Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environmental sustainability
• Social responsibility
• Governance

Environmental Achievements

• Invested approximately RMB50.679 million in emission reduction, resource protection and waste management, continuous energy conservation and consumption reduction, improvement of the flue gas treatment system in the plant area and sewage treatment project in the plant area to reduce the adverse impact of business operations on the environment.
• The Tire Production Base in Thailand obtained ISO 9001 (quality system certification), ISO 14001 (environmental management system), ISO 45001 (occupational health management system) and Thailand Green Factory Level 2 certification.

Social Achievements

• Chengshan Group Company Ltd. donated RMB700,000 to Rongcheng Charity Federation.
• Prinx Thailand donated 36,000 masks to Tajam Village, Thailand and 1,000 bags of rice and 2,000 bags of instant noodles to Thai citizens.
• Organized Prinx Chengshan’s 2021 “Green Office” competition.

Governance Achievements

• Included environmental, social and governance matters into the scope of responsibilities of the Group’s Development Strategy and Risk Management Committee.
• Established an ESG office to assist the Board in coordinating and communicating with the management.

Climate Goals & Targets

Environmental Challenges

• Rising prices of raw materials due to global supply and demand mismatch caused by the COVID-19 pandemic.
• Increased energy and labor costs due to domestic policies.
• Increased delivery costs and extended delivery times due to surge in sea freight rates and decreased global shipping efficiency.
• Weak domestic market demand intensifying price competition.
• International trade barriers hindering exports (anti-dumping and countervailing duties imposed by the U.S.).
• COVID-19 pandemic impacting overseas markets and international freight customs clearance.

Mitigation Strategies

• Adjusted strategies to focus on passenger vehicle tires and optimize sales structure.
• Successfully put into operation the factory in Thailand.
• Expanded production capacity in Shandong and Thailand.
• Preparing for the establishment of a tire production base in Anhui.
• Launching passenger vehicle brand plan, carrying out channel upgrading, and optimizing product structure.
• Improving supply capacity of overseas production bases.
• Increasing investment in fleet services and tire recycling.
• Strengthening Pandemic control in production, sales, and transportation.
• Establishing a Pandemic prevention mechanism of “rapid response and precise Pandemic prevention”.
• Adopting flexible sales strategies to respond to the Pandemic spread trend and change of demand in different markets.
• Reinforcing interdepartmental linkage and enhancing awareness of credit risk prevention.

Supply Chain Management

Responsible Procurement

• Suppliers were included in the Company’s “Carbon Peak, Carbon Neutrality” plan.

Climate-Related Risks & Opportunities

Physical Risks

• Extreme climate changes posing physical risks (production stoppage due to power outages, failure of outdoor logistics)

Transition Risks

• Introduction of relevant laws and policies, carbon tariffs, carbon trade barriers

Awards & Recognition

• 2021 Outstanding Quality Brand Award
• 2021 Industry Quality Model Award
• 2020 Award for Express Suppliers from China Post and Express News
• Pioneer for Public Benefit
• Truck Brother’s Reliable Product

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance

Environmental Achievements

• GHG emission per tonne of production was reduced by 5% compared with last year.
• The amount of solar power generation increased by 25% compared with last year.
• The amount of non-hazardous waste per tonne of production was reduced by 20%, and the amount of hazardous waste per tonne of production was reduced by 22% during the Reporting Period compared with 2020.

Social Achievements

• Total training hours: 337,087 hours; Average training hours per employee: 55 hours
• No child labour, forced, or compulsory labour was reported and/or identified within any sites of the Group during the Reporting Period.
• Organized various occupational health and safety-related training for different departments

Governance Achievements

• Certified to ISO 14001 Environmental Management System, ISO 9001:2015 Quality Management Systems, ISO 45001:2018 Occupational Health and Safety Management System Certification
• The Board evaluates the Group’s ESG performance by implementing independent assessments on a quarterly and annual basis
• The Board has discussed ESG matters and reviewed the Group’s progress of achieving short-term and long-term environmental targets at the board meetings.

Climate Goals & Targets

Environmental Challenges

• Extreme weather events may cause physical damage to infrastructure, raw materials for production and products which incur costs on recovery and repair.
• Tightening of climate-related policies may increase the cost of fulfilling such requirements. It might also raise the operating costs, insurance costs and penalties for noncompliance.
• A change in customer or user behaviour and preferences leads to a loss in customer and income if there is a failure to meet stakeholders’ expectations on climate risk management and goals.

Mitigation Strategies

• The Group reserves raw materials for production, plan and schedule production progress, and established a work process for preparing for abnormal weather changes.
• The Group strives to develop high energy-efficient, and high-quality tire products for new energy vehicles in order to meet the demand of customers and the standard of environmental laws and regulations.
• The Group has formulated emergency plans according to the risks identified in order to strengthen its ability to cope with the negative impacts brought from extreme weather emergency conditions.

Supply Chain Management

Supplier Audits: 13/year

Responsible Procurement

• All the contracted suppliers are required to comply with all the relevant environmental laws and regulations in order to minimise the environmental impacts brought by the operations of the suppliers.

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather
• Continuous high temperatures

Transition Risks

• Tightening of climate-related policies
• Cost to transition to lower emissions technology
• Changing customer behaviour
• Reputation risk

Opportunities

• innovation and development of environmentally friendly and energy-efficient products

Reporting Standards

Frameworks Used: GRI Standards, TCFD framework

Certifications: ISO 14001, ISO 45001, ISO 9001:2015

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• high energy-efficient, and high-quality tire products for new energy vehicles

Awards & Recognition

• Leading Enterprise of “Top Ten” Industrial Clusters in Shandong Province
• “Provincial Green Factory in 2022”
• The new product “Prinx XNEX SPORT EV (Blade Design Edition)” won the Silver Award of the Italian A’DESIGN AWARD, the French DNA Design Competition, and the Silver Award of the American MUSE Design Award
• “Shandong Provincial Intelligent Factory in 2022”
• Petroleum and Chemical Industry Energy Efficiency “Leader” Benchmarking Enterprise 2021
• Weihai Municipal 2022 Service-oriented Manufacturing Demonstration Enterprise
• First Prize of “Shandong Province Enterprise Technology Innovation Promotion Association Technology Innovation Award 2022”
• Rank 220 in “China’s 500 Most Valuable Brands”
• First Prize awarded by the “14th National Petroleum and Chemical Enterprise Management Innovation Conference”
• Rated as “Outstanding Contribution Unit for Innovation-Driven Development”
• The 12 projects in “Application of Tire Evaluation System in Virtual Simulation Technology of Vehicle Handling Performance” has won the Technology Innovation Award
• “Annual Corporate Governance Award”
• “Development of High-performance Ultra-wide and Low-profile All-steel Radial Truck Tires in Latin America” and “Development of professional off-road tires for all-terrain rough road conditions” projects are included in the second batch of technological innovation project plans of Shandong Province in 2022
• Selected as a technological leader in Shandong Science and Technology Leading Enterprises and the First Batch of Science and Technology Small Giant Enterprises List Conference in 2022

Environmental Metrics

ESG Focus Areas

• Environmental protection
• Sustainable development
• Social responsibility
• Corporate governance

Environmental Achievements

• Launched the “Carbon Footprint” project at the Tire Production Base in Shandong to reduce emissions.
• Energy consumption per tonne of All Steel Radial Tires and Semi-Steel Radial Tires is better than the industry’s Class 1 energy consumption standard.
• Tire Production Base in Thailand obtained ISO 14001 (environmental management system) and Thailand Green Factory Level III certification.

Social Achievements

• Participated in a modern technology seminar on corporate waste management organized by the Thai Government.
• Received an honorary certificate from the Thai Government’s Security Bureau for occupational safety, health and environmental management systems.
• Organized social responsibility activities in Thailand, donating plastic water tanks and daily necessities to Nongsecang Kindergarten.

Governance Achievements

• Environmental, social and governance matters included in the duties scope of the Group’s Development Strategy and Risk Management Committee.
• Board takes full responsibility for and leads the Group’s sustainable development management.
• Compliance with the Corporate Governance Code contained in Appendix 14 to the Listing Rules.

Climate Goals & Targets

Environmental Challenges

• Uncertainties in the prospects of global economic development due to inflation, high interest rates, geopolitical risks, and trade conflicts.
• Declining demand in North America and Europe for tires.
• Slow recovery and weak demand in the domestic commercial vehicle tires replacement market.
• International trade barriers and disruption of China’s tires export.
• Climate change, including physical risks (extreme weather) and transition risks (carbon tariffs).

Mitigation Strategies

• Stringent financial discipline and prudent management.
• Technological innovation to improve tire performance and durability.
• Development of green and environmentally friendly products.
• Active participation in responding to complaints and investigations to reduce export tax rates.
• Establishment of overseas production bases to diversify production capacity.
• Incorporation of climate risk management into the Group’s risk management system, including emergency plans for natural disasters and safety inventory plans.

Supply Chain Management

Responsible Procurement

• Introduced domestic and overseas quality suppliers to meet high quality requirements and make procurement costs more reasonable.

Climate-Related Risks & Opportunities

Physical Risks

• Production stoppage due to power outages caused by typhoons and thunderstorms
• Failure of outdoor logistics to operate normally affecting order delivery timeliness

Transition Risks

• Introduction of relevant laws and policies and the adoption of actions such as carbon tariffs and carbon trade barriers

Sustainable Products & Innovation

• Green and environmental protection products with low rolling resistance and high wear resistance

Awards & Recognition

• Chengshan’s flagship product of the “Hua” series, “Hua Ren Tire”, was awarded the “Best Popularity Award” of Golden Objects Award
• Chengshan CFH123A was recognized as the “Truck Brothers’ Trustworthy Product”