Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environmental protection
• Employee well-being
• Social responsibility
• Governance

Environmental Achievements

• Reduced electricity consumption per unit of production compared to the previous year.
• Implemented water recycling projects (Texhong Dyeing’s project reclaimed 40 tons of hot water daily from 100 tons of steam).
• Texhong Thai Binh Garment reduced sulfur emissions by approximately 60% with desulfation tower equipment.
• Jiangsu Century Texhong Textile upgraded two 6T coal boilers to natural gas boilers, investing RMB1.5 million.

Social Achievements

• Nantong Texhong hired 9 disabled employees.
• Xuzhou Texhong Yinlian hired 5 disabled employees and was recognized as an “Outstanding Overseas Chinese Enterprise”.
• Shandong Lanyan recruited 34 deaf interns and 11 fashion graduates, plus 5 deaf individuals from the community.
• Nantong Texhong employed 107 ethnic minority staff.
• Xinjiang Texhong employed 2,353 ethnic minority staff from 18 ethnic groups.
• Texhong Galaxy made donations and provided scholarships to students in Vietnam.
• Texhong Yinlong made donations to universities in Vietnam and recruited nearly 100 new graduates annually.

Governance Achievements

• Complied with the Code Provisions of the Corporate Governance Code.
• Established a Remuneration Committee, an Audit Committee, and a Nomination Committee.
• Maintained a high level of corporate governance emphasizing transparency, accountability, and independence.

Climate Goals & Targets

Environmental Challenges

• Fierce competition in the Chinese textile industry with increasing customer demand for diverse and differentiated products.
• Increased enforcement of environmental protection laws in China, posing pressure on dyeing and printing companies.
• Fluctuation in cotton prices.
• Fluctuation in exchange rates.
• High financing needs due to business expansion.
• Risk of receivables turning into bad debts due to the difficult market environment and customer requests for extended credit terms.
• Risk of product liability due to a wide range of products.
• Tax risks due to operations in various countries and regions.
• Legal and regulatory risks due to compliance requirements.
• Energy supply risks.
• Human resource risks due to labor-intensive nature of the industry and cultural differences among employees.

Mitigation Strategies

• Expanded yarn production capacity by acquiring secondhand equipment and leasing.
• Acquired two jeanswear factories in Vietnam and Cambodia.
• Implemented stable procurement and inventory strategies to hedge against cotton price fluctuations.
• Increased RMB loans to reduce USD loan ratios.
• Used foreign financing products to lock in foreign currency liabilities.
• Improved transparency of operations for banks.
• Regularly monitored and evaluated credit terms granted to customers.
• Improved customer reconciliation systems.
• Increased efforts on quality control.
• Improved production technology training for staff.
• Engaged financial officers familiar with local tax policies.
• Engaged legal advisors to ensure legal compliance.
• Equipped factories with generators to minimize electricity shortages.
• Undertook technological renovations to reduce energy consumption.
• Implemented performance-based unit counts and expanded staff training.
• Addressed issues concerning employee canteens and staff quarters.
• Improved staff retention through maintaining and expanding local presence.

Supply Chain Management

Responsible Procurement

• Regulation on the management of procurement operation of daily supplies of subsidiaries
• Regulation on the procurement of certain supplies of the headquarter and Texhong China

Climate-Related Risks & Opportunities

Sustainable Products & Innovation

• Elastic pure cotton core-spun yarn series
• High-end yarns and garment fabrics for knitting

Awards & Recognition

• Fortune 500 Chinese Companies 2017

Environmental Metrics

ESG Focus Areas

• Health and Safety
• Product Responsibility

Environmental Achievements

• Reduced water, electricity, and steam consumption by approximately 70% in Texhong Dyeing's pretreatment workshops by upgrading production processes.
• Taltex (Zhuhai) reduced CO2 emissions by 6,000 tons, SO2 emissions by 5.6 tons, and COD emissions by 3.6 tons annually by adopting a new dyeing process.
• Taltex (Zhuhai) reduced SO2 emissions by 32 tons and NOx emissions by 34 tons annually by removing a coal-fired boiler and upgrading equipment.

Social Achievements

• Established a “Dual Prevention System” at Shandong Texhong, providing training and examinations for all employees.
• Held a meeting on “Safe Production, 6S Management, and Backup Support” for all subsidiaries.
• Implemented various training programs for employees at all levels, including production training, management skills, safety training, and skills training.
• Provided comprehensive support for employee development through various programs, including “budding program”, “flourishing program”, and “stratified talent nurturing program”.
• Improved workplace conditions and amenity areas at headquarters and subsidiaries.
• Supported employees in need and offered relief and condolence to those facing difficulties.
• Employed 118 ethnic minority staff members at Nantong Texhong.
• Employed 9 physically challenged employees.
• Organized voluntary tree-planting events.

Governance Achievements

• Established a stringent system for procurement of bulk supplies and a whistle-blowing mechanism.
• Required all employees at headquarters and mid-to-senior management at subsidiaries to undergo anti-corruption training and sign a commitment.
• Implemented policies to protect intellectual property and ensure compliance with relevant laws and regulations.

Climate Goals & Targets

Environmental Challenges

• Not disclosed

Mitigation Strategies

• Not disclosed

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Open tender for selection of logistic services; inclusion of environmental and social sustainability clauses in contracts; incorporation of sustainability terms into the assessment system for transportation companies.

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: Appendix 27 “Environmental, Social and Governance Reporting Guide” to the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited

Certifications: ISO 9001

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Pure cotton products, including elastic pure cotton core-spun yarn series, high-end yarns, and garment fabrics for knitting.

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Shandong Texhong obtained certifications for environmental management system and energy management system.
• Texhong Winnitex Vietnam contracted a third-party company for energy audits every three years.
• Chung Charm Textiles received the “Bank of China (Hong Kong) Corporate Environmental Leadership Award” and “Hong Kong-Guangdong Cleaner Production Excellent Partners (Manufacturing)” awards.
• Significant energy savings achieved through technical renovations and equipment replacements (e.g., Changzhou Texhong saved 70,000 kWh and 60,000 kWh annually).
• Water savings achieved through various measures (e.g., Jiangsu Texhong saved 500 cubic meters of water per day).

Social Achievements

• Established a safety management system and implemented a top-to-bottom safety management accountability system.
• All subsidiaries passed the level three safe production standardization certification.
• Various measures taken to prevent occupational diseases (e.g., health and safety education, occupational health checkups).
• Protection for female employees in compliance with local laws and regulations.
• Continuous improvement in employment system (e.g., optimized performance management measures, revised leave and attendance policies).

Governance Achievements

• Board endorses the Group’s commitments to ESG responsibility and assumes full responsibility for ESG strategies and reporting.
• Established an internal control mechanism and designated the President’s Office as the anti-corruption department.
• Issued a series of anti-corruption policies, including a whistle-blower protection and reward system.
• No legal cases regarding corrupt practices were brought against the Group in 2019.

Climate Goals & Targets

Environmental Challenges

• Not disclosed

Mitigation Strategies

• Not disclosed

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Open tender for logistic services; clauses related to environmental and social sustainability added to logistics contracts; assessment system incorporating environmental and social sustainability terms.

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: Appendix 27 “Environmental, Social and Governance Reporting Guide” to the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited

Certifications: ISO 9001 (quality management), Level three safe production standardization, Occupational health and safety management system

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Bank of China (Hong Kong) Corporate Environmental Leadership Award
• Hong Kong-Guangdong Cleaner Production Excellent Partners (Manufacturing)

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Five subsidiaries passed environmental management system certification.
• Four subsidiaries conducted energy audits.
• Various energy-saving measures implemented, resulting in significant energy savings (specific figures not provided).
• Waste reduction initiatives implemented (specific figures not provided).

Social Achievements

• Nine subsidiaries passed three-level safety production standardization certification.
• Four subsidiaries passed ISO 45001 occupational health and safety management system certification.
• Established “Mommy’s Caring House” for pregnant and lactating female workers.
• Various employee activities and welfare programs implemented.

Governance Achievements

• Established a sound corporate governance structure for ESG matters.
• Implemented anti-corruption policies and reporting channels.
• No legal cases regarding corrupt practices.

Climate Goals & Targets

Environmental Challenges

• Climate change risks (extreme weather, rising sea levels)
• Supply chain disruptions (not explicitly stated, but implied).

Mitigation Strategies

• Energy-saving measures (e.g., inverter upgrades, equipment replacement).
• Clean energy adoption (e.g., photovoltaic power generation).
• Disaster preparedness plans (e.g., typhoon and flood prevention plans).
• Supplier engagement on environmental and social sustainability.

Supply Chain Management

Responsible Procurement

• Regulation on the Management of Procurement Operation of Daily Supplies of Subsidiaries
• Regulation on the Procurement of Certain Supplies of the Headquarter and Texhong China
• Environmental and social sustainability clauses added to logistics contracts.
• Environmental and social sustainability terms added to supplier assessment systems.

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather
• Rising sea levels
• Typhoons
• Floods

Opportunities

• Development of green and low-carbon products
• Improved energy efficiency
• Participation in renewable energy programs

Reporting Standards

Frameworks Used: ESG Reporting Guide (Appendix 27 to the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited)

Certifications: ISO 9001 (5 subsidiaries), ISO 14001 (5 subsidiaries), ISO 45001 (4 subsidiaries)

Environmental Metrics

ESG Focus Areas

• Low Carbon Operation and Green Development
• Quality Management
• Employee Well-being
• Supply Chain Sustainability
• Anti-corruption

Environmental Achievements

• Published Environment Policy
• Installed rooftop photovoltaic systems in four factories with a total installed capacity of 25.1 MW
• Reduced carbon dioxide emission by over 23,000 tonnes through photovoltaic power generation
• 5% of the Group’s yarn products obtained LCA certification
• Six subsidiaries obtained ISO 14001 Environment Management System certification
• Three years without environmental law violations

Social Achievements

• No major safety incidents
• Provided an equal, healthy and safe working environment
• Provided training and development opportunities for employees
• Implemented various employee wellbeing initiatives (spring festival dinner, book festival, Women's Day gifts, etc.)
• Donated to impoverished households and educational institutions
• Seven subsidiaries obtained ISO9001 quality management system certification

Governance Achievements

• Established ESG management organizational structure (Board, ESG Committee, Management, ESG working group)
• Implemented ESG compliance requirements in director performance appraisals
• Established relevant penalty mechanisms for ESG negative incidents
• Completed annual goal of honest operation (Employee Integrity Commitment, Integrity Texhong learning activity, Anti-Commercial Bribery Agreement signing)

Climate Goals & Targets

Environmental Challenges

• Increasingly stringent low-carbon environmental policies and regulations leading to increased investment costs
• Energy cost increases due to energy structure adjustment and electricity tariff reform
• Increased carbon emission costs due to carbon pricing
• Increased automation leading to higher operating costs
• Failure to meet customer demand for sustainable products leading to revenue decline
• Brand customers switching to green products impacting revenue
• Extreme weather events causing damage to plants and machinery, impacting production and revenue
• Rising temperatures increasing electricity consumption and potentially decreasing revenue from thermal products
• Rising sea levels causing flooding and impacting production

Mitigation Strategies

• Integration of sustainable development into procurement, transportation, production, and sales
• Implementation of 3R principles (reduce, reuse, recycle)
• Establishment of carbon footprint management teams
• Conducting LCA for key products
• Collaboration with suppliers for whole-process carbon emission assessment
• Using sustainable raw materials (organic cotton, recycled fibers, Tencel, etc.)
• Optimizing logistics routes, encouraging combined transportation, and using railway transport
• Establishing a logistics management system
• Increasing marine transportation and decreasing road transportation
• Adding clauses related to environmental and social sustainability requirements in contracts
• Using smart stereoscopic warehouses
• Prioritizing suppliers with outstanding sustainability performance
• Collaborating with suppliers on innovation and R&D of zero-carbon products
• Implementing energy conservation projects (motor modifications, inverter installations, etc.)
• Promoting renewable energy through photovoltaic systems
• Implementing water conservation measures (inverter installations, pipeline modifications, rainwater collection, etc.)
• Reducing packaging consumption and promoting reusable and recyclable packaging
• Implementing wastewater recycling and biochemical treatment
• Installing dust removal units and compound dust filter units
• Managing waste according to regulations and promoting reuse and recycling

Supply Chain Management

Supplier Audits: Annual on-site inspections and regular sample checks

Responsible Procurement

• Supplier Code of Conduct (including human rights, environmental protection, anti-discrimination, and safety and health)
• Anti-commercial Bribery Agreement
• Sustainable Procurement Policy (prioritizing suppliers with better ESG performance)

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather (flood, typhoon)
• Rising temperatures
• Rising sea levels

Transition Risks

• Stringent low-carbon policies
• Energy structure adjustment
• Electricity tariff reform
• Carbon pricing
• Customer demand for sustainable products

Opportunities

• Development of energy-efficient products
• Use of renewable energy

Reporting Standards

Frameworks Used: ESG Reporting Guide (Appendix 27 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited), GRI Sustainability Reporting Standards (partially)

Certifications: ISO 14001, ISO 45001, ISO 9001

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Texhong zero carbon yarn series
• Clean yarn series
• Zero carbon home textile series

Awards & Recognition

• Outstanding Award for Green and Sustainable Loan Issuer
• Pioneering Organisation in ESG Disclosure Enhancement
• Low Carbon Enterprise (Shandong Texhong)

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• Weakened demand for textiles in overseas markets, resulting in weak selling prices and lower production capacity utilization rates.
• Global inflation and economic downturn causing consumption downgrade.
• High inflation in developed economies dampening demand in the textile industry.
• Overcapacity and high inventory pressure in the textile industry.
• Fluctuation of cotton prices.
• Fluctuation of exchange rates affecting raw material procurement costs and financing costs.
• Increase in prevailing interest rates of banks increasing financing costs.
• Risk of tax incompliance caused by misunderstanding of regional tax policies.
• Electricity shortage affecting production facilities.
• Labor shortage or technical inadequacy of its labor force impairing efficiency.

Mitigation Strategies

• Controlling capital expenditures, optimizing resources, and streamlining management processes.
• Prioritizing investments with clear ROI and alignment with long-term objectives.
• Focusing resources on product segments with better competitive advantages and higher market potential.
• Optimizing product portfolio and marketing efforts.
• Strengthening regional production capacity and bolstering regional supply chain flexibility by promoting vertical integration and fostering supplier partnerships.
• Actively adjusting product mix and structure to adapt to the shift in market demand, and actively destocking on the sales side.
• Actively carrying out expense control, improving management efficiency and disposing of some inefficient assets.
• Closely monitoring the dynamics of cotton futures and supply and demand balance and correlation in the spot market and hedging risks through stable procurement and inventory strategies.
• Diversifying the development of the synthetic fiber category and reducing reliance on cotton.
• Strengthening communication with financial institutions and market analysis institutions to interpret the dynamics of financial market and making specific adjustments to financing structure.
• Increasing loans in RMB to reduce the ratio of loans in USD.
• Locking up exposure of liabilities in foreign currencies using foreign exchange financial products.
• Closely monitoring various important economic data published by the People’s Bank of China and the Federal Reserve and keeping abreast with its interest rate policy.
• Obtaining quotations for interest rate swap from financial institutions regularly and utilizing financial instruments to switch from floating to fixed interest rate.
• Enhancing the transparency of the Group’s operation for banks’ understanding and maintaining good working relationship between the Group and financial institutions.
• Monitoring various financing indicators in real-time and providing timely alerts.
• Diversifying the portfolio of financial institutions and financing products.
• Devising a reasonable spread for financing with different terms to strike a balance between financing costs and risks.
• Monitoring and evaluating credit terms granted to customers regularly.
• Monitoring the collectability of receivables in real-time and providing alerts and warnings.
• Closely monitoring market dynamics and operation of customers to devise plan for customer visit and collect the latest information of customers.
• Enhancing customer reconciliation system.
• Adopting collectability of receivables as a criterion of staff performance assessment.
• Arranging export credit insurance for all overseas customers with newly established relationship.
• Increasing efforts on quality control and devising improvement solutions for quality fluctuation.
• Controlling production process using state-of-the-art measurement equipment and online quality control system.
• Improving production technology training for staff members and cultivating responsibility awareness.
• Actively reaching out to customers for product liability incidents and coordinating for resolution.
• Engaging financial officers familiar with local tax policies and regulations to conduct tax audit and handle tax examination of the government.
• Liaising with local tax authority frequently to have thorough understanding of change in tax policies and policy interpretation.
• Engaging professional local tax consultation institutions for consultations on tax compliance advices, tax incentive policies and tax preparation solutions.
• Engaging qualified legal advisors or consultation institutions to review and provide advice on relevant documents to ensure legal compliance.
• Equipping production factories with generators to minimize the duration of electricity shortage.
• Conducting technological renovation on equipment to reduce energy consumption.
• Liaising with the government to seek permit for uninterrupted electricity supply.
• Commencing effective performance-based unit count.
• Expanding the scope of staff training.
• Addressing issue concerning the conditions of our canteen and staff quarters, enhancing the quality of our employees’ livelihood, and improving our backup supporting service.
• Training up and enhancing the management capability of our management staff, rolling out skill and capability reinforcement programme, strengthening the sense of belonging and honour of our staff.
• Improving staff retention through maintaining and expanding our presence in the locality.
• Selectively picking suppliers and entering into purchase agreements with suppliers which guarantee the raw materials supplied are in compliance with environmental protection standard.
• Establishing a factory internal check system and procedure in compliance with product-wise regular core environmental protection standard, setting up a highly regulated control system and strictly implementing it.
• Paying attention to news about development in environmental regulations, causing new factories to operate in strict compliance with any new regulations and existing factories to transform and upgrade their facilities to meet environmental protection standard.

Supply Chain Management

Responsible Procurement

• Selectively picking suppliers, entering into purchase agreements with suppliers which guarantee the raw materials supplied are in compliance with environmental protection standard (in particular dyestuff and chemicals).

Climate-Related Risks & Opportunities

Awards & Recognition

• Fortune China 500