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Alliance for Water Stewardship Comformity Assessment Report Prepared for Yunnan Dashan Drinks Co., Ltd.

Prepared by: SGS SGS Ref.: CN/CKG 2017021562

Version: 1 Date: 30th August 2018

This is a controlled document, which is subject to SGS document control procedures. It may not be reproduced in whole or in part without the express permission of SGS China

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REPORT DETAILS

REFERENCE CLIENT REFERENCE Lian Wang REPORT TITLE ALLIANCE FOR WATER STEWARDSHIP CONFORMITY

ASSESSMENT REPORT DATE SUBMITTED: 30th August 2018 CLIENT: Lian Wang

SHE Officer Yunnan Dashan Drinks Co., Ltd. T +86 (0) 871 6409 4931 Songmao Village, Qidian Town, Chenggong District, Kunming City, Yunnan Province, P. R. China https://www.dashanqy.com/ [email protected]

PREPARED BY: Jiansong Chang Scott Chen SGS-CSTC Standards Technical Services Co., Ltd. A-16F Century Yuhui Mansion No.73, Fucheng Road Beijing, CHINA 100142 Tel: +86 (0) 10 6845 6699 E-mail: [email protected]

SIGNED: Jiansong Chang Signed:

TECHNICAL SIGNATORY

Francesca Cerchia Signed:

STATUS FINAL DRAFT NOTICE This document is issued by SGS under its General Conditions of

Service accessible at http://www.sgs.com/terms_and_conditions.htm. Attention is drawn to the limitation of liability, indemnification and jurisdiction issues defined therein.

Any holder of this document is advised that information contained hereon reflects SGS’s findings at the time of its intervention only and within the limits of Client’s instructions, if any. SGS’s sole responsibility is to its Client and this document does not exonerate parties to a transaction from exercising all their rights and obligations under the transaction documents. Any unauthorised alteration, forgery or falsification of the content or appearance of this document is unlawful and offenders may be prosecuted to the fullest extent of the law.

July 27, 2018 [ALLIANCE FOR WATER STEWARDSHIP CONFORMITY ASSESSMENT REPORT]

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TABLE OF CONTENT REPORT DETAILS .................................................................................................................. 2

1 EXECUTIVE SUMMARY .................................................................................................. 4

2 SCOPE OF ASSESSMENT .............................................................................................. 5

3 STAKEHOLDER ANNOUNCEMENT AND CONSULTATION ....................................... 10

4 DESCRIPTION OF CATCHMENT .................................................................................. 12

5 SUMMARY OF SHARED WATER CHALLENGES ........................................................ 16

6 INDICATORS CHECKLIST ............................................................................................ 19

7 AUDIT FINDINGS ........................................................................................................... 42

8 SUMMARY ...................................................................................................................... 44

9 OPPORTUNITIES FOR IMPROVEMENT ....................................................................... 45

10 CONCLUSIONS AND RECOMMANDATIONS .............................................................. 46

11 REFERENCES ................................................................................................................ 47

APPENDIX 1 SGS AUDIT CHECKLIST ................................................................................ 53

APPENDIX 2 DASHAN ACTION PLANS RESPONSE TO FINDINGS ................................ 54


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1 EXECUTIVE SUMMARY The scope of services covers the conformity assessment of water use in compliance with the

AWS International Water Stewardship Standard (Version 1.0) for Yunnan Dashan Drinks Co.,

Ltd. (hereinafter referred to as “Dashan” or “the site”) located at Songmao Village, Qidian

Town, Chenggong District, Kunming City, Yunnan Province, P. R. China. The assessment has

been completed in compliance with the AWS Certification requirements, Version 1.0 dated July

2015.

Dashan was constructed in 2002, started operating in 2003, acquired by Nestlé Water (at 70%)

in 2010 and became a Nestlé Waters’ wholly-owned subsidiary in 2014. Dashan produces

mineral water, purified water and natural mineral water that are either packaged in bottles

(1350 ml, 330 ml and 550 ml) or HOD containers (HOD Home Office Delivery) of 18.9 l each.

The raw water used for the process is abstracted from 5 boreholes located on the site or in the

close vicinity.

On 11th-12th June 2018, SGS-CSTC Standards Technical Services Co., Ltd. (hereinafter

referred to as “SGS”) conducted the conformity assessment for Dashan’s facilities and

activities with regard to certification to the AWS Standard. A total of two findings were raised

during the course of the audit process, and they were all categorized as minor non-

conformities.

Dashan responded the findings raised with root cause analysis and action plans, and submitted

corrected documentation as evidence to successfully clear all findings raised in the audit.

Given the review of evidence provided and site visit inspections performed at Dashan, SGS

recommends that Dashan be awarded AWS Gold Certified status with a surveillance audit

interval of annual frequency.


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2 SCOPE OF ASSESSMENT The scope of services covers the conformity assessment of water use in compliance with the

AWS International Water Stewardship Standard (Version 1.0) for Yunnan Dashan Drinks Co.,

Ltd. in Chenggong District, Kunming City, Yunnan Province, P. R. China. The assessment has

been completed in compliance with the AWS Certification requirements, Version 1.0 dated July

2015.

Dashan is a wholly-owned subsidiary of Nestlé Waters which is situated between Songmao

and Malang Villages in Qidian Township. It is about 20 kilometers to the east of Kunming City,

the capital of Yunnan Province. Established in 2002, Dashan produces mineral water, purified

water and natural mineral water that are either packaged in bottles (1350 ml, 330 ml and 550

ml) or HOD containers (HOD Home Office Delivery) of 18.9 l each. The raw water used for the

process is abstracted from 5 boreholes (ZK1, ZK2, ZK3, ZK1bis, ZK2bis) located on the site

or in the close vicinity. The following Table 2.1 presents some basic information about the 5

boreholes.

Table 2.1 Basic Information of Boreholes

Borehole Reference

Year Constructed

Drilled Depth (m bgl)

Current Yield (m3/month)* Location

GPS Coordinates

X Y

ZK1 2003 298 6,312.1 Within the site 102°55′34.59″E 24°54′29.56″N

ZK2 2005 296 10,311.3 Outside the site 102°55′34.45″E 24°54′28.03″N

ZK3 2009 497 17,852.5 Outside the site 102°55′40.06″E 24°54′22.56″N

ZK2 bis 2012 450 20,716.2 Within the site 102°55′41.98″E 24°54′21.01″N

ZK1 bis 2012 395 10,106.3 Within the site 102°55′23.06″E 24°54′19.68″N

* Note: The statistical data in 2017 were used.

A pre-assessment for Dashan’s facilities and activities with regard to certification to the AWS

Standard was performed by SGS-CSTC Standards Technical Services Co., Ltd. (hereinafter

referred to as “SGS”) on 18th-19th January 2018. During the pre-assessment, SGS conducted

on-site audit covering production buildings, storage warehouses, administration areas, and


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employees’ accommodation, etc., personnel interviews and document reviews. The total of

twelve findings were raised during the course of the pre-assessment process. Dashan

responded that corrective actions will be taken to successfully clear all findings raised in the

pre-assessment before the commencement of conformity assessment.

On 11th-12th June 2018, SGS conducted the conformity assessment for Dashan’s facilities and

activities with regard to certification to the AWS Standard. The following Table 2.2 presents

our audit team, and the audit plan is attached as a separate document.

Table 2.2 SGS Audit Team

Audit Team Qualifications/Experience

Jiansong Chang Team Leader

AWS certified auditor, with more than 23 years experience in environmental impact assessment (EIA), treatment of wastewater, solid waste and hazardous waste, more than 5 years experience in performing environmental and social risk assessment in line with the IFC E&S, FSC FM and RTRS soy bean production standards.

Scott Chen Team Member AWS certified auditor, with 8 years experience in water balance testing, energy and water saving.

Guangxu Dai Technical Expert

Senior engineer of hydrogeology and engineering geology with more than 30 years experience in hydrogeology, engineering geology, water resources evaluation, conservation of water and soil, etc.

During the conformity assessment, we spent one day and a half on the inspection of Dashan’s

installations and activities in its workshops, as well as the personnel interviews and document

reviews at Dashan’s office. Another a half day was spent on the visit to Songmao Village and

Malang Village to interview stakeholders.

Dashan provided most of the requested supporting documentation as evidence whilst on site.

SGS provided initial feedback on the gaps between Dashan’s current management and the

level required by the standard during the closing meeting of the conformity assessment on 12th

June 2018.

The following Table 2.3 shows some representative pictures taken at the site.


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Table 2.3 Photos from Dashan Production Site

Signboard of Water Special Control Area Installed

by Dashan

Deep Well Room

Water Pipeline Installed by Dashan

Water Flow Meter Installed in Deep Well Room

Control Cabinet Installed in Deep Well Room

Hygrothermograph Installed in Deep Well Room

Daily Water Monitoring Record Kept in Deep Well

Room

Wastewater Treatment Facilities


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Sign Installed for the Outlet of Effluent Discharge

Drainage Ditch of Treated Effluent

Orchard Outside of Dashan Plant (responding to

local authority’s policy of returning cultivated land to forests)

WASH Facilities Installed in Employees' Dormitory

HOD Drinking Water Provided for Employees

Free Sampling and Testing Service Provided to Songmao and Malang Communities Regarding

Their Drinking Water Quality

Information Disclosure Bulletin Board of Dashan’s Water Stewardship Installed at Songmao Village

Committee

Information Disclosure Bulletin Board of Dashan’s

Water Stewardship Installed at Malang Village Committee


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Information Disclosure Bulletin Board of Dashan’s

Water Stewardship Installed at the Entrance of Employees’ Canteen

Interview with Local Villagers by SGS Auditor

Internal Training for Employees Regarding Water

Stewardship

“WET Project” Initiated by Dashan to Raise Local

Students’ Aareness of Saving Water

Dissemination of Knowledge Regarding Health and

Safety of Drinking Water to Local Communities

Sharing Water Challenges in the Catchment with Local Communities

Store Installed in Songmao Village to Sell HOD Drinking Water to Local Villagers at Half Price

Store Installed in Malang Village to Sell HOD

Drinking Water to Local Villagers at Half Price


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3 STAKEHOLDER ANNOUNCEMENT AND CONSULTATION Following the AWS Certification Requirements, before the on-site conformity assessment,

SGS released a stakeholder announcement on 7th May 2018, which stated Dashan’s intention

to pursue AWS certification. Besides submitting to AWS for publication on the AWS website,

the stakeholder announcement was also posted on the information disclosure bulletin board

respectively installed at Dashan, Songmao Village Committee and Malang Village Committee,

and displayed on Dashan’s website: https://www.dashanqy.com/shownews_71.html.

SGS received no feedback information since the release of the stakeholder announcement.

Information Disclosure Bulletin Board Installed at Dashan

Information Disclosure Bulletin Board Installed at

Songmao Village Committee

Information Disclosure Bulletin Board Installed at Malang Village Committee


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Screen Shot of Stakeholder Announcement Displayed on Dashan’s Website

During the conformity assessment, we also interviewed officials from local village committees

and local villagers. They all showed their satisfaction of Dashan’s water stewardship.

The following Table 2.4 presents the personnel interviewed.

Table 2.4 Main Personnel Interviewed during Stakeholder Consultation

Organization Personnel Interviewed

Songmao Village Mr. Wenfei Shi, Deputy Secretary

2 villagers

Malang Village Ms. Yuping Zheng, Deputy Secretary

2 villagers

Dashan

Mr. Boyce Wu, Factory SHE Manager

Mr. Kang Gao, Manager of Quality Control Department

Mr. Xueshou Xia, Manager of Administrative Department

Ms. Lian Wang, in charge of AWS certification, and assistant to Factory SHE Manager

2 employees


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4 DESCRIPTION OF CATCHMENT Dashan is located in the Dianchi Lake Watershed which has the total catchment area of 2,920

km2. Regionally, the site is 17km away from the east of Dianchi Lake, and 7km far away from

the west of Yang Zonghai Lake.

Dashan is situated in a 6 km long V-shape valley consisting of 2 sections:

w a 3.5km long section oriented SEE to NWW; and

w a 2.5km long section oriented NNE to SSW and leading to the Songmao reservoir which

is downstream and about 4km far away from Dashan, and acts as the outlet of the valley.

The usual terrain slope in the area is 15-25�. The highest point in the region is the top of

Shanmao Mountain located at the north of the valley with the elevation of 2,253m, and the

lowest point is situated in the valley near the site with the elevation of 2,073m. Water in the

area flows into the downstream Songmao Reservoir. The elevation at the Reservoir mouth is

2,011m. The upstream discharge area is located 1.5km far away from the site with the

elevation of 2,040m.

Based on the geological and hydrogeological conditions in the region, the shallow and deep

groundwater flow areas are identified in the aquifer of Emei basalt. The shallow groundwater

flow area contributes Dashan’s main source of water. In addition, it is discovered that the

groundwater discharge area in the aquifer of Emei basalt appropriately matches the surface

water discharge area.

The following Figure 3.1 shows the location of the site.

On the regional scale, the geology of the Dashan area consists of an Upper Basalt Permian

age plateau (Emei formation) overlying a Lower Permian Limestone formation (Maokou

formation). The basalt formation stretches to the north and to the south of Dashan area and is

locally covered by Quaternary formations.

The boundary between the basalt and limestone formations is located around 3.5 km west of

Dashan. Around 1.5 km east of Dashan, the basalt formation is bounded by the Lufeng

formation which is a Jurassic mudstone and siltstone formation.

The thicknesses of the Permian Emei basalt and the Permian Maokou limestone range

respectively from 300 m to 950 m and from 100 m to 350 m. At the Dashan location, ZK1bis,

ZK2bis and ZK3 boreholes have intercepted the limestone formation during drilling at depths

ranging from 390 m to 460 m. The thickness of the Quaternary formations ranges from 6 to 23

m in ZK1, ZK2, ZK3, ZK1bis and ZK2bis.


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Figure 3.1 Location of Dashan

Dianchi Lake

Yang Zonghai Lake


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The main aquifer in Dashan area is the Malang Songmao hydrogeological unit, which consists

of the Permian limestone aquifer, the Emei basalt aquifer and the Quaternary formations

aquifer. It is bounded by the Jurassic siltstone formations to the east. The total area of the

Malang Songmao hydrogeological unit is 22 km2 with the recharge area is 11.15 km2.

The following Figure 3.2 shows the Malang Songmao hydrogeological unit.

Figure 3.2 Malang Songmao Hydrogeological Unit


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Based on the Water Resource Sustainability Assessment Report prepared by Antea Group in

July 2016, 32 wells and springs were identified for water supply in Malang Songmao

hydrogeological unit. They are used by the local people for drinking water and everyday use

water, by industries and for irrigation. Most of these water supply points are pumped below 10

m3/h on average.

The following Figure 3.3 shows the land use in the Malang Songmao hydrogeological unit.

Figure 3.3 Land Use in the Malang Songmao Hydrogeological Unit

Dashan


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5 SUMMARY OF SHARED WATER CHALLENGES

Dashan has identified general shared water challenges in the catchment which had been communicated with local communities and government

authority. The following table 4.1 elaborates the shared water challenegs.

Table 4.1.Detailed Shared Water Challenges for Dashan

No. Water Challenge Associated Public-Sector Agency Relevant/Rationale for Stakeholders Score Relevant/Rationale for Site Score Total

Score Priority

(1-4) Rationale for Prioritization

1 Continuous increase of water shortage

Kunming Water Affairs Bureau is promoting water-saving campaign involving the entire people, and regulations including “Regulations on the Administration of Urban Water Saving in Kuming”, “Regulations on the Administration of Urban Water Supply in Kunming” and “Penalty Measures for the Administration of Water Saving in Kuming” had been issued by local government. According to the regulations, a non-resident water user with its water consumption exceeding 100t/month shall apply for the planned water-use index. The exceedance shall be checked on a monthly basis, and the cumulative price markup shall be collected.

The water consumption exceeding natural recharge may dry up boreholes, and result in the difficulty for local residents to get water.

3 It may increase Dashan’s difficulty to get water, result in the stakeholders’ complaints, even its production suspended.

3 9 1 The scoring of stakeholders and Dashan is according to the CRP2.0 report, WRSA report and the discussion of AWS team. The total score comes from the arithmetic product of stakeholders and Dashan’s scores. The priority 1, 2, 3 and 4 are respectively defined in accordance with the total scores are 7-9, 4-6, 2-4 and 1-2.

2 The groundwater abstraction of water plants in the catchment may result in the falling of grounwater level which may greatly influence local residents’ water consumption.

Imposing restrictions on the water withdrawal of all water plants in the catchment, and coordinating the relations among local enterprises and communities.

It will increase the difficulty for local residents to get water.

3 Water quantity that can be exploited will decrease, and uncertainties will increase to Dashan’s business development in the future. Local residents may have more complaints about Dashan. Pressure may be brought to local government because of the conflict

3 9 1


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Score Priority


between Dashan and local villagers. The local government may release the pressure to Dashan.

3 The local climate changes may result in the uncertainties of rainfall.

N/A The shortage of water recharge in the catchment

3 Result in the shortage of water recharge in Dashan

3 9 1

4 Risk of water contamination (surface water/groundwater)

An Ecological Compensation Mechanism for Watercourses in the Dianchi Watershed is being promoted by Kunming Water Affairs Bureau. An upstream enterprise must pay ecological compensation for the treatment of downstream water environment in the Dianchi watershed if it fails to meet the targeted water quality or complete the annual tasks of wastewater treatment. A responsibility system for each river reach in the Dianchi watershed had been promoted since 2008, and the total of 59 monitoring sections had been determined for 34 rivers.

Influencing local residents’ normal irrigation. They cannot monitor water quality in time, and their health may be influenced because of poor water quality. Water-related diseases may be produced.

2 Untreated sewage discharged from nearby villages, and fertilizers and pesticides used by local farmers may contaminate groundwater and irrigation water, and then influence the quality of groundwater extracted by Dashan.

2 4 2

5 The increase of water demand because of urban development and planning

The local government is planning to build pipeline networks of tap water.

Inceasing the water shortage in the catchment

3 Inceasing Dashan’s water shortage

2 6 2

6 Water tariff (taxes and dues for water resources so as to control groundwater exploitation)

Based on the “Implementation Suggestions on Quickly Promoting Water Tarrif Reform of Water Conservancy Works” issued by Kunming People’s Government on 14 November 2016, the system of cumulative price markup for over-quota/planned quota will be

The water consumption will be restricted, and the water cost will increase.

2 The cost for grounwater withdrawl will increase, and the profit will decrease.

2 4 2


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Score Priority


implemented and the price of groundwater will be improved.

7 The local governments lack effective water governance and regulatory supervision

The strictest water resources management system had been implemented by Kunming People’s Government, assessment methods had been issued, and an index system with three "red lines" (referring to the control of water resources exploitation and utilization, the control of water-use efficiency and restriction on receiving capacity of water function areas) had been established.

Poor water governance in the catchment, and unfair and irrational water use.

1 Over-exploitation of underground water by other plants results in the unfair competition. Poor water governance in the catchment leads to the decrease of available water resources.

2 2 3

8 Higher requirements of water efficiency and wastewater discharge standard, and difficulty in obtaining water permit

Local policies/procedures related to the application for the establishment of sewage outlet and water license

Difficulty in obtaining pollution discharge permit and water permit may influence management, production and living.

1 Difficulty in obtaining water permit and cost increase of sewage treatment. Currently, the treated effluent can meet the class A limit of national standard including the discharge of phosphate. Sludge is used as manure by local farmers.

2 2 3

9 Poor disposal of waste including domestic garbage

Local communities are improving the construction of sanitation infrastructure including garbage station, public toilets, etc.

contaminating the environment and influencing local people’s living quality

2 Causing great difficulty for Dashan’s prevention of foreign matters and contaminating water resources

1 2 3


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6 INDICATORS CHECKLIST

6.1 CORE AWS INDICATORS

As per the requirement set out in the Section 2.11.3.1 of the AWS Certification Requirements, the following table 6.1 presents all the CORE

AWS indicators with the relevant reviewed evidence provided by Dashan.

Table 6.1 Evidence Reviewed by SGS Against Each CORE AWS Indicator

Indicator Details (Core) Evidence Reviewed/Document Reference

1 Leadership (core)

1.1 Leadership commitment on water stewardship As Dashan’s parent company, Nestlé is one of the first companies that signed the CEO water mandate at corporate level for global company. It endorsed the CEO water mandate in 2008. https://ceowatermandate.org/about/endorsing-companies/ REF001: Nestlé Corporate Business Principles (Chapter 10: Water Stewardship) REF002: Screen shot of “”Home > Creating Shared Value at Nestlé Waters > Water Stewardship”

1.1.1 Has the organisation signed and published a statement related to his water stewardship commitment that includes all of the elements listed in core criteria 1.1?

A water stewardship commitment to follow all the AWS core criteria has been signed by both Dashan factory manager and the Category Technical Manager of Nestlé Water GCR. The commitment has been displayed at Dashan’s website: https://www.dashanqy.com/shownews_74.html, and posted on the bulletin boards respectively installed at Songmao Village Committee, Malang Village Committee and Employees’ Canteen of Dashan. REF003: Signed Water Stewardship Commitment by Dashan Factory Manager and Category Technical Manager Water GCR REF004: Bulletin board installed at Songmao Village Committee REF005: Bulletin board installed at Malang Village Committee REF006: Bulletin board installed at Employees’ Canteen of Dashan


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1.2.1 Has the organisation elaborated, agreed upon and discloses a water stewardship policy?

A water stewardship policy is described in the Chapter 10 (Water Stewardship) of Nestlé Corporate Business Principles and disclosed through its website: https://www.nestle.com/aboutus/businessprinciples. REF007: Nestlé Policy on Environmental Sustainability (Nestlé Commitment on Water Stewardship)

2 Water challenges (core)

2.1.1 Site boundaries (map) REF008: Layout of Dashan Factory

2.1.2 Name and location of sources of water (immediate and ultimate) REF009: Name and Location of Water Sources and Effluent Discharge REF010: Water Resource Sustainability Assessment for Dashan developed by Antea Group (France) in July 2016 (Page 39, Section 5.2: Water Sources)

2.1.3 Name and location of effluent discharges REF009: Name and Location of Water Sources and Effluent Discharge REF010: Water Resource Sustainability Assessment for Dashan developed by Antea Group (France) in July 2016 (Page 42, Section 5.4: Facility Wastewater Management) REF011: Graphic sign installed at the outlet of effluent discharge

2.1.4 Description or map of catchment (s) REF012: Catchment map REF013: Hydrogeological Survey Report for Dashan developed by Golder Associates in July 2014 (Page 3-6, Section 2.0: Natural Conditions, and Section 3.0: Geological and Hydrogeological Conditions)

2.2.1 Identification of stakeholders and their water challenges (list of stakeholders, prior engagement and their water challenges)

REF010: Water Resource Sustainability Assessment for Dashan developed by Antea Group (France) in July 2016 (Page 67-70, Section 7.1: Identification of Main Stakeholders) REF014: Stakeholder Mapping updated in July 2017


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2.2.2 Site sphere of influence (how the stakeholders are within the sphere of influence).

REF010: Water Resource Sustainability Assessment for Dashan developed by Antea Group (France) in July 2016 (Page 78, Section 8.1: Identification of Vulnerabilities and Potential Impacts) REF014: Stakeholder Mapping updated in July 2017

2.3.1 Catchment data (catchment plan, public initiatives and/or public goals for the site)

REF010: Water Resource Sustainability Assessment for Dashan developed by Antea Group (France) in July 2016 (Page 13-17, Chapter 2: Institutional and Regulatory Context) REF015: List of Catchment Plans, Scenarios and Notifications updated in June 2018 REF016: Relevant articles of catchment plans, scenarios and notifications applicable to Dashan’s water stewardship REF017: Response to Finding 01MINCAR

2.3.2 Water governance for the catchment: Water legal and regulatory requirements, including water and water use rights

REF010: Water Resource Sustainability Assessment for Dashan developed by Antea Group (France) in July 2016 (Page 13-19, Chapter 2: Institutional and Regulatory Context) REF018: List of national and local applicable laws, regulations and standards related to water and water use rights updated in June 2018 REF019: Relevant articles of national and local water-related laws, regulations and standards applicable to Dashan’s water stewardship and their compliance assessment

2.3.3 Water balance for the catchment (surface water, ground water, other)

REF010: Water Resource Sustainability Assessment for Dashan developed by Antea Group (France) in July 2016 (Page 88, Section 8.2.3: Groundwater Balance) REF013: Hydrogeological Survey Report for Dashan developed by Golder Associates in July 2014 (Page 22-25, Section 5.2: Analysis of Water Balance)

2.3.4 Appropriate and credibly measured data to represent the physical, chemical and biological status of the site’s water source(s) by temporally relevant time unit, and commentary on any anticipated future changes in water quality

REF013: Hydrogeological Survey Report for Dashan developed by Golder Associates in July 2014 (Page 26-28, Section 6.0: Vulnerability Assessment) REF020: Quality Monitoring Scheme of Water Sources REF021: Internal Monitoring Report for Water Sources in 2016-2017


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REF022: External Monitoring Report for Water Sources and Products in 2016-2017 REF023: Test Report for Products in May 2018

2.3.5 Water related areas for the catchment: identification of the areas and description of current status and trends

N/A. REF010: Water Resource Sustainability Assessment for Dashan developed by Antea Group (France) in July 2016 (Page 30, Section 3.7: Protected Areas) Two important water-related areas including Guyue Spring and Yang Zonghai Lake were mentioned in the pre-assessment. During the conformity assessment, we further consulted local expert, officials of Malang Village Committee and Songma Village Committee and local villagers. Based on the interview, the Guyue Spring belongs to an artesian spring which was reported with yield before 2009. It has no high conservation and cultural value. In addition, according to the latest “Master Plan of Kunming Yang Zonghai Lake Reserve (Urban and Rural Master Planning of Yang Zonghai Lake) (2018-2035)”, the protection areas of Yang Zonghai Lake are classified in 3 levels: w Class I; w Class II; and w Class III. The Class I Protection Zone prohibits the construction of projects in no relevance to the lake protection. The Class II Protection Zone prohibits the construction of new wastewater discharge facilities or industrial projects. The Class III Protection Zone is a buffering area, which prohibits the activities which can potentially cause environmental pollution. Dashan is located 7km downstream from the Yang Zonghai Lake and in the Class III Protection Zone of Yang Zonghai Lake Reserve. Currently, the area where Dashan is located is defined as the “Demonstration Zone of Industrial Transformation”. Based on the information mentioned above, Dashan has little influence on the Yang Zonghai Lake Reserve.

2.3.6 Infrastructure for the catchment: available information on current and projected sufficiency of water to meet the needs of the catchment

REF010: Water Resource Sustainability Assessment for Dashan developed by Antea Group (France) in July 2016 (Page 72-73, Section 7.2.2: Irrigation; Page 74-75, Section 7.3.1: Water Public Supply and Section 7.3.2: Wastewater Management)


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2.4.1 Water data for the site: water stewardship and incident response plan

REF024: Water Stewardship Plan - Improvement Action List (Year 2017) REF025: YNDS-COP-SHE-007 SHE Operational Control Procedure REF026: YNDS-COP-SHE-019 Business Continuity Plan (BCP) REF027: BCP8.9- Emergency Response Plan for Water Interruption REF028: BCP8.10- Emergency Response Plan for Contamination of Water Resources REF029: BCP8.11- Emergency Response Plan for Water Pipeline Frozen REF030: Response to Finding 02MINCAR

2.4.2 Water data for the site: water balance (volumetric balance of water input and output)

REF031: Dashan-Watermapping-2017-4th-Quarter REF032: Dashan-Watermapping-2018-1st-Quarter

2.4.3 Water data for the site: water quality (direct and outsourced water effluent and also possible pollution sources)

REF033: Quality Monitoring Scheme for Process Water and Effluent REF034: Internal Monitoring Data for Effluent in 2017 REF035: External Monitoring Report for Effluent in January, February, March, April, May and June 2018

2.4.4 Water data for the site: water quality (inventory of chemicals stored on site that are possible causes of water pollution)

REF036: Name List of Chemicals (including their MSDS, storage,etc) REF037: BCP8.2-Emergency Plan for Chemical Leakage and Hazardous Waste REF026: YNDS-COP-SHE-019 Business Continuity Plan (BCP)

2.4.5 Water data for the site: On-site identified water related. Documentation identifying existing, or historic, onsite Important Water-Related Areas, including a description of their status

N/A. Refer to 2.3.5

2.4.6 Water data for the site: water related costs, revenues and quantification of social, environmental and economic value generated by the site to the catchment

REF038: Water-Related Costs Invested on Local Communities by Dashan in 2017 REF039: CRP 2.0 - Dashan 2017 Action Plan REF040: Costs for Wastewater Treatment and Operating Costs for RO


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2.5.1 Indirect water use: list primary inputs with their associated (annual) water use and, if possible, the origin of the water

REF041: Summary List of Suppliers of Raw Materials and Providers of Outsourced Service and Their Associated Water Risk REF042: Map of Water Risk Filter Produced by WWF

2.5.2 Indirect water use: list of outsourced services that consume or affect water quality. List estimated annual withdrawals and quality data.

REF041: Summary List of Suppliers of Raw Materials and Providers of Outsourced Service and Their Associated Water Risk REF043: Test Report for Wastewater in May 2018 (generated from the provider of bottle preforms) REF044: Test Report for Wastewater in May 2018 (generated from the provider of HOD container covers)

2.6.1 List of shared water challenges that affect the catchment REF045: List of Shared Water Challenges in the Catchment

2.7.1 Site risks and opportunities: list of site water related risks and actions to address the challenges

REF010: Water Resource Sustainability Assessment for Dashan developed by Antea Group (France) in July 2016 (Page 78, Section 8.1: Identification of Vulnerabilities and Potential Impacts) REF046: Yunnan Dashan Factory Water Risk Profile

2.7.2 Site risks and opportunities: list water related opportunities REF047: Dashan Factory Water-Related Opportunities

2.7.3 Site risks and opportunities: analysis of potential savings/value creation that could result from actions to address the challenges. Look at the actions in the context of water quality, water related areas, water governance, etc.

REF047: Dashan Factory Water-Related Opportunities

3 Stewardship strategy and plan (core)

3.1.1 Evidence of a system that periodically evaluates compliance with legal and regulatory requirements in criteria 2.3, together with names of those responsible.

REF048: Dashan Factory Legal & Regulatory Affairs Management Process REF049: YNDS-COP-SHE-003 Procedure for Identification of Laws, Regulations and Other Requirements and Compliance Assessment


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REF018: List of national and local applicable laws, regulations and standards related to water and water use rights updated in June 2018 REF019: Relevant articles of national and local water-related laws, regulations and standards applicable to Dashan’s water stewardship and their compliance assessment REF050: Corrective Action Plan for Water-Related Compliance Assessment in 2017

3.2.1 Stewardship strategy that contains water challenges within the catchment and risks for the site together with the site responses

REF051: Dashan Stewardship Strategy signed by Factory Manager REF052: Posting of Dashan Stewardship Strategy on Factory Bulletin Board REF047: Yunnan Dashan Factory Water Risk Profile REF048: Dashan Factory Water-Related Opportunities

3.2.2 Stewardship plan that contains:

a) List of targets (as per criteria 2.7) and how continuous improvement and best practice are achieved. The targets need to be SMART

REF053: Operational Master Plan RFE054: Water Stewardship Plan - Improvement Action List of Dashan Factory (Year 2017) (submitted to and registered at local water affairs authority)

b) Proposed actions to achieve the targets and names of individuals responsible for each

REF053: Operational Master Plan RFE054: Water Stewardship Plan - Improvement Action List of Dashan Factory (Year 2017) (submitted to and registered at local water affairs authority)

c) A budget for the proposed actions with a cost benefit analysis REF053: Operational Master Plan RFE054: Water Stewardship Plan - Improvement Action List of Dashan Factory (Year 2017) (submitted to and registered at local water affairs authority)

d) Links to the desired results in terms of risks/opportunities, water stewardship outcome and shared water challenges

RFE054: Water Stewardship Plan - Improvement Action List of Dashan Factory (Year 2017) (submitted to and registered at local water affairs authority)

3.3.1 Evidence of responsiveness and resilience to water related risks embedded in the site’s incident response plan

REF025: YNDS-COP-SHE-007 SHE Operational Control Procedure


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REF026: YNDS-COP-SHE-019 Business Continuity Plan (BCP) REF027: BCP8.9- Emergency Response Plan for Water Interruption REF028: BCP8.10- Emergency Response Plan for Contamination of Water Resources REF029: BCP8.11- Emergency Response Plan for Water Pipeline Frozen REF055: YNDS-COP-SHE-002 Procedure for Identification of Environmental Factors and Assessment

3.4.1 Evidence of notification to relevant catchment authority of the intention of the site to contribute to the objectives of the catchment plan


4 Implementation of the water stewardship plan

4.1.1 Evidence of compliance legal and regulatory requirements with regards to water balance, water management and Important Water related areas

REF056: Pollution Discharge Permit (with valid period from 30 March 2017 to 30 March 2020) REF057: Water Extraction Permit for Natural Mineral Water (with valid period from 10 January 2012 to 1 June 2019) REF058: Water Extraction Permit for Dring Water (with valid period from 19 March 2012 to 19 March 2022) REF059: Permit for Food Production (with valid period from 20 October 2016 to 19 October 2021) REF060: Permit for Production of Industrial Product (plastic packaging container for food) (with valid period from 29 March 2017 to 28 March 2022) REF061: Mining License (with valid period from 27 July 2012 to 27 July 2017) REF062: Corrective Action Request for Mining License REF063: Certificate of Water Balance Test issued by Kuming Planned Water Supply and Water Saving Office (with valid period from 31st March 2016 to 30th March 2019)


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REF019: Relevant articles of national and local water-related laws, regulations and standards applicable to Dashan’s water stewardship and their compliance assessment REF021: Internal Monitoring Report for Water Sources in 2016-2017 REF022: External Monitoring Report for Water Sources and Products in 2016-2017 REF023: Test Report for Products in May 2018

4.1.2 Evidence of efforts to provide safe drinking water and sanitation where stakeholders have an unmet human right

REF064: Dashan CRP 2.0 Tracking Tool updated on 1st November 2017 REF065: Sales of HOD water at sales shop respectively installed at Songmao Village and Malang Village by the May of 2018 REF066: Test Report for Drinking Water of Songmao Village in 2017 REF067: Test Report for Drinking Water of Malang Village in 2017 REF068: Recommendations to Songmao Village Committee for treating its non-compliance drinking water

4.2.1 and 4.2.2

Evidence that the site water balance targets are met. If in a water scarcity situation, also evidence that there is a continuous decrease in water withdrawals

REF069: YNDS-COP-QA-020 Procedure for Water Source Control REF070: Application Form of Planned Water Extraction and Use by Dashan in 2017 (submitted to local water affairs authority) REF071: Responsibility Letter for Planned Water Stewardship Target signed between Dashan and local water affairs authority in 2017 REF072: Records of Water Use over the Years REF073: Analysis of water use and action plan in 2017 REF063: Certificate of Water Balance Test issued by Kuming Planned Water Supply and Water Saving Office (with valid period from 31st March 2016 to 30th March 2019) REF074: Plaque of Water-Saving Enterprise issued by the People’s Government of Kunming Municipality in 2016


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4.2.3 Only in scarcity situations, evidence of no net increase in water scarcity

N/A. It is not a water scares catchment.

4.3.1 Evidence that shows that water quality targets are met REF020: Quality Monitoring Scheme of Water Sources REF021: Internal Monitoring Report for Water Sources in 2016-2017 REF022: External Monitoring Report for Water Sources and Products in 2016-2017 REF023: Test Report for Products in May 2018

4.3.2 For water quality stressed catchments only: evidence of continual improvement or best practice

N/A. It is not a water quality stressed catchment.

4.3.3 For water quality stressed catchments only and where the site wishes to increase effluent levels of water quality parameters: evidence of no net degradation in water quality in the catchment

N/A. It is not a water quality stressed catchment.

4.4.1 Evidence that targets for the Important Water related Areas have been met

N/A. There is no important water related areas identified in the catchment.

4.4.2 Where Important Water Related Areas is a shared water challenge, evidence that best practice are met.

N/A. There is no important water related areas identified in the catchment.

4.5.1 Evidence of the site’s on-going efforts to contribute to good catchment governance (evidence of coordination and cooperation with catchment management authorities)

REF075: Contact List of Local Catchment Management Authorities RFE054: Water Stewardship Plan - Improvement Action List of Dashan Factory (Year 2017) (submitted to and registered at local water affairs authority) REF076: Record of receiving the local water affairs authorities’ inspection on Dashan’s water stewardship on 22 March 2017 REF077: Attendance of a meeting for groundwater users held by Kunming Water Administration and Supervision Brigade on 26 December 2016 REF078: Records of communication with local government authorities including water-related departments


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REF068: Recommendations to Songmao Village Committee for treating its non-compliance drinking water

4.5.2 Only for weak water governance catchments: evidence of continual improvement/best practice

RFE054: Water Stewardship Plan - Improvement Action List of Dashan Factory (Year 2017) (submitted to and registered at local water affairs authority) REF068: Recommendations to Songmao Village Committee for treating its non-compliance drinking water

4.6.1 Evidence that site product suppliers and water related service providers have been contacted and are taking actions to contribute to the water stewardship outcomes

REF041: Summary List of Suppliers of Raw Materials and Providers of Outsourced Service and Their Associated Water Risk REF079: Training records for product suppliers and water related service providers REF080: Dashan factory water resources training materials REF043: Test Report for Wastewater in May 2018 (generated from the provider of bottle preforms) REF044: Test Report for Wastewater in May 2018 (generated from the provider of HOD container covers) RFE081: Sustainable Water Stewardship Action Plans for suppliers of bottle preforms and HOD container covers

4.7.1 List of actions to ensure WASH on site REF082: WASH List REF083: Procedure of Cleaning Water Pools and Water Tanks REF084: Dashan WASH Baseline Assessment REF085: WASH Self-Assessment Tool REF086: Dashan 5S Route Map REF087: Photo of Storage Room of HOD Drinking Water for Employees REF088: Receiving Record of HOD Drinking Water for Employees


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4.8.1 Evidence and list of key owners of the water infrastructure and content of message that has been conveyed related to the site risks and shared water challenges

RFE054: Water Stewardship Plan - Improvement Action List of Dashan Factory (Year 2017) (submitted to and registered at local water affairs authority) REF068: Recommendations to Songmao Village Committee for treating its non-compliance drinking water REF078: Records of communication with local government authorities including water-related departments

5 Evaluation (core) “against the actions taken in the implementation of the plan”. Expectation of such an evaluation at least annually. For the first implementation, look for evidence that these indicators are included in the plan.

5.1.1 Post implementation data and discussion on performance (water risk)

REF039: CRP 2.0 - Dashan 2017 Action Plan REF064: Dashan CRP 2.0 Tracking Tool updated on 1st November 2017 RFE054: Water Stewardship Plan - Improvement Action List of Dashan Factory (Year 2017) (submitted to and registered at local water affairs authority) REF038: Water-Related Costs Invested on Local Communities by Dashan in 2017

5.1.2 Total amount of water related costs, cost saving and value creation with regards to the actions of criteria 3.2

REF064: Dashan CRP 2.0 Tracking Tool updated on 1st November 2017 RFE054: Water Stewardship Plan - Improvement Action List of Dashan Factory (Year 2017) (submitted to and registered at local water affairs authority) REF038: Water-Related Costs Invested on Local Communities by Dashan in 2017

5.1.3 Updated data for indicator 2.4.7 on catchment shared value creation

N/A. This is the initial assessment.

5.2.1 Evidence of evaluation of water related emergencies and extreme events (effectiveness of preventive and corrective measures) and inclusion of lessons learnt in the updated action plan

REF089: Notice of Adjusting Maximum Water Intake of Wells REF090: Maximum Water Intake of Wells


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5.3.1 Feedback and commentaries from stakeholders on the site water stewardship performance and factor input in the updated action plan

REF091: Investigation Report for Satisfaction of Dashan in 2017

5.4.1 Update of the plan with the inputs from indicators 5.1.1, 5.1.2, 5.2.1, 5.3.1. Update does not apply for the first implementation/audit

N/A. This is the initial assessment.

6 Disclosure and communication of performance (core)

6.1.1 Disclosure and public availability of summary related to the general governance structure of the site’s management with names of those accountable for compliance with water related laws and regulations

REF092: Screen shot of Dashan’s website REF004: Bulletin board installed at Songmao Village Committee REF005: Bulletin board installed at Malang Village Committee REF006: Bulletin board installed at Employees’ Canteen of Dashan

6.2.1 Disclosure of summary of site’s water stewardship results against the targets

REF093: Dashan Information Disclosure Report REF004: Bulletin board installed at Songmao Village Committee REF005: Bulletin board installed at Malang Village Committee REF006: Bulletin board installed at Employees’ Canteen of Dashan

6.3.1 Disclosure and public availability of efforts to address shared challenges and report on actions taken to help address these challenges and engage stakeholders, including public sector agencies


6.4.1 Document and make available a list any site water compliance violation together with the corrective action implemented to prevent further occurrence.

No regulatory violations occurred at Dashan to date


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6.5.1 Evidence of awareness related initiatives at site level with dates of communications and, if possible, level of awareness

REF094: Attendance list for training of water stewardship in July & November 2017 REF095: Pictures Taken during Training in November 2017 REF080: Dashan factory water resources training materials REF004: Bulletin board installed at Songmao Village Committee REF005: Bulletin board installed at Malang Village Committee REF006: Bulletin board installed at Employees’ Canteen of Dashan

6.2 ADVANCED-LEVEL AWS INDICATORS

SGS also conducted a benchmarking exercise for Dashan’s performance against the AWS Advanced-Level Criteria. The evaluation results are

presented in the following Table 6.2.

Table 6.2 Evidence Reviewed by SGS Against Advanced-Level AWS Criteria

Indicator Details (Advanced-Level) Evidence Reviewed/Document Reference Score

1 Leadership

1.3 Has the organisation initiated any action to further the AWS?

As Dashan’s parent company, Nestlé is an AWS member. http://a4ws.org/ REF096: Screen shot of AWS members

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1.4 Has the organisation committed to other initiatives that advance water stewardship?

As a drinking water factory, Dashan pays great attention to its water stewardship. It has been awarded the ISO 14001 certificate issued by SGS for its good environmental performance, in which water is listed as a “significant aspect”. REF097: ISO 14001 certificate (with valid period from 17 April 2018 to 16 April 2021)

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1.5 Is there a water stewardship commitment from the most senior executive of the organisation?

Nestlé is one of the first companies that signed the CEO water mandate at corporate level for global company. It endorsed the CEO water mandate in 2008. https://ceowatermandate.org/about/endorsing-companies/ In addition, a water stewardship commitment to follow all the AWS core criteria has been signed by the Category Technical Manager of Nestlé Water GCR. It has been posted on the bulletin boards respectively installed at Dashan factory, Songmao Village Committee and Malang Village Committee. REF003: Signed Water Stewardship Commitment by Dashan Factory Manager and Category Technical Manager Water GCR REF004: Bulletin board installed at Songmao Village Committee REF005: Bulletin board installed at Malang Village Committee REF006: Bulletin board installed at Employees’ Canteen of Dashan The commitment is also displayed at Dashan’s website. https://www.dashanqy.com/shownews_74.html

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1.6 Is there a commitment to assist with community water needs in time of stress?

A commit to directly assisting with community water needs in times of scarcity has been respectively signed by Dashan Factory Manager and the Category Technical Manager of Nestlé Water GCR. The commitment explicitly covers all AWS requirements. It has been publicly disclosed at Dashan’s website (https://www.dashanqy.com/index.aspx), Dashan factory, Songmao Village Committee and Malang Village Committee. Based on the article 8 of the commitment, Dashan respects the right of local communities including Songmao Community and Malang Community where Dashan is located to obtain enough safe water and sanitation. When the basic water needs of the communities cannot be met, we commit to modifying our water use to prioritize the needs of the communities above our business needs for water. If Kunming City issues a red alert of drought, and extreme water scarcity happening at Songmao and Malang Communities results in the failure to meet their basic water needs, we are willing, if we have access to water, to install a water station at the site for the convenience of local communities and provide 20 litres per person per day to the residents of Songmao and Malang Communities until their basic water needs are restored.

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REF003: Signed Water Stewardship Commitment by Dashan Factory Manager and Category Technical Manager Water GCR REF004: Bulletin board installed at Songmao Village Committee REF005: Bulletin board installed at Malang Village Committee REF006: Bulletin board installed at Employees’ Canteen of Dashan

2 Water challenges

2.9 Evidence of water data gathering beyond the standard requirements, especially in highly data deficient environments.

Dashan Water Stewardship and Water Saving Report issued in 2013 elaborated the gathering of more local water related data so as to better understand the aquifer. One important task is to collect rainfall data in the site area, especially the Malang Songmao hydrogeological unit where Dashan is located. Since no relevant data is available, Dashan established a small meteorological station in its plant in 2013, which can monitor rainfall, temperature, humidity, atmospheric pressure, average wind speed and mean wind direction on a daily basis. The meteorological data are used by Dashan to analyse the correlation between the rainfall and the ground water level. The analytical results can help Dashan to reasonably extract ground water. In addition, there are two communities, Songmao Village and Malang Village in the area where Dashan is located. Songmao Village uses a spring as their drinking water, and Malang Village uses deep borehole groundwater as their drinking water. Although sample facilities had been installed for the treatment of drinking water, the two villages don’t know whether their drinking water quality can comply with the national standards for drinking water quality because of testing data deficiency. Dashan entrusts an accredited lab (Yunnan Product Quality Supervision and Inspection Institute) to conduct a test of drinking water quality of Songmao Village and Malang Village on a yearly basis. The testing results showed that the total bacterial count of drinking water consumed by Songmao Village far exceeded its regulatory standard. In addition, coliform was detected. Besides submission of testing report and recommendations to Songmao Village Committee, Dashan also reported the testing results to local government authority and actively promote the construction of tap water network in the two villages. Dashan has brought the action of “active communication with, influence and support local government to introduce tap water network in the catchment” into its “Water Stewardship Plan - Improvement Action List of Dashan Factory (Year 2017)”, and the Plan has been submitted to and registered in the local government authority. The implementation of introducing tap water

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network in the catchment can not only improve local villagers’ drinking water quality, but also benefit the protection of groundwater resources. REF098: Dashan Water Stewardship and Water Saving Report, 2013 (Section 3.4: Water Resource Information) REF100: Statistics of Rainfall by Dashan REF101: Picture of Meteorological Station Established by Dashan REF066: Test Report for Drinking Water of Songmao Village in 2017 REF067: Test Report for Drinking Water of Malang Village in 2017 REF068: Recommendations to Songmao Village Committee for treating its non-compliance drinking water RFE054: Water Stewardship Plan - Improvement Action List of Dashan Factory (Year 2017) (submitted to and registered at local water affairs authority)

2.11 Site water related supply chain with indirect water use amounts and site efforts to date

Dashan has collected the annual indirect water use and the annual output of its supply chain including its suppliers of bottle preforms and HOD container covers, and assessed the indirect water use of its supply chain through the comparison with the Water Quota of Yunnan Province (DB53/T168-2013) issued by Yunnan Provincial Bureau of Quality and Technical Supervision in 2013. Based on the DB53/T168-2013, the water quota for the production of 1t plastic products (bottles, barrels) is 8 m3/t, and the water quota for the production of dyeing fabrics is 3 m3/100m. Currently, Dashan has two suppliers of bottle preforms, the water use of one supplier is 5.8 m3/t which is lower than the required water quota (8 m3/t), and another is 8.7 m3/t which is little higher than the required water quota (8 m3/t). The water use of the supplier of HOD container covers is 1 m3/100m which is lower than the required water quota (3 m3/100m). Dashan maintains the records of providing water stewardship trainings for its suppliers of bottle preforms and HOD container covers. Dashan helps them to collect national and local water-related laws, regulations and standards to ensure their compliance, and entrusts a qualified organization to test their effluent. In addition, Dashan assists them to develop a sustainable water stewardship action plan and is involved in the promotion of implementing the sustainable water stewardship action plan.

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REF041: Summary List of Suppliers of Raw Materials and Providers of Outsourced Service and Their Associated Water Risk REF042: Map of Water Risk Filter Produced by WWF REF079: Training records for product suppliers and water related service providers REF080: Dashan factory water resources training materials RFE081: Sustainable Water Stewardship Action Plans for suppliers of bottle preforms and outsourced service provider of washing HOD container covers REF043: Test Report for Wastewater in May 2018 (generated from the provider of bottle preforms) REF044: Test Report for Wastewater in May 2018 (generated from the provider of HOD container covers)

2.12 Site contribution to groundwater recharge and/or environmental flows restoration in coordination with relevant governmental agencies.

To identify its potential contributions to groundwater recharge or environmental flows restoration, Dashan has invited qualified companies to perform at least three water resource assessment reports in recent years including the Hydrogeological Investigation Report for Dashan’s Deep Wells ZK1-BIS and ZK2-BIS developed by Yunnan Institute of Geological Engineering Investigation and Design in 2012, Dashan Hydrogeological Investigation Report developed by Golder Associates in 2014, and Water Resource Sustainability Assessment Report developed by Antea Group (France) in 2016. The review of Dashan’s records showed that a face to face communication meeting was held with local government agencies such as water affairs bureau, economic development bureau and rural work bureau before performing the study so as to learn the industries and their types, the agriculture and its practice in the study area. Some historical data were also collected from local geological survey department. After completing the study, Dashan shared the results with local government agencies. According to the Water Resource Sustainability Assessment Report developed by Antea Group (France) in 2016, the recommended quantity of daily water intake was 2,400m3/d. Based on the recommended data, Dashan determined its maximum quantity of daily water intake was 2,300 m3/d. Meanwhile, effective measures were taken to monitor the groundwater level and the quantity of water intake. A flowmeter and a level gage had been installed for all boreholes. In addition, an alarm device to monitor the groundwater level was also installed for all boreholes. According to the conclusions and suggestions of the

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study, a CCTV inspection was regularly performed by Dashan to monitor the perfection of all boreholes. Based on the analytical results from 2013 to 2017, the groundwater levels are fairly static with very little variability. RFE101: Hydrogeological Investigation Report for Dashan’s Deep Wells ZK1-BIS and ZK2-BIS developed by Yunnan Institute of Geological Engineering Investigation and Design in 2012 REF010: Water Resource Sustainability Assessment for Dashan developed by Antea Group (France) in July 2016 REF013: Hydrogeological Survey Report for Dashan developed by Golder Associates in July 2014 RFE110: Record of meeting with local government agencies before performing the water resource sustainability assessment

2.13 Voluntary Social Impact Assessment for the site with emphasis on water

Dashan has been implementing CRP 2.0 program for many years. The CPR program evaluates Dashan’s potential social impacts and relevant mitigation measures have been taken. REF014: Stakeholder Mapping updated in July 2017 REF039: CRP 2.0 - Dashan 2017 Action Plan REF064: Dashan CRP 2.0 Tracking Tool updated on 1st November 2017

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4 Implementation of the water stewardship plan

4.9.1 Evidence of quantified improvements in water balance from site-set baseline date.

According to the national Norm of Water Intake for Beverage Processing (QB/T 2931-2008), the quantity of water intake for unit product is defined as three levels. The first level represents the advanced international level, the second level represents advanced domestic level, and the third level means the average domestic level. With regard to the production of mineral water, the three levels defined in the national Norm are 1.6 m3/t, 1.8 m3/t and 2 m3/t respectively. Based on Dashan’s records of water use over the years, the quantity of water intake for unit product in 2010 was 1.65 m3/t. To reduce its quantity of water intake for unit product, Dashan conducts its water balance on a quarterly basis and tries to find opportunities for improvement. In 2014, Dashan’s quantity of water intake for unit product successfully achieved 1.2 m3/t, a target defined by Dashan’s global technical group based on the analysis of Dashan’s reality, which is also lower than 1.6 m3/t, the first level defined in the national Norm. From 2014 to

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2017, Dashan’s quantity of water intake for unit product keeps around 1.2 m3/t, and it is 1.16 m3/t in 2014, 1.18 m3/t in 2015, 1.16 m3/t in 2016 and 1.20 m3/t in 2017. In 2016, Dashan invited a qualified third party to perform a water balance test. The test report was submitted to Kunming Planned Water Supply and Water Saving Office which organized an experts’ review meeting including the site visit to Dashan. Based on the results of experts’ review, Dashan was awarded a water balance testing certificate issued by Kunming Planned Water Supply and Water Saving Office on 31st March 2016, which mentioned Dashan’s test balance rate is 98.93%, which is higher than 95%, the requirement of the “General Principles of Water Balance Test in Enterprises (GB/T12452-2008)” issued by the General Administration of Quality Supervision, Inspection and Quarantine of the People’s Republic of China. According to the above regulation, the water balance test should be performed once every three years. Therefore, Dashan’s water balance testing certificate remains valid until 30th March 2019. In addition, Dashan is also named the “Water Saving Enterprise” by Kunming People’s Government in December 2016, and an honorary plaque was issued. REF063: Certificate of Water Balance Test issued by Kuming Planned Water Supply and Water Saving Office (with valid period from 31st March 2016 to 30th March 2019) REF072: Records of Water Use over the Years REF074: Plaque of Water-Saving Enterprise issued by the People’s Government of Kunming Municipality in 2016

4.9.2 Evidence showing that actions meet best practice expectations

Since 2014, the quantity of water intake for unit product in Dashan is lower than the first target level defined in the national Norm of Water Intake for Beverage Processing (QB/T 2931-2008). Based on the first target level of the Norm, the quantity of water intake for unit product is 1.6 m3/t, and the annually average water intake for unit product in Dashan is 1.216 m3/t in 2017. We also reviewed the quantity of water intake for unit product in the fourth quarter of 2017 and the first quarter of 2018, and the data are 1.23 m3/t and 1.25 m3/t respectively. In addition, Dashan is also named the “Water Saving Enterprise” by Kunming People’s Government in December 2016, and an honorary plaque was awarded. REF031: Dashan-Watermapping-2017-4th-Quarter REF032: Dashan-Watermapping-2018-1st-Quarter


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REF072: Records of Water Use over the Years REF074: Plaque of Water-Saving Enterprise issued by the People’s Government of Kunming Municipality in 2016

4.13 List of efforts to contribute to the development of regional industrial water related benchmarking and spreading best practice

Because of Dashan’s best practice in drinking water production, it is commissioned by Yunnan Provincial Administration of Quality and Technology Supervision to participate in the drafting of “Bottled (Barrelled) Drinking Natural Spring Water (Spring Water) Standard (DB53/118-2009, updated in 2015)”, which is a local mandatory standard and adopted in Yunnan Province. Dashan is the key drafting body of this local standard. RFE102: Bottled (Barrelled) Drinking Natural Spring Water (Spring Water) Standard (DB53/118-2009, updated in 2015)

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4.17.1 Evidence of completion of one of the initiatives listed under 1.4

Dashan has obtained the ISO14001 certificate issued by SGS on 17th April 2018, which remains valid until 16 April 2021. In addition, Dashan has developed a Water Stewardship Plan – Improvement Action List. Based on the document review, 3 improvement actions related to the reduction of water consumption and water saving had been fully implemented. REF097: ISO 14001 certificate (with valid period from 17 April 2018 to 16 April 2021) RFE054: Water Stewardship Plan - Improvement Action List of Dashan Factory (Year 2017) (submitted to and registered at local water affairs authority)

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4.18.1 List of actions taken to provide catchment stakeholders with access to off-site access to safe drinking water, adequate sanitation and hygiene awareness.

To improve local communities’ sanitation conditions, Dashan has helped the local residents to build garbage collection stations. Dashan also provides barrelled water and bottled water for local government authorities and primary schools for free with the total of 70 barrels every month. In addition, if buying drinking water at the sales shop respectively installed at Songmao and Malang Villages, local villagers can get barrelled water at a half-price discount. Dashan maintains all relevant records. REF038: Water-Related Costs Invested on Local Communities by Dashan in 2017 REF065: Sales of HOD water at sales shop respectively installed at Songmao Village and Malang Village by the May of 2018 REF103: Picture of sales shop installed at Songmao Village

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REF104: Picture of sales shop installed at Malang Village

5 Evaluation “against the actions taken in the implementation of the plan”

5.5.1 Review of the site water stewardship performance with executive team or board and provide evidence of meeting through minutes

Dashan has established an AWS executive team that is responsible for evaluating the site water stewardship performance. The factory manager is the team leader, and the team members consist of SHE manager, production manager, QA manger, HR/F manager, ENG manager and GA manager. Meanwhile, the regional water resource manager-Nestle AoA Water Technical and China Water BU SHE manager also provide support to Dashan’s executive team. An expert from the AWS China was invited to provide a training of the AWS standard on 3rd-4th July 2017, which covered the introduction of AWS standard and the gap analysis of Dashan’s water stewardship. Through the leading group’s discussion and analysis, Dashan identified the water resources challenges in the catchment, water risks and water-related opportunities. Dashan had also developed a documented water stewardship plan. In addition, a training of CRP 2.0 program and the AWS knowledge was provided to all employees respectively on 13th November 2017, 16th November 2017, 20th November 2017 and 24th November 2017. REF105: Dashan AWS Executive Team REF094: Attendance list for training of water stewardship in July & November 2017 REF095: Pictures Taken during Training in November 2017 REF080: Dashan factory water resources training materials

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6 Disclosure and communication of performance

6.7.1 Evidence of implementation of a programme for water education at catchment level and description of the programme

Dashan has organized and implemented Nestlé’s Project WET in local schools (https://www.dashanqy.com/news.aspx) and communities aiming to improve all participants’ water knowledge and enhance their awareness of saving water. Relevant documents and pictures were kept by Dashan. In addition, bulletin boards had been installed at local village committees to disseminate water-related knowledge and raise local people’s awareness of

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saving water. Dashan’s water stewardship process and contact information were also presented on the bulletin boards. REF106: Pictures of disseminating knowledge regarding health and safety of drinking water to local communities REF004: Bulletin board installed at Songmao Village Committee REF005: Bulletin board installed at Malang Village Committee

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7 AUDIT FINDINGS

Two minor non-conformities were raised during the audit process. They were considered partially meeting the AWS Core criterion requirement,

and some small adjustments were requested to make to the documentation in order to be considered fully compliant. The following table 7.1

shows the details of the minor non-conformities and required new information.

Table 7.1 Minor Non-Conformities Raised during the AWS Audit Process

No. Type Ref. Details Response by Dashan Relevant References

1 Minor Non-Conformance

01MINCAR Indicator 2.3.1 List of relevant aspects of catchment plan(s), significant publicly led initiatives and/or relevant waterrelated public policy goals for the site is required. Dashan had collected relevant catchment plans and prepared a list of water-related catchment plans. However, no aspects of the catchment plans related to Dashan’s water stewardship were identified. Especially for the following three catchment plans that are most related to Dashan’s water stewardship.

• Kunming Implementation Plan for the Prevention and Treatment of Water Pollution issued by the People’s Government of Kunming Municipality in 2016;

• Master Plan of Kunming Yang Zonghai Lake Reserve (Urban and Rural Master Planning of Yang Zonghai Lake) (2018-2035) issued by the Administrative Committee of Yang Zonghai Lake Scenic Area; and

• Master Plan for Kunming Municipality (2011-2020) issued by Kunming Planning Bureau.

On 20th June 2018, Dashan provided a corrective action plan for 01MINCAR, which consisted of root analysis, corrective actions, responsible person and implementation deadline. On 26th July 2018, Dashan provided the evidence of completing the corrective actions. Relevant articles of catchment plans, scenarios and notifications applicable to Dashan’s water stewardship had been identified, and a corresponding list was developed.

REF015: List of Catchment Plans, Scenarios and Notifications updated in June 2018 REF016: Relevant articles of catchment plans, scenarios and notifications applicable to Dashan’s water stewardship REF017: Response to Finding 01MINCAR


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No. Type Ref. Details Response by Dashan Relevant References

2 Minor Non-Conformance

02MINCAR Indicator 2.4.1 Copies of existing water stewardship and incident are required. Dashan’s YNDS-COP-SHE-019 Business Continuity Plan (BCP) consists of:

• BCP8.2-Emergency Plan for Chemical Leakage and Hazardous Waste;

• REF028: BCP8.9- Emergency Response Plan for Water Interruption; and

• REF029: BCP8.10- Emergency Response Plan for Contamination of Water Resources.

No emergency response plan for water pipeline frozen is included in the Business Continuity Plan (BCP). Dashan had developed the BCP8.11- Emergency Response Plan for Water Pipeline Frozen. However, it failed to incorporate the plan into its YNDS-COP-SHE-019 Business Continuity Plan (BCP).

On 20th June 2018, Dashan provided a corrective action plan for 02MINCAR, which consisted of root analysis, corrective actions, responsible person and implementation deadline. On 26th July 2018, Dashan provided the evidence of completing the corrective actions. Dashan had updated its YNDS-COP-SHE-019 Business Continuity Plan (BCP) and incorporated the BCP8.11- Emergency Response Plan for Water Pipeline Frozen into its BCP. The updated BCP had been reviewed and signed by the factory manager and all department managers.

REF026: YNDS-COP-SHE-019 Business Continuity Plan (BCP) REF029: BCP8.11- Emergency Response Plan for Water Pipeline Frozen REF030: Response to Finding 02MINCAR


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8 SUMMARY Based on the review of documents presented by Dashan, the interview with Dashan’s

managers and employees, the interview with local stakeholders, and the site reconnaissance,

Dashan has paid great attention to its water stewardship. A considerable quantity of effort and

work has been put into the preparation for the audit of AWS certification.

Two minor non-conformities were raised during the audit process. They were considered

partially meeting the AWS Core criterion requirement, and some small adjustments were

requested to make to the documentation in order to be considered fully compliant. Dashan

provided SGS additional information and documents after the completion of site visit to

ascertain its compliance to the AWS Standard. No further action was deemed necessary.

All evidence submitted to SGS in response to the findings was reviewed and evaluated for

compliance to the AWS standard. All actions were accepted as sufficient to demonstrate

compliance and the findings were cleared and closed.

In addition, according to the conformity assessment of Dashan’s performance against the AWS

advanced-level criteria, the total of Dashan’s cumulative advanced-level criteria scores is 64,

which is up to the AWS Gold level.


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9 OPPORTUNITIES FOR IMPROVEMENT This is the initial conformity assessment for Dashan against the AWS Standard, and more

attention is paid to the documented plan and implementation to date. Less focus was placed

on the evaluation of Dashan’s performance against the indicators as this was the first year of

operation under the intention of conformity to the AWS Standard. Therefore, it allows for many

areas for improvement going forward.

The future audits will additionally evaluate Dashan’s performance against the AWS Standard

indicators and how this is monitored and presented as compliance. Thus, SGS recommends

that Dashan develop practicable ways to monitor its performance against the AWS Standard

indicators, and keep relevant records in anticipation of future audits.


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10 CONCLUSIONS AND RECOMMANDATIONS Given the review of evidence presented and the site reconnaissance performed at Dashan,

SGS recommends that Dashan be awarded the AWS Gold Certified status with a surveillance

audit interval of annual frequency.


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11 REFERENCES REF001: Nestlé Corporate Business Principles (Chapter 10: Water Stewardship)

REF002: Screen shot of “”Home > Creating Shared Value at Nestlé Waters > Water

Stewardship”

REF003: Signed Water Stewardship Commitment by Dashan Factory Manager and Category

Technical Manager Water GCR

REF004: Bulletin board installed at Songmao Village Committee

REF005: Bulletin board installed at Malang Village Committee

REF006: Bulletin board installed at Employees’ Canteen of Dashan

REF007: Nestlé Policy on Environmental Sustainability (Nestlé Commitment on Water

Stewardship)

REF008: Layout of Dashan Factory

REF009: Name and Location of Water Sources and Effluent Discharge

REF010: Water Resource Sustainability Assessment for Dashan developed by Antea Group

(France) in July 2016

REF011: Graphic sign installed at the outlet of effluent discharge

REF012: Catchment map

REF013: Hydrogeological Survey Report for Dashan developed by Golder Associates in July

2014

REF014: Stakeholder Mapping updated in July 2017

REF015: List of Catchment Plans, Scenarios and Notifications updated in June 2018

REF016: Relevant articles of catchment plans, scenarios and notifications applicable to

Dashan’s water stewardship

REF017: Response to Finding 01MINCAR

REF018: List of national and local applicable laws, regulations and standards related to

water and water use rights updated in June 2018

REF019: Relevant articles of national and local water-related laws, regulations and

standards applicable to Dashan’s water stewardship and their compliance assessment

REF020: Quality Monitoring Scheme of Water Sources


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REF021: Internal Monitoring Report for Water Sources in 2016-2017

REF022: External Monitoring Report for Water Sources and Products in 2016-2017

REF023: Test Report for Products in May 2018

REF024: Water Stewardship Plan - Improvement Action List (Year 2017)

REF025: YNDS-COP-SHE-007 SHE Operational Control Procedure

REF026: YNDS-COP-SHE-019 Business Continuity Plan (BCP)

REF027: BCP8.9- Emergency Response Plan for Water Interruption

REF028: BCP8.10- Emergency Response Plan for Contamination of Water Resources

REF029: BCP8.11- Emergency Response Plan for Water Pipeline Frozen

REF030: Response to Finding 02MINCAR

REF031: Dashan-Watermapping-2017-4th-Quarter

REF032: Dashan-Watermapping-2018-1st-Quarter

REF033: Quality Monitoring Scheme for Process Water and Effluent

REF034: Internal Monitoring Data for Effluent in 2017

REF035: External Monitoring Report for Effluent in January, February, March, April, May and

June 2018

REF036: Name List of Chemicals (including their MSDS, storage,etc)

REF037: BCP8.2-Emergency Plan for Chemical Leakage and Hazardous Waste

REF038: Water-Related Costs Invested on Local Communities by Dashan in 2017

REF039: CRP 2.0 - Dashan 2017 Action Plan

REF040: Costs for Wastewater Treatment and Operating Costs for RO

REF041: Summary List of Suppliers of Raw Materials and Providers of Outsourced Service

and Their Associated Water Risk

REF042: Map of Water Risk Filter Produced by WWF

REF043: Test Report for Wastewater in May 2018 (generated from the provider of bottle

preforms)

REF044: Test Report for Wastewater in May 2018 (generated from the provider of HOD

container covers)


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REF045: List of Shared Water Challenges in the Catchment

REF046: Yunnan Dashan Factory Water Risk Profile

REF047: Dashan Factory Water-Related Opportunities

REF048: Dashan Factory Legal & Regulatory Affairs Management Process

REF049: YNDS-COP-SHE-003 Procedure for Identification of Laws, Regulations and Other

Requirements and Compliance Assessment

REF050: Corrective Action Plan for Water-Related Compliance Assessment in 2017

REF051: Dashan Stewardship Strategy signed by Factory Manager

REF052: Posting of Dashan Stewardship Strategy on Factory Bulletin Board

REF053: Operational Master Plan

RFE054: Water Stewardship Plan - Improvement Action List of Dashan Factory (Year 2017)

(submitted to and registered at local water affairs authority)

REF055: YNDS-COP-SHE-002 Procedure for Identification of Environmental Factors and

Assessment

REF056: Pollution Discharge Permit (with valid period from 30 March 2017 to 30 March 2020)

REF057: Water Extraction Permit for Natural Mineral Water (with valid period from 10 January

2012 to 1 June 2019)

REF058: Water Extraction Permit for Dring Water (with valid period from 19 March 2012 to 19

March 2022)

REF059: Permit for Food Production (with valid period from 20 October 2016 to 19 October

2021)

REF060: Permit for Production of Industrial Product (plastic packaging container for food) (with

valid period from 29 March 2017 to 28 March 2022)

REF061: Mining License (with valid period from 27 July 2012 to 27 July 2017)

REF062: Corrective Action Request for Mining License

REF063: Certificate of Water Balance Test issued by Kuming Planned Water Supply and

Water Saving Office (with valid period from 31st March 2016 to 30th March 2019)

REF064: Dashan CRP 2.0 Tracking Tool updated on 1st November 2017


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REF065: Sales of HOD water at sales shop respectively installed at Songmao Village and

Malang Village by the May of 2018

REF066: Test Report for Drinking Water of Songmao Village in 2017

REF067: Test Report for Drinking Water of Malang Village in 2017

REF068: Recommendations to Songmao Village Committee for treating its non-compliance

drinking water

REF069: YNDS-COP-QA-020 Procedure for Water Source Control

REF070: Application Form of Planned Water Extraction and Use by Dashan in 2017 (submitted

to local water affairs authority)

REF071: Responsibility Letter for Planned Water Stewardship Target signed between Dashan

and local water affairs authority in 2017

REF072: Records of Water Use over the Years

REF073: Analysis of water use and action plan in 2017

REF074: Plaque of Water-Saving Enterprise issued by the People’s Government of Kunming

Municipality in 2016

REF075: Contact List of Local Catchment Management Authorities

REF076: Record of receiving the local water affairs authorities’ inspection on Dashan’s water

stewardship on 22 March 2017

REF077: Attendance of a meeting for groundwater users held by Kunming Water

Administration and Supervision Brigade on 26 December 2016

REF078: Records of communication with local government authorities including water-related

departments

REF079: Training records for product suppliers and water related service providers

REF080: Dashan factory water resources training materials

RFE081: Sustainable Water Stewardship Action Plans for suppliers of bottle preforms and

HOD container covers

REF082: WASH List

REF083: Procedure of Cleaning Water Pools and Water Tanks

REF084: Dashan WASH Baseline Assessment


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REF085: WASH Self-Assessment Tool

REF086: Dashan 5S Route Map

REF087: Photo of Storage Room of HOD Drinking Water for Employees

REF088: Receiving Record of HOD Drinking Water for Employees

REF089: Notice of Adjusting Maximum Water Intake of Wells

REF090: Maximum Water Intake of Wells

REF091: Investigation Report for Satisfaction of Dashan in 2017

REF092: Screen shot of Dashan’s website

REF093: Dashan Information Disclosure Report in 2017

REF094: Attendance list for training of water stewardship in July & November 2017

REF095: Pictures Taken during Training in November 2017

REF096: Screen shot of AWS members

REF097: ISO 14001 certificate (with valid period from 17 April 2018 to 16 April 2021)

REF098: Dashan Water Stewardship and Water Saving Report, 2013 (Section 3.4: Water

Resource Information)

REF099: Statistics of Rainfall by Dashan

REF100: Picture of Meteorological Station Established by Dashan

RFE101: Hydrogeological Investigation Report for Dashan’s Deep Wells ZK1-BIS and ZK2-

BIS developed by Yunnan Institute of Geological Engineering Investigation and Design in 2012

RFE102: Bottled (Barrelled) Drinking Natural Spring Water (Spring Water) Standard

(DB53/118-2009, updated in 2015)

REF103: Picture of SAP installed at Songmao Village

REF104: Picture of SAP installed at Malang Village

REF105: Dashan AWS Executive Team

REF106: Pictures of disseminating knowledge regarding health and safety of drinking water to

local communities

REF107: Analytical chart of monitoring results of groundwater level in 2013-2018

REF108: Kunming Water Resources Bulletin in 2015


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REF109: Kunming Water Resources Bulletin in 2016

RFE110: Record of meeting with local government agencies before performing the water

resource sustainability assessment


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APPENDIX 1 SGS AUDIT CHECKLIST


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APPENDIX 2 DASHAN ACTION PLANS RESPONSE TO FINDINGS

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