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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 11-12
Page 13
Page 14-15
Page 16-17
Page 18-22
Page 23-44
Page 45
Page 46-52
Page 53
1
It has been a year since we made our first sustain-ability 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 pe-riod we made the second report. We’ve explored big and small solutions to apply to sustainability is-sues. For example, in trying to reduce our electric-ity costs we’ve used simple solutions such as put-ting 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 reduc-tion 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 transi-tioning to the use of T5 fluorescent lights. The ini-tial 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 manage-ment system. Our old system left much to be de-sired 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 pro-ceed.
General Manager’s Address
2
We’ve mentioned previously that the value of re-ports like this lies in the lessons learned in the re-porting process. We’ve come to realize that there is space for improvement in our organization. And we can improve upon those improvements. Sustain-ability now is more a process than a goal. It is apt that we begin our second decade tackling
the sustainability impacts of our continued opera-
tions. 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 pres-
sure 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 sus-
tainability is all about?
Nguyen Van Vinh
General Manager
General Manager’s Address (continued)
3
Our organization has learned some lessons with re-gards to the sustainability impacts of our operations. In 2011 we significantly improved on our monitoring systems especially on electricity use & waste manage-ment. We learned that we can vastly improve our per-formance on these two issues. It was decided that fo-cusing on this two issues can give our company signifi-cant economic gains plus the additional benefit of miti-gating 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 segrega-tion 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 govern-
ment & society because of our initiatives to save elec-
tricity & reduce waste. Third is the opportunity to
teach our employees on how to apply our solutions to
their own lives.
Lessons learned
4
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. Pri-oritizing the issues and challenges are often de-cided by the feasibility of solutions to said issues. Opportunities are also subject to the same decision making process. These decisions are constantly re-viewed 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.
5
Lessons learned
Improved effi-ciency on raw material usage
There was ini-tial resistance to the lean pro-duction meth-ods as old hab-its are difficult to unlearn.
Lean produc-tion methods are now being slowly imple-mented for all production lines.
A general re-duction in elec-tricity waste and waste gen-eration as these two are tied to produc-tion inefficien-cies.
Having one sin-gle customer
There is the big risk of having unstable order quantities if our primary customer is af-fected by cur-rent market situation.
Improve our production ca-pabilities to meet the de-mand of our sole customer.
Maintain and improved the current order quantities by being more ca-pable of filling all orders.
6
Lessons learned
Issues Risks Opportunities Targets Reduce electricity consumption
We are still un-sure as to whether we can control overtime which is the pri-mary contributor to our electricity use. Although the power situation improved in 2011 as compared to 2010 it is still un-certain whether the current power infrastruc-ture can support the growing de-mand for power in the future.
We are now ex-ploring simple so-lutions such as installing individ-ual switches to lighting fixtures in order to reduce power consump-tion.
A 25% reduction of our current electricity use as per demand of our primary cus-tomer.
Reduce waste generation
Most of the risks we faced were due to the com-pany culture. The new waste man-agement issues were considered onerous initially and there was re-sistance to the changes made. Also there is the problem of peo-ple reverting to their old habits.
We’ve now im-proved on our waste manage-ment & monitor-ing systems and we are continu-ously refining processes in or-der 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 cus-tomer.
7
Sao Viet Joint Stock Company was established on May 2000 and began opera-
tions on May 2001. It is operating only in Vietnam.
Sao Viet Joint Stock Company headquarters are located at 4th 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 2006. 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.
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 pro-
duction capacity for the PUMA brand in 2011. All of the products produced are
for export abroad namely in North America, Europe, and Asia; none of the prod-
ucts are sold locally.
About the Company
Above : Sao Viet Joint Stock Company (2001)
Above: Sao Viet Joint Stock Company (present day)
8
47%
25%
18%
9% 1%
Europe North America South America Asia Others
Geographic markets served in 2011
Samples of product range made in 2011
Product Range
9
Left: Cutting section
Right: Preparation section
Left:: Embroidery section
Company capabilities
10
Company capabilities
Above: Stitching section
Above: Assembly section
Above: Lean production line
11
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 ex-ecutive 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 chair-man 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 2004. 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 Man-ager assigned by the Board. Mr. Nguyen Van Vinh is the General Man-ager since 2003.
Structure of governing body
Board of Directors
Chairman
General Manager
Governance
There was no significant change in the organization’s governance dur-ing the reporting period.
12
Governance
Sao Viet Joint Stock Company maintains an “open door” policy with regards to communication with the highest governing body. Commu-nications is facilitated through common means (telephone, email, 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 em-ployer\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 employ-ees.
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 busi-ness 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 environ-mental conservation.
Sustainability issues are now regularly explored through weekly meetings joined by senior management. Any issues found and re-solved to be fixed are then communicated to the Chairman who makes the final decision on the resolution of these issues.
13
Each production unit has its own departmental head which report di-rectly to the General Manager. There are several main departments mainly management, administration, import & export, development, quality assurance, purchasing, and production.
General Manager
Quality Assurance
Manager
Assistant General
Manager
PurchasingCI TeamAdministration CSRTechnical\
Engineering
Laboratory
Accounting
Personnel
Import\Export
Payroll
Sewing
Outsole
Warehouse
Embroidery
Cutting\
Preparation
Assembly
Planning
Organizational structure
Factory 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.
14
This is the second sustainability report to be published by Sao Viet Joint Stock Company. The first report was published September 2011. This report will cover the company’s operational and sustainability activities within the period beginning from 01 January up to 31 De-cember 2011. The scope of this report will be limited to the activities of Sao Viet Joint Stock Company; it currently does not have any sub-sidiaries, 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 com-pany’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: 84-650-3757077 Fax: 84-650-3757078 Email: [email protected]
About this report
15
About this report (continued)
Report content was determined
by applying the Materiality Prin-
ciple as stated in the G3 guide-
lines on the topics raised by the
stakeholders. Internal and exter-
nal factors were considered when
evaluating the materiality of the
topics suggested. The following
process (Fig. 4) was used in de-
ciding the report content.
Process in determining report content
Aspects identified in
the kick off meeting
Aspects identified
by engagement with
stakeholders
Completeness check
Materiality Test
List of material indicators to monitor and report
on
List of all aspects and their respective indicators
considered for reporting.
Data measurement & calculations are based on internally developed sys-
tems and partially on techniques define in the GRI 3.0 protocols. This re-
port will have no restatement of data in the previous report. No signifi-
cant changes were made in the scope, boundary, or measurements in this
report.
16
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 or-der to determine what was to be material in this report. In indentify-ing 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 impor-tant in the reporting process. The top three stakeholders influenced by the company’s activities are as follows: employees, customers, and government.
Stakeholder engagement
17
Engagement was dependent on the particular stakeholders. Employee en-
gagement was done through a survey and management-employee dia-
logues. Other stakeholders were engaged through various means such as
telephone interview, face to face interview, written letters, and email.
Tool for prioritizing stakeholders
Stakeholder engagement (continued)
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 work-
ers wanted to know our performance on social responsibilities as
these issues (overtime, benefits, etc.) affect them directly. On the eco-
nomic side workers raised concerns about job stability, and their abil-
ity 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 per-
formance. The provincial environmental bureau, in particular, wants
to know about our compliance with current legislations and our envi-
ronmental performance especially on water use and waste genera-
tion/disposal. The labor department expressed interest in the health
and safety aspects of our operations.
18
Disclosure on Management Approach
19
Economic Our current economic policies are influenced by factors such as cur-rent market conditions, consumer preferences, and government regu-lations among other things. Our primary goal is to improve our cur-rent 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.
Disclosure on management approach
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 formu-lating 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 con-
cerns.
20
Disclosure on management approach (continued)
Social sustainability issues are tackled by the company’s sustainabil-ity 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 is-sues 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 com-pany’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 train-ing is usually conducted by a dedicated social compliance depart-ment. Monitoring of social sustainability issues is usually made by the dedi-cated social compliance group. This group would monitor and bench-mark performances such as:
Daily overtime Incidents of workplace accidents Worker grievance
All the data that are collected are then analyzed which are then pre-sented to the sustainability steering committee. Any issue that crop up are then attempted to be resolved.
21
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 formu-lating policies which address particular issues such as: Electricity conservation through improved production process,
retooling of equipment to improve energy use, and overall aware-ness 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 sus-tainability steering committee & the environmental compliance de-partment. 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 environ-mental sustainability issues that occur. Any decisions made with re-gards 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
22
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 com-pany’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 train-ing is usually conducted by a dedicated environmental compliance de-partment. 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 pre-sented 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 so-lutions can and will address some sustainability issues such as waste generation & energy use.
23
Performance indicators
24
Expenditures for 2011
As seen in the chart above most of the expenditures for 2011 was on materials & production costs. The organization is always seeking so-lutions 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 gov-ernment assistance in the foreseeable future.
30%
53%
8%
3% 5% 1%
production cost material cost labor cost taxes general costs others
25
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.
Employees
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 em-ployees come from adjacent provinces such as Dong Nai, Ba Ria-Vung Tau, An Giang, and Binh Thuan as shown in the graph below:
Temporary1%
Fixed term52%
Indefinite term47%
Employee distribution by contract type
26
Employees
Binh Duong35%
Ho Chi Minh City37%
Dong Nai8%
An Giang7%
Binh Thuan5%
Ba Ria -Vung Tau
6%
Others2%
Employee distribution by region
This distribution of employees is the same as of the previous report-ing period.
Collective bargaining
All permanent employees are covered by the collective bargaining agreement between the company & the trade union. This is regard-less whether the worker is a member of the union or not. The col-lective bargaining agreement is renewed every three years with the next one at the end of 2014.
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.
27
Employee turnover
Employee turnover ranges from 3% to 5% except for the period af-
ter 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 num-
ber of employees simply decide not to return to work. There was no
significant change in the turnover rate during the current reporting
period.
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 ex-plained earlier the biggest rate of turnover usually occurs right after the Lunar New Year .
Employee turnover rate
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
10.00%
Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov
28
Employee turnover
Turnover rate by gender
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
10.00%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Male
Female
Employees are distributed along the following age groups: 18-34 – 75% 35-44 – 24% 45+ - 1%
The highest turnover rate belongs to the 18-34 group which comprise a majority of the factories workers.
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
10.00%
Jan
Feb
Mar
Ap
r
May Jun
Jul
Au
g
Sep
Oct
No
v
De
c
17-35
35-45
45+
Turnover rate by age group
29
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 pro-gram 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 re-fining these incentive programs so they may be more effective by 2012.
30
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 es-pecially 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 tol-erance policy against recruiting child laborers. There have been no incidence of child labor recruitment since the beginning of our opera-tions. 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 re-cruiting 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 applica-tions. 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.
31
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’ free-dom of association. Our employees are free join the company trade union without fear of retaliation. The company encourages the work-ers to join the trade union. Around sixty percent (60%) of the com-pany’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.
Child labor/Young labor/Forced labor/Freedom of association
Above: Trade union activities
32
Worker education
Our workers are educated and trained from the start of their employ-ment 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 train-ing. All workers are trained in fire safety with quarterly fire drills and an-nual general fire drill in cooperation with the fire department.
Training type Ave hours per year Participants
Occupational health & safety 3 3900
Environmental awareness 3 3750
Labor law 3 3900
Fire safety 2 3900
Fire team training 8 200
First aid team training 8 250
Chemical safety 4 400
Electrical & mechanical safety 4 30
Employee training (2011)
33
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 per-cent (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 2001.
Discrimination
There are no special requirements with the exception of age in apply-ing for work in Sao Viet Joint Stock Company. Anyone has the oppor-tunity to work provided they pass the age requirements plus training and testing. The company does not discriminate against gender, eth-nicity, 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 discrimi-nation during the reporting period.
Senior management distribution by region
34
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 sup-plier which do not have any local counterpart in Vietnam. Materials from foreign sources are usually shipped by sea and by land. Pro-duction issues from the supplier side has sometimes been an issue; if a particular supplier cannot deliver the material on time our produc-tion 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
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 sub-stances that is provided by our customers. We make sure that our suppliers provide us with the required test reports that our custom-ers need for every material delivery that we receive.
Leather48%
Synthetic37%
Fabric\Textile10%
Foam 4%
Others1%
Materials used
35
Materials used
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 pri-mary customer and are also frequently audited for compliance issues.
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.
36
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).
0
100000
200000
300000
400000
500000
600000
700000
800000
900000
2010
2011
There was a 23% decrease in electricity use during this reporting pe-riod as compare with the previous one. 15% of this reduction was due to a lower amount of orders for 2011 resulting in lower produc-tion 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.
37
Indirect energy consumption
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.
-
0.50
1.00
1.50
2.00
2.50
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
38
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.
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 par-ticular month necessitating the use of the emergency generators.
-
10,000
20,000
30,000
40,000
50,000
60,000
2010
2011
39
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 im-proper 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
40
Water consumption
Sao Viet Joint Stock Company consumed 22,531 cu. m. of water for 2011 with an estimated cost of USD 7000. The primary source for the water is the provincial water supply. The factory has stopped draw-ing from its deep well for use in production at the request of the pro-vincial environmental bureau in 2010.
Water consumption (cubic meters)
The average water consumption for every pair produced was 5.38 li-ters per pair.
-
2.00
4.00
6.00
8.00
10.00
12.00
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Water consumption per pair (liters)
-
500
1,000
1,500
2,000
2,500
3,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2010
2011
41
Measures taken to reduce water consumption
The production process does not consume a significant amount of wa-ter. 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 2012.
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 ar-eas of the factory. We are now in the process of replacing all faucets by early 2012.
Rainwater collection point
42
Measures taken to reduce water consumption
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.
Faucet with aerator
Reminders to save water
43
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, pa-per, 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.
The apparent increase was due to better monitoring systems adapted by the company to manage waste output. Previously the company de-pended on numbers given by the service provider which tended to be underreported.
Waste generated for 2011
0
5
10
15
20
25
30
35
40
45
50
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
non hazardous hazardous
With improved waste monitoring & management we have determined that 79% of the waste generated was recycled and 21% was not recy-cled. This is in contrast to the roughly 50/50 distribution in our re-port 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.
44
Waste
Recycled/non recycled waste 2011
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
recycled not recycled
The organization is attempting to mitigate waste generation by em-ploying 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
45
Parting thoughts
During the process of writing our second report we learned about our significant weaknesses and strengths. Through the process of learn-ing, we were able to analyze & prioritize issues where we believe we can improve quickly. Given that we had more time to prepare, the ef-fort put into report making process was far much better than our pre-vious one. Hopefully by the next report, we will be able to show some gains in the issues we have prioritized.
46
GRI Content Index
Profile
Disclosure
Description Reported
Cross-reference/
Direct answer
Reason for
omission Explanation
1.1 Statement from the most senior decision-maker of the organiza-tion.
Yes Page 1-2
1.2 Description of key impacts, risks, and opportunities.
Yes Page 3-6
Profile
Disclosure
Description Reported
Cross-reference/
Direct answer
Reason for
omission Explanation
2.1 Name of the organization. Yes Page 7
2.2 Primary brands, products, and/or services.
Yes Page 7
2.3 Operational structure of the or-ganization, including main divi-sions, operating companies, subsidiaries, and joint ventures.
Yes Page 7
2.4 Location of organization's head-quarters.
Yes Page 7
2.5 Number of countries where the organization operates, and names of countries with either major operations or that are spe-cifically relevant to the sustain-ability issues covered in the re-port.
Yes Page 7
2.6 Nature of ownership and legal form.
Yes Page 11
2.7 Markets served (including geo-graphic breakdown, sectors served, and types of customers/beneficiaries).
Yes Page 7-8
2.8 Scale of the reporting organiza-tion.
Yes Page 7
2.9 Significant changes during the reporting period regarding size, structure, or ownership.
Yes Page 11
2.10 Awards received in the reporting period.
Yes Page 11
1. Strategy & analysis
2. Organizational profile
47
GRI Content Index
Profile
Disclosure
Description Reported Cross-reference/
Direct answer
Reason for omis-
sion Explanation
3.1
Reporting period (e.g., fiscal/calendar year) for information provided.
Yes Page 14
3.2 Date of most recent previous re-port (if any).
Yes Page 14
3.3 Reporting cycle (annual, biennial, etc.)
Yes Page 14
3.4 Contact point for questions re-garding the report or its contents.
Yes Page 14
3.5 Process for defining report con-tent.
Yes Page15
3.6
Boundary of the report (e.g., countries, divisions, subsidiaries, leased facilities, joint ventures, suppliers). See GRI Boundary Protocol for further guidance.
Yes
Page 14
3.7
State any specific limitations on the scope or boundary of the re-port (see completeness principle for explanation of scope).
Yes
Page 14
3.8
Basis for reporting on joint ven-tures, subsidiaries, leased facili-ties, outsourced operations, and other entities that can significantly affect comparability from period to period and/or between organiza-tions.
Yes
Page 14
3.9
Data measurement techniques and the bases of calculations, including assumptions and tech-niques 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.
Yes
Page 15
3.10
Explanation of the effect of any re-statements of information pro-vided in earlier reports, and the reasons for such re-statement (e .g . ,me rge rs /acqu is i t i ons , change of base years/periods, nature of business, measurement methods).
Yes
Page 15
3.11
Significant changes from previous reporting periods in the scope, boundary, or measurement meth-ods applied in the report.
Yes
Page 15
3.12
Table identifying the location of the Standard Disclosures in the report.
Yes Page 50
3.13
Policy and current practice with regard to seeking external assur-ance for the report.
Yes
Page 47
Not Applicable
At present we have no policy or practice of seeking external assur-
ance for our report
3. Report parameters
48
Profile
Disclosure
Description Reported Cross-reference/
Direct answer
Reason for
omission Explanation
4.1
Governance structure of the organi-zation, including committees under the highest governance body respon-sible for specific tasks, such as set-ting strategy or organizational over-sight.
Yes Page 14-15
4.2 Indicate whether the Chair of the highest governance body is also an executive officer.
Yes Page 14-15
4.3
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.
Yes Page 14-15
4.4
Mechanisms for shareholders and employees to provide recommenda-tions or direction to the highest gov-ernance body.
Yes Page 14-15
4.5
Linkage between compensation for members of the highest governance body, senior managers, and execu-tives (including departure arrange-ments), and the organization's per-formance (including social and envi-ronmental performance).
Yes Page 14-15
4.6 Processes in place for the highest governance body to ensure conflicts of interest are avoided.
Yes Page 14-15
4.7
Process for determining the qualifica-tions and expertise of the members of the highest governance body for guiding the organization's strategy on economic, environmental, and social topics.
Yes Page 14-15
4.8
Internally developed statements of mission or values, codes of conduct, and principles relevant to economic, environmental, and social perform-ance and the status of their imple-mentation.
Yes Page 14-15
4.9
Procedures of the highest govern-ance body for overseeing the organi-zation's identification and manage-ment of economic, environmental, and social performance, including relevant risks and opportunities, and adherence or compliance with inter-nationally agreed standards, codes of conduct, and principles.
Yes Page 14-15
GRI Content Index
4. Governance, Commitments, & Engagements
49
GRI Content Index
4. Governance, Commitments, & Engagements
Profile
Disclosure
Description Reported Cross-reference/
Direct answer
Reason for
omission Explanation
4.10
Processes for evaluating the highest governance body's own performance, particularly with respect to economic, environmental, and social performance.
Yes Page 15
4.11
Explanation of whether and how the precaution-ary approach or principle is addressed by the or-ganization.
Yes Page 15
4.12
Externally developed eco-nomic, environmental, and social charters, principles, or other initiatives to which the organization subscribes or endorses.
Yes Page 15
4.13
Memberships in associa-tions (such as industry associations) and/or na-tional/international advo-cacy organizations in which the organization: * Has positions in govern-ance bodies; * Partici-pates in projects or com-mittees; * Provides sub-stantive funding beyond routine membership dues; or * Views membership as strategic.
Yes Page 15
4.14 List of stakeholder groups engaged by the organiza-tion.
Yes Page 16
4.15 Basis for identification and selection of stakeholders with whom to engage.
Yes Page 16
4.16
Approaches to stake-holder engagement, in-cluding frequency of en-gagement by type and by stakeholder group.
Yes Page 16
4.17
Key topics and concerns that have been raised through stakeholder en-gagement, and how the organization has re-sponded to those key topics and concerns, in-cluding through its report-ing.
Yes Page 17
50
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 21-22
DMA LA Disclosure on Management Approach LA
Yes Page 19-20
DMAHR Disclosure on Management Approach HR
Yes Page 19-20
Disclosures on Management Approach
51
GRI Content Index
Economic Performance Indicators
Performance
Indicator Description Cross-reference/Direct answer
EC1 Direct economic value generated and distributed, including reve-nues, operating costs, employee compensation, donations and other community investments, retained earnings, and payments to capital providers and govern-ments.
Page 24.
EC7 Procedures for local hiring and proportion of senior management hired from the local community at significant locations of operation.
Page 33
Performance
Indicator Description Cross-reference/Direct answer
EN1 Materials used by weight or volume.
Page 34
EN2 Percentage of materials used that are recycled input materi-als.
Page 35
EN3 Direct energy consumption by primary energy source.
Page 38
EN4 Indirect energy consumption by primary source.
Page 36
EN5 Energy saved due to conser-vation and efficiency improve-ments.
Page 36
EN7 Initiatives to reduce indirect energy consumption and re-ductions achieved.
Page 36, 39
EN8 Total water withdrawal by source.
Page 40
EN16 Total direct & indirecrt green-house gas emissions by weight
The estimate total weight of direct & indirect greenhouse gas emissions for 2011 is 5677 metric tonnes. This was calcu-lated by using the CO2 equivalent of thevalues of EN1 & EN2.
EN22 Total waste by type and dis-posal method
Page 43-44
Environmental Performance Indicators
52
GRI Content Index
Social: Labor Practices & Decent Work Performance Indicators
Performance
Indicator Description Cross-reference/Direct answer
LA1 Total workforce by employment type, employment contract, and region.
Page 25-26
LA2 Total number and rate of employee turnover by age group, gender, and region.
Page 27-29
LA4 Percentage of employees covered by collective bargaining agreements.
Page 26
LA10 Average hours of training per year per employee by employee category.
Page 32
LA14 Ratio of basic salary of men to women by employee category.
Page 26
Performance
Indicator Description Cross-reference/Direct answer
HR2 Percentage of significant suppliers and contractors that have undergone screening on human rights and ac-tions taken.
Page 35
HR3 Total hours of employee training on policies and procedures concerning aspects of human rights that are rele-vant to operations, including the per-centage of employees trained.
Page 32
HR4 Total number of incidents of discrimi-nation and actions taken.
Page 33
HR5 Operations identified in which the right to exercise freedom of associa-tion and collective bargaining may be at significant risk, and actions taken to support these rights.
Page 30-31
HR6 Operations identified as having signifi-cant risk for incidents of child labor, and measures taken to contribute to the elimination of child labor.
Page 30-31
HR7 Operations identified as having signifi-cant risk for incidents of forced or compulsory labor, and measures to contribute to the elimination of forced or compulsory labor.
Page 30-31
Social: Human Rights Performance Indicators
53
I hereby declare to the best of my understanding this report fulfills the require-ment for a GRI G3 Application level B.
Name: Paul Mark Bautista
Position: Administrator
Date: 30 September 2012
GRI Application Level GRI Application Level
