Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environmental Protection
• Working Environment
• Operating Practices
• Corporate Social Responsibility

Environmental Achievements

• Emissions of industrial enterprises were lower than the standard prescribed by laws. Also, neither significant violation of environmental protection laws nor accidents exerting significant adverse impact on the environment occurred.

Social Achievements

• The Company and its subsidiaries adhere to the principle of fair recruitment regardless of age, gender, marital status, race, nationality, religion or disability, and always regard staff as the most important assets and appoint them according to their ability. Every staff enjoys equal opportunities.
• In 2015, the Company and its subsidiaries had no significant labour disputes.
• The Company and its subsidiaries provide the staff with a comparatively reasonable salary, appropriate medical protection and other insurance coverage.

Governance Achievements

• The Company had complied throughout the reporting period with the provisions of the Corporate Governance Code and Corporate Governance Report as set out in Appendix 14 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”).
• The Company had complied with the requirements of the Listing Rules to appoint three Independent Non-Executive Directors during 2015, namely, Mr Luo Zhenbang, Ms Leung Sau Fan, Sylvia and Mr Wang Xiaojun.

Climate Goals & Targets

Environmental Challenges

• global macroeconomic downturn and sluggish demands both at home and abroad had resulted in continuous depreciation of various major foreign currencies to promote export.
• the manufacturing industry in the PRC witnessed an obvious accelerated slowdown and continuous rise in labour costs.
• Manufacturers therefore experienced excess capacities and extremely intense price competition.

Mitigation Strategies

• hi-tech manufacturing was also affected significantly with a decrease in orders or the need to offer discounts to retain customers.
• Some customers even decided to shift the manufacturing of OEM products back to their homelands or other regions, making market development extremely difficult.

Supply Chain Management

Responsible Procurement

• Supplier Management and Control Procedures, covering the qualification accreditation, annual assessment and regular monitoring of the suppliers, and developed provisions for anti-commercial bribery as well as product delivery and service management system, including product quality control methods and product complaint handling

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• Environmental Protection
• Employment and Labour Practice
• Operational practices
• Anti-corruption
• Community Investment

Environmental Achievements

• Emissions of industrial enterprises were lower than the standard prescribed by laws in 2016. No material violation of environmental protection laws or accidents exerting material adverse impact on the environment was noted.
• Emissions of greenhouse gases and waste materials by the Major Industrial Enterprises had exhibited a downward trend and their costs for production and operation decreased in recent years.

Social Achievements

• The Company and its subsidiaries adhere to the principle of fair recruitment regardless of age, gender, marital status, race, nationality, religion or disability.
• All industrial enterprises have put in place various requirements, including but not limited to labour protection for female workers and underage workers, adequate protection of staff’s work and rest time, paid annual and causal leaves and occupational injury management.
• The Company and its subsidiaries provide the staff with a reasonable salary, appropriate medical protection and other insurance coverage.
• In 2016, the Company and its subsidiaries had no significant labour disputes.
• Major Industrial Enterprises have applied for and obtained relevant international certifications, such as Quality Management System Standard (ISO 9001), Environmental Management System Standard (ISO 14001), Occupational Health and Safety Management Standard (OHSAS 18001), Restriction of Hazardous Substances Directive (ROHS 2.0) and Quality System Requirements for Automotive Products and Services (ISO/TS 16949).
• In 2016, products of the industrial enterprises had no significant quality problems.
• The Major Industrial Enterprises will conduct necessary assistance to neighboring communities or people in need in accordance with different circumstances, and will use proper resources to support activities of communities.

Governance Achievements

• The Company had complied throughout the reporting period with the provisions of the Corporate Governance Code and Corporate Governance Report as set out in Appendix 14 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”).
• The Company had complied with the requirements of the Listing Rules to appoint three Independent Non-Executive Directors during 2016.
• The Company had adopted the Model Code for Securities Transactions by Directors of Listed Issuers , Appendix 10 of the Listing Rules, as the required standard for the Directors of the Company to trade the securities of the Company.
• The Company has enacted the Rules on Administration of Information Disclosure Affairs to maintain sound corporate governance and duly fulfill information disclosure obligations of a listed company and protect the rights and interests of the Company and investors.

Climate Goals & Targets

Environmental Challenges

• Global macroeconomic downturn and sluggish demands both at home and abroad had resulted in continuous depreciation of various foreign currencies by major countries to promote export.
• The manufacturing industry in the mainland China witnessed an obvious accelerated slowdown and continuous rise in labour costs, manufacturers therefore experienced excess capacities and extremely intense price competition.
• Technological development cannot follow the pace of market needs resulting from rapid market changes and cannot enhance the products’ quality on time.
• Some customers even shifted the manufacturing of OEM products back to their homelands or other regions, making market development extremely difficult.

Mitigation Strategies

• Hi-tech manufacturing strengthened investment in technology innovation and automation in production, having introduced advanced equipments and underwent business transformation.
• The construction of high precision PCB factory was completed. Besides, equipments were brought in and trial production was finished at the end of 2016, productivity is expected to be raised in 2017.
• The business of intelligent chargers developed medium power battery products while the business of plastic products renewed equipments and expanded the electroplating products in vehicle accessories and household appliances.

Supply Chain Management

Responsible Procurement

• qualification identification, annual review and regular supervision for suppliers, formulated anti-commercial bribery rules

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• Environmental Protection
• Social Responsibility
• Corporate Governance

Environmental Achievements

• Emissions of wastes, pollutants and noise were lower than the standard prescribed by laws in 2017. No material violation of environmental protection laws or accidents exerting material adverse impact on the environment was noted.
• Strengthened education to staff about energy saving and environmental protection, implemented target management for use of water and electricity to gradually reduce the consumption, and maximized the use of recyclable packaging materials instead of disposables.

Social Achievements

• Adhered to the principle of fair recruitment regardless of age, gender, marital status, race, nationality, religion or disability.
• Provided staff with reasonable salary, appropriate medical protection and other insurance coverage.
• Established a complete set of occupational safety and health management system.
• Provided employees with body check on a regular basis, and new employees received pre-employment training.
• No significant labour disputes in 2017.
• Products of the industrial enterprises had no significant quality problems in 2017.
• Applied for and obtained relevant international certifications, such as ISO 9001, ISO 14001, OHSAS 18001, ROHS 2.0, ISO/TS 16949 and SA8000.

Governance Achievements

• Complied with the provisions of the Corporate Governance Code and Corporate Governance Report.
• Established an Audit Committee, a Remuneration Committee and a Nomination Committee.
• Implemented a risk management and internal control system.
• Established the Rules on Administration of Information Disclosure Affairs and Guidelines on Identification of Discloseable Transactions and Inside Information.
• No significant disputes between the Company and its subsidiaries and business partners and lending banks in 2017.

Climate Goals & Targets

Environmental Challenges

• Hi-tech manufacturing faced challenges including complicated economic situation, continued increase in the costs of raw materials and labour, and the decrease of orders from several major customers.
• The cross-border e-commerce logistics business was affected by the customs policy adjustment and the fierce competition of the industry.
• Hainan Aerospace faced stability risk due to austerity measures in China, changes in government compensation standard, and substantial increase in construction costs.

Mitigation Strategies

• Hi-tech manufacturing strengthened investment in technology innovation and automation in production, enhanced cost control and underwent business transformation.
• Aerospace Digitnexus planned to integrate and upgrade the industrial traceability of landmark agricultural products nationwide.
• Hainan Aerospace and the Municipal Government of Wenchang City reached a settlement agreement to terminate the Land Development Agreement.

Supply Chain Management

Responsible Procurement

• Established procedures for administration and control of suppliers, including qualification identification, annual review and regular supervision for suppliers, formulated anti-commercial bribery rules.

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance

Environmental Achievements

• Reduced non-hazardous waste produced from 24,717 tonnes in 2018 to 3,690 tonnes in 2019.
• Implemented energy saving measures such as replacing lighting to LED energy conservation system and regularly eliminating equipment of obsolete processes and higher energy consumption.

Social Achievements

• Established a complete set of occupational safety and health management system.
• Provided employees with body check on a regular basis, and new employees will receive pre-employment training.

Governance Achievements

• Complied with the provisions of the Corporate Governance Code and Corporate Governance Report.
• Established Audit Committee, Remuneration Committee and Nomination Committee.

Climate Goals & Targets

Environmental Challenges

• Global economic slowdown and escalating trade frictions between China and the US materially inhibiting growth and profitability.
• Relocation of production bases by major customers to other countries.
• Continued Sino-US trade frictions, as well as increased operating costs.
• Major customers withdrew from the personal consumer electronics market.
• Economic cycle and iterative upgrade of electronic products, as well as sluggish performance of consumer electronics products and automotive markets.
• Adjustments on customs policies affecting cross-border e-commerce logistics business.
• Transformation of internet of things application business.
• High employee turnover rate, especially among employees under 30.

Mitigation Strategies

• Actively adjusted market and product structure to curb the sharp decline in economic scale and efficiency.
• Vigorously reduced current investment in fixed assets to ease tight cash flow and operating pressure.
• Strengthened management of receivables and inventories to improve the quality of economic operations.
• Expanded product lines from office and financial equipment to new economic industries such as new energy vehicles, smart devices and robots.
• Planning to develop a new production base in Vietnam.
• Focusing on transformation from the market of low-power products and intensifying efforts on the research and development of medium and high power products.
• Intensified development efforts on 5G, cameras and other products in the domestic market.
• Made progress in exploring the markets of integrated circuit substrate and aerospace products.
• Successfully cultivated new strategic partners while maintaining the relationship with existing major customers, and introduced the new electricity meter business.
• Completed the basic construction of the new liquid crystal module (“LCM”) plant.
• Strengthened scientific planning for the “14th Five-Year Plan”, with core strategies being innovation-driven, integrating into aerospace business, capital operation, and talent-based enterprise.
• Enlarged the room of development for employees and provided them with development platform and occupational guidance.

Supply Chain Management

Supplier Audits: Annual review and regular supervision for suppliers.

Responsible Procurement

• Qualification identification of suppliers; formulated anti-commercial bribery rules; management system for product delivery and service established, including product quality control methods and complaint handling.

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• Product safety
• Product quality
• Corporate governance and risk management

Environmental Achievements

• Reduced greenhouse gases emissions by 3% compared to the previous year
• Recycled 10% of waste originally scheduled to be sent to landfills
• Gradual replacement of outdoor lighting in the Dong Guan Hong Yuen factory with solar energy lamps, expected to save approximately 12,264,000 kWh of electricity per year

Social Achievements

• Total lost days due to work injury were more than half lower than last year
• No work-related fatalities in the past three years
• 100% of employees received training

Governance Achievements

• Established an effective whistle-blowing system
• Formulated and implemented an internal integrity system
• Arranged corruption prevention training for directors, senior management and staff

Climate Goals & Targets

Environmental Challenges

• Weak market demand, severe decline in overseas orders, fierce market price competition, significant decline in product profits
• Significant decline in sales from the hi-tech manufacturing business, especially the PCB business
• Decline in leasing demand for office buildings in Shenzhen

Mitigation Strategies

• Actively expanding domestic and overseas markets
• Optimizing business, market and product structure
• Promoting technological innovation and improvement of production capacity and efficiency
• Optimizing leasing strategy and increasing efforts in attracting tenants

Supply Chain Management

Supplier Audits: 458 suppliers (approximately 30% of total) engaged have implemented environmental, social and governance-related practices

Responsible Procurement

• Green procurement system
• Priority to suppliers with excellent environmental performance (ISO14001 certified)

Climate-Related Risks & Opportunities

Physical Risks

• Typhoons
• Floods
• Extreme temperature differences
• Rising sea levels

Transition Risks

• Legal, technological and market changes related to the low-carbon economy

Reporting Standards

Frameworks Used: Appendix 27 of the Rule Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited

Certifications: ISO14001, ISO9001, OHSAS18001, ROHS2.0, ISO/TS16949, SA8000

Awards & Recognition

• High and New Technology Enterprise in Guangdong Province
• High and New Technology Product Certificate of Dongguan City
• Excellent Enterprise in Green Manufacturing and Environmental Protection
• National Intellectual Property Advantage Enterprise