CORPORATE
SUSTAINABILITY
REPORT 2009
WHENWE
NEEDTO
BESURE
2
review
3
100% of employees are required to sign
the Code of Integrity and
Professional Conduct
and receive training on it
4 5
contents
C
Who we are 6
Why WE need to be sure 7
About this report 8
Our reporting scope 9
Further information and fee...
76
whoweare
SGS is the world’s leading inspection, verification,
testing and certification company, headquartered in
Genev...
8 9
ourreport
About this report
This is the first SGS Corporate Sustainability Report, prepared for our employees, custome...
10 11
Jointstatement
Joint statement from the
Chairman
&CEO
Dear stakeholders,
This is SGS’s first published Corporate Sus...
during 2008 we integrated sustainability into our
corporate business strategy
14 15
Ourapproach
At SGS we have strived to conduct our business responsibly and
ethically. We know that how we do busines...
16 17
Ourapproach
Sustainability management system
In 2008, the Sustainability Steering Committee approved a sustainabilit...
18
Ourapproach
19
Materiality
In determining which areas to focus and report on we have considered:
•	 the significance of...
20 21
Ourapproach
Our stakeholdersWe have consulted directly with a number of stakeholders and researched the views of oth...
22 23
Ourapproach
SGS Group Statement of Economic Value
Generated & Distributed
CHF Million	 2009	 %
Economic Value Genera...
24 25
Ourapproach
Measuring our performance
Our Corporate Finance team in partnership with Corporate Sustainability has de...
26
review
27
Over 90 LEAN programmes aimed at
improving efficiency
implemented to date
28 29
Professionalexcellence
Our contribution
to sustainable
development
Through our specialist services we are
able to in...
30 31
Professionalexcellence
Our Performance against our Code of Integrity and Professional Conduct (CIPC)
Compliance Hotl...
32 33
Professionalexcellence
Risk management
Like all companies, SGS is
faced with a growing range
of risks to our busines...
34 35
Professionalexcellence
Highlights and case studies
Continuous improvement lean programme
The need to standardise our...
36
review
37
With operations all over the world,
almost all nationalities are
represented at SGS
38 39
OurPeople
People
management
Attracting employees
We believe that our employees are our
most valuable asset, recognis...
40 41
Health and Safety performance
One of the main challenges we have faced in improving our safety performance is to cha...
42 43
OurPeople
What you
told us
From dialogue with our
stakeholders in 2009, we
were made aware of a
few interesting poin...
44
review
45
Annual water volume purchased
824,431 M3
46 47
Environment
EnvironmentWe are aware of our responsibility towards protecting the
environment and minimising our foot...
48 49
Environment
Environmental
management
Policy
Our revised environmental policy was
launched by our CEO in June 2009. I...
50 51
Environment
Highlights and
case studies
Aside from managing our own impacts,
we are passionate about using our
world...
Environment
What you told us
During recent dialogue with some of our
key stakeholders, a number of interesting
and importa...
review
5554
During 2009, we initiated a Group-wide
community survey based on the United
Nations’ Millennium Development Go...
56 57
Community
Across the world, SGS employees are
passionate about supporting their local
communities, offering their ti...
58 59
Community
Education Case Study:
Gansu Province, China
SGS China and Hong Kong and SGS Taiwan are committed
to suppor...
60 61
Community
Ensuring environmental sustainability
SGS is a main sponsor of “TOPtoTOP”, a global climate expedition
cro...
SGS Corporate Sustainability Report 2009
SGS Corporate Sustainability Report 2009
SGS Corporate Sustainability Report 2009
SGS Corporate Sustainability Report 2009
SGS Corporate Sustainability Report 2009
SGS Corporate Sustainability Report 2009
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SGS Corporate Sustainability Report 2009

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As the world’s leading inspection, verification, testing
and certification company we help our customers to build trust in their own
products, services and operations. It is therefore only right that we meet their expectations,
as well as the expectations of investors, by applying the same level of integrity and scrutiny
to our own operations.

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SGS Corporate Sustainability Report 2009

  1. 1. CORPORATE SUSTAINABILITY REPORT 2009 WHENWE NEEDTO BESURE
  2. 2. 2 review 3 100% of employees are required to sign the Code of Integrity and Professional Conduct and receive training on it
  3. 3. 4 5 contents C Who we are 6 Why WE need to be sure 7 About this report 8 Our reporting scope 9 Further information and feedback 9 Joint statement from our Chairman and CEO 10 Our approach to corporate sustainability 14 Governance 15 Sustainability management system 16 Materiality 18 Our Stakeholders 20 Measuring our performance 24 Professional excellence 28 Our contribution to sustainable development 29 Integrity 30 Risk management 33 What you told us 33 Highlights and case studies 34 Looking ahead 35 Our People 38 People management 39 Our performance 41 Highlights and case studies 42 What you told us 43 Looking ahead 43 Environment 46 Environmental management 49 Our performance 50 Highlights and case studies 51 What you told us 53 Looking AHEAD 53 Community 56 Community management 57 Highlights and case studies 58 Our performance 61 What you told us 61 looking ahead 61 Statement assurance 62 Benchmark GRI G3 Guidelines 64 Closing remarks 67 Glossary 68 Summary of reported data 69 Information 70
  4. 4. 76 whoweare SGS is the world’s leading inspection, verification, testing and certification company, headquartered in Geneva. We employ over 59,000 people to operate a global network of more than 1,000 offices and laboratories around the world. Our organisation comprises ten business units operating across ten geographical regions. Each region is led by a Chief Operating Officer (COO). Each business line is led by an Executive Vice President (EVP). The COOs and EVPs, in conjunction with the functional Senior Vice Presidents (SVPs) and the Group’s Chief Executive Officer, Chief Financial Officer and General Counsel make up the Operations Council which meets regularly throughout the year to determine Group-wide strategies and priorities and review performance. Management is overseen by a Board of eight non-executive Directors, including the Chairman, Sergio Marchionne. From our beginnings in 1878 as a grain inspection house, we have grown to become an industry leader. The Company, with 2009 revenues of CHF 4.7 billion and an operating margin of 17.3%, is listed on the SIX Swiss Exchange. An annual general meeting of shareholders is held with the outcomes posted on the SGS website. Why WE needto be sureAs the world’s leading inspection, verification, testing and certification company we help our customers to build trust in their own products, services and operations. It is therefore only right that we meet their expectations, as well as the expectations of investors, by applying the same level of integrity and scrutiny to our own operations. It is imperative that we conduct our business professionally and with absolute integrity. However, we want to go beyond this and fully embrace the opportunities and responsibilities that come from operating all over the world. We also know that to retain our leadership position we must continue to engage our stakeholders in demonstrating how sustainability is an integral and visible part of how we do business and involve them in the development of our services. Whowe are
  5. 5. 8 9 ourreport About this report This is the first SGS Corporate Sustainability Report, prepared for our employees, customers, suppliers, shareholders, investors and other stakeholders interested in our approach to doing business responsibly. It provides an initial account of our responsibilities and performance and explains how we are managing our sustainability agenda, through the services we deliver to customers and within our own operations. Going forward, SGS will report its sustainability performance annually. In this report, we have highlighted some of the outstanding efforts of employees and associates who are contributing to sustainable development. We want it to serve as a call to action to each employee to embrace our sustainability strategy and do what they can to minimise our impacts and optimise our positive contribution to a more sustainable world. At the same time, we want to inspire our customers and other stakeholders to engage with us on our journey through active dialogue and collaboration. We have chosen to report under the four pillars of our corporate sustainability management system: Our reporting scope We recognise that it will take time to fully compile sustainability data across all of our operating territories with sufficient confidence to report publicly or accurately assess year-on-year performance. Therefore, while we collect data for all operations, our Group performance is tracked and reported using carefully selected countries which have been identified as representative of our Group performance. These cover more than two-thirds of employees and over three-quarters of revenue. Joint ventures are reported as our own operations. Limitations of scope The data presented in this report covers employees but, with some minor exceptions, does not include professionals working on behalf of SGS. We are aware that there are some differences in the way that data is being collected across our trend countries, often because of varying local context. This could result in some figures being under- or overstated. We are working to standardise these going forward. While we have put a manual in place to specify our reporting requirements, we recognise that there may be ongoing variations until such time as we can align all countries and business units with this standard. In the interest of accurate disclosure, we have made a conscious decision to limit our scope in these early years of reporting to areas where we have a high level of confidence in the data. In doing so, we accept that we are not yet providing complete detailed coverage of every country. Over time the scope will broaden as our sustainability reporting becomes more established and we gain a deeper insight into the issues which are important to our stakeholders. We now routinely collect data using 80 indicators of sustainability, covering people, environment, business, community, reputation and trust. These are used internally to highlight performance and drive improvement. The selection of data and other content published in this report have been mapped against the Global Reporting Initiative G3 guidelines. However, our focus has been largely formed by the areas that we believe are important for our business and our key stakeholders. We have begun to test the validity of these with stakeholders during 2009. In developing our sustainability strategy, the structure and the content of this report, we have embraced the principles of materiality and completeness of disclosure, and responsiveness to stakeholders, which form the basis for the Accountability AA1000AS standard. At this stage, our stakeholder engagement is not sufficiently developed to declare full alignment. Nevertheless, we plan further stakeholder dialogue in 2010 to build on the formal consultation process begun in 2009. Further information and feedback For more information or to provide feedback on this report please consult our corporate website sgs.com or contact corporate.sustainability@sgs.com. For employees we have set up a dedicated intranet site on sustainability where they can find more information, review the latest performance data and share knowledge, advice and best practice. Professional Excellence Trust lies at the heart of the value we deliver to our customers and society as a whole. Our conduct is measured on our ability to consistently deliver integrity, ethics, capability and quality without compromise. People People are our single most important asset. A highly skilled, motivated, productive and committed workforce drives our business success. We have a responsibility to ensure that our employees are safe at work, are treated fairly and with respect, and that they are empowered to contribute. Environment We are committed to conducting our business in a way that protects the environment. We also recognise our broader role in contributing to sound environmental management through our range of innovative products and services. Community Local communities are critical to our reputation and success. Many communities also depend on us. We encourage the support of communities, by investing our time, expertise and resources. The scope of this first report represents all our regions and business lines and relates to the year ending 31 December 2009. Some narrative outlining our progress includes activities up to the point of report publication in early 2010. The content of this report has been reviewed by an Internal Audit Team and our Sustainability Steering Committee. SGS has commissioned second party verification of the report and has also sought independent verification of our compliance with the Global Reporting Initiative G3 guidelines from GRI.
  6. 6. 10 11 Jointstatement Joint statement from the Chairman &CEO Dear stakeholders, This is SGS’s first published Corporate Sustainability Report for the employees, customers, suppliers, shareholders and investors who each play a vital role in shaping our future. It is an opportunity to share what it means to us to be a responsible and sustainable company in the 21st century and to continue a dialogue with our stakeholders about the opportunities and challenges for our global business. It outlines our progress so far and some of the major priorities for SGS. It is the first step on a journey that will play a significant part in the future success of our Company. At SGS we believe it is vital to embrace sustainability as a positive challenge; a source of continuous enquiry, innovation and improvement. Our strategic priorities are focused on maintaining the ethical integrity of our business operations, reducing our environmental impact, improving our safety performance and involving our employees in meaningful grass-roots activities in the communities where they live and work. Over the past two years we have made significant strides in formalising our idea of sustainability by creating a structured management system. In 2008 we formed a Sustainability Steering Committee comprising the heads of our regions and businesses to shape the Group sustainability strategy. The strategy was endorsed by the Operations Council in 2008 and continues to be monitored periodically. Our Vice President Corporate Sustainability is supported by the Chief Operating Officers and Executive Vice Presidents in implementing the strategy across our global business and the establishment of regional Sustainability Sub-Committees ensures that the strategy is being effected locally. We have benchmarked our approach against a number of industry peers and best practice companies and we have designed a robust sustainability management system that will provide the information we need for ongoing improvement. We do not regard these commitments as the end target in our drive to a more sustainable future but as a useful guide in helping to integrate sustainability into every aspect of our business practice. Although we have some way to go in fully integrating sustainability throughout our global network, we are proud to highlight some important milestones on our journey so far. As a member of the Carbon Disclosure Project since 2006, we have put significant effort into reducing our carbon emissions. In November 2009, SGS signed the World Business Council for Sustainable Development (WBCSD) Manifesto for Energy Efficiency in Buildings which pledges our Company to a 10% reduction in CO2 emissions from our owned buildings by 2013 and 20% by 2020. We are especially proud to be part of the Dow Jones STOXX Sustainability Index. As we enter 2010 it is timely to pause and consider what the next decade might mean for us. Above all, we must continue to foster a culture of professionalism, integrity and personal safety and prepare our employees to act responsibly and appropriately in challenging situations and new territories. We will need to continue to adjust and respond to the changing needs of a society that expects increasing confidence in the products and services they use. We must also consider what political, economic and personal changes need to happen to put us on the path to a low carbon future. In particular, SGS has a very important role to play in helping our customers across all industry sectors as well as our own business lines to develop and adopt a range of technologies and practices that will contribute to a reduction in climate change. During 2010 we will be launching several important initiatives to ensure our alignment with international best practice through the training of employees and improving awareness on sustainability issues and supporting our employees in meeting our internal sustainability goals. We will be embarking on a Group-wide initiative to train our 59,000 employees in the principles of sustainability and equip them to apply this knowledge in their respective roles. Alongside this, we plan to implement a series of internal campaigns focused on key sustainability themes to empower teams of employees in every market to become protagonists of change and progress. These will serve to complement the existing contribution we are making as a business to develop new services, build global awareness on safety, implement continuous improvement projects in our labs, and promote diversity across our workforce. We will also be continuing our dialogue with stakeholders so that we can learn from them and improve our sustainability performance. This report underlines our commitment to dialogue and transparency and aims to stimulate purposeful discussion on our role in securing a more sustainable future. Please take some time to read it and share your ideas on how you think we should progress by sending an email to corporate.sustainablity@sgs.com. We look forward to continuing our dialogue with you during 2010 and beyond. Sergio Marchionne Christopher Kirk Chairman Chief Executive Officer
  7. 7. during 2008 we integrated sustainability into our corporate business strategy
  8. 8. 14 15 Ourapproach At SGS we have strived to conduct our business responsibly and ethically. We know that how we do business is as important as the services we deliver to our customers. Given that sustainability is now regarded as a significant driver of value to customers and society, it is especially important for us. Sustainability is about managing a long-term profitable business while taking into account all the positive and negative environmental, social and economic effects it has on society. During 2008, we integrated sustainability into our corporate business strategy and began to formalise our approach through the adoption of a Group-wide sustainability management system. Governance In July 2008, we appointed a Sustainability Steering Committee, chaired by our Chief Executive Officer (CEO) with 12 members comprising Chief Operating Officers (COOs) and Executive Vice Presidents (EVPs) from our regions and businesses: The Sustainability Steering Committee meets twice a year and is responsible for developing the Group sustainability strategy, monitoring performance and identifying areas for improvement. Our Operations Council endorses the strategy and formally reviews progress periodically. The Group sustainability programme is managed by the Vice President Corporate Sustainability, who reports directly to the CEO and is supported by the respective heads of businesses and regions. The Chief Operating Officers and Executive Vice Presidents provide strategic direction on sustainability and guide our individual businesses and employees to become engaged. We feel it is important that sustainability is not pre-defined or imposed. Instead, we want each region to have the flexibility to implement the strategy in a way that is right for their business. This approach will create both internal competition and innovation that will accelerate development across the Company. At a corporate level, we will continue to provide support by integrating sustainability principles into our policies, business processes, training and communications. For example, we have included sustainability criteria into the evaluation process for our major suppliers. In addition, we have opted to gather sustainability performance data through our financial management system in order to apply the same rigorous standards. Our approach to corporate sustainability CEO CoO EVP chairman environment people business community internal reporting communication and reputation Sustainability Steering Committee NorthAmerica SouthEastAsiaPacific WesternEurope Agriculture Automotive&GIS ConsumerTestingServices MineralsServices Oil,Gas&ChemicalsServices Environmentalservices Systems& ServicesCertification ChiefComplianceOfficer investorRelations& CorporateCommunication Board Operations Council Sustainability Steering Committee Sustainability Sub-committees Sustainability Management System External Influence and Engagement
  9. 9. 16 17 Ourapproach Sustainability management system In 2008, the Sustainability Steering Committee approved a sustainability management system to define and measure the Company’s sustainability impacts, engage stakeholders in a dialogue around our shared goals, implement programmes, and monitor and communicate our progress to stakeholders. Performance is monitored through a sustainability balanced scorecard. sustainability management system Key Performance Indicators Set targets Meet targetsSustainability programmes People Professional excellence improve Excel Community baseline Monitor measure and report involve reputation and trust communication plan Environment Reduce Professional Excellence • SGS Code of Integrity and Professional Conduct • Group Sustainability Control and Reporting Manual1 • Group Financial Manual • Group Treasury Manual • Supplier Management Policy • SGS Purchasing Terms (affiliates)1 • Information Security Guidelines • Fraud Prevention Guidelines • General IT Guidelines • SGS IT Resources Usage Policy • Information Security Guidelines • Due Diligence Guidelines for the Engagement of Agents, Consultants and Other Intermediaries People • Employment Policy • Quality, Health, Safety and Environment Policy • Health, Safety and Environment Manual • Travel Security Guidelines • Residential Security Guidelines • Security Guarding General Principles • Security Incident Reporting Procedures • Emergency Evacuation Procedure • Recruitment Policy • Expatriate Policy • Certifying Programmes Policy • Bonus Policy Environment • Environment Policy • Energy Efficiency in Building Policy1 Community • Community Policy1 • Community Investment Manual1 1 Policies currently under development A selection of our policies is available at www.sgs.com. Sustainability Sub-committees During 2008, two Sub-Committees were established in SGS China and Hong Kong and SGS West and Central Africa to focus on sustainability initiatives specific to these regions. Further Sub-Committees were set up in Chile and The Philippines in 2009, with more regional committees planned for 2010 and 2011. Below is a summary of our formal policies and internal guidelines linked to sustainability:
  10. 10. 18 Ourapproach 19 Materiality In determining which areas to focus and report on we have considered: • the significance of our impacts • the risks to our business and our sphere of influence • the expectations of our employees and external stakeholders Our impacts Our sustainability management system defines our direct impacts and shared goals as follows: • Governance and risk management is defined by laws and regulations, financial and structural governance including internal controls, committees and shareholders, risk management systems, policies and procedures, and the direct and indirect impacts of our sustainability services. Our shared goal is to EXCEL in the way we do business. • Direct social impact is defined by our Company vision and corporate values, as well as our Code of Integrity and Professional Conduct, our respect for human rights, our Quality, Health Safety and Environment policy, and our Human Resources and procurement policies and practices. Our shared goal is to IMPROVE our social performance. • Direct environmental impact is defined by our environmental management system, our environmental policy and the measurement of performance, including our carbon footprint. Key impact areas for us include climate change, water management, waste and pollution and biodiversity. Our shared goal is to REDUCE our environmental impact. • Philanthropy is defined by our guidelines for philanthropic activities, principles on charitable donations and our support for communities in need. Our shared goal is to INVOLVE our people in supporting the needs of communities in which we live and work. Risks and sphere of influence At the start of our journey we conducted a sustainability risk profile with the Sustainability Steering Committee to evaluate those issues which might potentially pose a risk to business revenue or our reputation. The process highlighted areas which posed the highest combined risk to revenue and reputation. Mapping the topics identified by the risk modelling into the following priority matrix enabled us to focus on issues that warranted specific action over those which required routine monitoring. These topics are addressed throughout this report. LOW HIGH LOW HIGH Laws & Regulations Risk Management Corporate Governance Vision & Values Code of Integrity & Professional Conduct Direct & Indirect SGS Sustainability Services Health & Safety Human Resources Waste Management Communication on Sustainability Community Involvement Stakeholder Engagement Climate Change Water Management Sustainable Procurement Biodiversity / Ecosystems Observe Act Risk Action Required
  11. 11. 20 21 Ourapproach Our stakeholdersWe have consulted directly with a number of stakeholders and researched the views of others in forming our approach and areas of focus. We have also reviewed the disclosures made by customers in similar corporate sustainability reports. It is not possible to present a comprehensive map of our stakeholders across our diverse operations. Each region and each business has a wide array of specific organisations that they engage with in areas such as technical development, innovation and regulation. Below we have presented an illustrative map of some common stakeholder groups that are applicable to the majority of our business areas. Over time we intend to broaden and deepen this understanding, as we seek to engage with external partners to add value and to develop our thinking. SGS Stakeholder Map Regions Europe, Middle East, E E E, BP, C E , C C E E , C E, BP, C E, C E, C E, S, Cs, C, Africa N, SIG, A Americas E E, C, S E E, C C E, C E E E, BP Asia Pacific E E E E, C E, C E , C E E, C E, N, C AgriculturalServices Businesslines MineralsServices Oil,GasandChemicals EnvironmentalServices LifeScienceServices ConsumerTestingServices SystemsandServicesCertification IndustrialServices AutomotiveServices Governments&InstitutionsServices BusinessLineNotspecified Stakeholder dialogue During 2009, we began to test our sustainability approach with a selected group of internal and external stakeholders through formal dialogue using an independently moderated electronic survey. The table below illustrates the scope of our dialogue across our regions and businesses. The exercise has been helpful in mapping out the issues of greatest importance to our stakeholders and understanding their expectations of SGS with regard to our own corporate responsibilities and our role in contributing to sustainable development through our services. Extracts from the dialogue process are featured in each of the sections of this report. We will be extending our dialogue in 2010. Shareholders Employees Suppliers, Business partners and consultants Media Special Interest Groups and academics Financial Community Customers Communities Regular Communication Reg ular Com m unication Regular Communication Sin gle Issue Consultations Regular Communication 1:1Inter views ,Custo mersur vey Reg ular Com m unication Review , Appraisals and sur veys Focus Groups and Employee Surveys Authorities, Governments and Regulators NGOs1:1 Single Issue Consultations, survey Key: E = Employees C = Customers S = Suppliers N = NGO BP = Business Partner Cs = Consultant SIG = Special Interest Group A = Academic
  12. 12. 22 23 Ourapproach SGS Group Statement of Economic Value Generated & Distributed CHF Million 2009 % Economic Value Generated Revenue 4,712 Financial Income 12 Total Economic Value Generated 4,724 100.00 Economic Value distributed Employee Wages and Benefits Salaries and wages 2,214 Total 2,214 46.87 Operating Expenses Subcontractors expenses 319 Depreciation, amortisation and impairment1 228 Other operating expenses 1,107 Total 1,654 35.01 Payments to Shareholders and Lenders Financial expenses 15 Dividends paid2 470 Total 485 10.27 Payments to Government Income taxes 200 Other taxes 49 Total 249 5.27 Payments to Community Community contirbutions and charitable donations 1 Total 1 0.02 TOTAL ECONOMIC VALUE DISTRIBUTED 4,603 97.44 ECONOMIC VALUE RETAINED 121 2.56 1 Includes CHF 5 million of impairment of a non-recurring nature 2 As proposed by the Board of Directors. OUR APPROACH TO CORPORATE SUSTAINABILITY While the SGS Annual Report provides information on our financial position and performance it is also important to measure the broader economic impact of our organisation on society. In this process we take the economic value generated by SGS through our services and from other income and look at how this value is distributed amongst our stakeholders. These global figures are presented on an accruals basis. revenues financialincome employees operatingexpenses shareholders&lenders government(Taxes) COMMUNITY retained Generated distributed retained 4’712 12 2’214 1’654 485 249 1 121
  13. 13. 24 25 Ourapproach Measuring our performance Our Corporate Finance team in partnership with Corporate Sustainability has developed a new data management tool called Solaris which uses the Group financial management platform to input and consolidate sustainability data for all countries. During 2008, all countries were provided with a template to enable accurate and consistent data capture. An accompanying handbook provides guidance on the most reliable sources of information and the importance of having supporting documentation to substantiate all data. As a result, all countries are now able to track sustainability performance across a large number of quantitative indicators. This data will enable each business to understand how it compares to others within SGS, and also identify where we need to improve as a company. Example of internal template for data gathering Each country must report on sustainability performance every half-year. Where appropriate, impacts are monetised to help us focus on the contribution that sustainability makes to our operational efficiency. All data is managed by our Finance team who apply the same standards to this as to our financial data. The team has strong support from respective functions including Compliance, Continuous Improvement, Corporate Communications and Investor Relations, Human Resources, Quality, Health Safety and Environment and Technical Governance. Improvement targets It is too early to set concrete targets for all areas as we are still in the process of establishing the baseline. However, some initial, short-term improvement goals have been set and these are covered within each of the four main sections of the report. It is our intention to agree definitive targets during 2010. We intend through our ongoing dialogue with stakeholders to incorporate their feedback.
  14. 14. 26 review 27 Over 90 LEAN programmes aimed at improving efficiency implemented to date
  15. 15. 28 29 Professionalexcellence Our contribution to sustainable development Through our specialist services we are able to instil trust in consumer products, new technologies and manufacturing processes. We operate a network of more than 1000 offices and laboratories and offer testing and certification to nearly all industrial sectors from mining to automobiles and from electronic goods to agriculture. Professional excellence is more than the quality of service our customers expect and more than something which we aspire to as individuals or as an organisation. It lies at the heart of the value we deliver to our customers and to society as a whole. Achieving professional excellence requires us to focus on three complementary aspects: • Service Provision – providing services to our customers that also support the needs of society. • Service Delivery and Improvement – the skills, experience and quality assurance that we apply in delivering and improving these services. • Integrity – the individual and collective decisions and judgments we make. Service Provision Through being in tune with our customers’ own sustainability programmes, we have already built up a very broad range of services that not only support environmental initiatives, but also ensure the safety of consumer products, monitor working conditions in Developing World factories and certify the safety management systems that protect workers from injury. A small sample of these services serves to illustrate the extent to which sustainability lies at the very heart of our business: • Our Ecodesign service looks at the life cycle of customers’ products and helps to reduce their environmental impacts through packaging reduction, lifespan optimisation, streamlining of logistics, energy and raw material efficiency and environmental labelling. In 2009 we developed a more integrated approach to assessing organisations’ carbon footprints, combining carbon foot-printing with carbon labelling, a thorough inventory of all greenhouse gases and supporting customers in all stages of assessment, from training to calculation and report writing. • We provide comprehensive technical and project management support for wind farm projects throughout their tender, construction and commissioning phases and have supported the building of Poland’s first wind farm which came online in September 2009. • In October 2009 the first safety, life duration and electrical performance tests of solar panels were performed in the newly built SGS Photovoltaic Laboratory in Germany. • We support many pharmaceutical companies in the development and approval of new medicines, carrying out testing in good manufacturing practice and conducting clinical trials. India and China are the main locations for Active Pharmaceutical Ingredient manufacturing worldwide and SGS plays a major role in their testing and quality assurance. In addition our Anti-Counterfeit Drug Programme establishes risk management, controls and counter measures to ensure that medicines provided to some of the poorest areas of the world are legitimate and safe. • The illegal trade in counterfeit goods places consumers’ health and safety at risk. Our Product Conformity Assessments assist governments to ensure that imported goods meet their technical and regulatory standards. We work closely with the regulatory bodies to check both the goods and their origins. This protects the consumer’s safety, supports the local economy by safeguarding local manufacturing and helps to combat organised counterfeiting. More generally, our Destination Inspection service routinely helps Customs administrations to facilitate compliant trade, optimise collection of import duties/taxes, and enhance the detection of fraudulent transactions and illegal cargo. Service delivery and improvement SGS has a responsibility to all our clients to deliver the best services in a responsible and efficient manner. At the same time, the nature of some of our work means that we operate in sensitive areas which can impact on issues such as ethics, safety, health and the environment. For these reasons, the delivery of services must be addressed as a key issue in our corporate sustainability approach. Our ability to guarantee excellence in service delivery comes from the combination and optimisation of skills, experience, technology and processes. In 2008 we introduced a customer survey tool, the “Voice of the Customer”, which focuses on quality of service, technical capabilities, turn-around time, responses to queries and value for money. This has been extended in 2009 and will continue into 2010. Voice of the Customer has identified many improvement opportunities and has enabled us to share best practices across SGS. One of the key impacts that SGS makes in terms of corporate sustainability is through the services we provide to our customers. As a result, it is imperative that we continually improve our services and enhance the positive impact we can make as a company. For us, professional excellence means being recognised globally for high standards of integrity and for the range and quality of the services we provide. We play a vitally important role in providing inspection, verification, testing and certification services in every region of the world. Professional Excellence Did you know? SGS global network has more than 1,000 laboratories and offices around the world. SGS is a founding member of the World Business Council for Sustainable Development. We provide comprehensive services in detecting and analysing dioxins that threaten global food chains.
  16. 16. 30 31 Professionalexcellence Our Performance against our Code of Integrity and Professional Conduct (CIPC) Compliance Hotline Activity: Global Data covering all SGS operations During the year, 136 CIPC concerns were reported via our compliance hotline, of which 19 were investigated and 17 confirmed breaches were identified. Integrity Our integrity underpins everything we do. It is the basis for us being trusted by our customers, and by consumers who buy the products we have tested. When a customer employs SGS to perform a service, they must have total confidence that it will be delivered reliably and professionally. Code of Conduct Our professional standards of business integrity are laid out in our Code of Integrity and Professional Conduct. Each employee is required to sign the Code, and our joint venture partners, agents, intermediaries, consultants and subcontractors are also required to comply with it. The Code reflects the Business Principles for Countering Bribery issued by Transparency International and Social Accountability International and incorporates the rules adopted by the International Federation of Inspection Agencies (IFIA), the professional association for the inspection industry. Integrity training We operate in many countries where the locally accepted custom and practice sometimes falls short of what we would expect, and we are aware that our employees are sometimes faced with difficult situations or circumstances that we might not have been able to prepare them for. It is therefore vital that we make our position on business ethics very clear to every employee, and that they know they have the full support of SGS in making the right decision when faced with any kind of dilemma. We ensure that the highest standards of integrity are applied to our activities around the world by providing annual mandatory training to all employees. This is complemented by an e-learning programme, available in English, French, Spanish and Chinese, to communicate this message and to help employees explore some of the potential dilemmas they might face. In this programme, employees are confronted with day-to-day challenges to help them test their understanding of SGS standards of business conduct at a practical level. Mandatory training will continue in 2010 with a revised programme designed to reflect the most topical integrity issues for our business. Senior management roles and responsibilities The Professional Conduct Committee (PCC) meets twice yearly and oversees implementation of the Code within the Group and advises management on all issues of business ethics. In addition to three Board Members including the Chairman, the PCC comprises the Chief Executive and the Chief Compliance Officer and the Head of Internal Audit. Chief Operating Officers are responsible for implementing the Code in the Regions whilst the Chief Compliance Officer monitors overall performance and conducts investigations of alleged misconduct. Compliance monitoring and assurance Responsibility for ensuring compliance with the Code, as well as all SGS policies and regulatory requirements, rests with regional Chief Operating Officers and Managing Directors. Serious legal non-compliances or health, safety or environmental incidents are reported as a priority to the appropriate member of the Operations Council. SGS also has a compliance hotline where any employee can report a concern safely and in confidence. Every employee is required to sign the Code of Integrity and Professional Conduct (CIPC) and refresher training is conducted every year. In addition, we monitor and assess compliance with our Code in a number of ways: • Most business lines have a Technical Governance group to routinely check the integrity of their own operations. • Operational management are required to sign a declaration of compliance with the Code and to explain and action any non-compliances. • All operations are audited at least once every three years by our Internal Audit team. • We have an integrity support service open to both employees and business partners to ask questions or raise concerns about professional conduct in any country in which we operate. • Our Chief Compliance Officer assesses, reports and makes recommendations on any significant non-compliances. There is a half-yearly report to the Board of Directors on non-compliances, which includes a summary of integrity issues reported. “Above all we must act with integrity. We should all thinkvery carefully about the impact of our actions. “ Christopher Kirk, CEO indicator What does this measure? 2009 CIPC REPORTS Total number of professional conduct issues reported through the compliance hotline 136 CIPC INVESTIGATIONS Total number of valid reports investigated 19 CIPC NON-COMPLIANCES Total number of breaches of CIPC identified through the compliance hotline 17
  17. 17. 32 33 Professionalexcellence Risk management Like all companies, SGS is faced with a growing range of risks to our business, including some which relate to sustainable development and corporate responsibility. These generally relate to the customers we choose to work for, the projects we support with our services, and the countries where we operate. They are invariably complex risks to assess and can touch upon issues of environmental sustainability, human rights and business ethics. In shaping our policies and making decisions in controversial areas, we recognise the importance of taking into account the opinions of relevant and informed stakeholders. What you told usWhilst our customers may be familiar with our services, we are increasingly aware that they also want more information about how we are managing sustainability. In our 2009 dialogue with some of our key stakeholders, our customers told us that they are well informed about sustainable development in general, but that they do not have enough knowledge of SGS to say whether we are a leader in corporate sustainability within our sector. This sets us the challenge of communicating what we do in this area more effectively; a view that is supported by many of our customers who told us that it is “quite important” or “very important” for SGS to publish an annual Corporate Sustainability Report. Our customers also expect SGS to be a leader in the contribution we make to sustainability through our services and told us that we perform particularly well in business ethics and integrity, customer relations and account management and our technical knowledge and expertise. They acknowledge that we are making a contribution to sustainable development through many areas, including environmental services, promoting socially responsible standards and working with customers to improve their management of safety and the environment. Our customers see us as performing less strongly in our own environmental management and in our support for local communities. Several also suggested areas where we can improve: • “SGS has the potential to significantly contribute to sustainability through its product offerings by influencing many companies to be more responsible and sustainable.” • “Consider your functional management areas such as Health & Safety, Environment, Quality Management and traditional Sustainability Management efforts as being the single entity of Sustainable Management.” We are taking our stakeholders’ suggestions on board, and wherever possible and feasible, will incorporate them into our future planning. We were pleased that in our employee survey, our employees told us that we performed well in the area of ethics and integrity with 94% thinking we are above average and best practice . This was rated as the most important aspect of corporate responsibility for us to focus on over the next three years giving a strong indication that we must not become complacent. Some quotes from our employees: • “SGS often set standards for their staff & operations that exceed the local laws, especially in developing economies. This creates a visible benchmark and a clear statement for all stakeholders that interact with SGS.” • “I think the corporate integrity and ethics standards are very good. The effort of the Group in the area of integrity is quite impressive.” • “SGS has a strong brand around the world. Some areas already combine their services to deliver to the market a single solution that embraces several initiatives. This must be perceived as a goal in all operations.”
  18. 18. 34 35 Professionalexcellence Highlights and case studies Continuous improvement lean programme The need to standardise our services does not mean that we are unable to improve the way we deliver them. In 2008 we launched “Lean”, a continuous improvement and operational efficiency programme. Lean aims at improving the efficiency of our service provision, shortening our delivery times, improving reliability and optimising the interface with our customers. It consists of four strategic programmes, looking at our laboratory operations, back office processes, sales relationships and our laboratory information management systems. Efficiency improvements are achieved through our employees who, working in small teams, design and implement solutions to improve the way we work. In 2008 there were 25 live projects which increased to over 90 in 2009. We have started to roll out the programme through a network of “lean leaders” who are being trained in lean techniques. So far we have 22 leaders who have each undergone three days of training, and anticipate this will rise to over 80 by the end of 2010.   During 2010 we will: • Following two years of data capture, carry out a review of the scope of data capture and calculation across our operating territories to further improve consistency • Continue to conduct our annual training on the Code of Integrity and Professional Conduct using a refreshed training format • Continue to develop high potential people through our leadership programme Looking Ahead “Our laboratory has been facing a lot of challenges, including requests for faster turnaround times from customers. We are looking forward to a more efficient laboratory with the help of Lean and to upgrading our productivity after implementing this project. We have identified unreasonable waiting time and figured out solutions to speed up the lead time and prevent unnecessary waiting.” Andy Tsai, Lab Manager of the Consumer Testing Services (CTS) lab in Kaohsiung, Taiwan “Having attended Yale University, where I majored in Physics, I was recruited by the University of Wisconsin before coming to Geneva to join the European Organisation for Nuclear Research (CERN). I attained my PhD in elementary particle physics and spent ten years in research. I then went to McKinsey & Co as a management consultant before joining the Continuous Improvement team at SGS almost five years ago. A team and I have developed an advanced tool which provides everything we need to know about our labs around the world – where they are, what they do, what accreditations they hold, who their customers are, what samples they have. I work with a core team of top lab experts; 22 outstanding colleagues representing practically all SGS services. “We want to get our labs to operate as one network, whilst respecting both the global and local entrepreneurial spirit. We are looking at critical lab operations to ensure highest quality deliverables with on-time delivery, whilst improving safety and ensuring our labs are the best places to work. We monitor and optimise resources for the benefit of our customers, staff and our shareholders. We are improving the physical footprint, looking at how we can best improve operational excellence. Our Voice of the Customer survey, which ran in 16 languages across 150 labs, resulted in 2,000 customer responses. We also use a blind customer experience process to sample our service delivery. “Lean has been very successful for our lab programme. As we move forward, we need to execute it virally. I have trained 60 colleagues as Lean leaders. We need to provide the tools to help people make changes in the best ways for their own lab. I am discussing how we integrate sustainability requirements into our programme and look forward to exploring these opportunities further as the programme evolves.” Stephen Armstrong (Global Program Manager - Assistant Vice President Continuous Improvement) Our employees at work
  19. 19. 36 review 37 With operations all over the world, almost all nationalities are represented at SGS
  20. 20. 38 39 OurPeople People management Attracting employees We believe that our employees are our most valuable asset, recognised across the world for their skills, knowledge and professionalism. The future success of our business relies on us continuing to attract, develop and retain people wherever we operate. This means creating a company where people can develop their potential and feel valued for their contribution. Our annual employee turnover across our regions was just 10.3%, which is indicative of the current economic climate. Across SGS, each region has developed programmes to increase the awareness of our brand, to attract and retain talented individuals, and to develop the specialist skills that we will need in the future. Developing talent We have a structured employee induction that maps out the essential training needed during a new employee’s first six months at SGS, covering job role and standards of performance as well as areas such as the SGS Code of Integrity and Professional Conduct, Quality, Health, Safety, Environment and Personal Security. Thereafter we provide a wide range of technical, professional and personal learning programmes to develop the right blend of skills to meet customers’ current and future needs. Our talent programme identifies people with leadership potential, to ensure they are being developed within their current role. Only employees who meet and exceed expectations in their performance are selected to participate. Delegates attend three workshops and develop a personal action plan which directly impacts business growth and initiatives. To date, more than 100 employees have attended the leadership programme. There has been particularly good take-up for our customised leadesrhip programme in China and Hong Kong where more than 200 employees have now participated. It is particularly challenging to accurately predict market needs in services relating to sustainability and corporate responsibility due to the rapid evolution of these areas and the ongoing development of formal standards. To match these market needs, it is important to maintain a workforce that is multi-skilled and highly adaptable. We are constantly reviewing our skills in relation to emerging markets and looking for innovative ways to develop new disciplines. We have a global Human Resources database that helps us manage talent identification, skills development, career planning and succession management. In 2010 we aim to launch an e-learning programmes on sustainability to raise awareness across the Company and to help employees understand how they can contribute. The programmes will also help managers understand how to build sustainable thinking into their day- to-day decision making. This initiative will be supported by the appointment of sustainability “champions” who will promote programmes and initiatives at grass-roots level in each of the countries in which we operate. Our employment practices Our Group employment policy sets common standards for the business that are compatible with the core International Labour Organisation Conventions. This is complemented by a relatively small set of core policies and guidelines. Within these Group policies, each market is able to develop its own detailed policies and approaches that are compatible with their local market context and needs. Diversity As well as recruiting from a wide talent pool of varied backgrounds and experiences, we actively encourage the diversity of views and ideas, and recognise the value of this in nurturing innovation and adapting to changing markets. With operations all over the world, almost all nationalities are represented in our Company. Our Operations Council alone represents 14 different nationalities. Recognition and reward We recognise the importance of providing a working environment which is fair, where each individual is recognised for their contribution, and rewarded according to SGS bonus policy. Our aim is to create an environment where there are no barriers to progress and where each individual has the opportunity to fulfil their ambition and potential. Work life balance Our focus is on providing equal opportunities for all employees within a fair system of recognition and reward based on merit. We recognise that, in some countries, creating the right work life balance can be especially challenging for women with family or caring responsibilities and that such commitment can make it difficult to pursue a chosen career within a globally diverse company. We routinely monitor the gender ratio of both the number of employees and the proportion that are managers. Currently, 23% of our managers are women. SGS employs one of the world’s most diverse workforces with over 59,000 people working in our laboratories, offices and field locations in every geographical region, along with a large number of associates and sub-contractors. Our management of human resources forms an integral part of our corporate sustainability approach. Recruitment, training, safety, health, wellbeing and the treatment of employees are all important aspects of our social responsibility. Our market has changed beyond recognition since we were founded in 1878, and our customers’ needs continue to change at an ever faster pace with the advent of new technologies and a sharper focus on safer, ethical and environmentally sound consumer products. At the same time, we must provide our services efficiently, reduce our own environmental impact and further improve our safety performance. This, coupled with the current economic climate, will be a big challenge for our employees to innovate and improve. It also provides some exciting opportunities for us to demonstrate what we can do, and to consolidate our position of leadership. Did you know? Globally, SGS spends over 53% of its revenues on wages and benefits to employees and sub-contractors. Last year there were 518 recordable incidents reported in our selected operating countries. Over 178,000 hours of safety training were provided during 2009. Our People
  21. 21. 40 41 Health and Safety performance One of the main challenges we have faced in improving our safety performance is to change the culture within our organisation to encourage employees to report near misses and minor accidents so we can act to avoid more serious injuries. The increased investment in training and communications that followed the establishment of the global QHS&E Council resulted in an increase in near miss reporting in 2008 and also a significant rise in the reporting of injuries. We are encouraged to see a continued rise in near miss reporting in 2009, combined with a downturn in injuries. We are seeking to reduce our TRIR below 1.0 next year, although we are reluctant to set a formal target at this stage as this might have a counter-effect on employees’ willingness to report accidents. In 2009, we found that a number of incidents were the result of slips, trips and falls, and inappropriate lifting. Tragically, two people working on behalf of SGS lost their lives as a result of a single offsite incident in Thailand whilst on SGS business. After an internal investigation, led by the Vice-Chairman of the QHS&E Council, we have implemented and reinforced a number of policies including training and mandatory personal monitors. We will continue to drive improvements through the implementation of initiatives such as: • Expanding existing behavioural change programmes • Increasing the number of safety meetings • Providing more effective training • Documented induction on hazard identification and risk assessment for all employees • Ensuring the correct use of personal protective equipment • Vehicle inspection and driver improvement programmes Security Security is an ever increasing concern and we carefully consider security risks for employees who travel by screening hotels, arranging airport pick-ups and even providing security guards in exceptional circumstances. Cultural training is provided for employees and their families who are relocated to help them integrate into their host country. Details of the support we provide to ensure security, safety and welfare are contained in our travel security guidelines and bulletin. Our performance Our employee turnover fell in 2009, most probably due to a combination of factors including the global economic downturn. We have continued to restructure our business in line with business development and, despite some redundancies at a local level, we have increased our overall global headcount by 2.6%. We employ roughly twice as many men as women across the organisation. Our equal opportunity ratio shows that a higher proportion of men reach management level and it is our goal to encourage and enable more of our female employees to pursue a management career path. We recognise that further research may be needed to better understand how to achieve this. We are well below our tolerance of 2.5 for sickness-absence rate and we aim to keep this rate low going forward. Health and Safety Providing a safe and secure workplace for everyone at SGS is paramount. It is our belief that all injuries are preventable and we strive to provide the best possible conditions, equipment and training to ensure our employees and those people working on behalf of SGS, can work safely and travel safely to and from their place of work. Our commitment to safety is contained within our Quality, Health, Safety and Environment (QHS&E) Policy and accompanying manual that together set out the protocols that govern health and safety management across the Group. Our global QHS&E Council, established in 2005, provides direction and support, and facilitates the sharing of best practices. Responsibility and accountability for performance sits within our regional and business management. All businesses are regularly audited by both internal and external safety specialists. The cross functional Technical Governance Group, which is an initiative sponsored by the EVPs of the Agricultural, Minerals and Oil, Gas and Chemicals business lines, audited 39 locations in Asia, Africa, Europe and North America. In 2009 we strengthened our safety communications by introducing a set of 75 safety training modules that can be accessed via the internet. These modules are designed to be viewed by teams, with discussion facilitated by a qualified trainer. OurPeople indicator What does this measure? 2009 employee natural turnover % of employees that leave SGS each year of their own will 10.3% Gender ratio (male) % of male employees 65.4% Gender ratio (Female) % of female employees 34.6% equal opportunity ratio (female managers / female employees) / (male managers / male employees) 0.58 sickness absence rate Number of days of sickness absence as a percentage of total days worked 1.74 training hours Number of training hours per FTE 16.8 2006 2007 2008 2009 Number of Recordable Incidents 415 451 569 518 Total Recordable Incident Rate (TRIR) 1.24 1.29 1.50 1.29 Lost Time Incident Frequency Rate (LTIFR) 1.00 0.96 1.18 1.09 Near Misses 355 358 830 1,491 Training Hours Completed 48,982 61,381 79,145 178,166 Injury rates are likely to be overstated as data includes people working on behalf of SGS, whereas working hours are calculated using only SGS employees. Safety statistics exclude data from one scope country which is currently unavailable. Data will be integrated in future reports. “By far the most important strength about this organisation is the peoplewho are in it.”Christopher Kirk, CEO
  22. 22. 42 43 OurPeople What you told us From dialogue with our stakeholders in 2009, we were made aware of a few interesting points with regard to how we manage our people. One of the key points we noted is that our stakeholders, including our employees, were keen for us to enhance training and awareness on areas such as sustainability. This is something that we plan to do in 2010 using an e-learning programme. We were also very encouraged to learn that 76% of our Executive Vice Presidents, Chief Operating Officers and Managing Directors surveyed wanted to take a leadership role or play an active part in sustainability. Some quotes from our employees: • “SGS should concentrate more on health and safety in the third world countries by making general awareness seminars and workshops to help authorities to be more aware of products affecting public health.” • “We need to give all staff a better understanding of sustainable development.” • “Education is a good area for sustainable development. If you want to protect the environment, think about actions that can make people respect the environment or change the view they have of the environment.” Looking ahead • Our customers are looking to us to provide ever-stricter safety performance, often as a condition of contract. We must collaborate in creating even safer working environments, which is why we will be appointing a senior level specialist to support and further strengthen our Group safety management system. • We need to continue to work strategically in partnership with communities and academic institutions to develop the skills that will be needed for our future business, particularly engineering, geology and life science services. • Although we believe that we have maintained an excellent equal opportunities ratio, we want to continue to work to attract more women into SGS, and to create the right employment conditions to enable them to achieve work life balance during their careers. • We plan to launch a Group-wide e-learning programme during 2010 to raise awareness and understanding of employees on key sustainability issues. We will also run a series of internal campaigns to help bring sustainability to life in the workplace. Highlights and case studies • In 2009, our Australian headquarters in Perth achieved certification OHSAS 18001, an international standard for safety management systems. • Over 178,000 hours of safety training were provided during 2009. • Our South-East Asia Pacific region set up a forum to discuss gender and promote women in leadership. • To date over 100 employees have participated in our leadership development programme and more than 200 employees participated in a customised leadership course for the China and Hong Kong region. The SGS Young Engineers’ Training Programme In Canada we developed an essential engineering skills programme to encourage and train young engineering graduates in metallurgy, a discipline that is in high demand in Minerals Services and Industrial Services. Each candidate has an individual plan that is designed to develop professional job skills, a business background and knowledge of SGS. The programme can be broadened to offer experience of associated disciplines such as finance, project management, health, safety and environment. Momentum is an internal SGS forum that has been set up by Deborah O’Dwyer, Leadership and Development Manager, South-East Asia Pacific, to raise awareness of gender diversity and to promote women in leadership. Employees were invited to engage in a pre-launch survey in June 2009 to provide insight into the information and events that they would like to see to promote diversity.    “I graduated in food science and first worked in a technical role within the dairy industry, then carrying out supplier audits for Ireland’s biggest supermarket chain. I came across SGS who were looking for auditors and joined in 1995. I think I have progressed through over seven different roles in my fourteen years at SGS; most of my time has been in SSC where I managed the Northern Ireland business. Soon afterwards I was given responsibility for all the Northern Ireland businesses, then for SSC across the UK. I look back on this period with great pride, working with a team to make this unit a high performing part of the UK and global business before moving on to my current role as Managing Director of SGS UK. It was not all easy as, even within the UK, the amount of travel required is significant. The variety of work, experience and opportunity that SGS offers has always been a strong attraction for me. We also have a particularly great team of people, not just in the UK but globally. I tell my team that if they have the right attitude and work hard, there should be no reason to look for a job outside SGS.”Pauline Earl (Managing Director UK) Our employees at work
  23. 23. 44 review 45 Annual water volume purchased 824,431 M3
  24. 24. 46 47 Environment EnvironmentWe are aware of our responsibility towards protecting the environment and minimising our footprint. As members of the Carbon Disclosure Project since 2006 we have been dedicated to reducing our CO2 emissions for some years now and are confident that we can achieve the targets we have set for ourselves, despite the continuing growth of our business and our headcount. This is a good start, but we still have some way to go. As we embark on our journey towards sustainability, there are other important environmental factors for us to consider in the short-term, such as reducing the volume of waste and pollution sources from our laboratories as well as our consumption of water. Our environmental impact can be divided into two main areas: • Internal: the impacts of our direct operations • External: the impact of the services we provide to our customers In our own operations, we are continually striving to minimise our environmental footprint. Our principal environmental impacts derive from the waste water discharges and waste from our offices and laboratories, CO2 and other air pollutants associated with employee travel and the energy consumed in our offices and laboratories. During 2009, we have reduced air travel by 13% with a consequent reduction of our C02 emission. Externally, SGS offers a range of inspection, testing, audit and verification services to help customers develop and implement environmental solutions across the world, from advising on sustainable forestry, monitoring dioxins, providing ISO 14001 certification and carbon footprint studies, to supporting the development of new wind farms. Our impact on the environment SGS has a direct impact on sustainable development through our business operations. Based on the reported data from our selected operating territories: • Our carbon footprint for 2009 was calculated at around 171,000 tonnes CO2 . Of this, around: o 53% was from electricity consumption in our offices and laboratories (equivalent to 182 million kWh); o 29% was from vehicle fuels; o 10% was from non-transport fuels; and o 8% was from air and train transport. • Our water consumption was 824,431 m3 . Our Services As a service company, SGS also makes an important indirect contribution to environmental protection through the services we deliver to customers across the world: • Our System and Services Certification Services help organisations to manage their own impact by certifying environmental management systems (e.g. ISO 14001). • Our Environmental Services include environmental quality monitoring in some of the most threatened environments in the world. • Our Consumer Testing Services and Systems and Services Certification provide assurances to consumers that products have been sourced from supply chains that meet designated environmental standards and are designed and manufactured to minimise carbon and other environmental impacts during development, use and disposal. • Our Forestry Services have developed a new service to verify tree planting projects to provide independent assurance to donors on the quality and effectiveness of designated projects. Some examples of our work over the past 18 months are summarised below: • SGS Poland acted as Owner’s Representative for energy provider, RWE, on the construction and commissioning of a wind farm which involved the installation of 18 wind turbines in Suwalki, north-east Poland. • SGS has worked in India for the Central Pollution Control Board to help develop a baseline for dioxins, and develop a standard methodology for monitoring volatile organic compounds (VOCs). They are keen to apply international directives and develop methods of analysis and control that work for them. • A gold mine in Ghana needed to return the tailings piles to local farmers. SGS carried out soil analysis to assess its suitability to plant crops before the land was handed over to the community for ongoing management. • The SGS Institute for Applied Chromatography in Antwerp, Belgium provided an expert for three regional workshops for part of a UNEP project on the Assessment of Existing Capacity and Capacity Building Needs to Analyse Persistent Organic Pollutants (POPs) in Developing Countries. • SGS is working with industry pioneers to develop an auditable standard on bio fuels covering verification of the source of materials to applied uses. • We are working with WWF in Hong Kong to develop various standards in sustainable environmental practices. • Through our Environmental Services in Taiwan, SGS offers services in air sampling and monitoring, covering emissions into the air as well as ambient air and workplace monitoring. We can also provide a mobile laboratory to investigate VOCs onsite. Did you know? SGS has one of the most comprehensive environmental testing capacities in the world. Each employee produces on average over 4.23 tonnes of CO2 each year while at work. SGS Headquarters in Geneva uses a thermal exchange system to cool and heat the building with water from Lake Geneva.
  25. 25. 48 49 Environment Environmental management Policy Our revised environmental policy was launched by our CEO in June 2009. It aims to ensure that employees deliver our services with minimal negative impact to the environment and the communities where we work and live. It also requires our suppliers and business partners to consider the environmental effects of their activities and to take reasonable steps to minimise them. There is further encouragement from our stakeholders to maximise the positive impact we can have on the environment through the development of new and innovative services. Governance and implementation The CEO is ultimately accountable for the environmental policy and the Company’s environmental performance. He is assisted by the Sustainability Steering Committee which oversees the implementation of all our social and environmental programmes. Senior management is responsible for ensuring policy compliance, including the establishment of improvement programmes and performance reporting. Our aim is to empower our employees to put the tools into practice and reduce the environmental impact of our activities. Energy and CO2 The energy we consume in our offices and laboratories and when we travel translates into CO2 emissions. Although our impact overall is low compared to others in industrial sectors, climate change remains an urgent environmental issue for us all. Since 2006, SGS has participated in the Carbon Disclosure Project, the most widely used international accounting tool for government and business leaders to understand, quantify, and manage greenhouse gas emissions. We are in the process of setting long-term strategic targets for carbon reduction, which will involve input from our COOs and EVPs over the coming months, and we will communicate this target in our next report. In November 2009, our CEO signed a pledge with the WBCSD Manifesto for Energy Efficiency in Buildings to reduce the CO2 emissions from our owned buildings by 10% by 2013 and 20% by 2020 using a 2010 baseline. We aim to achieve these reductions by implementing whenever and wherever possible: • Innovative technologies for the heating and lighting systems within our buildings and ensuring centralised system controls for each building • Reductions in the ‘stand-by’ mode consumption of all equipment and instruments used by adopting eco- buttons which act as current breaks • Installation of adjustable shading systems in order to reduce the amount of energy needed to cool buildings • Improved building insulation • Consideration of innovative and greener technologies in new building plans. In addition, we will continue to support our employees in improving their own behaviour through a range of measures including: • Cycle to work campaigns • Car sharing schemes • Office energy saving campaigns, e.g. lighting, air conditioning, IT equipment • Use of web based conferencing systems to minimise travel • Low-carbon emission car fleets • Economy class travel except for long distance flights • Education on how to save energy at work and at home • CO2 offsets and tree planting Waste and recycling The materials, resources and chemicals we consume in our laboratories and offices have the potential to generate polluting wastes. We therefore take preventative measures to control our activities and reduce potential environmental risks. Waste management is also a high priority because of the possible risk to our reputation and financial impact on the Company. In our laboratories we practise the highest standards of hazardous waste management, which are audited regularly by our technical governance team. Any potential non-compliance is reported and investigated as a matter of urgency. In addition, our regional operations are putting in place a range of initiatives to help reduce materials consumption and increase recycling rates across all of our global operations. Examples include: • Laboratory oils and chemicals recycling • Paper minimisation initiatives (avoid, reuse, recycle) • Use of recycled paper and other recycled materials • Office recycling schemes for paper, plastics, metal cans, toner cartridges, fluorescent light tubes and batteries Water and natural resources We operate in many parts of the world where water resources are becoming increasingly precious. The main activities which require careful waste water management are in our laboratories where we use a range of potentially polluting chemicals. In these cases it is an operating requirement that we meet local regulatory standards as a minimum. “I want employees to become more environmentally active. I would like everyone to think hard about what they candoto protect the environment.” Christopher Kirk, CEO
  26. 26. 50 51 Environment Highlights and case studies Aside from managing our own impacts, we are passionate about using our worldwide resources and the enthusiasm and knowledge of our employees to contribute to environmental local improvement initiatives. • SGS Systems and Services Certification (SSC) has launched a portfolio of services around The Equator Principles. Designed to help financial institutions carrying out project finance activities, the services offer social and environmental assessments, independent reviews for banks and mandated lead arrangers, independent monitoring and reporting, gap analyses of environmental management systems and training on The Equator Principles. • World Environment Day. In response to the global alarm about climate change, SGS China and Hong Kong actively supported and participated in the WWF Earth Hour on 28 March 2009. • Our Guangzhou branch set up a sustainability information corner and placed slogans around the building to remind employees to save energy. Nearly 30 SGS volunteers and around 300 citizens took part in an event on 18 April 2009 where SGS promoted energy saving concepts and collected used batteries for safe disposal. • SGS Taiwan opened a new laboratory in Kaohsiung to support continuous business growth. The building, which houses 500 employees, has a been designed to achieve maximum energy efficiency using wide opening windows for better natural ventilation and lighting, low energy lighting and a waste water collection system. • In June 2009, SGS launched a ‘Living Sustainability at SGS’ contest to invite ideas from employees on how we can become more environmentally responsible and innovative in our day- to-day operations. More than 290 ideas across six categories: transport, heating, electricity, paper, water and waste were contributed by employees in 41 countries. The following ideas were considered the best examples for SGS to adopt and contributors were each awarded a prize. The winning ideas will be highlighted and promoted at Group and country level during our 2010 internal campaign on energy efficiency in the workplace. o SGS shutdown monitor (China): SGS would create an easy to use energy saving device for PCs and laptops to maximise energy efficiency in labs and offices. o Green client report (South Africa): SGS would provide customers with the option of a paperless reporting service to reduce resources, time and costs. o Water saving initiative (France): SGS would install a simple water saving device to taps that mix air with water and drastically reduce water consumption. o Energy conservation (Australia): SGS would utilise filtered heat in fire assay to dry mineral samples prior to sample preparation. Our performance We currently manage, monitor and report our environmental performance using indicators relating to CO2 and water. We will be agreeing indicators for waste management and look forward to communicating our progress in this area in future. In the table below we have included a sub-set of our environmental key performance indicators to illustrate the current state of our performance. CO2 Our global emissions for 2009 are calculated as 4.23 tonnes CO2 per full-time equivalent employee. This is the equivalent of each employee driving approximately 48,000 km in a hybrid car (based on 89 g CO2 per km). As a service company, our direct impact is actually quite low compared to industrial corporations. Nevertheless it is greater than some other service organisations due to the scale of our laboratory operations worldwide. We are not surprised to find that our operations reported a wide range of results given the diversity of services we provide. Nevertheless, our aim is for all our operations to reduce their carbon intensity. Achievement of the targets will almost certainly deliver bottom line results in addition to the projected environmental savings. The accompanying graph indicates the sources of our emissions. Around 37% come from transport, 10% from non-transport fuel consumption and 53% from electricity consumption. Our electricity footprint is evaluated to be 182 million kWh. We believe we can and must go further towards reducing the carbon intensity of our business. Water use Our average water purchase per full-time equivalent employee in 2009 was 21.6 m3 . We will continue to monitor it carefully to maintain or reduce this level. While we make every effort to collect water usage for all our facilities, we are aware that some operations are based in rented buildings where this information is not readily available. As we encourage our leasors to provide this information in future we expect that this figure may increase. 8% Air & Train Transport 10% non- Transport fuels 29% vehicle fuels 53% electricity SOURCE OF CO2 indicator What does this measure? 2009 c02 emissions Total Annual CO2 emissions (tonnes) 170,958 carbon intensity (people) Annual CO2 emissions per employee (tonnes/FTE) 4.23 Carbon intensity (revenue) Annual CO2 emissions per revenue (tonnes/CHF Million) 47.2 Water use Annual water purchased (m3 ) 824,431 Water intensity Annual water purchased per employee (m3 /FTE) 21.6
  27. 27. Environment What you told us During recent dialogue with some of our key stakeholders, a number of interesting and important factors came to light. First, it confirmed our expectations that our stakeholders are very concerned with environmental issues; secondly it is clear that while our stakeholders regard many of our services as having a very positive environmental impact, they would also like to see a greater focus on strategic issues within SGS such as environmental management and energy efficiency. These insights only further enhance our drive to improve our performance and our reporting on key environmental issues. Employees in particular expect SGS to be a leader in environmental management. However, 53% of employees surveyed thought we were best practice or above average in this area, setting us a clear challenge to do more. Asked about the areas of environmental management that are most important, our employees gave roughly equal weightings to CO2 emissions, waste and water. Some quotes from our employees: • “Everyone wants to have a clear answer to the question of “how can I trust you environmentally?” • “We need to be a ‘low carbon’ service provider so that clients gain benefits to their own ‘carbon control’ programmes by using us compared with others.” • “I do believe that SGS can contribute more in supporting development programmes, research and other initiatives that can contribute to a better world with less CO2 emissions; these programmes can be in local universities or schools.” • “Travelling should be reduced worldwide to decrease our carbon footprint.” Looking ahead Over the next two years, we will conduct a more detailed assessment of our environmental impacts across all of our businesses and regions. This will help us to understand our most significant impacts and review our key performance indicators particularly around waste. It will also enable us to set more challenging targets for us as a Group. As a priority we need to obtain a comprehensive inventory of sources of pollution and wastes across our network of laboratories. Although individual laboratories use relatively small quantities of chemicals and therefore generate small quantities of waste, the cumulative effect of reducing our waste across our entire network could be significant. Our technical expertise in life cycle analysis will be particularly useful in prioritising where and how we can achieve the greatest reduction in potential environmental risks across our activities. We can all find ways to reduce our burden on the environment and as an organisation we are committed to supporting these efforts. For example, we can share more car journeys, use web-conference facilities for more meetings, switch off computers and photocopiers before going home, and print double-sided where possible. Such simple steps, multiplied by 59,000 employees can have a considerable effect, particularly if we extend the message and the good practice outside of work. Current Targets • To develop and publish long-term strategic carbon reduction targets. • To reduce CO2 emissions from SGS owned buildings by 10% by 2013 using 2010 baseline. • To produce an inventory of pollution sources and wastes from our laboratories by 2011. Our employees at work “I qualified in labour economics and industrial relations, financial management, and business management before starting my career in education with a World Bank project in Turkey and for the United Nations in Kyrgyzstan. After working with a leading wind turbine manufacturer and for an oil and gas consultancy, I joined SGS in July 2008. Today I am responsible for testing wind farm developments and advising on the risks of wind farm projects. We have built up a library of known issues and can advise developers on how to make the best investment decisions. I was attracted to SGS because of their strong business model but discovered that the people I work with are great and I love the independence that SGS gives me to make decisions.” Jale Cairney (Business Development Manager - Wind Energy services) 5352
  28. 28. review 5554 During 2009, we initiated a Group-wide community survey based on the United Nations’ Millennium Development Goals , the results of which will allow us to better understand the needs of, and get more involved in , the communities where we live and work
  29. 29. 56 57 Community Across the world, SGS employees are passionate about supporting their local communities, offering their time, skills and hands-on help. Many also hold positions of responsibility as trustees, governors and non-executive directors. The majority of employees regard our relationship with the communities in which they work and live as one of the most important features of being a responsible and responsive employer. Community management SGS supports social and environmental causes through donations, sponsorship and in-kind support. Whilst we do operate a small number of core programmes at Group and regional levels, we encourage local management to adopt a grassroots approach to communities by working with employees to identify the most relevant programmes of support. An important aspect of our approach centres on providing humanitarian and environmental support to communities affected by natural and man-made disasters. Our employees, who typically live within the communities where they work, are particularly effective at mobilising local support. For example, we use our premises as temporary shelters for our employees who have lost their homes, we use our vehicles to transport people and possessions away from areas at risk and deliver vital supplies, and we work with local aid workers to deploy our technical services to assess risks to health, safety and the environment and provide timely advice on mitigating further damage. All our community programmes are aligned to the Millennium Development Goals, with a particular focus on combating the spread of HIV/AIDS, malaria and other diseases, as well as ensuring environmental sustainability and providing disaster relief. We are also involved in supporting universal primary education and creating global partnerships for development. The following pages illustrate some examples of our community involvement activities around the world: Achieving universal education • SGS in Africa is a proud partner of the Educatis University, a Swiss graduate school of management offering distance learning programmes to individuals and companies whose education might otherwise be constrained by lack of time, financial resources or locality. The partnership with SGS allows students from developing countries to use our offices to sit their examinations locally, thus reducing costs and the need for travel. During a pilot scheme from October 2008 to October 2009, 21 students sat examinations in The Ivory Coast, Cameroon, Mali and Zambia. Following the success of this pilot, the programme is now being extended to other African countries. There are also plans to offer residential seminars using SGS premises in the future. www.educatis.org • ASSPEL (SGS employee association in Geneva) and SGS Headquarters provide ongoing support to the vital work of AVEC, an NGO working to fight child trafficking in the deprived town of Battambang in north-west Cambodia. The organisation helps spare children from the extreme dangers of living on the streets and provides them with safe houses and basic schooling. In December 2009, our employees raised almost CHF 5,000, and are sponsoring a range of kits designed to equip the children with uniforms and books. • SGS Headquarters provided financial support to a local high school in Geneva to help them launch their ‘Year of Solidarity’. Pupils were engaged in a series of activities to raise money for a wall to be constructed around a day centre for disadvantaged children in Ouagadougou in the small West African country of Burkina Faso. In January 2009, pupils from the school spent two weeks at the Beorg Neere (meaning ‘for a better day’) Center helping to build the wall and meet the children.   Our relationship with communities around the world forms the backbone of our Company. Much of our work involves us using our technical skills to help minimise environmental impacts and sustaining safe and healthy communities on behalf of our customers. At the same time, we are committed to supporting community development through being an active and responsible employer as well as a good corporate citizen. Our employees provide a vital link between the Company and the community, combining local customs, culture and knowledge with the professional and technical skills needed to support both local community and business development. Did you know? We donated almost CHF 800,000 on community programmes and charitable donations in 2009. Our employees supported 96 community projects with a particular concentration in Africa, Central and North-West Europe and South-East Asia Pacific. SGS China, Hong Kong and Taiwan have, between them, given over 3,000 employee volunteering hours to support primary schools in Hongwei Town in north-west China. Community “For me, community action is about being in touch with the people and needs around us and doing what we can as individualsor as a team to make a difference.”Christopher Kirk, CEO
  30. 30. 58 59 Community Education Case Study: Gansu Province, China SGS China and Hong Kong and SGS Taiwan are committed to supporting primary schools in Hongwei Town, a deprived mountainous area in the Gansu Province in north-west China. In August 2009, over 50 employees from Hong Kong, Shanghai, Guangzhou and Beijing volunteered as pair assistants to 83 underprivileged children in the region. To date, over 3,000 hours have been volunteered by employees. New classrooms were constructed at the Jiajiawa School in Longxi County within the Province following a Company and employee donation of CHF 35,000 in 2008. Since then employees have continued to raise funds and donate essential equipment to the classrooms. SGS is also supporting the education of children by training employees as volunteer teachers. At the end of 2008, the SGS Education Caring Committee invited employees to apply to become volunteer teachers. Over 100 employees attended a training event and 11 were selected as volunteer teachers. By November 2009, six had successfully been despatched to the school and the remaining teachers will complete their placements in the coming months. “It is helpless, as no one can choose their life because poverty and wealth have been set by destiny. However, I am very happy that we can help them change the current situation, provide them with food and clothes and support them with funds for education. Kindness does not expect reward and aid to the children in poverty means support to life and respect to the value of life.” Jackie Zhu, SSC, Beijing On learning about SGS’s involvement in the Gansu Province, one of our long-term partners, Synta - a leading manufacturer of telescopes was inspired to help. It donated one telescope to the Jiajiawa Primary School and will donate two further telescopes to schools in the region. The donations are a first step in community collaboration between Synta and SGS and we are excited by the prospect of Synta supporting the volunteer teacher project in the future or maybe even training children in astronomy. global partnerships for development Employee Wellbeing Programme, Tamale During 2009, GCNet extended its support to the Tamale region by supporting a comprehensive Employee Wellbeing Programme in collaboration with Revenue Agencies. The programme is designed to improve the health, wellbeing and financial wellness of staff, their families and the immediate community. Up to 38,000 people will benefit from the programme, including 15,000 local community residents, of whom 60% are women. In the first year since its opening, significant numbers of people have begun to benefit from health screening and advice and access to treatment, as well as financial awareness training and counselling. A total of 27 health information sessions were held which resulted in around 80% of staff being equipped with the knowledge to prevent non-communicable and preventable diseases, and offer advice on unwanted pregnancies. At least 50% of employees have been tested for diseases and of these, 80% of those diagnosed positive have been given access to treatment. Following a series of financial awareness seminars, 50% of employees now understand the concept of financial wellness and 10% have received one-to-one counselling on personal financial management, with 25% of these having been referred for further advice and support. As a result of raised awareness and understanding, 6,000 residents are now members of health insurance and retirement benefit schemes. Morton Community Healthcare Center, Lakefield SGS Canada at Lakefield employs over 400 people from the local vicinity and was keen to support a $4 million fundraising campaign to build a new primary health care medical centre. In 2008 SGS donated US$150,000 over three years towards the building of a 12,000 ft2 medical centre on a one acre site just outside of Lakefield in Douro-Dummer Township. “When we spoke to SGS there was never any doubt they were really behind the project. Perhaps some of our other corporate businesses in the area will look at this and see this as a lead example.” Ken Pipher, member of the Lakefield Medical Center Foundation board of directors. Highlights and case studies
  31. 31. 60 61 Community Ensuring environmental sustainability SGS is a main sponsor of “TOPtoTOP”, a global climate expedition crossing the seven seas and climbing the highest summits in seven continents using only human effort and the power of nature to raise awareness of climate change. It is focused on teaching children everywhere to love and protect our planet. TOPtoTOP is a non-profit organisation of volunteers under the patronage of the United Nations Environment Programme. The volunteers plan to sail 70,000 nautical miles, ride 18,000 km and climb 400,000 metres. In August 2010, the TOPtoTOP Global Climate Solutions Award will be presented to students from each of the seven continents who submit winning essays or theses on resolving or reducing global warming. Winners will be invited to a week-long expedition in Switzerland to collate stories of people who are making efforts to protect the environment and study the impact of climate change. www.toptotop.org Community performance data Group community survey During 2009, we conducted a Group-wide community survey to better understand the needs of, and get more involved in, the communities where we live and work. Results revealed that in 2009, SGS employees supported 96 community projects worldwide with many contributing personal time. We donated over CHF 348,000 to community programmes. The findings from our community survey will be reviewed alongside feedback from our employee and external stakeholder surveys in order to develop a global community investment model during 2010. What you told us We gained a great deal of insight from the stakeholder dialogue programme we undertook in 2009. With regard to our approach to supporting communities, the expectation of stakeholders was high, yet their understanding or knowledge of our activity was very low. They made it clear to us that they were interested in the area of community support, wanted to participate and would like to be better informed about SGS’s contribution. Our employees expect SGS to play a more active role in communities with 28.5% of those surveyed thinking we are above average in this area. Some quotes from our employees: • “I really believe SGS needs to be more connected with the communities where we live and work.” • “I think that SGS should look at developing a foundation where we can show the world, our [engagement] in charitable activity knowing that we have a presence in most, if not all countries in the world.” • “Perhaps consider some testing of borehole and drinking water of poor communities to ensure these are safe and also crop nutrition and fertility management by selecting some community farms.” Looking ahead We know that it is very important to our employees to feel that SGS is in touch with and responsive to the needs of the communities where they live and work. We also recognise our broader responsibility to supporting local economic growth by providing employment and training opportunities to people and deploying the skills and expertise of our employees during times of need. We are committed to building a strategic framework for community investment to enhance the synergistic relationships we have with local communities. We are currently working on a policy for global community involvement. Where our employees have experience and expertise that is useful to those around them, we want potential benefits to be realised. On key issues such as sustainability, we aim to increase dialogue and knowledge transfer so that we can help to contribute to personal and economic development as well as community development. Community performance data indicator What does this measure? 2009 investment in community Donations to community and voluntary groups CHF 348,345 investment in Sponsoring Sponsorship of events CHF 446,310 total community projects Total number of projects 96 Combating HIV/AIDS, malaria and other diseases • In April 2009, the Clinical Research team at Life Science Services in France and Corporate Communications sponsored one family’s challenge to defeat cystic fibrosis. The record-breaking 42,000 km race in the North Pole in -30° conditions involved 15 nationalities and raised vital funds for the charity www.vaincrelamuco.org • SGS donated money to a development project in Tambacounda in eastern Senegal over the past three years. The work is being managed by an NGO, Le Kinkeliba, which has been working to establish medical facilities in the district, offering access for the population to basic medical care. www.lekinkeliba.org • SGS Geneva HQ provides financial support to the Synergies Africaines contre le SIDA et les Souffrances, a non-governmental organisation which is focused on combating HIV/AIDS, malaria and other diseases in Africa. Providing disaster relief • On 8 August 2009, Morakot typhoon devastated Taiwan. In the immediate aftermath, SGS Taiwan, China and Hong Kong with the support of employees donated more than CHF 6,000 to local rescue organisations. • SGS Italy supported the Caritas Project Realization fund to build community centres for the people of Abruzzi following an earthquake which devastated the town. • Tropical storms which hit the Philippines at the end of September 2009 caused catastrophic flooding and damage to the homes of employees and their families. SGS employees were offered the opportunity to donate via their salaries to help colleagues through the difficult times. On 31 October 2009, employees in SGS Hong Kong participated in an International Coast Clean-up campaign hosted by the Ocean Conservancy. The event was held on the beach of Chun Kan Jiao. Quantities and types of waste were recorded and submitted to the Ocean Conservancy to help identify major causes of pollution.

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