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 firstname.lastname@example.org 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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