B. Management measures and
operation indicators

Part I. Analyses for strategies, risks & opportunities | Part II. Company administration structure
Part III. Participation of stakeholders
| Part IV. Major policies and management syste
Part V. Achievement indicators and keynote report

Achievement indicators and keynote report
 
I. Economic achievement indicators and economic report
i. Management measures
ii. Performance indicators
 
Direct influence
 
Indirect influence
II. Economic achievement indicators and economic report
 
i. Management measures
 
ii. Performance indicators
III. Social achievement indicators and social responsibility report
i. Labor
Management measures
 
Performance indicators
ii. Human rights
Management measures
Performance indicators
iii. Society
Management measures
Performance indicators
iv. Product responsibility
Management measures
Performance indicators
 
II. Economic achievement indicators and economic report
i. Management measures

Target:
COSCO Group has set the guidelines of environmental protection as "comprehensive management, cherishing resource, protection environment" and "COSCO Group is committed to protecting environment and cherishing global resources, and supports and participates in ecological protection activities as a social liability undertaker to initiatively improve enterprises' environmental protection system."

Policies and regulations:
COSCO Group has issued the Guiding Suggestions for COSCO to Build up Thrift Enterprise and Implement Global Compact, for which subsidiaries of the group have established settlement solutions and implementation details, aiming to build the group into a thrift enterprise.

COSCO has introduced into the IS014000 Environmental Management Standard to establish its environmental management system. Major second-tier subsidiaries of the group have introduced into the IS014000 Environmental Management System. At the same time, all ship companies have introduced into the International Safety Management Code (ISMC) to establish their pollution prevention management system.

Organizational liabilities:
The Safety Supervision Sector is responsible for the environmental protection of COSCO. Each subsidiary has set up administrative sector for environmental protection. The environment management liability has been stipulated in the work standard and covered in the evaluation for employees.

All ships are operated under the Energy Conserving Law. The captain, the No.1 responsible person for the energy conserving, and chief engineer officer, the No.2, are supposed to study the rules of energy conserving in earnest, pay attention to each process of the energy conserving, and establish responsibility system. The energy conserving management system should be perfected to set up energy conserving incentive mechanism, which is beneficial to energy conserving, consumption decrease and economic efficiency improvement. The group encourages high-efficiency fuel and controls low-efficiency fuel. Measures are adopted for old-aged ships to ensure fuel heating, and replace high-efficiency fuel with low-efficiency fuel. Therefore the relative unification between responsibility and rights has been achieved.

Training:
Each year COSCO organizes obliged training for administrative executives of the environmental management system to update their knowledge. In 2005 the group has organized training on the implementation of the Global Compact, attracting 56 personnel from the management system.

Supervision:
COSCO has established its safety supervisor system to supervise ship companies' environmental management and ISMC operation. Shipping companies have conducted internal auditing for all owned ships on schedule, gathered unqualified problems found in the auditing, given analysis, found pervasive problems and made correction. These companies have tried to find problem through internal auditing, and make initiative self-adjustment and self perfection, which has ensured the normal effective operation of the system. COSCO Shipping and Qingdao Ocean Shipping have invited crews to join the internal auditing carried out by official organs of COSCO. The internal audit for both companies' ships was implemented by the official organs to ensure the quality. It was also a good training for crews, meanwhile the ship auditing quality has been improved increasingly, the communication between onboard and inland units was enhanced, and the auditing effect was elevated. In 2005 the group has organized two teams view and emulation examination teams for internal auditing to join the internal auditing of COSCO Shipping and Qingdao Ocean Shipping.

Certification:
COSCO's environmental management system has passed the certification of Det Norske Veritas. With the establishment of the Global Compact and sustainable development management system, the environmental management system has been adjusted and improved. The certification for subsidiaries' environmental management system is as follows:
Development of environmental management systems
of subsidiaries of COSCO Group

Unit ISO14000 ISMC International Safety and Anti-pollution Rules

COSCON (China Ocean Shipping)

It has established management system and has passed the certifications

It has established management system and has passed the certifications

Guangzhou Ocean Shipping

It has established management system and has passed the certifications

It has established management system and has passed the certifications

COSCO Bulk Carrier

It has established management system and has passed the certifications

It has established management system and has passed the certifications

Qingdao Ocean Shipping

It has established management system and has passed the certifications

It has established management system and has passed the certifications

Dalian Ocean Shipping

It has established management system and has passed the certifications

It has established management system and has passed the certifications

Xiamen Ocean Shipping

It has established management system and has passed the certifications

It has established management system and has passed the certifications

Hong Kong Ocean Shipping

It has established management system and has passed the certifications

It has established management system and has passed the certifications

China COSCO (Singapore)

It has established management system and has passed the certifications

It has established management system and has passed the certifications

COSCO Shipbuilding

It has established management system and has passed the certifications

---

COSCO Shipyard

It has established management system and has passed the certifications

---

COSCO Logistics

It has established management system and has passed the certifications

---

China Marine Bunker

It has established management system and has passed the certifications

It has established management system and has passed the certifications

China Ocean Shipping Tally

It has established management system and has passed the certifications

---

Boao COSCO Co., Ltd

It is establishing the management system and planning the certifications

----

COSCO Human Resources

It hasn't established management system yet

----

COSCO Finance

It hasn't established management system yet

----


Achievements:
Since 2001, based on the Port State Control, the U.S. Coast Guard has launched the solution of Qualship 21, quality shipping for the 21st century, to encourage ship companies to improve environmental protection, pollution prevention and security level. So far a total of 63 ships of COSCO Group have been honored the title of Qualship 21, accounting for 7.3% of all Qualships 21 in the world.

In the Port State Control, environmental indicators such as vessel pollutant discharge are an important indicator. COSCO Group's average detainment ratio is much lower than the average level in other regions. The detail is provided as follows.

Year

Number of checked ships

Detained ships

Average detainment ratio

COSCO Group

Tokyo MOU region

Paris MOU region

US region

1995 512 22 4.30% 5.93% 11.21% 6.55%
1996 624 25 4.01% 5.63% 10.70% 6.26%
1997 697 14 2.01% 6.41% 9.66% 7.12%
1998 708 11 1.55% 7.29% 9.06% 4.73%
1999 763 13 1.70% 7.18% 9.15% 3.37%
2000 990 6 0.61% 6.87% 9.50% 2.52%
2001 1136 0 0.00% 7.76% 9.09% 2.19%
2002 1382 1 0.07% 6.67% 7.98% 2.50%
2003 1245 1 0.08% 8.49% 7.05% 1.99%
2004 1374 6 0.44% 6.51% 5.84% 2.43%
2005 1086 4 0.37% 5.21% 5.92% 2.36%


China Maritime Safety Administration has introduced the "Safe & Faithful Ship" to drive Chinese shipping companies to enhance safety and pollution prevention. The ships under the administration of COSCO Group having won the title take a large percentage.

 

Total

COSCO

Percentage

2003 146 96 65.8%
2004 111 76 69%

(Left Certificate of Qualship 21)

COSCO Group has been paying attention to the investment in science and technology. During the Tenth 5-Year Plan period, the group has invested 1.55 billion yuan in science and technology as well as informationization. In addition to subsidiaries' investment in scientific and technological innovation as required, COSCO has set up special fund for scientific research. Each year the group will confirm the amount of expenditure according to the needs of R&D, and to carry out scientific research activities in the entire group.

During the period of the Tenth 5-Year Plan, COSCO Group has completed 226 new R&D projects, and gained 15 patented technologies, products and software with self-owned intellectual property. The group has hosted and participated in 6 national and industry standards and has won province and ministry-level science and technology awards for its 7 projects. In terms of initiative innovation and intellectual property, the group has turned many projects into productivity, improving environmental protection and safety capability and efficiency, and providing capability assurance for enterprise' sustainable development. These projects include the "Application and Promotion of New Technology of Electricity Control Timing, Revolving Flow Sprayer Cylinder Oil Injection", Ship Energy Conserving & Consumption Decrease Research", "Voyage Data Recorder", "R&D for Container Parts Series Products", "Application of Oil Liquid Supervision Technology in Prediction Repair of Ship Mechanism Equipment", "Research on NACKS Ship Cost Control System", etc.



 
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COSCO Group, October 2006