Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance

Environmental Achievements

• Mengniu became a member of RSPO and facilitated the procurement of China’s first batch of “zero - deforestation” soybeans which were delivered in 1H24
• Set goal for green packaging by 2025/35

Social Achievements

• Excel as an Olympic Partner and Build a Global National Brand Strategy
• Launched the “Hundred -city Marathon” campaign

Governance Achievements

• “1+N” sustainability report disclosure system : 2023 Annual ESG Report / 1stTCFD Report of Mengniu 1st TNFD Report in China’s dairy industry / 1stGreen Packaging Value Report in China’s dairy industry

Climate Goals & Targets

Environmental Challenges

• Oversupply of raw milk resulted in a decline in raw milk prices and an imbalance between supply and demand
• Consumer demand fell below expectations
• Reshaping distribution channels
• Dairy categories are yet to be more diversified
• Room-temperature liquid milk segment has faced short-term challenges of declining raw milk prices and weaker-than-expected demand this year
• Domestic ice cream industry faced pressure from high inventory level in 1H24

Mitigation Strategies

• Actively drive the optimization of channel structure to consolidate our leading position in the room-temperature liquid milk segment
• Optimized product structure consistently driving profitability improvement
• Accelerated RTM channel transformation, Mengniu continues to optimize its channel structure and has maintained a leading position in offline channels, increased its share of online channels, and generated industry-leading growth rates across each channel
• Strategically invest in sub-segments under chilled-yogurt and consolidate market share to drive growth in a soft market
• Lean operations further enhanced execution efficiency, enabling milk formula business to become profitable in 1H24
• Strengthened brand leadership and continued to make breakthroughs in product innovation
• Focused on expanding market coverage, and improved channel control efficiency through digitalization

Supply Chain Management

Responsible Procurement

• Mengniu became a member of RSPO and facilitated the procurement of China’s first batch of “zero - deforestation” soybeans

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: TCFD, TNFD

Environmental Metrics

ESG Focus Areas

• Governance
• Environmental Sustainability (Carbon Net-zero)
• Social Responsibility (Common Prosperity)
• Ecosystem Collaboration
• Nutrition

Environmental Achievements

• 5.7% year-on-year reduction in carbon emissions at China Shengmu in 2021
• First in the industry to realize the recycling of plastic packaging, with a projected 300-tonne annual CO2 emission reduction upon full implementation.
• 6.87% year-on-year increase in annual green energy consumption across the group.
• Approved as a “National Green Supply Chain Management Enterprise”, five factories certified as “National-level Green Factory”

Social Achievements

• Establishment of the “136 Dairy Revitalization Project” leading to strategic cooperations across China, poverty alleviation projects, and cost reduction for farm partners.
• Construction of the China Dairy Industrial Park, providing employment and income for 31,000 farmers and herdsmen.
• First responders in various public emergency relief efforts (COVID-19, earthquakes, rainstorms), awarded the 11th “China Charity Award” for COVID-19 relief efforts.
• Introduction of more than 80 new products that are organic, low-fat, low-sugar, with reduced artificial ingredients, fortified with nutrients, and smaller portion sizes.

Governance Achievements

• Restructured Board of Directors in 2021 for greater diversity, strengthening strategic capabilities and optimizing ESG management.
• Inclusion in the HSI ESG Enhanced Index and HSI ESG Enhanced Select Index in March 2022.
• Specific ESG targets for management included in annual performance reviews.

Climate Goals & Targets

Environmental Challenges

• Not disclosed

Mitigation Strategies

• Not disclosed

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Not disclosed

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: UN Sustainable Development Goals (SDGs)

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

GREEN Strategy formulated by benchmarking against the UN SDGs.

Sustainable Products & Innovation

• Organic, low-fat, low-sugar, reduced artificial ingredients, fortified with nutrients, smaller portion sizes

Awards & Recognition

• 11th “China Charity Award”, Second-Class Award for Key Technology for Advancement in Science And Technology for The Control And Quality Improvement of Milk And Dairy Products

Environmental Metrics

ESG Focus Areas

• Governance-Sustainability
• Responsibility-Common Prosperity
• Environment-Carbon Net-Zero
• Ecosystem-Collaborative & Accountable
• Nutrition-Supreme & Inclusive

Environmental Achievements

• Mengniu's Qujing Factory became the first internationally and domestically dual-certified zero-carbon emission factory in the dairy industry.
• Yashili Reeborne Jingzhi infant formula milk powder achieved relatively zero greenhouse gas emissions.
• Promoted ISO 50001 Energy Management System Certification coverage, achieving 100% certification of Mengniu's own factories.
• Carbon emission reduction of about 180,000 tonnes by replacing coal-fired boilers, adopting water conservation measures, and using clean energy sources.
• Installed more than 14.6MW of solar photovoltaic capacity.
• 27 factories certified as "National-level Green Factories"
• Two factories obtained "Zero-Waste Factory" certification.

Social Achievements

• Launched the "Happiness 365+ Employee Care Work System"
• Employee training coverage rate reached 91.45%, with a total training time of 4,021,519.84 hours.
• Led the planting of 6 million+ mu and 12 million+ tonnes of high-quality forage grass nationwide, driving the breeding of 1.7 million+ dairy cows, and directly and indirectly pushing forward 4 million+ herdsmen nationwide to increase their income.
• Established 10+ planting, breeding and processing dairy industry parks nationwide, and built 30+ new pastures with strategic partners nationwide, and directly and indirectly promoted the employment and income of 60,000+ herdsmen.
• Donated 3.97 million boxes of high-quality student milk to 277 schools.
• Annual charitable donation expenditure reached RMB 106 million.

Governance Achievements

• Incorporated ESG indicators into the annual performance appraisal contract of managers.
• Set up a cross-departmental special working group on key ESG topics.
• Held 38 meetings with ESG-themed investors and rating agencies.
• Carried out internal risk management empowerment training.
• Incorporated the compliance clause into the contract template.
• 20,000+ employees completed compliance management system confirmation and compliance duty performance commitment.
• Comprehensively upgraded and issued the Integrity Compliance Manual (international edition).

Climate Goals & Targets

Environmental Challenges

• The livestock industry accounts for 15% of global carbon emissions, and there is no particularly effective carbon reduction program.
• The global food security crisis has yet to be completely resolved.

Mitigation Strategies

• Committing to achieving carbon neutrality in the value chain by 2050.
• Elevating forest protection to a critical action.
• Assisting in creating a dairy production and consumption model that does not exceed the carrying capacity of resources and the environment through technological innovation and sustainable consumption.

Supply Chain Management

Supplier Audits: 100% internal audit coverage rate for suppliers of raw material and auxiliary material

Responsible Procurement

• Revised Supplier Code of Conduct
• Joined Sedex responsible business platform
• Supplier training programs

Climate-Related Risks & Opportunities

Physical Risks

• Extremely cold weather
• Typhoon
• Extreme precipitation and flooding
• Extremely hot weather
• Sea level rise
• Climate warming

Transition Risks

• Policies and laws (energy structure and use, carbon pricing, environmental information disclosure)
• Technology
• Market (customer preference shift)
• Reputation

Opportunities

• Resource efficiency
• Source of energy
• Adaptability
• Products and services

Reporting Standards

Frameworks Used: Appendix 27 Environmental, Social and Governance Reporting Guide of The Stock Exchange of Hong Kong Limited, GRI Standards

Sustainable Products & Innovation

• Mengniu Yoyi C 0 Sucrose
• Yashili Reeborne Jingzhi infant formula milk powder

Awards & Recognition

• MSCI ESG rating upgraded to A
• Constituent of Hang Seng Corporate Sustainability Index
• Top prize among SASAC Central Enterprise ESG "Pioneer 50" Index
• KPMG China Future ESG Award - ESG Practice Award 2022
• Inner Mongolia Charity Award for Enterprise Donor Award
• CDP 2022 Environmental Leap Forward Progress Award
• 17th People's Corporate Social Responsibility Award for Green Development
• 2022 National Quality Benchmark Award
• China Dairy Industry Enterprise Award for High Quality Development
• First Prize for Technical Invention
• Grand Prize for Technical Progress
• Two First Prize for Technical Progress by China Dairy Industry Association
• Third prize of the first "Science and Technology Award for Conformity Assessment"
• Sustainable China Industry Development Initiative 2022 Industry Case of the Year by APEC
• 2022 Workplace Excellence certification
• Social Capital and Sustainability Industry Excellence Award
• Xinhua Credit Jinlan Cup ESG Outstanding Contribution Case

Environmental Metrics

ESG Focus Areas

• Governance-Sustainability
• Responsibility-Common Prosperity
• Environment-Carbon Net-Zero
• Ecosystem-Collaborative & Accountable
• Nutrition-Supreme & Inclusive

Environmental Achievements

• Reduced GHG emissions by approximately 185,000 tonnes
• Installed more than 22.06 MW of solar photovoltaic capacity with an annual electricity generation of 11,267.80 MWh
• 30 factories certified as “National-level Green Factory”, 9 as “Zero-Waste Factory” demonstration units, 5 with 3-star zero-waste management system certification
• Water consumption per tonne of dairy products fell by 3.8% compared to 2020, saving 1,062,000 tonnes of water annually
• Qujing Factory certified as a zero-carbon emission factory for the second consecutive year; Beijing Factory certified for carbon neutral management system; three Deluxe ice cream products granted carbon neutral certification

Social Achievements

• Employed 46,064 employees, with 26.32% female executives
• Employee training coverage rate of 92.76%, with 4,081,820.76 total training hours
• 100% of Mengniu's self-operated factories passed ISO 45001 Occupational Health and Safety Management System audit; 6 factories passed first-level safety production standardization evaluation
• Launched the “Love Her” program, offering free cancer screenings for female employees
• Conducted the Program of Inclusive Nutrition Plan in 452 schools, donating over 3.704 million boxes of milk

Governance Achievements

• Established an effective ESG governance mechanism with a Sustainability Committee at the Board level
• Granted ISO 37301 and GB/T35770 compliance management system certification, becoming the world’s first dairy company to obtain this certification
• Carried out 27 special supervisions of corruption risk, resulting in 8 rectification proposals and 22 improved policies
• Held 32 meetings with ESG-themed investors and rating agencies
• MSCI ESG rating upgraded from A to AA

Climate Goals & Targets

Environmental Challenges

• Climate change impacts (e.g., extreme weather events)
• Supply chain disruptions
• Water scarcity in some regions
• Maintaining high ethical standards throughout the supply chain

Mitigation Strategies

• GREEN sustainable development strategy with carbon peak by 2030 and carbon neutrality by 2050 goals
• Development of alternative sourcing strategies
• Implementation of water-saving technologies and practices
• Supplier Code of Conduct and ESG risk management system for supply chain

Supply Chain Management

Supplier Audits: 29 strategic suppliers completed SMETA third-party audits; 100% of raw and auxiliary material suppliers completed internal assessments

Responsible Procurement

• Supplier Code of Conduct
• ESG risk management system
• Supplier empowerment training

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events

Transition Risks

• Regulatory changes, market shifts

Opportunities

• Development of energy-efficient products

Reporting Standards

Frameworks Used: GRI Standards, HKEX ESG Reporting Guide

Certifications: ISO 37301, GB/T35770, ISO 14001, ISO 45001, CNAS, ISO/IEC 17025:2018, BRCGS, IFS, SQF, EU food standards, China GAP, FSC, RSPO, A2 Product Certification, AWS

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Mengniu aligns with the United Nations Sustainable Development Goals (SDGs)

Sustainable Products & Innovation

• Products with reduced sugar, low sodium, low fat, reduced artificial ingredients, smaller sizes
• Carbon neutral products
• Products with sustainable packaging

Awards & Recognition

• MSCI ESG rating upgraded from A to AA
• Constituent of the Hang Seng Corporate Sustainability Index for four consecutive years
• Bloomberg Green ESG 50-Enterprises
• China Food CSR Golden Tripod Award
• China Food CSR Advanced Enterprise Award
• Asia Pacific IP Team of the Year Award 2023
• IAM Strategy 300: The World’s Leading IP Strategists 2023