Climate Change Data

Environmental Metrics

ESG Focus Areas

• Sound Operational Management
• Ongoing Environmental Optimisation
• Social Co-Development

Environmental Achievements

• Reduced COD, BOD, SS and NH emissions by 53,073 tonnes, 25,997 tonnes, 36,551 tonnes and 4,753 tonnes respectively.
• Produced 9,090 MWh of clean energy, accounting for approximately 3% of total power consumption.
• Investment for infrastructure relating to city water processing plants, sewage treatment plants, city water supply and sewage pipelines amounted to approximately HK$2,030 million and the major acquisition of water projects made was approximately HK$170 million. It had additional water processing capacity of 800,000 m³/day, additional sewage treatment capacity of 55,000 m³/day and built a garden water plant.

Social Achievements

• No fatal incident or material work injury of employees at work was identified.
• Provided a comprehensive range of benefits for its employees, including the payment of five insurances and one fund; provision of a safe, comfortable and clean working environment; provision of transport, communication, holiday and relief allowances; and thorough implementation of paid leave system.
• Organised various training activities for employees, including orientation training, training for various positions, themed seminars, and skill contests.

Governance Achievements

• Maintained compliance with the provisions of the Corporate Governance Code.
• Established three board committees: Audit Committee, Nomination Committee, and Remuneration Committee.
• No litigation relating to corruption was identified.

Climate Goals & Targets

Environmental Challenges

• High energy consumption percentage for water supply (21.2%) and sewage treatment (33.8%) businesses.
• Need to reduce water leakage to maximize the economic benefits of energy consumption.

Mitigation Strategies

• Promoting new processes, technologies, and initiatives for energy saving and consumption reduction.
• Improving resource utilization management model to reduce consumption of supplies.
• Prioritizing sites that enable gravity flow water distribution for new water plants.
• Gradually carrying out reconstruction or upgrade of water plants with obsolete processes.
• Reducing leakage ratio and enhancing water supply efficiency.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Supplier preliminary review system
• Tendering system for bulk materials
• Administrative Measures on Tender
• Catalogue of suppliers for bulk materials

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: GRI G4 Guidelines, Hong Kong Stock Exchange’s ESG Reporting Guide

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Jingzhou Water Affairs Group Co., Ltd. named National Civilised Unit, Model Enterprise of Harmonious Labour Relations in Hubei Province, and Water Supply Rescue Team Advanced Organisational Unit.
• Chongqing Yongchuan Qiaoli Water Co., Ltd. named Grade AAA Enterprise of Harmonious Labour Relations in Chongqing and Consumer Rights Protection and Integrity Unit.
• Xinyu Water Affairs Group Co., Ltd. named Enterprise of Harmonious Labour Relations in Jiangxi.

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Reduced leakage ratio (specific figures not provided but compared to industry average)
• Reduced water supply unit power consumption (specific figures provided, showing year-over-year decrease)

Social Achievements

• Increased number of employees by approximately 562
• Acquisition of major water projects amounting to HK$160 million
• New large-scale construction and upgrade projects amounting to HK$2,800 million
• Completion of the Group’s financing amounting to HK$2,410 million

Governance Achievements

• Not disclosed

Climate Goals & Targets

Environmental Challenges

• Gap between cities and between urban and rural areas concerning water environment and water supply quality, pressure, and stability
• Relatively low use capacity of water resources per capita and uneven distribution, extreme groundwater over-exploitation and acute shortages of clean fresh water in China
• Large quantities of domestic sewage and industrial wastewater discharged, leading to water pollution

Mitigation Strategies

• Actively participating in various water-related businesses that improve the environment and society
• Creating a corporate sustainable development model that is characterized by environmental friendliness and humanity, science and innovation as well as proactiveness

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: GRI

Certifications: CNAS

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Listed Company with Best Investment Value in China Water Industry 2017
• Operating enterprise with best investment growth in China 2017
• Leading enterprise in niche market and single capability in China Water Industry 2017
• National Civilised Unit
• laboratory accreditation certificate by China National Accreditation Service for Conformity Assessment (CNAS)

Environmental Metrics

ESG Focus Areas

• Sustainable Water and Wastewater Management
• Renewable Energy

Environmental Achievements

• Improved water quality and reduced water leakage through upgrades to water supply plants, pumping stations, and distribution networks
• Reduced pollution through upgrades to drainage pipeline networks and sewage treatment plants
• Development of direct drinking water business to reduce plastic bottle consumption and alleviate 'white pollution'
• Majority of sewage treatment plants comply with First Grade A under the Pollutant Discharge Standards for Urban Wastewater Treatment Plants (GB18918-2002)

Social Achievements

• Providing safe drinking water in rural areas to improve quality of life and promote rural revitalization
• Serving a population of 680,000 with direct drinking water projects in 31 cities

Governance Achievements

• Establishment of an Environmental Social Management System Working Group (EWG) to oversee green projects

Climate Goals & Targets

Environmental Challenges

• Water scarcity
• Environmental impact of wastewater

Mitigation Strategies

• Effective wastewater processing to minimize environmental impacts
• Upgrading sewage treatment plants
• Implementing urban-rural water supply integration strategy
• Developing direct drinking water business to reduce plastic bottle consumption

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: ICMA Green Bond Principles 2018, LMA/APLMA/LSTA Green Loan Principles 2021

Third-party Assurance: Sustainalytics (Second Party Opinion)

Awards & Recognition

• 2019 Best Infrastructure and Public Utilities Stock Company at the Golden Hong Kong Stocks Awards

Environmental Metrics

ESG Focus Areas

• Environmental Improvement
• Social Co-development
• Sound Corporate Governance

Environmental Achievements

• Reduced average leakage ratio of water supply business to 14.88% (lower than industry average of 23.22%)
• Achieved an energy-saving rate of 12% to 37% (average 23%) in 13 pumping stations, saving 3.288 million kW∙h annually.
• Provided 60,737 MWh of clean energy, accounting for approximately 12% of total electricity consumption.
• Reduced discharge of SS, COD, NH3-N, and BOD emissions in wastewater treatment.
• Successfully issued US$350 million of green bonds for eligible green projects.

Social Achievements

• Increased number of users of water supply service by approximately 760,000 to over 7.46 million.
• Added 200,000 households and 700,000 people to urban and rural water supply users.
• Developed the “Fingertip Water” mobile app with over 2,000,000 users.
• Maintained “zero infection” rate for Covid-19 for the second consecutive year.
• No material safety liability incidents occurred.

Governance Achievements

• Established a four-tier ESG governance structure.
• Implemented a comprehensive risk management framework.
• Complied with the relevant guidelines in the “Corporate Governance Code” and “Corporate Governance Report”.

Climate Goals & Targets

Environmental Challenges

• Stringent energy consumption targets and emission standards driven by China's climate action.
• Extreme weather impacting water sourcing, water quality, and water supply.
• Natural disasters disrupting water supply.
• Freezing weather causing damage to water supply networks.

Mitigation Strategies

• Closely monitoring national policies and adjusting strategies.
• Strengthening communication with water authorities and developing contingency plans.
• Strengthening protection of water facilities and cooperating with emergency authorities.
• Strengthening water supply pipeline inspection and adopting anti-freeze measures.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Centralised and strategic procurement models, multi-circle evaluation of suppliers, incorporation of ESG rating criteria into supplier selection.

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather (high temperature, floods, mudslides, thunderstorms, freezing weather)
• Water source and water quality risks (low water levels, algae blooms)
• Water restriction risks

Transition Risks

• Policy risks (stringent energy consumption targets and emission standards)

Opportunities

• Development of environmentally-friendly industries (photovoltaic power generation and pipeline direct drinking water).

Reporting Standards

Frameworks Used: Hong Kong Stock Exchange ESG Reporting Guide, GRI G4 Sustainability Reporting Guidelines

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Pipeline direct drinking water

Awards & Recognition

• Best Infrastructure and Public Utilities Stock Company (6th Golden Hong Kong Stocks Awards)
• Water Resilience Award (Asian Development Bank)
• Evergreen Award 2021 – Sustainability Inclusion Award (Caijing Magazine)

Environmental Metrics

ESG Focus Areas

• Sustainable Water Management
• Renewable Energy
• Affordable Basic Infrastructure
• Clean Water and Sanitation
• Affordable and Clean Energy
• Industry, Innovation, and Infrastructure

Environmental Achievements

• Achieved a leakage rate of 14.9% in FY 2021-22 with an intent to reduce it to 10% for prefecture-level urban water supply and less than 12% for county-level urban water supply by 2035.
• Implementing Green Operation’s Plan to promote clean energy, energy efficiency improvements, and reduction in leakage rates.

Social Achievements

• Intends to improve the quality of life by providing better “last-meter drinking water solutions” to urban and rural residents.
• Aims to eliminate the gap between urban and rural water supply by extending urban pipelines to rural areas.

Governance Achievements

• China Water (parent company) has established a four-level risk management framework.

Climate Goals & Targets

Environmental Challenges

• Water scarcity in certain regions of China.
• Urban-rural supply-demand gap in water access (98% urban vs 84% rural).

Mitigation Strategies

• Extending water supply and providing safe drinking water to underserved populations.
• Implementing projects to improve water supply efficiency, quality, and capacity.
• Introducing leak detection technologies and building new pipelines to reduce leakage rates.

Supply Chain Management

Responsible Procurement

• Assessment of ESG disclosures of suppliers, focusing on environmental issues, labor issues, social, and occupational health, and safety issues.

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: MSCI Sustainability Bond and Sustainability Loan Assessment Methodology, Sustainability Bond Guidelines 2021 (ICMA)

Third-party Assurance: MSCI ESG Research LLC

UN Sustainable Development Goals

• Goal 6
• Goal 7
• Goal 9

Environmental Metrics

ESG Focus Areas

• Governance
• Environmental Improvement
• Social Co-development
• Climate Change

Environmental Achievements

• Reduced electricity consumption per unit of water supply to 264 kW·h/1,000m3 (lower than the industry average of 300 kW·h/1,000m3)
• Average leakage ratio of water supply was 14.33% (lower than the industry average of 23.22%)
• Treated a cumulative total of 209 million m3 of sewage, reducing the discharge of various pollutants
• Provided 65,954 MWh of clean energy (approximately 12% of total electricity consumption)
• Total installed capacity of PV power generation units reached 76 MW (providing approximately 17% of total electricity consumption under full-load operation)
• Reduced CO2 emissions by 25,400 tonnes by offsetting plastic barrels from pipeline direct drinking water supply

Social Achievements

• Launched the “Water Star” campus recruitment and management trainee programme
• Developed the Fingertip Water mobile app, providing comprehensive water services functions
• Achieved 100% satisfaction rate in complaint handling
• No material safety liability incident occurred for three consecutive years
• Maintained a 100% contract signing rate with 11,394 employees
• Actively carried out various community activities

Governance Achievements

• Established a four-tier ESG governance structure
• Implemented a performance-based wage system
• Formulated and issued the “Regulations on Labour and Human Rights Management of China Water Affairs Group Limited”
• Formulated the “Regulations on the Management of Clean Practices of China Water Affairs Group Limited”
• Conducted anti-corruption training for all directors, supervisors, chief financial officers and other management personnel

Climate Goals & Targets

Environmental Challenges

• Severe drought in the Yangtze River Basin
• Stringent energy consumption targets and emission standards due to China's “dual carbon” strategy
• Challenges in accepting and applying new technologies
• Potential higher operational and management costs in projects located in climate-vulnerable areas

Mitigation Strategies

• Activated water shortage emergency plans
• Closely monitored water levels and water quality
• Coordinated with government departments to ensure raw water supply
• Implemented measures such as extending water intake pipelines, adjusting water supply pressure, building weirs and switching to alternative water sources
• Pay close attention to national policies and adjust the Group’s strategy in a timely manner
• Conduct trial runs of new technologies before full-scale application
• Conduct on-site inspections and due diligence to assess climate risk of projects

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Centralised and strategic procurement models
• Incorporation of ESG rating criteria into supplier inspection, admission, management and evaluation process

Climate-Related Risks & Opportunities

Physical Risks

• Flooding hazards
• Persistent drought
• Extreme high temperature
• Freezing hazards

Transition Risks

• Policy changes
• Technology innovation
• Investment and mergers
• Market Regulations

Opportunities

• Development of pipeline direct drinking water
• Acceleration of PV construction
• Water treatment process reformation
• Energy utilisation in sewage water treatment
• Application of smart water services
• Green finance

Reporting Standards

Frameworks Used: GRI Standards 2021, HKEX Environmental, Social and Governance Reporting Guide

Certifications: Null

Third-party Assurance: SGS-CSTC

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Pipeline direct drinking water

Awards & Recognition

• “Excellent ESG Enterprise of 2021-2022” from Hong Kong Economic Times
• “Best ESG Award” at the 7th Zhitong Caijing Listed Company Awards
• BBB in MSCI ESG Ratings
• “2022 Sina Finance Hong Kong and U.S. Stocks - Best Investment Value Listed Company” award

Environmental Metrics

ESG Focus Areas

• Environmental Improvement
• Social Co-development
• Governance

Environmental Achievements

• Reduced average electricity consumption per unit of water supply to 257kW·h/1,000m3 (below industry average of 300kW·h/1,000m3)
• Reduced leakage ratio of water supply business to 14.42% (below industry average of 23.22%)
• Successfully commissioned the second phase of the Shenzhen Grand Industrial Zone Water Plant Project, increasing water supply capacity and using deep treatment technology.
• Completed and officially commenced water supply for the central water plant for urban-rural water supply integration in Gongyi City.
• Achieved full mechanical completion of the ExxonMobil Project sewage treatment facilities.
• Received an SQS1 (excellent) sustainability quality score from Moody’s Corporation.
• Clean energy provided amounted to 68,985 MWh. Total installed capacity of PV power generation units reached 80 MW.
• Reduced the discharge of chemical oxygen demand (COD) by 54,677 tonnes, biochemical oxygen demand (BOD) by 23,970 tonnes, suspended solids (SS) by 45,523 tonnes, and ammonia nitrogen (NH3-N) by 5,514 tonnes.

Social Achievements

• Launched the “Fingertip Water” App, serving over 3 million users in 56 cities.
• Maintained a 100% contract signing rate with 11,579 employees.
• Implemented a performance-based wage system.
• Established a comprehensive welfare protection system.
• No material safety production liability incident for three consecutive years.
• 100% training coverage rate for employees through the “China Water Online Academy”.

Governance Achievements

• Established a four-tier ESG governance structure.
• Implemented a risk management framework.
• Group’s governance policy is in compliance with the relevant guidelines in the Corporate Governance Code.

Climate Goals & Targets

Environmental Challenges

• Climate change impacts on water sources and operations (flooding, drought, extreme temperatures)
• Stringent energy consumption targets and emission standards due to China's “dual carbon” strategy.
• Challenges in adopting new technologies for emission reduction.
• Reputational risks related to climate action.
• Stringent environmental protection requirements from government regulators and consumer preference for green products.

Mitigation Strategies

• Strengthened flood prevention facilities, emergency repair capabilities, and water quality testing.
• Developed plans to cope with water shortages (extending intake pipes, building weirs).
• Implemented heat prevention and ventilation measures.
• Closely monitoring national policies and adjusting strategies.
• Conducting trial runs of new technologies before widespread adoption.
• Incorporating corporate climate action into sustainable development strategies and enhancing publicity.
• Upgrading sewage treatment plants, raising emission standards, and achieving energy recovery.
• Accelerating the development of environmentally friendly industries, such as pipeline direct drinking water.
• Purchasing appropriate commercial insurance policies for all subsidiaries.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Centralised and strategic procurement of bulk commodities.
• Incorporating ESG rating criteria into supplier selection and evaluation.

Climate-Related Risks & Opportunities

Physical Risks

• Flooding, storms, typhoons, persistent drought, extreme high temperatures, cold waves, frost

Transition Risks

• Policy changes related to energy, carbon emissions, and environmental protection.
• Technological innovation challenges.
• Market regulations and consumer preferences.

Opportunities

• Resource efficiency improvements (reduced water consumption and leakage, reduced material consumption).
• Increased automation and informationization.
• Reduced conventional energy consumption and increased use of clean energy.
• New business transformation and diversification.
• Participation in the carbon market.

Reporting Standards

Frameworks Used: GRI Standards 2021, HKEX ESG Reporting Guide

Certifications: ISO 14064-1:2018 (GHG emission verification)

Third-party Assurance: SGS-CSTC

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Pipeline direct drinking water

Awards & Recognition

• Outstanding Award for Green and Sustainable Loan Issuer (Water Affairs Industry) from HKQAA
• Sustainability Improvement Award at the “Caijing Evergreen Awards”,
• MSCI ESG A Rating
• Best Infrastructure and Utilities Company at the “8th Zhitong Caijing Listed Company Awards”,
• Outstanding Exhibition Award and Outstanding Product Award from the Organizing Committee of the 2nd National Water Conservation Industry Innovation and Development Achievement Exhibition