Climate Change Data

Environmental Metrics

ESG Focus Areas

• Climate Change
• Sustainable Manufacturing
• Human Capital
• Governance

Environmental Achievements

• Following customers’ commitments to SBTi to achieve the goal of reducing emissions by 46.2% by 2030, as compared with the base year of 2019

Social Achievements

• Investing in human capital, lifting workplace standards & fair compensation, and creating a safe & friendly workplace with more interaction & communication
• The Only FLA Accredited Footwear OEM/ODM Globally

Governance Achievements

• Board supervision & ESG working group; following UN SDGs, code of conducts of WFSGI & reporting data validated by SGS; ESG Report: HKEx guide, GRI, SASB, TCFD

Climate Goals & Targets

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRI, SASB, TCFD

Certifications: FLA Accredited

Third-party Assurance: SGS

Awards & Recognition

• ‘Most Honored Company’ in the 2024 Asia (ex-Japan) Executive Team - Consumer/Discretionary - Rest of Asia
• 8 awards including ‘Grand ESG Award’ and ‘Best IR Company’ in the HKIRA 10th Investor Relations Awards 2024 (mid-cap category)
• First included in 2024 Sustainability Yearbook (China Edition) & recognized as Industry Mover

Environmental Metrics

ESG Focus Areas

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

Environmental Achievements

• 66.0% of footwear production bases implemented ISO 14001:2015 management system
• Received the Top 100 Sustainable Enterprise in Vietnam for four consecutive years
• Energy saving achievements of 148,131,001 MJ

Social Achievements

• FLA certification for Pou Chen Group (including Yue Yuen), the only sports footwear manufacturer globally certified by FLA
• Over 310,000 regular employees worldwide, with 240,000 female employees (77.9%)
• No child labor employed
• Collective Bargaining Agreement covers 92.8% of shoemaking business segment employees
• 98.6% rate of conclusion for 6,214 complaint and consultation cases
• 4,031 households benefited from summer camp for employees' children
• 80 Muslim prayer rooms built in Indonesia and Bangladesh factories

Governance Achievements

• Established various employee relations channels and maintained continuous dialogues with employees
• Implemented a comprehensive performance management system
• Established an internal information management system for occupational hazards
• Implemented “Discipline/Engagement Committee Measures” for fair and impartial handling of complaints
• No complaints or notices received from government authorities due to material breaches of employment and labor practices
• No cases of corruption, bribery, extortion, fraud or money laundering reported

Climate Goals & Targets

Environmental Challenges

• Concerns from stakeholders regarding labor rights and occupational safety and health
• Potential risks from climate change (extreme weather, flooding) impacting operations
• Maintaining high quality standards and compliance with legal requirements in production and supply
• Ensuring the credibility and completeness of greenhouse gas inventory data

Mitigation Strategies

• Established dedicated sustainable development units to coordinate communication with stakeholders
• Implemented an emergency response plan for natural disasters
• Improved water treatment plant capacity
• Implemented energy-saving projects and gradually replaced high-pollutant/high-carbon-emission fossil fuels
• Regularly evaluates suppliers and implements management mechanisms
• Continuously enhances the credibility and completeness of inventory data

Supply Chain Management

Supplier Audits: 10 supplier factories for quality management, 64 for sustainable development management (2019)

Responsible Procurement

• Requires material suppliers to provide material inspection reports and commitment documents for zero use of prohibited and restricted substances
• Conducts sample tests for specific materials
• Requires suppliers to sign confidentiality agreements and undertakings
• Conducts regular reviews with suppliers to ensure quality standards and legal compliance
• Promotes the “Group Code of Conduct” to suppliers

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather, flooding

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

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

Certifications: ISO 14001:2015 (66% of footwear production bases), FLA Certification (Pou Chen Group)

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Vietnam’s Top 100 Sustainable Enterprises (Pou Sheng factory)

Environmental Metrics

ESG Focus Areas

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

Environmental Achievements

• Four factories in Indonesia awarded Indonesia National Environmental Protection Blue Medal Award for three consecutive years (2019-2021).
• 1,222.76 MWh Solar Power Generation
• 73,996 MWh Green Energy Certificate REC Procurement

Social Achievements

• The Group is the only sports footwear manufacturer in the world that is certified by the Fair Labor Association (FLA).
• Collective Bargaining Agreement covers approximately 269,000 employees globally, accounting for 92.6% of the total number of employees in the shoemaking business segment.
• No child labor employed.
• 3,616 cases of complaint and consultation registered in the employee relationship management system, with 99.5% of the cases being concluded within 2 months.

Governance Achievements

• Established an ESG working team to advise and assist the Board on ESG issues.
• Generally complied with applicable laws and regulations in various regions.
• Achieved BBB rating from MSCI ESG Research for the first time during the Reporting Period.

Climate Goals & Targets

Environmental Challenges

• Power rationing in mainland China affecting production and shipments.
• Uncertainty caused by policies implemented by various countries (e.g., carbon tax).
• Production disruption caused by extreme weather conditions.
• Increase in investment on ventilation and cooling facilities due to rising temperatures.
• Flooding risk due to rising sea levels.

Mitigation Strategies

• Production schedule adjustment, plant ventilation design/equipment adjustment, addition/rental of emergency generator sets.
• Advance the enterprise internal carbon pricing mechanism.
• Promote energy consumption and carbon emission monitoring and statistics.
• Disaster prevention measures, production and labor force planning management.
• Adjustment on ventilation design/facilities of plants, new plant design, risk response planning of production bases.

Supply Chain Management

Supplier Audits: 100% of sampled factories conform to the local basic salary and fair compensation standard (14% of footwear production plants audited).

Responsible Procurement

• Code of conduct, supplier sustainability requirements, non-disclosure agreement, product security undertakings, undertaking of ethics and integrity.

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events (heavy rain, snowstorm, typhoon, flood), rising sea levels

Transition Risks

• Power rationing, carbon tax, failure to meet national greenhouse gas reduction targets.

Opportunities

• Low carbon energy transition (solar PV, clean energy, energy-efficient equipment), improvement on manufacturing process to offer low carbon products, waste treatment adopting circular economy model.

Reporting Standards

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

Certifications: FLA, ISO 14001 (57.1% of footwear production bases), ISO 45001 (51.6% of footwear production plants)

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Goal 7 (Affordable and clean energy)
• Goal 8 (Decent work and economic growth)
• Goal 13 (Climate action)

Initiatives contribute to these goals through energy conservation, renewable energy use, fair labor practices, and climate change mitigation.

Sustainable Products & Innovation

• Exploring application of environmentally friendly materials in footwear.

Awards & Recognition

• Indonesia National Environmental Protection Blue Medal Award, CSR Corporate Social Responsibility Award

Environmental Metrics

ESG Focus Areas

• Environmental Sustainability
• Social Responsibility
• Governance

Environmental Achievements

• Reduced carbon intensity from 2.6-3.5 kg CO2e/pair
• 16% renewable energy share
• 35.4% water recycle rate
• Reduced hazardous waste intensity to 0.03kg/pair

Social Achievements

• FLA accreditation since 2018 (first and only footwear supplier)
• Occupational injury rate decreased by 20.4%
• Average training hours per employee: 12.5 hours
• 92.9% of employees covered by CBAs

Governance Achievements

• Established ESG taskforce in May 2022
• 98.1% of major suppliers signed Undertaking of Ethics & Integrity
• Climate Change Policy adopted in 2021

Climate Goals & Targets

Environmental Challenges

• Climate change risks (extreme weather, regulatory changes)
• Supply chain disruptions
• Environmental compliance issues (e.g., sewage discharge violations)

Mitigation Strategies

• TCFD-aligned climate risk management
• Investment in renewable energy (solar, RECs)
• Improved energy efficiency
• Water treatment upgrades
• Waste reduction and recycling initiatives
• Supplier audits and engagement

Supply Chain Management

Supplier Audits: Annual audits, including document review and remote video audits.

Responsible Procurement

• Code of conduct
• Supplier sustainability requirements
• RSL compliance
• ZDHC MRSL compliance

Climate-Related Risks & Opportunities

Physical Risks

• Extreme climate events
• Rising average temperature

Transition Risks

• Enhanced disclosure requirements of carbon emission
• Carbon-pricing mechanism
• Compulsory requirements on the use of renewable resources
• Low-carbon production
• Impacts of production
• Impact on corporate image

Opportunities

• Participate in the carbon trading market
• Automation process development
• Improved efficiency of water use
• Participate in the renewable energy market
• To set up a circular economy model for shoe manufacturing
• Use of efficient mode of transportation
• To improve energy efficiency
• Introduction of new technologies

Reporting Standards

Frameworks Used: HKEx, GRI, SASB, TCFD

Certifications: ISO 50001, ISO 14064, ISO 14001, ISO 45001, FLA

Third-party Assurance: Third-party assurance provider (SGS and FLA)

UN Sustainable Development Goals

• SDG 3
• SDG 5
• SDG 7
• SDG 8
• SDG 10
• SDG 12
• SDG 13

Initiatives align with various SDGs, including good health and well-being, gender equality, affordable and clean energy, decent work and economic growth, reduced inequalities, responsible consumption and production, and climate action.

Awards & Recognition

• Institutional Investor Asia Executive Team 2022 awards
• HKIRA 8th IR Awards 2022 awards
• Financial Times Climate Leaders 2022 awards

Environmental Metrics

ESG Focus Areas

• Climate Change
• Labor Standards
• Occupational Safety and Health
• Supply Chain Management
• Corporate Governance

Environmental Achievements

• 66% of footwear factories certified ISO 14001:2015
• 47% of factories using Higg FEM for environmental assessment
• 24% green energy share in 2023 (up from 16% in 2022)
• 5,877.4 MWh energy saved, reducing GHG emissions by 4,195.3 tCO2e in 2023
• 41% water recycle rate

Social Achievements

• MSCI ESG Rating upgraded to and maintained at ‘BBB’ in 2023
• S&P Global CSA score placed performance ahead of 83% of companies in the Textiles, Apparel and Luxury Goods industry
• CDP Climate Change Score 'B-' (Management), CDP Water Security Score 'B' (Management)
• Occupational injury decrease of 44.4%
• Average training hours 13.6 hrs/person
• 94.47% of employees covered by CBAs
• No forced labor
• No child labor
• No occupational fatality

Governance Achievements

• 40% Independent Directors
• 20% Female Directors
• 100% of suppliers signed Honest Transaction Agreement
• No significant violations of regulations
• Implemented Climate Change Policy (2021), Sustainable Development Code of Practice, and Supplier – Friendly Workplace Guidelines (2023)

Climate Goals & Targets

Environmental Challenges

• Climate change risks (extreme weather, rising temperatures, sea levels)
• Transition risks (regulatory changes, carbon pricing, market shifts)
• Supply chain disruptions
• Maintaining compliance with evolving environmental regulations
• Managing risks of infectious diseases
• Maintaining high ethical standards and preventing corruption

Mitigation Strategies

• TCFD-aligned climate risk management
• Investment in renewable energy (RTS, REC, PPA)
• Improved energy efficiency measures
• Waste reduction and reuse initiatives
• Strengthened supplier management and audits
• Implementation of “Code of Conduct”, “Prevention of Bribery Policy”, and “Whistleblowing Policy”
• Regular integrity and anti-corruption training

Supply Chain Management

Supplier Audits: Number not specified, but audits are conducted annually.

Responsible Procurement

• Code of conduct
• Supplier sustainability requirements
• Honest Transaction Agreement
• Non-disclosure agreements

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events
• Rising temperatures
• Rising sea levels
• Wildfires

Transition Risks

• Regulatory changes
• Carbon pricing
• Market shifts
• Changes in consumer preferences

Opportunities

• Investment in renewable energy
• Improved energy efficiency
• Development of low-carbon products and services
• Participation in carbon trading market

Reporting Standards

Frameworks Used: GRI, SASB, TCFD

Certifications: ISO 14001, ISO 45001, ISO 50001, ISO 9000

Third-party Assurance: Third-party assurance for parent company's report; ensures reliability of Group's report.

UN Sustainable Development Goals

• SDG 7 (Affordable and clean energy)
• SDG 8 (Decent work and economic growth)
• SDG 12 (Responsible consumption and production)
• SDG 13 (Climate action)

Initiatives are aligned with these SDGs, as described throughout the report.

Sustainable Products & Innovation

• Exploration of environmentally friendly materials

Awards & Recognition

• Various awards and recognitions are mentioned but not listed comprehensively.