Luenthai Sustainability Book

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e X t r a O r d i n a r y

c o m p a n y

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MESSAGE FROM THE CEO

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ABOUT US PEOPLE

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COMMUNITY

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ENVIRONMENT

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OUR FUTURE

Our Business of Reinvention: Our Business of Sustainable Shared Success Daily M E S S A G E

F R O M

T H E

C E O

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he future is being created right NOW. Technology is evolving and converging at an exponential rate, and changing the way we live and the way we do our business. The advances in technology are altering the traditional s u p p l y c h a i n i n t o a d i g i t a l o n e : m o r e s t r e a m l i n e d , well-connected, and sustainable.

Today, a supplier can source and sell to a customer anywhere; and virtually everyone has become someone else’s competitor. The world has become just one market where everyone competes.

The question we ask ourselves in Luenthai is: What is our position in the challenging business environment?

Luenthai is an eXtraOrdinary Company.

Our history and culture have prepared us to not only accept the changes required to succeed in the emerging market, but to embrace the challenges with much enthusiasm and passion.

We are committed in providing value to our stakeholders. We want to live up to our vision of Sustainable Shared Success Through Reinvention.

We believe that synergy resulting from working towards a sustainable shared success with our partners: shareholders, customers, suppliers, our people and our communities, will create more positive and long-lasting benefit to the end-consumers, the industry, and the world.

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For us in Luenthai, this journey has begun with the reinvention of ourselves. Using our digitalization and automation strategy, we will be improving the speed in designing and producing our products, and carrying this same pace until they are shipped to our end consumers. We will keep our processes, service and product delivery flexible and able to respond to unanticipated changes. We will ensure quality is inputted in all our systems, processes, products, and in our culture. Further, we will keep overall cost down across the supply chain.

Leveraging our investment in information technology, we are transforming our manufacturing bases to Smart Factories capable of real time control on critical processes, and allowing intelligent and useful ways to use data that also serve as basis for immediate correction and cross functional co mmunicat ion . I t i s a l s o ou r goal t o link f r ont a nd b a c k - e n d processes and create Smart Enterprise. Ultimately, we will be partnering with our suppliers and customers in creating Smart Supply Chain that is not only efficient and profitable but also sustainable.

In Luenthai, sustainability goes beyond economic prosperity. In this book, we will detail how we would show care for our people, our community, and the environment; and how we will try to become better daily.

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Sustainability goes beyond economic prosperity. We show eXtraOrdinary care for our people, our community and the environment, and we try to become better daily.

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This is our story. This is our eXtraOrdinary journey to sustainability.

Raymond Tan

Luen Thai Holdings Limited 02

ABOUT US

Luenthai is an eXtraOrdinary Company.

We make quality products. We provide excellent services.

We are a leader in fashion and lifestyle apparel and accessories manufacturing.

We have over 40,000 employees in 18 production facilities in 7 countries. We are committed to give the best care to our people, our communities, and the environment in all these locations.

We strive to be better, daily.

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LUENTHAI WORLD

One Production Origin

One Market Destination

A future where we can produce close to market: at the store, at the distribution centers, or even directly to customers.

That future is now.

CHINA•CAMBODIA•PHILIPPINES•BANGLADESH•INDIA•INDONESIA•VIETNAM•HONG KONG•NEW YORK

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STRATEGIC BUSINESS UNITS

Luenthai is a leader in fashion and lifestyle apparel and accessories working in partnership with the world’s leading apparel and accessories brands through its SBUs.

Casual Knits and Woven Wear Philippines•Vietnam

Outwear, Casual Woven, Performance Apparel, Knitwear and Intimate China•Indonesia•Bangladesh•India

Knits and Woven China•Vietnam

Computer, Camera Bags and Backpacks China•Philippines•Cambodia

Fashion/Sleepwear China•Cambodia•Vietnam

Luxury/Fashion Bags China•Philippines•Cambodia

Sports Active Wear Philippines•China•Cambodia

Sweaters China•Indonesia

Fabrics Vietnam

Fabrics Philippines

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A LUENTHAI SUSTAINABILITY CULTURE G iving eXtraOrdinary care is a daily habit in Luenthai.

Adopted from our culture campaign called “Be XO Daily”, we strive to go beyond the ordinary with special focus on XO CARE for our people, our communities, and the environment.

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OUR GROWING COMMITMENT TO SUSTAINABILITY L

uenthai immediately embarked on its philanthropic efforts soon after its founding in 1965. Our founder Dr. Tan Siu Lin’s desire has always been to give back to the communities where we operate. Since then, our journey towards serving has continuously grown.

2000s

The Luenthai Sustainability Strategy and Goals will ensure that this commitment will remain in the company as we go further in the 21st century.

“Go Green” Campaign EcoProfit Certification

1980s Tan Siu Lin Foundation in China

1970s Philanthropy’s early beginnings

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Environmental Compliance in Manufacturing

1990s

Cleaner Production

Environmental Compliance in other manufacturing facilities

“iServe. iGive Back”

Unified Principles of Social Responsibility and Practice (UPSRP)

2022 Achievement of XO Care Targets (Our People, Our Community and the Environment)

2018 2010s HER Project “Be XO Daily�

Tuloy Foundation Partnership

Launching of Luenthai Sustainability Program

Increased engagement with Luenthai employees and other stakeholders

Start of Five-Year Sustainability Monitoring ESG Compliance Reporting

EMBARKING ON A FIVE-YEAR JOURNEY In

setting our Sustainable Goals, Luenthai ensures they are transparent and achievable. Thus, the Sustainability Strategy is specific, clear, measurable, and encompasses an initial five-year period (2018-2022).

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LUENTHAI SUSTAINABILITY STRATEGY T

here are three core areas which our Sustainability Strategy focuses on: our People, our Community, and the Environment. To ensure success, a special Sustainability Committee within Luenthai’s Management Board has been tasked to oversee that the sustainability strategy is effectively rolled out within all strategic business units and in all Luenthai locations around the world.

To ensure success of this strategy, a special Sustainability Committee within Luenthai’s Management Board has been tasked to oversee that the sustainability programs are effectively rolled out within all strategic business units and in all Luenthai locations around the world.

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UNDERSTANDING THE FRAMEWORK

ICONS Heart: iServe. iGive Back Launched in 2009, this program is Luenthai’s corporate campaign which drove all of the company’s community and charity works. The “i” in the campaign name meant to highlight every individual’s should do his share in giving back to the community.

Hands: Together The interlocking hands connecting the three XO Care programs represent our attitude in infusing the spirit of cooperation and teamwork in achieving our sustainability goals.

SHAPES

COLORS

Circles Represent the unity and totality of our company’s sustainability efforts.

Blue: People Represents our loyalty to give the very best to our people.

Even spacing A balance of business success and giving back.

Red: Community Represents our community giving.

Concentric circles Represent the common goals and targets to achieve.

Green: Environment There would be no business, if we don’t take care of the planet. Thus, we ensure we operate our business with green in mind.

passion

for

Feet: Our Legacy Footsteps represent the forward looking and practical action steps of our sustainability programs. They are the specific ways Luenthai aspires to achieve its sustainability goals.

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OUR XO CARE GOALS eXtraOrdinary care for Luenthai means promoting empowerment of individuals by helping them help themselves. Self-responsibility comes from taking care of the community, then further expanding the responsibility to the environment.

Our goals are guided by these core beliefs:

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Luenthai cares for its people and believes that their well-being and happiness are the foundation of excellent services and great products.

Luenthai cares for the community because we believe it is our responsibility to do our share to meet the needs of society aside from our own.

Luenthai cares for the environment because we believe that economic prosperity and environmental stewardship can go hand in hand.

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HOW DO WE MEASURE INFO BITS OUR PROGRESS? ONGOING HALFWAY FINISHED WE GO BEYOND

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PROGRESS LEVEL ONGOING We are at the starting point, prepared and ready to implement a project/initiative.

HALFWAY We are halfway on achieving our specific targets. At the same time, we are exploring new opportunities to broaden our impact.

FINISHED We have reached our target. The project is completed successfully.

WE GO BEYOND We know there is always more to be done beyond our targets.

WE GO BEYOND OUR TARGET Committed to transparency, we measure our

progress towards 2022 goals.

We use three progress levels. As we start our five–year journey toward our sustainability goals, we are committed to satisfy the needs and achieve favorable results year after year.

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A s a labor-intensive employer, Luenthai recognizes the

importance of providing excellent care for our people. We approach this strategy from two areas – HAPPY PEOPLE and BEST PLACE TO WORK.

When we see our people happy, this is proof that we are succeeding in our goal to give them eXtraOrdinary care. Whether it is in the area of developing their skills and talents, advancing their careers, giving them mentorship, engaging them and valuing their contributions, we want to see happy people at Luenthai.

In line with this, we also want to be considered as the best place to work. We do this by ensuring our workplace has the highest standards in health and safety.

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eXtraOrdinary care for our people means making them happy and providing them with the best place to work.

OUR PEOPLE 18

OUR STRATEGY FOR PEOPLE A

motivated workforce is a productive workforce. This is one of our core beliefs when we think of our strategy for people.

Our people strategy is based o n t h e d u a l - f a c t o r theory that says that there are certain factors in the workplace that cause job satisfaction, while a separate set of factors can cause dissatisfaction.

Our strategy, therefore, is to focus on various hygiene factors under BEST PLACE TO WORK, and motivation factors under HAPPY PEOPLE.

As an employer, we believe that our people’s well-being is the foundation of excellent services and great products.

This program highlights motivational factors like recognition, sense of achievement, growth and promotion opportunities, responsibility, and meaningfulness of work.

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This program spans from basic health and safety, and social compliance to worklife integration and wellness. We believe that through this program, our growing number of production locations will have consistent programs that support only the best quality of work environment, serving as examples for eXtraOrdinary care for employees.

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OUR XO CARE FOR OUR PEOPLE TARGETS HAPPY PEOPLE

EMPLOYEE ENGAGEMENT

PEOPLE DEVELOPMENT Provide talent development opportunities to employees in different tiers, covering leadership, and soft and technical skills.

• Dedicate learning time per employee to up grade their skills to ensure they thrive in the workplace • Increase mentors and specialists to help their peers learn and grow

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Providing right conditions and motivation for employees to contribute to the organizational success, translating positive Employee Net Promoter Scores / Employee Satisfaction Rating.

• Favorable net promoters score/employee satisfaction rating • Invest management time on structured exchange with people • Increase retention of new hires reaching one year

TRANSPARENCY AND COMMUNICATION

PERFORMANCE AWARDS & RECOGNITION Linking performance with incentives; as well as providing employee recognition through awards.

Providing two-way communication channels accessible to employees. The effort has to be regular and consistent.

• Complete submission of government mandated reports • Recognize employee ideas and acknowledge their efforts

• Establish employee recognition programs • Establish rewards for performance • Provide opportunities for employee advancement

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FIVE-YEAR TARGET: HAPPY PEOPLE PROGRESS TARGET

PROGRESS

People Development

Employee Engagement Performance Awards and Recognition Transparancy and Communication

Luenthai cares for our people because we believe their well-being is the foundation of excellent services and great products.

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OUR XO CARE FOR OUR PEOPLE TARGETS BEST PLACE TO WORK

RESPONSIBLE EMPLOYMENT

DIVERSITY AND INCLUSION We will uphold the highest ethical standard in support of equal employment and career advancement opportunities.

• Compliance with local and international laws on employment discrimination • Continue to hire and provide training for the advancement of the marginalized sector

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We will uphold the highest ethical standard for employment in compliance to applicable local and international laws and customers standards.

• Zero tolerance for harassment and abuse at work • Consistently comply with labor laws

WORK-LIFE INTEGRATION Create synergy between all areas that defines “life” that spans work, home/family, well-being, and wellness.

WORKPLACE SAFETY We will comply with applicable local laws and international standards on workplace safety.

• Devote wellness hours to allow employees to practice a healthier and balanced lifestyle • Reduce absences due to sickness

• Consistently comply with laws and international standards on safety • Provide training and education on health and safety

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FIVE-YEAR TARGET: BEST PLACE TO WORK PROGRESS TARGET

PROGRESS

Diversity and Inclusion Responsible Employment

Workplace Safety

Work-Life Integration

This program spans from basic health, safety and social compliance to work-life integration and wellness.

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OUR INITIATIVES FOR OUR PEOPLE

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n 2012, GJM, a Luenthai company, adopted HER (Health Enable Returns) Project in collaboration with ANN INC. and BSR, a global nonprofit organization for sustainability.

HER Project is a program that promotes hygiene and health knowledge among female employees by means of education, consultation, and seminars.

HER Project also produces Peer Educators who train and in turn train others on various health campaigns.

GJM’s HER Project has helped improve the health of its female employees, and has helped mothers and health guardians of the family to bring home the knowledge and spread to their wider community the benefit gained in the program.

In 2013, GJM was accorded the “Responsible ANN Leadership Award” in recognition of its success with the HER Project. Inspired by this success, Luenthai has expanded the program to other locations.

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OUR INITIATIVES FOR OUR PEOPLE

The HER Project promotes hygiene and health knowledge among female employees by means of education, consultation, and seminars. But beyond that, the program has helped the employees to be more inspired and empowered.

EMPOWERED WOMEN

BETTER MORALE AND HARMONY IN WORKPLACE

IMPROVED LEADERSHIP SKILLS

BOOSTED HEALTH AWARENESS

REDUCTION OF ABSENTEEISIM AND TURNOVER 29

LEADERSHIP AWARD

BY ANN INC.

G

JM, a Luenthai Company, was a recipient of the “Leadership Award 2013” from ANN INC. during its Vendor Conference in January 2014.

The award recognizes GJM’s achievements in CSR and its commitment to improving women’s health and welfare in the workplace.

GJM launched the HER Project under the platform of Healthy Workers: Enterprise Excellence! The project allowed GJM to sponsor breast cancer screening for women 40 years old and above. It also enabled the successful training of many female peer educators who led various health related education programs.

Further, over 1,000 employees also benefited from a company-wide Female Health Open Day in coordination with a local community hospital, which provided free physical check up, ultrasound, and routine blood test.

GJM is the first factory in China that was sponsored by ANN INC. for this project.

XO EMPLOYEE AWARDS This

recognition program honors employees who strive to become better, believe in success, exceed expectations, and embrace change. The same values that are within our “Be XO Daily� culture.

To be an XO Employee Awardee, employees will have to undergo rigorous screening by a panel appointed from management, supervisors, and from the ranks.

Screening is multiple levels with meticulously crafted steps ensuring that the most deserving are recognized.

Winners and nominees of the XO Employee Awards naturally become part of the building and beefing up of the leadership and talent pool within Luenthai.

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OUR INITIATIVES FOR OUR PEOPLE OUR INITIATIVES FOR OUR PEOPLE Empowering Communities through Skills Development & Employment

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uenthai empowers members of the community by partnering with government, non-government, and educational institutions in providing skills development to the local people.

Through these collaborations, people in all Luenthai’s production locations around the world are provided the opportunity to gain employment in the manufacturing industry.

In the Philippines, for example, Luenthai partners with Technical Educational and Skills Development Authority (TESDA) in launching an accredited 3-month sewing program that trains zero skill learners with the necessary know-how to get a job in various apparel manufacturing companies, not just Luenthai.

Aside from this, there are s e v e n technical-vocational schools that offer a similar training program wherein Luenthai provides the machines, trainers, and materials.

Training our people does not stop in the pre-hiring stage. With the advent of new technology, new machines, and new demands, Luenthai people need constant training and upgrading of skills which the company provides and invests on.

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On University/College Collaboration Beyond sewing and production, Luenthai provides o p p o rtu n i ti es i n em pl o y m en t o f o th er h i g h - s k i l l s a nd office-based jobs as well. Through our collaborations with universities and colleges such as the University of the Philippines, we provide lectures and technical orientation on the apparel business, and do our part in sharing our expertise in topics such as leadership, organizational behavior, and industrial engineering, among others.

Through community skills development and sharing our expertise, Luenthai helps members of the community by giving them a chance to gain skills, knowledge, and contribute to their own communities by becoming productive members.

For Luenthai, one of the biggest ways we serve the community is by providing them with skills, employment, and career advancement.

OUR INITIATIVES FOR OUR PEOPLE “iServe.iGive Back” WINS EXCELLENCE AWARD T

he People Management Association of the Philippines HRM Foundation (PMAP) has recognized Luenthai’s “iServe.iGive Back” program in the 2015 CSR Excellence Award.

The program was rated high on innovation, sustainability, replication, scalability, and social and business impact – besting other entries in this nationwide search under the Livelihood Category.

The “iServe.iGive Back” is a community service and transformational program that marries the Luenthai’s long running community outreach activities with its culture building initiative. As a transformational program, it promotes giving back as an inside out motivation, a commitment, and a habit.

Born as a corporate initiative in 2009, Verte Philippines has adopted this program in 2012. Since then, through this program, the company has reached out and touched lives in the community. Verte has also partnered with other organizations that share the same aspirations of giving care to others.

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OUR INITIATIVES FOR OUR PEOPLE WELLNESS PROGRAMS TOWARDS A HEALTHIER LIFESTYLE Luenthai is committed to be a healthy employer,

taking an active role in workplace wellness advocacy and partnering with employees towards a healthier lifestyle.

As such, we invest in their health and well-being. The company holds continuous health-related activities such as disease awareness talks, consultations, and provision of services by health professionals including doctors, nurses, and nutritionists.

We also hold fitness and sports events, employing the services of coaches and experts so that our employees can reap the benefits of a healthy lifestyle.

We do all these as part of our eXtraOrdinary care to our people. After all, healthy employees become happy people.

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Wellness, talent recognition, and a celebration of employees’ sa c r i f i c e f o r t h e i r f a m i l i e s w e r e a l l highlight s o f De s kt o p’s “ Ha ppy P eo ple” initiative. To encourage a healthy lifestyle, the company held a Fun Run in March 2016 as well as a Sports Fest in April. The two events, not only shared the importance of personally taking care of one’s h e a l t h , t h e y a l s o i n s t i l l e d a s e n s e o f camaraderie among Desktop employees.

Furthermore, talent recognition events were also held in the form of a poster making contest and singing competition launched in June and July 2017. Lastly, “Dakila ka Inay, Itay Award” (Honoring Working Parents) was held to celebrate the effort of the wor king fa t he r s a nd m o t h e r s a t D e s k t o p w h o s e children have graduated college.

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A

company is a member of the community. Thus, Luenthai considers its corporate social responsibility a top priority. With our leadership status, employee size, and worldwide presence, we believe we can make a big difference in the everyday lives of people.

We also form partnerships with like-minded institutions and organizations to spread the most meaningful and beneficial programs to the community.

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We can make a big difference in the everyday lives of people.

OUR COMMUNITY 36

OUR STRATEGY FOR OUR COMMUNITY Our

XO Care for Community Plan centers on two specific areas: upholding children’s rights and promoting employee volunteerism.

These strategies represent the general company-driven community initiative to care for children and youth, and employee volunteerism that gives our people the chance and freedom to help their own selected charities.

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XO KIDS The incidence of child labor in the apparel and textile industry has been one of the biggest issues against it. With a strong commitment to uphold children’s rights, Luenthai has not only put in place strict policies against child labor, it has also actively pursued supporting and initiating programs that benefit children and youth, especially the underprivileged ones.

DONATE AN HOUR An hour’s work to raise funds to benefit a charity of their own choice is a successful employee volunteerism program at Luenthai. Through this initiative, Luenthai employees team up to help a specific charity or sector of the community that they would like to serve.

To boost participation and to benefit more people, the company matches a portion of the funds raised.

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OUR XO CARE FOR COMMUNITY TARGETS XO KIDS

Uphold Children’s Rights As a leader in the apparel and accessories industry, Luenthai supports children’s rights by preventing harm to children and youth, and at t he sam e t i m e p r ot e c t i ng t he i r interests. We integrate this thinking into our core strategies and operations.

• Zero tolerance on child labor • Actively pursue, support, and initiate programs for children, especially the underprivileged 39

Skills Training for the Youth

Youth Development Programs We believe in programs that are beneficial to the overall development and growth of the children,especially the disadvantaged ones. We will continue to develop and support prog r a m s t h a t w i l l e m p o w e r t h e y o u t h t o unleash their full potential.

We believe that every child has the right to better themselves. We want to inspire the youth to have access to programs to help them realize their career goals. We will continue to provide life skills and technical skills training to youth, equipping them to dream big.

• Provide scholarship • Put up learning classes • Provide access to livelihood opportunities

• Partner with at least one NGO helping children • Create major programs on youth development on sports, arts and livelihood

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FIVE-YEAR TARGET: XO KIDS PROGRESS TARGET

PROGRESS

Uphold Children’s Rights Youth Development Program Skills Training for the Youth

We support children’s rights. We work in partnership with others to create a world where every child can grow in health, peace, and an opportunity to become successful adults.

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OUR XO CARE FOR COMMUNITY TARGETS DONATE AN HOUR

Employee Volunteerism We give our employees the opportunity t o share and serve the community as volunteers. More importantly, we will continue t o inspire our employees to consider volunteerism as a way of life.

• Increase donations from employees yearly • Increase volunteer hours yearly

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Community Projects

Collaboration with Other Partners We believe that the key to sustainable s h a r e d su c c e ss i s c ol l abora tio n. W e w ill expand our cause b y c o l l a b o r a t i n g w i t h o t h e r s t a k e h o l d e r s (customers, vendors, government, non-government organizations, and educational institutions) who share the same values with our company.

We recognize that every community has its own needs and potentials. We will find ways to make a positive impact to the community by regularly assessing their needs and providing them access to better resources. •

Adopt a community by sponsoring projects especially focused on helping children

• Create community projects in collaboration with government and non-government organizations

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FIVE-YEAR TARGET: DONATE AN HOUR PROGRESS TARGET

PROGRESS

Employee Volunteerism

Collaboration with Other Partners

Community Projects

Employee volunteerism does not only help others, it helps our people to realize their value and contribution to the community.

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OUR INITIATIVES FOR THE COMMUNITY LUENTHAI FOOTBALL SCHOOL:

YOUTH DEVELOPMENT THROUGH SPORTS

T

he Luenthai Football School was established in February 2013. Inspired by the success of the Chelsea Soccer School in Hong Kong (CSSHK), the company initiated a similar program that offers free football training to children and youth in the Philippines. Initially, the program catered to the children or young dependents of Verte employees, Philippine Air Force in Clark (Angeles, Pampanga), and Clark Development Corporation (CDC), the governing authority in the business zone.

Due to its success, it is now open to the public and benefits the underprivileged children from Tuloy sa Don Bosco Foundation, Inc. (Tuloy) in Alabang and Pampanga. On top of these centers, the Football School has initiated programs reaching the indigenous communities around Clark.

The Aetas, an indigenous group who live in the mountainous regions near Clark, has joined the football family in the latter part of 2016.

The school maintains its program of regular, free football training, providing uniforms and equipment needed for competitions and trainings sessions.

The Luenthai Football School also partners with private schools and football clubs. Its partnership with CSSHK also resulted in bringing batches of deserving kids from Tuloy to Hong Kong for training. To date, there have been 6 batches of kids and coaches from the Philippines who have gone to Hong Kong.

Luenthai Football School believes that every child has the right to play.

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OUR INITIATIVES FOR THE COMMUNITY Since its inception, the program has produced top caliber players due to the hiring of nationally acclaimed football coaches who have had experiences in competing in international football tournaments.

These achievements bring both pride and credibility to the Luenthai Football School as it is now getting national attention through its hallmark activity, the Luenthai Cup, tournament for-a-cause now on its third year.

The top players who have been trained in the Luenthai Football School were offered full football scholarships from their universities as well as entrance to women’s national teams.

To date, the Luenthai Football Program has been keeping its charitable spirit alive. Having served hundreds of kids, it continues to build athletic excellence, discipline and a source of fun and friendship for the children and youth of the community.

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CHELSEA SOCCER SCHOOL HONG KONG I

n 2008, Luenthai CEO Raymond Tan co-founded the Chelsea Soccer School Hong Kong (CSSHK), formerly Chelsea Football Foundation, together with one of Hong Kong’s best footballers, Leslie Santos; and business partner-friend, Ben Lam. Since then, CSSHK has helped less fortunate children by providing them free access to professionally crafted football training. At the same time, CSSHK offers ex-professional footballers the chance to give back to the community and the sport by providing them with coaching opportunities and sharing their passion with the children.

FUN FACT: The oldest student is an 82 year old grandma, who attends the session weekly.

The unique business model of CSSHK allows it to provide free schooling for less financially capable students by charging paying students with a premium fee, which is double the amount of other football schools. This allows all students regardless of financial ability the opportunity to play football competitively. CSSHK also requires all registered students to participate in mandatory community service activities to instill and share value of social responsibility. Further, CSSHK provides weekly training sessions to various marginalized groups in Hong Kong such as juvenile delinquents, children with special needs and the elderly.

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OUR INITIATIVES FOR THE COMMUNITY GLOBAL KIDS IN CAMBODIA Luenthai

in Cambodia has There are about 200 children and launched “Global Kids”, a campaign 50 staff and volunteers at FLOW. in partnership primarily with Future Other than providing food and Light Orphanage (FLOW). shelter, the orphanage delivers educat ional o pport unit ies and Phaly Noun, one of the millions vocational training to children. expelled during Pol Pot’s regime in the 1970’s, founded FLOW. In 1993, s h e re t u rn e d on a mi ssi on to provide care and new livelihood for children in Cambodia.

Luenthai and volunteer-employees have raised charity money and donated to FLOW. In June 2015, volunteers also spent time with children and residents of FLOW providing fun activities, facility improvements, and a feeding program. The activity has h e l p e d L u e n t h a i re f oc us i ts community program in Cambodia.

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OUR INITIATIVES FOR THE COMMUNITY

MY JOURNEY TO COMMUNITY SERVICE

LUENTHAI AND TULOY PARTNERSHIP I

wanted my legacy to be someone who uses football to positively impact people’s lives. Football has given me my health, a lifetime friendship with my son, and useful business strategies and I want to give back.

CEO, RAYMOND TAN

In 2008, I started my personal charity by co-founding Che l s e a S occe r S chool H ong Kong (CS S H K ) .

Inspired with its success, I wanted to replicate t h i s i n L u e n t h a i . I started t h e f i r s t Luenthai Football Program at Clark, Philippines. I met Mr. Arthur Tugade, then CEO/ President of Clark Development Corporation, and he told me about a 70-year-old priest, Fr. Rocky Evangelista of Tuloy Foundation, who is also passionate about charity football. A few months later, I met Fr. Rocky while he was coaching tons of street kids at the orphanage he runs in Tuloy Foundation. Immediately, I knew this was the start of something beautiful.

To support Fr. Rocky, I donated football shoes, sent our Clark coaches to Tuloy, and started fundraising. With opportunity to send Tuloy to train with professional Hong Kong coaches of Chelsea, we sent batches after batches. For kids that don’t

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have travel documents and cannot travel, CSSHK has been sending two coaches to Tuloy regularly. While originally focused on the training of girls in the hope of making the Philippines national team, we expanded our attention to Tuloy boys, as well, after the success of the Tuloy Boys in beating CSSHK U14 team, 7-1.

In J u n e 2 0 1 7 , w e r e gi s t e r e d T u l o y FC w i t h Philippines Football Association. Our goal is to merge our Clark and Bahay Bata kids into TuloyFC and see them become Philippine champions, youth national team players, and adult national team players. I have full confidence that this will happen.

I have promised them jobs as professional players, coaches, assistant coaches, or workers in the factories so that the children do not have to worry and can enjoy playing the beautiful game with passion and discipline.

EMPOWERING THE KIDS. Aside from football, Luenthai also supports various programs like Performing Arts, Culinary Arts and other Skills Training at Tuloy sa Don Bosco.

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Be XO Daily

In 2016, Yuenthai Philippines Inc., a Luenthai company in Cebu, started to plan a “factory of the future”, and I was contemplating on a culture campaign to drive this project. Then an idea came to me, when in one of my visits to Tuloy, while chatting with two ex-Tuloy kids, one girl shared a principle that she proudly said she learned in Tuloy: ”Doing ordinary duties extraordinarily well!”. I took this inspiration and launched “Be XO (eXtraOrdinary) Daily”, which is now Luenthai’s new corporate culture.

Tuloy Bahay Bata Witnessing my own personal transformation at Tuloy, I told Fr. Rocky that I hope to support meaningful community projects within 30 minutes of each Luenthai factory so that our employees can regularly help. One day, Fr. Rocky told me about a center for street children in Angeles, Pampanga, Philippines that was not properly managed and was being offered to Tuloy. With donations from my Philippines management team, Tuloy re-opened the center last October 2016. Our past Christmas parties at Clark have raised over US$300,000 and our Clark workers continue donating one hour of their overtime pay to this center each year. Our Clark workers further formed Luenthai Volunteers and have an extensive volunteerism program in place.

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FATHER ROCKY EVANGELISTA

Global expansion On a geopolitical and international level, my eldest brother Henry Tan advised me in May 2017 that Hong Kong’s Chief Executive CY Leung wished to meet Fr. Rocky and I to better understand Tuloy. While Mr. Leung stepped down as Hong Kong’s Chief Executive in late June 2017, he took up a senior position in the Chinese Central government where he wishes to connect Chinese people with Filipinos through the “One Belt, One Road” initiative. Through this program, we hope to see Tuloy become a “brand name” for “XO Kids”.

Chairmanship of Tuloy I first met Fr. Rocky and Tuloy four years ago, and it has been the most fruitful journey of my life. I can’t stop sharing these experiences with my family, friends, and business partners. Frankly speaking, I don’t know how to repay Tuloy, so when Fr. Rocky asked me to be part of the Tuloy Board in 2016, I was honored and accepted this invitation without any hesitation.

In April 2017, to my surprise, I was appointed by the Board as the new Chairman of Tuloy Foundation. I didn’t think I was qualified for the job as I had only been in Tuloy’s board for one year, I am not Filipino, and not even a resident of the Philippines.

“Tuloy has been an amazing blessing to my life and my business, allowing me to see miracles, and challenging me to grow and dream beyond anything I could imagine. If this is God’s plan, who am I to say no?”

F

r. Marciano “Rocky” Evangelista, SDB is the founder of Tuloy Foundation, Inc., a non-government, non-profit organization that provides residential care services for thousands of children and youth. As a Salesian priest, he does what St. John Bosco did to help street children during his time. The Tuloy sa Don Bosco started in 1993 caring for 12 children in a 40- sqm room.

To date, the Foundation has helped over 10,000 children and the small facility now occupies a sprawling 4.5 hectares of land that serves as both home and school for the children.

Because of his work in uplifting the lives of children and the youth, Fr. Rocky has been bestowed with much recognition such as the Miss World Humanitarian Award for 2017 and Most Outstanding Kapampangan Award.

He began his life of priesthood in 1970 when Pope Paul VI ordained him at St. Peter’s Square. Prior to forming Tuloy, he was doing academic and administrative responsibilities within the order, having a master’s degree in Education and a doctoral degree in Organizational Development.

In 2010, Fr. Rocky published a book called “Finally I AM HOME” detailing his personal journey as a little boy growing up in Pampanga and his eventual calling that led him to start the foundation for underprivileged children and youth in Manila.

For more information about Fr. Rocky and Tuloy Foundation, visit https://www.tuloyfoundation.online 54

OUR INITIATIVES FOR THE COMMUNITY DISASTER AID AND SUPPORT FOR PEOPLE WITH DISABILITIES G

JM, Luenthai’s women’s wear division, demonstrates its eXtraOrdinary care for the community by being a company people could rely on, especially when natural disasters strike.

The employees and company raised and donated funds amounting to over RMB200,000 to the victims of the 2004 South Asia Tsunami; 2008 5.12 Sichuan Earthquake: 2010 Haiti Earthquake: 2010 Qinghai Earthquake: 2010 Gansu Mudflow and 2013 Sichuan Yuan Earthquake.

Moreover, GJM has demonstrated its care towards children and people with disabilities.

In 2015, GJM Panyu visited the Panyu Disabled Children Rehabilitation Centre. The team donated food, books, toys, and t-shirt which the children wore during their celebration of International Children’s Day.

Because of GJM’s continuous commitment to help people with disabilities as well as providing them with employment opportunities, the company has been receiving yearly awards from the Panyu Disabled People’s Federation since 2012.

Another continuous community effort by GJM is the annual blood donation which started from 2011.

SUPPORT FOR SCHOOLS & INDIGENOUS COMMUNITIES Desktop, Luenthai’s computer, camera, and backpacks division, has been demonstrating its

eXtraOrdinary care to the community by supporting public schools and indigenous communities in Bataan, Philippines.

Its 2016 Adopt-a-School Program led by Desktop Philippines Inc. (DTPI) management and employees distributed tote bags with school supplies and a pair of shoes to 400 pupils of Ipag Elementary School, Brgy Ipag, Mariveles, Bataan, Philippines.

The Adopt-a-School Program was held again in 2017. This time, two other schools: Sta. Mariana de Jesus Academy Inc., and Bayview Elementary School received in-kind donations for their 300 and 470 students, respectively.

These events are held during months of July and August.

Meanwhile, a blood donation program was also held at DTPI in October 2016. The event was held in cooperation with the Philippine National Red Cross (PNRC). One hund r e d e i g h t e e n e m p l o y e e s ( 1 1 8 ) j o i n e d t h e p r o g r a m . T he P NR C s upplies o n e - f o u r t h o f t h e count r y’ s national blood requirement. The organization encourages donating blood to help save lives in the country.

Another program, “Pamaskong Handog “ (A Christmas Offering) was held in 2016 for the benefit of the Aetas of Bataan. Some 80 employees from DTPI went to the Aeta community in Old Bataan, Mariveles and distributed grocery packages in time for the Christmas holiday. The Aetas are a g r o u p o f indigenous people scattered throughout the northern island of Luzon , Philippines.

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Climate change is a real global phenomenon and has become a growing

concern by many manufacturing companies, including Luenthai.

As we expand our market, we r e c ogni z e t he ne e d t o b e m or e environmentally conscious in the way we conduct our business. From sourcing our materials up to the distribution to the end consumers, we will purposively trace and reduce our environmental footprint.

Furthermore, we will engage the whole company and our partners in our goal to leave more handprint towards improved environmental sustainability.

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Luenthai recognizes its responsibility to trace its footprint and to leave more handprint towards environmental sustainability.

OUR ENVIRONMENT 58

OUR STRATEGY FOR OUR ENVIRONMENT eXtraOrdinary care for the environment encompasses not only adherence and compliance with environmental laws and regulations in every location where we operate. It means that green thinking will be embedded in all that we do.

Aside from carefully monitoring and controlling our carbon footprint, Luenthai will measure and address all its environmental impact as we deliver our commitment to our customers.

Thus, our XO Care for Environment strategy focuses on minimizing our environmental footprint and maximizing our environmental handprint.

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To minimize our environmental footprint, our strategy is to conscientiously reduce our impact while achieving economic growth.

To maximize our environmental handprint, our strategy is to empower our employees towards environmental leadership. We believe that we can successfully achieve sustainability by cultivating a sense of awareness and responsibility in our workplace and in our community.

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OUR XO CARE FOR ENVIRONMENT TARGETS: MINIMIZING OUR FOOTPRINT Luenthai recognizes we cannot practice

a “business as usual” stance in the face of climate change. We, therefore, endeavor to achieve these specific targets within a five-year period

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SUSTAINABLE MATERIALS

WASTE

INCREASE IN THE USE OF RECYCLED INPUT MATERIALS

INCREASE OPERATIONAL WASTE DIVERSION

INCREASE THE USE OF SUSTAINABLE MATERIALS

REDUCTION IN PAPER CONSUMPTION

CARBON AND ENERGY REDUCTION IN ENERGY CONSUMPTION REDUCTION IN CO2 EMISSIONS PER PRODUCT/UNIT INCREASE IN THE USE OF RENEWABLE ENERGY

WATER REDUCTION IN FRESH WATER CONSUMPTION PER GARMENT INCREASE IN THE USE OF RECYCLED WATER

CHEMICALS ENABLE ZERO DISCHARGE OF HAZARDOUS CHEMICALS 62

FIVE-YEAR TARGET: OUR IMPACT PROGRESS TARGET

PROGRESS

Sustainable Materials Waste Carbon and Energy Water Chemicals

We cannot practice a “business as usual” stance in the face of climate change.

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OUR XO CARE FOR ENVIRONMENT TARGETS: MAXIMIZING OUR HANDPRINT

COLLABORATE WITH OTHER EDUCTATIONAL INSTITUTIONS ON RESEARCH AND DEVELOPMENT

G

iving eXtraOrdinary care for the environment means we we have to equally work as hard in maximizing our handprint as we try hard to reduce our footprint. This means we have to create positive impact on the environment through a more structured advocacy.

In the next five years, we will expand our circle of influence from actively participating in tree planting activities to focusing on raising awareness, to collaborating with other institutions, to venturing in transparent reporting, to supporting green innovations and social enterprise, and to supporting the United Nations Sustainability Development Goals.

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CONDUCT ENVIRONMENTAL LEADERSHIP SESSIONS FOR OUR EMPLOYEES AND STAKEHOLDERS

SUPPORT AND SPEARHEAD GREEN INNOVATION COMPETITION FOR STUDENTS

SUPPORT SOCIAL ENTERPRISE THAT ADVOCATES GO GREEN

HELP PROMOTE THE UNITED NATIONS SUSTAINABLE GOALS 66

FIVE-YEAR TARGET: GO GREEN PROGRESS TARGET

PROGRESS

Environmental Leadership Green Partnership Green Contest Recycling International Campaign

Go Green is a company advocacy promoting environmental awareness and encouraging everyone to do their part in taking care of the environment.

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OUR INITIATIVES FOR ENVIRONMENT PLANTING TREES, CULTIVATING AWARENESS W

ith its commitment to maximize the handprint for the environment, Luenthai has started a tree-planting program in 2009. Over the past seven years, Luenthai has planted thousands of trees that help improve air quality.

But more than the trees, Luenthai has cultivated a sense of awareness and responsibility in the hearts of its employees to continuously foster an eXtraOrdinary care for the environment.

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More than the trees, Luenthai has cultivated a sense of awareness and responsibility in the hearts of its employees to continuously foster an eXtraOrdinary care for the environment.

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OUR INITIATIVES FOR ENVIRONMENT GET CONNECTED A

way of moving forward towards a sustainable future, GetConnected is Luenthai’s latest drive towards its transformation into a Smart Factory, Smart Enterprise, and Smart Supply Chain.

It supports sustainability through technology in the following ways: Artificial Intelligence (AI) will automatically create unique, complex, and complete project plans for 25-30 processes typically found in manufacturing operations. AI will eliminate the long time and hard work usually involved in this process.

Flexibility, a much needed criteria in meeting customer needs in a constantly changing environment, is ensured with an AI algorithym in place since it will adapt to new customers and products instantly.

Real-time, transparent, off-site status of processes can be done through mobile devices (smart phones, tablets, laptops, other display boards) thereby facilitating an environmentally-friendly paperless environment.

An estimated 400,000 pieces of paper for the group would be saved in the digitalization process within the first quarter of the year.

This translates into 48 trees and 4,000 liters of water annually.

In line with Luenthai’s objective of minimizing our environmental impact, YTI has made investments on saving energy because it directly affects the volume of greenhouse gas (GHG) emissions that cause global warming.

With regard to renewable energy, YTI’s “Factory of the Future” has a 500 KWH solar installation which will support about 25% of its electricity needs.

Construction-wise, YTI’s “Factory of the Future” in Cebu was built from Aerated Concrete Blocks (AAC) which use about a fifth of the material of traditional concrete cinder block construction. These blocks are also made mostly from recycled materials (waste material) in the fabrication process. Because of its lightness, the blocks also require much less energy to make and transport to the job site.

A further reduction in electric consumption, will be supported by the skylights on the third floor which enables natural lighting and painted with special paint for optimal thermal efficiency. Cooling pads, an evaporative air cooling system, will also create a comfortable working environment with low energy consumption and costs.

STP WATER RECYCLING

AERATED CONCRETE BLOCKS

EVAPORATIVE COOLING SYSTEMS RAINWATER HARVESTING SYSTEM

2018 Technology and Sustainability at YTI. Luenthai rolls out the GetConnected plan at its sports activewear division, YTI.

SKYLIGHT ROOF

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OUR FUTURE: SUSTAINABLE SMART SUPPLY CHAIN A

sustainable supply chain is both technologically driven as well as environmentally friendly, besides being customer-focused and responsive.

The company realizes that in the 21st century, there is a need more than ever to be ready to change – to be flexible and adaptable like water.

We have made investments on eco-friendly machines that are being used in various Luenthai production facilities around the world.

An investment we will continuously make as we transform ourselves into a sustainable company.

SMART FACTORY In 2016, Yuenthai Philippines Inc., (YTPI) a Luenthai Company in Cebu, made a bold move in technology by building “Factory of the Future”.

The “Factory of the Future” envisions to become not just a hub for smart innovations but also an example of responsible and sustainable manufacturing. Taking a cue from Industry 4.0, the smart factory at YTPI features real time control of 28 critical processes, facilitates immediate corrective action, reduces global and non-productive time, and reduces cycle time to below 30 days.

SMART ENTERPRISE Moving forward, this smart capability in production will extend to other functions that 71

will also improve drastically from a digitalization strategy. This includes standardized, automated and integrated financial and operational reporting beyond SAP. It will also include HR and CSR platforms that will improve the monitoring and control of our environmental impact. At this stage, we will link our sales and manufacturing and support operations.

SMART SUPPLY CHAIN The end goal for this smart strategy is to have a sustainable supply chain which is not only customer-focused, flexible and efficient but also green. Throughout our supply chain management – from product design, material sourcing, manufacturing, logistics, and even end-of-life of products – our systems and processes would have been integrated with our environmental commitment and goals.

WATERLESS DYEING MACHINE WATERLESS DYEING PROCESS THAT USES PURE DYE STUFF WITH NO CHEMICAL ADDITIVES

AUTOMATED FOLDING AND BAGGING SPEED AND FLEXIBILITY IN HIGH-VOLUME REQUIREMENTS

WHOLE GARMENT KNITTING MACHINE SUSTAINABLE COST EFFICIENT AND MINIMIZES WASTE

LASER PRINTING REDUCES EXPOSURE TO CHEMICALS

E M B R A C I N G C H A N G E B U I L D I N G O U R F U T U R E S H A R I N G S U C C E S S P R O V I D I N G

X O

C A R E

D A I L Y !

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Contact Us Uni t 1001-5, N a n y a n g P l a za , 57 H u n g T o R o a d K w u n T o n g , K o wloon, Hong Kong ( 852) 2193-3000 www.luenthai.com Luenthai Sustainability Committee F r a n k S a u c e d a • S u n n y T a n • G e o r g e F u n g • S a n d y Fok