Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environmental Protection
• Employee Well-being
• Responsible Management
• Community Investment

Environmental Achievements

• Quanling Power Plant approved as a national model of environmental protection by the National Development and Reform Commission.
• Yangzhou Hazardous Waste Project recognized as a Yangzhou City and Jiangsu Province “Civilized Construction Site”.

Social Achievements

• Formulated Capital Environment Holdings Limited Occupational Health Management System.
• Formulated Capital Environment Holdings Limited Staff Employment Management System.
• Various training programs implemented to improve employee skills and knowledge.

Governance Achievements

• Formulated Integrity and Responsibility Guidelines and Employee Responsibility and Penalty Management Measures.
• Established an Internal Accountability Committee to investigate corruption incidents.

Climate Goals & Targets

Environmental Challenges

• Lack of adequate waste treatment facilities in many communities.
• Delays in the use of new technologies and lack of investment in R&D for waste classification.
• Soil pollution remains a significant challenge in China.
• Lack of hazardous waste treatment facilities or outdated facilities leading to illegal dumping.

Mitigation Strategies

• Investing in projects related to environmental protection, such as the Ningbo Kitchen Waste Treatment PPP Project.
• Implementing the Environmental Management Measures to regulate waste management and ensure compliance with government standards.
• Developing modern waste collection systems to improve residents’ waste disposal habits and awareness.
• Establishing an industrial hazardous waste treatment facility in Yangzhou Industrial Park.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Procurement Management Measures and Tender Management Measures (Interim)
• Equipment and Commodity Procurement Management System
• Tendering and Procurement Committee

Climate-Related Risks & Opportunities

Physical Risks

• More frequent and severe storms, changes in sea level and heatwaves

Transition Risks

• Government controls on activities contributing to climate change, leading to legal risks and increased operational costs.

Opportunities

• Emergence of new technologies, products and markets related to greenhouse gas emissions control.

Reporting Standards

Frameworks Used: HKEX ESG Reporting Guide, GRI Standards (2016)

Certifications: ISO 9001

Third-party Assurance: Carbon Care Asia (CCA) for carbon assessment

UN Sustainable Development Goals

• SDG 13: Climate Action

Contribution to reducing greenhouse gas emissions through biogas capture and utilization.

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Environmental sustainability
• Product sustainability
• Talent sustainability
• Social sustainability

Environmental Achievements

• Proportion of sustainable raw material procurement reached 6.3%
• Reduced carbon dioxide emissions by an average of 0.9 kg each dress by use of Naia™ Renew raw materials and DV One production process

Social Achievements

• Launched the “Star” Project to enhance service awareness of all employees
• 100% of customer complaints were responded and addressed
• 82.8% of employees received training, average training duration per employee was 13.3 hours
• No corruption case in the Group

Governance Achievements

• Established an ESG governance framework with the board of directors as the top-level decision-making body
• Complied with all applicable code provisions under the Corporate Governance Code during the Fiscal Year 2022

Climate Goals & Targets

Environmental Challenges

• Recurring pandemic in many provinces and regions in China impacted the whole retail environment
• Significant decline in customer traffic of offline shops due to pandemic preventive and control measures

Mitigation Strategies

• Increased investment in brand strength
• Strengthened comprehensive capacity building to support the sustainable and large-scale development of multi-brands
• Optimized construction of a fan-focused global retail network
• Optimized business operation efficiency, reasonably controlled daily expenses, maintained abundant cash flow

Supply Chain Management

Supplier Audits: 248 new suppliers approved in Fiscal Year 2022

Responsible Procurement

• Code of Conduct for Suppliers
• ISO 14001 and ISO 9001 performance indicators incorporated into supplier management and evaluation system

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather and natural disasters

Sustainable Products & Innovation

• Sustainable cotton materials
• Lyocell
• Bast fibers
• Sustainable cellulose fibers
• Naia™ Renew cellulosic acetic fiber
• Yak wool series
• OEKO-TEX100 safety fabric series

Environmental Metrics

ESG Focus Areas

• Governance
• Responsibility
• Environment
• Ecosystem
• Nutrition

Environmental Achievements

• Mengniu’s Qujing Factory was certified as a zero-carbon emission factory for the second consecutive year.
• Beijing Factory under Mengniu’s Chilled Product Business Unit was certified as a carbon neutral management system.
• Mengniu’s Deluxe Frozen Cheese Milk Ice Cream, Deluxe Strawberry Milk Ice Cream, and Deluxe Vanilla-Flavored Milk Ice Cream have been granted the carbon neutral certification.
• Reduced GHG emissions by about 185,000 tonnes through more than 260 carbon reduction initiatives.
• 30 factories certified as “National-level Green Factory”.
• 9 factories recognized as “Zero-Waste Factory” demonstration units.
• 5 factories awarded the 3-star certification of zero-waste management system.
• 100% coverage in environmental management system certification for self-operated factories.
• Water consumption per tonne of dairy products has fallen by 3.8% compared to 2020.
• Water reuse volume was about 2.04 million tonnes, with a reclaimed water rate of 6.44%.

Social Achievements

• Launched the world’s first model in the nutrition and health field — MENGNIU.GPT and “WOW Health+” digital intelligence platform.
• Employed 46,064 employees, including 26,996 male employees and 19,068 female employees.
• The proportion of female executives has reached 26.32%.
• Employee training coverage rate reaches 92.76%, with a total training duration of 4,081,820.76 hours.
• Selected as 2023 China’s Best Employer and 2023 Best ESG Practice Employer by Forbes.
• Conducted the Program of Inclusive Nutrition Plan in 452 schools, donating more than 3.704 million boxes of milk and covering 582,000 students.
• Mengniu Public Welfare Foundation spent RMB 51.2475 million on charitable initiatives.

Governance Achievements

• Consolidated 28 ESG actions into 26 to further clarify the directions and cores of ESG work and improve management efficiency.
• Set up Working Group on Responsible Procurement and Working Group on Green Packaging.
• Included sustainable development KPIs into the performance appraisal of middle management personnel.
• Received six awards, including “Best Company Board”, “Best ESG”, and “Best IR Program”, from Institutional Investor.
• Granted ISO 37301 and GB/T35770 compliance management system certification.

Climate Goals & Targets

Environmental Challenges

• Increasingly urgent earth crisis requiring more efforts to create a more sustainable dairy production and consumption model.
• Food safety risks caused by nuclear wastewater pollution.
• Industry public opinion risks brought by aspartame.

Mitigation Strategies

• Formulated the GREEN sustainable development strategy with a commitment of reaching carbon peak by 2030 and carbon neutrality by 2050.
• Set the goal of “zero deforestation” in the whole industrial chain by 2030.
• Adopted countermeasures to alleviate and reduce the impact of emerging risks on the development of the Group (refer to “Nutrition and Health” and “Excellent Quality” sections).

Supply Chain Management

Supplier Audits: 29 strategic suppliers completed SMETA third-party audits, 100% internal assessment coverage rate of raw and auxiliary material suppliers.

Responsible Procurement

• Supplier Code of Conduct
• Sedex SAQ questionnaire
• SMETA audits
• Sunshine Agreement

Climate-Related Risks & Opportunities

Physical Risks

• Water scarcity

Transition Risks

• Regulatory changes

Opportunities

• Development of energy-efficient products
• Renewable energy utilization

Reporting Standards

Frameworks Used: GRI Standards, HKEX ESG Reporting Guide

Certifications: ISO 37301, GB/T35770, ISO 14001, ISO 45001, CNAS, ISO/IEC 17025:2018, ISO 9001, GMP, HACCP, FSSC 22000, BRCGS, IFS, SQF, China GAP, FSC, RSPO, 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

• Carbon-neutral products
• Products with reduced sugar, low sodium, low fat, reduced artificial ingredients, and smaller sizes
• Products with new environmental plastic-reduced packaging
• Plant-based cap for Milk Deluxe Desert Organic Pure Milk
• PLA and PBS straws

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: Green Sustainable Operation Certification
• China Food CSR Advanced Enterprise Award: Green Sustainable Operation Certification
• Asia Pacific IP Team of the Year Award 2023
• IAM Strategy 300: The World’s Leading IP Strategists 2023
• 24th China Invention Patent Silver Award
• Inner Mongolia Autonomous Region's First Patent Gold Award