2011 - Li & Fung Limited

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SUSTAINABILITY OVERVIEW In 2011, we continued to build a strong foundation for sustainability, within our own operations and our supply chain. Since 2009, we have been implementing our Sustainability Strategy, which engages our employees, customers, suppliers, industry partners and communities to address our common environmental and social challenges. These challenges include: the risks posed by climate change and resource scarcity on the environmental side; and on the social side, our aspiration to support and catalyze economic development and social progress in the areas in which we operate. Our people are core to our success and the implementation of our strategy. To support our people, we have policies, programs and partnerships, as well as a system to track and deliver results that are meaningful to our business. As we reported in 2010, our strategy integrates actions that aim to improve the sustainability of our own operations and facilities and of our global supply chain. These actions range from social and environmental risk assessment and due diligence during the investment/acquisition process as we expand our business, to implementing management systems and checking and reporting on our performance, and to working with our customers, suppliers and industry partners to continually upgrade the sustainability of our supply chain. In 2011, we updated our standards by revising our Code of Conduct for Suppliers and our Supplier Compliance Manual. The launch of these standards establishes our new approach towards sustainable compliance by providing a transparent framework for us to work with our customers and suppliers to improve working conditions and environmental performance, and to provide more sustainable sourcing options. 40 LI & FUNG LIMITED | ANNUAL REPORT 2011 We also reinforced our commitment to human rights both publicly on our website, as well as internally through employee education and training on our Code of Conduct on Business Ethics. This effort will continue into 2012 with specific initiatives to enhance our sustainability programs and our management of risks. We recognize that there will continue to be sustainability challenges and opportunities going forward, and progress to be made. Building a solid foundation and supporting our employees, customers and suppliers to be more sustainable is critical to our continued efforts to make a difference in our communities around the world. Highlights of our sustainability initiatives and achievements in 2011 are shared below. ENVIRONMENT ENERGY AND CARBON We appreciate the risk that climate change poses to our business and the world. For our business, primary risks relate to the availability and increased cost of resources and the disruptive impacts that unpredictable and severe weather events could have on our supply chain. Addressing these risks is therefore an important part of our Sustainability Strategy. In addition to making our own operations more energy- and carbon-efficient, we are expanding our initiatives to support our suppliers to do the same in their facilities. 2011 marked the first full year of implementing the energysaving initiatives recommended by the Investment Grade Audit (IGA) of our headquarters in Hong Kong and of the global
campaign for our employees to adopt a range of behavioral changes. Our network of offices around the world also retrofitted existing lighting, where feasible, with more efficient LED, CFL and/or T5 fixtures in 2011. All of these efforts resulted in our global offices reducing our carbon footprint by 18% per m2 and electricity consumption by 13% per m2 , compared with 2010. In addition to the environmental benefits of reduced energy consumption, these measures enabled us to save approximately US$490,000 per year in energy costs. Overall in 2011, our total global electricity consumption was 163,461 GJ (45,405,947 KWh) compared with 171,016 GJ (47,504,4891 KWh) in 2010, and our Scope 1 and 2 greenhouse gas emissions were 32,120 tons of CO equivalent, compared 2 with 35,630 of the same unit the previous year. This data comprises part of our disclosure through the Carbon Disclosure Project. For the third consecutive year, we were awarded the Energywi$e Excellent rating for our Hong Kong offices and the “Class of Good” Energywi$e Label under the Hong Kong Awards for Environmental Excellence program of the Hong Kong government. Going forward, we will continue to adopt energy-efficient technologies, to conserve energy and to support our supply chain partners to improve their energy efficiency and carbon intensity. 1 Total electricity consumption and carbon emissions data reported for 2010 and 2011 covers our office-based activities as these offices have been involved in our targeted reduction campaigns and retrofitting projects. The data reported in this report for the year 2010 have been adjusted downward, from what was reported in our 2010 Annual Report. This adjustment is a result of a revision to our internal reporting system to both enhance the robustness of the data and bring the system in line with our financial reporting. The SUSTAINABILITY (CONTINUED) WATER AND WASTE Water scarcity is a significant global challenge and particularly acute across many key producer economies of Asia. As noted above, being resource efficient is critical as we expand our business. In 2011, we consumed 124,064 cubic meters of water, compared with 105,310 of the same unit in 2010. Absolute consumption in our offices increased in 2011, reflecting the expansion of our business operations. However, our efficiency and conservation efforts resulted in our water consumption per headcount reducing by 2.8% in the same year. This was achieved through the use of water-efficient technology recommended by the IGA and the efforts of our employees globally to conserve water. In 2011, our waste reduction campaign again focused on paper, a significant portion of our offices’ waste stream. As above with water, our absolute A4 paper consumption increased in 2011 reflecting the expansion of our business operations. However, we reduced our consumption per person by 10% as a result of our continued conservation efforts. Our total paper consumption in 2011 was 149,072 reams compared with 136,6782 reams in 2010. We also again maintained our “Class of Excellent” Wastewi$e Label in Hong Kong. We will continue to seek opportunities to reduce paper, minimize waste, purchase items with sustainability features and enhance recycling. reporting scope for the next Annual Report will include LF offices and other facilities, which are captured in our new SAP Carbon Impact reporting system that we are rolling out in 2012. 2 For the same reasons noted in footnote #1, our paper data reported in this report for the year 2010 have been adjusted downward from what was reported in our 2010 Annual Report. LI & FUNG LIMITED | ANNUAL REPORT 2011 41
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Page 6 and 7: THE AMERICAS Guatemala City Lima Ma
Page 8 and 9: CHAIRMAN’S STATEMENT Victor Fung
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36 FINANCIAL RISK MANAGEMENT NOTES
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LIFUNG TOWER 888 Cheung Sha Wan Roa
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2011 - Li & Fung Limited

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