In 2013, Youth Development continued to be the focus of our CSR activities. This is reflected in the theme of this year’s report, “mapping a brighter future for our youth”, which shows our ongoing commitment to setting youth on the right path in life, with equal opportunities for a better education regardless of their social or economic circumstances.

In addition to youth development, we recognise that we have an obligation to manage resources such as water, energy and food wisely, reduce our carbon footprint and minimise the waste we generate. In this report, we describe the measures we took during the year to become more environmentally-conscious in our operations, such as our participation in WWF’s Low-carbon Office Operation Programme (LOOP).

Through the various programmes we offered in 2013, we benefited over 500,000 children, youths, their families and the physically challenged.

I am delighted that our efforts in these areas are becoming more widely acknowledged. During the year we were selected for inclusion in the Hang Seng Corporate Sustainability Index Series for 2013–2014 based on our performance in corporate responsibility and, in our case, for our “high environmental, social and corporate governance standards”. Although recognition such as this affirms that we are on the right track, we have not lost sight that we still have more to do to achieve our long-term CSR objectives.

Last year, we reported in accordance with the Global Reporting Initiative (“GRI”) G3.1 Guidelines in our CSR reporting for the first time. We have done so again this year, but with an enhanced level of disclosure and a more comprehensive perspective on our CSR efforts to our stakeholders. We also broadened our stakeholder engagement so that we are better able to align our long-term CSR strategies with the expectations of our stakeholders.

I would like to acknowledge everyone at Melco and our stakeholders in the community who participated in our CSR activities and programmes during the year, including our staff members and NGO partners. Thanks to you, we made significant progress in our sustainability journey in 2013, and I look forward to your continued support and participation in the year ahead.

Melco has published CSR reports on an annual basis since 2007. In 2012, Melco published its first report in accordance with the GRI G3.1 guidelines. It attained a C+ application level. For 2013, Melco has broadened its disclosure with the objective of fulfilling a B+ application level.

Included in this year's report are the significant economic, environmental and social impacts arising from the activities of Melco at our main office in Central, Hong Kong, as well as our operations in Macau, during the 2013 calendar year. It also discusses our stakeholder engagement process, provides stakeholder information, and discloses data that reflect our environmental performance.

This Report does not cover the economic, environmental and social performance data from Melco’s associate companies (Entertainment Gaming Asia Inc., Melco

Crown Entertainment)and subsidiaries (Jumbo Kingdom, MelcoLot) due to the different data collection systems they employ. In some cases, where certain sustainability initiatives, practices or measures undertaken by these companies are relevant to Melco’s sustainability activities, they have been included in this Report.

It should be noted that some quantitative data covering our environmental performance is from the June 1, 2012 to May 31, 2013 period in order to correspond with the data collected from our participation in the WWF Low Carbon Operation Programme* (“LOOP”), mentioned later in this report.

Melco’s previous CSR Report was published in April, 2013, covering the year 2012.

We believe that everyone in society deserves the right to reach their full potential. With our focus on Youth Development, we support the aspirations of all young people who may not have the opportunity to pursue a higher education with scholarships and other forms of assistance.

As an environmentally responsible company, we strive to make the most effective use of the resources we consume, the waste we generate and the carbon we emit. Wherever possible, we take action to mitigate the impact of our operations on the environment.

We also cooperate with NGOs in the community to create and deliver meaningful programmes that make a difference in people’s lives.

Within our own company, we treat our employees fairly and with respect. To help them develop as well-rounded individuals and become even more valuable members of our staff, we provide a wide range of educational and training opportunities.

We have built accountability and transparency into our corporate governance structure, and make every effort to communicate with our shareholders on our financial progress.

In 2013, we achieved our 2012 CSR goals for the year in respect of Youth Development, The Environment, Education, Corporate Governance and Stakeholder & Staff Engagement. (Please refer to Goals and Progress on page 27.)

As a leading company in the leisure and entertainment industry, our business carries significant impacts for our stakeholders, both within our organisation and the communities in which we operate.

These impacts have a bearing on people’s lives, society and the environment as well as our continuing success as a company. In order to understand our impacts better, we commissioned the Business Environment Council (“BEC”) to carry out a stakeholder engagement exercise.

Through this exercise, we learned Melco retains its reputation as “a responsible and caring company with good community investment.” We also received detailed feedback about specific issues that impact our stakeholders, which we can mitigate through our environmental and sustainability initiatives.

All of the feedback received has helped us shape the content of this year’s report and will guide our CSR committee in prioritising sustainability issues to be addressed in the future.

Impacts of our business

Community Engagement. Rather than providing one-off sponsorships to community investment programmes, stakeholders suggested that Melco should develop strategic long-term partnerships with NGOs that reflect its environmental, social and economic impacts.

Greater communication should be initiated between Melco’s senior executives and the Hong Kong community, particularly with regard to the company’s CSR initiatives.

As a multinational business, Melco should give greater attention to its international operations in the company’s CSR reports.

Corporate Governance. Melco has received the Corporate Governance Asia Annual Recognition Award every consecutive year since 2006, acknowledging Melco’s high standard of corporate governance.

Staff Engagement. Given the fierce competition for talent in the catering industry, Melco may wish to allocate more resources for talent retention and development.

Operational staff may not have sufficient understanding of changes in laws and regulations (e.g. the Trade Descriptions Ordinance), which could interfere with their daily work.

Due to time constraints, staff — especially employees of Melco’s subsidiaries and affiliates — may not find it feasible to participate in volunteer activities.

Impacts of the industry

The Environment. As the leisure and gaming industry has a significant impact on the environment, a Group-level governing body overseeing Melco’s environmental performance should be set up.

Although Jumbo Kingdom has joined WWF to provide sustainable seafood such as an alternative shark-free menu, Melco could do more to promote eco-friendly dietary habits. Melco should also step up efforts to reduce food waste and join the Hong Kong Government’s Food Wise Hong Kong Campaign.

Given its significant environmental footprint, Melco should continue to focus on issues such as energy use, effluent and wastewater discharge, waste management and the use of natural resources.

Gambling addiction. Melco should do more to alleviate gambling addiction-related problems.

Youth Development and Education. Melco should continue to address the problems of drug addiction and youth unemployment, especially among those who may not have the opportunity to receive higher education because they are less well-off.

Understanding the views of stakeholders is critical to aligning our CSR and sustainability agenda with the issues they have identified as being of material interest.

On an on-going basis, a dedicated staff member and email account allow stakeholders, including employees, to provide recommendations and comments to the highest governing body of the company. For this year’s CSR report, we appointed BEC to organise focus groups, telephone interviews and written questionnaires with internal and external stakeholders in October 2013. The purpose of these activities was to:

	Collect views and assess the expectations of stakeholders with regards to our CSR performance
	Identify and prioritise key sustainability issues
	Summarise stakeholders’ views and provide recommendations to further enhance our CSR performance and reporting status

For this year’s materiality assessment, the CSR reporting practices of Melco’s industry peers and the feedback of Melco’s stakeholders were taken into account. This approach is in line with the principle of materiality as recommended by GRI.

Stakeholder views help us decide which topics should be covered in our sustainability report. For this report, our stakeholders were asked to select topics they considered to be material from a list of 31 Indicator Aspects.

Six sustainability topics were located in the top-right hand quadrant of the plot. Accordingly, these topics are deemed to be material for Melco and are essential for disclosure in the CSR report. The six material topics include the following:

Young people in today’s society face ever-growing challenges but not all are as well equipped to deal with them. In 2013, our programmes inspired and gave new hope to youth and children dealing with serious illnesses or drug problems, to new migrants settling in Hong Kong and to deserving students who did not have the financial means to attend university.

Over 500,000 children, youths, the physically challenged and their families benefited from our programmes during the year.

Applicants for employment are considered regardless of their race, colour, religion, sex, marital status, age, national origin, and other considerations that are deemed inappropriate by local labour laws.

Selection criteria are based on job and competency requirements, which may include work experience, education and training, special professional knowledge and abilities, other job related factors and potential for development.

Available positions within the company will be filled, whenever possible, with qualified internal candidates prior to recruiting from external sources.

The Nomination Committee regularly reviews the structure, size and composition (including the skills, knowledge and experience) of the Board to identify individuals suitably qualified to become Board members and make recommendations to the Board on the selection of individuals nominated for directorship.

Scope and Objective
Hong Kong Quality Assurance Agency (“HKQAA”) has been commissioned by Melco International Development Limited (“Melco”) to conduct an independent verification of its 2013 Corporate Social Responsibility (“CSR”) Report (“the Report”). The Report states Melco’s CSR performance and efforts towards sustainable development for the period from 1st January 2013 to 31st December 2013. Since Melco participated in the Low Carbon Operation Programme (“LOOP”) organized by WWF, the environmental performance data is reported from 1st June 2012 to 31st May 2013 which is in line with the timeframe of LOOP.

The aim of this verification was to provide a reasonable assurance on the completeness and accuracy of the information stated in the Report. The Report covers the standard disclosures defined in the Global Reporting Initiative (GRI) Sustainability Reporting Guidelines Version 3.1 (G3.1) with B+ application level.

Methodology
The process applied in this verification was based on the current best practices such as the “ISAE 3000 - Assurance Engagements Other Than Audits or Reviews of Historical Financial Information”.

The Report was reviewed against the following criteria:

The verification process included reviewing of relevant documentation, interviewing responsible personnel with accountability for preparing the Report and verifying the selected representative sample of data and information presented in the Report. Raw data and supporting evidence of the selected samples were thoroughly examined.

Conclusion
It is the opinion of the verification team that the Report fulfills the B+ application level of the GRI G3.1 Guidelines.

The Report provides a structured, balanced and consistent representation of Melco’s CSR performance of 2013. Melco was found to have strong commitment to embrace CSR as their business practice. It continued its effort in stakeholder engagement and formally applied a materiality assessment process to define its environmental, social and economic material issues for reporting. The identified issues were ranked and prioritized based upon significance to Melco and its stakeholders. Furthermore, enhancement work was undertaken to widen the coverage of data and information disclosed in the Report. Over the years, Melco has placed strong emphasis on community involvement and development, there were more beneficiaries benefited from Melco’s contribution in 2013 as compared with previous years. As a result of the verification process, the information contained in the Report is accurate and reliable. It is a fair and honest disclosure in all material aspects of Melco’s CSR initiatives, targets, progress and performance.

Signed on behalf of
Hong Kong Quality Assurance Agency