Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Reduced total energy consumption by 40.2%
• Reduced coal usage by 59.64%
• Reduced electricity usage by 30.84%
• Decreased total water consumption by 1,877,714.6 tonnes compared to 2015
• Successfully achieved emission reduction targets for 2016
• Invested RMB 25.93 million in enterprise-wide environmental projects

Social Achievements

• Launched the "Sinochem Dedicating to Rural Prosperity" agricultural service project, benefiting over 4.6 million people
• Launched the "Spring Breeze Action" poverty-alleviating program, donating fertilizer, pesticides, and equipment worth over RMB 1 million
• Provided over 6,000 field trainings and field tests, covering over 1.1 million farmers
• Organized over 5,500 activities promoting agricultural resources into rural areas, benefiting over 2 million people
• Organized more than 2,000 farmer training programs, benefiting over 5 million farmers
• Built more than 2,000 demonstrative fields and provided 1000 on-site demonstration meetings, benefiting 1.5 million farmers

Governance Achievements

• Improved the discipline inspection system to reinforce education on integrity and review case studies for comprehensive training on anti-corruption
• Conducted 19 integrity seminars with new leading cadres
• Organized Sinofert staff in key positions to sign 181 annual integrity undertakings
• Organized integrity conversations 269 times
• Held professional or case training with discipline inspection personnel and marketing staff 859 times

Climate Goals & Targets

Environmental Challenges

• Inappropriate or overuse of fertilizers leading to environmental problems such as water source pollution, soil ecology destruction, and soil depletion

Mitigation Strategies

• Offered farmers soil testing formulas and scientific guidance to choose appropriate fertilizer products, enhancing fertilizer efficiency and reducing environmental impact
• Implemented energy reduction measures such as replacing high energy consuming engines, reducing electricity generation within the factory, promoting utilization of thermal energy, recycling water resources, and replacing energy inefficient machines

Supply Chain Management

Responsible Procurement

• Only accredited raw material suppliers that pass assessments can become qualified suppliers

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: ESG Reporting Guide set out in Appendix 27 to the Rules Governing the Listing of Securities on the Hong Kong Stock Exchange

Environmental Metrics

ESG Focus Areas

• Environmental Protection
• Occupational Safety and Health
• Employee Well-being
• Community Development
• Supply Chain Management
• Anti-corruption
• Product Quality

Environmental Achievements

• Reduced SO2 emissions from 1703.64 tonnes in 2016 to 1509 tonnes in 2017
• Reduced COD emissions from 50.43 tonnes in 2016 to 49.96 tonnes in 2017
• Reduced NH3-N emissions from 10.94 tonnes in 2016 to 9.37 tonnes in 2017
• Completed upgrades to boiler flue gas denitrifier at Sinochem Changshan, meeting latest emission standards
• Completed installation of desulfurizers at Sinochem Yunlong, reducing SO2 and NOx emissions
• Converted a coal-fired boiler to natural gas at Sinochem Dongfang
• Implemented dredging and anti-seepage project at Sinochem Changshan's sewage facility
• Completed feasibility study for sewage treatment station at Sinochem Fuling (to be completed by end of 2018)
• Implemented technical alternation project for sewage recycling and rainwater diversion at Sinochem Yunlong
• Reduced fresh water consumption by 230,198.0 tonnes compared to 2016

Social Achievements

• Lowest voluntary resignation rate (5.8%) in four years, indicating high employee satisfaction and retention
• Provided 19 training programs to 968 employees, totaling 11,219 study hours
• Implemented a micro-study platform with an average readership of 1,259 visitors
• Cooperated with the Ministry of Agriculture and local agricultural units to promote scientific fertilizer use and train farmers
• Increased the area of contralateral deep fertilization from 4,000 to 1.4 million mu between 2015 and 2017, generating an estimated RMB168 million in extra income for farmers

Governance Achievements

• Established a “no corruption” system based on the principles of “dare not corrupt” and “unwilling to corrupt”
• Implemented comprehensive disciplinary education including anti-corruption training for employees
• Established internal reporting channels and supervision systems
• No violations of discipline were found in 2017
• Complied data from all suppliers in China, resulting in 1,175 accredited bulk raw material suppliers

Climate Goals & Targets

Environmental Challenges

• Reducing energy consumption while increasing production capacity (as seen in Sinochem Changshan's 2017 performance)
• Managing the environmental impact of fertilizer production and use
• Ensuring the responsible handling of waste materials

Mitigation Strategies

• Implementing energy reduction measures at various subsidiaries (detailed in the report)
• Promoting scientific fertilizer use through soil testing and farmer education
• Formulating comprehensive management guidelines for waste handling and recycling

Supply Chain Management

Supplier Audits: 1,175 accredited suppliers as of 31 December 2017

Responsible Procurement

• Assessment criteria for raw material bulk suppliers including business nature, scale, and site inspection

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: HKEx ESG Reporting Guide

Certifications: ISO 9001

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Highly efficient side deep fertilizers

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Environmental Protection
• Talent Management
• Operating Practices
• Community Engagement
• Climate Change

Environmental Achievements

• Invested RMB168 million in environmental protection, covering heat source transformation, wastewater and dust management, and anti-leakage projects.
• Implemented energy-saving technological transformations and construction of waste comprehensive utilization devices (phosphogypsum).
• All three subsidiaries obtained ISO14001 Environmental Management System Certification.
• No environmental events at general or above level, or any serious HSE issues with great impacts during the reporting period.

Social Achievements

• Comprehensive implementation of human resources and labor policies, prioritizing occupational health and safety and employee training and development.
• Active COVID-19 prevention and control work to protect employee health.
• Annual training plans providing courses on occupational health and safety, product knowledge, and technological exchange.
• Welfare programs and activities (e.g., badminton competitions) to care for employee mental health.

Governance Achievements

• Rigorous execution of anti-corruption system, quality management, and supply chain management.
• Active research and development work on bio-fertilizers, continuously improving existing product systems.
• Contribution to society through community charity activities (e.g., protective equipment donation, free soil testing service, agricultural field guidance).

Climate Goals & Targets

Environmental Challenges

• COVID-19 pandemic impacting global economy and posing challenges to Sinofert's operations.
• Relationship between chemical fertilizer production and environmental pollution requiring pollution control and governance.
• Climate-related risks including policy-induced risks, market risks, and physical risks from extreme weather.

Mitigation Strategies

• Maintaining core operation principles balancing business interest, environmental protection, and social development.
• Investment in environmental protection projects to address air, water, and soil pollution.
• Implementation of hierarchical authorization management and risk management training for employees.
• Establishment of contingency plans for environmental emergencies and emergency response mechanisms for heavily polluted weather.

Supply Chain Management

Supplier Audits: Annual review and irregular sampling investigation of 1,363 suppliers (173 trading companies, 1,190 production companies)

Responsible Procurement

• Entry review mechanism considering business nature, scale, productivity, management stability, technological strengths, environmental and social performance.
• Prioritization of suppliers with comprehensive environmental management mechanisms and ISO14000 or similar certifications.
• Selection of efficient, energy-saving, and emission-reduction equipment.

Climate-Related Risks & Opportunities

Physical Risks

• Damage caused by extreme weather incidents

Transition Risks

• Raising requirements for production and products
• Cost of adopting low-carbon technology

Reporting Standards

Frameworks Used: Appendix 27, the “Environmental, Social and Governance Reporting Guide” to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, AA1000AS v3

Certifications: ISO 14001 (three subsidiaries), FAMI-QS (Sinochem Yunlong)

Third-party Assurance: SHINEWING Sustainability Advisory Services Limited

Sustainable Products & Innovation

• Bio-fertilizers

Environmental Metrics

ESG Focus Areas

• Environmental Protection
• Product Quality and Safety
• People-Orientation
• Partnership
• Climate Change
• Supply Chain Management
• Integrity and Anti-Corruption

Environmental Achievements

• Reduced energy consumption per unit of output by 28.8% (2020 baseline)
• Reduced greenhouse gas emissions by 198,900 tonnes (2019 baseline)
• Achieved 100% recycling rate of hazardous waste
• Achieved 76.4% recycling rate of non-hazardous waste
• Sinochem Yunlong awarded “National Green Factory”

Social Achievements

• No work-related fatalities
• Implemented stringent pandemic prevention measures
• Provided various employee activities to enhance satisfaction
• Conducted 91 anti-corruption training sessions, covering 7,906 people

Governance Achievements

• Established a robust ESG risk management system
• Implemented internal control systems aligned with international standards
• Received “ESG Leading Enterprise Award 2022” for Leading Community Project and Theme Award (ESG Product Comprehensive Platform)

Climate Goals & Targets

Environmental Challenges

• Inventory risk due to fertilizer market fluctuations
• Environmental and social risks due to stringent environmental protection requirements
• Climate change risks (transition and physical risks)

Mitigation Strategies

• Strict inventory and accounts receivable control
• Issuing notice on controlling year-end inventory and accounts receivable
• Strengthening process monitoring of inventory
• Strict compliance with environmental laws and regulations
• Implementation of measures to prevent and control pollution
• Formulation of emergency plans for environmental pollution incidents
• Risk identification and mitigation strategies for climate change

Supply Chain Management

Supplier Audits: 1,906 suppliers reviewed and assessed

Responsible Procurement

• Prioritization of suppliers with good environmental and social performance, especially those with ISO 14001 certification
• Establishment of a supplier evaluation system

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events

Transition Risks

• Changes in customer preferences
• Costs of adopting low-carbon technologies

Opportunities

• Development of energy-efficient products

Reporting Standards

Frameworks Used: Stock Exchange of Hong Kong Limited’s ESG Guide

Certifications: ISO 14001 (multiple subsidiaries), ISO 9001 (multiple subsidiaries)

Third-party Assurance: CECEP (HK) Advisory Company Limited

Sustainable Products & Innovation

• Bio-stimulant “Youcuilu”, bio-stimulant AHP, “biologics + organic carrier” soil health products

Awards & Recognition

• ESG Leading Enterprise Award 2022 – Leading Community Project Award
• ESG Leading Enterprise Award 2022 – Theme Award (ESG Product Comprehensive Platform)
• National Green Factory (Sinochem Yunlong)

Environmental Metrics

ESG Focus Areas

• Environmental Protection
• Product Quality and Safety
• Compliance Operations
• Product Responsibility
• Prevention and Treatment of Environmental Incidents
• Environment and Natural Resources
• Efficient Use of Resources
• Occupational Health and Safety
• Talent Management
• Supply Chain Management
• Community Investment
• Integrity and Anti-Corruption

Environmental Achievements

• Achieved 100% recycling rate of hazardous waste.
• Reduced chemical oxygen demand (COD) and ammonia nitrogen in wastewater by 25% compared to the baseline.
• Reduced nitrogen oxide emissions by 8.12% compared to 2022.
• Achieved 100% utilization rate of phosphogypsum.
• Reduced energy consumption per unit of output by 74.36% (compared to 2020 baseline).

Social Achievements

• No corruption litigation cases.
• 100% resolution rate and customer satisfaction rate for product and service complaints.
• Conducted 246,503 hours of safety training for 59,842 employees.
• Supported RMB 579,000 in targeted procurement assistance and RMB 193,000 in educational sponsorship.

Governance Achievements

• Inclusion in Hang Seng SCHK China Central SOEs ESG 40 Index and Hang Seng SCHK SOEs High Dividend Yield ESG Index.
• Bloomberg Businessweek’s “2023 ESG Leading Enterprise Award – Leading Environmental Initiative Award” for Sinochem Yunlong Green Factory Project.
• Established comprehensive ESG management and control systems overseen by the Corporate Governance Committee.

Climate Goals & Targets

Environmental Challenges

• Oversupply situation in the fertilizer market in the first half of 2023 with strong market cautiousness and continuous price declines.
• Severe situation facing China’s fertilizer industry due to the gradual opening up of the domestic fertilizer market, diminishing regional characteristics, and potential intensification of market competition.
• Climate-related risks, including transition risks (e.g., adopting low-carbon technologies) and physical risks (e.g., extreme weather events).

Mitigation Strategies

• Deepening implementation of the “Bio+” strategic transformation, promoting modern agricultural technology service platforms, enhancing product R&D, and comprehensively improving agricultural productivity.
• Consolidating market share of potash and phosphate industries, strengthening strategic procurement capabilities, and developing high-quality supply channels.
• Implementing various energy-saving and carbon-reduction projects (e.g., carbon capture, low-temperature heat recovery, environmental relocation, biomass pellet substitution).
• Conducting annual risk identification exercises and formulating response and preventive measures to minimize environmental impacts.
• Establishing effective mechanisms for prevention and emergency response, including emergency drills.

Supply Chain Management

Supplier Audits: 1,926 suppliers reviewed

Responsible Procurement

• Prioritizing suppliers with robust environmental management systems (e.g., ISO 14001 certifications).
• Establishing a supply chain evaluation system covering various aspects such as supplier’s nature, size, operational status, supply capacity, quality standards, after-sales service, and other performances.
• Promoting green and sustainable procurement, prioritizing high-efficiency, energy-saving, and emission-reducing products and equipment.

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events such as strong typhoons and floods

Transition Risks

• Enhancing production and product quality, shifts in customer preferences, costs associated with adopting low-carbon technologies

Opportunities

• Investing in bio-stimulants and bio-bacterial agents, focusing on the research and development of soil conditioning products to maximize fertilizer utilization efficiency.

Reporting Standards

Frameworks Used: Environmental, Social, and Governance Reporting Guide (ESG Guide) of the Stock Exchange of Hong Kong Limited, AA1000 Assurance Standard v3

Certifications: ISO 14001 (Shandong Fertilizer, Sinochem Changshan, Sinochem Yunlong), ISO 50001 (Sinochem Changshan, Sinochem Yunlong, Shandong Fertilizer), ISO 9001 (Shandong Fertilizer, Sinochem Changshan, Sinochem Yunlong)

Third-party Assurance: CECEP (HK) Advisory Company Limited

Sustainable Products & Innovation

• Bio-formulation “Youliangmei”, bio-compound fertilizer “Kedefeng”, and bio-phosphate fertilizer “Sandaimeilinmei”.

Awards & Recognition

• Bloomberg Businessweek’s “2023 ESG Leading Enterprise Award – Leading Environmental Initiative Award”