En route to Sustainability Cathay Pacific

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En route to Sustainability Cathay Pacific Powered By Docstoc
					En route
to Sustainability
Sustainable Development Report 2011
Executive Summary
                                         Overview of 2011
                                         Below are some of our financial, operational, environmental and social highlights from 2011:

                                         Financial and Operational

                                                    $5.5                                 27.6                           1,649,000                               FUEL AS                              DELIVERY OF

                                                    BILLION                              MILLION                         TONNES                                 41.5%                            6      BOEING
                                                                                                                                                                                                        777-300ER
                                                    GROUP
                                                    ATTRIBUTABLE
                                                                                         PASSENGERS
                                                                                         CARRIED
                                                                                                                         OF CARGO
                                                                                                                         CARRIED
                                                                                                                                                                OF OPERATING
                                                                                                                                                                COSTS
                                                                                                                                                                                                 3     AIRBUS
                                                                                                                                                                                                       A330-300S
                                                    PROFIT
                                                                                                                                                                                                 4     BOEING 747-8F
                                                                                                                                                                                                       FREIGHTERS
                                         •	 New	cargo	markets	at	Bengaluru,	Chongqing,	                •	 New	Business	Class	seats	installed	in	15	aircraft      •	 Cargo	load	factor	fell	by	8.5%
                                            Chengdu	and	Zaragoza                                       •	 Mobile	boarding	pass	service	introduced	in	Auckland    •	 Cargo	joint	venture,	Air	China	Cargo,	launched
                                         •	 New	passenger	routes	to	Abu	Dhabi	and	daily		              •	 Refurbishment	of	our	Business	Class	lounge,		
                                            flights	to	Chicago	                                           The	Wing,	at	Hong	Kong	International	Airport	



                                         Environmental


                                                   15,851                                            11.6%                                    19.8%                                  3RD YEAR ON THE

                                                                                                                                                                                    FTSE4 GOOD
Contents                                            THOUSAND TONNES
                                                    CO2 EMITTED
                                                                                                     FUEL EFFICIENCY
                                                                                                     ATK IMPROVEMENT
                                                                                                     SINCE 1998
                                                                                                                                               RTK IMPROVEMENT
                                                                                                                                               SINCE 1998                            GLOBAL INDEX

    Overview of 2011
                                         •	 Adoption	of	electronic	cargo	airway	bills	                 •	 “Topping	off”	of	the	new	Cathay	Pacific	Cargo	         •	 Participation	in	the	European	Commission’s	long-term	
01 A Joint Message from the Chairman     •	 First	Cathay	Pacific	lounge	refurbishment	aspiring		          Terminal,	which	contains	sustainability		                 climate	change	monitoring	programme,	IAGOS
                                                                                                          design	features
   and Chief Executive                      to	LEED	standard	at	San	Francisco                                                                                    •	 Became	a	member	of	the	Asia	Pacific	Business	and	
                                         •	 17,967	tCO2		offset	in	2011	by	staff	and	passengers        •	 Partnership	with	Swire	Hotels	on	our	carbon	offset	       Sustainability	Council	(APBSC)
02 Understanding Our Business                                                                             scheme,	FLY	greener

04 Approach to Managing Our Business
05 Stakeholder Engagement
                                         Social


                                                                                                  29,500                                   4,037
06 Corporate Governance                             OVER                                                                                                                              CX AWARDED
07 Safety
10 Operating Our Flights
                                                   1,000
                                                    SUPPLIERS GLOBALLY
                                                                                                  GROUP STAFF
                                                                                                  WORLDWIDE
                                                                                                                                            VOLUNTEER
                                                                                                                                            HOURS BY
                                                                                                                                                                                      THE “FIVE YEARS PLUS”

                                                                                                                                                                                      CARING
12 Managing Our Infrastructure                      FOR CX AND KA                                                                           HONG KONG STAFF                           COMPANY
14 Interacting with Customers            •	 Evaluation	of	English	On	Air	programme	with	               •	 Dragonair	Youth	Aviation	Academy	established
                                            reference	to	the	London	Benchmarking	Group	model           •	 Staff	appeal	efforts	for	those	affected	by	the	New	
16 Working with Our Supply Chain         •	 Cathay	Pacific	Green	Explorers	programme	for	young	           Zealand	and	Japan	earthquakes	and	Thai	floods	
                                            people	launched
18 Investing in People and Communities                                                                 •	 Staff	performance	management	system		
                                         •	 Cathay	Pacific	Charitable	Fund	launched                       re-structured	to	focus	on	staff	development		
                                                                                                          and	career	progression
                                                                                                                                                      Cathay Pacific Sustainable Development Report 2011   1




                                                                                                              “Sustainability is integral to the
                                                                                                              success and long-term viability of
                                                                                                              Cathay Pacific Airways.”




A Joint Message
                                      The sustainability challenge at Cathay Pacific                          order to excel, we need to anticipate and provide for the changing
                                                                                                              needs of our customers, staff and business partners, honour our
                                      Sustainability is integral to the success and long-term viability       commitments to the environment and to the wider community and
                                      of Cathay Pacific Airways. As an airline, we can only remain            ensure we have the right tools and resources to grow our business


from the
                                      profitable in a thriving economy which sustainably provides for         for the future.
                                      the communities that support our business. Finding ways to
                                      minimise any negative impact on the health of the societies and         Whilst it has not always been a simple matter to find environmentally
                                      environment in which we operate has therefore become a priority.        sound solutions that are both operationally and economically feasible,


Chairman and
                                                                                                              the continuing quest to do so has provided new opportunities
                                      We believe that for real sustainability to be achieved at Cathay        for innovation and lateral thinking. Through the resourcefulness,
                                      Pacific, it has to be fully integrated into our business strategy. To   creativity and dedication of our staff and with the cooperation of our
                                      this end, we have been formulating our Sustainable Development          business partners, we have been able to build the case for adopting


Chief Executive
                                      Strategy over the last two years. In 2011, we identified five areas     many of these initiatives – some small, some more significant –
                                      where we believe we should focus our efforts in addressing              and they are now adding value to the business, as well as bringing
                                      sustainability: flights, customers, staff and the community,            positive benefits to the community and environment.
                                      infrastructure and the supply chain. These areas are all integral
                                      to the running of our business and the structure of this year’s         We have not yet found the most effective solutions to all the
                                      Sustainable Development report reflects these priorities.               challenges we face today, but we remain confident that we can –
                                                                                                              and indeed we must – do so. In the meantime, we will continue
                                      One of our biggest challenges is the cyclical and volatile nature       to plan for the future, to concentrate on attaining the best possible
                                      of the aviation industry, where more often than not, we need to         outcomes for our stakeholders and to strive for operational
                                      focus on immediate issues such as rising fuel prices, operational       excellence in everything we do, in order to achieve our vision
                                      disruptions, economic downturns, natural disasters – or even social     of being the world’s best airline.
                                      unrest. Our industry currently faces testing times and some of
                                      these issues are highlighted in the Overview of 2011 section. But       Sustainability is a journey and we are committed to it for the long
                                      while we need to take a pragmatic approach to dealing with these        haul; we realise that this path will not always be easy, but we know
Christopher Pratt   John Slosar       problems in the short term, it is vital that our overarching strategy   that it is the right one.
Chairman            Chief Executive   for the airline reflects a clear focus on the longer term picture. In
2           Cathay Pacific Sustainable Development Report 2011




    Understanding                                                         Environmental indicators table
                                                                          Aircraft Operations                  units                              2011*   †
                                                                                                                                                                2010*   †
                                                                                                                                                                            Social indicators table
                                                                                                                                                                            Issue                                                         units         2011+        2010+


    Our Business                                                          ATK
                                                                          RTK
                                                                          RPK
                                                                                                               million
                                                                                                               million
                                                                                                               million
                                                                                                                                               26,383
                                                                                                                                               19,309
                                                                                                                                              101,536
                                                                                                                                                              24,461
                                                                                                                                                              19,373
                                                                                                                                                              96,588
                                                                                                                                                                            Total CX Group workforce
                                                                                                                                                                            by Location
                                                                                                                                                                            Hong Kong
                                                                                                                                                                                                                                          no.

                                                                                                                                                                                                                                          no.
                                                                                                                                                                                                                                                     28,158

                                                                                                                                                                                                                                                     21,784
                                                                                                                                                                                                                                                                   26,564

                                                                                                                                                                                                                                                                   20,475
                                                                          All Flights                                                                                       China                                                         no.           825           749
                                                                                                                                                                            Outports                                                      no.         5,549         5,340
                                                                          Fuel Consumption                     thousand                          5,032         4,818        by Employment Type
    Cathay Pacific is an international airline registered and based in
                                                                                                               tonnes                                                       Flight Crew                                                   no.         3,133          3,022
    Hong Kong, offering scheduled passenger and cargo services to
    162 destinations in 42 countries and territories. As Hong Kong’s      Fuel                                 grammes/ATK                         191            197       Cabin Crew                                                    no.        10,520          9,740
    major airline, we provide vital links for trade, investment in        Efficiency                           improvement                      11.6%           8.7%        Ground Staff                                                  no.         8,603          8,120
    business and leisure travel. Through our passenger and cargo                                               since 1998 %                                                 Subsidiary Staff                                              no.         5,902          5,682
    services under Cathay Pacific, Dragonair and Air Hong Kong,                                                grammes/RTK                         261           249
    we connect Hong Kong to the world. Cathay Pacific and its                                                                                                               Average hours of training per year
                                                                                                               improvement                      19.8%         23.4%         Flight Crew                                                   hrs             44            47
    subsidiaries now employ over 29,000 people worldwide.
                                                                                                               since 1998 %                                                 Cabin Crew                                                    hrs             62            38
                                                                          Global CO2                           thousand                         15,851        15,175
    Major subsidiaries and associates                                                                                                                                       Airport Staff                                                 hrs             32            25
                                                                          emissions                            tonnes in CO2e                                               Engineering Staff                                             hrs            264           294
     Cathay Pacific Catering Services (HK) Limited                 100%
                                                                                                               grammes/ATK                         601           620        Subsidiary Staff                                              hrs             21            21
     Cathay Pacific Holidays Limited                               100%                                        improvement                      11.6%           8.7%        Employee covered under collective                             %              2.0           3.4
     Hong Kong Airport Services Limited                            100%                                        since 1998 %                                                 bargaining agreement (2)
     Hong Kong Dragon Airlines Limited                             100%                                        grammes/RTK                         821           783        Employees receiving                                           %              100           100(1)
     Vogue Laundry Service Limited                                 100%                                        improvement                      19.8%         23.4%         performance reviews
                                                                                                               since 1998 %                                                 + Covers, CX, KA, 100% owned Hong Kong-based               Note:
     Air Hong Kong Limited                                          60%
                                                                          Other indicators (1)                                                                                  subsidiaries, and Air Hong Kong                        CX: Cathay Pacific Airways
     Air China Limited                                           19.53%                                                                                                     (1) Includes CX, KA, CPCS, HAS.                            KA: Hong Kong Dragon Airlines
                                                                                                                                                                            (2) % of employees under collective bargaining
                                                                          Electricity consumption              mWh                             95,442 93,232                    agreements are reported where it is applicable
                                                                                                                                                                                                                                       CPCS: Cathay Pacific Catering Services
                                                                                                                                                                                                                                       HAS: Hong Kong Airport Services
    Selected awards for 2011                                              Potable water                        m3                             741,814 724,933                   and in accordance with local legislation. We only
                                                                                                                                                                                have data for Australian, Canadian, and UK outports.
                                                                          consumption
    Cathay Pacific                                                        Paper & cardboard                    tonnes                            1,826         1,679
                                                                          recycled(2)
    Airline of the Year                                                   Aluminium cans                       kg                               77,678        37,671
    3rd South East CEO Conclave
                                                                          recycled
    Best Frequent Flyer Programme – Asia Miles                            Plastic recycled                     kg                               89,737        40,463
    2011 Business Traveller Asia-Pacific Travel Awards
                                                                          Note:
    HKAEE Gold Award 2010                                                 * incorporates KA
    Hong Kong Awards for Environmental Excellence (HKAEE)                 † Fuel consumption includes testing, training, and wet-lease flights
                                                                          (1) For Hong Kong and 100% owned Hong Kong-based subsidiaries.
                                                                          (2) CPCS receives significant amount of cardbox from its procurement that are recycled.
    Dragonair                                                                 1 tonne of fuel = 3.15 tonne of CO2
                                                                              GWP of CO2 is 1; assumes that all other GHG gases are negligible as these impacts
    World’s Best Regional Airline                                             still uncertain.
    2011 World Airline Awards (Skytrax)

    Air Cargo Excellence Award
    2011 “Air Cargo World” Magazine

                                                                                                                                                                                Visit the report website for the complete table.
                                                                                                                                                Cathay Pacific Sustainable Development Report 2011   3


 Economic Value Added                                                                                                            2011                   2010            % Change
 For the year ended 31 December 2011                                                                                            HK$M                   HK$M

 Direct economic value generated
 Turnover                                                                                                                     98,406                89,524                     9.9%
 Finance income                                                                                                                  982                   677                    45.1%
 Surplus on sales of investments                                                                                                   –                 2,165                  -100.0%
 Gain on deemed disposal of an associate                                                                                           –                   868                  -100.0%
 Share of profits / (losses) of associated companies                                                                           1,717                 2,587                   -33.6%
                                                                                                                             101,105                95,821                     5.5%
 Economic value distributed
 Purchases of goods and services                                                                                               71,949               58,294                        23.4%
 Employee wages and benefits                                                                                                   14,772               13,850                         6.7%
 Payments to providers of capital                                                                                               3,941                6,207                       -36.5%
 Taxation                                                                                                                         803                1,462                       -45.1%
 Community investments including charitable donation
 – Direct payment                                                                                                                    17                     11                   54.5%
 – In the form of discounts on airline travel                                                                                         6                      5                   20.0%
                                                                                                                               91,488               79,829                       14.6%
 Economic value retained
 – Depreciation                                                                                                                 6,127                  6,316                      -3.0%
 – Profit / (loss) after dividends                                                                                              3,455                  9,681                     -64.3%
 Retained for re-investment and future growth                                                                                   9,582               15,997                       -40.1%
 Note:
 The above table summarises the distribution of the economic value generated from the Group which includes Cathay Pacific and all its subsidiaries including Dragonair and
 Air Hong Kong. Share of losses / profits of associated companies include our share of losses / profits of Air China. Please refer to our 2011 Annual Report page 96-97 for details
 of our principal subsidiaries and associates.



Cathay Pacific Group Fleet profile as of 31 December 2011
 Cathay Pacific Fleet profile
                                                                                      BOEING                                  AIRBUS
 Aircraft Type (A/C)
                                             777-200 777-300 777-300ER                747-400 747-400F 747-400ERF 747-8F A330-300 A340-300 TOTAL
 No. of Operating A/C in Subfleet                  5      12         24                    21       14           6     4       33       13   132
 Average age of Operating Subfleet (years)     14.57   10.62       2.38                 19.56    16.01        3.02  0.10     9.21    14.60 10.57
 Passenger                                         x       x          x                     x                                   x        x
 Freighter                                                                                           x           x     x

 Dragonair Fleet profile                                                                                     Air Hong Kong Fleet profile
                                                               AIRBUS                                                                    AIRBUS      BOEING
 Aircraft Type (A/C)                                                                                   Aircraft Type (A/C)
                                              A320-200     A321-200 A330-300 TOTAL                                                      A300-600F 747-400BCF TOTAL
 No. of Operating A/C in Subfleet                   11            6       15     32                    No. of Operating A/C in Subfleet         8           3    11
 Average age of Operating Subfleet (years)        9.10        11.05    10.19   9.98                    Average age (years)                   6.72       21.20 14.65
 Passenger                                           x            x        x                           Passenger
 Freighter                                                                                             Freighter                                        x                    x
4         Cathay Pacific Sustainable Development Report 2011




    Approach to
    Managing
    Our Business

    Toward a sustainable future                                               Sustainable Development Strategy                                                                                                      A key component of this Strategy is to encourage staff to mitigate
                                                                                                                                                                                                                    or reduce the social and environmental impacts by making their
    At Cathay Pacific, we are committed to a journey that leads to            Our Sustainable Development Strategy comprises five “priority areas”,                                                                 day-to-day decisions responsibly. This enables us to address and
    a sustainable future. This means that our company continues to            with safety and sound corporate governance underpinning each area:                                                                    integrate sustainability issues into our business and support our
    deliver financial rewards for our shareholders and brings about the                                                                                                                                             ability to deliver ‘economic value’ – i.e. profits – for shareholders.
    benefits of the aviation industry, while not compromising the quality                                                                                                                                           Action plans are being developed to be implemented in the coming
    of life of our staff, our passengers, the communities we serve and                                                                      TE GOVERNANC
                                                                                                                                  ORA
                                                                                                                                                                                                                    five to 10 years, up to 2020.
    the state of the environment.                                                                                            P                                                             E
                                                                                                                      C   OR                TY
    Our approach to managing our business toward a sustainable future                                                                  SAFE
    is simple: to ensure we have the right infrastructure to facilitate the                                                             Com
                                                                                                                                           munitie
                                                                                                                                                  s                       Oper
                                                                                                                                                                              atin                                                     “As a Group we should always
                                                                                                                                     nd                                           go
    required improvements that may emerge. We do this by:
                                                                                                                               eo
                                                                                                                                 plea                                               ur
                                                                                                                                                                                       Fli                                             seek to be ahead of legislation
                                                                                                                                                                                                                                       rather than reacting to it: that




                                                                                                                                                                                               gh
                                                                                                          nP
    – Providing a framework in the form of a Sustainable




                                                                                                                                                                                                 ts
                                                                                                        gi
                                                                                                    stin
      Development Strategy                                                                                                                                                                                                             even if the environmentally ‘clean’
                                                                                                Inve


    – Engaging our stakeholders regularly                                                                                                                                                                                              way of doing something is more
                                                                                          Wo r k i n g w it h o u r




                                                                                                                                                                                                         u cture
    – Putting in place sound corporate governance systems,                                                                                                                                                                             expensive and therefore on the
                                                                                                                                                                                                                                       face of it uneconomic, we should




                                                                                                                                                                                                      In fr a str
      procedures and practices
    – Embracing “safety comes first” as an embedded philosophy                                                                                                                                                                         always, regardless of mandatory




                                                                                                                                                                                                    our
                                                                                                     Sup




                                                                                                                                                                                                                      Sir Adrian Swire legislation, have a close look at the


                                                                                                                                                                                                 ing
      in all our activities
                                                                                                             ply




                                                                                                                                                                                                ag
                                                                                                                      Ch




                                                                                                                                                                                               an
                                                                                                                           n
                                                                                                                                                                                                                                       overall feasibility of adopting such
                                                                                                                          ai




                                                                                                                                                                                           M
                                                                                                                                                                                                                      in 1989
                                                                                                                                     Inte                                            ers
                                                                                                                                            ra c ti
                                                                                                                                                      n g w it h o u r C u s t o m                                                     a practice, both from the point of
                                                                                                                                                                                                                                       view of general public good and
                                                                                                                                                                                                                                       enlightened self-interest.”
                                                                                                                                                                                                                                                             Cathay Pacific Sustainable Development Report 2011   5




Stakeholder
Engagement                                                                   Below are some of the issues raised by our stakeholder groups this year, together with CX’s actions:

                                                                                                This year our stakeholders said:                                                                      What we are doing:

                                                                                                              They are not familiar with the company’s sustainability strategy and performance,       A series of internal initiatives have been planned in 2012 for staff to raise
                                                                                                              especially outports.                                                                    awareness and engage staff on how sustainability relates to their work.
                                                                                                              They would like more transparency on our operational impacts, with clear long           We have been working with various departments on a set of specific targets for
                                                                                                              term goals, performance indicators, action plans and measurement of impacts.            the key areas of our operation, which will be rolled out in 2012.
                                                                                                              We should develop a supplier audit system.                                              We are putting together a framework for supply chain compliance checking.



Stakeholder engagement helps us understand the current and                   Below is a summary of ongoing work in developing a well-defined materiality matrix on sustainable development risks.
emerging issues our key stakeholders are concerned about. It helps           This enables us to better identify significant issues for the company.
define our Sustainable Development Strategy as well as how and
what we report. We follow a five-year stakeholder engagement plan                                                                                                                                                     Safety                                  Interacting with Customers




                                                                      HIGH
                                                                                                                           Included in Report:                                            Included in Report:
to ensure we systematically engage with a range of interest groups                                                                                                                                                             Safety                                    Customer
                                                                                                                           Brief description                                                   In-depth with                                                             expectation
on a regular basis, at least once every two years.                                                                                                                                             commitments
We aim to report on sustainability issues that are “material” or                                                                                                                                                      Operating Our Flights                              Offering sustainable
                                                                                                                                                                                                                                                                         products and services
relevant to us – that is, when issues substantially affect our long                                                                                                                                                            Fuel efficiency and
term commercial and operational viability.                                                                                                                                                                                     GHG reductions
                                                                      Importance to Multiple Cathay Pacific Stakeholders

                                                                                                                                                                                                                                                                         Increasing customer awareness
                                                                                                                                                                                                                                                                         on sustainability issues
Our materiality assessment combines the Swire Group approach                                                                                                                                                                   New technology
                                                                                                                                                                                                                               investment (biofuels)
on identifying the risk concerns of our stakeholders, and our own                                                                                                                                                                                             Working with Our Supply Chain
materiality scoring methodology, which follows the principles
                                                                                                                                                                                                                      Managing Our Infrastructure                        Engaging suppliers and staff
outlined in international standards such as the Global Reporting                                                                                                                                                                                                         on sustainable procurement
Initiative (GRI) and the AA1000APS.                                                                                                                                                                                            Operate buildings to a high
                                                                                                                                                                                                                               environmental standard
                                                                                                                                                                                                                                                              Investing in People and Communities
The resultant ‘materiality’ of our report is then reviewed by an
independent Stakeholder Review Panel.                                                                                                                                                                                          Manage and reduce noise                   Staff occupational health



                                                                                                                                                                                                                               Biodiversity and                          Staff engagement
                                                                                                                                                                                                                               conservation issues

                                                                                                                                                                                                                                                                         Creating value for
                                                                                                                                                                                                                               Air quality issues                        local communities


                                                                                                                                                                                                                               Effective resource                         Engagement with
                                                                                                                           Not included                                                   Included in Report:                                                            local communities
                                                                                                                                                                                                                               management
                                                                                                                           in Report                                                         Brief description
                                                                      LOW




                                                                                                                                                                                                                               Implementing sustainable
                                                                                                                          LOW                    Potential Impact to Cathay Pacific                      HIGH                   sourcing practices

                                                                             Note: This matrix indicates the relative importance and impact of issues based on our internal analysis.
6         Cathay Pacific Sustainable Development Report 2011




    Corporate
    Governance


    Governance of sustainability                                                                                                                              Risk management and sustainable development
    Cathay Pacific is committed to maintaining a high standard of corporate governance, and devotes                                                           The Corporate Risk Management Department (comprising risk management, legal, insurance and
    considerable effort to putting in place best practices in accordance with our Code of Conduct on                                                          compliance teams) manages corporate risk and provides advice for the entire Cathay Pacific Group.
    Corporate Governance.                                                                                                                                     The Group Risk Register is reviewed annually, with a commitment to ensuring that our risk management
                                                                                                                                                              system is consistently in line with the AS/NZS 4360: 2004 risk management standards.
    The governance of sustainable development at Cathay Pacific is led by the Chairman, with the Chief
    Executive being accountable for the Sustainable Development Strategy. The following diagram shows                                                         Following the roll-out of the current risk management framework to Cathay Pacific departments in
    the reporting lines of various sustainability committees:                                                                                                 Hong Kong, this framework was progressively introduced to Cathay Pacific Group subsidiaries and
                                                                                                                                                              regional outports in 2011.
                                                                                                                                                              In the past few years, we have been identifying our environmental and social risks. After completion
    Governance structure for sustainability
                                                                                                                                                              of an initial climate change risk study at Cathay Pacific in 2011, we will be incorporating climate change
                                                                                                                                                              issues much more consistently into business plans. This process will then expand to other sustainable
                                                                                                             Chairman                                         development issues next year – such as environment and community issues.


                                                                                                       Board of Directors                                     Corporate compliance
                                                                                    Chief Executive, 5 Executive Directors,12 Non-Executive
                                                                                         Directors, including 4 Independent Directors                         It is the policy and intent of Cathay Pacific, Dragonair and the Hong Kong-based 100% owned
                                                                                                                                                              subsidiaries to operate at all times in full compliance with all applicable laws and regulations.
                                                     Management Committee                                                                                     To support clear communication and ensure awareness of our antitrust policy and guidelines, we run
                                                                                                              Audit                  Board Safety Review
                                               Chief Executive, 3 Executive Directors,                      Committee                    Committee
                                                       8 Executive Officers
                                                                                                                                                              face-to-face workshops, online training for new joiners and regular refresher online training for other
                                                                                                                                                              employees. We encourage employees to report any apparent or suspected violations of our antitrust
                                                                                                                                         Swire Group          policy and associated guidelines, with strict confidentiality ensured.
     Fleet Steering Group                    Sustainable Development                     Long Term Action Group (LTAG)                  Environmental
                                                 Steering Group                               on Climate Change                         Best Practice
                                            Chaired by Director Corporate Affairs       Chaired by Director Corporate Development       Working Group
                                                                                                                                          Swire Group
                                                                                             The European Union                     Environmental Committee
       Inflight Services                  Property Services Department
         Department                                                                        Emissions Trading Scheme                   Swire Supply Chain
                                                 Environmental                                   Compliance
        Environmental                                                                                                                   Sustainability
          Committee                                Committee                                    Working Group                          Working Group
                                                                                                                                                                                                                        Cathay Pacific Sustainable Development Report 2011   7




                                                                        Safety                                                                                  75
                                                                                                                                                                PORTS REGUlARly
                                                                                                                                                                AUDiTED ON SAFETy
                                                                                                                                                                                             15%
                                                                                                                                                                                             DECREASE ON MODERATE
                                                                                                                                                                                             RiSk SAFETy iNCiDENTS
                                                                                                                                                                                                                                      Very low risk
                                                                                                                                                                                                                                      OF AN ADVERSE EVENT
                                                                                                                                                                                                                                      ASSOCiATED WiTh FliGhT
                                                                                                                                                                                                                                      CREW FATiGUE


                                                                        We put safety first




                                                                                                                                                                  Our safety performance
                                                                                                                                                                  One of our safety goals is zero accidents and zero ‘high risk’
                                                                                                                                                                  incidents. In 2011, there was one event classified as an accident,
                                                                        Governance of safety at Cathay Pacific                                                    compared with two in 2010. There were two ‘high risk’ safety
                                                                                                                                                                  incidents and 67 ‘moderate risk’ safety incidents in 2011. No
                                                                                                                                                                  accidents have been reported for Dragonair during the same period.
                                                                                                  Cathay Pacific Board
Operational safety
At Cathay Pacific, we manage safety by managing our operational                                                                                                   Safety Incidents (Cathay Pacific)
risks. This is primarily achieved through our Safety Management           Board Safety Review Committee (BSRC)
System (SMS). To ensure that our staff understands how we use             Chairman: Independent safety expert                                                     2011
the SMS and to demonstrate how they can contribute to safety                                                                                                                                                                                     Moderate Risk
management, we rolled out an SMS e-Learning package and
                                                                          (Meets twice yearly)
                                                                                                                                                                                                 67
knowledge test for CX staff in June 2011.                                                                                                                            2                                                                           High Risk
During 2011, we updated and revised the way we measure and                                              Chief Executive
monitor our safety performance within the airline. The safety                                                                                                     2010
metrics are documented and reviewed on a monthly basis by                                                                                                                                               79
the Airline Safety Review Committee (ASRC).
                                                                          Airline Safety Review Committee (ASRC)
We continue to monitor our flight safety by capturing and analysing
                                                                                                                                                                     1
                                                                          Chairman: General Manager Corporate Safety
flight data from all our flights and reports from staff. For ground
operations, we audit the 75 ports into which we operate on a              Directors, General Managers,                                                            2009
                                                                          Heads of Departments, Managers
regular basis. We also continued assisting with the ISAGO (IATA                                                                                                                                          82
Safety Audit for Ground Operations) initiative. The aim is to improve     (Meets monthly)

operational safety in the airport ground environment and to reduce                                                                                                   3
damage to aircraft and equipment.
                                                                                                 Safety Action Committees                                         2008
                                                                             Flight Operations                 Occupational Health & Safety*                                                                                 118
                                                                             Engineering                       Flight Data Analysis Review                               4
                                                                             Cabin                             Fatigue Risk Management System
                                                                                                                                                                  Note: Safety Occurrences include all incidents and accidents that occurred in 2011.
                                                                             Ramp/Cargo                                                                           Risk levels are determined by the Cathay Pacific risk management matrix. High risk are
                                                                                             (Meets monthly)              (Meets bi-monthly *Meets quarterly)     significant risks that require immediate attention. Moderate risks are significant risks that
                                                                                                                                                                  require appropriate mitigation and monitoring.

                                                                               Governance line                 Reporting line           Information line
8          Cathay Pacific Sustainable Development Report 2011
                                                                                                                                                                          0                     0
                                                                                                                                                                          STAFF FATAliTiES      SERiOUS WORk-RElATED iNJURiES




    Staff safety                                                                                                     “Cathay Pacific has demonstrated
                                                                                                                     itself as an industry leader by early                Charles Haddon-Cave Safety Review
    The overall Lost Time Injury Frequency Rate (LTIFR) reduced by
    7.9% in 2011.                                                                                                    adoption of FRMS as an integral
                                                                                                                                                                          In 2011, Cathay Pacific commissioned a leading international
    We continue to put an emphasis on improving staff Occupational                                                   part of their Safety Management                      expert on aviation safety, Sir Charles Haddon-Cave, Q.C.,
    Health and Safety (OHS). All new joining cabin crew complete an                                                  System. FRMS is another example                      to conduct an in-depth review of the safety systems and
    e-learning module related to OHS as part of their induction training,
                                                                                                                     of our commitment to making                          culture within Cathay Pacific, Dragonair, and Air Hong Kong.
    as well as attend an annual half-day training session on manual                                                                                                       Seventy deliverable action points were recommended, and
    handling skills.                                                                                                 Cathay Pacific one of the world’s
                                                                                                                                                                          each one is being overseen and followed up by a director.
                                                                                                                     safest airlines.”
    Lost Time Injury Frequency Rate                                (Cathay Pacific)
                                                                                                     Captain Darryl Soligo,
                                                                                                     Aircrew Officers Association Technical and Safety Committee,                               “Safety of our passengers and
    2011
                                                                                                     FRMS Committee Pilot Representative, and Training Captain
                                                                                                     at Cathay Pacific.
                                                                                                                                                                                                crew is front and centre of my
                    20.6                                                        Subsidiary Staff                                                                                                responsibilities as chief of
                                                                                KA                                                                                                              Cathay Pacific. I am confident
                           25.2
                                                                                                                                                                                                that, consistent with this
                                                                                CX
                                        33.8                                                       Alcohol and Other Drugs Policy                                                               commitment, we have an
                                                                                                   Our Alcohol and Other Drugs Policy and Programme aims to                                     excellent and well established
    2010                                                                                           educate employees on issues related to alcohol and other                                     safety programme. At the
                 18.4                                                                              drug use, and to promote and maintain work place safety in                                   same time, even the best
                                                                                                   a supportive environment.                                                  John Slosar,
                                                                47.3                                                                                                                            safety programmes always
                                                                                                                                                                              Chief Executive
                                                                   52.1                            Passenger safety                                                                             have room for improvement.”
                                                                                                   There were zero passenger fatalities in 2011 as a result of our
                                                                                                   operations in Cathay Pacific and Dragonair.
    Fatigue Risk Management System
                                                                                                   We continue to conduct comprehensive risk assessments on all
    Managing pilot fatigue risk is an important component of Cathay                                new cabin products. Our crew are also able to call upon inflight
    Pacific’s SMS. During 2011, we continued to develop the Fatigue                                medical assistance 24/7 through the use of the Medlink system.
    Risk Management System (FRMS), which is an evidence-based,
    data-driven system that is used to monitor and control fatigue risk to
    a level that is ‘As Low As Reasonably Practical’ (ALARP). We target
                                                                                                   Public health and food safety
    any systemic issues with rostering patterns, and conducted a pilot                             Cathay Pacific monitors public health outbreaks closely to ensure
    fatigue survey to help identify flights that needed some attention.                            that we protect the health and safety of our front line employees as
    Current data indicates that Cathay Pacific’s risk of an adverse event                          well as the travelling public.
    associated with flight crew fatigue is very low.
                                                                                                   Working together with our caterers, we continue to do our utmost
                                                                                                   to serve inflight meals that meet the highest levels of food safety
                                                                                                   and hygiene.
                                                                                                                          Cathay Pacific Sustainable Development Report 2011   9


Introduction to Priority
Area Sections              Emissions from our flights form the largest part of our business’ operational         Operating                                                     10
                           carbon footprint. As a responsible business, projected increases in our
                           emissions cannot be left unchecked, and we are therefore committed to
                                                                                                                 Our Flights
                           reducing these impacts.




                           Our ground operation is an area where we are working hard to reduce our               Managing                                                      12
                           footprint, primarily from electricity consumption of our buildings and equipment
                           stock, vehicular emissions, resource use and waste generation.
                                                                                                                 Our infrastructure




                           Our service philosophy – Service Straight From The Heart – is an integral             interacting                                                   14
                           part of the Cathay Pacific culture. Our priority is to provide a great service that
                           is warm, friendly, professional and sensitive to our passengers’ needs.
                                                                                                                 with Customers




                           Our Airline Purchasing and Engineering Procurement departments are                    Working with                                                  16
                           responsible for purchasing the range of goods and services that the airline
                           needs, from the largest spend items such as aircraft and fuel, to the smallest
                                                                                                                 Our Supply Chain
                           such as office supplies and marketing memorabilia. Many of our suppliers are
                           companies who also report publicly on their sustainability performance and
                           hold similar values towards corporate responsibility as ourselves.




                           Our staff is one of our greatest strengths and assets, and they are an important      investing in People and                                       18
                           key to our success. That is why we make it a priority to support staff at the
                           workplace, empowering them to make a difference in the local communities
                                                                                                                 Communtities
                           across our network.
10         Cathay Pacific Sustainable Development Report 2011




                                                                                     Operating                                                                                           11.6%
                                                                                                                                                                                         ATk iMPROVEMENT
                                                                                                                                                                                         SiNCE 1998
                                                                                                                                                                                                                  19.8%
                                                                                                                                                                                                                  RTk iMPROVEMENT
                                                                                                                                                                                                                  SiNCE 1998




                                                                                     Our Flights
                                                                                       Reducing our carbon footprint




     Climate change                                                                  We support fully the International Air Transport Association (IATA)’s   Improving fuel efficiency
                                                                                     climate change commitments.
     Aviation currently accounts for 2% of global emissions from                                                                                             Our operating culture of fuel efficiency has been embedded since
     human activity. As aviation grows to meet increasing demand,                                                                                            our first non-stop long haul flights from Hong Kong to London and
     it is forecasted that by 2050, this could rise to 3%.                             2010 > An average improvement of fuel efficiency of                   Vancouver in the early 1980s, through reducing weight onboard.
                                                                                              1.5% per year                                                  Our fuel efficiency initiatives reflect the IATA four-pillar strategy:
     Comparison of aviation CO2 emissions
     vs other forms of transport (%)                                                   2020 > A cap on aviation CO2 emissions from 2020
                                                                                              (carbon neutral growth)
                                                                   1.5                                                                                           Technology                  Operations



                                                                                                                                                                                1                          2
                                                                   2.0                 2050 > Aspiration for 50% reduction in net CO2 emissions                   Airframe,                   Maximum
                                                                                                                                                                  engine                      efficiency
                                                                   16.5                       over 2005 levels
                                                                                                                                                                  New fuels                   Minimum
                                                                                                                                                                                              weight
                                                                   2.5
          77.5                                 %
                                                                                                                                                                Infrastructure               Economic



                                                                                                                                                                                3                           4
                                                                                                                                                                                             instruments
                                                                                                                                                                  Air routes,
                                                                                                                                                                  ATM                         Offsets &
                                                                                                                                                                                              trading
                                                                                                                                                                  Airport
        International aviation                        Other transport                                                                                             procedures                  Incentives

        International marine                          Emissions from other sectors
        Road transport
                                                                                                                                                                                                                                                                   Cathay Pacific Sustainable Development Report 2011   11




In 2011, we received three A330-300s; six Boeing 777-300ERs                                                                                                                                                            In 2011, our Head of Environmental Affairs was appointed to IATA’s
and four Boeing 747-8Fs. We now have a total of 24 Boeing                                                                                           2011 GHG Emissions (tCO2e)*                                        Climate Change Task Force which is leading the industry’s work to
777-300ERs, powered by two highly efficient GE90 engines,                                                                                                                                                              develop airlines’ commitment to carbon neutral growth for 2020 and
which form the backbone of our ultra long-haul fleet, where the                                                                                     Scope 1                              Scope 2                       to develop proposals for a global agreement on emissions.
greatest fuel efficiency improvements of 26-28% are realised.                                                                                       16,286,705 (99.67%)                  53,695 (0.33%)
                                                                                                                                                    Jet fuel, ground fuel                Electricity and               Carbon offsetting
                                                                                                                                                    and Towngas                          Towngas                       FLY greener, the first carbon offset programme launched by
Boeing 777-300ER fuel efficient features                                                                                                                                                                               an Asian airline in 2007, is part of our ongoing effort allowing
                                                                                                                                                  * Details of our GHG emissions and PricewaterhouseCoopers report     passengers to contribute to projects that reduce CO2 emissions.
                                                                                                                                                    are available at in www.cathaypacific.com/sdreport                 More information can be found at www.cathaypacific.com/flygreener.
                    New raked wing tip
                    to improve aerodynamic
                    efficiency
                                                                                                                                             Our total CO2 emissions from fuel burn in 2011 were 15.9 million
                                                                                                                                             tonnes, which is in line with the operational growth of the airline.
                                                                                                                                             In 2011, our total carbon efficiency relative to our overall capacity
                                                                                                                                             (available tonne kilometre, ATK) has improved 11.6% since 1998.
                                                                                                                                             Since 1998, our carbon efficiency relative to actual traffic volume
                                                                                                          Wing modified to
                                                                                                                                             (revenue tonne kilometre, RTK) has improved 19.8%.
                                                                                                          reduce drag

                                                                                                                                             The future
                        Powered by two GE90 engines
                                                                                                                                             Utilising fuel efficient modern aircraft with the latest designs and      In 2011, 3,392 tCO2 were offset by our passengers. Cathay Pacific
                                                                                                                                             technological advancement appropriate for our operations is one           and Dragonair also offset the CO2 impacts of staff travelling on
                                                                                                                                             of the most significant ways that we can reduce our environmental         business, amounting to 14,575 tCO2 at an approximate cost of
                                                                                                                                             impact and meet our climate change targets. We work with                  HK$788,000.
                                                                                                                                             manufacturers so that these technologies can be brought to the
Global CO2 emissions –                                                                                                                       forefront of research and development.
Cathay Pacific Group Fleet                                                                                                                                                                                             Contributing to climate change science
                                                                                                                                             Cathay Pacific is also a member of an industry coalition, the
                                                                                                                                             Sustainable Aviation Fuel Users Group (SAFUG), and the Roundtable         To assist in increasing understanding of climate change science
         1,200
grammes CO2




                                                                                                                                             for Sustainable Biofuels (RSB).                                           in the atmosphere, Cathay Pacific signed a memorandum of
         1,050
                                                                                                                                                                                                                       agreement with In-service Aircraft for a Global Observing System
                                                                                                                                             In 2011, we hired a dedicated Biofuels Manager and developed a            (IAGOS), which is a European Commission long-term climate
              900                                                                                                                            sustainable aviation biofuels strategy which will drive our efforts for   change monitoring project through the use of installed equipment
                                                                                                                                             the next five years.                                                      on long-haul aircraft of international airlines (www.iagos.org).
              750
                                                                                                                                                                                                                           Visit the report website for detailed flight emissions, other environmental
              600                                                                                                                            Economic measures                                                             data and initiatives.
              450                                                                                                                            Emissions Trading
              300                                                                                                                            Cathay Pacific believes it is more appropriate for aviation emissions
                                                                                                                                             to be regulated under a global sectoral scheme under the UN’s
                                                                                                13,769

                                                                                                         14,393

                                                                                                                  13,852
                                                                                                                           15,175

                                                                                                                                    15,851
                                                                                       11,327
                                                                              10,474




              150                                                                                                                            International Civil Aviation Organization (ICAO) rather than by the
                                     7,651
                    7,380
                             7,128



                                             7,658

                                                      8,136

                                                              8,159

                                                                      9,693




                                                                                                                                             imposition of the regional European Union’s Emissions Trading
               0
                    1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 +                                                  Scheme (EU ETS), due to the global nature of the industry. Despite
                                                                     *    * *+ *+ *                                                          our strong opposition, we have been working in full compliance with
                            total C02 emissions                          grammes/RTK                              grammes/ATK                the EU ETS regulation.
                            (in thousand tonnes)
                    * includes Dragonair             + includes testing, training, and wet lease flights
12         Cathay Pacific Sustainable Development Report 2011




                                                                              Managing                                                                                       hAS 25%
                                                                                                                                                                             VEhiClES ARE
                                                                                                                                                                             EURO iV, EURO V OR
                                                                                                                                                                             ElECTRiC GROUND
                                                                                                                                                                                                       VOGUE 6.4%
                                                                                                                                                                                                       lESS PERChlOROEThylENE
                                                                                                                                                                                                       USED COMPARED TO 2010




                                                                              Our infrastructure
                                                                                                                                                                             SERViCES EqUiPMENT
                                                                                                                                                                             WiTh lOWER
                                                                                                                                                                             EMiSSiON lEVElS




                                                                                                                                                   Resource Use
                                                                                Increasing energy efficiency and
                                                                                                                                                   In our offices
                                                                                better resource use                                                We continue to make progress on sourcing sustainable materials for
                                                                                                                                                   our products, using mixed source Forest Stewardship Council (FSC)
                                                                                                                                                   certified or recycled paper and biodegradable plastic in many of
                                                                                                                                                   our products.

                                                                                                                                                   Inflight
                                                                                                                                                   We are using biodegradable plastic bags that hold our inflight
     Air quality and emissions on the ground                                  reduce emissions during the dry cleaning process, such as reducing   blankets, cutlery and duty free purchases, and are using paper from
                                                                              the consumption of solvents and switching from a diesel boiler to    responsibly managed sources for our inflight magazines. We are
     Our wholly-owned subsidiary, Hong Kong Airport Services (HAS),           a dual fuel boiler. In 2011, Vogue added a new Euro IV and Euro V    proud to have introduced the use of a more sustainable material
     has the largest vehicle fleet in the Group, and is the largest ground    truck and one Euro IV van to its collection and delivery fleet.      (corn starch) for the toothbrush and shoe horn contained in our
     handling agent in Hong Kong, serving 33 airlines. In total, 25% of its
                                                                              Cathay Pacific Catering Services (CPCS), a 100% subsidiary           Business and First Class customer amenity kits.
     533-strong fleet now comprise lower emission vehicles, including
     Euro IV and Euro V vehicles and electric ground support equipment.       of Cathay Pacific, serves 36 airlines and is one of the largest      On the freight side, as part of IATA’s goal of achieving e-freight
                                                                              flight kitchens in the world. This year, air cool condensers in      worldwide, we have successfully adopted the electronic airway bills
     Vogue Laundry Services is another wholly-owned subsidiary of             the blast chillers were replaced by more energy-efficient water      (e-AWB) for all cargo flights from Hong Kong, and are sharing our
     Cathay Pacific. It employs over 600 staff and serves over 18 airlines,   cool condensers.                                                     experience with other airlines.
     25 hotels and has a daily output of 261,000 items, equivalent to
     77 tonnes of laundry. Vogue has been actively exploring ways to                                                                                   Visit our report website for more stories on our The Club magazine and
                                                                                                                                                       mobile boarding pass.
                                                                                                                                                                                        Cathay Pacific Sustainable Development Report 2011   13




Waste management and recycling                                            With help from our cabin crew since 2006, we recycle plastic cups,
                                                                          plastic bottles and aluminium cans inflight. We started recycling
The Cathay Pacific Group recycles a range of materials in its offices,    glass bottles in the last quarter of 2011.
including paper, plastic, metal, aluminium cans, printer cartridges,
waste lubrication oil and garment hangers.
CPCS prepares an average of 60,000 meals per day. As part of an           Inflight Waste Recycling (Kg)
ongoing programme, CPCS gives food offcuts to a pig farm in Hong
Kong, which helps reduce the amount of food waste sent to landfill.       Aluminium Cans
                                                                                                                        2011
Vogue laundry uses 2.5 million garment hangers every year. There              29,802
continues to be a successful rate of reuse through our rebate
                                                                                                                        2010
programme with customers.                                                       34,721
    Visit our report website to read more about how we make good use of
    our old crew uniform.                                                 Plastic Bottles
                                                                                34,492
                                                                                                                                               Buildings
                                                                                   38,661                                                      Our headquarter buildings, Cathay Pacific City and Dragonair House,
                                                                                                                                               are based at Chek Lap Kok, Hong Kong. They mainly comprise
                                                                          Plastic Cups                                                         offices, flight training centres and stores. Both premises are certified
                                                                                                                                               to the ISO14001 international environmental management standard,
                                                                                   18,810                                                      and are both equipped with building management systems.
                                                                                                                                               In 2011, there was an increase in the total electricity consumption
                                                                                     20,250
                                                                                                                                               of our buildings due to the installation of an additional simulator and
                                                                                                                                               increased usage of existing ones.
                                                                          Glass*
                                                                                                                                               As part of making our buildings more energy efficient, we have
                                                                                                                        164,024                commenced trialling different lighting products. We will also be
                                                                                                                                               commissioning a detailed energy audit to assist us in refining our
                                                                                                                                               energy-efficiency programme.
                                                                          *Data start from September to December 2011
                                                                                                                                               The new cargo terminal, “topped out” in November 2011, contains
                                                                                                                                               many sustainability design features, including the HK$1.4 billion
                                                                                                                                               material handling system, which utilises regenerative power, and
                                                                                                                                               a chilled ceiling cooling system for the offices.


                                                                                                                                               Hong Kong International Airport expansion plan
                                                                                                                                               Cathay Pacific supports Hong Kong Airport Authority’s blueprint
                                                                                                                                               for airport expansion, including the construction of a third runway,
                                                                                                                                               and believes that this is important to the sustainability of the Hong
                                                                                                                                               Kong economy and to ensure the long-term competitiveness of our
                                                                                                                                               home hub.
14         Cathay Pacific Sustainable Development Report 2011




                                                                            interacting
                                                                            with Customers
                                                                              Offering alternative and
                                                                              sustainable products




     Customer satisfaction                                                  Defect-free cabins
                                                                            With last year’s defect-free project, we aim to ensure no aircraft
     Listening and responding to our customers                              leaves Hong Kong with any faults that may spoil a passenger’s
     We are constantly looking for ways to enhance our customers’           enjoyment of the flight. Building on this, our Engineering and Cabin
     experience of flying with us, which is why we value feedback from      Quality & Standards teams worked together this year to introduce
     our customers.                                                         a new reporting and measuring process, and developed more
     Detailed customer satisfaction surveys are undertaken daily            focussed performance metrics for this initiative. With the efforts
     on Cathay Pacific and Dragonair flights in all classes to help us      of our Inflight Service Managers (ISMs), cabin crew and service
     understand passengers’ ratings and satisfaction on different aspects   providers at over 80 stations around the world, our cabins are
     of their travel experience with us. We collect around 30,000 of        checked prior to passenger boarding, with any findings on defects
     these responses per month. We also make use of questionnaires          and cleanliness reported. During the summer of 2011, a seven-
     and customer focus groups.                                             week road show was launched to highlight this. We also engaged
                                                                            with the ISM community through 21 ISM forums.




                                                                                                                                                   Visit our report website to find out how customer feedback influenced
                                                                                                                                                   our new Business Class cabins.
 162                               Fly TO                                   CARRiED                                                                                                         Cathay Pacific Sustainable Development Report 2011   15
  DESTiNATiONS                     42 COUNTRiES AND TERRiTORiES             27.6 million PASSENGERS iN 2011

Customer service                                                           Emergencies management                                                 Service recovery
Getting it right when things go wrong                                      Our Crisis Management Centre is prepared to handle any                 Service failures are often an unavoidable part of the travel
We aim to handle disruptions in an effective and timely manner.            emergency or accident involving our aircraft, should the need arise,   experience but our customers tell us that they understand things
We have a robust emergency response system designed to                     anywhere around the world. In such situations, our Emergency Plan      may go wrong as long as we take steps to quickly recover. In 2011,
manage and support service disruptions or major incidents when             takes immediate effect and triggers the assembling of the Crisis       we introduced an initiative to all our frontline teams to ensure that
they occur during our operations.                                          Management Team. This activates our central telephone enquiry          all service failures are proactively resolved on the spot, and through
                                                                           centre, the Cathay Emergency Passenger Information Centre              this, we want our customers to remember more about how we
                                                                           (CEPIC), where phone lines are on standby 24 hours to link up          recovered than the actual service failure. Our aim is to enhance the
Flight Disruption Control System
                                                                           calls from any of our outports. These can be accessed toll-free by     experience for our customers and our frontline teams, as well as
A typhoon simulation exercise was conducted in April 2011 to test
                                                                           the public to ensure information is disseminated immediately to        improve on our service.
the Flight Disruption Control System and the Flight Disruption
                                                                           passengers and their families involved in the incidents.
Control Centre. This system helps us to continually improve on
timely communication of accurate and relevant information to and           Approximately 1,200 staff volunteers from the specially-trained
from the outports, and be better prepared for disruptions.                 Care Team are also on hand to offer humanitarian support to our
                                                                           passengers and their families during and after a crisis.
Customer and Commercial Control Team
Our new Customer & Commercial Control (CCC) team was created
to provide a coordinated response during disruptions across the
network, helping to better manage customers’ experience. Where
the Integrated Operations Centre tends to look at operational issues
like crew rostering, engineering and flight planning, the CCC is
dedicated to focussing on the passenger experience, such as
passenger protection and hotel arrangements.
                                                                                                                                                      Visit our report website to read about how our Delhi airport team shone
                                                                                                                                                      in the midst of an airport blackout.


                                                                                                                                                  Customer engagement and education
                                                                                                                                                  Communicating sustainability to our customers
                                                                                                                                                  In 2011, we produced an inflight video that introduces
                                                                                                                                                  Cathay Pacific’s sustainability initiatives.

    Visit our report website to find out how one of our crew went beyond
    the call of duty and received the Betsy Award for her dedication
    and service.
16         Cathay Pacific Sustainable Development Report 2011




                                                                             Working with
                                                                             Our Supply Chain
                                                                               Working with suppliers to offer
                                                                               more sustainable products




     Engaging with suppliers                                                 Proposed New Supply Chain Sustainability Compliance Process
     We aim to enhance the sustainability performance of our supply
     chain through ongoing compliance with our Supplier Code of
     Conduct, which is reviewed and updated periodically. We manage
     our sustainable development risks related to our supply chain by
     actively working with suppliers who share the standards we place
     on environmental, health & safety, human rights and labour                   CODE OF CONDUCT       COMMUNICATIONS             SELF         RISK          CLASS
     practices, business ethics and community issues.                              QUESTIONNAIRE                                ASSESSMENT   ASSESSMENT   DETERMINATION
     The Code forms part of the supply tenders and contracts managed
     by our local offices, and suppliers, both new and existing, are
     expected to comply with these standards by completing a
     questionnaire as part of the selection process.
     We are developing a suppliers’ compliance checking system where
     our suppliers are ranked on our business risk matrix, each of which
     carries varying levels of follow-up actions. These range from
     supplier-initiated self-assessment for low risk suppliers, background
     checks of publicly available documents, to a comprehensive site
     visit for suppliers deemed to be in the highest risk category.
                                                                                                                                                                                      Cathay Pacific Sustainable Development Report 2011   17
  OVER   1,000 SUPPliERS GlOBAlly FOR CX AND kA




Sustainable Sourcing                                                         Involving the local community                                        Timeline for Working with Our Supply Chain
Individual staff has been taking initiative with suppliers in exploring      With financial support from the Hong Kong Government’s Home
                                                                                                                                                    2006 Identified the need for a more coordinated approach to
the use of alternative materials with lower impacts. A successful            Affairs Department, and in association with the Outlying Islands
example in 2011 includes switching from plastic to corn starch               Women’s Association (OIWA), our subsidiary CPCS collaborated                sustainability in our supply chain
and cellulose in manufacturing the disposable toothbrushes and               with local community service centres in Tung Chung in 2009 to
                                                                                                                                                    2007 Developed and launched our Code of Conduct. First
shoehorns in our amenity kits. Our teams are also working with               establish a facility that packs inflight cutlery and headsets and
suppliers to expand our offering of sustainably sourced fish to a            semi-processed vegetables for inflight meals. The aim of the                questionnaires sent to Hong Kong-based suppliers.
greater number of routes. In the long term, we aim to utilise more           initiative is to support women’s development, promote harmonious
                                                                                                                                                    2008 Launched online tool for suppliers to complete
alternatives with sustainability attributes and expand our support           families, and build inclusive communities by leveraging our
of products that adhere to relevant sustainability credentials by            operations on Lantau Island. It provides training and employment            questionnaire regarding their compliance with our Code.
organisations such as the Fairtrade Foundation, Forest Stewardship           near the women’s homes so they can also look after their families.          New suppliers are contractually committed to meeting
Council (FSC) and Marine Stewardship Council (MSC).                          Feedback from the community has been positive, and in 2011,                 our Code of Conduct.
                                                                             30 to 35 women worked at the facility every day.
    Visit the report website to find out how we work with our suppliers to
                                                                                                                                                    2009 Revised Code of Conduct to include ethics
    include sustainable features in our San Francisco lounge.
                                                                                                                                                    2010 First publication of the Supply Chain Sustainability
                                                                                                                                                         Newsletter distributed to local and outport suppliers.
                                                                                                                                                         Outport-based suppliers asked to complete questionnaire
                                                                                                                                                         for the first time.

                                                                                                                                                    2011 Development of a framework for supply chain
                                                                                                                                                         compliance checking.
18          Cathay Pacific Sustainable Development Report 2011




                                                                                 investing in People
                                                                                 and Communities
                                                                                   Empowering our people to
                                                                                   make a difference




     Employee relations and engagement                                           Ground staff                        Flight crew
                                                                                 Nearly 40% of Cathay Pacific        Cathay Pacific has put in place an extensive support infrastructure
     We are committed to providing the best possible working                     and Dragonair’s employees are       to assist our flight crew on benefits, sickness, rostering, general
     conditions for our staff, in order to attract and retain the best talent.   ground-based, either at our         welfare and in areas of a technical or operational nature.
     There are a variety of channels for staff to provide their views and        offices, cargo hubs, or airports.
                                                                                                                     We value our crew, and therefore, one of our goals is to strive to
     ideas. We also engage staff on climate change and conservation              Each of these groups has a
                                                                                                                     offer the most attractive working conditions and packages available
     issues through activities with external organisations.                      staff consultative committee
                                                                                                                     to them.
                                                                                 that meets regularly.
                                                                                                                         Visit the report website to find out more about these issues, and the
                                                                                 In 2011, we conducted our third         Human Intervention and Motivation System (HIMS) programme which
                                                                                 company-wide Organisational             assists pilot recovery from chemical dependency.
                                                                                 Alignment Survey on ground
                                                                                 staff in Hong Kong and
                                                                                 throughout the Cathay Pacific
                                                                                 and Dragonair outport network.
                                                                                 It provided insights on how the
          Visit the report website for an insiders’ look at the Mumbai team      company can sustain success in
          World Café Vision Day.                                                 the long term.


     Engaging with our diverse, mobile workforce
     Our team consists of diverse cultures, geographies, background
     and languages. We work with multiple trade bodies based
     in different countries that have specific union regulations,
     and we uphold freedom of association for our staff. We are
     actively working with the various staff groups to enhance
     communication and consultation, to ensure views are heard
     and acted upon appropriately.
                                                                                                                                                                                                                 Cathay Pacific Sustainable Development Report 2011   19
   29,000 EMPlOyEES WORlDWiDE                             22,200 EMPlOyEES iN hONG kONG                       4,037 VOlUNTEER hOURS By hONG kONG STAFF

Cabin crew                                                                               Developing a winning team                                                  Encouraging staff involvement
As part of our frontline team, cabin crew provide invaluable input to                                                                                               There are more than 1,000 staff in the CX Volunteers team.
the way we serve customers. Their views are important to us, and                         Learning and development                                                   In addition to encouraging
consultation and feedback remains a key focus. We also do our best                       We provide learning and development opportunities in preparation           staff to participate in company-
to show our appreciation to their professionalism and hardwork                           for staff’s various roles and responsibilities.                            organised initiatives, we support
through a number of ongoing initiatives.                                                 There are annual refreshers for all crew. Leadership and                   staff in their own charitable
                                                                                         management skills training are provided to senior crew to support          endeavours via the Cathay
     Visit the report website for further details on the above initiatives.                                                                                         Pacific Charitable Fund launched
                                                                                         them in managing and mentoring the younger generation of crew.
                                                                                         There are also voluntary learning programmes that cater to both            in November 2011.
                                                                                         crew’s work and personal life.
Cabin Crew Nationality Mix for CX and KA in 2011
                                                                                         Recruitment and selection
                                                                                         As an equal opportunities employer, our recruitment is not limited
                                                                                         by gender, race, national origin, religion, disability or family status.
                                                                                         We have been undertaking local recruitment in the communities
                                                                                         where we operate.

                                                                                         Retaining talent
                                                                                         We are proud of our ‘family-oriented’ culture and encourage staff
                                                                                         to see the long-term value of working with us. In appreciation of
                                                                                         the hardwork of our staff that helped make 2010 a record year,
                                                                                         those eligible received five weeks’ share of profit, along with
                                                                                         a salary bonus.
   Canada           321         Japan               458       Singapore            313
   China             88         Korea               333       Thailand             275   Employee welfare
   Hong Kong      6,190         United Kingdom      413       Taiwan               519   We provide an Employee Assistance Programme in Hong Kong and
                                                                                         outports, which staff and eligible dependents can access for free.
   Indonesia        265         Malaysia            460       United States        223
   India            180         Philippines         549
                                                                                         Community investment
The following countries have fewer than 10 staff and are not shown on the graph.
Argentina 1      Germany 1         Netherlands 3          Pakistan 1                     Cathay Pacific recognises the importance of contributing to the
                                                                                         communities in the destinations where we operate. Our global
Australia 4      Sri Lanka 6       Nepal       2
                                                                                         community investment strategy is to leverage the resources of
                                                                                         our company to address the needs of the communities we serve,
                                                                                         focussing mainly in three areas: youth and education, medical care
                                                                                         and environmental conservation.




                                                                                                                                                                        Visit the report website to read about our staff’s stories.
20         Cathay Pacific Sustainable Development Report 2011




     Youth and education                                                      Medical care services                                                   Contribution to the
     We believe in investing in educational programmes for young              We believe it is our responsibility to support access to essential      Hong Kong community
     people and building on their interest in aviation. The following are     medical care services, especially for vulnerable and impoverished       We are dedicated to serving our
     some of this year’s highlights:                                          groups in the regions we serve.                                         neighbours in the Tung Chung
     – English On Air – our flagship programme offering English-              Some of our long-term medical initiative commitments include:           community. Highlights from
       speaking opportunities for young people in Hong Kong                                                                                           2011 included our continued
                                                                              – Orbis                                                                 partnership with the
     – Celebrating 100 years of aviation –the Cathay Pacific Aviation                                                                                 Neighbourhood Advice Action
                                                                              – Hong Kong Society for the Blind
       Knowledge Contest for secondary school students; and launch of                                                                                 Council Tung Chung Integrated
       the Dragonair Youth Aviation Academy                                   – Cathay Pacific Wheelchair Bank                                        Services Centre, visiting the
                                                                              – Dreamflight                                                           elderly, organising Christmas
                                                                                                                                                      parties for children, and
                                                                                                                                                      recycling and redistributing
                                                                              Environmental conservation                                              our office computers.
                                                                              It is important to conserve habitat and species diversity
                                                                              where we can, as well as raising public awareness through
                                                                              educational activities.                                                 Responding to local needs               Copyright owner : Kadoorie Farm and Botanic Garden
                                                                                                                                                      around the world
                                                                              This year, Cathay Pacific ran a youth environmental programme,          Drawing on our unique position of being able to organise the
                                                                              Green Explorer, where forty students from around the world went         carriage of supplies and personnel efficiently, Cathay Pacific has
                                                                              on an eight-day trip to Sichuan in mainland China. There, the young     continued to respond quickly to help and support those affected by
                                                                              participants learned about conservation and sustainable                 natural disasters around the world in 2011. These included helping
                                                                              development in China.                                                   those affected by: the earthquake and tsunami in Japan; earthquake
     – Life Education Activity Programme (LEAP) – conducting talks                                                                                    in Yunnan, China; floods in Pakistan and Thailand; and landslides in
       and discussions with young people on the dangers of drug and                                                                                   Gansu Province, China.
       substance abuse
                                                                                                                                                      We also continued our support to UNICEF by raising money through
     – Xialongren – a Dragonair programme that provides access to the                                                                                 our inflight “Change for Good” programme.
       aviation industry to young students in China
     – Dragonair Aviation Certificate Programme (DACP) – youth-                                                                                       Cathay Pacific staff getting involved around the world:
       oriented activity that explores the world of aviation, co-organised
       by the Hong Kong Air Cadet Corps                                                                                                                  North America          East Asia                Africa
                                                                                                                                                         Europe                 Southeast Asia
                                                                                                                                                         Mainland China         South Asia




                                                                              We also assisted in the reintroduction of 609 endangered pig-nosed
                                                                              turtles (Carettochelys insculpta) to Indonesia by donating cargo
                                                                              space and air tickets to the organisers of the operation. The release
                                                                              involved full participation of the villagers of Bupul, and was an
                                                                              opportunity to educate the village children.

         Visit the report website to read more about the above initiatives.
                                                                                                                                                          Visit the interactive world map on the report website for more stories on
                                                                                                                                                          how our teams are involved in helping others around the world.
                                                  About
                                                                                                                                        This brochure provides an executive summary of Cathay Pacific’s
                                                                                                                                        Sustainable Development Report 2011. To view the full report,
                                                                                                                                        please visit our website at www.cathaypacific.com/sdreport .

                                                                                                                                        The content and quality of the information in our report is guided by the




                                                  this Report
                                                                                                                                        Global Reporting Initiative (GRI) G3.1 reporting guidelines. The Report
                                                                                                                                        Application Level is A+.

                                                                                                                                        We have engaged PricewaterhouseCoopers Limited to perform an
                                                                                                                                        independent limited assurance of the report. The assurance scope and
                                                                                                                                        statement is available on the report website. Selected subject matter
                                                                                                                                        that has been verified are marked with a “ ”.
                                                  Acknowledgements
                                                                                                                                        We welcome your feedback. Please contact us:
                                                  We wish to thank Two Tomorrows, Copeland and Partners,
                                                  CSR Asia and Sedgwick Richardson for their assistance in                              environment@cathaypacific.com
                                                  the development and preparation of this Report. We would                              Environmental Affairs Department
                                                  also like to thank: Ms Rachel Fleishman, Dr Glenn Frommer,                            Cathay Pacific City
                                                  Mr James Munro and Mr Peter Witton, for their participation                           8 Scenic Road
                                                                                                                                        Hong Kong International Airport
                                                  in the Stakeholder Review Panel. The panel statement can                              Lantau
                                                  be viewed online.                                                                     Hong Kong




                                                  Environmental Affairs Department




                                                  Mark Watson                 Janice Lao                     Evelyn Chan                    Prian Chan                  Carol Cheung
                                                  Head of Environmental       Environmental                  Environmental                  Assistant Environmental     Environmental
                                                  Affairs                     Manager                        Projects Manager               Manager                     Coordinator




Our principle subsidiaries based in Hong Kong:
                                                                          FTSE Group confirms that Cathay Pacific Airways Limited has been independently                 Published in July 2012
                                                                          assessed according to the FTSE4Good criteria, and has satisfied the requirements
                                                                                                                                                                         Copyright Cathay Pacific Airways Ltd, 2012
                                                                          to become a constituent of the FTSE4Good Index Series. Created by the global index
                                                                          company FTSE Group, FTSE4Good is an equity index series that is designed to facilitate
                                                                          investment in companies that meet globally recognised corporate responsibility
                                                                          standards. Companies in the FTSE4Good Index Series have met stringent social and
                                                                          environmental criteria, and are positioned to capitalise on the benefits of responsible
                    60% owned by Cathay Pacific                           business practice.

				
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