Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environmental Protection
• Employment and Labour Practices
• Operating Practices
• Community Investment

Environmental Achievements

• Reduced greenhouse gas emissions (Scope 1: 5,148.69 tonnes; Scope 2: 7,300.10 tonnes)
• Implemented waste management strategies, including recycling and reuse of materials
• Improved water conservation measures
• Used recycled water to clean floors
• 90% of chromium extracted from sewage dehydration reused

Social Achievements

• Established a comprehensive human resources management mechanism
• Provided equal opportunities to employees in terms of compensation and benefits, promotion, performance appraisal, training and career development
• Implemented a 3-level safety training program for all employees
• Provided competitive remuneration packages and social security benefits
• Organized training activities on safety, quality, operation standards, repair and maintenance of facilities

Governance Achievements

• Established a comprehensive disciplinary monitoring system to cover operation and production processes
• Established channels for receiving reports of suspected corruption
• No litigation case of corruption involving the Group and its employees during the reporting period

Climate Goals & Targets

Environmental Challenges

• Tannery industry challenges including large amounts of animal solid waste, strong pH value raw materials, corrosive chemicals, and water-intensive operations leading to potential environmental pollution
• Increasingly stringent environmental protection regulations and rising costs of environmental protection investments

Mitigation Strategies

• Continuous improvement of technology and sufficient resources to maintain a leading position in the industry
• Continuous improvement, emission reduction, energy conservation, resource economization, recycling, and reuse
• Compliance with environmental laws and regulations
• Investment in advanced sewage treatment technologies, including chromium recycling

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Strict procurement management and evaluation systems
• Approved supplier list

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: The Stock Exchange of Hong Kong Limited’s Environmental, Social and Governance Reporting Guide

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• 2017 Top Ten Outstanding Enterprises by CPC Suining County Committee

Environmental Metrics

ESG Focus Areas

• Environmental Protection
• Employment and Labor Practices
• Operating Practices
• Community Investment

Environmental Achievements

• Invested approximately RMB1.1 million to cover and seal the desulfurization pool and adjustment pool of the sewage treatment station and add exhaust collection and treatment equipment.
• Completed the maintenance of the closed system of the sulphur-containing sewage sedimentation pool, replaced chromium-containing sewage pipes and engaged experts to evaluate the sewage treatment station and carry out systematic transformation to improve the biochemical treatment system and the efficiency of processing total nitrogen pollutants in sewage. Total investment of approximately RMB370,000.
• Recycled 425 barrels of liquid containing chromium, reused in the production process or sold to qualified recycler.
• Engaged a qualified, licensed company to dispose of approximately 3,142.49 tonnes of waste fur, waste hair residue and industrial sludge.
• Reduced non-hazardous solid waste by approximately 641.04 tonnes or 12.36% compared to the previous year.

Social Achievements

• Established a fair, reasonable and competitive remuneration scheme.
• Provided various benefits including job subsidies, overtime subsidies, overtime meal allowance, festival welfare gifts, staff quarters, hospital and medical care and general health checkups.
• Organized activities to show condolences to employees and retired employees who are in difficulty.
• Provided social security benefits for all employees, including various social insurance fees and housing provident fund.
• Organized a Guandan competition to enhance cohesion among employees and alleviate work pressure.
• Did not reduce employee benefits or lay off employees during the COVID-19 outbreak.
• Provided on-the-job training for employees in Hong Kong and introduced corporate culture, industry knowledge and job responsibilities to new staff.
• Organized safety training, online training in corporate management knowledge and online sessions on the basic knowledge of leather craftsmanship.

Governance Achievements

• Established a comprehensive “Environmental Protection Management System”.
• Set up the environment and safety centre to centrally supervise and monitor environmental protection work.
• Implemented the “Administrative Measures for Environmental Pollution Incidents”.
• Formulated “Measures for Management of Solid Wastes” to regulate hazardous and non-hazardous solid or semi-solid wastes.
• Established “Internal Control System of Quality Center” to monitor and test the quality of raw materials, crust, blue skins and finished products.
• Established “Customer Information Management System” to ensure employees handle customers’ information diligently and confidentially.
• Adopted a zero-tolerance approach for all kinds of corruption, bribery and extortion.
• Established channels for whistleblowers to submit reports of suspected personal interests, briberies, extortion, frauds, money laundering and other illegal acts.

Climate Goals & Targets

Environmental Challenges

• Strict national environmental policies and global warming.
• Violations including the concentration of hydrogen sulfide and odor in the unorganized exhaust gas not meeting the emission limit, and the reading of the online total nitrogen monitor not meeting the total nitrogen discharge limit.
• Safety conditions of the warehouse of dangerous chemicals not regularly assessed and no safety equipment in compliance with the “Regulations on the Safety Administration of Dangerous Chemicals” had been installed.

Mitigation Strategies

• Formulated a comprehensive “Environmental Protection Management System”,
• Invested in environmental projects to ensure compliance with pollutant emission standards and renovated the internal environment of its plant.
• Formulated the “Contingency Plan for Environmental Emergencies”,
• Entered into an emergency rescue mutual assistance agreement with surrounding enterprises.
• Engaged environmental experts to analyze and investigate the situation and formulated rectification proposals.
• Added corresponding environmental protection equipment and testing equipment, systemic transformation of the sewage treatment station and removal of waste that had been accumulated for a long time.
• Installed equipment complying with the standard, such as electrostatic earthmoving devices, combustible gas alarm devices, lightning protection devices, monitoring systems, exhaust systems and eye washers, and carrying out anti-static epoxy flooring work in the dangerous waste warehouse.

Supply Chain Management

Supplier Audits: Annual review for suppliers based on material quality, delivery status, service quality and price level.

Responsible Procurement

• Assessing the quality and ethical standards of business partners before entering into contracts.

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: HKEX ESG Guide

Certifications: ISO 9001:2015

Environmental Metrics

ESG Focus Areas

• Environmental Protection
• Employment and Labor Practices
• Operating Practices
• Community Investment

Environmental Achievements

• Reduced non-hazardous sewage by approximately 51,365 tonnes (7.83%)
• Reduced paper consumption by approximately 0.23 tonnes (23.47%)
• Slightly increased water consumption by approximately 844.07 tonnes (0.28%) due to increased production but offset by water reuse initiatives.
• Xuzhou Tannery recognized as a water-saving enterprise in Jiangsu Province

Social Achievements

• No work-related fatalities in the past three years
• Reduced lost days due to work injury from 162 to 133 days
• Organized various employee activities to enhance cohesion and alleviate work pressure
• Supported the rehabilitation plan for people with disabilities and recruited employees with physical disabilities

Governance Achievements

• Established a comprehensive “Environmental Protection Management System”
• Established “Administrative Measures for Environmental Pollution Incidents”
• Established a “Contingency Plan for Environmental Emergencies”
• Implemented “Administrative Measures against “Three Violations”” to strengthen safety management
• Established “Customer Information Management System” to protect customer data
• Implemented a zero-tolerance approach to corruption, bribery, and extortion
• Provided anti-corruption training for directors and employees

Climate Goals & Targets

Environmental Challenges

• Stricter national environmental policies and global warming
• COVID-19 pandemic
• Noise pollution in some production positions
• Potential relocation of Xuzhou Tannery due to new residential buildings

Mitigation Strategies

• Investment in environmental projects to ensure compliance with emission standards
• Implementation of a comprehensive environmental protection management system
• Development of a contingency plan for environmental emergencies
• Installation of VOCs treatment facilities, exhaust collection and treatment equipment
• Implementation of various epidemic prevention measures to protect employees
• Installation of silencers and mufflers on noisy machines, employee safety training
• Relocation plan pending environmental impact assessment approval

Supply Chain Management

Supplier Audits: Annual review of suppliers based on material quality, delivery status, service quality, and price level

Responsible Procurement

• Assessment of supplier’s corporate background, qualifications, production scale, management system, and production equipment

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events

Transition Risks

• National-level regulatory policies on climate change

Opportunities

• Low carbon development models

Reporting Standards

Frameworks Used: Environmental, Social and Governance Reporting Guide (Appendix 27 to the Listing Rules)

Certifications: ISO 9001:2015

Sustainable Products & Innovation

• Eco-leather manufacturing technology
• Enzyme preparations for environmentally-friendly light production

Awards & Recognition

• Xuzhou Tannery recognized as a water-saving enterprise in Jiangsu Province

Environmental Metrics

ESG Focus Areas

• Environmental Protection
• Employment and Labor Practices
• Operating Practices
• Community Investment

Environmental Achievements

• Replaced coal with natural gas as fuel to reduce greenhouse gas emissions.
• Implemented various measures to save steam and natural gas, including installing thermostatic steam traps and improving pipeline maintenance.
• Implemented water-saving measures, resulting in a decrease in water consumption.
• Actively promoted a "Paperless Office" to reduce paper consumption.

Social Achievements

• Maintained employee compensation and benefits during the COVID-19 pandemic.
• Implemented various anti-epidemic prevention measures to protect employee health and safety.
• Provided safety training to employees, including three-level safety education for new hires.
• Organized various training activities related to safety, product quality, etc.

Governance Achievements

• Established a clear ESG governance structure with defined responsibilities for the Board, management team, and functional departments.
• Implemented anti-corruption training for directors and employees.
• Established channels for whistleblowers to report suspected corruption or illegal activities.

Climate Goals & Targets

Environmental Challenges

• Global warming and stricter environmental laws and regulations.
• COVID-19 pandemic.
• Noise levels in some job positions failing to meet standards.
• Suppliers unable to provide sufficient steam to Xuzhou Tannery.

Mitigation Strategies

• Established a sound "Environmental Protection Management System" to comply with national environmental protection laws and regulations.
• Formulated a "Contingency Plan for Environmental Emergencies" and entered into an emergency rescue mutual assistance agreement with surrounding enterprises.
• Implemented various measures to reduce emissions, including dust collection, use of qualified pigments, and waste gas collection and treatment equipment.
• Implemented measures to reduce sewage discharge, including multiple sedimentations and biological or chemical treatments.
• Implemented measures to manage solid waste, including hazardous and non-hazardous waste management plans.
• Implemented measures to control noise, including using low-noise equipment and planting trees.
• Implemented various measures to conserve energy, water, and other resources.
• Implemented measures to protect employees during the COVID-19 epidemic, including providing sufficient epidemic prevention supplies and conducting regular sterilization.

Supply Chain Management

Supplier Audits: Annual review of suppliers based on material quality, delivery status, service quality, and price level.

Responsible Procurement

• Assessment of suppliers based on various criteria, including attitude towards environmental and social issues.
• Establishment of strict internal rules and regulations and evaluation systems for both new and existing suppliers.

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events, rising tides, and flooding.

Transition Risks

• Changes in government policies, laws, and regulations related to climate change.

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: Appendix 27 to the Listing Rules of The Stock Exchange of Hong Kong Limited

Certifications: ISO 9001:2015

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Eco-leather

Awards & Recognition

• Water-saving enterprise in Jiangsu Province

Environmental Metrics

ESG Focus Areas

• Environmental Protection
• Resource Management
• Employee Well-being
• Community Well-being
• Supply Chain Management
• Product Responsibility
• Anti-corruption

Environmental Achievements

• Reduced hazardous sewage discharged by approximately 0.87 tonnes (80.56%) compared to the previous year.
• Reduced non-hazardous sewage discharged by approximately 46,532.88 tonnes (12.17%) compared to the previous year.
• Achieved target to decrease emission intensity of hazardous and non-hazardous sewage by 5% compared to the previous year.
• Reduced electricity consumption by approximately 1,217.01 MWh (22.07%) compared to the previous year.
• Achieved target to reduce consumption intensity of electricity by 5% compared to the previous year.
• Reduced water consumption by approximately 117,051.00 tonnes (40.05%) compared to the previous year.
• Achieved target to reduce consumption intensity of water by 5% compared to the previous year.

Social Achievements

• Maintained a low employee turnover rate.
• Provided various safety trainings and drills to enhance employees' safety awareness and emergency response capabilities.
• Organized “Safe Production Month” and “Fire Safety Month” activities.
• Provided commensurate remuneration, personal growth and career development opportunities; and other fringe benefits.

Governance Achievements

• Established a sound “Environmental Protection Management System”.
• Established strict internal rules and regulations and evaluation systems for suppliers.
• Implemented a zero-tolerance approach for all kinds of corruption, bribery and extortion.
• Provided anti-corruption training activities for directors and employees.

Climate Goals & Targets

Environmental Challenges

• Overcapacity in the footwear leather market.
• Increasing policy requirements on environmental protection.
• Slow economic recovery after the COVID-19 pandemic.
• Impact of ecological leather and genuine leather substitutes on the domestic leather industry.
• Suppliers unable to supply sufficient steam to Xuzhou Tannery.

Mitigation Strategies

• Investing resources to develop environmentally friendly products.
• Assessing climate risks and studying various adaptation methods.
• Setting environmental and social KPIs and distributing them to functional departments.
• Implementing various resource reduction measures.
• Improving the utilization rate of various production equipment.

Supply Chain Management

Supplier Audits: Annual review of suppliers based on material quality, delivery status, service quality and price level.

Responsible Procurement

• Assessment of suppliers based on attitude towards environmental and social issues.
• Establishment of strict internal rules and regulations and evaluation systems for suppliers.

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events
• Flooding

Transition Risks

• Changes in government policies, laws and regulations

Opportunities

• Development of energy-efficient products

Reporting Standards

Frameworks Used: Appendix C2 to the Listing Rules of The Stock Exchange of Hong Kong Limited

Certifications: ISO 9001:2015

Sustainable Products & Innovation

• Eco-leather