Environmental Accountability

As is the case with social accountability, environmental sustainability requires a commitment to continuous improvement. It is an area in which the goals are extremely fluid, given the escalating pace of environmental awareness and the resultant impact on work practices.

While SA8000 provides the Company with a globally measurable social standard, further work is being undertaken to identify an appropriate environmental standard that is applicable across our Group. Until such a standard is formally adopted, the Company's ability to measure its commitment to environmental improvement will be limited to the reporting of individual activities and actions. Additionally, the Company will report its carbon footprint.

It goes without saying that the Company works to all applicable environmental laws and regulations. Yet it is our belief that we can go further. This may involve the implementation of basic workplace initiatives such as recycling and a commitment to reduce waste, or it may include the building of complex infrastructure that leads to more energy efficient processes.

These tasks have historically been undertaken in isolation and have generally been driven by committed employees who, in their day to day jobs, have identified and applied more environment-friendly workplace techniques and applications. This style of grassroots employee activity has evolved as part of the culture of the Billabong group. It is a culture that is encouraged and supported at a management level, given this is a company that owes its heritage to its reliance on the natural elements.

Within Billabong International Limited, responsibility for the environment falls within the scope of the Company's directors and is identified as one of the eight primary functions of the Board. Operational responsibility rests with regional general managers who oversee a range of both in-house and third-party initiatives.

Initiatives range from ensuring suppliers meet applicable local laws, through to the education of designers in relation to environment-friendly materials and processes. As the designers then introduce more environment-friendly product into the Company's ranges, consumers will then dictate the speed with which it is accepted and embraced. As volumes for environment-friendly product increase, production costs could be expected to fall. This would be expected to lead to more competitive retail pricing which, in turn, could help drive further demand.