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Community Environment

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, an appropriate environmental standard that can be applied across the Group’s global operations is yet to be identified. Therefore, the Company's ability to measure its commitment to environmental improvement is limited to the reporting of individual activities and actions such as the annual calculation of 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 Board of Directors. 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 products into the Company's ranges, consumers will then dictate the speed with which they are 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.

Climate Change

Billabong has traditionally undertaken individual initiatives that, instinctively, are deemed to be beneficial for the environment. These may include support for environment groups, initiation or extension of recycling programs, reductions in the use of packaging materials or the greater use of more environment-friendly fabrics and fibres. In isolation, each project has absolute merit. However, the benefit of such projects and their contribution to the Company's impact on the environment is generally difficult to quantify.

In 2006, the growing global awareness of climate change and the shared global understanding of the need to reduce emissions challenged that position. In response to this, Billabong implemented a number of initiatives designed to better understand and analyse climate change risk, measure emissions output and provide the Company with a benchmark from which future improvement could be demonstrated. Central to this was the compilation of the Group's annual carbon inventory (see Carbon Footprint).

Carbon Footprint

Billabong International Limited chooses to undertake voluntary calculation and reporting of its global greenhouse gas inventory.

Prior to the 2007-08 financial year, the Group reported its greenhouse gas inventory according to guidelines set out in the Australian Greenhouse Office Factors and Methods Workbook (December 2006) and the Greenhouse Gas Protocol Corporate Accounting and Reporting Standard (GHG Protocol).

During the 2007-08 financial year, the Australian Government enacted the National Greenhouse and Energy Reporting Act 2007 (NGER). The NGER Act, which works in conjunction with the National Greenhouse and Energy Reporting Regulations 2008, provides a regulatory framework for the calculation and reporting of greenhouse gas emissions by Australian corporations. From 1 July 2008 all corporations captured by the Act must record the relevant emissions data in preparation for public reporting in the 2008-09 financial year. Corporations are required to comply with the Act if they have:

- operational control of a facility that emits 25 kilotonnes or more of greenhouse gases (CO2 equivalent), or produce or consume 100 terajoules or more of energy; or their corporate group emits 125 kilotonnes or more greenhouse gases (CO2 equivalent), or produces or consumes 500 terajoules or more of energy.

While Billabong International Limited is well under the thresholds for mandatory reporting under the NGER Act, the Company has chosen to comply with relevant sections of the Act in the interests of transparency and comparability. To ensure the accuracy and reliability of its data, the Company engaged audit firm Deloitte to review its footprint for both the 2006-07 and 2007-08 financial years.

The NGER Act covers Australian emissions only. It also covers Scope 1 and Scope 2 emissions only. As the majority of Billabong International Limited's revenue is earned in offshore markets, Billabong has chosen to apply the NGER Act to all of its global operations. Additionally, the Company has voluntarily applied elements of the Greenhouse Gas Protocol Corporate Accounting and Reporting Standard to capture known Scope 3 emissions. Therefore, the Company provides three separate calculations for its global greenhouse gas inventory. These are:

- As measured according to the NGER Act, the Company's preliminary carbon footprint for the 2008-09 financial year was 5026 tonnes of CO2 equivalent (up from 3780 tonnes of CO2 equivalent in the prior year).

- As measured according to the NGER Act, the Company's preliminary global carbon footprint for the 2008-09 financial year was 16,361 tonnes of CO2 equivalent (up from 13,483 tonnes of CO2 equivalent in the prior year).

- As measured according to the NGER Act and incorporating known Scope 3 emissions as defined by the Greenhouse Gas Protocol Corporate Accounting and Reporting Standard, the Company's preliminary global carbon footprint for the 2008-09 financial year was 28,111 tonnes of CO2 equivalent (up from 24,017 tonnes of CO2 equivalent in the prior year).

The global inventory covers all of the Group's owned and controlled operations in Australia, New Zealand, Japan, China, Singapore, Malaysia, Indonesia, Hong Kong, Korea, South Africa, the United States of America, Canada, Brazil, Chile, Peru, Argentina, Venezuela, the United Kingdom, Italy, Spain, Austria, Belgium, the Netherlands, Germany and France.

Comparisons to prior year

The introduction of the National Greenhouse and Energy Reporting Act 2007 (NGER), coupled with revisions to various emission factors through the 2007-08 financial year, necessitated the need to re-state the Group's prior-year carbon footprint for comparative purposes.

In the 2006-07 financial year, Billabong International Limited reported a global carbon footprint of 16,463 tonnes of CO2 equivalent as measured according to the Australian Greenhouse Office Factors and Methods Workbook (December 2006) and the Greenhouse Gas Protocol Corporate Accounting and Reporting Standard (GHG Protocol). The measure included Scope 1, Scope 2 and Scope 3 activities globally.

Application of the NGER Act guidelines to all global operations saw the 2006-07 carbon footprint re-stated to 15,583 tonnes of CO2 equivalent. Much of the decline related to the Group's retail operations in Japan and was caused by a recalculation of electricity usage per square metre of retail space. This followed the collection and application of more detailed data through the 2007-08 financial year.

The carbon footprint for the Group's Australian operations in the 2006-07 financial year was 4918 tonnes of CO2 equivalent as measured against the Australian Greenhouse Office Factors and Methods Workbook (December 2006). When re-stated applying the NGER Act guidelines, the footprint was 4865 tonnes of CO2 equivalent.

Direct comparisons based on the re-stated 2006-07 financial year data is as follows:

  • As measured according to the NGER Act, the Group's carbon footprint increased 4865 tonnes CO2-e at 30 June 2007 to 3870 tonnes CO2-e at 30 June 2008 and 5026 tonnes CO2-e at 30 June 2009. The increase in the carbon footprint as measured according to the NGER Act is primarily attributable to growth in retail doors and the duplication of head office facilities for part of the year.
  • As measured according to the NGER Act and applied across all global operations, the Group's global carbon footprint moved from 10,109 tonnes CO2-e at 30 June 2007 to 13,483 tonnes CO2-e at 30 June 2008 and 16,361 tonnes CO2-e at 30 June 2009. The increase in the carbon footprint as measured according to the NGER Act applied globally followed the addition of a number of new business units in both the 2007-08 and 2008-09 financial years.
  • As measured according to the NGER Act across all global operations and with the addition of Scope 3 emissions under the GHG Protocol, the Group's global carbon footprint moved from 15,588 tonnes CO2-e at 30 June 2007 to 24,017 tonnes CO2-e at 30 June 2008 and 28,111 tonnes CO2-e at 30 June 2009. The increase in the carbon footprint as measured according to the NGER Act and including Scope 3 emissions as identified in the GHG Protocol also related to the inclusion of new business units.

Based on each $1 million of sales revenue, the Group's carbon footprint:

  • lifted from approximately 14 tonnes of CO2-e in the 2007-08 financial year to approximately 16.7 tonnes CO2-e in the 2008-09 financial year as measured according to the NGER Act;
  • reduced from approximately 10 tonnes of CO2-e in the 2007-08 financial year to approximately 9.8 tonnes CO2-e in the 2008-09 financial year when the NGER Act is applied to all global operations;
  • reduced from approximately 18 tonnes of CO2-e in the 2007-08 financial year to 16.8s tonnes of CO2-e in the 2008-09 financial year when the NGER Act and the GHG Protocol (Scope 3) are applied to all global operations.

The Company continues to build its understanding of its impact on the environment and is pursuing a range of initiatives designed to reduce its overall carbon footprint.

Our Work In-house

Billabong International Limited undertakes a range of region-specific and brand-specific initiatives within its offices around the world. These range from one-off projects through to complete philosophical shifts in business practices.

At a workplace level, various environmental programs are implemented. These include recycling, the use of video conferencing in place of offshore travel, the phasing out of paper-based purchasing procedures, reductions in packaging and the inclusion of environmental performance targets in individual staff performance plans.

At a product design level, the Company continue to explore the use of new materials and fabrics that provide the ability to create more sustainable finished products. These include a growing use of organic cottons, the use of recycled stock for swing tags and the development of innovative fabrics such as the Group's eco-supreme suede that is made out of recycled plastic soda bottles.

Each of the above initiatives has obvious merit, yet the Company continues to explore ways to better benchmark and measure improvements in its environmental performance.

Be The Change You Want In The World

Be The Change You Want In The World is a philosophical challenge for people to live their life by example. In effect, it encourages individuals to proactively lead the change to a more responsible world.

Billabong has adopted Be The Change You Want In The World as the statement under which the brand's environmental and social strategies are grouped. It effectively serves as an information portal through which visitors to the Company's website can learn more about environmental and social initiatives and better understand the groups and charities supported by the brand.

Sustainable Products

Billabong has a proud history in the development of innovative and functional product for its target boardsports markets. This same commitment to improvement is applied by the Group's sourcing and design teams and has led to the testing and commercial production of a range of more environment-friendly apparel products. These include t-shirts made from organically-grown thread, t-shirt prints using water-based inks and boardshorts using a fabric made from recycled plastic soda bottles. Improved production techniques and a growing demand for these alternative products have seen them progressively introduced into the Company's product range. Importantly, these technologies are rapidly evolving and greater awareness is driving heightened demand.

The key technologies now in commercial production within the Group include:

Recycled materials

Billabong continues to participate in the trialing of recycled materials for use in various apparel products. One of the more unusual products that made it into mainstream production was the use of a 100% recycled polyester material made from old plastic soda bottles. Billabong uses the material, an exclusive fabric called eco-supreme suede, for a line of boardshorts that were introduced to the market in 2007.

Put simply, the creation of the fabric begins with the collection of used plastic drink bottles. The bottles are then each inspected and appropriate bottles have their caps and labels removed before being granulated. The small plastic flakes are then dried and, through a process known as polymerization, are made into a polyester fibre. The benefits of using such a fabric to develop apparel products can be measured on multiple levels, the most obvious being an easing of the pressure on landfill.

Approximately 10 plastic bottles are used in the manufacture of a single pair of boardshorts. This is calculated based on the weight of the plastic bottles and assumes an average weight per bottle of 36 grams. The top part of the bottle is removed at the start of the process, leaving about 23 grams of plastic. The recycled fabric weighs about 230 grams per yard and it takes about one yard of fabric to make a pair of boardshorts. Therefore, we conclude 10 bottles per pair of boardshorts.

Up to 30 June 2009, the Billabong Group had consumed an estimated five million used plastic bottles in the production of the eco-supreme suede fabric.

The recycled plastic bottle boardshorts are just one of a number of tangible examples of Billabong's move towards the development of recycled product that retains comparable quality and functionality as traditionally-made product.

Organic cotton

Cotton is a natural fibre, so the reference to organic cotton relates more to the way it is grown rather than the fibre itself. The organic cotton is grown using techniques that have a lower impact on the environment. This is achieved through the elimination of artificial pesticides and fertilizers, the use of systems such as crop rotation that help retain the integrity of the soil and the use of less water intensive strategies. In short, organic farming relies more on biological processes rather than chemical-based techniques to nurture and grow the cotton. For a harvest to be termed organic, a certification agency must verify that the correct growing techniques have been applied.

Beyond the growing and harvesting of organic cotton, there are further techniques such as the dyeing and printing of garments where environmentally-sensitive techniques can be used. These include the use of water-based inks and dyes, rather than synthetic or chemical-based techniques.

Products made using these technologies include t-shirts and jeans and they are each marketed under the Organics banner.

Retail

Billabong International Limited is increasingly applying more environment-conscious solutions within its own retail stores. One area of focus is electricity consumption, with the Group trialling various initiatives within its Australasian retail network. This includes a new store model that has reduced lighting consumption from up to 75 Watts per square metre to 24-25 Watts per square metre. Neon or fluorescent signage is also being replaced with LED systems, which draw significantly less power. Such initiatives should ultimately be reflected in reduced power consumption which, in turn, should lead to future reductions in the Group's carbon footprint.

Our support of Third Parties

Billabong International Limited undertakes a range of initiatives to encourage the preservation and enhancement of the natural environments that are touched by the boardsports lifestyle.

The Company has its roots in a surf-based culture and focuses much of its support activities around the conservation of the world's ocean environments. Billabong International pursues this objective through support of third-party organisations whose charters reflect this goal.

The groups supported include the global Surfrider Foundation, the Australian Marine Conservation Society and SurfAid International. This support extends across multiple international territories including Australia, Europe and North America. It ranges from direct cash contributions through to general promotion and awareness campaigns. To help promote general environmental awareness and foster a greater understanding of the work of the Company's environmental and social partners, there are a number of marketing initiatives undertaken globally. These include:

Design for Humanity

This is a charitable program undertaken globally by the Billabong Girls brand. It seeks to generate funds from the sale of limited edition product, with the profits from these activities directed to the Company's preferred environmental and humanitarian causes. Design for Humanity was created to allow Billabong to best utilise its resources to empower, encourage and promote awareness of various charities amongst the youth market and the industry at large. In addition to the sale of products, Design for Humanity initiatives may include traditional fundraising events and promotions. All activities are centred around the chosen charity, while at the same time celebrating fashion, music or art.

Project BLUE

Project Blue is a USA-based initiative established for the sole purpose of raising funds to support ocean and beach protection. The project is a partnership of surf industry participants, each of which has committed to a three-year involvement in the initiative. The brands each create limited and special-edition products, with a portion of the sale proceeds donated into Project Blue. The proceeds are then used to support the Surfrider Foundation.

Project BLUE was created in response to the declining state of the USA's coastal waterways and beaches and to help with their revitalization and protection for generations to come. According to the 2006 Surfrider Foundation 'State of the Beach Report', research shows a gradual decline in water quality, overdevelopment and beach erosion along US coasts. These issues continue to fatigue a natural resource that is essential to not only American popular culture and recreation, but the health and well-being of our surroundings.

To learn more about Project Blue you can visit www.betruetoblue.com