



GRI103 103-1103-2103-3

-ExplanationofthematerialtopicanditsBoundary-Themanagementapproachanditscomponents-Evaluationofthemanagementapproach

Yes

SafetyisourtoppriorityinCNCo.Wecontinuouslystrivetoprovideasafeandhealthyworkingenvironmentandtocultivateasafemind-setforbothouremployeesandcontractorsalike.Byhavingastrongsafetyfocustogetherwithrobustreportingandlearningculturewemakesafetyeveryone’spriority.Ourgoalistobuildanindustryleadingsafetyculture.

Wecontinuetomeasureandmonitorsafetystatisticsandhaveanumberofinitiativestoimprovesafetyacrossourfleetandwithinouroffices.

See"Safety"sectionofthereportonourapproach/policiesandstatistics.CNCohasa“whistle-blowing”procedureinplacetoreportanyissuesthatmaynegativelyaffecthealth,safetyorenvironment.Thisprocesscanbeanentirelyconfidential.Somerelativelyminorissueswerereportedthroughthischannelwitheachcasethoroughlyinvestigatedandappropriateactiontakenwhererequired.

Pages25-32

GRI403 403-1 Workersrepresentationinformaljointmanagement–workerhealthandsafetycommittees

Yes

Onboardourvessels45%ofourseafarersarerepresentedonthejointH&Scommittees.Fortheoffices,wehaveH&Scommitteesinkeylocations:Singapore/Australia/NZ/PNG/Fiji(comprisedofrepresentativesfromalldepartments).

N/a

GRI403 403-2 Typesofinjuryandratesofinjury,occupationaldiseases,lostdays,andabsenteeism,andnumberofwork-relatedfatalities

Yes

Tablesincludedinthereportandreferencesareprovidedinthe"Safety"Sectionofthereport

Pages79-80

GRI403 403-3 Workerswithhighincidenceorhighriskofdiseasesrelatedtotheiroccupation

Yes

Companyprovidescareforallseagoingandshore-basedemployeeswhoseworkplaceiscontrolledbytheorganisation.Forseafarerswelookaftertheirhealthandwelfarebyprovidinggymsonboardourvesselsandimprovingcooksskills.

Seafarersareatanaboveaveragerisktodevelopmentalproblemsrangingfromasenseofisolation,loneliness,severehomesicknessallthewayuptotheriskofcommittingsuicide.In2016,CNCopartneredBefriendersWorldwide(BW),aninternationalnetworkofcrisishelplinestosetupadedicatede-mailandhotlineserviceforCNCoemployeeswhoarefeelingdepressedorneedemotionalsupport.BefriendersWorldwidehasaninternationalnetworkofover350crisishelplinesin36countriesthatprovidesemotionalsupporttothoseindespair.Theservicesareconfidentialinnature.

N/a

MaterialTopicsHealthandSafety

91



GRI403 403-4 Healthandsafetytopicscoveredinformalagreementswithtradeunions

Yes

FollowingtopicsarefullycoveredinCBAforseafarers:Workinghours,sicknessandinjury(incl.sickpay),compensationfordisabilityanddeath,medicaltreatment,insurance.

N/a

GRI416 416-1 Assessmentofthehealthandsafetyimpactsofproductandservicecategories

Yes

Allpersons,includingthirdpartycontractorsandclientpersonnelonboardCompanyvesselsaresubjecttothesamehealthandsafetyrequirements.SMSSection5dealswiththesafety,HealthandEnvironmentManagement.Allpersonsareprovidedwithavesselinductionandappropriatelysupervisedthroughouttheirstayonboard.Arecordofinductionandtrainingismaintainedonboard.PersonalProtectiveEquipment,MedicalLockerandPandemicLockerEquipmentaremaintainedonboardinaccordancewiththeSMSSection5.Duringthelatterpartof2017,aSafetyMaturityAssessmentwasconductedbyathirdpartyconsultancyspecialisinginmaritimesafety.Theaimwastogaugethesafetymaturitylevelbothonboardtheshipsandashoreinthefunctionsdealingwiththeships.Theresultsfromthesurveywillbeusedtodeterminewhichareasneedimprovementandhowtoensuresuchimprovementwillindeedmaterialise.

OfficeH&SCommitteesmeetregularlytoassessimpactofH&Sissuesandputmeasuresinplacetorectifyitasnecessary.

N/a

GRI416 416-2 Incidentsofnon-complianceconcerningthehealthandsafetyimpactsofproductsandservices

Yes

Accidents/incidentsthathavecausedinjuryordamagetoathirdpartyemployeeorthirdpartyequipment/assetsarerecordedusingaThirdPartyAccident/IncidentReport(TPA).In2017atotalof4TPA’swerereported.

Page30

92



GRI103 103-1103-2103-3


Yes

Wehavehighstandardsofbusinessethicsandcorporategovernance,includingzerotolerancetowardsanycorruptpractices.Thisincludescurtailingthepracticeoffacilitationpayments,aswellasconductingduediligenceontheethicalrecordoftransactionalpartners,includingcustomersandsuppliers.OurCodeofConductisourmaingovernancedocumentwhichtogetherwithotherpoliciesandproceduressetsstrongfoundationonhowweconductouroperations.CNCohasa“whistle-blowing”procedureinplacetoreportanygovernanceissuesthatmayhaveanegativeaffectonCNCo.

See"Governance"sectionofthereportformoreinformation.Nomaterialissueswerereportedthroughthisprocessduringthereportingperiod.

CodeofConduct

GRI205 205-1 Operationsassessedforrisksrelatedtocorruption

Yes

CNCo'sCorporateCodeofConductisacomprehensivegovernancedocumentthatsetsoutrulesonhowCNCogroupemployeesmustbehaveinthecourseofcarryingouttheirduties.OneoftheareascoveredbytheCodeisanti-corruption.TheCodetogetherwithinternalcontrolssetastrongfoundationtopreventanycorruptionrelatedincidents.TheCompanycarriesoutanti-corruption/anti-briberytrainingandon-linetestforemployeeswithinthegrouptoensuretheirunderstandingofwhatisrequiredofthem.

Allourbusinessoperationsareassessedforrisksrelatedtocorruption.Anyincidentsofpotentialoractualnon-compliancearereportedtotheInternalRiskManagementCommitteeandinvestigated.ThecompanyhasZerotolerancetowardscorruption.Formoreinformationsee"Anti-corruption,anti-trustandmonopolypractices"sub-sectionofthe"Governance"sectionofthereport.

Page16

GRI205 205-2 Communicationandtrainingaboutanti-corruptionpoliciesandprocedures

Yes

Formoreinformationsee"Anti-corruption,anti-trustandmonopolypractices"sub-sectionofthe"OrganisationalProfileandGovernance"sectionofthereport.

Page16

GRI205 205-3 Confirmedincidentsofcorruptionandactionstaken

Yes

Therewerenoincidentsofcorruptionreportedin2017.

N/a

GRI206 206-1 Legalactionsforanti-competitivebehaviour,anti-trust,andmonopolypractices

Yes

Therewerenolegalactionsforanti-competitivebehaviour,anti-trust,andmonopolypracticesin2017.

N/a

EthicalandUncorruptedCompany

93



GRI103 103-1103-2103-3


Yes

Abilitytogeneraterevenuetocoveroperatingcosts,reducedebt,returncapitaltoinvestorsandmakethenecessarystrategiccapitalinvestmentstoensurelong-termbusinesssuccess.Strongmanagementofthebalancesheetandcashflowtomaintaintrustfrominvestors,businesspartnersandemployees.

CNCo'ssoleshareholderisJohnSwireandSonsLimitedwhichisaprivatelimitedliabilitycompany.Despiteverychallengingmarketconditionsandstrongcompetition,CNCocontinuestoexpanditsoperationsandinvestinnewtonnage.Manyeffortshavebeenmadetoseekefficienciesandcutcoststoensureprofitability.

SeeMD'ssectionformoreinformation.

Pages3and4

GRI201 201-2 Financialimplicationsandotherrisksandopportunitiesduetoclimatechange

Yes

See"Climate-relatedrisksandopportunities"sectionofthereport

Pages62-63

GRI103 103-1103-2103-3


Yes

Providingafairandsafeworkingenvironmentthatisfreefromdiscriminationandharassment,respectinghumanrightsandcomplyingwithalllegalrequirementsrelatedtoemploymentconditionsiscriticaltoCNCo'ssustainability.Thisincludesensuringthatallemployeesreceiveproperinstructionregardingtheirownrightsandareinapositiontoseekimmediatehelpifthoserightsareviolated.InadditiontotheCodeofConductwehave"EqualOpportunities,Diversity,InclusionandRespectintheWorkplace"Policy.Formoreinformationsee"Ourpeople"sectionofthereport.WealsocomplywithUKModernDaySlaveryAct2015(MSA)whichcoversourbusinessandoursupplychain(seeMSAStatementonourwebsite).

CNCohasa“whistle-blowing”procedureinplacetoreportanyissuesrelatedtohumanrightsandpotentialviolationsoftheMSA.Thiscanbeanentirelyconfidentialprocess.Nomaterialissueswerereportedthroughthisprocessduringthereportingperiod.

CodeofConduct

MSAStatement

GRI406 406-1 Incidentsofdiscriminationandcorrectiveactionstaken

Yes

Noincidentsofdiscriminationwererecordedin2017.Formoreinfosee"Diversityintheworkplace/Anti-discriminationandanti-harassment"sectionofthereport.

Pages37-38

HumanRightsandModernSlavery

FinancialStability

94



GRI408 408-1 Operationsandsuppliersatsignificantriskforincidentsofchildlabour

Yes

CNCocomplieswiththeUKMSA.Aspartofthatcommitmentwewillnottoleratechild/forcedorcompulsorylabourwithinourbusinessorinoursupplychain.Wepublishanannualstatementwhichisavailableonourwebsitewhichdetailsactionstakenandplanned.

Seesectionon"ChildandForced&CompulsoryLabour/ModernDaySlaveryAct"Therewerenocasesofchildlabourin2017.

MSAStatementPages17-18

GRI409 409-1 Operationsandsuppliersatsignificantriskforincidentsofforcedorcompulsorylabour

Yes

Seesectionon"Child/Forced&CompulsoryLabour/ModernDaySlaveryAct"Therewerenocasesofforcedorcompulsorylabourin2017.

Pages17-18

GRI412 412-1 Operationsthathavebeensubjecttohumanrightsreviewsorimpactassessments Yes

Weemployseafarersfrommanycountrieswithalargepercentagecomingfrom:China,PacificIslands,Philippines,SriLankaandUkraine.Weusemanningagenciesinthosecountrieswhichareresponsibleforrecruitmentandmanagementofhumancapital.Weworkwiththemanningagenciestoensurethattheyhaveallthenecessarygovernanceinplacetopreventanypotentialhumanrightsviolations.Weconductduediligenceusingself-assessmentquestionnairesaswellasphysicalauditswhenpossible.Wealsoworkwithourhighrisksuppliersincludingshipyardstomakesurethattheycomplyinteralia withMSAprovisions.

MSAStatement

GRI412 412-2 Employeetrainingonhumanrightspoliciesorprocedures Yes

Weprovidedessentialtrainingtoourmanagementteamsmostlikelytoencounterpotentialissueswithregardtomodernslaveryinlinewithbestinternationalpractices.Wealsoraiseawarenessofmodernslaveryofourseagoingandshore-basedemployeesthroughmonthlynewslettersandpresentations. MSAStatement

GRI412 412-3 Significantinvestmentagreementsandcontractsthatincludehumanrightsclausesorthatunderwenthumanrightsscreening

Yes

In2017,wehaveaddedtherequirementforallnewandre-contractedsupplierstocomplywithUKMSAbyincludingarelevantclauseintoCNCo’sServiceAgreementtemplateandbydesigningaspecificMSAquestionnairetobeapartofthesupplieron-boardingandmanagement.

Moreinformationcanbefoundunder"Child/Forced&CompulsoryLabour/ModernDaySlaveryAct"sectionofthereport

MSAStatementPages17-18

95



GRI103 103-1103-2103-3


Yes

Providingallstatutorybenefitsthatcoverworkers'basicneeds,workingandresthours,minimumemploymentageaswellasprotectingbasicworkerrights,enhancingworkers'jobsecurityandimprovetermsofemploymentincludingprovisionofhealthcare.CNCoaimstobetheEmployerofChoicebytreatingpeoplewithrespectandprovidingthemwithgoodandsafeworkingconditions,equitableremunerationandbenefits.InadditiontocompliancewithallstatutoryrequirementswhichincludesILOMaritimeLabourConvention(MLC)forourseagoingemployees,weaimtogobeyondlegislationinensuringthatouremployeesarewelllookedafterandsafe.Wehaveinplacegovernancestructuressupportedbyourpoliciesandprocedures.Formoreinformationsee"Ourpeople"sectionofthereport.

CNCohasa“whistle-blowing”procedureinplacetoreportanyissuesrelatedtolabourpractices.Thiscanbeanentirelyconfidentialprocess.SeagoingemployeescanalsocontactDPAtoraiseanyissuesrelatedtotheconditionsoftheiremployment.Nomaterialissueswerereportedthroughthisprocessduringthereportingperiod.

CodeofConduct

GRI401 401-1 Newemployeehiresandemployeeturnover Yes

See"People"sectionofthereportandtablesintheDataSection

Pages84-85

GRI401 401-2 Benefitsprovidedtofull-timeemployeesthatarenotprovidedtotemporaryorpart-timeemployees

Yes

AllofthestatutorybenefitsareprovidedasanabsoluteminimuminallofCNCo'skeylocationsforallemployees.Additionalbenefitsforfull-timeemployeesinclude:

-Lifeinsuranceanddisabilitycoverage-Bonuspaymentsandlongserviceawards

Allofourseafarersreceive:-PrivateHealthcare-Pensionarrangementsorcashinlieuforallseafarers-LifeInsurance-CollectiveBargainingAgreementinplacewithInternationalTransportFederation(ITF)affiliates-Discretionarytraining

Keylocationsaredefinedascountrieswheremorethan3%ofouremployeesarebased.

N/a

GRI401 401-3 ParentalleaveYes

Outof28employeeswhoweregrantedmaternityandpaternityleaveduringthereportingperiod,24returnedtowork.N/a

LabourStandardsandRelations

96



GRI402 402-1 Minimumnoticeperiodsregardingoperationalchanges

30daysnoticeisprovidedfortheseafarers

N/a

GRI407 407-1 Operationsandsuppliersinwhichtherighttofreedomofassociationandcollectivebargainingmaybeatrisk

Yes

CNCoseafarersarecoveredbycollectivebargainingagreements(CBA)orequivalent.AllcontractsarefullycompliantwiththeMaritimeLabourConvention(MLC)2006.

N/a

GRI103 103-1103-2103-3


Yes

Duringthetimeoffasttechnologicaldevelopmentsinthefieldofwidespreade-communicationsthereisfastgrowingexpectationofexistingorpotentialseagoingemployeesthatshippingcompaniesshouldprovideaccesstointernettofacilitateeasierconnectivitywithfamiliesathome.Andmoregenerally,havingimprovedworkingconditionsonboard.

CNCocarriesoutEmployeeEngagementandAlignmentsurveyseverytwoyearstoprovideopportunitytoallCNCoemployeestostatetheirviewsonissuesrequiringattention.Thoseissuesarerecorded,reportedtoSeniorManagementandactionstakenarereportedbacktoemployees.Forseagoingemployees,CNCoalsoholdsseafarerforumsinvariouscountriestoinformthemaboutCompany'sstrategicdirection,forthcomingdevelopmentsandtoprovidefeedbackandansweranyquestionstheymighthave.

Nomaterialissueswerereportedduringthereportingperiod.

CodeofConductPage42

GRI103 103-1103-2103-3


Yes

Thepaceofdigitisationhasfarexceededregulationtocontrolandmanagedataprivacyandprotection,leadingtodataandliabilitybreachesthatcancostmillions,andcompromisedataofcustomers.Inthemarinesector,increasedautomationandintegrationviaonlineplatforms,havesimultaneouslyincreasedtheriskofcyberattacksthatthreatentohaltoperationsandsafetyofcrewonboard.CNCotakesthoserisksseriouslyandidentifiedCybersecurityasamaterialissueforbusiness.WehaveInformationSecurityPolicywhichisavailableonCorporateIntranet.

In2017alltheofficeemployeescompletedtheon-linecybersecurityawarenesscourse.Regularcommunicationonsecuritymeasuresisprovidedviae-mails,NiuSwireandtownhallmeetings.

Formoreinformationsee"Cybersecurity"sectionofthereport.Anysecurityissuesreportedweredealtwithimmediatelyandwithminimumdisruptiontothecustomers.

Page18

ChangingWorkforceDemands

Cybersecurity

97



GRI103 103-1103-2103-3

- ExplanationofthematerialtopicanditsBoundary-Themanagementapproachanditscomponents-Evaluationofthemanagementapproach

Yes

Inadditiontoactingresponsibly,companiesareexpectedtoeffectivelycommunicatetheirsustainabilityeffortstointernalandexternalstakeholders.SustainabilityisawaytopositionanddifferentiateCNCointhelongterm.WeareconstantlylookingforwaystoreachouttoourstakeholderstotellthestoryaboutourSustainabilityjourney.ThisSDreportisacomprehensiverecordofwhatwedotoensurethatCNCoisanethicalcompanythatisdoingbusinessinasociallyandenvironmentallyresponsiblemanner.

Weaimtofosteradialoguewithourstakeholdersbyusingvariousformsofcommunicationandsolicitfeedback.

Thisreport

GRI103 103-1103-2103-3

- ExplanationofthematerialtopicanditsBoundary-Themanagementapproachanditscomponents-Evaluationofthemanagementapproach

Yes

CNCoiscommittedtothesafe,sustainableandresponsiblerecyclingofitsvesselsattheendoftheireconomiclifeatcarefullyselectedandindependentlycertifiedShipRecyclingFacilities.Doingsoproperlysafeguardsthehealthandwellbeingofshiprecyclingworkersandensuresthatharmfulchemicalsandtoxinsarenotreleasedintotheenvironment.CNCoidentifiedShipRecyclingFacilitieswhichareearlyvoluntaryadoptersoftheHongKongInternationalConventionfortheSafeandEnvironmentallySoundRecyclingofShips(HKConvention)inAlang,India.CNCohavebeenbuildingcapacityatselectedyardstobeClassNKCertified,HKConventioncompliant,andgettingthemtoimprovetheirsocialconditions.Additionalvoluntaryinvestmentincludedplacingmonitoringteamsattheyardwiththemandateto“STOPanyunsafeact”.

See"SustainableShipRecycling"sectionofthereport.Nogrievanceswererecordedduringthereportingperiod.

Pages57-58

GRI306 306-2 Wastebytypeanddisposalmethod

Yes

CNCosustainablyrecycled2vesselsattheendoftheirworkinglifeatShipRecyclingFacilitiesinAlang,India:

MVChengtu9,397tonsofrecycledmaterial53.73tonsofhazardouswaste28,680tonsofOil/Bilgewater99.97%recycled,componentsre-used.

MVChenan9,403tonsofrecycledmaterial64,745tonsofhazardouswaste40,230tonsofOil/Bilgewater99.74%recycled,componentsre-used.

Page58

ClearandTransparentCommunications

ShipRecycling

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GRI306 306-3 SignificantspillsYes

Nosignificantspillswererecordedfromoperationsorduringshiprecyclingin2017.N/a

GRI306 306-5 Waterbodiesaffectedbywaterdischargesand/orrunoff Yes

Therewerenowaterdischargesand/orrunoffsduringshiprecycling.

N/a

GRI103 103-1103-2103-3


Yes

Understandingoursupplychainrisks,conductingduediligenceonoursuppliersandsupplychainpartnerstoensurethatoursupplychainisfullycompliantwithanyregulatory,environmentalandH&Srequirementsaswellasfreeofhumanrightsviolationsandmodernslavery.WehaveinplaceSupplyChainSustainabilityCodeofConductandaduediligenceprocessforsuppliers.Tostart,wearefocussingonhighrisk/highvaluesuppliers.

Formoreinformationsee"SupplychainandProcurementmanagement"sectionofthereportandCodeofConductforSuppliers.

Nogrievancesorissueswererecordedduringthereportingperiod.

SupplyChainSustainabilityCodeofConduct

Page21

GRI308 308-1 Newsuppliersthatwerescreenedusingenvironmentalcriteria

Yes

EnvironmentalandSocialcriteriaareincludedintheSupplyChainSustainabilityCodeofConduct.WehavedevelopedSupplyChainSustainabilityquestionnaire(forself-auditsandforthefollowupphysicalaudits)forhighrisksuppliers.Thequestionnairecoversmainareasofsustainabilityrisksandasksforevidenceonhowthoserisksaremanaged.Around20strategicsupplierssubmittedself-auditquestionnairesandwereassessed.Weareworkingondevelopingandrollingoutawidersupplierassessmentandauditprogrammeinthenextcoupleofyearsusingriskbasedapproach.

N/a

GRI308 308-2 Negativeenvironmentalimpactsinthesupplychainandactionstaken

Yes

SDSupplierself-assessmentquestionnaireasksaboutsupplier'senvironmentalimpacts:

-Whatarethecompany'smainenvironmentalimpacts?-Whatisthecompanydoingtomanageitsenvironmentalrisksandimpacts?

Answerstothosequestionsareassessedbyprocurementdepartmentandifanyissuesfound,raisedwiththeSDDepartment.Thoseareasarealsocoveredduringhighrisksupplieraudits.

Around20ofhighrisksupplierswereauditedduringthereportingperiod.Nosupplierswereidentifiedashavingsignificantactualorpotentialnegativeenvironmentalimpact.

N/a

TransparencyinSupplyChains

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GRI414 414-1 Newsuppliersthatwerescreenedusingsocialcriteria

Yes

LabourpracticescriteriaareincludedintheSupplyChainSustainabilityCodeofConductandquestionnaire.WehavedevelopedaseparateMSAspecificquestionnaireforhighrisksupplierstoundergotheself-auditprocess.Thequestionnairecoversthemainareasofsocialrisksandasksforevidenceonhowthoserisksaremanaged.CNCocomplieswiththeModernDaySlaveryAct.

Formoreinformationsee"Child/Forced&CompulsoryLabour/ModernDaySlaveryAct"sectionofthereport.Around20newsuppliersrespondedtheMSAself-audit.

Pages17-18

GRI414 414-2 Negativesocialimpactsinthesupplychainandactionstaken

Yes

OnlyHighRisksuppliersareassessed.Supplierself-assessmentquestionnairecoversareasrelatedtosupplier'ssocialimpactssuchaslabourpracticesandhumanrights.

AnswerstothosequestionsareassessedbyrelevantdepartmentsandSDteam.Around20supplierswereassessedin2017.Nosupplierswereidentifiedashavingsignificantactualorpotentialnegativesocialimpact.Morehighrisksupplierauditsareplannedfor2018.

N/a

GRI103 103-1103-2103-3

-ExplanationofthematerialtopicanditsBoundary-Themanagementapproachanditscomponents-Evaluationofthemanagementapproach Yes

Bigdataanalyticsareappliedtomanyindustriestopromotebetterqualitydecision-makingprocesses.Bigdataisvoluminous,withvarietyandvelocityofdatageneratedandcollectedfrommultiplesystemsisstoredineitherstructuredorunstructuredform.Datadrivendecisionmakingisimportantforoperationalefficiencyimprovements,routeandsupply-chainoptimisation,shipoperationalefficiency,cargotrackingandregulatorycomplianceaswellasfuelsavings(Bunkercosts)etc.

ByusingbigdataandsystemintegrationCNCocanimproveenergysavingsfromoperations,safety,schedulemanagement,fleetplanning,fleetallocation,serviceplanning,chartering,conditionmonitoringandmaintenance,environmentalregulationcompliance,hullandpropellercleaning,retrofitandmodification.Fornewbuildings,sensordatacollectedfrompastvesselswillbeusedfordesignoptimisation.Datacollectedfromship’ssensorsusingIOTwillbehelpfulforpredictiveanalysis,whichisnecessarytoavoiddelaysandincreasetheship’soveralloperationalefficiency.

CNCoacknowledgestheimportanceofbigdataintheefficiencyandtheefficacyofouroperations.WeestablishedthepositionofDataComplianceManagertoassistusinthisareaandthepositionwillcommencein2018.

N/a

BigDataandSystemsintegration

100



GRI103 103-1103-2103-3

-ExplanationofthematerialtopicanditsBoundary-Themanagementapproachanditscomponents-Evaluationofthemanagementapproach Yes

Ensuringthatthebusinessofferstherightconditionsforallemployeestothrive,regardlessofgender,race,cultural,andotherdifferences.Thisincludestheexaminationofdeepstructuralinequalitieswithinthebusinesses,includingthedistributionofminoritiesinuppermanagementandthedesignofvesselstomanagediverseneeds.Evidenceshowsthatdiverseteamsperformbetter,sopartofthisisredesigningthebusinessforhigherperformance.

WecontinuetoseektoencouragemorewomentojoinCNCofleetbycreatingaculturewherewomenfeelsafeandaresupported.Wehaveinplace"EqualOpportunities,Diversity,InclusionandRespectintheWorkplace"Policywhichaimstoembeddiversityandequalityintoallouroperationstoensurethatwebenefitfromawelcoming,positive,innovativeandout-performingworkenvironment,whichisessentialtoCNCo’scontinuingsuccess.InadditiontothepoliciesweprovideanAdviceandGuidancewhistleblowinghotlinetodealwithanypotentialissues.

Pleasesee"Diversityintheworkplace/Anti-discriminationandanti-harassment"sectionofthereportformoreinformation.

Therehavebeennogrievancesreportedduringtheperiodcoveredbythisreport.

CodeofConduct

Pages37-38

GRI405 405-1 Diversityofgovernancebodiesandemployees

Yes

ThebalanceoftheExecutiveteamfromthegender,ageandethnicdiversityperspectiveisarecognisedissueforCNCo:allBoardMembersaremale;twooutoftenExCommembersarefemaleswiththebalancebeingmen.ThisissueisbeingaddressedthroughLeadershipDevelopmenttrainingandsuccessionplanning.Employeebreakdownbygenderandagegroupareincludedinthereport.

See"OurPeople"sectionofthisreportformoreinformation.

Page37

GRI405 405-2 Ratioofbasicsalaryandremunerationofwomentomen

No

Thisisnottrackedorreported.

N/a

GRI406 406-1 Incidentsofdiscriminationandcorrectiveactionstaken Yes

Noincidentsofdiscriminationwererecordedin2017.

N/a

DiversityandInclusion

101



GRI103 103-1103-2103-3


Yes

SupportoflocalcommunitiesincountriesandcommunitieswhereCNCohasamajorpresenceisimportanttous.Supportmaycomeintheformofinvestmentsineducationandtalentdevelopment,aswellasspecificprojectstoaddressspecificdevelopmentchallengesforthatcommunity,includingenvironment,wastemanagement,health,education,etc.CNCobelievesthatlong-termvaluecreationdependsonthesustainabledevelopmentoftheCompanyandgivingbacktothedifferentcommunitiesinwhichCNCooperatesandwhichitimpacts.OurSDPolicycoversthiscommitment.

CNCohasa“whistle-blowing”procedureinplacetoreportanycommunityrelatedissues.Nomaterialissueswerereportedthroughthisprocessduringthereportingperiod.

See"OurCommunities"sectionofthereport.

SustainableDevelopmentPolicy

Pages45-51

GRI413 413-1 Operationswithlocalcommunityengagement,impactassessments,anddevelopmentprograms

Yes

See"OurCommunities"sectionofthereport.CNCoinvestsinourkeystakeholdercommunitiesduetotheglobalnatureofouroperations.AnumberofCorporatePhilanthropic(CP)projectsarebeingimplementedinvariousgeographiclocationswithnumerousemployeeengagementactivities.WecalculateSocialReturnonInvestmentforlargeCommunityInvestmentprojectstoensurethattheycreatevaluetothecommunities.WemonitorourCPprojectstomeasureimpact.

Pages45-51

GRI413 413-2 Operationswithsignificantactualandpotentialnegativeimpactsonlocalcommunities

Yes

Thenatureofourglobaloperationsmeansthatweservemanycommunitiesworldwidebytransportinggoodsbetweenvariousports.WehavemoreimpactinsmallislandstatesinthePacificasweareanintegralpartoftheireconomyandhavebeenoperatinginthatregionfordecades.WealsoemployalargenumberofseafarersfromChina/Philippines/PNG/SriLanka/UkraineandthePacificIslandswhichweconsiderourkeystakeholdercommunities.WehaveanumberofCommunityInvestmentandCorporatePhilanthropicprojectsinthosecountries.Everyprojectiscarefullyevaluatedpriortoinitiationtoensurethatthereisnonegativeimpactonlocalcommunities.

Theenvironmentalimpactiskepttominimumaswecomplywithallcurrentenvironmentalregulationsanddealwithanyincidentspromptlyandinfullcooperationwithlocalauthorities.

Pages45-51

CommunityInvestmentandDevelopment

102


Contact

Request for Feedback

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

Contact Details

Simon BennettGeneral ManagerSustainable Development The China Navigation Company300 Beach Road#27-01 The ConcourseSingapore 199555

Tel +65 6309 3632

[email protected]

www.swirecnco.com

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GRI Assurance Statement

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Documents

SUSTAINABLE DEVELOPMENT REPORT · 2018. 12. 5. · 1x CV1100 Bulk Division (chartered fleet) Tonnage as detailed in Fleet Profile Bulk Logistics Division (owned fleet) 1x Cement Carrier