Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance

Environmental Achievements

• Total air emissions of the boiler reduced significantly after using natural gas instead of coal since September 2017 (0.27 tonnes in 2017 vs 11.08 tonnes in 2016).
• Amount of cinders generated reduced due to the switch to natural gas.
• Switched to LED lighting since late 2015.

Social Achievements

• No severe injuries or fatalities of employees in 2017.
• Collaboration with Jiangnan University and Fujian Normal University to provide online distance education diploma program to over 100 staff members.
• Annual training provided to the management team of distributors.
• No child labor issues identified during supplier audits.

Governance Achievements

• Compliance with all code provisions of the Corporate Governance Code.
• Established anti-corruption policy and reporting channels.
• Share option scheme to reward employee contributions.

Climate Goals & Targets

Environmental Challenges

• Deterioration of market competition
• Ineffective management of the retail operations of distributors
• Failure to re-align and adjust store network to more popular retail channel
• Ineffective brand promotion activities or failure to maintain and promote the brand, particularly in the first- and second-tier cities where the Group targets to expand
• Distributors’ credit risks
• Business susceptible to extreme or unseasonable weather conditions
• Misjudgement of fashion trends or changes in consumers’ demand or failure to respond to such changes in a timely manner

Mitigation Strategies

• Improving product quality without raising the price
• Enhancing the originality and individuality of its products
• Reforming its supply chain
• Adjusting and upgrading its retail channels
• Adopting a consignment model to speed up store openings
• Investing in brand LILANZ
• Expanding into new markets
• Accelerating online-to-offline development
• Launching new retail business

Supply Chain Management

Supplier Audits: one or two on-site visits annually

Responsible Procurement

• Legal compliance of suppliers
• Priority given to suppliers with ISO14000 environmental management accreditation

Climate-Related Risks & Opportunities

Physical Risks

• Extreme or unseasonable weather conditions

Sustainable Products & Innovation

• Using more environmental-friendly fabrics made from bamboo fiber

Awards & Recognition

• Top 100 Most Valuable Brands of Listed Companies in China
• Most Internationally-Competitive National Brand in PRC Menswear Industry
• Best Quality Service Brand 2017

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance

Environmental Achievements

• Reduced air emissions significantly after using natural gas instead of coal for the boiler since September 2017.
• Reduced water consumption by about 20% on average in the washing process of some jeans products by adopting the latest washing technology.
• Launched an environmentally-friendly jeans collection made with blended fabrics of cotton yarn and polyester yarn extracted from recycled plastic bottles; each pair of jeans on average uses about seven plastic bottles.

Social Achievements

• No severe injuries or fatalities of employees.
• Provided annual training to the management team of its distributors, covering areas relevant to retail management.
• Made donations totaling RMB25.2 million to The World Middle School Games and other charitable associations.

Governance Achievements

• Complied with all code provisions of the Corporate Governance Code.
• Established Audit Committee, Remuneration Committee, Nomination Committee and Risk Management Committee.
• Adopted a Board Diversity Policy.

Climate Goals & Targets

Environmental Challenges

• Slow-down of the economy and consumer spending.
• Deterioration of market competition.
• Ineffective management of the retail operations of distributors.
• Misjudgement of fashion trends or changes in consumers’ demand.
• Ineffective brand promotion activities.
• Distributors’ credit risks.
• Inventory risks.
• Business susceptible to extreme or unseasonable weather conditions.
• COVID-19 epidemic.

Mitigation Strategies

• Improving retail management and propelling channels transformation.
• Opening stores at quality locations within shopping malls in a more selective manner.
• Encouraging distributors of the core collection to operate more direct-retail stores.
• Replacing the consignment model of the smart casual collection with a direct-retail model.
• Reinforcing inventory management by reducing pre-orders and preparing sufficient production capacity for replenishment orders.
• Clearing channel inventories by selling accumulated inventories online and during special sales events.
• Focusing on the optimization of the store network.
• Reducing production of 2020 fall products to facilitate destocking of spring channel inventories.
• Granting sales rebates to distributors most affected by the epidemic.

Supply Chain Management

Supplier Audits: one or two on-site visits annually

Responsible Procurement

• All major raw material suppliers are required to comply with the Environmental Protection Law of the PRC and those with ISO14000 environmental management accreditation will be given the priority in the selection process.

Climate-Related Risks & Opportunities

Physical Risks

• extreme or unseasonable weather conditions

Sustainable Products & Innovation

• environmentally-friendly jeans collection

Awards & Recognition

• Top 500 Brands in China
• China (Industry) Quality Evaluation Gold Award 2019
• Better Living — Fashion Culture Contribution Award
• Alifish Innovative Marketing Pioneer Award

Environmental Metrics

ESG Focus Areas

• Environmental sustainability
• Employee benefits and welfare
• Human rights and labor interests
• Product quality and safety
• Supply chain management
• Corporate governance
• Social investment
• Anti-corruption

Environmental Achievements

• Reduced carbon emissions by 214 tonnes through the construction of a solar photovoltaic power generation system.
• Reduced air emissions by using natural gas instead of coal for the boiler.
• Discharged less than 150 litres of chemical liquid waste.
• Increased the utilization rate of fabrics through various measures, reducing scraps generated during the production process.

Social Achievements

• Launched a youth aesthetic education plan.
• Provided competitive remuneration and benefits to employees.
• Implemented a work system with integrated computation of working hours to secure staffs’ right to rest and leave.
• Provided free medical examinations for workshop staff and online psychological counselling services.
• Made charitable donations amounting to RMB12,023 million.

Governance Achievements

• Established a comprehensive and rigorous ESG governance structure.
• Implemented an anti-corruption policy and whistleblowing system.
• Complied with all code provisions of the Corporate Governance Code.

Climate Goals & Targets

Environmental Challenges

• Slow-down of the economy and consumer spending.
• Deterioration of market competition.
• Ineffective management of the retail operations of distributors.
• Misjudgement of fashion trends or changes in consumers’ demand.
• Ineffective brand promotion activities.
• Distributors’ and consignees’ credit risks.
• Inventory risks.
• Business susceptible to extreme or unseasonable weather conditions.

Mitigation Strategies

• Actively responded to market changes by continuously facilitating new retail business, promoting sales and driving store efficiency.
• Launched quality and iconic items as well as rejuvenated the brands.
• Strengthened the development of the new retail business and optimized the integration of online and offline models.
• Pragmatically developed its own retail network and supported distributors in optimising the retail network.
• Established an inventory management system with higher sell-through rate.
• Implemented the strategy of “Simplified Design, Excellent Quality”, providing customers with high quality products with value.
• Vigorously carried out promotional activities.
• Adjusted its product mix to reduce the impact of climate change on business.
• Adopted a flexible order management.

Supply Chain Management

Supplier Audits: One to two on-site inspections before official cooperation, and periodic inspections during cooperation.

Responsible Procurement

• Legal compliance of suppliers’ operations.
• ISO14000 environmental management accreditation for raw material suppliers.

Climate-Related Risks & Opportunities

Physical Risks

• Adverse or unusual weather conditions may lead to changes in product design direction and timing of sales.

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

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

Certifications: ISO 14001, ISO 45001

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Eco-friendly jeans collection made with blended fabrics of cotton yarn and polyester yarn extracted from recycled plastic bottles.
• Regenerated fibre decorative labels.

Awards & Recognition

• Certificate of China Green Product Certification
• “down with the best hydrophobic performance” and “the world’s outstanding down with ultra warm technology” (WRCA)
• “shirt with the least color deviation after 30 washes” (WRCA)
• “Secondary Award for Scientific and Technological Advancement” at the 2023 Science and Technology Awarding Ceremony of the China National Textile and Apparel Council
• “Brand Enhancement Discovery Award of the Year” at the 2023 T-EDGE Global Innovation Conference
• “Pioneering Minimalist Menswear Brand” at the 2023 Brand Power (Kunming) International Summit Forum
• “Star-and-Fans Brand Award” at the Weibo Excellent Garment Brand Value Enhancement Forum
• “Best Video Account Marketing Award” in the Tencent Social Media category