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1.Statement of the President
2.General Information Of COSCO
3.General information of the report
4.Basic profile of companies
implementing sustainable
development management system
5.Global Compact and sustainable
Statement of the President
The year of 2007 witnessed four major transformations of COSCO Group, including the transformation from periodical development to long-term sustainable development propelled by a scientific outlook on development, and the transformation from the hardware-oriented strategy to a software-oriented strategy, and so on. With ships of more than 50 million DWTs of carrying capacity in hands, COSCO Group managed to seize market opportunities, innovate in business philosophy and enhance lean management to further enhance its position as the second largest shipping enterprise in the world. In the year, the group improved its manufacturing capacity, achieved higher economic efficiency and made new progresses in capital operation. All its listed companies perfected their market positioning and managerial structure, gaining approvals from the international capital market. These improved COSCO Group's brand influences and industry appeal, and enhanced corporate cohesion. COSCO Group was listed in the Fortune Global Top 500 four years ahead of schedule, and its leading position in the international shipping, logistics and ship-building industries is universally acknowledged.

COSCO Group is well aware that in an era of economic globalization, advanced concepts and behaviors concerning social responsibility form an indispensable part of an enterprise"s core competitiveness. The ten principles of the United Nations Global Compact set the new standards for the evaluation of the sustainable development ability of modern enterprises, and the enterprises" ability to shoulder social responsibility and to profit from intangible possessions becomes essential to their development. The United Nations Global Compact has not only brought about changes in the global ideology and value concepts, but has also introduced new managerial philosophy into enterprises, revolutionized their business modes, prevented and controlled risks, improved efficiency and effectiveness, and provided the best practices for business management innovation.

COSCO Group has been attaching great importance to the integration of its social responsibility and development strategy. Since the Group became a member of both the United Nations Global Compact and the World Business Council for Sustainable Development (WBCSD), COSCO Group has further cultivated its cooperative spirits as an international enterprise and enhanced its management system for sustainable development by conforming to the ten principles of the United Nations Global Compact. While achieving rapid growth, COSCO Group has propelled the supply chain and related parties to fulfill their social responsibilities, the image as a good international corporate citizen. COSCO Group has put forward in the World Business Council of Sustainable Development the indicator system research in the sustainable development of global shipping industry together with Det Norske Veritas (DNV), leading the industry towards global sustainable development and contributing to the green shipping initiative.

The two sustainable development reports issued by COSCO have been widely applauded, and the COSCO Group Sustainable Development Report 2005 was chosen as a notable COP by the United Nations Global Compact, the first notable COP issued by a Chinese enterprise. However, an enterprise" commitment to the Global Compact and sustainable development goes beyond annual sustainable development reports. It is demonstrated by the continuous implementation of the Global Compact to promote sustainable development. To stick to the commitment, COSCO Group has incorporated sustainable development and social responsibility as part of its daily operation, making sustainable development and social responsibilities an indispensable part of it.

COSCO Group implemented several projects in 2007, establishing its role as a pioneer among the Chinese enterprises to fulfill the corporate social responsibility and the Global Compact. COSCO Group had:

allocated poverty-relief fund in Tibet and promoted the implementation of aid programs as a means to pay back to the society;

transported successfully the exhibits for the event of the Chinese Year in Russia and demonstrated COSCO Group's strength as a major state-owned enterprise;

developed new technologies, techniques and methods to cut energy consumption by a large margin;

adopted the cost-effective vessel speed to reduce fuel consumption and pollutant emission;

reduced vessel speed at U.S. ports to cut pollution and became one of the five shipping companies to enjoy preferential rate at U.S. ports;

and received the green flag award for environmental protection issued by the U.S. Port Authority of Long Beach for a third time.
  As far as I am concerned, COSCO Group boasted two highlights when fulfilling the Global Compact and performing social responsibilities in 2007. First of all, the Group established a sustainable development information management platform. The self-designed IT platform is the first of its kind in the world. It categorizes the contents in the Global Compact and the requirements of related parties into more than 500 indicators for management, and satisfies the needs for data collection, statistic analysis, report integration, information release and knowledge management, etc. The system adopts a comprehensive architecture with multi-layer automatic accounting, which realizes the management of sustainable development and overall risks, and forms risk database and basic indicator database. This first-of-its-kind information system is applauded by dozens of organizations including the global compact offices of the United Nations and China, and the GRI. The second highlight is that COSCO Group has planned to establish a long-term mechanism for the performance of the Global Compact and social responsibilities in accordance with the Guidelines for Global Compact Corporate Social Responsibility Management System, the GRI Guidelines for Sustainable Development, the Guidelines for Central Enterprises Comprehensive Risk Management and the Guidelines for Central Enterprises to Fulfill Social Responsibilities, and constructed a scientific and standard management system for sustainable development and ensured its effective operation. Based on the integrated system of quality environment and occupation safety, COSCO Group"s sustainable development management system focuses on sustainable development and risk management, adopts the Lean Six Sigma strategy, and realizes the reconstruction of business flows and managerial innovation. The system incorporates COSCO Group"s indicators for sustainable development into the production, operation, management and decision-making processes of the Group, and forms an indicator-based sustainable development management system in every post of the parent company and the subsidiaries. The system is highly praised for its comprehensive coverage of the interests of all the related parties. The mode and method COSCO Group adopts to carry out the Global Compact are held up and promoted around the world by the United Nations Global Compact as an example.

As a major state-owned enterprise, the responsibilities COSCO Group shoulders are fourfold: it shoulders the political responsibility to construct a harmonious society, the economic responsibility to secure and increase the value of state-owned assets, the legal responsibility to comply with all the laws, rules and regulations, and the productive responsibility to provide the society with high-quality products and services. COSCO Group will continue to fulfill the Global Compact, adopt the business philosophy and operation mode of the outstanding enterprises in the world, establish and optimize a comprehensive management system of social responsibility and sustainable development, develop and maintain the sustainable development information system, set new goals, indicators and evaluative mechanism for sustainable development, and carry out its social responsibilities step by step from a global viewpoint.

The COSCO Group Sustainable Development Report 2007 covers largely the same scope as does the Report 2006. It is complied according to the 2006 edition of GRI standards, and covers all the indicators of the COSCO Group. In 2007, COSCO Group expanded the number of subsidiaries taking part in the sustainable development management system from the original COSCO Group headquarters and 15 pilot units to COSCO Group headquarters and 20 subsidiaries. These subsidiaries make up more than 90 percent of COSCO Group?s major business as well as other industries. The COSCO Group Sustainable Development Report 2007, compiled according to the 2006 Global Reporting Initiative (GRI) Guidelines for Sustainable Development Report, combines the ten principles of the United Nations Global Compact and the special requirements for maritime companies from the International Maritime Organization, and satisfies the requirements in the Risk Management for Enterprises Directly under the Central Government and the Guidelines for Social Responsibilities of Enterprises Directly under the Central Government issued by the State-Owned Assets Supervision and Administration of China. More sustainable development indicators have been included in the management system and written in the Report 2007.

This Report is compiled according to the GRI Guidelines 2006. To ensure its reliability, COSCO Group has asked for supervision from the Global Compact Promotion Office of the China Enterprise Confederation, applied for third-party approval from the Det Norske Veritas and reported to GRI for grading evaluation.

June 25, 2008
Cosco 2008.09