Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environment
• Employment and Labor Practices
• Operating Practice
• Community Involvement

Environmental Achievements

• Developed procedures to monitor emission of air pollutants, wastes, wastewater and noise in compliance with relevant laws and regulations.
• Adopted energy saving policy to reduce carbon footprint.
• Established Wastes Management Policy providing guidelines on handling wastes.
• Implemented Office Environment Management Regulation to provide guidelines for employee to save energy in office.

Social Achievements

• Maintained a high labour standard and strictly abided by relevant laws and regulations, such as the Labour Law of PRC, the Labour Contract Law of the PRC and the Employment relations Act 2000 of New Zealand.
• Provided diversified on-the-job trainings based on the needs of respective positions and talents and interests of employees.
• Established a comprehensive quality management system to monitor the entire production process.
• Established a “Community Involvement Policy” to promote community involvement and social contribution.

Governance Achievements

• Established a system to oversee compliance issues related to environmental, health and safety and quality management.
• Formulated policies to promote sustainability and manage risks related to environment, employment and labor practices, operating practice and community involvement.
• Adopted the Model Code for Securities Transactions by Directors of Listed Issuers.
• Established three Board committees including the Audit Committee, the remuneration committee and the nomination committee.

Climate Goals & Targets

Environmental Challenges

• Rising concern on environmental issues.
• Changes in market conditions, technological advancements, developing industry standards and changing customers’ needs and preferences for new products and/or services.
• Uncertainty over the global economy, the PRC economy entering a “new normal”.
• Depreciation of Renminbi.

Mitigation Strategies

• Regular audits and review for resource usage to identify any potential risk related to resource consumption.
• Investing significant resources in research and development to ensure leadership in the business.
• Monitoring changes of economic environment and adjusting business plan under different market conditions.
• Monitoring exchange rate movement and taking appropriate activities to reduce the exchange risk.

Supply Chain Management

Responsible Procurement

• Choice of suppliers based on performance on compliance, environmental, health and safety management and quality management.

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: Appendix 27 to the rules governing the listing of securities on The Stock Exchange of Hong Kong Limited

Third-party Assurance: APAC Compliance Consultancy and Internal Control Services Limited

Sustainable Products & Innovation

• Cloud
• Traveller
• KuangChi Martin Jetpack
• KuangChi Solar Ship

Awards & Recognition

• Game Changer Project of the Year by Canadian Solar Industries Association

Environmental Metrics

ESG Focus Areas

• Environment
• Employment and Labour Practices
• Operating Practice
• Community Involvement

Environmental Achievements

• Responded to the request by the Ministry of Environmental Protection of the People’s Republic of China to reduce volatile organic compounds emission by undertaking an engineering project.
• Adopted energy saving policy to reduce the carbon footprint.
• Implemented measures in the office to reduce waste generated (e.g., double-sided printing, paperless solutions, recycling bins).

Social Achievements

• Strengthened the talent nurturing system and designed new employee development system and mechanism to enhance staff quality.
• Brought in 357 experts on high and new technology from around the world, 35% of whom were with master’s degree or above.
• Supported technical innovation and learning by hosting students and enthusiasts at its facilities and offering talks and demonstrations (Martin Aircraft Company Limited).

Governance Achievements

• Adopted a board diversity policy.
• Established three Board Committees: Audit Committee, Remuneration Committee, and Nomination Committee.
• Adopted the Model Code for Securities Transactions by Directors of Listed Issuers.

Climate Goals & Targets

Environmental Challenges

• Industry risk (changes in market conditions, technological advancements, customer needs)
• Macroeconomic environment (uncertainty over global and PRC economy)
• Foreign Exchange Rate Risk (depreciation of Renminbi)

Mitigation Strategies

• Continued investment in R&D of in-depth space business.
• Awareness of economic environment changes and adjustment of business plans.
• Monitoring foreign exchange positions and using hedging instruments when appropriate.

Supply Chain Management

Supplier Audits: Continuous supplier assessments and on-site audits are carried out to evaluate the performance of our existing suppliers.

Responsible Procurement

• The choice of suppliers is based on the performance on different areas, including but not limited to compliance, environmental, health and safety management and quality management as stipulated in our internal “Supplier Evaluation and Approval Standard”.

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: Appendix 27 to the rules governing the listing of securities on The Stock Exchange of Hong Kong Limited

Third-party Assurance: APAC Compliance Consultancy and Internal Control Services Limited

Environmental Metrics

ESG Focus Areas

• Environment
• Employment and labour practices
• Operating practice
• Community involvement

Environmental Achievements

• Reduced air pollutants emission (Nitrogen oxides, Sulfur dioxide, Particulate matter) compared to 2018.
• Reduced GHG emission (Scope 1 and 2) compared to 2018.
• Implemented measures to reduce non-hazardous waste generation (double-sided printing, paperless solutions, recycling bins).

Social Achievements

• Strengthened talent nurturing system and designed new employee development system and mechanism to enhance staff quality.
• Provided a healthy and safe working environment.
• Established labor unions at all levels to provide communication platforms for employees.
• Provided health and occupational diseases checkup to employees.
• Commissioned a consultancy company to review its safety working procedures.

Governance Achievements

• Updated board diversity policy and adopted the Nomination Policy.
• Complied with the disclosure requirements in accordance with Chapter 14A of the Listing Rules.
• Maintained a high standard of business integrity throughout its operations and tolerates no corruption or bribery in any form.

Climate Goals & Targets

Environmental Challenges

• Decrease in revenue generated from sales of chips.
• Impairment losses on trade receivables and contract assets.
• Losses in strategic investments (AVI and SkyX).
• Difficulties in R&D activities and commercialization of products.
• Impact of COVID-19 outbreak on operations.

Mitigation Strategies

• Successfully recovered approximately RMB93,200,000 in the first half of 2019 in connection with the trade receivables related to the sales of self-developed aeronautic products.
• Intensive communication and negotiation with customers to resolve outstanding trade receivables.
• Making corresponding provisions for impairment of strategic investments.
• Continued investment in research and development of future technology business.
• Taking all possible and reasonable measures to mitigate and limit the impact of COVID-19 outbreak on operations.

Supply Chain Management

Supplier Audits: Continuous supplier assessments and on-site audits are carried out.

Responsible Procurement

• Compliance, environmental, health and safety management and quality management

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: Appendix 27 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, GRI

Certifications: ISO9001

Third-party Assurance: APAC Compliance Consultancy and Internal Control Services Limited

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• KuangChi Science’s AI Headquarters was named as one of the 33 major AI industry projects in Shanghai.