Table of Contents. Page 1-2. General Manager s Address. Page 3-6. Lessons Learned. Page 7. About the Company. Product Range.

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2 Table of Contents General Manager s Address Lessons Learned About the Company Product Range Company Capabilities Governance Factory Organizational Structure About This Report Stakeholder Engagement Disclosures on Management Approach Performance Indicators Parting thoughts GRI Content Index GRI Application Level Page 1-2 Page 3-6 Page 7 Page 8 Page 9-10 Page Page 13 Page Page Page Page Page 45 Page Page 53 i

3 General Manager s Address It has been a year since we made our first sustainability report. As we ve mentioned earlier this is only the first steps in our journey in sustainability. With the release of our second report we hope to show the readers on how much we ve progressed, be it big or small in their perspective after reading the report. Challenges remain the same or more so in the period we made the second report. We ve explored big and small solutions to apply to sustainability issues. For example, in trying to reduce our electricity costs we ve used simple solutions such as putting individual power switches on light fixtures so we can turn off lights that are not being used. On the other end of solutions we ve already begun transitioning to lean manufacturing to improve our efficiency. Both solutions work in addressing reduction of electricity cost. We are now, to the best of our abilities, trying solutions no matter how simple or complex to tackle our sustainability issues. That is not to say that we didn t have problems along the line. Trying to be sustainable, to be blunt, is not cheap at the start. In the above example of reducing electricity costs we are now also transitioning to the use of T5 fluorescent lights. The initial investment came with a cost but taking the long view convinced us that this was the right way to proceed. The same goes with our waste management system. Our old system left much to be desired and the new one we are building does come with an initial cost. But taking the long view again convinced us that it was also the right way to proceed. 1

4 General Manager s Address (continued) We ve mentioned previously that the value of reports like this lies in the lessons learned in the reporting process. We ve come to realize that there is space for improvement in our organization. And we can improve upon those improvements. Sustainability now is more a process than a goal. It is apt that we begin our second decade tackling the sustainability impacts of our continued operations. As we ve previously mentioned, it is no longer enough for our organization to be a good shoe producer but we should be able to produce in an ethical and sustainable manner. A lot of pressure is being put upon organizations to operate in this way. In the end it is simply about taking the long view. We have to be able to take stock of the current impacts of our operation, improve upon the good and mitigate upon the bad, all for the good of the next generation. After all isn t that what sustainability is all about? Nguyen Van Vinh General Manager 2

5 Lessons learned Our organization has learned some lessons with regards to the sustainability impacts of our operations. In 2011 we significantly improved on our monitoring systems especially on electricity use & waste management. We learned that we can vastly improve our performance on these two issues. It was decided that focusing on this two issues can give our company significant economic gains plus the additional benefit of mitigating the environmental impact of our operations. We faced several challenges when we decide primarily to focus on these two issues. First is financial; the changes made to our production process came at an initial cost. Second is cultural or the current mindset of the organization. For example, to improve our waste management we instituted waste segregation at the departmental level where previously we conducted all segregation at the waste. Departmental waste segregation was initially considered time consuming and was not regarded favorably. But through persistence and with the aid of some incentive programs were able to conducted segregation. We also learned that opportunities abound when we decided to tackle our primary sustainability issues. As mentioned earlier the two main issues that we decided upon had obvious financial benefits if we were able to implement solutions. Another opportunity that we saw is that we were looked upon favorably by government & society because of our initiatives to save electricity & reduce waste. Third is the opportunity to teach our employees on how to apply our solutions to their own lives. 3

6 Lessons learned A management steering committee was established to identify and prioritize sustainability issues. This committee meets once a week in order to track the current issues progress and discuss new ones. Prioritizing the issues and challenges are often decided by the feasibility of solutions to said issues. Opportunities are also subject to the same decision making process. These decisions are constantly reviewed and refined if necessary. As of the current reporting period we ve made some slight progress in addressing our primary sustainability issues. But as we still refining our monitoring process we still have not properly benchmarked our progress. This current reporting period is the first time we had a full year to do the monitoring as opposed to the previous year where we were given only a few months to submit our sustainability report. With this current report we may begin the proper benchmarking procedures and see any progression or regression in the next report. 4

7 Lessons learned Improved efficiency on raw material usage Having one single customer There was initial resistance to the lean production methods as old habits are difficult to unlearn. There is the big risk of having unstable order quantities if our primary customer is affected by current market situation. Lean production methods are now being slowly implemented for all production lines. Improve our production capabilities to meet the demand of our sole customer. A general reduction in electricity waste and waste generation as these two are tied to production inefficiencies. Maintain and improved the current order quantities by being more capable of filling all orders. 5

8 Lessons learned Issues Risks Opportunities Targets We are still unsure We are now ex- as to ploring simple so- whether we can lutions such as control overtime installing individual which is the primary switches to contributor lighting fixtures to our electricity in order to reduce use. power consumption. Although the Reduce electricity consumption Reduce waste generation power situation improved in 2011 as compared to 2010 it is still uncertain whether the current power infrastructure can support the growing demand for power in the future. Most of the risks we faced were due to the company culture. The new waste management issues were considered onerous initially and there was resistance to the changes made. Also there is the problem of people reverting to their old habits. We ve now improved on our waste management & monitoring systems and we are continuously refining processes in order to give us a full picture of our waste generation situation. A 25% reduction of our current electricity use as per demand of our primary customer. A 25% reduction of our current electricity use as per demand of our primary customer. 6

9 About the Company Sao Viet Joint Stock Company was established on May 2000 and began operations on May It is operating only in Vietnam. Above : Sao Viet Joint Stock Company (2001) Sao Viet Joint Stock Company headquarters are located at 4 th Street, Dong An Industrial Zone, Binh Duong Province in the south of Vietnam. It covers an area of 15,000 square meters. It is consisted of four main workshop areas and 3 warehousing facilities along with a canteen, clinic, and an administration office. It began with six lines in 2001; it expanded its production facilities in It had a total manpower of 3985 employees, 11 production lines and a production capacity of 480,000 pairs per month at the end of the reporting period. Above: Sao Viet Joint Stock Company (present day) Sao Viet Joint Stock Company has produced and exported footwear for known international brands such as PUMA, DIESEL, and FILA. It allocated all of its production capacity for the PUMA brand in All of the products produced are for export abroad namely in North America, Europe, and Asia; none of the products are sold locally. 7

10 Product Range 9% 1% 18% 47% 25% Europe North America South America Asia Others Geographic markets served in 2011 Samples of product range made in

11 Company capabilities Left: Cutting section Right: Preparation section Left:: Embroidery section 9

12 Company capabilities Above: Stitching section Above: Assembly section Above: Lean production line 10

13 Governance Sao Viet Joint Stock Company is a 100 % Vietnamese owned limited liability company. It has a total capitalization of USD 4,000,000. It is governed by a Board of Directors the majority of which have no executive position in the company. There is a total of 4 directors comprising the Board. The majority shareholder is Mr. Pham Quang Chanh who also serves as the chairman and holds an executive position in the Company. Mr. Chanh has been serving as the Chairman since 2000 and has been involved in the footwear manufacturing industry since The other directors, two male and one female have no executive positions in the Company. Day to day operations is managed by an independent General Manager assigned by the Board. Mr. Nguyen Van Vinh is the General Manager since Board of Directors Chairman General Manager Structure of governing body There was no significant change in the organization s governance during the reporting period. 11

14 Governance Sao Viet Joint Stock Company maintains an open door policy with regards to communication with the highest governing body. Communications is facilitated through common means (telephone, , face to face conversation, letter, etc.) and is not limited to shareholders only. Employees are free to express their views and opinions to the Board members through aforementioned means. Regular employer\employee meetings are held in order for employees to express any of their concerns directly to management. In addition, employee concerns can also be relay through the trade union and the health and safety committee of the factory. We are currently using a suggestion box system and are currently planning a hotline to serve our employees. The compensation for the highest governing body including senior managers and executive are directly linked mainly to the economic performance of the Company. Social and environmental performance often have relatively little effect to the compensation of the above mentioned bodies and individuals. To ensure that there no conflict of interests the members of the Board are required to disclose any business interest they may have in the same industry. An internally develop code of ethics guides all business decisions made. All business transactions by the Company are regularly audited to ensure it is all ethical and above the board. The governance of the company is guided by an internally developed code of conduct & ethics which complies with local and international norms. In addition the Company also tries to comply with current principles and legislation with regards to social equity and environmental conservation. Sustainability issues are now regularly explored through weekly meetings joined by senior management. Any issues found and resolved to be fixed are then communicated to the Chairman who makes the final decision on the resolution of these issues. 12

15 Factory organizational structure Each production unit has its own departmental head which report directly to the General Manager. There are several main departments mainly management, administration, import & export, development, quality assurance, purchasing, and production. General Manager Assistant General Manager Quality Assurance Manager Technical\ Engineering Administration CI Team Purchasing CSR Laboratory Import\Export Planning Cutting\ Preparation Accounting Warehouse Sewing Personnel Outsole Embroidery Payroll Assembly Organizational structure There were no significant changes to the organizational structure during this reporting period. The organization did not receive any significant awards during this reporting period. The organization is a member in good standing with the Vietnam Chamber of Commerce & Industry since 2002 and also communicates with other various bodies like the Vietnam Small & Medium Business Association. 13

16 About this report This is the second sustainability report to be published by Sao Viet Joint Stock Company. The first report was published September This report will cover the company s operational and sustainability activities within the period beginning from 01 January up to 31 December The scope of this report will be limited to the activities of Sao Viet Joint Stock Company; it currently does not have any subsidiaries, joint ventures, etc. and thus any activities regarding these will not be included in this report. The company operates only in Vietnam therefore only its Vietnam operations will be covered in this report. Technical descriptions of our products shall not be included in this report. Information we have deemed confidential shall not be reported or only be partially reported. This report shall be published on a annual basis. There were no significant changes in the company s organizational size and structure during the reporting period. This report was written in accordance to the guidelines specified in the Global Reporting Initiatives Sustainability Reporting Guideline. Any questions about this report can be directed to: Paul Mark Bautista Sao Viet Joint Stock Company Tel: Fax: saoviet1@hcm.vnn.vn 14

17 About this report (continued) Report content was determined by applying the Materiality Principle as stated in the G3 guidelines on the topics raised by the stakeholders. Internal and external factors were considered when evaluating the materiality of the topics suggested. The following process (Fig. 4) was used in deciding the report content. Aspects identified in the kick off meeting Aspects identified by engagement with stakeholders List of all aspects and their respective indicators considered for reporting. Materiality Test List of material indicators to monitor and report on Completeness check Process in determining report content Data measurement & calculations are based on internally developed systems and partially on techniques define in the GRI 3.0 protocols. This report will have no restatement of data in the previous report. No significant changes were made in the scope, boundary, or measurements in this report. 15

18 Stakeholder engagement The contents of this report were determined by the framework laid out by the Global Reporting Initiative s G3 guidelines. A process of identifying, prioritizing, and engaging stakeholders was made in order to determine what was to be material in this report. In indentifying stakeholders the following was considered: Who has the ability to influence whether or not our company can reach its goal. Who does our company depend on for our daily operations? Who is most dependent on out company? What groups do our company interact with? The identified internal and external stakeholders were the following: Employees Shareholders Customers Suppliers Subcontractors Trade union Government Prioritization of stakeholders was accomplished by the using the tools in the GRI publication Pathways. The stakeholder table tool (Table 1) was used to establish which stakeholder was most important in the reporting process. The top three stakeholders influenced by the company s activities are as follows: employees, customers, and government. 16

19 Stakeholder engagement (continued) Tool for prioritizing stakeholders Engagement was dependent on the particular stakeholders. Employee engagement was done through a survey and management-employee dialogues. Other stakeholders were engaged through various means such as telephone interview, face to face interview, written letters, and . The stakeholders we engaged raised several concerns and opinions on which we may report on: The survey we conducted with the employees produced a 60% rate of return. The two main concerns were social and economic. The workers wanted to know our performance on social responsibilities as these issues (overtime, benefits, etc.) affect them directly. On the economic side workers raised concerns about job stability, and their ability to earn a stable income. This is similar to the results during the last reporting period. Our engagement with our suppliers and subcontractors resulted in their desire to know about our economic performance. Their concern lie mainly in continued and stable orders between Sao Viet and them. The government in general wishes that we report on our social performance. The provincial environmental bureau, in particular, wants to know about our compliance with current legislations and our environmental performance especially on water use and waste generation/disposal. The labor department expressed interest in the health and safety aspects of our operations. 17

20 Disclosure on Management Approach 18

21 Disclosure on management approach Economic Our current economic policies are influenced by factors such as current market conditions, consumer preferences, and government regulations among other things. Our primary goal is to improve our current order loading, which went down from last year. Our policies are determined at the highest level of management based on the factors previously mentioned. We have adopted a cost reduction culture and encourage each employee to contribute ideas to further this goal. Given that the organization has given its capacity solely to PUMA it is understandable that our situation carries a certain amount of risk. Unwanted economic changes which could affect PUMA s ability to maintain stable orders can severely impact our operations. Though there are certain risks involved, our organization believes in this strategy. We believe in PUMA s commitment created demand which equals our ability to supply. Health & safety/human rights/labor practices The organization has set performance goals on the social impacts of the organization s continued operations. Accordingly the company has set the following goals: Promotion of a safe and healthy working environment, Maintenance and improvement of the company s current PUMA S.A.F.E. rating. In order to achieve these goals the organization has set and is formulating policies which address particular issues such as: Improved worker awareness & training in occupational health & safety. Reduction of accidents in the workplace. Reduction of overtime through improved efficiency. Continuous worker engagement to recognize their social concerns. 19

22 Disclosure on management approach (continued) Social sustainability issues are tackled by the company s sustainability steering committee & the social compliance department. The steering committee is made up of top management representatives, senior department heads, and senior supervisors. This committee usually meets twice a month to discuss any social sustainability issues that occur. Any decisions made with regards to sustainability are incorporated into the company s rules and regulations. These new decisions are then disseminated down to the worker level. Dissemination of new sustainability decisions are done by two ways: 1. Awareness 2. Training Awareness sessions are mostly comprised of informational drives and through media such as posters flyers, etc. Any decisions which will impact on the company s operations are usually posted on the company s bulletin boards. To ensure that these decisions are known to the general worker population, training and awareness sessions are usually conducted with regards to the topic of the decision. The training is usually conducted by a dedicated social compliance department. Monitoring of social sustainability issues is usually made by the dedicated social compliance group. This group would monitor and benchmark performances such as: Daily overtime Incidents of workplace accidents Worker grievance All the data that are collected are then analyzed which are then presented to the sustainability steering committee. Any issue that crop up are then attempted to be resolved. 20

23 Disclosure on management approach (continued) Environment Environmental sustainability is relatively new in the issues that we tackle. We have set goals that are in line with our primary customer s goal for 2015 namely: 25% reduction in electricity consumption 25% reduction in water consumption 25% reduction in waste generation. In order to achieve these goals the organization has set and is formulating policies which address particular issues such as: Electricity conservation through improved production process, retooling of equipment to improve energy use, and overall awareness of proper electricity use Water conservation through improved company infrastructure and awareness Waste reduction through efficient production processes. Environmental sustainability issues are tackled by the company s sustainability steering committee & the environmental compliance department. The steering committee is made up of top management representatives, senior department heads, and senior supervisors. This committee usually meets twice a month to discuss any environmental sustainability issues that occur. Any decisions made with regards to sustainability are incorporated into the company s rules and regulations. These new decisions are then disseminated down to the worker level. Dissemination of new sustainability decisions are done by two ways: 1. Awareness 2. Training 21

24 Disclosure on management approach (continued) Awareness sessions are mostly comprised of informational drives and through media such as posters flyers, etc. Any decisions which will impact on the company s operations are usually posted on the company s bulletin boards. To ensure that these decisions are known to the general worker population, training and awareness sessions are usually conducted with regards to the topic of the decision. The training is usually conducted by a dedicated environmental compliance department. Monitoring of environmental sustainability issues is usually made by the dedicated environmental compliance group. This group would monitor and benchmark performances such as: Daily electricity consumption Daily water consumption Daily waste generation & measurement. All the data that are collected are then analyzed which are then presented to the sustainability steering committee. Any issue that crop up are then attempted to be resolved. Additional information In line with addressing these sustainability issues the organization is also trying solutions which have some impact on sustainability such as lean production. The organization believes that adapting these solutions can and will address some sustainability issues such as waste generation & energy use. 22

25 Performance indicators 23

26 Expenditures for % 3% 5% 1% 30% 53% production cost material cost labor cost taxes general costs others As seen in the chart above most of the expenditures for 2011 was on materials & production costs. The organization is always seeking solutions to reduce the operating costs in order to gain more economic benefits. All of the organizations income is derive from the sale of the footwear it processes. No government assistance was sought or received during the current reporting period. The organization has no plans of seeking any government assistance in the foreseeable future. 24

27 Employees At the end of the reporting period the company was employing 3985 full time employees; the company does not employ part time workers. A majority of the contract types are of the fixed and indefinite term type as shown in the graph below. A temporary contract is define as one which lasts only 1 month; a fixed term contract is one which lasts 1 to 3 years; and a indefinite term contract has no time limit. Temporary 1% Indefinite term 47% Fixed term 52% Employee distribution by contract type A majority of the employees originate from Binh Duong and nearby Ho Chi Minh City as shown in the graph below. The rest of the employees come from adjacent provinces such as Dong Nai, Ba Ria- Vung Tau, An Giang, and Binh Thuan as shown in the graph below: 25

28 Employees Binh Thuan 5% An Giang 7% Dong Nai 8% Ba Ria - Vung Tau 6% Others 2% Binh Duong 35% Ho Chi Minh City 37% Employee distribution by region This distribution of employees is the same as of the previous reporting period. Collective bargaining All permanent employees are covered by the collective bargaining agreement between the company & the trade union. This is regardless whether the worker is a member of the union or not. The collective bargaining agreement is renewed every three years with the next one at the end of Wage ratio The basic salary given to employees are on a 1:1 ratio with regards to gender in all employment categories. There is no wage disparity between male & female workers. 26

29 Employee turnover Employee turnover ranges from 3% to 5% except for the period after Tet (Lunar New Year) where it rose to 9%. It is a common for the factory to experience a larger turnover rate after Tet because a number of employees simply decide not to return to work. There was no significant change in the turnover rate during the current reporting period % 9.00% 8.00% 7.00% 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Employee turnover rate Females comprise 96% of the total workforce of the factory while the remaining 4% is comprised by males. This is the biggest factor which determines the higher rate of turnover in females. As explained earlier the biggest rate of turnover usually occurs right after the Lunar New Year. 27

30 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Employee turnover 10.00% 9.00% 8.00% 7.00% 6.00% 5.00% 4.00% Male Female 3.00% 2.00% 1.00% 0.00% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Turnover rate by gender Employees are distributed along the following age groups: % % % The highest turnover rate belongs to the group which comprise a majority of the factories workers % 9.00% 8.00% 7.00% 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% Turnover rate by age group 28

31 Employee turnover One of our immediate goals is to reduce the turnover rate especially after the period after Tet. In order to realize this we have instituted an financial incentive based program to reward all those who come back to work early. We have also instituted the same incentive program for all those who refer new employees for our factory. With these program we had hoped to reduce our current turnover rate to a more satisfactory level but it s effect seemed minimal. We will be refining these incentive programs so they may be more effective by

32 Child labor/young labor/forced labor/freedom of association Several operations within the factory have been identified as risks for the following: Child labor/young labor Forced labor Freedom of association The majority of the identified operations are on the manufacturing side where there is a possibility of the above incidents may occur especially child\juvenile worker recruitment. According to the Vietnam labor law a child laborer is one whose age is 15 years old and below. Sao Viet Joint Stock Company has a zero tolerance policy against recruiting child laborers. There have been no incidence of child labor recruitment since the beginning of our operations. We prefer to recruit workers who are 18 and above but recent labor shortages in our area has forced us to reconsider this. Now we are recruiting workers who are a 17.5 years old. These are considered as young workers according to the Vietnam labor law and accorded the following: 7 hours of work daily but with full pay. No overtime No hazardous or heavy work These young workers are monitored separately in order to assure that all provisions stated by the local labor laws are followed. There have been incidences of the company hiring young workers and treating them as adult workers. These were caused by the employees using altered, falsified or borrowed documents in their job applications. When these incidents were discovered our recruitment process was reviewed and revised in order to prevent any future occurrences from happening. We now advise all potential recruits to make sure all their documents are genuine because otherwise they may encounter problems in the future like in social and health insurance claims. 30

33 Child labor/young labor/forced labor/freedom of association Sao Viet Joint Stock Company does not use any form of forced or bonded labor. All work in the factory is voluntary including overtime. Management systems are in place in order to monitor overtime. All employees are briefed that all overtime is voluntary and refusing to work overtime will not incur penalties. There has been no incidences of forced labor since the beginning of our operations. Sao Viet Joint Stock Company does not hinder our employees freedom of association. Our employees are free join the company trade union without fear of retaliation. The company encourages the workers to join the trade union. Around sixty percent (60%) of the company s employees are members of the trade union. All employees are covered by the collective bargaining agreement agreed upon by the company and the trade union. This is regardless whether the employee is a member of the trade union or not. Above: Trade union activities 31

34 Worker education Our workers are educated and trained from the start of their employment here. New workers are given a three day training with regards to company policies and procedures, compensation, and occupational health and safety. Workers are given on the job training especially if they are assigned to operations such as sewing and lasting. Machine operators are given additional training with regards to machine safety. Chemical handlers are given training in chemical safety. In addition we have begun to educate the workers in environmental awareness & conservation which include topics such as electricity & water use. This is in line with our goals of having an environmentally aware workforce. All workers have annual occupational health and safety refresher courses as mandated by law. This includes emergency first aid training. All workers are trained in fire safety with quarterly fire drills and annual general fire drill in cooperation with the fire department. Training type Ave hours per year Participants Occupational health & safety Environmental awareness Labor law Fire safety Fire team training First aid team training Chemical safety Electrical & mechanical safety 4 30 Employee training (2011) 32

35 Senior management Seventy five percent (75%) of Sao Viet s senior staff originate from Binh Duong and Ho Chi Minh City with the remaining twenty five percent (25%) coming from different provinces. The average years of employment for the senior management staff is 8.5 years. A majority of the senior management staff has been employed since the company started in Discrimination Senior management distribution by region There are no special requirements with the exception of age in applying for work in Sao Viet Joint Stock Company. Anyone has the opportunity to work provided they pass the age requirements plus training and testing. The company does not discriminate against gender, ethnicity, religion, sexual orientation, level of education, place of origin, and social standing. All recruitment policies & procedures reflect this and all recruitment personnel are trained not to discriminate There is no disparity in pay between genders; we follow the principle of Equal work, equal pay. There have been no incidences of discrimination during the reporting period. 33

36 Materials used The materials we use in shoe production are obtained from both local and foreign sources. We use foreign sources for mainly because the standards of the materials of some local suppliers will not pass our customers standards and the customer sometimes nominates supplier which do not have any local counterpart in Vietnam. Materials from foreign sources are usually shipped by sea and by land. Production issues from the supplier side has sometimes been an issue; if a particular supplier cannot deliver the material on time our production schedule is significantly affected. This can be a cause of overtime work in order to catch up with the shipping schedules. This is the reason our company prefers to do business with reliable suppliers Fabric\Textile 10% Materials used Foam 4% Others 1% Leather 48% Synthetic 37% Materials used by weight (metric tonnes) Material quality is an important issue for us. We test all materials for quality issues when they arrive. We also test for restricted substances such as lead and chromium; we follow a standard for restricted substances that is provided by our customers. We make sure that our suppliers provide us with the required test reports that our customers need for every material delivery that we receive. 34

37 Materials used 5% 95% recycled non recylced The company uses approximately 4% recycled materials in its input material. This comes mainly from recycled fabrics paper products which is part of labeling & packaging. In addition to material quality 100% of our materials suppliers are screened for compliance with regards to human rights, labor issues, etc. We ensure that all our supplier comply with the local labor laws and customer standards. Our suppliers are nominated by our primary customer and are also frequently audited for compliance issues. 35

38 Indirect energy consumption The total amount of electricity used for 2011 was 7,924,884 kwh. The primary source of electricity was hydroelectric and coal fed power plants Electricity consumption (kwh) 2010/2011 The periods of low consumption of electricity was mainly due to the factory ceasing operations during the Lunar New Year (Feb) and the low order season (Aug-Sep). There was a 23% decrease in electricity use during this reporting period as compare with the previous one. 15% of this reduction was due to a lower amount of orders for 2011 resulting in lower production costs and the remaining 8% was due to cost saving measures such as the use of T5 lights and the installation of individual switched for light fixtures. 36

39 Indirect energy consumption Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec The total amount of electricity used per pair for 2011 on the average was about 1.42 kwh per pair. The high points in the graph is due to less orders during the low season but with the Company consuming more or less the same amount of electricity per month. 37

40 Direct energy consumption The total amount of diesel consumed for 2011 was 90,200 liters. This was used for the factory s backup generators during power outages. This represents a 65% decrease in diesel use when compare to the 2010 reporting period. The power situation in the company s region stabilized during 2011 resulting in less power outages during that time. The amount of diesel consumed was equivalent to 874,903 kwh. 60,000 50,000 40,000 30,000 20, ,000 - Diesel consumption (liters) 2010/2011 The average diesel consumption (converted to kwh) for every pair produced was.50 kwh per pair. In February 2011 several power outages occurred during that particular month necessitating the use of the emergency generators. 38

41 Measures taken to mitigate electricity consumption Our 2010 study of the compressor fill and drain rate has shown us that some compressor are less efficient than others. The less efficient compressors are constantly running and therefore consuming more electricity. Further study shows that this inefficiency is primarily cause by leaking air, improper compressor maintenance, and improper load balancing. We have detected and begun repairing the leaks. All compressors have been inspected and all broken and worn down parts have been replaced. Our compressor layout has been modified in order to properly balance compressor use. In 2011 we were able to achieve a 20% reduction in compressor electricity use through these measures. Compressor fill/drain rate 39

42 Water consumption Sao Viet Joint Stock Company consumed 22,531 cu. m. of water for 2011 with an estimated cost of USD The primary source for the water is the provincial water supply. The factory has stopped drawing from its deep well for use in production at the request of the provincial environmental bureau in ,000 2,500 2,000 1,500 1, Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Water consumption (cubic meters) The average water consumption for every pair produced was 5.38 liters per pair Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Water consumption per pair (liters) 40

43 Measures taken to reduce water consumption The production process does not consume a significant amount of water. The majority of water consumption is domestic (toilets, hand washing, etc.) Sao Viet Joint Stock Company installed 4 cisterns to collect rainwater during the rainy season. Each cistern has a capacity of 65,000 liters. This collected water is used in the workers toilets. This is projected to save a company about 5% in water cost during the rainy season. Two more cisterns with a capacity of 40,000 liters each are now being constructed and will be used in early Rainwater collection point Faucets and water pipes are regularly inspected to make sure there are no leaks. Substandard materials and equipments were replaced with higher quality replacements in order to ensure less breakdowns. Water pressure in some areas was reduced to lessen stress on the pipes and faucets as well as to reduce wastage. Faucets with aerators were tested and installed during the last period of 2011 in several areas of the factory. We are now in the process of replacing all faucets by early

44 Measures taken to reduce water consumption Faucet with aerator In addition environmental awareness training has been given to the workers in order for them to realize the value of water conservation. Workers are now enjoined to do their part in conserving water. Reminders to save water 42

45 Waste In 2011, Sao Viet Joint Stock Company generated a total of 390 metric tons of waste; 330 metric tons classified as non hazardous waste and 60 tons classified as hazardous waste. The non hazardous waste was comprised mainly of leather (synthetic and natural), fabrics, foam, paper, and wood. The hazardous waste was comprised by used\expired chemicals, chemical containers, fabrics which had cleaning solutions, dust from the vacuum collectors, and fluorescent lights Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec non hazardous hazardous Waste generated for 2011 The apparent increase was due to better monitoring systems adapted by the company to manage waste output. Previously the company depended on numbers given by the service provider which tended to be underreported. With improved waste monitoring & management we have determined that 79% of the waste generated was recycled and 21% was not recycled. This is in contrast to the roughly 50/50 distribution in our report last year. Underreporting by the service provider tended to make the past data unreliable. The primary mode of disposal for all non recyclable materials was incineration with a secondary disposal mode being put in a landfill. 43

46 Waste 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 - Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec recycled not recycled Recycled/non recycled waste 2011 The organization is attempting to mitigate waste generation by employing more efficient use of input material. There are now several lean lines in operation to ensure aid us in this goal. We are hoping that in the future we can convert all of our production lines into lean production lines in order for us to be able to use our materials more efficiently. Segregation bins 44

47 Parting thoughts During the process of writing our second report we learned about our significant weaknesses and strengths. Through the process of learning, we were able to analyze & prioritize issues where we believe we can improve quickly. Given that we had more time to prepare, the effort put into report making process was far much better than our previous one. Hopefully by the next report, we will be able to show some gains in the issues we have prioritized. 45

48 GRI Content Index 1. Strategy & analysis Reported Crossreference/ Direct answer Yes Page 1-2 Reason for omission Explanation 1.2 Description of key impacts, risks, and opportunities. Yes Page Organizational profile Profile Description Disclosure 1.1 Statement from the most senior decision-maker of the organization. Profile Crossreference/ Description Reported Disclosure Direct answer 2.1 Name of the organization. Yes Page 7 Reason for omission Explanation Primary brands, products, and/or services. Operational structure of the organization, including main divisions, operating companies, subsidiaries, and joint ventures. Location of organization's headquarters. Yes Page 7 Yes Page 7 Yes Page Number of countries where the organization operates, and names of countries with either major operations or that are specifically relevant to the sustainability issues covered in the report. 2.6 Nature of ownership and legal form. 2.7 Markets served (including geographic breakdown, sectors served, and types of customers/ beneficiaries). 2.8 Scale of the reporting organization. 2.9 Significant changes during the reporting period regarding size, structure, or ownership Awards received in the reporting period. Yes Page 7 Yes Page 11 Yes Page 7-8 Yes Page 7 Yes Page 11 Yes Page 11 46

49 GRI Content Index 3. Report parameters Profile Disclosure Description Reported Cross-reference/ Direct answer Reason for omission Explanation 3.1 Reporting period (e.g., fiscal/ calendar year) for information provided. Yes Page Date of most recent previous report (if any). Reporting cycle (annual, biennial, etc.) Contact point for questions regarding the report or its contents. Yes Yes Yes Page 14 Page 14 Page Process for defining report content. Boundary of the report (e.g., countries, divisions, subsidiaries, leased facilities, joint ventures, suppliers). See GRI Boundary Protocol for further guidance. State any specific limitations on the scope or boundary of the report (see completeness principle for explanation of scope). Basis for reporting on joint ventures, subsidiaries, leased facilities, outsourced operations, and other entities that can significantly affect comparability from period to period and/or between organizations. Data measurement techniques and the bases of calculations, including assumptions and techniques underlying estimations applied to the compilation of the Indicators and other information in the report. Explain any decisions not to apply, or to substantially diverge from, the GRI Indicator Protocols. Explanation of the effect of any restatements of information provided in earlier reports, and the reasons for such re-statement ( e. g., m e r g e r s / a c q u is i t ions, change of base years/periods, nature of business, measurement methods). Significant changes from previous reporting periods in the scope, boundary, or measurement methods applied in the report. Table identifying the location of the Standard Disclosures in the report. Policy and current practice with regard to seeking external assurance for the report. Yes Yes Yes Yes Yes Yes Yes Yes Yes 47 Page15 Page 14 Page 14 Page 14 Page 15 Page 15 Page 15 Page 50 Page 47 Not Applicable At present we have no policy or practice of seeking external assurance for our report

50 GRI Content Index 4. Governance, Commitments, & Engagements Profile Disclosure Description Reported Cross-reference/ Direct answer Reason for omission Explanation Governance structure of the organization, including committees under the highest governance body responsible for specific tasks, such as setting strategy or organizational oversight. Indicate whether the Chair of the highest governance body is also an executive officer. For organizations that have a unitary board structure, state the number of members of the highest governance body that are independent and/or non-executive members. Mechanisms for shareholders and employees to provide recommendations or direction to the highest governance body. Yes Page Yes Page Yes Page Yes Page Linkage between compensation for members of the highest governance body, senior managers, and executives (including departure arrangements), and the organization's performance (including social and environmental performance). Processes in place for the highest governance body to ensure conflicts of interest are avoided. Process for determining the qualifications and expertise of the members of the highest governance body for guiding the organization's strategy on economic, environmental, and social topics. Internally developed statements of mission or values, codes of conduct, and principles relevant to economic, environmental, and social performance and the status of their implementation. Yes Page Yes Page Yes Page Yes Page Procedures of the highest governance body for overseeing the organization's identification and management of economic, environmental, and social performance, including relevant risks and opportunities, and adherence or compliance with internationally agreed standards, codes of conduct, and principles. Yes Page

51 GRI Content Index 4. Governance, Commitments, & Engagements Profile Disclosure Description Reported Cross-reference/ Direct answer Reason for omission Explanation Processes for evaluating the highest governance body's own performance, particularly with respect to economic, environmental, and social performance. Explanation of whether and how the precautionary approach or principle is addressed by the organization. Externally developed economic, environmental, and social charters, principles, or other initiatives to which the organization subscribes or endorses. Yes Page 15 Yes Page 15 Yes Page Memberships in associations (such as industry associations) and/or national/international advocacy organizations in which the organization: * Has positions in governance bodies; * Participates in projects or committees; * Provides substantive funding beyond routine membership dues; or * Views membership as strategic. Yes Page List of stakeholder groups engaged by the organization. Yes Page Basis for identification and selection of stakeholders with whom to engage. Yes Page Approaches to stakeholder engagement, including frequency of engagement by type and by stakeholder group. Yes Page Key topics and concerns that have been raised through stakeholder engagement, and how the organization has responded to those key topics and concerns, including through its reporting. Yes Page 17 49

52 Disclosures on Management Approach G3 DMA Description Reported Cross-reference/Direct answer Explanation DMA EC Disclosure on Management Approach EC Yes Page 19 DMA EN Disclosure on Management Approach EN Yes Page DMA LA Disclosure on Management Approach LA Yes Page DMAHR Disclosure on Management Approach HR Yes Page

53 GRI Content Index Economic Performance Indicators Performance Indicator EC1 Description Direct economic value generated and distributed, including revenues, operating costs, employee compensation, donations and other community investments, retained earnings, and payments to capital providers and governments. Cross-reference/Direct answer Page 24. EC7 Procedures for local hiring and proportion of senior management hired from the local community at significant locations of operation. Page 33 Environmental Performance Indicators Performance Indicator EN1 EN2 EN3 Description Materials used by weight or volume. Percentage of materials used that are recycled input materials. Direct energy consumption by primary energy source. Cross-reference/Direct answer Page 34 Page 35 Page 38 EN4 EN5 EN7 EN8 EN16 EN22 Indirect energy consumption by primary source. Energy saved due to conservation and efficiency improvements. Initiatives to reduce indirect energy consumption and reductions achieved. Total water withdrawal by source. Page 36 Page 36 Page 36, 39 Page 40 The estimate total weight of direct & indirect greenhouse gas Total direct & indirecrt greenhouse gas emissions by emissions for 2011 is 5677 metric tonnes. This was calculated by using the CO2 equivalent of thevalues of EN1 & weight EN2. Total waste by type and disposal method Page

54 GRI Content Index Social: Labor Practices & Decent Work Performance Indicators Performance Indicator LA1 LA2 LA4 LA10 LA14 Description Total workforce by employment type, employment contract, and region. Total number and rate of employee turnover by age group, gender, and region. Percentage of employees covered by collective bargaining agreements. Average hours of training per year per employee by employee category. Ratio of basic salary of men to women by employee category. Cross-reference/Direct answer Page Page Page 26 Page 32 Page 26 Social: Human Rights Performance Indicators Performance Indicator Description Cross-reference/Direct answer HR2 HR3 HR4 HR5 HR6 HR7 Percentage of significant suppliers and contractors that have undergone screening on human rights and actions taken. Total hours of employee training on policies and procedures concerning aspects of human rights that are relevant to operations, including the percentage of employees trained. Total number of incidents of discrimination and actions taken. Operations identified in which the right to exercise freedom of association and collective bargaining may be at significant risk, and actions taken to support these rights. Operations identified as having significant risk for incidents of child labor, and measures taken to contribute to the elimination of child labor. Operations identified as having significant risk for incidents of forced or compulsory labor, and measures to contribute to the elimination of forced or compulsory labor. Page 35 Page 32 Page 33 Page Page Page