1
Table of Contents
General Manager’s Address
Page 1-2
Lessons Learned
Page 3-6
About the Company
Page 7
Product Range
Page 8
Company Capabilities
Page 9-10
Governance
Page 11-12
Factory Organizational Structure
Page 13
About This Report
Page 14-15
Stakeholder Engagement
Page 16-17
Disclosures on Management Approach
Page 18-22
Performance Indicators
Page 23-44
Parting thoughts
Page 45
GRI Content Index
Page 46-52
GRI Application Level
Page 53
i
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
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
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
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
Lessons learned
Improved effi- There was iniciency on raw tial resistance
material usage to the lean production methods as old habits are difficult
to unlearn.
Lean production methods
are now being
slowly implemented for all
production
lines.
Having one sin- There is the big
gle customer
risk of having
unstable order
quantities
if
our
primary
customer is affected by current
market
situation.
Improve
our
production capabilities
to
meet the demand of our
sole customer.
5
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.
Lessons learned
Issues
Risks
Reduce electricity We are still unconsumption
sure
as
to
whether we can
control overtime
which is the primary contributor
to our electricity
use.
Although
the
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.
Reduce
waste Most of the risks
generation
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.
6
Opportunities
Targets
We are now exploring simple solutions such as
installing individual switches to
lighting fixtures
in order to reduce
power consumption.
A 25% reduction
of our current
electricity use as
per demand of
our primary customer.
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.
About the Company
Sao Viet Joint Stock Company was established on May 2000 and began operations on May 2001. It is operating only in Vietnam.
Above : Sao Viet Joint Stock Company (2001)
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.
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 2011. All of the products produced are
for export abroad namely in North America, Europe, and Asia; none of the products are sold locally.
7
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 2011
8
Company capabilities
Left: Cutting section
Right: Preparation section
Left:: Embroidery section
9
Company capabilities
Above: Stitching section
Above: Assembly section
Above: Lean production line
10
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 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 Manager assigned by the Board. Mr. Nguyen Van Vinh is the General Manager since 2003.
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
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, 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 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
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
Technical\
Engineering
Laboratory
Administration
Quality Assurance
Manager
CI Team
Purchasing
Import\Export
Planning
Cutting\
Preparation
Accounting
Warehouse
Sewing
Personnel
Outsole
Embroidery
Payroll
CSR
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
About this report
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 December 2011. 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:
84-650-3757077
Fax:
84-650-3757078
Email:
[email protected]
14
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
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
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 email.
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
Disclosure on Management Approach
18
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
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
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
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
Performance indicators
23
Expenditures for 2011
3%
5%
1%
8%
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
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 RiaVung Tau, An Giang, and Binh Thuan as shown in the graph below:
25
Employees
Binh Thuan Ba Ria 5%
Vung Tau
An Giang 6%
Others
2%
7%
Binh Duong
35%
Dong Nai
8%
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 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.
26
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.
10.00%
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
Employee turnover
10.00%
9.00%
8.00%
7.00%
6.00%
5.00%
Male
4.00%
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:

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.
10.00%
9.00%
8.00%
7.00%
6.00%
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%
17-35
35-45
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
45+
Turnover rate by age group
28
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
2012.
29
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
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
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
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)
32
Senior management
Senior management distribution by region
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 2001.
Discrimination
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
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
Materials used
Fabric\Textile
10%
Foam Others
4% 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
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
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.
900000
800000
700000
600000
500000
400000
2010
300000
2011
200000
100000
0
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
Indirect energy consumption
2.50
2.00
1.50
1.00
0.50
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
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
2010
2011
20,000
10,000
-
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
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
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 drawing from its deep well for use in production at the request of the provincial environmental bureau in 2010.
3,000
2,500
2,000
1,500
2010
2011
1,000
500
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.
12.00
10.00
8.00
6.00
4.00
2.00
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Water consumption per pair (liters)
40
Oct
Nov
Dec
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 2012.
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 2012.
41
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
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.
50
45
40
35
30
25
20
15
10
5
0
Jan
Feb
Mar
Apr
May
Jun
non hazardous
Jul
Aug
Sep
Oct
Nov
Dec
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
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
recycled
Jul
Aug
Sep
Oct
Nov
Dec
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
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
GRI Content Index
1. Strategy & analysis
Profile
Description
Disclosure
1.1
1.2
Reported
CrossReason for
reference/
omission
Direct answer
Statement from the most senior
decision-maker of the organization.
Yes
Page 1-2
Description of key impacts,
risks, and opportunities.
Yes
Page 3-6
Explanation
2. Organizational profile
Profile
Description
Disclosure
2.1
Name of the organization.
Reported
CrossReason for
reference/
omission
Direct answer
Yes
Page 7
Primary brands, products, and/or
services.
Yes
Page 7
Operational structure of the organization, including main divisions, operating companies,
subsidiaries, and joint ventures.
Yes
Page 7
Location of organization's headquarters.
Yes
Page 7
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.
Yes
Page 7
2.6
Nature of ownership and legal
form.
Yes
Page 11
2.7
Markets served (including geographic breakdown, sectors
served, and types of customers/
beneficiaries).
Yes
Page 7-8
2.8
Scale of the reporting organization.
Yes
Page 7
2.9
Significant changes during the
reporting period regarding size,
structure, or ownership.
Yes
Page 11
Awards received in the reporting
period.
Yes
Page 11
2.2
2.3
2.4
2.5
2.10
46
Explanation
GRI Content Index
3. Report parameters
Profile
Description
Reported
Reporting period (e.g., fiscal/
calendar year) for information
provided.
Yes
3.2
Date of most recent previous report (if any).
Yes
3.3
Reporting cycle (annual, biennial,
etc.)
Yes
3.4
Contact point for questions regarding the report or its contents.
Yes
3.5
Process for defining report content.
Yes
3.6
Boundary of the report (e.g.,
countries, divisions, subsidiaries,
leased facilities, joint ventures,
suppliers). See GRI Boundary
Protocol for further guidance.
Yes
Disclosure
3.1
3.7
3.8
3.9
3.10
3.11
3.12
3.13
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.,mergers/acquisitions,
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.
Cross-reference/ Reason for omisDirect answer
sion
Explanation
Page 14
Page 14
Page 14
Page 14
Page15
Page 14
Yes
Page 14
Yes
Page 14
Yes
Page 15
Yes
Page 15
Yes
Page 15
Yes
Page 50
Yes
Not Applicable
Page 47
47
At present we have no
policy or practice of
seeking external assurance for our report
GRI Content Index
4. Governance, Commitments, & Engagements
Profile
Cross-reference/ Reason for
Direct answer
omission
Description
Reported
4.1
Governance structure of the organization, including committees under
the highest governance body responsible for specific tasks, such as setting strategy or organizational oversight.
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 recommendations or direction to the highest governance body.
Yes
Page 14-15
4.5
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).
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 qualifications 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 performance and the status of their implementation.
Yes
Page 14-15
4.9
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 14-15
Disclosure
48
Explanation
GRI Content Index
4. Governance, Commitments, & Engagements
Profile
Description
Reported
Disclosure
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.
Cross-reference/ Reason for
Direct answer
omission
Yes
Page 15
Yes
Page 15
4.12
Externally developed economic, environmental, and
social charters, principles,
or other initiatives to
which the organization
subscribes or endorses.
Yes
Page 15
4.13
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 15
4.14
List of stakeholder groups
engaged by the organization.
Yes
Page 16
4.15
Basis for identification and
selection of stakeholders
with whom to engage.
Yes
Page 16
4.16
Approaches to stakeholder engagement, including frequency of engagement by type and by
stakeholder group.
Yes
Page 16
4.17
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
4.10
4.11
49
Explanation
Disclosures on Management Approach
G3 DMA
Description
Disclosure
on
Management
Disclosure
on
Management
Disclosure
on
Management
Disclosure
on
Management
DMA EC Approach EC
DMA EN Approach EN
DMA LA Approach LA
DMAHR Approach HR
Reported
Cross-reference/Direct
answer
Yes
Page 19
Yes
Page 21-22
Yes
Page 19-20
Yes
Page 19-20
50
Explanation
GRI Content Index
Economic Performance Indicators
Performance
Indicator
EC1
EC7
Description
Cross-reference/Direct answer
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.
Page 24.
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
Description
Cross-reference/Direct answer
EN1
Materials used by weight or
volume.
Page 34
EN2
Percentage of materials used
that are recycled input materials.
Page 35
Direct energy consumption by
primary energy source.
Page 38
EN4
Indirect energy consumption
by primary source.
Page 36
EN5
Energy saved due to conservation and efficiency improvements.
Page 36
Initiatives to reduce indirect
energy consumption and reductions achieved.
Page 36, 39
EN8
Total water withdrawal by
source.
Page 40
EN16
The estimate total weight of direct & indirect greenhouse gas
Total direct & indirecrt greenemissions for 2011 is 5677 metric tonnes. This was calcuhouse gas emissions by
lated by using the CO2 equivalent of thevalues of EN1 &
weight
EN2.
EN22
Total waste by type and disposal method
EN3
EN7
Page 43-44
51
GRI Content Index
Social: Labor Practices & Decent Work Performance Indicators
Performance
Indicator
LA1
LA2
LA4
LA10
LA14
Description
Cross-reference/Direct answer
Total workforce by employment type,
employment contract, and region.
Page 25-26
Total number and rate of employee
turnover by age group, gender, and
region.
Page 27-29
Percentage of employees covered by
collective bargaining agreements.
Page 26
Average hours of training per year
per employee by employee category.
Page 32
Ratio of basic salary of men to
women by employee category.
Page 26
Social: Human Rights Performance Indicators
Performance
Indicator
HR2
HR3
HR4
HR5
HR6
HR7
Description
Cross-reference/Direct answer
Percentage of significant suppliers
and contractors that have undergone
screening on human rights and actions taken.
Page 35
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.
Page 32
Total number of incidents of discrimination and actions taken.
Page 33
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.
Page 30-31
Operations identified as having significant risk for incidents of child labor,
and measures taken to contribute to
the elimination of child labor.
Page 30-31
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 30-31
52
GRI Application Level
I hereby declare to the best of my understanding this report fulfills the requirement for a GRI G3 Application level B.
Name: Paul Mark Bautista
Position: Administrator
Date: 30 September 2012
53