PASS Seminar ESG Reporting: Challenges in Collecting Non-financial - PowerPoint PPT Presentation

PASS Seminar ESG Reporting: Challenges in Collecting Non-financial Data Dr Guy Look, CFO and Executive Director 24 September 2019 Sa Sa International Holdings Limited Stock Code: 178

Agenda Company Profile 1 Key Message #1 2 Key Message #2 3 Key Message #3 4 Takeaway Messages 5

Company Profile

Sa Sa’s Company Profile Founded in 1978 Listing in 1997 on The Stock Exchange of Hong Kong Limited Turnover in FY2018/19* HK$8+ billion Market Capitalisation* HK$8+ billion *Year ended 31 Mar 2019

Sa Sa’s Journey towards Sustainable Beauty Our Sustainable Beauty Transformation Commenced in 2010 2010 2013 2015 2016 2018 2019 Published our 1 st Established the Pledged to use plastic Committed to phase out Included in the Hang Seng Upgraded ESG Taskforce to ESG report ESG Taskforce bag levy collected for plastic microbeads in all Corporate Sustainability Sustainability Steering sustainability causes exfoliating and cleaning Benchmark Index for the Committee with Board of 8 th consecutive year only products sold at Sa Sa by Directors representation the end of 2018

Some of Our Green Achievements Sustainability Is All about Teamwork GHG Emission (Absolute) Energy Intensity CO 2 23.7% 17.8% Compared to our baseline Compared to our baseline year (2014/15) year (2014/15) Recycling rate at logistic centre Stores with LED illumination system 100% 84%

Key Message #1 Goal Alignment Ensures Our Whole Company and Staffs Understand How They Can Contribute towards Sustained Growth

PROFIT

PEOPLE Employee Wellbeing Customer Satisfaction Community Investment and etc… PROFIT PLANET Environmental Footprint – Operations Sustainable Business Model Supply Chain Investor Returns Environmental Impacts Efficient Process Environmental Footprint – Products and etc… and etc…

Why, What, How Sa Sa Collects Non-financial Data Sa Sa Also Uses This Why-What-How Model to Create Value Proposition on Sustainability Growth  Why the disclosure of non-financial data is crucial to our success? WHY  What sustainability topics matter most to our people? What  How to collect meaningful non-financial data from and for our people? How

What is The Purpose of Disclosing Non-financial Data? Through Disclosing Non-financial Data and Information, We Hope to…… For investors: • Demonstrate how our ESG approach reduces enterprise risks and operating costs and creates business opportunities Source: FSDC, Environmental, Social and Governance (ESG) Strategy for Hong Kong

What is The Purpose of Disclosing Non-financial Data? Through Disclosing Non-financial Data and Information, We Hope to…… For investors: • Demonstrate how our ESG approach reduces enterprise risks and operating costs and creates business opportunities For current and prospective employees: • Develop a sense of shared purpose across Sa Sa’s employees on our sustainability journey as they are key to Sa Sa’s success for sustainable growth

What is The Purpose of Disclosing Non-financial Data? Through Disclosing Non-financial Data and Information, We Hope to…… For investors: • Demonstrate how our ESG approach reduces enterprise risks and operating costs and creates business opportunities For current and prospective employees: • Develop a sense of shared purpose across Sa Sa’s employees on our sustainability journey as they are key to Sa Sa’s success for sustainable growth For other key stakeholders: • Show sustainability is in Sa Sa’s corporate DNA and also how Sa Sa is mindful of their needs and interests

2010-2019: Sprinkle Effect Glocal Greenovation Challenge, Red packet reuse & recycling a competition focused on find solutions for environmental organized by Greener Actions protection for business sector Upcycled old uniforms into eco bag, with these items supporting the local community groups Eco meal kit to employee & customer funded by Plastic Bag Levy

2010-2019: Sprinkle Effect Individual projects implemented without Focus and Alignment to Sa Sa’s Ethos Business Risks Sustainability Risks Market competitiveness Company growth GHG Emission Changing customer behavior Pollution and wastes Talent retention Talent development and retention Operational cost increase Reputation Risk Customer satisfaction… HOW TO FIX THIS?

2010-2019: Sprinkle Effect ‘‘ ‘‘ Comments Mainly consistent Mainly positive with however missing of not many improvement on Sa Sa long term strategy and areas mentioned. ’’ ’’ goals. from external parties ‘‘ ‘‘ Board approved the ESG Absence of clear strategy and policies however no dedicated action plans; more focus on governance structure project-based initiative. ’’ ’’ established for ESG.

2019: Strategic Alignment with Our Business Goals Goal Alignments Ensures Our People Understand How They Can Contribute to Sa Sa and Thus Avoid Costly Misalignment Sustainability Risks & Opportunities Business Risks and Opportunities Goals Market competitiveness Green product development Changing customer behavior Efficiency in energy usage Talent retention Over-packaging Operational cost increase Training & Development Reputation Risk Customer satisfaction OUR ANSWER TO “HOW TO FIX THIS?”

What Sustainability Is and Isn’t for Sa Sa Today Sustainability Connects Everyone to Think Together It is NOT about: It is about: Integrate sustainability Philanthropic activities into the business Greenwashing / Evaluate and respond to the Corporate Social environmental and social Responsibility risks and opportunities Box ticking approach to Respond to the stakeholders’ comply with regulations needs and expectations

Key Message #2 Robust Sustainability Governance —Committed Leadership, Clear Direction, and Strategies are Imperative

From ESG Taskforce to Sustainability Steering Committee…… Setting up Sustainability Steering Committee Helps Sa Sa Establish and Communicate Goals And Strategies Clearly And Ensures Sustainability Is Integrated with Other Business Goals YESTERDAY TODAY Strategy and Execution Governance Strategy and and Leadership People Execution Development Governance and Leadership Charity Environmental Social Green Project Program Stewardship Responsibility

Importance of Robust Sustainability Governance Sa Sa’s Sustainability Governance = Committed Leadership + Clear Direction + Strategies  Board of Top-down Commitment begins at the top to show we mean business about sustained growth Directors delegation  Responsible for evaluating and determining the issuer's ESG-related risks and opportunities  Develop sustainability vision and strategies, and ensure ESG risk management and internal control systems are in place to manage the execution Sustainability Steering  Made up of department heads to ensure the execution is inline with business Committee strategies  Provide directions and guidance on sustainability vision, strategies, goals and targets  Advise the Board on the ESG management and its effectiveness  Each working group is championed by a selected department head Bottom-up  Working Groups Recommend initiatives, targets and practices relating to the scope of work to information flow the Committee  Implement the directions and execute action plans agreed by the Committee

Key Message #3 Sustainability framework provides a big picture with purpose, goals and targets, action plans and progress to guide the whole company move towards sustainable growth

Sa Sa’s Sustainability Framework It Also Helps Build ESG Culture Sustainable Growth: Making Life Beautiful Innovation People Operational Efficiency Reducing environmental and Investing to “Retain, Engage, social impacts of products and Promoting energy efficiency Attract, Develop” our staff business activities Raising consumer awareness on Minimizing waste sustainable consumption Working together with business partners to meet and exceed Sa Maximizing returns to shareholders Utilizing resource usage Sa’s commitments and communities

Mechanism Behind Sustainability Framework: Integrate ESG into Commercial Decision Grow Revenue Enhance Brand • Launch green/healthy portfolio of products, • Attract and retain talent Increase • services and solution Engage communities and stakeholders • • Shift from selling products to selling services Enhance license to operate • Strengthen brand and reputation Sustainable Value Shorter Term Longer Term Creation Reduce Cost Reduce Risk • • Save energy & cut costs Stay ahead of future regulations Reduce • • Leverage digital technologies to reduce resource Anticipate resource scarcity and price volatility • usage Account for externalities (e.g. assign a cost of • Source sustainable raw materials carbon) • Avoid supply chain disruptions

Understanding Our ESG Integration Metrics: Why We Banned Microbeads?