SUSTAINABLE FUTURE BUILDING A - SUSTAINABILITY REPORT 2018 - Fraser and Neave, Limited

 
SUSTAINABLE FUTURE BUILDING A - SUSTAINABILITY REPORT 2018 - Fraser and Neave, Limited
BUILDING A SUSTAINABLE FUTURE

BUILDING A
SUSTAINABLE
FUTURE
SUSTAINABILITY
REPORT
2018

                                  i
SUSTAINABLE FUTURE BUILDING A - SUSTAINABILITY REPORT 2018 - Fraser and Neave, Limited
VISION
CONTENTS                       BUILDING A SUSTAINABLE FUTURE                                         To be a stable and sustainable
                                                                                                     Food & Beverage leader in the
SUSTAINABILITY AT F&N          F&N’s portfolio of diversified products bring                         ASEAN region.
01   Sustainability            people together across generations and
     Highlights 2018
02   Board Statement
                               communities. As we continue our journey to                            MISSION
03   Message from Chairman     become a food and beverage leader in ASEAN,
     of SDC                    the Group remains committed to building great                         To be ASEAN’s leading owner
04   About this Report                                                                               and provider of quality and
                               brands and delivering high-quality, delicious                         innovative products that
06   About F&N
11   Our Sustainability        products to meet consumers’ nutritional needs.                        consumers choose and trust.
                                                                                                     To support our mission,
     Approach                  Through our brands and investments in our                             we are guided firmly by our
20   Our 2020 Targets and      communities, we will continue to make F&N an                          commitment to create value
     Progress
                                                                                                     for our stakeholders by
                               essential part of consumers’ lives for even more                      ensuring that our corporate
DELIVERING VALUE
THROUGH SOCIAL
                               generations to come.                                                  actions positively impact
COLLABORATION, HUMAN                                                                                 the socio-economic and
CAPITAL DEVELOPMENT                                                                                  environmental factors.
AND INNOVATION
22   Economic Value
     23 Economic                                                                                     OUR MAIN BRANDS
         Performance
     24 Innovation
                               CORPORATE PROFILE
31   Empowering Our People
     32 Talent Management      Established in 1883, Fraser and Neave, Limited (“F&N”) is a
                               leading Southeast Asia Consumer Group with expertise and
40   Enhancing Social
                               prominent standing in the Food & Beverage and Publishing &
     Well-Being
                               Printing industries. Leveraging its strengths in marketing and
     41 Creating Value for     distribution, research and development, brands and financial
         Society               management, F&N provides key resources and sets strategic
     50 Health and Nutrition
                               directions for its subsidiary companies across both industries.
MANAGING IMPACTS AND
CONDUCTING BUSINESS IN         Listed on the Singapore stock exchange, F&N ranks as one of the
A RESPONSIBLE MANNER           most established and successful companies in the region with
                               an impressive array of renowned brands that enjoy strong market
52   Eco-Efficiency            leadership. F&N is present in 11 countries spanning Asia Pacific,
     54 Water Stewardship      Europe and the USA, and employs over 7,700 people worldwide.
     57 Effluents and Waste
     61 Packaging
     63 Energy and Climate
         Change
68   Responsible Supply
     Chain
     69 Sustainable Sourcing
73   Safety and Well-Being
     74 Occupational Health      In line with the Group’s efforts towards greater environmental conservation, we have adopted an
         and Safety              electronic transmission for our Annual Report and Sustainability Report.
     78 Consumer Health
         and Safety              The electronic version of the Annual Report is available on Fraser and Neave, Limited’s website
     82 Product and Service      (fraserandneave.com/investor-relations/annual-reports). Shareholders and other interested parties
         Labelling               who wish to receive a printed copy may order it through the website (fraserandneave.com/contact-
                                 us/request-annual-report), e-mail (ir@fraserandneave.com) or telephone ((65) 6318 9393).
APPENDIX
84   Performance Summary         F&N FY2018 Sustainability Report is only available in electronic version, and is available for
87   GRI Standards Content       download at fraserandneave.com/investor-relations/corporate-sustainability.
                                                                                                             #G O PAPER LESS
     Index
SUSTAINABLE FUTURE BUILDING A - SUSTAINABILITY REPORT 2018 - Fraser and Neave, Limited
BUILDING A SUSTAINABLE FUTURE

SUSTAINABILITY HIGHLIGHTS 2018

                                                           14%
                                Sugar level

                                DECREASED
  ZERO                          31%
                                to 6.0g/100ml        31%
                                                           REDUCTION
                                                           in water
  WORK-RELATED                                             intensity
                                                           ratio*
  FATALITIES
  IN FY2018
                                8,600
   Healthier choice
   options offered in
                                RSPO                       5%
  14 OF                         credits
                                purchased                  REDUCTION
                                                           in solid waste

  OUR 15
                                                           intensity ratio*

   product categories
                                                           Employee-driven
                                                           innovations totaling

                                40%
                                                           to an estimated

                                REDUCTION
                                                           S$3M
                                                           per annum
                                in PET resin
                                packaging material
                                at Shah Alam plant

GROWTH                                                     *at the group-level, compared to FY2017
SUSTAINABLE FUTURE BUILDING A - SUSTAINABILITY REPORT 2018 - Fraser and Neave, Limited
FRASER AND NEAVE, LIMITED & SUBSIDIARY COMPANIES
SUSTAINABILITY REPORT 2018

BOARD STATEMENT
                                       SUSTAINABILITY OVERVIEW           with an aim to minimise risks      This is the second year we
                                       AND GOVERNANCE                    for society, environment and       are reporting our sustainability
                                       As one of the leading             to ensure longevity of our         performance in accordance
                                       consumer groups in SEA,           Company. Similarly, we identify    with the Global Reporting
                                       the Board of Fraser and           business opportunities to          Initiative (“GRI”) framework
                                       Neave, Limited (“F&N” or          ensure we are sustainable          and in compliance with
                                       the “Group”) recognises           for the long-term.                 the Singapore Exchange’s
                                       the great responsibility the                                         (“SGX”) listing rules. We have
                                       Group has in protecting the       At F&N, the Board continues        transitioned from the GRI-G4
                                       interest of future generations.   to take the lead in F&N’s          guidelines, used in our previous
                                       The Board believes that acting    sustainability direction. It has   sustainability report for FY2017,
                                       responsibly is the only way to    tasked the newly reconstituted     to the GRI Standards. In our
                                       achieve a balance between         Sustainability and Risk            FY2017 inaugural report,
                                       profitable long-term growth       Management Committee               we described F&N’s legacy of
                                       and protecting our planet         (“SRMC”) with responsibility       ESG stewardship, set targets
                                       and people.                       for steering our company-          and provided a report card
                                                                         wide sustainability                on our sustainability efforts.
                                       For many years, the Board         strategy. The Sustainability       This year, we focus on the
                                       has anchored sustainability       Development Committee              progress we have made during
                                       in its strategy. This is in       (“SDC”), which is made             the past year.
                                       recognition that the Group’s      up of business CEOs and
                                       success is measured not only      representatives from senior        Following the materiality review
                                       on its economic achievements,     management across the F&N          conducted last year, we have
                                       but just as important,            Group, supports the SRMC,          delegated responsibility to
                                       its environmental and social      and monitors the progress of       the SRMC to consider and
                                       successes. Guided by              our sustainability reporting       re-validate the ESG factors that
                                       sustainable business practices,   initiatives. During the year,      are of concern to stakeholders
                                       we conduct our business           the Board maintained               and significant to F&N’s
                                                                         oversight over the SRMC and        business. During the year,
                                                                         SDC, managing sustainability       further improvements have
                                                                         risks and opportunities,           been achieved on several
                                                                         while ensuring all environment,    targets including our water
                                                                         social and governance (“ESG”)      and solid waste intensities.
                                                                         matters significant to our
                                                                         business are aligned with          As we continue to embark
                                                                         our Vision 2020.                   on the sustainability journey,
                                                                                                            we remain committed to
                                                                                                            building a responsible business
                                                                                                            that delivers sustainable value
                                                                                                            to our stakeholders over the
                                                                                                            long-term.

02
SUSTAINABLE FUTURE BUILDING A - SUSTAINABILITY REPORT 2018 - Fraser and Neave, Limited
BUILDING A SUSTAINABLE FUTURE

MESSAGE FROM CHAIRMAN OF SDC
                                                                   to have made a positive            part in global efforts to reduce
                                                                   contribution for the past 135      GHG emissions. For instance,
                                                                   years, and fully appreciates       we are on track to purchase
                                                                   how financial and non-financial    RSPO credits for 100% of our
                                                                   success are complementary:         palm oil usage by the year
                                                                   we take our responsibility to      2020.
                                                                   make a positive impact in the
                                                                   future very seriously.             F&N places great emphasis
                                                                                                      on being a key part of
                                                                   As you will see on page 15,        prosperous communities
                                                                   Consumer Health & Safety           in which we operate. This
                                                                   is F&N’s most important            includes hiring locally and
                                                                   sustainability topic. We           empowering our talent, and
                                                                   understand that the role our       also sharing happiness and
                                                                   products play in people’s daily    helping vulnerable members
                                                                   lives and activities have been     of our communities, wherever
                                                                   evolving. People are now more      we can, to make a difference.
                                                                   health conscious and pay more      It is reassuring to witness
                                                                   attention to the health benefits   the enthusiasm for F&N’s
                                                                   and nutrition, ingredients         sustainability journey
                                                                   and sugar content in their         from employees at all levels.
                                                                   food and beverages. We have        F&N’s success is built from
                                                                   listened to our consumers and      our own financial performance
                                                                   deliberated on how we can          and long-term profitability is
                                                                   better adjust our products to      only possible when we protect
                                                                   accommodate their specific         it through our actions on the
Mr Lee Meng Tat                                                    needs and requirements.            environment and society.
Chairman of Sustainability Development Committee                   The sugar content in our
                                                                   products continues to fall,        F&N is working to collect
                                                                   and I am proud that we now         consistent sustainability
                                                                   offer healthier choice options     reporting indicators, which will
                                This is F&N’s second               in 14 out of our 15 product        allow stakeholders to analyse
                                sustainability report, and I       categories.                        changes in our performance
                                am delighted to be able to                                            over time and facilitate
                                introduce the progress we have     One of the highlights of the       comparison with peers.
                                made on our sustainability         year for me is seeing the          The use of the Global
 We now offer                   journey over the past year.        bottom-up and innovative           Reporting Initiative Standards
 healthier choice               F&N’s vision is to be a stable     ways in which F&N employees        is essential for this, and
                                and sustainable Food &             are finding solutions to           we are also taking steps to
 options in 14 out              Beverage leader in the ASEAN       environmental issues, such as      progressively integrate the
 of our 15 product              region, and this report sets out
                                many of the ways in which we
                                                                   water use and waste reduction.
                                                                   Our “Green Carnivals” and
                                                                                                      United Nation’s Sustainable
                                                                                                      Development Goals (“SDGs”)
 categories.                    deliver value and care for our     “Waste to Wealth Campaign”         into our reporting and strategy.
                                shared planet.                     have raised awareness of
                                                                   environmental stewardship          We are grateful for your
                                This report has been prepared      and led to direct performance      continued support, and hope
                                in accordance with the Global      improvements. 2018 has             that this report gives you an
                                Reporting Initiative Standards     been designated as the “Year       insight into F&N’s efforts to
                                (Core), which represent global     of Climate Change” by the          be a sustainability leader in
                                best practice in sustainability    Singapore government and we        ASEAN and beyond.
                                reporting. F&N is proud            are determined to play our

                                                                                                                                    03
SUSTAINABLE FUTURE BUILDING A - SUSTAINABILITY REPORT 2018 - Fraser and Neave, Limited
FRASER AND NEAVE, LIMITED & SUBSIDIARY COMPANIES
SUSTAINABILITY REPORT 2018

ABOUT THIS REPORT
WELCOME TO THE F&N                                                          1. Delivering Value

SUSTAINABILITY REPORT 2018                                                  a. Driving Economic Value
                                                                            b. Empowering Our People
                                                                            c. Enhancing Social Well-Being

F&N is proud to present                This year, we have further           2. Managing our Impacts
its second SGX-compliant               enhanced our reporting
sustainability report based on         approach and have prepared           a. Eco-Efficiency
the GRI framework. Since the           the F&N Sustainability Report        b. Responsible Supply Chain
delivery of its inaugural report       2018 in accordance with the          c. Safety & Well-Being
in FY2017, we have continued           GRI Standards ‘Core Option’.
the journey we outlined,                                                    REPORTING PERIOD AND SCOPE
focusing on putting ESG at             Different from last year,            This report contains data and practices relating to F&N’s
the centre of everything we            the report is organised into         key operations in:
do. This year has been one of          two themes and six core areas:
significant change, progress                                                •   Singapore (F&B and Printing);
and achievement.                                                            •   Malaysia (F&B and Printing); and
                                                                            •   Thailand (F&B)

                                                                            The reporting period is from 1st October 2017 to
                                                                            30th September 2018

              Singapore                                         Malaysia                                    Thailand

                        F&N Foods Ptd Ltd (“FNFS”)                      Fraser & Neave Holdings Bhd               Fraser & Neave Holdings
                                                                        (“F&NHB”)                                 Bhd (“F&NHB”)
                        F&N Creameries (S) Pte. Ltd. (“FNCS”)           - F&N Beverages Manufacturing             - F&N Dairies (Thailand)
                                                                          Sdn Bhd (“F&NBM”)                         Limited (“F&NDT”)
                        Times Publishing Group                          - F&N Dairies Manufacturing
                        - Times Printers Pte Ltd (“TP”)                   Sdn Bhd (“F&NDM”)                       F&N United Limited
                                                                                                                  (“F&NUL”)
                                                                        - F&N Beverages Marketing
                                                                          Sdn Bhd
                                                                        - Fraser & Neave (Malaya) Sdn Bhd
                                                                        - Borneo Springs Sdn Bhd

                                                                        F&N Creameries (M) Sdn Bhd
                                                                        (“F&NCM”)

                                                                        Times Publishing Group
                                                                        - Times Offset (Malaysia)
                                                                          Sdn Bhd (“TOM”)

04
SUSTAINABLE FUTURE BUILDING A - SUSTAINABILITY REPORT 2018 - Fraser and Neave, Limited
BUILDING A SUSTAINABLE FUTURE

ASSURANCE POLICY                    We aim to obtain external
F&N’s policy is to align our        assurance on our subsequent
reporting of non-financial          sustainability reports.
information with the best and
most up-to-date standards           We value and welcome
and protocols available at the      feedback from our stakeholders
beginning of our financial          as they help us to continuously
year. We believe in reporting       improve our sustainability
against reliable data and strive    approach, performance and
to improve the quality of our       disclosure.
non-financial disclosures.

       Contact
        Us                         Please send your
                                   comments and
                                   suggestions to

   sustainability@fngroup.com.sg

                                                                      05
SUSTAINABLE FUTURE BUILDING A - SUSTAINABILITY REPORT 2018 - Fraser and Neave, Limited
FRASER AND NEAVE, LIMITED & SUBSIDIARY COMPANIES
SUSTAINABILITY REPORT 2018

ABOUT F&N                                                                               520M+                          POTENTIAL CONSUMERS
Fraser and Neave, Limited (“F&N” or the “Group”) originated more than a century
ago from the spirited decisions of two enterprising young men, John Fraser and           13            F&B PRODUCTION FACILITIES

                                                                                          45+
David Neave, who diversified from their printing business to pioneer the aerated
water business in Southeast Asia (“SEA”) in 1883.

The entrepreneurial spirit, embodied by our founders, remains in today’s F&N.
                                                                                                             WAREHOUSE FACILITIES
As a soft drink company, F&N seized the growth opportunities and ventured
into beer brewing business in 1931 in partnership with The Heineken Company
and built a very successful beer empire in Asia Pacific – through its joint venture        7,700+                          EMPLOYEES

                                                                                            500+
company, Asia Pacific Breweries Limited (“APB”). In 1959, it entered the Dairies
business by forming a canned milk joint venture with Beatrice Foods of Chicago,
and in 2007, it acquired Nestle’s liquid canned milk business in Thailand,                                                PRODUCTS

                                                                                             6
Malaysia, Singapore and Brunei, and accelerated its growth in the dairy business.
Today, F&N is the largest canned milk producer in SEA. In 1985, the Group
diversified into the Properties business. Starting with the redevelopment of its
soft drinks and brewery sites in Singapore, F&N soon grew its property arm –
                                                                                                             COUNTRIES (S.E.A)
Frasers Centrepoint Limited (“FCL”, now known as Frasers Property Limited) to
become one of the leading property companies in Singapore with multi-national
businesses in residential, hospitality, retail, commercial and industrial properties.          1                        F&N
In 2012, F&N divested its equity stake in APB to realise a substantial value for
shareholders. In 2014, the Group re-listed FCL on the Singapore Stock Exchange,
thereby realising its latent value.

Today, F&N is a leading Asia Pacific Consumer Group with expertise and
prominent standing in the Food & Beverage and Publishing & Printing industries.
Leveraging its strengths in marketing and distribution, research and development,
brands and financial management, as well as years of acquisition experience,
the Group provides key resources and sets strategic directions for its subsidiary
companies across both industries.

Listed on the Singapore stock exchange, F&N ranks as one of the most
established and successful companies in the region with an impressive array
of renowned brands that enjoy strong market leadership. F&N is present in
11 countries spanning Asia Pacific, Europe and the USA, and employs over
7,700 people worldwide.

                  Food & Beverage                            Publishing &
                      Division                             Printing Division

      Non-Alcoholic
                                        Beer
        Division
                                                                                        South Africa

                                                                                                       USA

                                                                                                               Chile

          CEO                         CEO                       CEO
     Mr LEE Meng Tat             Mr Edmond NEO            Mr SIEW Peng Yim

06
SUSTAINABLE FUTURE BUILDING A - SUSTAINABILITY REPORT 2018 - Fraser and Neave, Limited
BUILDING A SUSTAINABLE FUTURE

                                                                                                                                     CONTRIBUTION BY SEGMENT
                                                                                                                                                                                     Profit Before
                                                                                                                                                   Revenue                        Interest & Taxation

                                                                                                                                                $1,927m                                   $213m

                                                                                                                                               25%         60%                         0%         108%
                                                                                                                                               15%         0%                          -1%        -7%
    54 million

                                                                                                                                       Attributable Profit Before
                                                                                                                                       Fair Value Adjustment &
                     69 million

                                                                                                                                           Exceptional Items                           Total Assets
                                                                                  96 million

                                                                                                                                                   $122m                                 $4,491m
                                  32 million

                                                                                                                                               -9%       137%                           10%        73%
                                                                                                                                               -2%       -26%                           7%         10%

                                                                                                                                     Legend:
                                                                                                                                       Beverages       Dairies          Publishing & Printing      Others

                                                                                                                                     EMPLOYEE BREAKDOWN

                                                                                                                                                Full Time                                Contract
                                                                    267 million
                                                     6 million

                                                                                                                                                   6,500                                   1,200

                                                                                                                                          23%         47%         30%              30%          67%      3%

                                                                                                                                                Executive                             Non-Executive
*
    Myanmar

                     Thailand

                                          Malaysia

                                                     Singapore

                                                                    Indonesia

                                                                                  Vietnam

                                                                                                                             China
                                                                                               Australia+

                                                                                                                 Hong Kong

                                                                                                                                                   2,400                                   5,300

       Legend:
       Manufacturing Plants                               Offices                                                                         30%         45%         25%             21%           52%    27%
                 Dairies                                         Dairies                                    Population
                                                                                                            Source: Worldometers
                 Soft Drinks                                     Soft Drinks
                 Beer                                            Beer                                                                Legend:
                                                                                                                                       Singapore       Malaysia          Others
                 Publishing & Printing                           Publishing & Printing
       *         Under construction
       +
                 The Group owns ~7.8% of PMP Limited
                                                                                                                                                                                                              07
SUSTAINABLE FUTURE BUILDING A - SUSTAINABILITY REPORT 2018 - Fraser and Neave, Limited
FRASER AND NEAVE, LIMITED & SUBSIDIARY COMPANIES
SUSTAINABILITY REPORT 2018

F&N BUSINESS MODEL

      OUR STRATEGIC FOCUS
      • WINNING WITH BRANDS
        - Focus our resources on
          and drive the growth of
          brands that are in the
          medium- to high-growth
          segments and where F&N
          has a right to win
                                                                                                            PEO
      • WINNING WITH                                                                                           PLE
        INNOVATION
        - Focus on offering new
          products that appeal to
          consumers                                                                          T
                                                                                           EN

                                                                                                                          IN
      • WINNING IN

                                                                                                                            TE
                                                                                      EM

        MARKETPLACE

                                                                                                                              LLE
                                                                                    AG

        - Focus on strengthening
                                                                       WIDE RISK MAN

          levers to execute a strong

                                                                                                                                 CTU
          go-to-market strategy that
                                                   GOVERNANCE

          reduces cost and risk                                                                   Delivering
      • WINNING WITH PEOPLE                                                                                                         AL
        - Focus on attracting and                                                                  Value for
          retaining the talent we
          need to achieve our                                                                    Shareholders
                                                                                                                               CIAL
                                                                    SE-

          growth priorities
                                                                  RI

                                                                                                                             AN
                                                                RP

                                                                                                                           FIN

                                                                                        TE
                                                                                      EN
      OUR DISTINCTIVE
      ASSETS
                                                                                                                    ER
      • DYNAMIC BRAND                                                                                          O L D PS
                                                                                                             EH SHI
        PORTFOLIO                                                                                        STAK
                                                                                                              ION
      • EXCELLENT R&D
                                                                                                         RELAT
        CAPABILITIES
      • STRONG TEAM
      • MARKETPLACE
        EXCELLENCE
      • STRONG STRATEGIC
        PARTNERS

08
BUILDING A SUSTAINABLE FUTURE

Our business model enables us to be agile which has allowed us to react quickly to take advantage of opportunities and achieve
sustainable, long-term value creation for our stakeholders. Leveraging our key resources (People, Intellectual, Financial and
Stakeholder Relationships), we aim to deliver profitable growth by focusing on: 1) Winning with Brands, 2) Winning with Innovation,
3) Winning in Marketplace, and 4) Winning with People. In delivering on our promise, we are committed to protecting the
environment and will continue to contribute positively to our society, while managing operational risks of our businesses and
adhere to ethical principles of corporate governance.

    F&N KEY RESOURCES             VALUE ADDING ELEMENTS                  VALUE CREATED                 VALUE SHARED WITH

                                       IN OUR CORE MARKETS            WE CREATE VALUE FOR OUR
                                      OF MALAYSIA, SINGAPORE        STAKEHOLDERS BY MANAGING
                                           AND THAILAND,           AND DEPLOYING OUR RESOURCES
                                         AND NEW MARKETS             AND ASSETS EFFICIENTLY AND
            PEOPLE                                                          EFFECTIVELY                     EMPLOYEES
    Our People are our most
                                      524                                                              Fostering a culture of

                                                                      $1,927
      powerful resource                                                                             continuous learning, career
                                      MILLION                                                       development and reward for
                                       consumers
                                                                      MILLION                             our employees
                                                                      REVENUE
                                                                                                        Read more from pages 31 to 39

                                      13
                                      F&B
                                       manufacturing
                                       facilities
                                                                      $213
                                                                      MILLION
        INTELLECTUAL                                                  PBIT
    Our brands, processes                     Over                                                          CONSUMERS
     and technology help
   connect with the way our                   500
                                              F&B
                                                                                                       Providing high-quality,
                                                                                                     delicious products to meet
       consumers live                                                 Our products                  consumers nutritional needs
                                              products
                                                                      are available
                                              and flavours                                              Read more from pages 26 to 27
                                                                      in

                                                                      120
                                                                                                        and 78 to 83

                                       Over                                +
                                      250,000
                                      F&B
                                                                      COUNTRIES

                                       outlets
          FINANCIAL                                                   We employ                           STAKEHOLDERS
   We are supported by our
   strong business portfolio          STRATEGIC PARTNERS
                                                                      7,700+
                                                                      PEOPLE
                                                                                                      Managing our resources
                                                                                                   effectively and responsibly to
  which boasts strong liquidity                                       in 11 countries              create value and support job
   and robust performance                                                                          creation beyond our business
                                                                                                        Read more from pages 52 to 67

                                                                              NEW F&B
                                                                     50+       products launched
                                                                               in 2018

        STAKEHOLDER                                                                                        COMMUNITIES
       RELATIONSHIPS
 We have built strong alliances
   with customers, strategic
                                                                      22
                                                                      PRODUCT &
                                                                                                        Giving back to local
                                                                                                     communities through job
                                                                                                     creation, useful products,
     partners, employees,                                             PROCESS                           social responsibility
  investors and communities                                           excellence                            programmes
                                                                      awards
                                                                                                        Read more from pages 26 to 27
                                                                                                        and 40 to 51

                                                                                                                                        09
FRASER AND NEAVE, LIMITED & SUBSIDIARY COMPANIES
SUSTAINABILITY REPORT 2018

OUR SUPPLY CHAIN
                                    F&N uses different equipment and machinery as well as a range of raw
                                  materials for the production of its beverages and, printer consumables for
                                 printing. We engage with about 3,500 suppliers globally, including Malaysia,
                                 Singapore, Thailand, Taiwan, India, Australia, New Zealand, the US and UK.
                                   Our suppliers also provide us with materials used in our distribution and
                                 retail operations. For the financial year under review, we spent an estimated
                                        S$1.2 billion on products and services provided by our suppliers.

       SOURCING                     PRODUCTION                     DISTRIBUTION                      MARKETING                   POST-CONSUMER
                                                                                                     AND SALES                     PACKAGING
                                                                                                                                  MANAGEMENT

                                       We engage with about 3,500 suppliers globally

          SOURCING                     PRODUCTION                     DISTRIBUTION             MARKETING AND SALES                  POST-CONSUMER
    We place emphasis on         We have a standardised         We have a fully integrated        We place emphasis on                 PACKAGING
  sourcing quality materials       and safe production          and extensive distribution     responsible marketing and              MANAGEMENT
  from suppliers who have      process that complies with        system that ensures our        sales practices, and take        We minimise the impact
     good environmental          all relevant standards in       products are distributed      steps to engage consumers         of post-consumer waste
  and social performance.      order to deliver high quality   efficiently to all consumers.     and customers through            on the environment via
 We also prioritise capacity     products to consumers.        Our focus is to minimise the    various marketing activities.   research and development
   building of procurement       The production process         environmental and social          Input from consumers           to deliver innovative and
    staff, encourage them           optimises resource         impacts from transportation        and customers is used            environment-friendly
   to adhere to sustainable      use, and considers the          by managing our energy         to improve our marketing        packaging and labelling,
 purchasing standards and       environmental and social        use, while enhancing the         practices and enhance         conducting carbon footprint
 to practise good business     impacts of waste, effluents     safety of our personnel and          our sustainability.        assessments, and applying
    ethics in all aspects of   and emissions generated at           local communities.                                              the 5R principles of
           their work.               production stages.                                                                           reduce, reuse, recycle,
                                                                                                                                   rethink and reinvent.

10
BUILDING A SUSTAINABLE FUTURE

OUR SUSTAINABILITY APPROACH
     SUSTAINABILITY VISION                must respond. To continue
     AND FRAMEWORK                        delivering value to its                 • Delivering value through innovation, human
     As the global context becomes        stakeholders, F&N must root               capital development and social collaboration;
     increasingly defined by              its activities in resilience and          and
     volatility and unpredictability,     embrace the interconnections
     prioritising sustainability          it shares with its communities
                                                                                  • Managing our impacts and conduct business in
     is no longer an option for           and environment. It aims
                                                                                    a responsible manner.
     businesses but the only              to create a financially,
     viable path. F&N recognises          environmentally and socially
     the range of emerging risks          sustainable future for its
     and challenges to which it           business by:

F&N’s sustainability framework comprises six core areas.

                 Under the Delivering Value theme are:                         Under the Managing our Impacts theme are:

                 1) Economic Value;                                            1) Eco-Efficiency;

                 2) Empowering Our People; and                                 2) Responsible Supply Chain; and

                 3) Enhancing Social Well-Being.                               3) Safety and Well-Being.
   Vision
    Our

                                                      To create a financially, environmentally,
                                                   and socially sustainable future for our business
   Mission

                                        To contribute to positive changes in society by improving the economic,
    Our

                                        environmental, and social well-being of the communities we operate in

                            Economic                                     Social                            Environment
       Pillars

                      Achieve business growth                    Enhance social being               Mitigate environmental impact
Sustainable

 Creation
  Value

                      Delivering value through innovation, human                      Managing our impacts and conducting
                      capital development and social collaboration                      business in a responsible manner

                                                            Enhancing                               Responsible
   Areas

                    Economic            Empowering                                                                    Safety and
   Core

                                                              Social         Eco-Efficiency           Supply
                      Value             Our People                                                                    Well-Being
                                                            Well-Being                                Chain

                                                                                                                                    11
FRASER AND NEAVE, LIMITED & SUBSIDIARY COMPANIES
SUSTAINABILITY REPORT 2018

OUR SUSTAINABILITY APPROACH

MANAGEMENT AND                         the Chief Executive Officer
GOVERNANCE STRUCTURE                   of Non-Alcoholic Beverages,                                F&N Board
F&N has set up a dynamic               Mr Lee Meng Tat, and staffed
team to implement, execute             by employees of key functions,
and monitor policies                   regions and levels. The SDC                         Sustainability and Risk
and procedures across                  provides general direction and                      Management Committee
the organisation. The                  monitors the progress of F&N’s
responsibility for steering            sustainability reporting project.                        Sustainability
and aligning company-wide                                                                  Development Committee
sustainability strategy is with        In FY2018, the SDC convened
the Sustainability and Risk            on sustainability matters four
                                       times and the SRMC two times.                      Sustainability Development
Management Committee
                                       The SDC provided inputs and                              Working Team
(“SRMC”) at the Board level.
The SRMC is supported by               comments which have been
Sustainability Development             incorporated to strengthen our                      Sustainability Reporting
Committee (“SDC”), chaired by          sustainability agenda.                                    Secretariat

                                                                                       Pillar Heads and Sustainability
                                                                                            Initiatives Champions

                                                                                          Sustainability Data Owners

                        SUSTAINABILITY DEVELOPMENT COMMITTEE

           Lee Meng Tat (Chairman)                                         Lai Kah Shen
           Chief Executive Officer,                                        Financial Controller (F&B Division), F&N
           Non-Alcoholic Beverages (NAB), F&N
                                                                           Dr Yap Peng Kang
           Lim Yew Hoe                                                     Head, Research and Development, F&N
           Chief Executive Officer, F&NHB
                                                                           Jennifer See
           Siew Peng Yim                                                   General Manager, Singapore and Indonesia, FNFS
           Chief Executive Officer, Times Publishing Group
                                                                           Waradej Patpitak
           Hui Choon Kit                                                   First Vice-President, Manufacturing, F&NHB
           Chief Financial Officer & Group Company Secretary, F&N
                                                                           Rommel Fuentebella
           Josephine Woo                                                   Vice-President Marketing, Isotonic/CSD/Water/Tea, F&N
           First Vice-President, Group Human Capital, F&N

           Pillar Heads in Sustainability Development Working Team

12
BUILDING A SUSTAINABLE FUTURE

KEY STAKEHOLDERS’ ENGAGEMENT
F&N strives to build and maintain strong relationships based on trust and respect with our eight key stakeholder groups, namely
employees, suppliers, customers, investment community, consumers, regulators, non-governmental organisations (“NGOs”) and
local communities.

It utilises various platforms for appropriate stakeholder engagement across these eight categories, to ensure that our stakeholders are
given the opportunity to voice their demands, opinions, concerns and suggestions, as shown in the table below.

Information received via these channels feeds into our planning and strategy for sustainable value creation.

 Engagement Channel                           Issues Raised                                 Actions Taken

 Employees

 • Biannual employee engagement survey        •   Engagement with employees                 Refer to:
 • Robust compensation and benefits           •   Learning & development opportunities      • Section on Talent Management
   framework                                  •   Equitable rewards & recognition             (pg. 32-39)
 • Annual CEO town hall/roadshow              •   Safe and healthy work environment         • Section on Occupational Health and
 • Annual gatherings                                                                          Safety (pg. 74-77)
 • Communique, iConnect (intranet),
   F&N Digest (biannual newsletter),
   email news highlights, quarterly CEO
   messages

 Suppliers

 • Supplier meetings                          • Fair & robust procurement system            Refer to:
 • Annual audits                              • Support of local businesses                 • Section on Sustainable Sourcing
 • Tender management system                   • Social & environmental responsibility         (pg. 69-72)

 Investment Community

 • Annual general meetings                    • Transparency in disclosure                  Refer to:
 • Face-to-face meetings &                    • Business/financial performance              • Message from Chairman of SDC
   conference calls                           • Disclosure on relevant information to         (pg. 03)
 • Office/plant visits                          shareholders                                • About This Report (pg. 04-05)
 • Investor Day                                                                             • Section on Economic performance
 • Website and SGXNET announcements,                                                          (pg. 23)
   presentations, press releases
 • Annual reports

 Distributors & Trade Customers

 •   Annual customer meetings                 •   Latest consumer & shopper trends          Refer to:
 •   Annual factory visits                    •   Product innovation                        • Message from Chairman of SDC
 •   Annual business planning                 •   Customer relationship management            (pg. 03)
 •   Business development activities          •   Shopper loyalty programmes                • Section on Innovation (pg. 24-30)
 •   Joint supply chain meetings              •   Improving customer service level
 •   Quarterly business reviews               •   Strategic business development
 •   Customer appreciation events             •   Business practices & ethics
                                              •   Competitive operational system
                                              •   Efficient delivery system

 Consumers

 • Marketing & sales promotions               •   Product quality & safety                  Refer to:
 • Brand communication through                •   Consumer health & safety                  • Section on Innovation (pg. 24-30)
   advertising                                •   Fair & reasonable product pricing         • Section on Consumer Health and Safety
 • Social media interaction                   •   Social & community engagement               (pg. 78-81)
 • On-ground events & activities              •   Environment-friendly packaging            • Section on Health and Nutrition
 • Dedicated consumer hotline                                                                 (pg. 50-51)
                                                                                            • Section on Product and Service
                                                                                              Labelling (pg. 82-83)

                                                                                                                                     13
FRASER AND NEAVE, LIMITED & SUBSIDIARY COMPANIES
SUSTAINABILITY REPORT 2018

OUR SUSTAINABILITY APPROACH

 Engagement Channel                                Issues Raised                             Actions Taken

 Regulators

 • Active participation in industry                • Tax transparency                        Refer to:
   collaborations e.g. Singapore’s Health          • Social & environmental responsibility   • Section on Consumer Health and Safety
   Promotion Board (“HPB”). Federation             • Fair & legal labour practices             (pg. 78-81)
   of Malaysian Manufacturers                      • Safety at work                          • Section on Health and Nutrition
 • Meetings with government agencies               • Compliance with laws & regulations        (pg. 50-51)
   and statutory bodies                            • Water & waste management                • Section on Product and Service
                                                   • Environment friendly labelling &          Labelling (pg. 82-83)
                                                     packaging                               • Section on Creating Value for Society
                                                   • Greenhouse gas emissions (“GHG”)          (pg. 41-49)
                                                                                             • Section on Water Stewardship
                                                                                               (pg. 54-56)
                                                                                             • Section on Effluents & Waste
                                                                                               (pg. 57-60)
                                                                                             • Section on Packaging (pg. 61-62)
                                                                                             • Section on Energy & Climate Change
                                                                                               (pg. 63-67)
                                                                                             • Section on Talent Management
                                                                                               (pg. 32-39)
                                                                                             • Section on Occupational Health and
                                                                                               Safety (pg. 74-77)

 Communities

 • Collaboration & partnership                     • Consumer health & safety                Refer to:
 • Outreach programmes                             • Social & environmental responsibility   • Section on Consumer Health and Safety
 • Meetings with community                         • GHG emissions                             (pg. 78-81)
   representatives                                 • Job opportunities for locals            • Section on Health and Nutrition
 • Leadership programmes                           • Promotion of good health & quality        (pg. 50-51)
 • Sponsorship of sporting events                    of life                                 • Section on Product and Service
 • Donation of food and beverages to the           • Skills development in sports &            Labelling (pg. 82-83)
   less privileged and elderly                       leadership                              • Section on Creating Value for Society
                                                   • Stimulating local economies               (pg. 41-49)
                                                                                             • Section on Water Stewardship
                                                                                               (pg. 54-56)
                                                                                             • Section on Effluents & Waste
                                                                                               (pg. 57-60)
                                                                                             • Section on Packaging (pg. 61-62)
                                                                                             • Section on Energy & Climate Change
                                                                                               (pg. 63-67)
                                                                                             • Section on Talent Management
                                                                                               (pg. 32-39)
                                                                                             • Section on Market Presence (pg. 39)

14
BUILDING A SUSTAINABLE FUTURE

OUR MATERIAL ISSUES
We undertook our first materiality assessment in January 2017 to identify, prioritise, validate and review relevant sustainability issues.
Facilitated by an independent sustainability consultant, the exercise involved key internal stakeholders, including the SDC, to identify,
prioritise and validate ESG factors that are material to F&N’s business operations and of significant interest to our stakeholders.
This year, the SDC reviewed and revalidated the material ESG factors.

              Step 1:                                      Step 2:                                        Step 3:
              IDENTIFICATION                               PRIORITISATION                                 VALIDATION
              Preliminary issues were identified           To provide weightage to the                    Based on outcome of the
              based on a comparative analysis              material issues identified in                  workshop, we were able to plot
              conducted of peer companies                  Step 1, they were reviewed by                  a preliminary materiality matrix,
              and industry best practices in               our CEOs, heads of department                  which was then validated by the
              sustainability. These issues were            and directors. This allowed us                 SDC and the Board. The next
              discussed with the SDC to distil             to prioritise the issues according             step in this process involves
              those that were relevant to F&N.             to how likely they are to impact               obtaining feedback on this report
              Subsequently, employees were                 our business and the extent to                 from stakeholders. This feedback
              surveyed to obtain their views               which they are likely to impact                will be used to develop next
              on material issues. From these               our sustainability. Their level of             year’s sustainability report.
              sessions and survey, we crafted              importance was thus plotted –
              a list of key issues, opportunities          from moderate to high.
              and challenges facing F&N.

F&N’s SDC revisited the 15 material issues identified last year and confirmed that these topics remain important. The major change
this year is the increased importance of Talent Management to the business.

The following matrix depicts 15 issues that are seen to be of importance to both F&N and our stakeholders. We have focused on these
material issues in this report.

             High

                                                                                                                  Consumer Health and Safety

                                                                                                                     Water Stewardship
                                                                                                                     Economic Performance

                                                                                          Occupational Health and Safety
 Importance to stakeholders

                                                                                                                   Effluents and Waste
                                                                            Energy and Climate Change
                                                                                                                                      Innovation
                                                            Creating Value for Society          Health and Nutrition

                                                                                            Packaging      Sustainable Sourcing
                                                                                Market Presence
                                      Product and Service Labelling
                                                                                                            Talent Management

                                                                                         Route Planning

Moderate                                                              Importance to business                                                  High

                                                                                                                                                15
FRASER AND NEAVE, LIMITED & SUBSIDIARY COMPANIES
SUSTAINABILITY REPORT 2018

OUR SUSTAINABILITY APPROACH

MATERIAL ISSUES                                                                             Boundaries

                                                                                                                         Communities
                                                                                                            Community
                                                                                                            Investment
                                                                                                Consumers
                                                            Employees

                                                                                                                                       Regulators
                                                                                    Customers
                                                                        Suppliers
Material Topic                                     SDG(s)
 M01 Economic Performance
 We are committed to creating direct                          •         •            •                         •
 economic value for our shareholders
 through the generation of profits and
 for our employees through stable
 employment.

 GRI 201-1 Economic Performance
 M02 Innovation
 We invest in product and process                             •                      •              •          •
 innovation to increase our product range
 and improve efficiency and productivity.
 Innovation is critical not only for long-term
 business success but also in response
 to growing concerns on social and
 environmental issues.
 M03 Sustainable Sourcing
 We promote sustainable and responsible                       •         •                                      •
 procurement and sourcing via a risk
 management and supplier selection that
 is integrated with ESG factors, as well as a
 focus towards local sourcing to contribute
 to local employment when possible.

 GRI 204-1 Procurement Practices
 M04 Talent Management
 We recruit the best talent, train them,                      •                                                             •           •
 and keep them motivated via career
 development goals and reviews.

 GRI 401-1, 401-2 Employment;
 GRI 404-1,
 404-2 Training and Education
 M05 Market Presence
 We contribute to the economic                                •                                                             •
 development in the local communities in
 which we operate by hiring locally and
 providing our employees attractive salaries
 and comprehensive benefit packages.

 GRI 202-2 Market Presence

16
BUILDING A SUSTAINABLE FUTURE

MATERIAL ISSUES                                                                          Boundaries

                                                                                                                      Communities
                                                                                                         Community
                                                                                                         Investment
                                                                                             Consumers
                                                         Employees

                                                                                                                                    Regulators
                                                                                 Customers
                                                                     Suppliers
Material Topic                                  SDG(s)
M06 Occupational Health and Safety
Our Health and Safety Management                           •                                                                         •
Plan complies with relevant laws and
regulations. It is supported by appropriate
policies and programmes to safeguard the
health and safety of our people at all times.

GRI 403-2 Occupational Health and Safety
M07 Consumer Health and Safety
We are committed to producing beverages                    •                                     •                       •           •
of the highest quality that are safe,
and which address health concerns.
Our products comply with relevant
standards across their entire life cycle.

GRI 416-1, 416-2 Customer Health
and Safety
M08 Health and Nutrition
We promote healthy lifestyles and the                      •                                     •                       •           •
consumption of nutrition products in line
with consumer needs.

M09 Product and Service Labelling
We provide accessible and adequate                         •                                     •                                   •
information on our products and services
in line with relevant laws and regulations.
This helps consumers make informed
purchasing choices.

GRI 417-1, 417-2 Marketing and Labelling
M10 Creating Value for Society
We strive to create a positive impact                      •                                                             •           •
on local communities through social
development projects focused on
strengthening vulnerable groups with
education and basic needs, supporting
sports and active lifestyles, promoting
environmental consciousness and
sponsoring festive celebrations.

GRI 413-1 Local Communities

                                                                                                                                           17
FRASER AND NEAVE, LIMITED & SUBSIDIARY COMPANIES
SUSTAINABILITY REPORT 2018

OUR SUSTAINABILITY APPROACH

MATERIAL ISSUES                                                                             Boundaries

                                                                                                                         Communities
                                                                                                            Community
                                                                                                            Investment
                                                                                                Consumers
                                                            Employees

                                                                                                                                       Regulators
                                                                                    Customers
                                                                        Suppliers
Material Topic                                     SDG(s)
 M11 Water Stewardship
 We seek to use water efficiently across the                  •                      •              •                       •           •
 value chain and employ water resource
 risk management to ensure that our
 activities do not threaten water resource in
 the long term for both our own operations
 and our local communities.

 GRI 303-1, 303-3 Water
 M12 Effluents and Waste
 We comply with international and                             •                                                             •           •
 national standards in effluents and waste
 management. These include actions to
 minimise waste in the production process.

 GRI 306-1 Effluents and Waste

 M13 Energy and Climate Change
 We curb our contribution to climate change                   •                                                             •           •
 by managing our GHG emissions from
 our production processes and transport.
 This includes creating greater energy
 efficiencies in our operations and using as
 much renewable energy as possible.

 GRI 302-1, 302-3 Energy
 GRI 305-1, 305-2, 305-4 Emissions
 M14 Route Planning
 Optimising our routes to market, including                   •         •            •                                                  •
 the transfer of products, goods and
 materials as well as employees, serves to
 reduce our carbon emissions, minimise
 costs, and improve efficiencies.
 M15 Packaging
 We use innovative packaging to meet                          •         •                           •                       •           •
 consumers’ demand and seek out
 innovative processes to reduce post-
 consumption waste.

18
BUILDING A SUSTAINABLE FUTURE

 OUR COMMITMENTS

  Delivering value through social collaboration,                           Managing impacts and conducting business in a
  human capital development and innovation                                 responsible manner

 I.   Economic Value                                                     IV. Eco-Efficiency
 1.   M01 Economic Performance: We are committed to                      7.   M11 Water Stewardship: We seek to use water
      creating direct economic value for our shareholders                     efficiently across the value chain and employ water
      through the generation of profits, which will also benefit              resources risk management to ensure sufficient water
      our employees in the form of salaries and benefits.                     for our production purposes.

 2.   M02 Innovation: We invest in product and process                   8.   M12 Effluents and Waste: We comply with
      innovation to increase our product range and improve                    international and national standards in effluents and
      efficiency and productivity. Innovation is critical not only for        waste management. These include actions to minimise
      long-term business success but also in response to growing              waste in the production process and post consumption.
      concerns on health, social and environmental issues.
                                                                         9.   M15 Packaging: We use innovative packaging
                                                                              to minimise our environmental impact and meet
                                                                              consumers’ demands.
 II. Empowering Our People                                               10. M13 Energy and Climate Change: We curb our
                                                                             contribution to climate change by managing our GHG
 3.   M04 Talent Management (Empowering Growth):                             emissions from our production processes and transport.
      We recruit the best talent, train them, and keep them                  This includes creating greater energy efficiencies in our
      motivated via career development goals and reviews.                    operations and exploring the use of renewable energy
                                                                             where possible.
 4.   M05 Market Presence: We contribute to the economic
      well-being of employees by paying them attractive
      salaries. We recruit senior management from local
      communities wherever possible.
                                                                         V. Responsible Supply Chain
                                                                         11. M03 Sustainable Sourcing: We promote sustainable
                                                                             and responsible procurement and sourcing via sourcing
 III. Enhancing Social Well-Being                                            risks management, supplier selection and local sourcing.
 5.   M10 Creating Value for Society: We strive to create
                                                                         12. M14 Route Planning (Transportation): Optimising our
      a positive impact on local communities through social
      development projects.                                                  routes to market, including the transfer of products,
                                                                             goods and materials as well as employees, serves to
 6.   M08 Health & Nutrition (Advocating Active Lifestyle,                   reduce our carbon emissions, minimise costs and
      Sports Development): We promote healthy lifestyles                     improve efficiencies.
      and the consumption of nutritious products in line with
      consumer needs.

                                                                         VI. Safety and Well-Being
                                                                         13. M06 Occupational Health and Safety: Our health and
                                                                             safety management plan complies with relevant laws
                                                                             and regulations. It is supported by appropriate policies
                                                                             and programmes to safeguard the health and safety of
                                                                             our people at all times.

                                                                         14. M07 Consumer Health and Safety: We are committed to
                                                                             producing beverages of the highest quality that are safe
                                                                             and which address health concerns. Our products comply
                                                                             with relevant standards across their entire life cycle.

                                                                         15. M09 Product and Service Labelling: We provide
                                                                             accessible and adequate information on our products
                                                                             and services in line with relevant laws and regulations.
                                                                             This helps consumers make informed purchasing
                                                                             choices.

                                                                                                                                         19
FRASER AND NEAVE, LIMITED & SUBSIDIARY COMPANIES
SUSTAINABILITY REPORT 2018

OUR 2020 TARGETS AND PROGRESS
As part of our commitment to sustainability, we have established nine key performance targets in 2017 for the entire F&N Group
including Singapore, Malaysia and Thailand, based on the high priority material issues identified. These medium-term performance
targets are set to be achieved by 2020.

Recognising the importance placed on climate change, a new target to reduce our greenhouse gas intensity has been added this year,
as part of our commitment in the global call-to-action on Energy & Climate Change management.

1.   M03 Sustainable Sourcing: The Group has set a target to          3.    M06 Occupational Health and Safety: To reduce the Group
     purchase 100% RSPO credits for our palm oil usage by 2020.             Lost Time Injury Frequency Rate (“LTIFR”) to Zero by 2020.
                                                                            (Updated target from SR2017)
     Interim Target: Purchase RSPO credits for 30% of our palm
     oil usage by 2018.

RSPO CREDITS                                                          GROUP LOST TIME INJURY FREQUENCY RATE
                                                                      (REPORTED INJURY CASES/MILLION HOURS)
         5,000      5,000                                                       2.95

                                                                                                           2.43
                                                   3,600     3,600

                                                                                                                                       0
         2018      Target                          2018      Target            2017                       2018                      Target
            Malaysia                                  Thailand
                                                                      * 2017 data does not contain data from F&NCM as they only implemented the
                                                                        system to record workplace accidents in Apr 2018

2.   M04 Talent Management: The Group has set a target                4.    M11 Water Stewardship: We intend to reduce the water
     of providing an average of at least 12 training hours per              intensity ratio at our plants across the Group by 5% from
     employee per year by 2020.                                             2017 by 2020.

AVERAGE TRAINING HOURS PER EMPLOYEE ACROSS THE GROUP                  GROUP WATER INTENSITY RATIO (m3/MT)

                                  14.77                                         2.66
         12.63                                               12.00                                                                   2.53

                                                                                                           2.27

         2017                     2018                       Target            2017                       2018                      Target

20
BUILDING A SUSTAINABLE FUTURE

5.     M12 Effluents and Waste: The Group has set to reduce                     7.   M13 Energy and Climate Change: We target to reduce the
       solid waste intensity ratio by 5% from 2017 by 2020.                          Group’s GHG emissions ratio by 5% between 2017 and
       (Updated target from SR2017 to measure a different aspect                     2020. (New target to reinforce our commitment regarding
       from Water Stewardship)                                                       Climate Change)

GROUP SOLID WASTE INTENSITY RATIO (kg/MT)                                       GROUP GHG EMISSIONS INTENSITY RATIO (MTCO2e /MT)

          21.53                                                                        0.0823                 0.0818

                                    20.41                    20.45                                                                   0.0782

          2017                      2018                     Target                    2017                    2018                   Target

6.     M13 Energy and Climate Change: We target to reduce                       8.   M02 Innovation: To invest in product and process
       the Group’s energy intensity ratio by 5% between 2017                         innovation to expand our offering of nutritious products and
       and 2020.                                                                     improve efficiency and productivity.

                                                                                     Please refer to the section on Innovation (pg. 24-30) for
GROUP ENERGY INTENSITY RATIO (MJ/MT)                                                 more info on the innovative projects implemented to
                                                                                     improve productivity and efficiency and enhance our
         1,007.07
                                                                                     range of products.
                                  1,000.06                  956.72
                                                                                9.   M07 Consumer Health and Safety: We will offer at least one
                                                                                     healthier choice option in all our product categories by 2020.
                  393.29                    391.61                     373.63
                                                                                     We have healthier alternate products for 14 of the 15 (93%)
                                                                                     product categories.

                  613.78                    608.45                     583.09   10. M10 Creating Value for Society: We will continue to provide
                                                                                    outreach and engagement programmes across Singapore,
                                                                                    Malaysia and Thailand by exploring and implementing
          2017                      2018                     Target                 appropriate outreach programmes to address community
                                                                                    needs.
     Purchased energy (Electricity) ratio
     Non-Renewable energy (LPG, Natural Gas, Diesel, Fuel Oil) ratio                 Please refer to the section on Creating Value for Society
                                                                                     (pg. 41-49) for more info on our various projects across
                                                                                     Singapore, Malaysia and Thailand.

                                                                                                                                                 21
FRASER AND NEAVE, LIMITED & SUBSIDIARY COMPANIES
SUSTAINABILITY REPORT 2018

DELIVERING VALUE THROUGH SOCIAL
COLLABORATION, HUMAN CAPITAL
DEVELOPMENT AND INNOVATION
ECONOMIC VALUE
F&N strives to deliver sustainable long-term
value for its stakeholders. We are achieving
this by maintaining leadership positions in
our core markets. We are investing in our
brands positions, leveraging on innovative
technologies and our employees’ expertise to
improve existing and roll out new products
that are delicious and of high-quality that
meet the nutritional needs of our consumers.

This section presents a                In the Innovation section,
snapshot of our economic               we share our approach to
performance, which provides            ensuring our brands stay
us with a firm foundation              relevant to consumers, through
to continue delivering the             improving existing products
products that our consumers            and introducing new products
love. F&N’s contribution to            and packaging. Each year we
economic development in the            become increasingly more
local communities where we             aware of how we can innovate
operate is highlighted in the          to maximise positive impacts -
Market Presence section.               and minimise negative impacts
                                       - of our products and processes,
                                       and in this section, we
                                       highlight the initiatives we are
                                       implementing to achieve this.

Material issues covered                                                   SDGs mapped to

1.   M01 Economic Performance
     GRI 201-1 Economic Performance

2.   M02 Innovation

22
BUILDING A SUSTAINABLE FUTURE

ECONOMIC PERFORMANCE
Our economic performance is managed as part of our business strategy. For a more in-depth
discussion, please refer to our Annual Report.

                                                                                       DIVIDEND                                   COST OF SALES
Others
                                                                                                S$65m        S$65m                       S$1,237m S$1,254m
5%
                                                                  Singapore
Thailand                                                                 24%
32%

                         S$1,927m                                                                2017         2018                          2017         2018
                           FY2018 REVENUE

                                                                                       EMPLOYEE BENEFIT EXPENSES1                 TAXATION

                                                                                               S$279m       S$275m                                      S$20m
                                                                    Malaysia
                                                                                                                                           S$15m
                                                                         39%

                                                                                                 2017         2018                          2017         2018
           Others
           6%
                                                            Singapore                  PROFIT AFTER TAX                           ECONOMIC VALUE RETAINED3
           Thailand                                               25%
           31%                                                                                S$1,326m2                                   S$303m        S$312m

                              S$1,898m
                              FY2017 REVENUE

                                                                                                            S$179m
                                                              Malaysia
                                                                  38%
                                                                                                 2017         2018                          2017         2018

Notes:
1 Employee Benefit Expenses comprises Staff Costs, Employee Shared Based Expenses Defined Contribution Plans and Defined Benefit Plans
2 2017 Profit After Tax included a S$1.2m fair value gain recognised when the Group first equity accounted for its share of Vinamilk profits in April 2017
3 Economic value retained = Direct economic value generated (Revenue) less Economic value distributed (Cost of Sales, Employee Benefit Expenses, Taxation, Dividend).
   Community investments are not included

                                                                                                                                                                        23
FRASER AND NEAVE, LIMITED & SUBSIDIARY COMPANIES
SUSTAINABILITY REPORT 2018

ECONOMIC VALUE

INNOVATION

                                                                            Innovation is central to our business, and central to maintaining
                                                                            sustainable value creation. This is as true now as at any point
                                   TARGET:
                                                                            in our 135-year history. We are continuously leveraging on
                                   To invest in product and
                                                                            innovation to deliver value through new and unique product
                                   process innovation to
                                                                            offerings to meet consumers’ evolving needs toward healthier
                                   expand our offering of
                                                                            beverage choices, convenience and affordability. Through
                                   nutritious products and
                                                                            innovation we also improve the operational efficiency of our
                                   improve efficiency and
                                                                            manufacturing processes and better manage our impacts on
                                   productivity
                                                                            the environment.

Our Approach                                                                                       • Innovation & creation of products and
Our R&D unit, based in                                            1.                                 packaging based on sensory science
Singapore with teams in                                      Innovation &                            (a scientific method of measuring and
Malaysia and Thailand,                                         creation                              interpreting consumers’ response to
drives the creation of great                                                                         prototypes/products based on the
new products that our                                                                                senses of taste, smell and touch).
consumers love. The unit also                 5.              Our research           2.
leads efforts for continuous                Quality        and development        Scientific       • Scientific advances for application
improvements to our                        products          are guided by        advances           in our processes and products.
manufacturing and logistical                                 the following
processes. In this section,                                 five principles:                       • Technical developments that support
we share our approach                                                                                quality improvement and cost
and FY2018 highlights of                          4                             3.                   optimisation.
delivering consumer-based                     Regulatory                    Technical
innovation, enhancing process                 compliance                  developments             • Regulatory compliance of our local
innovation and encouraging                                                                           and export business.
employee-driven innovation.
                                                                                                   • Quality products that meet food safety
                                                                                                     standards.

 Our Innovative Framework
 Priority Areas                                    External Collaboration                        Innovation Culture
 Continuous improvement to deliver high-           Collaborate with authorities such as          Develop products based on scientific
 quality innovative beverage products to           Singapore’s Health Promotion Board            research, consumer insights and tastes
 consumers.                                        (HPB), Agri-Food & Veterinary Authority       relevant to evolving Asian lifestyles.
                                                   (AVA), Ministry of Health, Federation of
 More new products to expand our target            Malaysian Manufacturers (FMM) and             Constantly refine our products to meet the
 consumer groups.                                  Thailand’s Food and Drug Administration       changing needs of consumers and ensure
                                                   (FDA) to adhere to food safety regulations    consistent delivery of good taste and the
                                                   and support national health priorities.       right nutritional values.

                                                   Collaborate with research institutes
                                                   to access cutting-edge research and
                                                   scientific studies to discern the efficacy
                                                   of our products.

24
BUILDING A SUSTAINABLE FUTURE

Consumer-Focused Innovation      We draw upon local knowledge
At F&N, we continuously          of consumer preferences to
deliver new and unique           develop products that meet
product offerings while          our customers’ needs. Our new
focusing on meeting              products are thoroughly tested
consumers’ evolving needs        before they reach the shelves      We continuously deliver new and
toward healthier choices,        to ensure that they are safe       unique product offerings while focusing
flexibility and affordability.   for our consumers and of the
We strive to continue to         highest quality.                   on meeting consumers’ evolving needs
deliver our “Pure Enjoyment,
Pure Goodness” promise to        New products launched during
                                                                    toward healthier choices.
our consumers by offering        FY2018 provided our customers
healthier options and            with healthier options while
more convenience without         the improved packaging cater
compromising on taste.           to the various occasions and
                                 needs of our consumers.

              NEW
              products in FY2018

  Singapore                                                       Malaysia
  • F&N Sarsi Zero (H)                                            • 100PLUS Reduced Sugar (H)
  • F&N Orange Zero (H)                                           • 100PLUS Blackcurrant (H)
  • F&N Lychee Pear (H) (Limited Edition)                         • 100PLUS ACTIVE Powder
  • F&N MAGNOLIA Plus Lo-Fat Hi-Cal UHT Milk                      • F&N ICE MOUNTAIN Drinking Water (H)
    with Oats (H)                                                 • F&N Lemon Lime Sparkling Drink
  • 100PLUS Zero Sugar (H)                                        • F&N SEASONS Juice – Mango, Apple, Lychee and Orange
  • F&N NUTRIWELL Snow Pear with Red Dates (H)
  • F&N NUTRISOY with Walnuts (H)
  • F&N SEASONS White Chrysanthemum Tea No Sugar (H)
  • F&N FRUIT TREE Fresh Apple & Aloe Vera 50% Less
    Sugar & Calories Juice (H)                                    Thailand
  • F&N FRUIT TREE Fresh Orange 50% Less Sugar &                  • CARNATION Plus Sweetened Condensed Milk
    Calories Juice (H)                                            • F&N MAGNOLIA Barista 100% Pasteurised Milk

   (H) – Healthier option

Healthier Options
We invest heavily in the development of healthier products. Our R&D labs were established to develop products that are both
nutritious and delicious. Our R&D team also constantly seeks to innovate to find the best solutions for our customers. One of our
main focus area is reducing sugar content in our beverages. This year we continued to make strong progress year-on-year: in 2004,
our beverages contained on average 8.7g of sugar per 100ml and this has fallen by 31% to 6.0g/100ml in 2018.

                                                                               31%
                                                  2011                                               We invest
                     2004
                  8.7g/100ml
                                                7.3g/100ml                 2018                      heavily in the
                                                                         6.0g/100ml
                                                                                                     development
                                                                                                     of healthier
                       We are committed to reducing added                                            products.
                              sugar in our products.

                                                                                                                               25
FRASER AND NEAVE, LIMITED & SUBSIDIARY COMPANIES
SUSTAINABILITY REPORT 2018

ECONOMIC VALUE

We launched ten new products in Singapore in FY2018, each of which was awarded the
Healthier Choice Symbol (“HCS”) by the Health Promotion Board (“HPB”).

 1 F&N Sarsi Zero and                  and it is recognised to have        4 F&N SEASONS                      traditional ingredient used by
    F&N Orange Zero:                   cholesterol-lowering properties        White Chrysanthemum             generations for over 3,000
The same great taste as the            and helping to care for the            Tea No Sugar                    years and are recognised for
regular range, an all-time             heart. Regular intake of          is unsweetened, with no sugar        health benefits and antioxidant
favourite, F&N Orange and              oats is also connected to         and contains no artificial           properties. Freshly brewed for
F&N Sarsi, minus the sugar.            improvements in gut health        flavouring, preservatives and        wellness within, it has 25%
                                       and satisfies hunger due to its   colouring.                           less sugar and is certified
F&N Lychee Pear:                       high fibre content.                                                    ‘Healthier Choice’ by the HPB.
A unique combination of                                                    5 100PLUS
flavours, the limited-edition            3 F&N NUTRISOY                       Zero Sugar:                       7 F&N FRUIT TREE Fresh
F&N Lychee Pear is the perfect               with Walnuts:               the latest addition to the                Apple & Aloe Vera 50%
drink to pair with traditional         F&N NUTRISOY welcomes             100PLUS range of drinks serves            Less Sugar & Calories Juice
celebratory dishes.                    a new variant to its range of     up a thirst-quenching electrolyte    is ranked the lowest sugar
                                       Healthier Choice soya milk        drink. 100PLUS Zero Sugar            apple juice drink in Singapore.
  2 F&N MAGNOLIA                       drinks - F&N NUTRISOY             offers zero calories in a daily      In addition, this new 50%
     Plus Lo-Fat Hi-Cal                with Walnuts is calcium-          functional electrolyte drink that    less Sugar and Calories juice
     UHT Milk with Oats                rich, cholesterol free, low in    is both refreshing and delightful.   range also carries the HCS by
is higher in calcium and lower         Glycaemic Index and low in        The electrolytes in 100PLUS          the HPB and taste as great as
in saturated fat than regular          sugar and saturated fat. It is    Zero Sugar replenish minerals        the regular ones. These juices
milk. In addition to carrying          also a good source of protein,    such as sodium and potassium.        are high in Vitamin C, making
the HCS, the new variant               Omega-3 and Vitamin E.                                                 them the healthier choice
is also halal certified. Rich          In addition to carrying the        6 F&N NUTRIWELL Snow                for all who want a boost of
in dietary fibres, minerals            HCS, our F&N NUTRISOY                  Pear with Red Dates:            antioxidants. Just 2 servings
and vitamins, oats have                range is halal-certified and      F&N NUTRIWELL’s latest               of these juices deliver 100%
long been associated with              suitable for vegetarians.         addition is freshly brewed with      of the Recommended Dietary
health benefits. For example,          It is also supported by the       natural ingredients to restore       Allowances (“RDA”) of Vitamin
beta-glucan contributes to a           Singapore Heart Foundation        balance in the body. Red Dates,      C to help maintain the immune
decrease in blood pressure             as a heart-friendly drink.        also known as jujube, is a           system. The F&N FRUIT TREE

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