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ESG

Environment, Social and Governance

REPORT 2017 Luen Thai Holdings Limited (Incorporated in the Cayman Islands with limited liability)

(Stock Code: 311)

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. We have 37,000 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.

Doing an extraordinary business and giving extraordinary care are what we do daily.

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A LUENTHAI SUSTAINABILITY CULTURE Giving extraordinary care to our people, our communities, and the environment is a daily habit in Luenthai. Adopted from our culture campaign called “Be XO Daily,” we strive to go beyond the ordinary as we launch our sustainability program.

ABOUT THIS REPORT This is the first Environmental, Social and Governance (ESG) report of Luen Thai Holdings Limited (the “Company”, “Luen Thai” or collectively, the “Group” together with its subsidiaries) (Stock code: 0311). Luen Thai is a global industry consolidator and multi-product expert in apparel and accessories. The Group is principally engaged in apparel and bags manufacturing while the Group’s production and operations are mainly carried out by the Company’s subsidiaries in mainland China and certain Southeast Asian countries including the Philippines, Vietnam, Cambodia and Indonesia with well-established manufacturing operations and facilities. The Group is committed to fulfilling corporate social responsibility, pursuing customer’s satisfaction, improving working environment and contributing to environmental preservation in addition to striving for economic benefits for its sustainability and long term growth. This ESG report highlights Luen Thai’s efforts in attaining sustainability on the following aspects: • Social Aspects (community involvement, employment, health and safety, development and training, labor standards, supply chain management, product responsibility and anti-corruption) • Environmental Aspects (emissions, use of resources, the environment and natural resources)

For Luen Thai, 2016 was a year of successful strategic transformation with a focus on its long- term sustainable growth. In the future, with the numerous support from our customers, business partners, management executives, shareholders, employees and all other stakeholders, the Group will continue to achieve sustainable growth and development through various initiatives in the environmental and social aspects, endeavouring to contribute to the harmony of society and sustainability of the world. The details of our corporate governance have been set out in the Group’s Annual Report 2016 under the section headed “Corporate Governance Report”. The Report covers the period from 1 January to 31 December 2016. Some contents were traced to previous period when needed. The Group has complied with the “comply or explain” provisions of the ESG Reporting Guide set out in Appendix 27 of the Rules Governing the Listing of Securities on the HKEX. This report is to provide an overview on the ESG management approach, strategy and objectives of the Group as a way to enhance the understanding of our stakeholders on the Group’s achievements and future plan on the ESG areas. This report has been reviewed and approved by the board of directors of the Company. This ESG report is publicly available in English and Chinese. Should there be any discrepancy between the English and Chinese versions, the English version shall prevail. If you have any comments or queries on this ESG report, please contact the Company. The contact details are as follows: Luen Thai Holdings Limited 5th Floor, Nanyang Plaza, 57 Hung To Road, Kwun Tong, Kowloon, Hong Kong Email: corporate_communications@luenthai.com Website: http://www.luenthai.com 02

LUENTHAI SUSTAINABILITY STRATEGY There 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 Luenthaiâ€™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.

UNDERSTANDING THE FRAMEWORK

ICONS

Heart: iServe. iGive Back Launched in 2009, this program was Luenthai’s corporate campaign which drove all of the company’s community and charity works. The “I” in the campaign name meant to highlight that every individual 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 Representing our loyalty to give the very best to our people.

Even spacing A balance of business success and giving back.

Red: Community Representing our passion 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.

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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. 04

OUR XO CARE GOALS Extraordinary care for Luenthai means promoting empowerment of individuals by helping them help thems elves. From this grows self-responsibility to take care of the c ommunity and expands into the larger context of taking care of the planet. Our goals are guided by these core beliefs:

â€œLuenthai cares for our people because we believe that their well-being and happiness is the foundation of excellent services and great products.â€?

“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.” 06

PEOPLE Extraordinary Care for Our People is Luenthaiâ€™s goal when it comes to people sustainability. This belief is translated into action through programs under two main categories: Happy People and Best Place to Work. As a labor-intensive employer, Luenthai believes that the peopleâ€™s wellbeing is the foundation of excellent services and great products. Thus, the company ensures its people are happy, engaged and full of passion for their work.

A motivated workforce is a productive workforce. This is one of our core beliefs when we think of our strategy for people. O u r p e o p l e s t r at e g y i s b a s e d o n dual-factor 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 peopleâ€™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 opp ortunities, resp onsibility, and meaningfulness of work.

This program under XO Care for our People spans from basic health, safety, and social compliance to Work-life Integration and Wellness. We believe that through our BEST PLACE TO WORK initiative, our growing number of production locations will have consistent programs that support only the best quality of work environment, serving as examples of extraordinary care for employees.

Diversity and Inclusion With a global operation, Luenthai strongly believes in diversity and inclusion in the workplace. The company is committed to a fair and respectful treatment of its employees, regardless of age, gender, rank and other differences such as ethnicity, religious and cultural background, among other.

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Training Programs

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EMPLOYEE ENGAGEMENT Employee Engagement is another important aspect of Luenthaiâ€™s goal to have Happy People. The company conducts surveys to gather and measure the engagement level of employees as well as to gather feedback on the most important issues and concerns for the employees.

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Performance Awards & Recognition Initiatives under the Happy People strategy include employee recognition programs that acknowledge the employees’ loyalty, hard work and actions that support the company’s goals and values. XO Employee Awards, as an example, is the company’s yearly recognition awards for employees who exemplify the values of its “Be XO Daily” corporate culture campaign: continuously striving to do better, believing in success, exceeding expectations and embracing change. To be an XO Employee Awardee, employees undergo rigorous screening by a panel composed of management, supervisors, and rank-and-file employees. Screening is done on multiple levels to ensure that the most deserving indivisuals are recognized. Currently, this recognition program is being held at Luenthai Philippines and Cambodia. In the next few years, it will be rolled out to the rest of Luenthai’s offices and facilities. Meanwhile, other SBUs have their own long-time performance and recognition programs in lieu of the XO Awards.

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Another key initiative under the Happy People strategy is people development. Here, Luenthai ensures that its people have the necessary knowledge and skills in order to cope with a constantly changing and challenging business environment. Under this program, the company invests time and resources for training sessions, performance reviews and career advancement and growth opportunities for all its employees so that they may achieve both professional and personal growth.

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Transparency and Communication Luenthai prides itself to be a fair employer, adhering strictly to fair labor practices and laws. Apart from upholding its own internal UPSRP, the company takes its responsibility to follow local laws and regulations conscientiously to ensure fair wages, benefits and compensations are accorded to all workers and employees. Labor Cased Filed With a global operation, Luenthai strongly believes in diversity and inclusion in the workplace. The company is committed to a fair and respectful treatment of its employees, regardless of age, gender, rank and other differences such as ethnicity, religious and cultural background, among other. 16

Workplace Safety Workplace safety and health and safety training are among the key programs under Luenthaiâ€™s Best Place to Work initiative. Here, the company strives to provide the best quality of work environment through its compliance to applicable laws and international standards. In addition, providing employees health and safety training is a key priority for the company to prevent accidents at work and develop a positive health and safety culture among all employees.

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Work-life Integration 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 Programs Wellness programs both in-house or held in partnership with third-party institutions is an example of programs that facilitate in the workplace the integration between work and personal life. With the theme â€œWork for Wellness,â€? Luenthai motivates its employees to take care of their health and fitness through participating in various wellness or health activities organized by the company. These programs also help promote Luenthai as the Best Place to Work.

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COMMUNITY Luenthai considers its social responsibility towards the community a top priority. With its leadership status, employee-size and a worldwide presence, the company is committed to make a difference in the everyday lives of people. Thus, under the banner of Extraordinary Care for the Community (XO Care for the Community), Luenthai pledges to continue its positive contributions to help individuals and groups within the communities where it operates.

Our XO Care for Community Plan centers on two specific areas: Upholding Childrenâ€™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.

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 Childrenâ€™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.

An hourâ€™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.

Upholds Children’s Rights The 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. The company believes that a truly sustainable future is possible only when children have health, peace, and an opportunity to become successful adults. On the other hand, employee volunteerism gives the employees freedom to help a charity of their choice.

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Community Outreach Programs Luenthai recognizes that every community has its own needs and potentials. Thus, the company strives to maximize its impact to the communities within thirty minutes of its location. By assessing its local communityâ€™s unique needs, Luenthai is able to help in a more timely and suitable way.

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Collaborations Luenthai believes that key to sustainable shared success is collaboration. To expand its cause, the company collaborates with other stakeholders (customers, vendors, government, non-government organizations, and educational institutions, among others) who share the same values of serving and giving back to the community.

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ENVIRONMENT Climate change is a real global phenomenon and has become a growing concern by many manufacturing companies, including Luenthai. A s w e e x p an d ou r mar ket , we re c ogniz e the ne e d t o b e m o re 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.

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. A s i d e f r o m c a r e f u l l y m o n i t o r i n g and controlling our carbon footprint, Luenthai will measure and address all our environmental impact as we deliver our commitment to our customers. Thus, our XO C are for Environment strategy fo cus es on minimizing our environmental footprint and maximizing our environmental handprint.

To minimize our environmental footprint, our strategy is to 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. 30

ENVIRONMENTAL PROTECTION Effective and Efficient Use of Resource The continuous improvement in the efficient utilization of resource is one of the objectives of the Group. During the year, the Group has implemented different guidelines and policies in order to enhance the efficiency of the use of energy.

Water Resources Utilization Water is one of the valuable resources from our nature. The Group is committed to the preservation of natural resources while the water resource is no exception. With respect to water resources management policies, the Group is devoted to ensuring the compliance with the local discharge regulations for the processing of discharged water. In order to manage the safe use of water resources in each factory, water purification plants system has been set up for the reuse of water. Relevant operation criteria for the treatment of fresh water and sewage have also been formulated.

The consumption on energy during the productions of apparels and bags, which are the core businesses of the Group, accounts for most of our energy consumptions in the aspects of electricity, water and packaging materials. With well-established production facilities in strategic locations, the Group is capable to produce excellent products to our customers with improving efficiency and environmental friendliness. The Group is committed to searching for various ways to reduce the resource consumption while enhancing our performance, efficiency and capacity.

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The aggregate amount of the domestic and industrial water consumption of the Group is approximately [ . ] tonnes for 2017 (2016: 1,843,000 tonnes). The Group had saved approximately [ . ]% of total water consumption by reusing treated industrial water in 2017 (2016:1%). The water intensity per unit of production is approximately [ . ] tonnes for garment and [ . ] tonnes for bag respectively (2016: 0.03 tonnes for garment and 0.04 tonnes for bag).

Use of Raw Materials The Group has always maintained close communication with brand customers and material suppliers in the course of material selection. We follow brand customersâ€™ quality requirements and standards in selecting materials. The packaging materials for our garment and bags products include carton box, plastic bag and other auxiliary items. In 2017, the total consumption of packaging materials was approximately [.] tonnes (2016:8,400 tonnes).

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Use of Energy The Group implemented its energy management strategy through the following initiatives, such as installation of environmental friendly air conditioning system, energy-efficient lighting system and environmental friendly steam- drying room.

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In 2017, the Group consumed approximately [ . ] kWh electricity (2016: 44,255,000 kWh). The Group had saved approximately [ . ]% of total electricity consumption (2016: 2%) by using environmental friendly light tubes. With the continuous effort, the Group believes that a gradual increase in energy saving will be achieved. The electricity intensity per unit of production is approximately [ . ] kWh for garment and [ . ] kWh for bag respectively (2016: 0.60 kWh for garment and 1.16 kWh for bag).

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In 2017, the boiler fuel consumption was approximately [ . ] kg (2016: 9,820,000 kg). The Group aims for gradual increase in the utilization of environmental friendly fuel, such as the biomass fuel, which can help to reduce the carbon footprints and hence attain success in environmental conservation.

GREENHOUSE GAS AND CARBON EMISSION The Group has established manufacturing operations and facilities in different strategic locations, including the China, the Philippines, Cambodia, Indonesia and Vietnam. The Group is dedicated to complying with the environmental regulations in the corresponding locations.

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The Group manages and reduces the emissions of air pollutants, including the greenhouse gas, in various means. The Group has implemented different policies in order to reduce the emissions of air pollutants, such as adoption of environmental friendly manufacturing facilities and equipment which enables the use of renewable energy and energy saving. The Group measures the emissions of the air pollutants timely so as to achieve our goals in emissions reduction. 35

CO 2

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The Group’s total carbon emission of greenhouse gas is approximately [ . ] tonnes in 2017 (2016: 57,900 tonnes). The Group has started a treeplanting program since 2009. Over the past seven years, the Group has planted more than 800 trees.

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Effective and Efficient Use of Resource The Group acknowledges the importance of preserving our environment and is devoted to protecting the environment. We do believe that every business relies on the natural resources of our planet and has the social responsibility to conserve our environment. Thus, monitoring and reducing air pollutant emission, achieving energy and resource saving as well as reducing waste production are considered as the Groupâ€™s environmental objectives for the preservation of the natural resources. Luen Thai has taken consideration of environmental sustainability during business development. The Group will continue to strive with the implementation of various policies and initiatives to protect our environment. For the establishment of environmental protection guidelines and policies, the following principles have been adopted by the Group, such as compliance with relevant environmental laws and regulations, education and training on staff awareness of environmental protection and minimization of the utilization of hazardous substances.

Waste Management The Group has complied with the environmental protection regulations in the disposal, transfer and handling of hazardous waste. The hazardous waste is handled by licensed professionals in order to minimize the risk of the hazardous waste brought to the environment. The Groupâ€™s total production of hazardous waste is approximately [ . ] tonnes in 2017 (2016: 800 tonnes). Meanwhile, the nonhazardous waste is handled by the recycler, incinerator or sent to the landfill. The aggregate amount of non-hazardous waste is approximately [ . ] tonnes in 2017 (2016: 8,100 tonnes).

The Group has implemented waste management strategy to alleviate the impact on the environment from both of the hazardous and non-hazardous waste production. The Group adopts the principles of reducing, reusing, recycling and replacing for the waste management.

2016

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Operating Practices Customer Services and Product Management The principal customers of the Group are companies selling branded apparel and bags. The Group has well established operational experience partnering with major global brands in apparel and bags, offering competitive price, good quality, reasonable labelling and reliable delivery times. Efficient communications between the Group and the customers have been established through various means which enable the Group and the customers to achieve their profitability and sustainable growth. The Group respects and protects our customers’ intellectual property rights and other trade secrets. For any products that are related to intellectual property rights and trade secrets, the Group will take measures to keep them in strict confidence and prevent unauthorized disclosure of such information.

Product excellence is one of the core values of the Group. We have emphasized the importance in collection and analysis of customer’s feedback on our products. Procedures have been taken to enhance the quality of our products and to raise the customer’s satisfaction continuously. The excellence of our products has been recognized by obtaining different awards worldwide. Our products are manufactured in compliance with the applicable international standards, laws and regulations. Our products will also be verified in accordance with the verification standards as agreed with our customers.

Supply Chain Management Luen Thai is a global industry consolidator and multi-product expert in apparel and bags manufacturing. Luen Thai has strategic partnerships with diverse and leading global brands. Good relationship with suppliers constitutes one of the essential elements of the Groupâ€™s success. To achieve positive business growth, the Group maintains close relationship with our suppliers in order to deploy the capability and capacity of the suppliers for accomplishing the Groupâ€™s business goals. The policy and principles governing the sourcing decisions of the Group has taken the social responsibility into considerations. The sound practices in risk diversification has been in our supply chain management. The suppliers are expected to comply with the applicable local regulations governing ethical behavior, employment practices, health and safety, and the environment. We have a zero tolerance policy towards bribery and corruption. The policy of conflict of interest is established as our crucial values for our supply chain management.

ONE PRODUCTION ORIGIN

ONE MARKET DESTINATION

Intergrity and Anti-Corruption The Group has formulated anti-corruption policy, rules and regulations for our employees, contractors and suppliers to minimize the possibility of bribery, extortion, fraud and money laundering. Any contravention to the policy, rules and regulations identified with solid evidence, the contravened parties of or for services will be terminated. We have a zero-tolerance policy regarding bribery and corruption in any form or at any level in association with any aspect of the Groupâ€™s activities. We got certain policies on bribery, gifts and entertainment which prescribe the minimum set of rules adopted to prevent, identify and address any instances of alleged or actual bribery or corruption.

The employee induction process for new hires includes extensive guidance on anti-corruption measures. Relevant working policy, rules, regulations and procedures will be reviewed from time to time. A complaint mechanism was also set up for reporting corrupted behavior. The detailed anticorruption guidelines and procedures are informed to the employees, contractors and suppliers through communication. The procedures cover various channels for reporting the corrupted behavior, such as declaration of conflict of interest prior to the official engagement

Unit 1001-5, Nanyang Plaza, 57 Hung To Road Kwun Tong, Kowloon, Hong Kong (852) 2193-3000 www.luenthai.com