Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environmental Protection
• Employee Well-being
• Supply Chain Management
• Anti-corruption
• Community Investment

Environmental Achievements

• Reduced nitrogen oxides emissions to 0.65 kg
• Reduced sulphur oxides emissions to 528.76 kg
• Reduced particulate matter emissions to 52.10 kg
• Reduced NOx emissions from natural gas boilers to 30mg/m³ from 150mg/m³
• Reduced NOx emissions from boilers to 150mg/m³ from 200mg/m³
• Reduced electric furnace particle emissions to 10mg/m³ from 15mg/m³
• Recycled electric furnace slag and refining slag for road construction
• Relocated part of production facilities with compensations from local government

Social Achievements

• Established an effective system of employment policies, including equal recruitment policy, equal promotion policy, work-life balance policy, compensation policy, remuneration and allowance policy, dismissal and retirement policy, anti-discrimination policy, diversity policy, employee welfare and benefit policy
• Provided dormitories and subsistence allowance for staff
• Organized staff activities to enhance sense of belonging
• Conducted periodic training for employees (11,525 person-times, 54,541.75 hours)
• Awarded “Advanced Company of Safety Manufacturing for the Year 2019” by Bohai New District in Cangzhou
• Established an internship base agreement with universities in Hebei Province

Governance Achievements

• Implemented “Anti-fraud, Anti-Corruption and Anti-Commercial Bribery Management Policy”
• 52 employees received anti-corruption training, 118 Communist Party members received probity training
• Established a whistle-blowing policy

Climate Goals & Targets

Environmental Challenges

• Delay in the supply of ancillary facilities and services from the supplier under the Phase One project, resulting in lower capacity utilization rate
• More stringent environmental protection policies implemented in the Beijing-Tianjin-Hebei region, affecting production and sales volume
• Changes in the year-end inventory management policy of major customers and a decline in the market prices of other oil pipes and pipe billets, resulting in a slight decrease in sales revenue
• Impact of COVID-19 Pandemic on the Group’s businesses

Mitigation Strategies

• Further enhance production research and development and cost control capabilities
• Accelerate development in western China, exploration of new clients and promotion of new products
• Expand the scope of promotion of customer information system
• Establish optimised sales platforms in overseas markets and improve promotion strategies for high-end customised non-API products
• Adopt an efficiency and effectiveness oriented lean management system
• Implement proactive and effective measures to mitigate the impact of COVID-19 Pandemic and international oil price fluctuations
• Reassessing the fluctuation (if any) to the demand and selling price of OCTG products
• Reassessing the sustainability of existing suppliers
• Expanding the supplier base of raw materials
• Negotiating with customers on possible delay in delivery timetables
• Improving the Group’s cash management by expediting debtor settlements
• Negotiating with suppliers an extension of payment terms

Supply Chain Management

Responsible Procurement

• Stringent supplier selection process
• Regular on-site inspection

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: Appendix 27 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited

Awards & Recognition

• Advanced Company of Safety Manufacturing for the Year 2019 of the District

Environmental Metrics

ESG Focus Areas

• Environmental protection
• Employee safety and well-being
• Supply chain management
• Anti-corruption
• Community investment

Environmental Achievements

• Reduced particulate matter emissions from 75.8 tons/year to 56.7 tons/year
• Reduced sulfur dioxide emissions from 18.3 tons/year to 15.3 tons/year
• Reduced nitrogen oxide emissions from 51.8 tons/year to 48.1 tons/year
• Saved approximately 40,000 m³ of water per year by updating the cooling system
• Obtained GB/T24001-2016 environmental management systems certificate, GB/T45001-2020 Occupational health and safety management system certificate and the Q/SY1002.1-2013 HSE system certificate

Social Achievements

• Organized various staff activities (annual meeting, chorus competition, basketball competition, team building activities, movie watching, technical competition, the quiz, etc.)
• Provided dormitories and various subsidies for staff
• Implemented a fair and equitable talent selection system
• No severe or lethal industrial accidents recorded
• 2,005 employees participated in 7,161 person-times of trainings, totaling 465,022.02 hours

Governance Achievements

• Implemented “Anti-fraud, Anti-Corruption and Anti-Commercial Bribery Management Policy”
• Established a whistle-blowing policy
• Established an independent internal audit department
• Complied with all relevant code provisions set out in the CG Code
• Obtained the champion at the Micro Fire Station Competition

Climate Goals & Targets

Environmental Challenges

• COVID-19 pandemic causing temporary production halt and disruptions
• Decline in oil and gas demand leading to decreased product demand and prices
• Increased unit price of scrap metals
• Disruptions in the availability of raw materials

Mitigation Strategies

• Reassessment of OCTG product demand and selling prices
• Expansion of the supplier base of raw materials
• Expansion of the product market
• Development and promotion of new products
• Improvement of product quality
• Improved cash management by expediting debtor settlements and negotiating with suppliers on payment terms

Supply Chain Management

Responsible Procurement

• Stringent supplier selection process
• Assessment of suppliers’ profile and principles (product quality, labour standards, environmental and quality management, ethical business conduct)

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: Appendix 27 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited

Certifications: GB/T24001-2016, GB/T45001-2020, Q/SY1002.1-2013

Awards & Recognition

• Premium Brand of Hubei
• Quality Benchmark of Industrial Enterprises of Hubei Province
• Intellectual Property Rights Advanced Enterprise of Hebei Province

Environmental Metrics

ESG Focus Areas

• Environmental Protection
• Social Responsibility
• Governance

Environmental Achievements

• Achieved ultra-low emission standards of Hebei Province for particulate matter, sulfur dioxide, and nitrogen oxides.
• Obtained ISO14001 environmental management system certification and ISO50001 energy management system certification.
• Implemented various measures to reduce greenhouse gas emissions, including replacing vehicles with low-emission standards and reusing surplus heat from production.

Social Achievements

• No severe safety incidents or fatalities.
• Provided various employee benefits and welfare programs, including dormitories, subsidies, and regular staff activities.
• Implemented a fair and equitable talent selection system and performance appraisal system.
• Complied with relevant laws and regulations regarding prevention of child labour or forced labour.

Governance Achievements

• Established a sound carbon emission management system.
• Implemented “Anti-fraud Management Policy” and “Practice for Professional Integrity for Employees”.
• Established a whistle-blowing channel to encourage reporting of fraud, corruption, and bribery.

Climate Goals & Targets

Environmental Challenges

• Increased greenhouse gas emissions due to increased production.
• Increased waste generation due to increased production and improved waste collection efficiency.
• Potential risks to operations caused by climate change, such as typhoons and floods.

Mitigation Strategies

• Implemented various measures to reduce greenhouse gas emissions (detailed in the report).
• Implemented waste reduction and recycling strategies (detailed in the report).
• Adopted necessary measures to prevent potential risks to its operations caused by climate change (detailed in the report).

Supply Chain Management

Supplier Audits: 67 key suppliers assessed

Responsible Procurement

• Stringent supplier selection process
• Green procurement policies

Climate-Related Risks & Opportunities

Physical Risks

• Typhoons and floods

Reporting Standards

Frameworks Used: The Stock Exchange of Hong Kong Limited’s Environmental, Social and Governance Reporting Guide

Certifications: ISO14001, ISO50001, GB/T24001-2016, GB/T45001-2020, Q/SY1002.1-2013

Awards & Recognition

• Excellent Brand in Hebei Province
• 2020 Hebei Province Credit Construction Enterprise
• Trustworthy Enterprises in Hebei Province
• 2021 Hebei Province Science and Technology Innovation Patent Top 100 Private Enterprise List (34th place)
• 2021 Top 100 Innovative Enterprises in Strategic Emerging Industries in Hebei Province (51st place)
• Hebei Provincial Intellectual Property Preponderant Enterprise
• 2020-2021 Annual Proficiency Testing Quality Award
• 2021 Hebei Provincial Occupational Health Enterprise
• 2021 Cangzhou Municipal Occupational Health Enterprise
• 2021 Cangzhou Municipal Exemplary Enterprise in Safety Culture

Environmental Metrics

ESG Focus Areas

• Corporate Governance
• Environmental
• Social
• Supply Chain Management
• Product Responsibility
• Community Investment

Environmental Achievements

• Shortened the smelting cycle of the electric arc furnace by 10%, reducing carbon emission content by more than 10%
• Successfully implemented the “Continuous Casting Tundish Oxygen Combustion Innovation Project”, saving 50%-60% of gas energy and effectively reducing carbon dioxide emissions
• Supplied more than 15,000 tons of casings for high-performance shale gas drills
• Successfully developed high-toughness J55 and K55 oil casings without heat treatment, reducing carbon emissions by 25% compared with conventional production processes
• Completed the Clean Production Acceptance Inspection, achieving electricity saving of about 2,515,200 kWh/a, water saving of about 17,100 m3/a, natural gas saving of about 134,100 m3/a, and economic benefits of 2.6697 million RMB/a

Social Achievements

• Launched the “Carbon Reduction Day” and launched a series of carbon reduction activities
• Established an effective system of employment policies, including equal recruitment policy, equal promotion policy, work-life balance policy, compensation policy, remuneration and allowance policy, dismissal and retirement policy, anti-discrimination policy, diversity policy, training policy, employee welfare and benefit policy
• Organized regular staff activities to enhance interaction and enhance their sense of belonging
• Organized a series of activities such as “Celebration 4th May Speech Contest”, Parent-child Series Activities, Parent-child Relationship Seminar, Women’s Day Activity, Qixi Joy Festival, 24th Anniversary Factory Celebration

Governance Achievements

• Established the ESG Committee and an ESG Working Group to formulate annual action plans and monitor the implementation of ESG-related strategies
• Formulated the “Environmental and Corporate Social Responsibility Policy” to integrate ESG into our Five-Year Plan, business management and various targets
• Implemented an “Anti-fraud Management Policy” and “Practice for Professional Integrity for Employees”
• Launched the “Report on Code, Reward Now” publicity, internally promoted the reporting channel “Dalipal People” Official Account, established an “Anti-Corruption Whistle-blowing” program

Climate Goals & Targets

Environmental Challenges

• Extreme weather events and climate change
• Increasingly stringent environmental laws and regulations in China
• The epidemic brought uncertain risks to the company’s normal operation and management

Mitigation Strategies

• Formulated an implementation plan for carbon reduction actions to actively practice and promote low-carbon development
• Incorporated the carbon peak and carbon neutrality plan into the Company’s “2023-2027 Five-Year Plan”
• Revised and improved relevant environmental and energy policies, completed the training and implementation of responsibilities for all employees

Supply Chain Management

Supplier Audits: 100%

Responsible Procurement

• Stringent supplier selection process
• Require suppliers to sign the “Compliance Commitment” before signing contracts
• Classify suppliers according to the supply materials

Climate-Related Risks & Opportunities

Physical Risks

• Typhoons, flooding caused by heavy rain, hot weather

Transition Risks

• Increasingly stringent environmental laws and regulations

Opportunities

• Development and transportation of new energy sources

Reporting Standards

Frameworks Used: HKEX ESG Guide

Certifications: ISO 14001, ISO 9001, GB/T45001-2020, API Q1

Sustainable Products & Innovation

• High-strength and high-toughness oil casings without heat treatment
• Rare earth corrosion-resistant oil casing

Awards & Recognition

• Hebei Province Enterprise Culture Construction Demonstration Unit
• Hebei Provincial Entrepreneurs Association
• Honor of “Quality Partner” China Petroleum Technology and Development Corporation
• Provincial Safety Culture Demonstration Enterprise
• White List of Key Industrial Chain and Supply Chain Enterprises in Hebei Province
• Corporate Governance Award of the Year Gelonghui Greater China Area Best Listed Companies

Environmental Metrics

ESG Focus Areas

• Environmental management system
• Emissions of exhaust gases
• Waste management
• Water management
• Greenhouse gas emissions
• Energy efficiency
• Climate risks and opportunities
• Employee rights and benefits
• Diversity and Inclusion
• Development and training of employees
• Occupational health and safety
• Supplier Management
• Product quality
• Customer Service
• Customer Privacy Protection
• Intellectual Property Protection
• Welfare and Charity
• Innovative Research and development
• Information Security
• ESG Governance
• Business Ethics
• Protection of Investors’ Rights and Interests
• Risk Management

Environmental Achievements

• Reduced total GHG emissions compared to last year
• Successfully completed several energy-saving technology transformation projects resulting in an estimated annual reduction of 3,400 tonnes CO2e
• Achieved a dual harvest of solid waste reduction and resource utilization efficiency enhancement in the hot-state recovery and utilization of refined slag project with a steel recovery rate exceeding 70%
• Obtained carbon footprint certification for 6 products
• Obtained ISO14001 environmental management system certification

Social Achievements

• Established a dedicated team to carry out a compliance management enhancement project, collecting over 1,100 legal regulations and other applicable requirements across various professional modules and identifying and categorizing comprehensive risks of over 210 items in 19 business modules
• Organized various forms of training, emergency drills, and other activities to continuously improve emergency management mechanisms
• Improved employee occupational health monitoring management files establishment rate to 100%
• Improved employee occupational health inspection rate to 100%
• Improved occupational hazards in the workplace detection rate to 100%
• Improved employee social security coverage rate to 100%
• Completed approximately 450 training programs throughout the year
• Launched the Internal Referral Center, successfully recommending more than 30 candidates
• Strengthened collaboration with universities through on-campus recruitment activities and the establishment of university-enterprise internship bases

Governance Achievements

• Established an ESG Committee and an ESG Working Group
• Appointed Riskory Consultancy Limited as a professional consultant to provide ESG and sustainability advisory services
• Obtained a Grade A from Wind ESG Rating, with its overall ESG score ranked among the top in the industry
• Established a dedicated team to carry out a compliance management enhancement project
• Developed the “General Guidelines for Prohibited and Mandatory Legal Norms”, which clarify the prohibitive and mandatory provisions in 587 legal norms related to major areas of business management
• Conducted special compliance audits on key businesses and solidified risk response measures

Climate Goals & Targets

Environmental Challenges

• Increased disclosure standards to combat “greenwashing”,
• European Union “Carbon Border Adjustment Mechanism” (CBAM) putting forward urgent requirements for the Company’s green and low-carbon transformation and upgrading
• Energy and resource scarcity
• Increased severity and frequency of extreme weather events
• High cost of compliance with environmental management and supervision policies
• Updated climate-related disclosure requirements from the Hong Kong Stock Exchange

Mitigation Strategies

• Formulated a carbon reduction action plan
• Developed a scientifically systematic action plan for carbon peaking and carbon reduction
• Implemented various energy-saving technology upgrades and initiatives
• Improved waste management systems
• Improved water usage management
• Established a sound carbon emission management system
• Actively promoted carbon emission verification and cleaner production review
• Implemented various safety management systems

Supply Chain Management

Supplier Audits: 109 suppliers audited/year

Responsible Procurement

• Supplier Management Policy
• Procurement Control Procedures
• Compliance Commitment Letter

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events (hurricanes, floods, strong winds)

Transition Risks

• Stricter energy consumption control policies and environmental protection policies
• High cost of compliance with new regulations
• IFRS S2 climate-related disclosures

Opportunities

• Increased demand for green products

Reporting Standards

Frameworks Used: Appendix C2 to the Rules Governing the Listing of Securities on the Main Board of The Stock Exchange of Hong Kong Limited

Certifications: ISO 14001, ISO 45001, API Q1, CNAS

UN Sustainable Development Goals

• Goal 3: Good Health and Well-being
• Goal 9: Industry, Innovation and Infrastructure
• Goal 12: Responsible Consumption and Production
• Goal 13: Climate Action

The report details how Dalipal's initiatives contribute to these SDGs through its operations.

Sustainable Products & Innovation

• Economical corrosion-resistant oil casings
• L80-13Cr oil pipes

Awards & Recognition

• National Green Factory
• Hebei Province Integrity Enterprise
• Enterprise Credit Rating Certificate AAA
• Hebei Province Manufacturing Single-item Champion Enterprise
• National Intellectual Property Advantageous Enterprises