Humanity today faces many urgent challenges to its long-term sustainability, including the availability and quality of water, deforestation, the non-sustainable use of resources - particularly energy - and pollution caused by the emission of toxic gases and particulates into the atmosphere and by the irresponsible disposal of liquid and solid waste. Of particular concern, is the generation of so-called "greenhouse gases" (principally carbon), leading to atmospheric warming that will potentially result in long-term climate change. These issues have also given rise to a variety of heightened social challenges, including those stemming from increased pressure on dwindling resources.

In a world where negative fallout from man's activities is beginning to threaten the long-term viability of our species, the public rightly demands more accountability and more evidence of good governance in the way large corporations conduct their businesses. Any responsible, proactive company must therefore make these issues central to their business planning. Not to do so would be to abrogate both their commercial and their ethical responsibilities to their stakeholders - including their customers, shareholders and the wider community.

As a high diversified business group, Swire is very conscious of the potentially adverse impacts that some of our activities may have upon the environment or society. We try hard to mitigate these negative effects and continually seek new ways to "do it better".

Swire is committed to the ongoing development of our businesses along sustainable lines: we provide quality products and services to our customers, we strive to minimise the impact of our activities upon the environment by reducing waste generated and resources consumed and we care for and make a positive contribution to the communities in which we operate. We offer equitable, safe and healthy workplaces to our staff and we foster their career development. We insist upon the very highest standards of professionalism, accountability and transparency in all our business dealings. We pursue these aims as part of our overall commitment to corporate good governance and we recognise they are vital to the continued provision of satisfactory returns to our shareholders.

The underlying philosophy that has guided Swire over almost 200 years is the pursuit of operational excellence in everything that we do. Throughout our long history, we have prided ourselves on being forward-looking, innovative and original; these qualities have determined the successful development of our businesses and they are vital to our long-term sustainability.

• Swire Group Sustainable Development Policy
• Swire Group Companies' Sustainable Development Reports
• Case Study - James Finlay

The Swire group's Sustainable Development Policy commits the group to working on the environmental, health and safety, employment, supply chain and community issues that our operations affect, and to working with other parties to promote sustainable development in the industries in which we operate. Given the wide diversity of the group's business portfolio, implementation of the policy is handled on a company-by-company basis and is overseen by the Directors appointed to the company by Swire; this is a core responsibility of each company's management team. For information on the specific actions taken by individual companies to implement Swire's Sustainable Development Policy, please see: http://www.swirepacific.com/eng/about/sd.php

Swire Group Sustainable Development Policy

We adopt this policy because: Long-term value creation for our shareholders depends on the sustainable development¹ of our businesses and the communities in which we operate. We wish to excel as corporate citizens. Our policy: Industry leadership: We will work with others to promote sustainable development in the industries in which we operate. In our operations: We will meet or exceed all legal requirements and: Be a good steward of the natural resources and biodiversity under our influence and ensure that all potential adverse impacts of our operations on the environment are identified and appropriately managed. Operate as far as is reasonably practicable in a manner which safeguards the health and safety of all our stakeholders. Strive to be an employer of choice by providing an environment in which all employees are treated fairly and with respect and can realise their full potential. Favour suppliers and contractors who promote sustainable development and encourage the responsible use of our products and services by our customers and consumers. Promote good relationships with the communities of which we are a part and enhance their capabilities while respecting people's culture and heritage. Making it happen: All companies in which the Swire group has a controlling interest will have action plans for applying this policy in a way which is relevant to their business. We will encourage other companies in which we have an interest as a shareholder or through our supply chain to implement similar policies. We will encourage and empower our staff to be proactive on sustainable development matters both at work and in the community. We will monitor our performance. Operating companies in the Swire group should monitor their performance and report it externally regularly. We will review this policy periodically, having regard in particular to stakeholder dialogues. Note: 1 Sustainable Development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs. - "Our Common Future", 1987 - World Commission on Environment and Development. Sustainable development covers environmental, health and safety, employment, business partnerships and community matters.

The major operating companies within the Swire group annually publish their own Sustainable Development reports. Details can be found here:

• Swire Pacific
• Swire Properties
• Cathay Pacific and Dragonair
• Cathay Pacific Catering Services
• Finlays
• Hong Kong Aircraft Engineering Company (HAECO)
• Hong Kong Aero Engine Services (HAESL)
• Hong Kong Airport Services (HAS)
• HUD Group
• Swire Beverages
• Swire Resources
• Vogue Laundry (covered by Cathay Pacific Airways' report)
• Taikoo (Xiamen) Aircraft Engineering Company (TAECO)
• The China Navigation Company (CNCo)
• Swire Pacific Offshore

A wholly owned subsidiary of the Swire group, Finlays is an international company active in a number of interrelated market sectors, with a focus on tea and horticulture.

Vision

Finlays' vision is of business and communities thriving together in a future that is environmentally sustainable and socially just. The group is firmly committed to sustainability throughout its operations and has placed this belief at the forefront of its business philosophy.

Shaping the Future Together

As an agribusiness, we have a high level of dependence on the natural environment. We need to fully understand the world around us, as well as the needs of the many thousands of people upon whom we rely to contribute to a well-run business. We must make sure that our actions are governed by a caring approach which manifests itself in practical and pragmatic solutions designed to address the issues we face. Natural resource depletion, climate change and population demands sit at the top of the agenda. But other factors will emerge over time.

The Finlays group has worked with Forum for the Future to develop a comprehensive plan for the sustainable management of its operations in Kenya, involving careful recording of the environmental and social impact of its operations and building scenarios of how the Kenyan economy and Finlays' businesses might develop in the future. As well as considering issues such as population growth, climate change and energy shortages, the study also considered how the retail sector might evolve. The end result was a set of scenarios that could be used to think through issues we face as a business and discuss them with our key stakeholders.

Commitments to Sustainability

This review helped formulate a realistic strategy across all our businesses. By scrutinising not just the business itself but also its environmental impact, its relationship with the people who work for it, the communities in which they live, our partners and suppliers, and the products we market, we investigated every aspect of Finlays' contact with the world.

There are five global commitments by which we now guide our actions and evaluate our success:

• Business
  We will address social, political and environmental issues by demonstrating that it is more financially rewarding to be sustainable.
• Environment
  We aim to have "zero net impact" as our minimum environmental standard; overall we commit to making a positive contribution to environmental recovery and resilience.¹
• People
  We strive to make Finlays an enjoyable and rewarding place to work; nurturing and developing our people for the benefit of the individual, the company, and the community.
• Communities and Suppliers
  We will take an active leadership role in dealing with sustainability issues and will share our knowledge for the benefit of our suppliers, communities and society in general.
• Products
  We will develop and provide sustainable products and services that contribute positively to the health and well-being of society.

• Over 50,000 people are dependent on Finlays for their livelihood. We are very serious about our responsibilities towards our people and their communities. We provide housing, schooling and medical facilities and are also extremely aware of the potential impact of our activities on the local and global environment. Our flower farms and many of our tea estates are Fairtrade-accredited.
• We have worked hard to provide improved conditions for our farm workers, who receive fair wages, decent housing, clean drinking water, sanitary facilities and a safe and wholesome work area.
• We look at every opportunity to strengthen relationships with the local community by creating more opportunities for employment and developing partnerships with smallholders.
• Our health services in Kericho cater for the entire estate population (workers and dependants) through our clinics and hospital, which provide a high clinical standard of primary (WHO principles) and tertiary healthcare services to all employees and their resident dependants. We were one of the first employers in sub-Saharan Africa to provide an HIV programme of testing, ARV treatment and return to work programmes. Our initiatives include maternal child health, immunisation, local disease control, HIV, health nutritional education.
• The FinMax Joint Body, a registered non-profit partnership between Finlay Flowers in Kenya and its Fairtrade partners, manages the proceeds from the sale of its Fairtrade flowers in Europe. FinMax supports a number of childcare and educational initiatives, running two crèches, providing bursaries to secondary and university students, supplying sporting equipment to its estate schools and assisting physically challenged children and children who have been abandoned or orphaned due to HIV.

Carbon Reduction

• Finlays has launched a comprehensive exercise to measure and reduce its carbon footprint by applying cleaner technology (using sustainable firewood, hydro-electricity, combined heat and power), managing its resource use and minimising negative effects on the environment. The group works with other companies and organisations at both a local and international level in pursuit of these aims as we seek to reduce our dependency on the national grid and non-renewables. In 2009, 86% of energy on our tea estates in Sri Lanka came from renewable sources.
• The group is actively committed to educating its employees and the broader communities in which it works on the risks presented by climate change and the methods that can be collectively considered to minimise greenhouse gas emissions.

Finlays Tea Estates, Kericho
Finlays' operations at Kericho include four black tea factories, two tea extract factories and two flower farms. The energy requirements are significant, both for electrical power and production of the steam required to manufacture and process tea. To service this energy requirement, Finlays has developed its own site-specific hydroelectric facilities, resulting in a 32% contribution to its electrical energy needs. A further four percent is derived from diesel generation when the local grid fails, and the remaining 64% comes from the Kenyan national grid. A new small combined heat and power (CHP) facility is soon to come on line, which will generate another 10% of the total electrical power requirement, further reducing dependence on the grid.

Waste Management

• Finlays has implemented community waste programmes in both Kenya and Sri Lanka, involving the composting of farm by-products, which are returned to the fields as natural fertilisers, and the collection and separation of other waste, such as plastics, glass and metals, for reuse, recycling or recovery - either by the estate or by third-party contractors. In Sri Lanka, the initiative has attracted the attention of the Central Environmental Authority, which is interested in taking the programme to the wider community.
• Finlays Horticulture has worked with a major UK supermarket customer to achieve 24% reduction in cut flower packaging, by reducing cellophane size and weight and moving from plastic to cardboard, and has achieved a 16% reduction in prepared vegetable packaging, by removing trays on basic produce. Finlays are accredited to Kenya Flower Council Gold Member standard.

Water Management

• Finlay Flowers at Kericho sponsors FOMAWA (Friends of the Mau Watershed), an NGO that initiates projects to conserve and reforest the Greater Mau forest, which neighbours Finlays' estates and serves as the major water catchment for the region. The company has recently commissioned a tree project to encourage the estate community to purchase indigenous and exotic tree seedlings at subsidised prices to plant in their own gardens.
• Finlays is at the forefront of environmentally sustainable farming practices. Finlays Horticulture Kenya uses closed loop hydroponic cultivation on its farms as a means to maximise water and fertiliser application efficiency and minimise use. The company has invested in constructed wetlands on its farms to provide a natural process to treat its grey water before returning it to the water table.

Horticulture in Kenya
Lake Naivasha is at the centre of Kenya's horticultural industry, which is the largest contributor of foreign exchange to the country. The lake is the second largest in Kenya and has traditionally been a valuable resource for irrigation, fishing, farming and livestock grazing. However, as a result of over-abstraction, pollution and declining biodiversity, the water catchment area has come under significant stress. Given that a range of very different stakeholders rely upon the lake's waters for their livelihood - including large irrigators who conduct commercial horticulture, pastoralists who live a nomadic existence in the region, a vibrant tourism industry, water service providers who supply potable water to local residents and state utility KENGEN, who uses water for geothermal electricity - only a collective approach can begin to address this problem.

Industries around Lake Naivasha have taken the initiative to address water use and environmental management by helping to implement Kenya’s national water policy, which promotes decentralised governance of user groups. The Lake Naivasha Growers’ Group (LNGG), which includes companies such as Finlays Horticulture Kenya, have funded a Water Allocation Plan to guide the establishment of multiple local Water Resource Users’ Associations (WRUAs). The LNGG has supported the WRUAs in the area, particularly those in the upper catchment, who significantly impact water availability and quality, in adopting water conservation measures and environmentally friendly livelihood strategies. The Lake Naivasha Water Resources User Association (LANAWRUA), the WRUA responsible for Lake Naivasha and the immediate area around its perimeter, is currently seeking funding with the assistance of the government, CARE international and WWF, to broaden its activities and undertake components of its own Sub-Catchment Management Plan to improve positive water management in the region. This case illustrates the benefits of a group of companies getting together to help implement what is a good national water policy on paper, to help reduce shared risk around the lake.

• Finlays is committed to pursuing the very highest standards of professionalism and corporate governance. This means taking the most ethical path in all its operations, meeting and exceeding relevant national and international legislation and industry and consumer standards, and ensuring that its businesses are fully transparent and accountable to their stakeholders. Quality control is also maintained by ensuring horticultural products can be traced from the retail end of the supply chain right back to the individual grader, precise greenhouse and time of harvest. Group companies are audited by numerous international accreditation bodies and Finlays is a registered producer with the Fairtrade Foundation and The Rainforest Alliance.
• Finlays is a member of the Common Code for the Coffee Community (4C), which focuses on improving efficiency in coffee production, while respecting social and environmental factors and optimising traceability.
• Finlays is accredited for EFSIS BRC Global Standard (Grade A), an independent service providing retailers, manufacturers and caterers with food quality inspections. The group is affiliated to the UK Tea Council, a founding member of the British Coffee Association and a member of the UK Beverage Services Association.

Finlays Fast Facts

• Largest independent tea trader and largest packer of Fairtrade tea and Fairtrade roast and ground coffee in the world. Founded in 1750, Finlays has a total land holding of 57,721 acres
  • Tea: produces over 46 million kg per annum from 37,082 acres in Kenya and Sri Lanka. Trades over 100 million kg from offices in the UK, Kenya, Dubai, Malawi, Vietnam, Indonesia, Mainland China, Sri Lanka and the USA; blends and packs over 17 million kg per annum
  • Coffee: blends and packs 2.5 million kg per annum
  • Flowers: 800 acres under greenhouse or polytunnel in Kenya, South Africa and Mainland China producing over 325 million stems per annum for the UK, continental Europe and Japan. Sources and processes 836 million stems in Kenya, the UK, Mainland China and Germany. One of the world's largest producers and packers of Fairtrade roses and lilies
  • Vegetables: grows and processes 7.1 million kg per annum on 220 acres and sources a further 29 million kg per annum. First supplier of Fairtrade vegetables into the UK
  • Insects (Integrated Pest Management): Dudutech produces biological control organisms to control common pests and diseases; 22 acres of insect production facilities in Kenya yield 580 million insects a month
  • Rubber: 4,248 acres in Sri Lanka producing one million kg latex per annum
  • Timber: 15,000 acres in Kenya and Sri Lanka producing 220,000 sm³ of eucalyptus and 33,000 sm³ cyprus.
  • Coconuts: 500,000 nuts per annum in Sri Lanka
• Operates a 2.2 million cubic-foot facility in Sri Lanka