18 December 2013

To our stakeholders:

I am pleased to confirm that The Soneva Group reaffirms its support of the Ten Principles of the United Nations Global Compact in the areas of Human Rights, Labour, Environment and Anti-Corruption.

In this annual Communication on Progress, we describe our actions to continually improve the integration of the Global Compact and its principles into our business strategy, culture and daily operations. We also commit to share this information with our stakeholders using our primary channels of communication.

Sincerely yours,
Sonu Shivdasani
Chairman and CEO

Soneva supports the Universal Declaration of Human Rights and respect the protection of human rights.

At Soneva we call our employees hosts as we recognize that our host form a key ingredient to our ongoing success. We are hosts to our guests and deliver our service with pride. It also creates a sense of ownership.

We share the Soneva Code of Ethics and Values with all our host’s when they join the Company and we constantly reinforce them through mandatory training programmes at our resorts and corporate office.

Soneva is committed to the ethical, moral and legal responsibilities of conducting business across the globe and as such the company has developed various policies to which our Hosts and our suppliers will honor and operate in accordance with. The company has specific policies which outline our position relating to discrimination, equal opportunities, harassment and local compliance.

Soneva has established a wide variety of policies and procedures that are designed to make sure human rights are protected.

Soneva has taken the following measures to prevent human rights violations in its work locations:
• A 360 degree performance appraisal that allow the hosts to give feedback on host performance
• Host survey is conducted on regular basis
• Suggestion box where New Idea Better Ideas are encouraged and reviewed by senior management
• Open door policy for the host to address issues with senior management
• Training sessions that include human rights issues
• Each host receive a Host Handbook
• Soneva truly believes in and strives to live by its Core Values. In order to ensure that all our practices, processes, policies and standards are in line with our stated Core Values we have established a Core Value Guardian Committee. The committee will be accessible to all Soneva Hosts. Hosts can bring to the direct notice of the Core Value Guardians any issues that they feel are in direct violation of Soneva Core Values however small they might be. The Core Value guardians will examine these issues in detail and come up with remedial measures.

Soneva’s Human Resources Team is constantly following up with our hosts to ensure their human rights are protected.
• Performance appraisals are done twice a year.
• On a monthly basis suggestions through our New Idea Better Idea programme is evaluated and implemented as seen fit.
• Incident reports are followed up as they occur
• Quarterly one to one interviews with up to 25% of our hosts by external management to discuss any matters that the host wishes to discuss, but specifically pertaining to how they feel about their workplace, their colleagues and the company management and to raise any issues that they have.
• Monthly meet the management sessions, where hosts have the opportunity to speak directly with the senior management about any issues that may affect them personally.
• Regular external Human Resources Audits are conducted at our resorts to ensure that all policies and procedures are being followed, monthly reporting is adhered to, host welfare standards are being met.

Soneva’s Host Handbook covers policies of hosts’ rights, compensation and responsibilities. It uphold the freedom of association and the effective recognition of the right to collective bargaining. Working at Soneva is based on a mutual agreement between Soneva and the hosts, where hosts are allowed to leave if they chose to do so. Under no circumstance is child labour allowed. One of Soneva’s core value is equality were hosts are not discriminated based on ethnicity, religion, age, sex, political view or disability.

Extensive and detailed policies are in place that relate to local compliance, discrimination, equal opportunities, and non-harassment. We as a company follow all local labour law requirements relating to host’s rights, compensation and benefits, in addition to which, the company offers many additional rewards and benefits based on host performance, loyalty, welfare and charitable activities.

All hosts receive competitive salaries as well as service charges. In addition, a variety of benefits are offered such as insurance, pension scheme, uniforms, laundry, transportation, meals and accommodation. Regular surveys are conducted in the countries we operate to ensure that our salaries are benefits are at the higher end of the competitive set benchmark. Our host’s receive 100% of service charge.

A host village is built at the resorts where the host can spend their spare time. The host accommodation is compared to a mid-range hotel in its self, the Human Resources team manage the maintenance and housekeeping of the host accommodation, and regular inspections are conducted to ensure preventative maintenance measures are enforced.

The host restaurant serves three nutritional meals per day. The target is to get 90% satisfaction of the host restaurant, which we are close to achieving, surveys are conducted monthly to monitor performance/quality and address any matters/suggestions that are raised.

The host village also has game rooms, football pitch (Soneva Fushi), volleyball court, gymnasium, TV salas, library and a little shop. At Soneva Kiri the hosts have their own swimming pool. We also offer our hosts various wellness activities and discounts in our resort Spa’s. All visiting practitioners who visit our resorts are required to offer free consultations/treatments to our hosts during their tenure at the resorts.

In 2013 we employed on average around 700 hosts in which 636 were at our properties. We have 100% compliance in working contracts.

Local Hosts
Great emphasis is put in order to provide local employment. We have a strong belief that local hosts provide the best service as they feel ownership and pride when guests come to their home.

In 2013 76% of our hosts were local from the country in which we operate in.

Gender Equality
The gender distribution of our host is 19% female and 81% male. We believe in gender equality and encourage women to work with Soneva.

There are significant differences in the gender distribution depending on our location.
In Thailand distribution is 36% female and 64% male, whereas in Maldives the distribution is 94% male and 6% female.
Host facilities

Soneva invests a great deal of resources into our hosts. Host development and training, host recognition, cross training and rotation and empowerment is an important part of how our teams operate.

As many of our resorts are located in remote areas where the hosts have to live on-site we have developed a host village concept including host accommodation, host restaurant, host library, relaxation rooms, game rooms and sporting facilities.

This is an important factor of ensuring that hosts enjoy working with Soneva.

Host food score
Quality in the host facilities is important. An ambitious target of achieving 90% satisfaction on host food score was set in 2009. On average 78% was achieved on host food score, which is below our target and five percent less than the year before.

Host Learning & Development
Host development and training is also important. In 2012-13 a total of 71,577 training hours were completed. Of this, 17% or 12,305 hours were dedicated for sustainability training.

Our Learning & Development team makes sure all hosts get an introduction in the Soneva SLOW LIFE philosophy and both local and worldwide environmental challenges and solutions. Specific sustainability training is provided for individual teams and hosts.

Soneva’s environmental performance is reported in Soneva Sustainability Report 2012-13, which is publically available on www.soneva.com.

Soneva Resorts has a total commitment to responsible business. Soneva’s core purpose is ‘To create innovative and enlightening SLOW LIFE’ and its core philosophy is SLOW LIFE – Sustainable-Local-Organic-Wellness Learning-Inspiring-Fun-Experiences.

These SLOW LIFE values position Soneva Resorts as a committed leader and pioneer, in providing sustainable tourism options for consumers, suppliers and partners. From the use of locally sourced sustainable building materials, to sourcing and purchasing quality food and products from local areas and communities, to using chemical free, organic choices wherever possible, all these are intelligent choices and initiatives, reflecting Soneva Resorts’ commitment to SLOW LIFE.
Soneva has sustainability as one of its five top goals of the company and reads: To lead the industry in environmental performance and to make significant improvement in our performance of this goal every year and ultimately become decarbonising.

Social & Environmental Conscience is the name of the programme which controls and drives Soneva’s SLOW LIFE principles. A Holistic Environmental Management Programme states our principals. Soneva Resorts measures its operational performance through its own Carbon Calculator, which then is audited by an independent third party. The Carbon Calculator measures our total carbon footprint which includes emissions from energy consumption (Scope 1 & 2) as well as emissions from air travel (including guest air travel), freight, ground travel, food, waste, paper and water consumption (Scope 3).

Total carbon footprint in 2012-13 was 46,098 tons CO2. Only 14% of these emissions came from energy consumption, which is the figure typically quoted by companies when measuring their carbon footprint. 78% of the emissions we measure came from guest air travel.

Soneva is focused on positive social and environmental interactions and supports The SLOW LIFE Foundation (www.slowlifefoundation.org) to handle a variety of programmes including the Social & Environmental Responsibility Fund, Carbon Sense Fund, Clean Water Projects, Care for Children and Restaurants Against Hunger. The programme is lead by the Social & Environmental Conscience who engages our SLOW LIFE team members (Marine Biologist, Permaculturist, Horticulturist, Human Resources, Engineering, Food & Beverage, Gardening etc.) to ensure that programmes are implemented throughout Soneva Resorts.

Soneva’s core philosophy of SLOW LIFE (Sustainable-Local-Organic-Wellness Learning-Inspiring-Fun-Experiences) is based around Agenda 21 and Greenhouse Gas Protocol. Main environmental concerns are focused on energy management, water management, waste management, biodiversity and social responsibility.

Decarbonising
Soneva Resorts’ vision is to become decarbonising through implementing programmes that will result in a net absorption of CO2. A Carbon Calculator has been developed to monitor this covering the full footprint of our operations including energy consumption, air travel, ground travel, freight, food, paper, waste and water.

The Carbon Calculator gives Soneva an in-depth overview of emissions and covers far more than most companies consider. For example, only 14% of Soneva emissions are from energy used at resort level, which is the common measure and one that can be directly influenced and improved. 78% of Soneva's carbon footprint is derived from guest air travel, emissions that cannot be controlled directly by our resorts' actions. To mitigate these emissions we established the Carbon Sense Fund. A carbon levy of 2% of room revenue is added to guest bills. These funds are then deployed in carbon mitigating projects, such as Soneva Forest Restoration project in Thailand, SLOW LIFE in Myanmar and Darfur Stoves Project in Sudan.

Soneva Fushi installed a 70 kW solar PV system in 2009. It produces 100,000 kWh per year. At the time of implementation it was the largest solar PV system in the Maldives. We will be expanding our solar facility by a further 600 kW in 2014 and invest in energy efficient equipment that will recue our diesel consumption by 40-50%.

Water Management
Soneva sources all its water sustainably and is 100% self-sufficient – 39% rainwater collected, 17% deep well and 44% desalination. In addition, Soneva Resorts have put in place water saving practices. Water saving shower heads, aerators in taps and push valves in heart-of-house areas are all examples of technologies introduced to reduce water consumption.

Waste Management
In total, 74% of Soneva waste is recycled through its Eco Centro Waste-to-Wealth programme, up from 27% compared to 2008/09 baseline. The overall carbon footprint of Soneva waste management is negative 69 ton per year, which means our recycling efforts result in more carbon avoidance than produced, hence decarbonising.

Food waste is composted and the fertile soil produced is reused in the garden. Wood waste is made into biochar and charcoal that is used at the resort. Glass is crushed and mixed in cement allowing us to make designer table tops.

Soneva’s room amenities such as soap, shampoo and body lotion are offered in ceramic reusable containers, instead of plastic wrapping. 150,000 plastic bottles are saved per year and practically eliminated through banning imported water and bottling own water in reusable glass bottles.

Vegetable Garden
Soneva employs perma-culturalists to ensure that indigenous species are protected and that nothing harmful is introduced to the natural environment. 7,500 m2 is set aside for vegetable gardens following organic principles growing 12,000 kgs per year. No artificial fertilizers are used but rather composting soil from our composting piles.

The purpose of these is to both improve our carbon footprint from freight of food items and to be able to serve fresh and nutritional food. This is particularly relevant for the Maldives, which rely to a large extent on imported food. It also improves our guest satisfaction. We have received numerous guest comments praising Soneva Fushi's rocket salad, as tasting far better than top city restaurants.

Biodiversity
Soneva has for many years hired a full time Marine Biologist who undertakes a range of activities such as monitoring the house reef, training hosts, taking guests on snorkeling trips and explaining about the marine life related Soneva.

Soneva Fushi through its Marine Biologist has since 2007 worked with 5 other resorts in the Baa Atoll to get Baa Atoll recognized as a UNESCO Biosphere Reserve. The status was achieved 2012.

The focus has been particularly on the protection of our disappearing shark populations in the atoll. Soneva Fushi has been actively campaigning against shark fishing in Maldives. By petitioning, educating and pressuring the government this goal was finally realised in March 2010 and the Maldives became only the second country in the world to implement an outright ban shark fishing.

At Soneva Kiri we started a Coral Restoration project in 2011 using metal frames with electrical current from solar panels. After two years the 1,850 transplanted corals over 40x12 metres have grown well (1 cm per month) and 62 different fish species have been counted.

Education
In 2012-13 a total of 71,577 training hours were completed. Of this, 17% was dedicated for sustainability training. Part of the mandatory training is a three day ‘Living SLOW LIFE’ programme educating the hosts on the SLOW LIFE principles and global environmental issues.

76% of hosts are local from the country in which we operate in. Several of the non-local are from neighbouring countries such as Sri Lanka, India and Bangladesh, which helps support these developing countries.

Soneva Nature Trip
The annual Soneva Nature Trip has become an influential awareness-raising event in the Maldives and part of the national education curriculum.

During a week-long excursion to different islands in Baa Atoll, around 100 students, mainly from the overcrowded capital Male, go snorkelling, bird-watching and tree-climbing, identify native plants, conduct waste audits in local villages and learn more about climate change and other environmental challenges.

2013 was the 16th anniversary and we passed 1,500 people being trained.

SLOW LIFE Symposium
Soneva Kiri hosted the 4th Soneva SLOW LIFE Symposium in 2013. The three day gathering of 30 top environmental names resulted in several concrete commitments being made. E.g. climate scientist Johan Rockstrom and environmental economist Pavan Sukhdev will aim to bring the Top 10 fishing companies together to discuss sustainable solutions for the fishing industry.
www.slowlifesymposium.com

Since its establishment in 1995, Soneva has had a total commitment to responsible business. It was, and still is, endorsed by the founders Sonu and Eva Shivdasani.

In addition to operate sustainably Soneva wants to have a positive impact beyond its operational boundaries. In 2010 The SLOW LIFE Foundation was established to streamline the work.

A perfect example of this is the decarbonising goal. Of the annual carbon footprint of 46,098 tons CO2 78% is attributed to guest flights. To address the carbon emissions not directly under our control we established the Carbon Sense Fund that invests in carbon mitigating projects.

• Soneva Forest Restoration Project has since 2011 planted 511,920 trees of 90 different local species using Framework Species Methodology (20-30 different species). A total area of 300 acres of degraded forest land is being restored in Northern Thailand, mitigating 255,000 tonnes of CO2.
• SLOW LIFE in Myanmar is the first Gold Standard carbon credit project in Myanmar, which will distribute energy efficient cook stoves in rural Myanmar. Benefits of the project to the local community are extensive including monetary savings for households, protection of biodiversity, training and employment opportunities and health benefits from significantly reduced indoor air pollution. All of this can be achieved while offering supporters an attractive return on investment.
• Darfur Stoves Project was established in early 2012. The project will distribute highly efficient cook-stoves to 125,000 families in the war-torn region of Darfur, Sudan, mitigating at least 350,000 tons of CO2 over the next seven years. In addition to the climatic benefits the Darfuri families will benefit from lower energy expenses, less time spent foraging for firewood in dangerous areas and less indoor air pollution, one of the biggest killers of women and children in Africa. To date 23,000 stoves have been distributed.
• A 1.5MW Wind Turbine mitigating 70,000 tons CO2 was built in Tamil Nadu, India in 2008.

In October 2008, Soneva Resorts banned imported bottled water and instead bottle its own Drinking Water enhanced with minerals bottled in reusable glass bottles. Globally, 780 million people lack access to safe drinking water and 2.5 billion to basic sanitation services. In recognition of this, Soneva gives 50% of the revenue generated from its water sales to The SLOW LIFE Foundation, which works with various charities to implement Clean Water Projects. In four years Soneva has helped over 600,000 people to have access to safe water. 488 projects in 53 countries have been implemented. Main implementing partners are Water Charity and Thirst-Aid.

Soneva wanted, however, to do more and through The SLOW LIFE Foundation it initiated and funded the establishment of the WHOLE WORLD Water campaign, which aims to bring the whole hospitality industry together to address global water challenges. The simple step is to follow Soneva’s example by bottling our own drinking water, selling it and contributing 10% of water revenues to clean water projects. The campaign was launched March 2013.

Soneva’s commitment to sustainability reflects our belief that a responsible business is the best business model.

Soneva has zero tolerance for corruption, bribery and extortion. We support the UN Convention Against Corruption and continue to make sure that our company and hosts follow the principles.

We have a specific policy relating to local compliance which clearly requires our suppliers and business partners to adhere to our principles.

We do not currently have a protocol in place to guide hosts in situations where they are confronted with extortion or bribery, but will implement a training programme to address this in 2014.

Internally, Soneva is maintaining a check and balance system over transactions. The records are maintained with proper evidence of expenditure. Each team member is responsible for its team budget and this is further checked and controlled by finance. Our accounts are then audited by each fiscal year end.

Soneva has not been involved in any legal cases involving corruption and bribery. Soneva does internal audits that are checked by the CFO and CEO. Soneva’s books and accounts are subjected to statutory external audit annually. These audits are used as one of the methods of identifying any suspicious payments which could be related to bribery or corrupt behavior. There has been no such incident reported in the period.