Sustainability Report 2017 - Finlays€¦ · Energy 87% of our energy consumption is from renewable...

Section Title

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SustainabilityReport 2017

Contents

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Contents

Environmental impact statementThis report is printed by an ISO14001 printer using vegetable based inks on FSC accredited paper which has been carbon captured through the Woodland Trust scheme and has the following benefits:

0.185 tonne of carbon

captured

567 car miles

4.60m2

of new native woodland

= or

IntroductionForeword ................................................................................................................................ 4

Sustainability view of the industry ................................................................................... 5

About FinlaysFinlays fast facts .................................................................................................................. 6

Sustainability fast facts 2018 ............................................................................................ 8

Group structure .................................................................................................................. 10

Global network ................................................................................................................... 11

Scope of report ................................................................................................................... 12

Management approach to sustainability ....................................................................... 13

Sustainable FutureDelivering a sustainable future ....................................................................................... 14

Integrated Landscapes ...................................................................................................... 16

Land Stewardship ............................................................................................................... 19

Our People ........................................................................................................................... 21

Low Impact Operations ..................................................................................................... 24

Empowered Communities ................................................................................................ 28

Sustainable Supply ............................................................................................................. 31

GovernanceLegal form and governance .............................................................................................. 33

Swire GroupSwireTHRIVE ........................................................................................................................ 34

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Finlays Sustainability Report 2017

Supply chains became longer and more complex; the final product got further and further from where it started, in every sense. Soon the race was on to package and produce brands that would keep consumers hooked. But today – once again – people want to know the origin of their food and drink. That is why we believe the future of our industry is to reconnect with the past.

At Finlays we have never lost touch with our own past. The lessons of two centuries feel more relevant today than ever. We are drawing on these long-held values to try and create a better future for the beverage industry. That means harnessing new technologies in a responsible way – ensuring future innovations drive our industry to new heights, delivering healthy products to consumers around the world. It means continuing the tradition of fair dealings that has helped us build life-long relationships and thriving communities.

It means using over a century of agricultural experience to make our crops sustainable and our supply chains transparent. Most of all it means empowering our customers – both large and small – to develop the natural, traceable and trusted products their consumers are now asking for. Within Finlays it means unleashing the skills and knowledge of our team members to ensure that we meet the needs of our customers and their consumers.

With deep roots across the globe, we believe that no-one is better placed than Finlays to unleash the global potential of tea and other natural products to create tomorrow’s beverages.

Foreword

In the past, consumers used to know where their food and drink came from: it was local and natural. Then populations grew and spread out. Many things changed.

Guy ChambersGroup Managing Director James Finlay Limited

Introduction

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We carried out research into new factors, horizon-scanned and interviewed key stakeholders. For the most part, the challenges we identified in 2008 remain unchanged, though looming larger and no longer distant.

The review allowed us to stand back, reflect on what we as Finlays have achieved, take a view around the wider beverage industry and other relevant sectors and initiatives.

The tea industry is at a pivotal moment in its identification and management of some of the key factors impacting on it.

Consumers and brands want to trust that the tea they buy is made in a way that supports the industry long-term, that supply is transparent and traceable and the product is good for people and our planet.

The tea and coffee sector have challenges around climatic change and changing weather patterns, licence to operate, transparency, regulation on agrochemicals, of which many countries are dependent on for growing.

The financial sustainability of the formal estate model is under severe pressure from the informal tea economy. Many regions have social models fit for the 19th Century. We could potentially have significant over-supply if all producers applied standard agronomy practices and had a good season.

Tea mechanisation is seen by many in the same way the Luddites viewed cotton and wool weaving machinery. Yet work as a tea picker is physically very difficult, and not a career of choice for those that have options.

On top of existential challenges faced by the industry, every year there seems to be an exposé of unacceptable/unethical labour standards highlighted by the media and civil society

There are bright spots, that are starting to become a consensus on some of the big issues the industry needs to tackle.

There is emerging a greater understanding of the impacts climatic change is having; producers and governments are beginning to embrace mitigation strategies to ensure that not just tea but agriculture in these regions has a future (such as the ISLA Mau project).

Sustainability view of the industry

On agrochemicals, as an industry we are beginning to understand that managing pests and disease do not require significant amounts of chemicals. Assamica bushes were originally found in the jungle of Assam, they are used to being surrounded and thrive within a rich source of biodiversity.

On labour, there is really no excuse. Most producers have an awareness of standards on their properties and as employers it is their responsibility to make sure standards are at the required levels and that they are proactive on issues such as gender.

But we also need other organisations such as certification bodies not just to recognise but assist the industry moving forward. Certification should not be a commoditised standard, but provide value and assurance to all in the chain by moving the dial in line with best practice. We also need civil society organisations to support those who do and challenge those that don’t.

Finlays refreshed strategy gives a clear articulation of what we believe are the challenges we have to face.

The future is daunting but exciting.

In 2017 we conducted a full review and refresh of our 2009 sustainability strategy. In the review we tested the key factors and scenarios underpinning the strategy.

Michael Pennant-JonesGroup Head of Sustainability James Finlay Limited

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Tea65.7m kgProduces 65.7 million kg per annum from 13,000 hectares

of land dedicated to tea growing in Kenya, Sri Lanka

and Argentina.

13.8m kgManufactures and trades

over 13.8 million kg of tea extracts per annum.

2.3m kgManufactures and trades 2.3 million kg of decaffeinated tea and 1.4 million kg of tea

aroma per annum.

64m kgTrades 64 million kg of tea

from offices in the UK, Kenya, Sri Lanka, UAE,

Malawi, Vietnam, Indonesia, China and the USA.

10.7m kgBlends and packs over 10.7 million kg of tea per annum.

7.7m kgManufactures over

7.7 million kg and trades 7.8 million kg of coffee

extract per annum.

5.2m kgBlends and packs over 5.2 million kg of coffee

per annum.

Coffee

125m stems133 hectares in Kenya,

producing over 125 million stems per annum for the UK

and Continental Europe.

Flowers

654,000 nutsOver 654,000 coconuts produced per annum

in Sri Lanka.

Coconuts

Finlays Fast Facts

(GRI: 102-2, 102-7)

About Finlays

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5,000 hectares5,000 hectares in Kenya, Sri Lanka and Argentina producing 157,000 sustainable tonnes of Eucalyptus,

Pine and Cyprus.

Timber

2,000 hectaresOver 2,000 hectares in Sri Lanka producing over 1.4 million kg of

rubber latex, per annum.

Rubber

82,000m3 Operates an 82,000m3 facility

in Sri Lanka.

Cold Storage

1.1m kgProducing over 1.1 million kg of ancillary crops in Sri Lanka such as cinnamon,

pepper and cocoa.

Ancillary Crops

14.6m kg Manufactures and sells over

14.6 million kg of herbal teas and other extracts such as fruit,

sweeteners and caffeine in China and Kenya.

Botanicals and Other Extracts

(GRI: 102-2, 102-7)

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Water

10,516m2 wetlands on our sites.

Tea is rain fed crop.

Flowers use drip irrigation.

405,291m3 Recycle/reused water in

our operations.

Wetlands systems to clean water before

releasing.

Energy

87% of our energy

consumption is from renewable sources.

4596 GJs of solar generated

from our sites,

18,504 GJs from hydro power,

1,196 GJs from Biogas and over

1million GJs from biomas thermal.

Carbon

23% reduction in our Scope 1

carbon emissions since 2013.

7,396t of carbon saved.

1.38t of Co2e produced

per tonne ofproduction produced.

Forests

60,000ha of additional land

protected within the Mau forest in Kenya

in partnership collaboration.

12.5ha of degraded land rehabilitated into

Afromontane forest in Kericho, Kenya.

Peru

Colombia

Brazil

Honduras

Guatemala

Costa Rica

Nicaragua

Argentina

Sustainability in action on our properties Biodiversity studies conducted in 3 Regions, within 8 sites.

Sustainability Fast Facts 2017

Kenya Employees – 10,450 | Hectares – 11,500

Sri Lanka Employees – 12,000 | Hectares – 11,900

Argentina Employees – 356 | Hectares – 3,433

Tea Sourcing Origin

Regions where we operate in and source from:

Coffee Sourcing Origin Botanicals

About Finlays

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Species

1,129 plant species.

836 species of birds.

496 species of mammals.

2,716 species of invertebrates.

55 beehives established on our farms, providing pollination, secondary incomes and nutrition.

Community Support

over 15,000 smallholder farmers.

Voluntary contributed

US$2 million in community investments.

Certification

100% Rainforest Alliance Certified™

(Kenya, Argentina and Sri Lanka) tea produced.

59% of Green beans sourced

certified (Rainforest Alliance, Fairtrade,

Organic)

Chain of custody; Rainforest Alliance, UTZ,

and organic ISO14001 and SMETA assurance.

Protected

Over 45,000 indigenous seedlings provided in Kenya,

Argentina and Sri Lanka.

4,077ha of natural, protected, habitats within our

property.

9,750kgs biological pest

management used.

Papua New Guinea

Sustainability in action on our properties Biodiversity studies conducted in 3 Regions, within 8 sites.

Vietnam

Indonesia

India

Malawi

Kenya

South Africa

Zimbabwe

China

Tanzania

Sri Lanka

Uganda

MozambiqueBurundi

Ethiopia

CongoMadagascar

Rwanda

Germany

(GRI: 304-3)

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Finlays have a unique position in that we own and operate a vertically integrated global supply chain for tea, which spans tea farms and direct contracts in all major tea-growing regions, some of which we have owned and brought the best from bush to cup, for over a century.

(GRI: 102-1, 102-2, 102-3)

Group structure

Finlays operates in many parts of the world, across a diverse spread of geographies, local cultures and languages. Whilst respecting our local cultures, we also seek to build a common operating culture within Finlays.

Finlays head office is located at: Swire house, 59 Buckingham Gate, London, SW1E 6AJ

We have offices, manufacturing plants, tea estates and R&D facilities located globally.

We operate a global, customer focused commercial function to support customers around the world to supply tea, coffee extracts and botanical extracts (either from our own facilities or those of others). We act as a trusted global business partner. Furthermore, we specialise in technology and processes that ‘bring the best from bush to cup’.

Tea Estates

Beverage Packing

Sourcing & Supply

Extracts & Ingredients

Innovation Ventures

About Finlays

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We employ over 25,000 employees, globally.

Our primary markets are in the UK, USA and Asia.

Total Net Sales: US$ 505,488,000

Total Capitalisation broken down in terms of debt and equity:

Debt: US$268,964,000; Equity: US$502,123,000

Global network

Trading/sales offices

Manufacturing sites

Tea estates

Blending

Packing facilities

(GRI: 102-4, 102-6, 102-7)

Gonzales San Antonio

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Exceptions to full disclosure are:

– Tea trading offices in Dubai, Indonesia, Vietnam and Malawi, report Occupational Health and Safety (OHS) and partial scope 3 data, due to the small size of their offices.

– Damin International Holding Limited’s data is now included in all aspects of this report. Within profit this is reported at share percentage of 49.5%, economic contribution figures are at an average share percentage of 41% and production volumes and environmental performance is included at 100%. Damin is the largest tea extracts producer in the world.

– Aspen Beverage Group was acquired in June 2017, the group’s performance data is only included in total capitalisation. Aspen has increased our market share in the Cold-Brew sector in North America.

(GRI: 102-10, 120-50, 102-51, 102-52, 102-53, 102-54, 305-2)

Scope of report

The report covers all main aspects of Finlays global operations in USA, Africa, Sri Lanka, Argentina, China and UK.

Reporting period: the report follows a calendar year for 2017. Annual reports have been produced since 2009.

Our methodology uses the indicators included in the Global Reporting Initiative (GRI) guidelines, with carbon measurements based on World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD), GreenHouse Gas (GHG) Protocols.

This report has been prepared in accordance with the GRI Standards: Core option.

If there are any queries about this report, please contact us at [email protected] or write to us at:

Sustainability Finlays, Swire House, 59 Buckingham GateLondon, UK, SW1E 6AJ

About Finlays

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Our Mission is to connect humanity through natural beverages. Combining tradition and innovation to create a healthier, happier and better world by bringing the best from bush to cup.

Responsibility for sustainability sits with our Group MD, our Group Head of Sustainability, and members of Finlays global Executive. Sustainability is reported twice per year to Finlays Main Board as a standing agenda item.

(GRI: 102-11, 102-16, 102-18)

Management approach to sustainability

Our head office provides oversight, facilitation and guidance. Commitment is owned by each division head and subsequent senior managers across our regions of operation. Each regional head has sustainability KPIs built into their performance analysis.

Our new strategic sustainable objectives are aligned with our core business strategy, values and vision.

All our regions face different challenges depending on the location, products and stakeholders.

Our company Vision is to grow Finlays profitably and sustainably by serving as the industry’s trusted leader in the supply of tea (in all its wonderful varieties, formats and applications), coffee and botanical extracts to the world’s beverage brand owners.

Precautionary approach; a key aspect to our environmental policy is to seek to understand, protect and enhance biodiversity around our operations and where practicable pursue a restorative agenda.

We not only seek to protect and enhance the environment and biodiversity surrounding our operations and ensure the safety of our employees by executing a robust OHS management system; we also look to empower and embrace our local communities, wherever in the world they might be.

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It is 9 years since the first Sustainability Strategy for Finlays was introduced and since then much has changed, both internally and externally.

Taking on board lessons from the lastdecade; the increasing expectationsfrom stakeholders, and our parent company’s sustainability strategy; SwireThrive (see page 35), our new strategy looks to future proof our business and reduce risk, whilst being proactive and rising to challenges.Our new sustainability strategy reflects our current business model and is aligned with our internal business strategy.

It is essential to have a strong practical narrative around our business not just for external audiences but also internally, allowing our employees to equate their daily actions with improvements in the overall sustainability of our business.

Included in our strategy is the perception of the increased demand for transparency by consumers and B2B customers of how products are made and the standards under which they are made, covering the whole supply chain.

Globally we see increasing contributions from companies and corporations to achieve and implement the UN Sustainable Development Goals (SDGs) by 2030. Our new strategy aligns our areas of influence with the SDGs.

Plans for 2018

– Implement the roll out of our strategy, globally.

– Set annual targets, regionally, to support our strategic targets to 2022.

– Create working groups for each strategic objective to ensure best practice, knowledge and skills sharing across the group and supply chain.

Sustainable Future

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Delivering a sustainable futureOur sustainability strategy focuses on 6 strategic sustainability objectives that cover all aspects of our business from production to manufacturing and commercial. Our strategic objectives will be met by the end of 2022. To do this we will be open and transparent, endeavouring to create positive impact.

Our vision is being supported though our commitment to, and adoption of objectives and targets relating to six strategic sustainability objectives and all regions and aspects of our value chain. To support our strategic objectives, we are focusing on achieving group targets by 2022. This will ensure that our products are sustainable at every step, from where we grow and source raw materials until they reaches the ultimate consumer.

Integrated Landscapes

Our tea estates are dependent on the people, communities and natural resources in the wider, external landscape. To sustain our operations and license to operate we will work towards an integrated landscape.

Finlays will protect and enhance 100,000 hectares of natural forest by 2022.

Sustainable Supply

Finlays recognises the increasing demand to be transparent and responsible.

We commit to providing responsible and traceable supply of all raw materials and influencing our supply chains through sharing best practice.

Finlays will have 100% traceable, transparent supply to internationally accepted standards on tea and coffee by 2022.

Land Stewardship

At Finlays we recognise that good agricultural practices and land management is essential if we are to be economically and environmentally sustainable. We will practice and demonstrate outstanding land management.

Finlays will reduce agrochemical usage by 50% by 2022.

Empowered Communities

We recognise and rely on community collaboration across all our regions of operattions. We commit to empowering local communities by acting as a catalyst for positive change.

We aim to be responsible members within communities, in which we operate and where possible, to generate positive impact on society.

Finlays will make a positive impact in the communities within which we operate.

Our People

Our employees are at the heart of our business. Finlays is committed to being an employer that demonstrates opportunity, fairness and equality, providing an inspiring fulfilling and adaptable workplace.

Finlays will increase participation of women in management to 30% by 2022.

Low Impact Operations

At Finlays we recognise that effective and efficient management of resources is not only good for the environment but is also good business practice.

We will reduce impact by de-carbonising and minimising water usage, waste and pollutants.

Finlays will reduce year on year our environmental impact throughout our operations.

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Finlays will protect and enhance 100,000 hectares of natural forest by 2022.

Around the world, climate change is happening fast and is particularly affecting tropical agriculture. Climate change can often be mitigated by preserving and enhancing climatic regulators such as forests. In Kenya degradation of the Mau Forest poses a significant threat to agriculture around Kericho, impacting on weather, biodiversity, watershed and our licence to operate.

Integrated Landscapes

Sustainable Future

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The Mau forest, Afromontane forest covers over 400,000 hectares in South-West Kenya. The forest is crucial in providing the environment that allows agriculture and thus communities and industry in the region to flourish. It regulates the regions’ micro-climate, the rainfall patterns and has a critical role as a watershed. Rich in biodiversity, the forest also assists regional agriculture to remain resilient to pests and disease.

Within 20 years, more than 25 per cent of the South West Mau forest has been lost. The loss is the outcome of encroaching, growing populations, increased livestock overgrazing, charcoal burning, and timber extraction.

Finlays have been working in partnership with IDH, government representatives, and other organisations to protect and regenerate the Mau, through the South West Mau Sustainable Landscape project that was launched in Kericho under ISLA on 30th June 2015.

To date Finlays has:

– 12.5 ha of degraded forest rehabilitated near the Mara Mara Forest station.

– Sponsored the ‘Bongo Surveillance Programme’

– Funded 2 new guard outposts on the Eastern boundary of the forest

– Purchase of essential equipment for forest rangers

– Quarterly aerial surveillance flights over the forest

– Funded the livestock intensification program pilot aimed at improving livelihoods and reducing grazing pressure

– Training on law enforcement for stakeholders

– Rehabilitation and protection of Kipchobos spring (community water)

– Established beehives with local communities providing them with alternate livelihood options

– Carried out a biodiversity study on the adjacent forest

We will continue to collaborate with all stakeholders in the South West Mau Sustainable Landscape Project (ISLA) to implement activities in the protection and rehabilitation of the forest.

Future plans include:

– Increase preservation: Fencing the Eastern boundary. The fence will be approximately 45km in length, and will provide an invaluable management tool to reduce human- wildlife conflict and assist Kenya Forest Service regulate access to the forest and the exploitation of its resources.

– Reduce further deforestation: Through the introduction of zero grazing and a forest buffer zone (tea/bamboo).

– Address illegal commercial activities: Quarterly aerial surveillance flights co-funded by Finlays and IDH, and guided by Rhino Ark, during which they fly over the South West Mau Forest to spot illegal activities.

– Tree-enrichment planting: Participating in the sustainable replanting of degraded forest blocks. So far, 200 hectares have been planted and another 300 hectares planned.

– Increase mechanisms: for the Kenya Forest Service to control access to the forest and enforce forest laws.

– Sustainable livestock management: To reduce over-dependence on the forest for grazing.

Argentinian Landscape Project Our Argentinian tea fields are located in Misiones province, lying north-east in Argentina. Bordering Brazil, Paraguay and Uruguay.

Misiones falls within a biodiversity rich region which forms part of the Atlantic Forest Biome. In May 2017 stakeholders in Misiones, Argentina, met to identify and discuss the risks and opportunities facing key sectors in the Misiones region. The workshop was organised by Finlays Argentina, Tea2030 (a global tea collaborative platform overseen by Forum for the Future), and S&D Coffee and Tea.

The workshop was the first time industry participants had come together for such an event in over 50 years in Misiones. Attending were representatives from the government, civil society, the tea industry as well as paper, pulp and timber sectors. Government representatives, competitors, NGOs, other sectors operating in the region; paper and timber, etc. A landscape-approach analysis was undertaken to assess all levels of risk in relation to a host of potential social, economic and environmental challenges (including labour, climate change and biodiversity loss), within the region.

The workshop informed further interest to support the development of a thriving region and tea sector in Argentina to sustainably manage the producing landscapes and encourage a restorative and holistic approach in the region.

Longer term the group objectives are to reduce sustainability risks, build resilience in Argentinian tea production and ensure the long-term security of supply to businesses sourcing tea from Argentina.

Further collaboration of the landscape project with other tea companies, small holders, institutions, and local Government, in a national government plan to promote Argentinean Tea, within the global market. The project is identified as PROTA (Proyecto Identidad Té Argentina). Our landscapes team are leading the project with the Government, sharing our expertise in tea production and sustainability. This will showcase our commitment to change and to creating a sustainable region within Misiones and the Argentinian tea industry.

‘Conservation of forests is far more likely to succeed when smallholders are empowered to do sustainable farming.’

Kenya Integrated Sustainable Landscape Initiative (ISLA) update

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(GRI: 304-1, 304-4)

Argentina

In Argentina biodiversity studies were conducted within two of our properties; Argente and Acaragua, on which we have more than 1,500 Ha of natural rainforest of the “Selva Paranaense” part of the Atlantic Forest Biome (Bosque Atlántico). This biome holds over 7% of the global biodiversity, of which 40% of the species found here are endemic to the region. Today only 7% of this forest biome remains, with Misiones holding 45% of the remaining forest.

The results of the study show that our two sites are species rich, having recorded a high level of mammals, birds and flora. Including some activity from 12 endangered species. Such as the critically endangered purple palomita (Claravis geoffroyi) dove, that flock when bamboo plants fructify, which occurs every several decades. Other endangered species recorded include, Paca (Cuniculus paca), the Greater Nakedtailed Armadillo (Cabassous tatouay), the Lesser Anteater (Tamandua tetradactyla) and forest cats including ocelot, tirica and puma. In the summer survey we recorded a new species of beetle for Argentina, the Anychocerus albitarsis (Cerambycidae).

The aim of the study was to evaluate the current status of the biodiversity on our sites and create an informed plan to enhance and protect the biodiversity fundamental for a sustainable future.

These plans will be put in place in 2018. We will look to increase areas assigned for green corridors; hold education sessions within schools and communities to extend the knowledge of the importance of conservation locally and consider the removal of alien flora, increasing the regeneration of indigenous forest canopy.

Biodiversity Reports This year we conducted biodiversity studies in two regions; Argentina and Sri Lanka. To follow on from our previous studies conducted in Kenya and Sri Lanka in previous years.

Sri Lanka

In Sri Lanka we conducted a biodiversity assessment in Rakwana a region which has a mosaic of diverse natural habitats, including lowland wet evergreen forests, mid elevation evergreen forests and moist-mixed evergreen forests. The area receives up to 3000mm annual rain and the relatively drier areas receive up to 2500mm.

In Sri Lanka, the estates lie adjacent to the Sinharaja forest World Heritage site which while rich in biodiversity is crucial as a local watershed.

The diverse climatic and habitat variations have resulted in the presence of numerous plant and animal species. The documented species found on Finlays property included 332 species of plants and 317 animals. Among them, 200 are confined only to Sri Lanka and 109 are listed as critically endangered species according to IUCN red list, such as; the flame-striped jungle squirrel (Funambulus layardi) and Asian elephant (Elephas maximus Linnaeus).

Our aim is to achieve sustainable use of natural resources, retaining a pristine environment where nature thrives along with economically productive plantation landscape.

To increase the abundance of species and ecosystem services, we are working to increase the conservation of natural areas, expand current ecological corridors to link remnant forested areas. External pressures on vegetation and alien plant invasion have to be addressed to enable indigenous flora to prosper and to increase hydrological performance. The abundance of invasive plant species removed will be considered for producing biogas and organic fertiliser.

To achieve this conservation of biodiversity is essential and accepted at our managerial level. This will require promoting best practices and commitment to land management to maintain high levels of biodiversity and ecosystem services and also develop sustainable plantations.

Plans for 2018

– Continued collaboration within the Mau forest project, including fencing of the Mau

– Increased landcover in Sri Lanka and Argentina.

– Continue to contribute and promote landscapes and PROTE in Argentina.

‘We can’t protect, what we don’t know.’ Michael Pennant-Jones Group Head of Sustainability

Images above, left to right: Ocelot (Leopardus pardalis) discovered in Misiones, Argentina by our camera traps. The Bongo (Tragelaphus eurycerus) found and protected in Mau Forest, Kenya and Sri Lanka White- faced Starling, endemic rare bird restricted to the wet zone.

Sustainable Future

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Land Stewardship

Reduce agrochemical usage by 50% by 2022.

Agricultural land is a decreasing resource. Tea bushes remain economical for over 50 years and we must manage the land accordingly. This means employing good agricultural practices and growing tea with the minimum of unnecessary inputs.

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Inter Company Plantation Meeting (ICPM) Finlays ICPM was held in Argentina this year for the first time.

Finlays holds its ICPM every two years, allowing all our growing operations to get together to discuss growing techniques, share experiences and enhance best practice within our group.

The team met over a week, visiting sites throughout Misiones, Argentina. Best and current agricultural practices from each region were shared, with discussions focusing on topics such as soil health, soil erosion prevention, tea planting techniques, weed control, pest and disease management, to name a few. In the future years we will be looking to standardise best practice in agronomy across the group and the ICPM will be a key event to share, challenge and learn.

Field Innovation Group (FIG) In Sri Lanka the estates have come together to discuss innovative ideas and best practices for some of the key challenges they face growing tea within the region. The formation of this group is the first time the estate managers have begun to explore collectively best practice and new ways of working in the field. Their remit is to define and standardise best field practice across TESL. In 2017 the team explored, showcased and trialled agronomy challenges such as non-chemical weed control, reducing soil erosion and increasing carbon content, fertiliser application, optimising machine harvesting and Nematode management.

Preventing soil erosion and silt runoff, in Sri Lanka is important. Especially as the location of our Rakwana estate lies between the head waters of two important river catchments (River Kalu- flows to the highest populated area in the country, River Walawe flows to the dry zone of the country). Sri Lanka is prone to erosion, silt build up and landslides; in order to prevent this appropriate land husbandry practices are followed, including ensuring good groundcover is in place.

Alternatives for weed controlLooking beyond agro-chemicals and aligning our growing regions to achieve targets to reduce usage by 50% by 2020, we are revisiting the concept of useful, friendly weeds and introducing further alternatives for weed control. This is building upon previous knowledge that increased presence of natural forest reduces the occurrence of pests and disease.

Growing tea requires little use of agro-chemicals, as cool climatic conditions mean most pests do not reach the economic injury levels. However, tea does encounter some pests, such as mites, aphids and weevils and some diseases such as armillaria root rot. In tea fields differing weeds occur, such as Commelina Bengalensis or Khaki weed, however, these are heavily dependent on which growing region we are in.

To reduce agro-chemical use Integrated Pest Management (IPM), is key. IPM uses a variety of methods and techniques, including cultural, biological and structural strategies that discourage pests and keep agro-chemicals to levels that are economically justified and reduce or minimise risks to human health and the environment.

In Argentina, Kenya and Sri Lanka we are exploring the concept of integrated weed management and friendly weeds, trialling several techniques to reduce our use of agro-chemicals. Such techniques for pest and weed control can include; timely fertiliser application; specific pruning to reduce disease and differing pruning techniques to increase shade and ground cover and biological controls. Using fungal spores and tiny mite predators to reduce the numbers of mites and other potential pests, biologically.

The use of botanical extracts as deterrents is being used as pest management at the nursery level.There are many other “friendly weeds” used, such as legumes, that are nitrogen fixing, enriching soil structure and health.

In Sri Lanka, our Blairlomond Estate has explored a local alternative to manual weeding by introducing mechanical weeding cooperative. Finlays provided mechanical weeders, training and loans to local cooperative members, who are then contracted out to do mechanical weeding within the region, including smallholders. Weeding contracts are offered within tea fields and vacant lots. Currently there are 10 member machines available for contracts.

Reducing agro-chemicals will enhance the growth of friendly flora and fauna that enrich the biodiversity and which in turn will balance the ecosystems within the tea, pest and the soil.

(GRI: 307-1)

Plans for 2018

– Continue our trials on weed reduction using alternative methods.

– Increase groundcover using food safety friendly weeds

– Increase use of mechanical weeding

– Increase use of natural pest management

– Develop best practice and set annual targets across our growing regions to support our strategy.

Sustainable Future

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Our People

Increase participation of women in management to 30% by 2022.

Being a good employer enables us to attract key talent, retain skilled employees and develop our internal skill sets to optimise our current and future potential and reputation. We need to build on and enhance the standards within Finlays. Traditionally there has been a lack of women in management roles within the tea industry. If we want to be an employer of choice we need to attract the best talent.

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Gender inequality in the workplace is a complex issue; it is defined, in the workplace, as equal opportunities for women and men to develop their competencies, to make their choices and realise their full ambition in work life without any restriction on the basis of gender (Rissen and Kolehman, 2005).

Since the inception of project Athena in JFK in 2014, we have achieved significant milestones towards the advancement of gender equality and representation of women within all sectors of the company.

Implementing the Gender Equality and Diversity Policy and Strategy in 2015, has ensured that no persons are discriminated directly or indirectly in all facets of employment (recruitment, appraisals, promotion, career development and remuneration) on the basis of gender.

The project and team have achieved great advances, including:

Implementing a trainee management programme, which has created opportunities for 29% of women in junior management positions in the tea estates since 2015.

Our apprenticeship programme for Women in Technology has enrolled 20 women in the Technical Institute for technology on courses such as masonry, mechanics, plumbing, electrical, carpentry etc. Following qualification and a competitive interview processes, 90% have been successfully absorbed into the system as artisans.

Implementing a talent development programme which develops skills and competencies of both men and women thus enabling them to be qualified for career advancement.

Women in leadership training, which combines leadership training with attendance of a conference and symposium providing opportunities for elevated networking and access to inspirational talks from women mentors who are trailblazers in different sectors.

A key aspect to the project is building the awareness and capacity of all employees to support gender equality and women empowerment within the workplace. We are working to change perceptions of being gender blind or gender neutral to being positively gender inclusive and transformative.

The programme has aided women representation at JFK to reach 32%. This is 1% shy of the 33% constitutional requirement (The Constitution of the Republic of Kenya 2010) and attaining critical mass to influence decision making and participation.

Ethical Trade Initiative (ETI)The Ethical Trade Initiative is a leading alliance of companies, trade unions and non-governmental organisations that promotes respect for workers’ rights around the globe.

Finlays has been a corporate member of ETI since 2009. As a member, Finlays agrees to adopt the ETI Base Code of labour practice throughout our own operations and our supply chains, where possible. The ETI Base Code is based on the conventions of the International Labour Organisation (ILO) and addresses issues like wages, hours of work, health and safety and discrimination.

Being a member allows Finlays to participate in a tripartite group with representatives from other companies, global trade unions and voluntary organisations, enabling us to work together to tackle the many complex questions about what steps companies should take to trade ethically, and how to make a positive difference to workers’ lives.

Our membership also enables us to demonstrate our commitment to ethical practices in the work place and ethical trade to our customers.

In 2018, we plan to further demonstrate our commitment by providing training to management and carrying out preliminary assessments at various manufacturing facilities.

Gender Equality in James Finlays Kenya Limited (JFK)

(GRI: 404-2)

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23

(GRI: 120-11, 403-1, 403-2)

The James Finlay Group is committed to providing a healthy and safe workplace for our employees, contractors and visitors, from meeting all of its statutory responsibilities, to realising our vision of achieving ‘Zero Harm’

This strategy defines the framework within which the James Finlay Group will meet these commitments, demonstrates how we will monitor and measure our progress, and details how we will progressively implement an ‘Always Safe’ approach that applies to everyone, and everything we do, across our business.

The Group Board and Senior Executive Management Team fully commend and support this strategy, accept responsibility for implementing it across their business units, and are committed to a process of continual improvement to ensure success.

Our Zero Harm strategy was launched in April 2017 across the Group, engaging as many of our people as possible.

Simultaneously all regions carried out a baseline assessment against a group Zero Harm road map, identifying which elements they could progress that would have the greatest impact in their workplaces, and drafting action plans to implement these.

The Finlays Always Safe Team, comprising of OHS managers across the regions, was formed with the intention to meet monthly to monitor progress, share learnings from both good and bad experiences, discuss opportunities for continual improvement, and drive a unified approach to H&S.

Corporate Audits10 audits based on the Corporate Health and Safety Management System were completed in 2017, covering all our main regions of operation, except for our Argentinian operations. Improved scores were recorded within 9 out of 10 regions, with 1 staying static.

The overall group average score improved from 76% to 79% since 2016.

Notes:

1. Hazards reporting is where unsafe acts or conditions are identified and spotted before these result in near misses or accidents and demonstrate employee engagement

2. Rates are calculated per 200,000hrs worked, which equates to 100 employees working 40 hours per week for 50 weeks of the year

Some Key FiguresComparison of 12 months data from April 2017 to March 2018 with that from April 2016 to March 2017 indicates that the Zero Harm strategy is achieving significant success, as per the following table:

Health and SafetyFinlays has seen considerable progress in 2017, with our ‘Always Safe’ campaign in pursuit of our aspiration to achieve Zero Harm across the entire Finlays Group.

Apr 2016 – Mar 2017

Apr 2017 – Mar 2018 Difference

Lost time injury rate

Lost working hours rate

Hazard reporting rate

50% decrease

46% decrease

10% increase

0.14

28.94

34.74

0.28

53.18

31.12

Plans for 2018

– Globally roll out our gender programmes and set regional, annual targets to enable us to meet our 2022 target.

– Promote and discuss ETI base codes throughout our operations (and supply chains)

– Deliver ‘Always Safe Leadership’ course for front line managers, and ‘training the trainers’ internally

– Review our corporate health and safety management system to reflect the International H&S standards.

Management Reviews

In October 2017 group guidance on annual H&S management reviews was developed and used to great effect by business managing directors to review H&S performance to date, to identify opportunities for improvement, and set challenging but realistic objectives for 2018 supported by SMART based action plans.

24


Low Impact Operations

To reduce year on year our environmental impact throughout our operations.

Reducing the footprint of our businesses is not just good financially but increases the operational health of the business.

Increasingly local environmental legislation is requiring low impact operational compliance from a reduction in pollutants and emissions, to reducing the demand for energy and water.

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25

Tea-valution and LEED GoldOur new state-of-the-art, global research and development centre officially opened on April 5 at the Quonset Business Park in North Kingstown, Rhode Island, USA. The Rhode Island Governor Gina Raimondo attended the ribbon cutting ceremony along with state and local officials. The state of Rhode Island is extremely proud and excited by the official opening of this new research centre, which signals that there is true economic development within Rhode Island; for Finlays, it enables us to continue to grow our global market participation.

The US market is seeing major growth in premium tea beverages, coupled with a growing significance placed on the tea ingredient, linked to product attributes such as origin e.g. “Chinese green tea”. As interest in clean label and healthy products increases, consumers are seeking more authentic beverage experiences and increasingly demanding greater transparency from the food and beverages that they consume. This is driving innovation in the ‘natural beverage’ space while placing greater emphasis on tea quality and flavour.

In the competitive US market, enticing consumers with innovation remains key, driving brand owners to create ‘differentiated’ products using ‘exotic’ teas and botanical blends. While black tea still accounts for over three-quarters of domestic hot tea consumption, green tea is experiencing the highest growth, with speciality/niche ingredients such as rooibos, matcha and white tea of increasing interest, particularly to the Millennial generation.

Finlays new facility is going for LEED Gold, with certification dueto arrive in 2018. The R&D space houses new technologies and product developments, created in collaboration with our customers, putting usat the forefront of future beverage advancement. That, combined with our deep-rooted history and expertise in tea and natural ingredients and our unique integrated supply chain, will continue to position us as thought leaders in the marketplace.

Finlays Cold Storage (FCS) has commissioned Sri Lanka’s largest roof mounted solar power plant system generating capacity of 1,000 kWp in February 2017. The solar plant is a grid tie system which is expected to generate 27% of the cold storage’s current electricity requirement and save an estimated 900 tonnes of Carbon per annum.

As part of obtaining LEED certification FCS has carried out several improvements in terms of saving electricity and water. FCS is expecting to be certified as a LEED Gold facility by May 2018. We have converted all the florescent, halogen lamps to LED in the office, refrigeration plant and other utility areas and are expecting an estimated saving of 47,880 kWh /year. All water fixtures are replaced and the new water efficient fixtures are compliance with LEED standard and estimated water saving is 1.9 million litres/year.

LEED gold certifications were obtainable due to the contribution funding acquired from the Swire Sustainable Development fund.

Environmental performanceAt Finlays we are continuously looking for ways to reduce our environmental footprints in all regions of operation, while growing our business, sustainably.

Our vision is one of a business that is environmentally sustainable, socially just and financially viable. We are firmly committed to sustainability throughout our operations and we have placed this belief at the forefront of our philosophy; our environmental policy reflects this. We aim to have ‘zero net impact’ on the environment and we are committed to making a positive contribution to environmental recovery and resilience.

Applying continual improvement targets for the reduction of our greenhouse gas (GHG), energy, water and waste impacts across our operating regions from production, manufacturing to our trades and commercial operations are significant in reducing our environmental footprints and positive contributions.

Public pressure and regulations have tightened around the world, and stronger action to tackle climate change is being driven by governments, legislation and certification bodies. This is combined with extreme climatic conditions being experienced, globally.

The increase of extreme weather events, have inevitable business implications for our work force and operations. We are seeing variations impacting most of our operating and sourcing regions, globally in some way or other. Flash flooding after heavy rains following long periods of drought have impacted our operations, employees and communities in these regions. Erratic, changes to rainfall patterns impact harvesting, planting and maintaining our tea bushes and are impacting the ability to effectively dry coffee beans throughout global supply.

These occurrences are informing behaviour change and leading to new ways of producing and operating; increased groundcover will aid soil health and stability and shelters and solar driers to aid the drying of beans.

To support our vision to grow our business whilst decoupling our environmental impact from our growth, our operations take annual steps to monitor, report and reduce our footprints to ensure we operate as efficiently as possible and working towards functioning as low impact operations, globally.

What is LEED?

Leadership in Energy and Environmental Design (LEED) is an internationally recognised green building certification system, which verifies that a building was designed and built with efficiency systems in place regarding energy savings, water efficiency, CO

2 emissions reduction,

improved indoor environmental quality, and stewardship of resources and sensitivity to their impacts. LEED-certified projects are assigned one of four levels of certification to acknowledge the degree of achievement. The number of points that your project earns determines the level of LEED certification that you will receive; LEED Certified™; LEED Silver®; LEED Gold®; LEED Platinum®.

26


Water is a vital resource in all landscapes, including where Finlays share the landscape with important water ecosystems. In Kenya this is the Mau forest, Sri Lanka we have property adjacent to world heritage sites; Sinharaja Forest Reserve, which impact vastly on the regions water quantity and quality. In Argentina our farms lie within the same region as Iguazu falls, UNESCO World Heritage site. We know the importance of water; our tea crops are rainfed and are highly influenced by any changes in rainfall and climatic variations.

This is why we are doing what we can to preserve any natural forests, resources and ecosystems where we have influence and are directly able.

In 2017 we have experienced the impacts of drought within our regions of operation and sourcing; Kenya, Sri Lanka and South Africa.The impacts of the droughts are reflected in the water consumption patterns, seeing increased amounts of water use to compensate for the extreme variances in rainfall and temperature variances, since 2013.

(GRI: 302-3, 302-4, 303-1, 303-3)

Water Water is critical for all biodiversity, the planet and all its inhabitants. The conservation and efficient use of water is a key part of good agricultural practices.

Total water use

Blue water

Green water

Recycled and reused

Water use intensity**

1,917,493

1,326,750

447,301

143,442

0.0077

Water use (m3) 2013 2016 2017*

2,308,798

1,921,603

328,269

58,926

0.0085

4,675,482

3,633,204

291,302

750,976

0.0166

23%

50%

-35%

-50%

20%

EnergyReducing reliance on non-renewal energy and the emissions associated has been a requirement since our first sustainability report.

Top 3 performers since 2013

(Total energy)

Finlays Flowers .................... -50%

Tea Estates Kenya ....................... -23%

Finlays Colombo .................. -22%

Over 87% of all our energy consumed in 2017 was sourced from renewable resources, with 82% of our energy being produced on our own sites in the form of renewable sources such as solar, biogas, hydro and biomass.

In 2017 Finlays generated 4600GJs of solar energy in Sri Lanka, with 700GJs being exported to the grid, reducing carbon emissions in the area and positively impacting the local community indirectly.

As part of our medium-term targets from 2013 to 2017, our regions have been implementing energy saving initiatives such as education sessions, energy audits and retrofits, installing LEDs, light-holes and running diagnostics on operations to ensure our operations are running efficiently. We have been working towards obtaining two LEED gold certificates within 2017 to further ensure our operations are efficient.

Since 2013 our energy has been reduced overall by 2%.


(Total water)

Finlays Colombo .................. -24%

Tea Estates Sri Lanka .................. -11%

Finlays Beverages ................... -2%

Total energy

Direct

Direct non-renewable

Direct renewable

Indirect

Indirect non-renewable

Indirect renewable

Intensity**

2,002,826

1,862,277

217,818

1,644,459

140,548

54,886

85,662

0.0080

Energy use (GJ) 2013 2016 2017*

2,131,535

1,972,112

184,016

1,788,096

159,421

82,260

77,161

0.0078

2,796,198

2,440,386

171,195

2,269,191

355,809

246,073

109,736

0.0099

-2%

-3%

-22%

0%

10%

57%

-20%

-4%

* Includes Damin data** Total resource use / Production volumes in tonnes.

2017 v 2013(excluding Damin)



Sustainable Future

27

Within all regions of operations Finlays endeavours to follow the waste hierarchy principles to; reduce, recycle, reuse and recover

The “waste hierarchy” ranks waste management options according to what is best for the environment. It gives top priority to avoiding waste generation all together. When waste is created, it gives priority to the 4 R’s; for reduce, re-use, then recycling, then recovery, and lastly the least desirable waste process is disposal (e.g. landfill, incineration without energy capture)

Our Waste sent to landfill has reduced by 57% since 2013, through applying the concept of the waste hierarchy and circle of life theory. Seeing more than 88% of our waste being recovered this year compared to waste recovered in 2013. We have recovered waste through composting, converting to energy; biogas and coffee logs.

Our operations in Pontefract, Yorkshire remains zero waste to landfill for the fourth consecutive year.

The United Nations (UN) Climate Neutral Now campaign states that the world must become carbon neutral to ensure that global temperature rise does not exceed 2°C in order to avoid the most dangerous impacts of manmade climate change.

Finlays Colombo carried out its first carbon footprint assessment. The division aims to work towards a carbon neutral status by 2020 and has developed an action plan to be implemented over a three-year period.

To aid the reduction of carbon occurring in our atmosphere Finlays provided over 45,000 seedlings in 2017 and undertook engagement session with communities regarding the importance of indigenous trees.

We have installed 760 improved cookstoves in homes, in Kenya. Saving aproximately 1500 tonnes of carbon and increasing household health benefits, reducing the amount of fuel required by approximately 56%, for employees to cook and warm households. The project aims to float carbon credits for sale on the volunteer market in 2018.

WasteReducing waste and thinking about how the waste we generate can be reused within our businesses.

Total carbon use

Total Scope 1 Emissions



Intensity**

32,872

15,467

16,645

9,160

0.00013

Carbon use (t CO2e) 2013 2016 2017* 2017 v 2013

(excluding Damin)

42,893

13,130

18,571

11,192

0.00016

82,374

11,999

59,424

10,951

0.00029

24%

-23%

8%

19%

21%

CarbonCompanies are now facing mounting pressure from consumers, shareholders, governments (both nationally and international) and staff to effectively address climate risk.

(GRI: 306-2, 305-1, 305-3, 305-4)


(Waste to landfill)

Finlays Beverages .............. -100%

Finlays Extracts & Ingredients .......... -59%



(Scope 1 & Scope 2)

Finlays Flowers .................... -59%

Finlays Colombo .................. -18%


Total waste

Total landfill

Total waste recovered

Total waste recycled

Total waste reused

Total production (tonnage)

Intensity**

37,737,348

18,990,972

16,988,630

1,160,427

597,319

249,153,089

0.15

Waste use (tonnes) 2013 2016 2017*

45,264,265

12,346,456

30,744,328

1,645,929

527,552

273,140,323

0.17

87,016,445

9,049,185

36,636,956

6,173,038

35,157,266

281,966,191

0.31

12%

-57%

88%

38%

-33%

2%

9%




28


Empowered Communities

Create a positive, sustainable impact on communities.

Our licence to operate is dependent on the communities around us, socially, economically and environmentally. It is fundamental that communities are empowered to improve their own circumstances, rather than relying long term on outside agencies.

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29

USA

Finlays USA, Inc. formed a committee to initiate a volunteerism program in 2016, focusing on the topic of hunger. Our monthly food bank collections in 2017 have seen our employees contribute over 800 pounds (363kgs) of food, which we deliver twice a month.

In addition to food donation, the committee also gives their time to volunteer at a soup kitchen. In our Rhode Island facility, twenty-eight colleagues volunteer monthly in groups of 3/4 to prepare and serve lunch to members of the local community, serving an average of three-hundred people each time. Members of our New Jersey office volunteer at a local church, feeding 25-30 people each Saturday.

Although the programmess in each location are different, our team members are rewarded with the same feeling of accomplishment and warmness that comes from providing a valued contribution to the community.

In addition to our volunteerism programmes, we have a “Dress Downfor Charity” appeal during which our employees choose a different charity to receive donations each week. We collected US$7043 in 2017 anddonated the money to 27 different charities, including our ‘Charity StartsAt Home’ programme.

‘Charity Starts At Home’ is an internal initiative, funded by our USA employees through donating funds in ‘Dress Down for Charity’ the funds collected were matched by the company.

This programme helps employees who are having a temporary financial struggle by providing gift cards for a local market to help purchase food.

Colombo Next year marks 125 years of Finlays operations in Sri Lanka. Throughout the years Finlays has been committed to contributing towards the empowerment of the Sri Lankan community primarily in areas of education and improving health care facilities. We conduct an English language teaching programme for children of lower income. This programme has been in operation for the past eight years. Many children in the vicinity have benefited by improving their spoken English skills.

The Company provides stationery items to those in need and in 2017, 256 students of the Haldummulla Primary school were provided with their annual stationery requirement. Further to this, Finlays Colombo set up a fully furnished computer unit for the Baranankattuwa K.V. school situated in Puttalam with 342 students from Grades 1-10.

In April 2017 we completed the project on “school based interventions to control Dengue vector in the Gampaha district”. This was in collaboration with the University of Kelaniya, Sri Lanka. This project consisted of several awareness programmes and implementation of prevention methods to control mosquito breeding sites within and surrounding the schools. The programme was implemented in 30 schools.

Colombo completed its expansion of the Neonatal unit of the Colombo North Teaching Hospital at Ragama. The new expansion done by Finlays Colombo now provides four separate rooms for the unit with individual access to the main unit, easing patient congestion.

CommuniTEA in KenyaWithin our tea operations in Kenya, JFK houses employees and their family members, amounting to approximately 20,000 people. In 2017 we conducted several activities that were focused on capacity building and improving service delivery to our employees. To achieve this, our community and social workers carry out a number of key initiatives throughout the years.

This included running capacity building and awareness programmes for all employees, providing information and discussions on preventing gender based violence (GBV). We also looked to increase awareness of human rights and educate employees on life skills that would enable them to change behaviour and impart positive living values. The campaign’s aim was to increase community awareness of the availability of services and support for dealing with GBV. We held road shows and talks during international women’s day (IWD) and 16 days of activism against gender based violence.

Two events were run on the Day of the African Child (June), in schools and villages, focusing on increasing awareness on child protection and increasing the safety of children in our community. School campaigns were run to educate our children on child protection, sexual awareness and HIV. Nutritional assessment for all pre-school children is also carried out to children below the age of 5 years.

Our Kitchen Garden Programme continues to prove beneficial, providing skills development and tools to grow a variety of nutritive local vegetables and fruit, including fruit trees for shade. Employees are also taught how to cook the vegetables while maintaining all its nutrients. Through this the employees can supplement the household food basket.

30


Finlays provides direct employment for approximately 25,000 people globally, having an impact on local economies within our regions of employment. We strive to distribute economic value generated by each country’s resources, fairly. By having equitable distribution, we help to eradicate poverty, reduce social inequality and raise standards of living.

Our economic contribution includes: direct employment, buying from local, regional and global suppliers, alongside the distribution and retailing of our products. Whilst economic growth and development are key performance indicators within our business, our Group’s operations have clear sustainability objectives, echoing our commitment to creating a sustainable future. Working with communities to ensure skills development to benefit communities as well as ensure environmental protection.

In the year ending 31 December 2017, Finlays generated $546 million in economic value. The majority of this value was distributed through the course of our business to our employees, shareholders, suppliers and governments, as well as to local communities through our sustainability activities. In 2017, the economic value retained was $33 million and Finlays contributed US$2million to community investments.

Finlays work collaboratively with smallholders in many markets and various projects with farmers. We help provide them with an income so they can support their dependents and contribute to the development of the communities in which they live and where we operate.

In many cases, Finlays assists farmers with marketing activity, logistical support and essential farming expertise and good agricultural practice.

Direct economic value generated

Revenues

Revenues plus external interest, royalty income and proceeds from sale of assets

$546m

Economic value distributed

Operating costs

Costs of materials,

services and facilities

$380m

Employee wages and benefits

Cost of employees’ salaries and

benefits

$99m

Payments to providers of

capital

All financial payments

made to the providers of the

organisations capital

$9m

Payments to government

Tax paid including

remittance taxes and excise taxes

$23m

Community investments

Voluntary contributions

and investment of funds in the

broader community

$2m

Economic value retained $33m

*excluded from these figures are Aspen and Damin are included at 41% proportion

Economic ContributionCommuniTEA in Kenya (cont.)

The Finlays medical department conducts primary health care programs that aim at preventing disease. We have the wellness programs that are conducted quarterly within the dispensaries. Employees normally come for general check-up i.e. monitoring their sugar levels, blood pressure, family planning services and receive basic health information.

To ensure that female employees continue to care for their young ones after resuming work from maternity leave, JFK has established creches where children are cared for by caregivers. Mothers can take nursing breaks to breastfeed and bond with their children. Finlays meets the cost of maintaining the facility and paying the caregivers who look after the children.

Through the Finlays Charitable trust initiative, the local communities surrounding our area of operation have also been supported. Last year we constructed 4 science laboratories for 4 secondary schools, 2 libraries for 2 secondary schools, 2 classrooms for a secondary school and a multipurpose hall for a secondary school. We also constructed a maternity wing for 1 of our local dispensaries.

Essential Oils This innovative project plans to develop alternative livelihoods through the introduction of crop diversification with smallholders and co-operatives in Kenya. The pilot trial is a 3-year trial exploring new sustainable trade supply chain using UK Agritech strategy with Innovate UK. Innovate UK, provide public funding to support business led innovation in the agriculture and food sector, for over 6 years.

Our essential oils project is sustainably assessing growing opportunities and market development for the production of a range of essential oil crops, for two smallholder farmer groups in Kenya. This project is part funded by Innovate UK and is a partnership with Dudutech Kenya, University of Lincoln, University of Reading and Forum for the future.

The objective is to support more resilient livelihoods and aims to develop a variety of crops fit for market which could enable smallholders’ production (and income) portfolios to increase, be more balanced, robust and develop into long-term supply programmes. The current oils that are being piloted include Lavendum, Vetiver, Geranium, Rosemary, Lemon and Eucalyptus.

Economic value generated by regionEconomic evaluations and reporting are reported using US dollars since April 2017*.

200180160140120100806040200

Africa Asia & Middle-East

North & South America

UK

USD

(m

illi

on

s)

Sustainable Future

31

Sustainable Supply

Finlays will be 100% traceable, transparent supply to internationally accepted standards on tea and coffee by 2022.

Customers want to understand where the raw materials in their products have come from, who has supplied them, and the ethical and environmental standards under which they have been produced.

Supply chains are also under increased scrutiny from non-governmental organisations, government and the media. With every person now having a camera in their pocket and access to a worldwide audience, scrutiny of everything we do is the click of a button away.

32


To demonstrate transparency in our sourcing practices, we commit to providing responsible and traceable supply of all raw materials and influencing our supply chains through sharing best practice.

To be transparent, a business demonstrates behaviour that is honest and open about their sustainability and sourcing practices, goals and progress. Finlays believe we should move away from ‘having nothing to hide’, to proactively showing, sharing and proving we have nothing to hide.

Traceability is the ability to track any material or product through all stages of production, processing and distribution. It is important for product integrity and food safety.

Sustainable SourcingIn 2017, we began working towards establishing a Finlays Sustainable Sourcing Policy to ensure all our existing and new suppliers understand the standards we expect them to uphold and comply with. Our policy covers areas of existing and new legislation such as UK Modern Slavery Act as well as human rights in the workplace and environmental conservation and management acts.

To inform best practice for the suppliers in our supply chain, Finlays demonstrates assurance of responsible practices by auditing and certifying our farms and producer groups as well as our blending, trading and packing facilities. All our estates are 100% Rainforest Alliance Certified™ – this ensures our good practices are independently verified and marketable.

Plans for 2018

– Issue our Finlays Sustainable Sourcing Policy to all existing suppliers work with them towards compliance.

– Assess and certify more of our manufacturing facilities, focussing on Rainforest Alliance Chain of Custody certification and the Ethical Trade Initiative Base Code.

– Standardise our traceability practices and explore options for innovative solutions to traceability.

Finlays recognises that modern slavery as an issue has become increasingly visible, particularly in the UK.

As a business with both a history and an ethical framework of good employment practice, Finlays takes its commitments under the Modern Slavery Act very seriously and many of its existing initiatives, policies and procedures go beyond the minimum standards set out in the Act.

We have put in place measures to prevent, detect and manage incidences of modern slavery, and engaged with a number of stakeholders including the Ethical Trading Initiative (of which it is a Group-wide member) and Stronger Together: an organisation focused on raising awareness of and providing training for the prevention of modern slavery.

We have initiated a number of steps across the Group to ensure we go beyond mere compliance, including: risk assessments across our regions, develop informed actions plans, conduct training and develop and communicate best practice and Inclusion of modern slavery in our internal audit risk cycle.

Modern Slavery Statement

(GRI: 102-9; 102-12; 102-13)

Producer technical assistanceAs part of our commitment to ensuring responsible and traceable supply of products to our customers, we encourage smaller producers who supply leaf to our factories in Kenya and Argentina to work towards Rainforest Alliance certification. We understand the challenges this brings them, especially with regards to improving their agricultural practices and safeguarding themselves and their land from misuse of agrochemicals such as herbicides and fertilisers.

In Argentina, we support a number of small producers covering over 900 hectares of land with Rainforest Alliance group certification. We provide technical assistance to these producers throughout the year to ensure they meet the required standards of agricultural production and are continually improving. Technical Assistance is provided by our team of expert agronomists and includes training on safe use and storage of agrochemicals as well as good document management. We also supply producers with the agrochemicals they require to ensure they receive genuine and well-priced inputs.

Governance

33

Main BoardThe Main Board, which is tasked with organisational oversight and setting strategy, comprises three ExecutiveDirectors responsible for various aspects of the business, two shareholder nominated Non-Executive Directors, one of whom is the Chairman, and three Independent Non-Executive Directors.

Philippe de Gentile-WilliamsNon-Executive Director and Chairman

Guy ChambersExecutive Director – Group Managing Director

Julian RutherfordExecutive Director – Group Finance Director

Julian DaviesExecutive Director – Director Corporate Affairs

James Hughes-HallettNon-Executive Director

Stuart StrathdeeIndependent Non-Executive Director

David JohnstonIndependent Non-Executive Director

Christiane KuehneIndependent Non-Executive Director

The Chairman of the Board is Philippe de Gentile-Williams who is a Group Staff Director at John Swire and Sons Limited, the Company’s ultimate parent company.

Divisional BoardsEach Business region is overseen by either a statutory or a management board comprising senior executives and representatives of the Main Board.

Sri LankaIn Sri Lanka, the Group has two publicly listed companies in which it has controlling stakes. The Boards of these companies, in addition to the representation referred to above, also include a number of Independent Non-Executive Directors. They are fully compliant with corporate governance regulations applicable in Sri Lanka.

Internal auditThe Group has an extensive Internal Audit function which is monitored by a series of committees that report to a Group Audit Committee comprising of two Independent Non-Executive Directors and one representative of John Swire and Sons Limited.

In addition, the Group Managing Director, Group Finance Director and Director Corporate Affairs also attend the Group Audit Committee meetings together with the Group Internal Auditor and, as required, a representative from the external auditors, KPMG LLP.

Other committeesA number of functional committees are in place at both Group and Divisional level. These cover a range of issues including Health and Safety, Sustainable Development, and Human Resources.

Policies and proceduresA series of policies and procedures have been developed with the aim of making all employees fully aware of their responsibility for ensuring that the Group conducts its business in accordance with applicable laws and regulations. These include a Group Corporate Code of Conduct and a Whistleblowing Policy designed to ensure that good governance is across the Group. A series of guidance notes have been issued to employees on such matters as competition compliance, the UK Bribery Act, and the Modern Slavery Act. All relevant staff have been given appropriate training on these and other issues.

Each business region maintains a Risk Register which is updated at least twice per annum and the main board formally reviews the consolidated Group Risk Register annually.

Employee forumsThroughout the Group our employees have opted to use a number of different options to engage in this dialogue. This includes Trade Union recognition and also democratically elected worker forums. A variety of other internal communications vehicles are also used to facilitate interaction between management and employees, such as employee feedback survey, conferences, workshops, magazines and newsletters.

Operating companies– Argente SA– Aspen Enterprises, Ltd– Aspen Management Company, LLC– Casa Fuentes SACIFI– Damin International Holding Limted (49.5%)– Finlay Airline Agencies (Pvt) Limited– Finlay Beverages Limited– Finlay Cold Storage (Pvt) Limited– Finlay Extracts and Ingredients UK Limited– Finlay Extracts and Ingredients USA, Inc.– Finlay Hull Limited– Finlay Instant Teas (Pvt) Limited– Finlay Insurance (Brokers) (Pvt) Limited– Finlay Properties (Pvt) Limited– Finlay Rentokil (Ceylon) (Pvt) Limited– Finlay Tea Solutions (Hong Kong) Limited– Finlay Tea Solutions Colombo (Pvt) Ltd– Finlay Tea Solutions UK Limited– Finlay Teas (Pvt) Limited– Finlay Vietnam Limited– Finlays Colombo Limited (99.8%)– Finlays Linehaul Express (Pvt) Limited (50%)– Finlays Maldives (Pvt) Limited– Hapugastenne Plantations PLC (90%)– James Finlay (Blantyre) Limited– James Finlay (Guizhou) Tea Co., Ltd.– James Finlay (Kenya) Limited– James Finlay (ME) DMCC– James Finlay International Holdings Limited– James Finlay International Inc– James Finlay Limited– James Finlay Mombasa Limited– James Finlay Plantation Holdings (Lanka) Limited– Newburgh Green Teas (Pvt) Limited (54%)– Udapussellawa Plantations PLC (91.8%)– Xiamen James Finlay Trading Co. Limited

Legal form and governanceFinlays was founded in Scotland in 1750. James Finlay and Co. was a partnership until 1909 when a private company was incorporated as James Finlay and Company Limited before being floated on the Glasgow Stock Exchange in 1924. The Company was re-registered as a public limited company, and renamed James Finlay PLC in 1981. The Company was acquired by John Swire and Sons Limited in 2000 when it was renamed James Finlay Limited, the Company is now a subsidiary of Finlay Group Limited which in turn is a wholly-owned subsidiary of John Swire and Sons Limited.

(GRI: 102-5, 102-7, 102-13, 102-16, 102-18, 102-56)

34


With Swire’s 200th anniversary on the horizon, the time was right to set out to determine a new level of ambition for the Group’s environmental sustainability efforts. This is an opportune moment to future-proof the Swire Group for the next 200 years, and more.

The challenges the Swire Group face today range from resource scarcity to climate change. How we choose to respond to these challenges will define the future of Swire. In response, SwireTHRIVE was co-created by the Swire Group Sustainability Committee (SGSC), comprising the Sustainable Development Office (SDO) and representatives from all major operating companies.

SwireTHRIVE has been endorsed by Swire Pacific and John Swire & Sons’ Boards and focuses on environmental sustainability because the success of people, communities, and Swire itself depends on a thriving natural environment. The key issue areas of SwireTHRIVE are Carbon, Waste, Water, Sustainable Materials, Biodiversity, and Climate Resilience.

“As the Group enters its third century... new challenges will inevitably arise: alongside an abiding focus on nurturing and developing their own staff, on practical innovation and of course on commercial viability, our existing businesses must adapt to a world in which, quite rightly, everything that they do will be judged by its impact upon the environment and the community” Barnaby SwireChairman, John Swire & Son

John Swire and Sons’ aim is to create long term value for its shareholders. Achieving this depends on the sustainable development of its businesses and the communities in which it operates. The executive management of each company in which John Swire and Sons has a controlling interest should apply this policy in a way which is relevant to their business. Associated and joint venture companies are encouraged to follow this policy, as are our suppliers.

SwireTHRIVESwire has a long-standing commitment to ethical and responsible behaviour, sustainable growth, long-term focus, and shareholder value, which are all underpinned by strong values. Swire have always looked ahead and taken the right decisions for the long term and today. This approach is more relevant than ever.

(GRI: 102-44)

SwireTHRIVE strategy framework supports the Group-wide Sustainable Development Policy

In its operations, aim to:

– Reduce its carbon footprint by adopting industry best practices to improve energy efficiency, and by increasing the use of renewable energy.

– Turn today’s waste into a resource for tomorrow, contributing to the creation of a circular economy, where waste materials are no longer simply thrown away, but are retained and re-used as a future resource.

– Use water responsibly and sustainably and to protect its watersheds.

– Be a good steward of the natural resources and biodiversity under its influence and to identify and manage appropriately the potential adverse impact of its operations on the environment.

– Safeguard the health and safety of its employees and others with whom it interacts, with the ultimate aim of causing zero harm.

– Source materials responsibly and sustainably, including ensuring that its suppliers meet, and preferably exceed, the sustainability standards in its supplier guiding principles.

– Bring value to the communities in which it operates and respect their culture and heritage.

– Encourage its staff to engage actively in sustainable development matters at work and in the community.

– Monitor the company’s performance and report regularly.

JS&S Sustainable Development PolicyIndustry leadership:

To be leaders in sustainable development in the industries in which it operates.

Swire Group

35

SDGs and Strategy

The Sustainable Development Goals (SDGs), otherwise known as the Global Goals, are a global call to action to end poverty, protect the planet and ensure that all people enjoy peace and prosperity.

Building on from the Millennium Development Goals, and including new areas such as climate change, economic inequality, innovation, sustainable consumption, peace and justice, among other priorities. The goals are interconnected and company and organisation involvement is increasing.

The table below shows how the SDGs, GRI, SwireTHRIVE and Finlays Sustainability strategy align.

Finlays Sustainability Objectives

Swire Thrive / Swire Policy

Sustainable Development Goals (SDG)

GRI Disclosure

Protect and enhance biodiversity

Build lasting climatic resilience

Protect and enhance biodiversity

Use and manage water responsibly

Build lasting climatic reilience

Pursue long-term goal of decarbonisation

Use and manage water responsibly

Turn todays waste into tomorrow’s resource

Swire Development Policy

Swire CSR Policy

Turn todays waste into tomorrow’s resource

Source materials sustainably

304-1, 304-3, 304-4

403-1, 403-2

302-1, 302-3, 302-4, 303-1, 303-3, 305-1, 305-2, 305-3, 305-4, 305-5, 306-1, 306-2

102-7

102-9

102-11

Finlays is committed to creating a sustainable future.

It’s the only future we have.

James Finlay LimitedSwire House59 Buckingham GateLondonSW1E 6AJ

Email: [email protected]

www.finlays.net

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