Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environmental Management
• Emission Management
• Hazardous and Non-hazardous Waste
• Supply Chain Management
• Product Responsibility
• Customer Service
• Intellectual Property Protection
• Anti-Corruption
• Employee health and safety
• Energy use and efficiency
• Employee development and training
• Solid waste treatment and management
• Use of raw materials
• Sewage discharge and management
• Labor Standards
• Air emissions and management
• Water resources and water efficiency
• Greenhouse emissions and management
• Community Engagement and Contribution
• Climate Change

Environmental Achievements

• Reduced air pollutant emissions (specific figures provided for NOx, SO2, PM2.5, PM10, and CO2)
• Reduced greenhouse gas emissions (Scope 1 and 2 emissions data provided)
• Improved waste recycling (increased waste recycling)
• Promoted the use of renewable energy (promoted renewable energy projects)
• Enhanced water conservation awareness (provided employees with water conservation training/publicity)
• Achieved ISO 14001:2015 certification for environmental management systems in multiple subsidiaries

Social Achievements

• Maintained a 95% customer satisfaction rate
• Implemented a comprehensive performance appraisal and fair promotion mechanism
• Implemented equal opportunities and diversity policy
• Provided training and development opportunities for employees (total training hours provided)
• Actively participated in community investment (relief donations and public welfare reliefs)

Governance Achievements

• Established a robust ESG risk management process
• Implemented countermeasures against material ESG risks (product quality, health and safety, community engagement, intellectual property rights, infectious diseases)
• Established anti-corruption policies and whistle-blowing system
• Implemented a sound internal control system

Climate Goals & Targets

Environmental Challenges

• Product quality
• Health and safety
• Community engagement and contribution
• Intellectual property rights
• Infectious diseases
• Climate change related physical risks (flooding)

Mitigation Strategies

• Adopted ISO 9001 quality control procedures
• Formulated the Compilation of Production Safety Management System
• Established Chongqing Machinery & Electric Co., Ltd. Management Measures for External Donations
• Reviewed relevant qualifications of new employees, signed Labor Contract and Confidentiality Contract
• Formulated six management measures according to pandemic prevention and control headquarters
• Established the Emergency Plan for Flood Prevention and the Business Continuity Plan
• Established the Emergency Plan for Heavy Pollution Weather

Supply Chain Management

Supplier Audits: 370 suppliers

Responsible Procurement

• Administrative Measures for Centralized Procurement of Bulk Materials
• Implementation Rules for Centralized Procurement of Bulk Materials

Climate-Related Risks & Opportunities

Physical Risks

• Flooding

Reporting Standards

Frameworks Used: Appendix 27 Environmental, Social and Governance Reporting Guide (ESG Guide) of the Main Board Listing Rules of The Stock Exchange of Hong Kong Limited

Certifications: ISO 14001:2015, ISO 45001:2018

Environmental Metrics

ESG Focus Areas

• Workplace quality
• Environmental protection
• Operating practices
• Community involvement

Environmental Achievements

• CQGI Group awarded the title of national “Green Factory” by the General Office of the Ministry of Industry and Information Technology
• Chongqing Cummins approved by the Ministry of Industry and Information Technology as a Model Enterprise for Green Design of Industrial Products

Social Achievements

• Implemented a series of risk control activities and formulated corresponding internal policies covering human resources planning, employee recruitment approval, talent management for key positions and employee remuneration system.
• Formulated the Compilation of Production Safety Management System to regulate the management of production safety of subsidiaries.
• Established a safety production risk fund management system.
• Strengthened production safety training for employees of subsidiaries.
• All subsidiaries adopted ISO 9001 quality management procedures.
• Launched the Chongqing Machinery & Electric Co., Ltd. Enterprise Innovation Incentive Measures (Trial).

Governance Achievements

• Established the Environmental, Social and Governance Working Group to identify, assess and determine relevant environmental, social and governance risks, and formulate risk response measures.

Climate Goals & Targets

Environmental Challenges

• Certain subsidiaries’ dormitories are still using boilers for bathing and water supply with low energy efficiency.
• The subjective awareness of the subsidiaries’ employees to reduce carbon emissions needs to be further enhanced.
• Recycling of oily metal scraps is not cost-effective for subsidiaries as the disposal price of oily metal scraps is low. It is challenging to standardize the recycling processes.
• The duration of the annual effective power generation is limited, and the rate of return is not high.
• Some employees’ awareness of water conservation needs to be strengthened.

Mitigation Strategies

• Promote the upgrading and transformation in relevant subsidiaries.
• Formulate unified management and control measures from the company level through regular research to improve the attention and management efficiency of each subsidiary.
• Strengthen supervision and inspection, and promote the standardized disposal rate of subsidiaries to reach 100%.
• Negotiate with the local government to obtain relevant administrative subsidies to improve the efficiency of project implementation.
• Increase publicity efforts by producing banners to further improve employees’ awareness of water conservation.

Supply Chain Management

Supplier Audits: 1,277

Responsible Procurement

• Openness, fairness and transparency
• Careful evaluation of price, quality, cost, delivery, after-sales service

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather

Reporting Standards

Frameworks Used: HKEX ESG Reporting Guide

Certifications: ISO 14001: 2015, ISO 45001: 2018, ISO 50001/GB/T 23331-2020

Awards & Recognition

• National “Green Factory” (CQGI Group)
• Model Enterprise for Green Design of Industrial Products (Chongqing Cummins)

Environmental Metrics

ESG Focus Areas

• Environmental Performance
• Social Responsibility
• Sustainability Governance
• People-Oriented
• Community Engagement

Environmental Achievements

• Completed enhancement of boiler equipment (Pigeon Company); Completed low-carbon combustion transformation of boilers (CAFF Company); Implemented additional photovoltaic systems; Chongqing Cummins launched the Planet 2050 program.
• Partitioned the metal scrap warehouse and stored oil-free metal scraps separately; Upgraded the storage area of oily metal scraps; Selected qualified entities for unified collection and non-hazardous disposal; Provided garbage sorting training.
• Machine Tools Group, Chongqing Cummins, and Chengfei Company completed the installation of rooftop photovoltaic systems; CGQI Group is implementing a photovoltaic project; Chengfei Company’s wind turbine blade production base in Xinjiang was put into operation.
• Installed sensor-activated faucets; Chongqing Cummins optimized its water recycling system.

Social Achievements

• Established the “three-inspection system” for product quality; Implemented the dual manager system for key procedures; Required quality reinspection before delivery; All subsidiary companies implemented ISO 9001 quality control procedures.
• Established rigorous service procedures for customer service; Engaged professional organizations for website security monitoring.
• Formulated the “ Employee Performance Assessment Management Measures ”; Conducted annual performance evaluations for middle-level executives and business managers; Provided timely performance feedback and guidance.

Governance Achievements

• The Board of Directors oversees ESG risk management; The Board leads the Environmental, Social, and Governance Working Group; The ESG Working Group assists the Board in assessing and managing material ESG risks; Implemented remediate measures for identified risks.

Climate Goals & Targets

Environmental Challenges

• Environmental awareness of subsidiaries’ employees needs further enhancement; Recycling of oily metal scraps is not cost-effective; Standardizing recycling processes is challenging; Duration of annual effective power generation is limited; Rate of return on renewable energy projects is not high; Employees’ awareness of water conservation needs strengthening.

Mitigation Strategies

• Formulate unified control measures at the company level; Strengthen supervision and inspection; Promote standardized disposal rate of subsidiaries to reach 100%; Negotiate with local government for administrative subsidies; Enhance communication efforts through banners; Produce banners to improve employees’ awareness of water conservation.

Supply Chain Management

Supplier Audits: 1,554 registered domestic suppliers audited

Responsible Procurement

• Administration Measures for the Bulk Material Procurement; Centralized Procurement Catalog for 2022; Blade Raw Material Supplier Management Procedures (Chengfei Company); Equipment and Tooling Supplier Management Procedures (Chengfei Company); Internal control systems for procurement business processes (Chongqing Water Company).

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events (e.g., heavy snow, heavy rainfall)

Transition Risks

• Climate change and extreme weather – transition risk

Opportunities

• Development of energy-efficient products and renewable energy projects

Reporting Standards

Frameworks Used: HKEX ESG Reporting Guide

Certifications: GB/T24001-2016/ISO 14001:2015, ISO 50001, GB/T 23331-2020, OHSAS 8001, ISO 45001, GB/T 45001-2020

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• A in Wind ESG ratings for two consecutive years; Several subsidiaries elected on the list of Smart Factories and Digital Workshops in Chongqing; 2023 Energy Management Insight Award (Chongqing Cummins)