Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environmental Protection
• Employee Caring
• Operating Practices
• Community Investment

Environmental Achievements

• Modified dust remover in Shanghai Hilong Shine New Material Co., Ltd., significantly reducing dust emission.
• Undertook emission reduction projects in Shanghai Hilong Drill Pipe Co., Ltd., including installing new smoke remover equipment and refining production technology.
• Energy-saving retrofit of Shanghai Hilong Drill Pipe Co., Ltd., effectively reducing electricity and natural gas consumption.
• Recycled packaging materials, effectively reducing consumption.

Social Achievements

• Established a sound human resources management structure.
• Created a favorable working environment for employees.
• Provided comprehensive promotion channels and training system.
• Adopted various systems to protect employees' health and safety.
• Organized various employee activities.
• Over 90% of subsidiaries passed work safety standardization certification.

Governance Achievements

• Established the HSE committee for centralized management of occupational health, safety, and environmental protection.
• Formulated a series of audit monitoring systems to prevent bribery, extortion, fraud, and money laundering.
• Implemented the “Management System for Audit Department”, “Regulations for the Implementation of the Audit Work”, “Management System for Fraud and Irregularities”, and “Clean Government Self-Discipline Standard”.

Climate Goals & Targets

Environmental Challenges

• Waste gas emissions (VOCs and industrial dust)
• Waste water emissions (oil-containing wastewater and domestic sewage)
• Greenhouse gas emissions (Scope 1 and 2)
• Solid waste emissions (general industrial wastes and hazardous wastes)
• Noise pollution from various sources

Mitigation Strategies

• Installed environmental protection facilities to collect and treat waste gases.
• Treated oil-containing wastewater as hazardous waste and hired professional agencies for treatment.
• Recycled water in production and prevented leakage.
• Sold recyclable solid wastes and entrusted professional bodies to deal with unrecyclable wastes.
• Employed qualified professional bodies for hazardous waste treatment.
• Promoted green office and green production, conducted energy-saving retrofit projects, and adopted energy-saving measures.
• Used low-noise equipment, arranged equipment reasonably, and installed vibration dampers and silencers.

Supply Chain Management

Responsible Procurement

• Supplier Management System
• Requirement of ISO14001 environmental management system certificate

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: ESG Reporting Guide (Appendix 27 to the Rules Governing the Listing of Securities on The Stock Exchanges of Hong Kong Limited)

Certifications: ISO9001, NS-1

Sustainable Products & Innovation

• New linkage technology for oilfield gathering pipelines
• Tin-free self-polishing antifouling coating

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• Slight decrease in revenue of oilfield equipment manufacturing and services segment due to persistent COVID-19, fluctuation in the oil and gas industry, cautious investment and purchasing by upstream customers, fierce market competition, price sensitivity of customers, and rising raw material prices and transportation costs.
• Potential impact of the recent outbreak of COVID-19 on the Group’s business, results of operations and financial position
• Impact of geopolitical factors arising in connection with recent military conflict between Russia and Ukraine on the Group’s business operations

Mitigation Strategies

• Various measures to reduce capital expenditure, reduce cost and increase efficiency; active accounts receivable and inventory management; prioritizing cooperation with customers with good collection records; successful debt restructuring; actively adjusting strategy to explore new business fields; implementing all-round normalized control of the pandemic; strengthening market development; giving full play to the synergy among drilling and workover services, technical services and trade services; obtaining qualification certification of many large international customers; extending or renewing many contracts; implementing several measures to mitigate emissions produced by the Group’s offices.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• The Group has been committed to complying with applicable standards and environmental protection laws and regulations. Further, the Group did not incur any material cost in complying with such laws and regulations during the reporting period.
• Several of the Group’s subsidiaries have obtained certifications from Beijing CNP CHSE Conformity Center and ABS Quality Evaluations Inc. that their environmental management systems are in conformity with the requirements of the ISO 14001 standards.
• Hilong not only complies with the applicable local environmental laws and regulations of places it operates, but also spares every effort to assist clients to reduce waste and waste treatment costs through optimizing its operation procedures and adopting new technologies.

Social Achievements

• The Group prides itself on providing a safe, effective and congenial work environment. Adequate arrangements, trainings and guidelines are implemented to ensure that the working environment is healthy and safe.
• The Group provided regular occupational health and safety check-ups and trainings for its employees.
• The Group is committed to participating in community events and has worked with a number of charitable organizations with an aim to improve community well-being and social services.

Governance Achievements

• The Company has adopted the code provisions as set out in Part 2 of the Corporate Governance Code as its own code of corporate governance.
• The Company has applied the principles set out in Part 2 of the CG Code during the year under review.
• The Company has established a Board Independence Evaluation Mechanism.

Climate Goals & Targets

Environmental Challenges

• Lockdowns in Shanghai due to COVID-19 in April and May 2022 posed immense challenges to the production and operation of Hilong, resulting in increased costs and hampered profitability.
• The lockdowns resulted in an increase in our costs, especially transportation costs to a large extent, which in turn hampered the profitability of the Company for the first half of the year.
• An increase in inventory stock to cope with any emergency such as lockdown also led to temporary increase in inventory, causing negative effect to the operating cash flow during the first half of 2022.

Mitigation Strategies

• Before lockdown started, the Company strengthened risk prediction and response measures, and arranged some front-line team to stay in factories to continue production while ensuring the workforce’s safety and wellbeing are safeguarded.
• The Company prioritized and ensured the timely delivery of orders where delivery time was tight, allowing fundamental operations and minimizing losses.
• After the lockdown in Shanghai was fully lifted in early June 2022 and the gradual easing of the COVID-19 measures in China subsequently, the impact of the pandemic on Hilong was reduced.
• While vigorously exploring the market and actively striving for orders, the Company adopted cost control measures to reduce cost and increase efficiency.
• The Company also strengthened its cash flow management, took active accounts receivable and inventory management measures, and covered the cash flow targets which were not completed in the first half of 2022.

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: ISO 14001, OHSAS 18001

Certifications: ISO 14001, OHSAS 18001