Climate Change Data

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• Changing legal and regulatory requirements in the PRC pharmaceutical industry.
• Centralized tender process for pharmaceutical products.
• Price restrictions and price competition in China.
• Changes to products included in the Medical Insurance Drugs Catalogs or the National Essential Drug List.
• Competition in the PRC pharmaceutical industry.
• Risks in pharmaceutical distribution and retail businesses.
• Geographic concentration of pharmaceutical distribution and retail businesses.
• Reductions in purchases by or delays in collecting receivables from customers.
• Difficulties in carrying out expansion plans and realizing benefits from acquisitions.
• Potential goodwill impairment.
• Counterfeit products in the pharmaceutical distribution and retail markets.
• Disruption to manufacturing and storage facilities.
• Uncertainties in product development.
• Dependence on a limited number of major products.
• Severe side effects from products.
• Products not manufactured in accordance with applicable quality standards.
• Non-compliance with PRC regulatory licensing requirements.
• Changing environmental regulations.
• Product liability claims.
• Damage to brand reputation.
• Dependence on continued supply of raw materials.
• Disruption, loss or material change in supplier relationships.
• Failure to maintain optimal inventory levels.
• Need for additional capital.
• Currency fluctuation on translation.
• Elimination of government incentives.
• Failure to comply with PRC anti-corruption measures.
• Adverse news associated with the PRC pharmaceutical industry.
• Inadequate internal risk management and control system.
• Failures in information technology system.
• Dependence on key personnel.
• Legal uncertainties regarding land and buildings.
• Inconsistent interests of minority shareholders of publicly-listed subsidiaries.
• Loss of control over Dong-E-E-Jiao.
• Significant influence of controlling shareholder.
• Reputational risks from actions of other China Resources entities.

Mitigation Strategies

• Improved internal control system to prevent anti-corruption violations.
• Measures to monitor and combat counterfeit drugs.
• Established quality control management system and standard operating procedures.
• Expansion plans to extend customer geographical reach.
• Selective acquisition opportunities to enhance leadership and market share.
• Ongoing efforts to optimize pharmaceutical distribution and retail businesses.
• Improved allowance for doubtful debts.
• Internal control measures to minimize the risk of infringement upon the intellectual property rights of third parties.
• Security mechanisms regarding data access control, physical equipment security, network security, security management procedures and data backup.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• Economic Responsibility
• Employee Responsibility
• Customer Responsibility
• Partner Responsibility
• Public Responsibility
• Environmental Responsibility

Environmental Achievements

• Reduced CO2 emission by 9.93% compared with the same period of 2015
• Reduced coal consumption by 27.11% (CR Double-Crane)
• Reduced SO2 emission by 26.11% (CR Double-Crane)
• Reduced nitric oxide emission by 13.97% (CR Double-Crane)
• Reduced COD emission by 4.71% (CR Double-Crane)
• Completed construction of phase II of the 5.5MWp photovoltaic power generation project (Dong-E-E-Jiao)

Social Achievements

• 100% of employees signed labor contracts
• 100% of employees received occupational health examinations
• 26.8% female manager proportion
• Organized various EHS training projects for employees (212,365 hours)
• Organized 355 emergency drills with 21,058 participants
• Launched the “Singing Crane Action” training program for 32,373 grassroots medical workers (CR Double-Crane)
• Provided experiential products to 12,445 employees (Dong-E-E-Jiao)
• Donated medical equipment to CR Hope Town of Jinzhai

Governance Achievements

• Successfully listed on the Main Board of Hong Kong Stock Exchange
• Improved corporate governance structure and internal control system
• Revised and formulated corporate governance systems
• Conducted 29 meetings of the board of directors and shareholders
• Implemented a unified remuneration system
• Reduced four legal entities

Climate Goals & Targets

Environmental Challenges

• Weak global economic recovery
• China’s economic downturn
• Complex and changeable policies of the pharmaceutical and healthcare industry

Mitigation Strategies

• Accelerated innovative development
• Actively promoted business transformation
• Optimized resource allocation
• Strengthened international cooperation
• Promoted transformation and upgrading

Supply Chain Management

Supplier Audits: 100% responsible procurement ratio

Responsible Procurement

• Integrated CSR management into the supplier evaluation index

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: Guideline on Environment, Society and Governance Reporting Guide by Hong Kong Exchanges and Clearing Limited, Guiding Opinions on the Performance of Social Responsibility by Central Enterprises, Implementation Outline of Central Enterprises Twelfth Five-year Harmonious Development Strategy by the State-Owned Assets Supervision and Administration Commission of the State Council, China Corporate Social Responsibility Reporting Guidelines (CASS-CSR3.0) by Chinese Academy of Social Sciences, CR Corporate Citizenship Construction Guide, CRPG Social Responsibility Work Management Measures

Awards & Recognition

• China’s 500 Most Valuable Brands (Dong-E-E-Jiao)
• Demonstration Enterprises of Safety Culture Construction in Beijing
• China’s 100 Most Valuable Listed Companies (CR Sanjiu)
• First place in the corporate social responsibility development index of the pharmaceutical and healthcare industry
• Company with the Best Investor Relations (CR Double-Crane)
• Special Contribution Award for the Board Governance (CR Double-Crane)
• Five-Star Enterprise among Chinese Industrial Corporations to Fulfill Social Responsibility (CR Double-Crane)
• Most Responsible Listed Company for Society (Dong-E-E-Jiao)
• Best B2B Value Creation Award (CR Pharmaceutical Commercial)
• Beijing Municipal Model Enterprise of Safety Culture Construction

Environmental Metrics

ESG Focus Areas

• Environmental Protection
• Social Responsibility
• Governance
• Employee Well-being
• Customer Satisfaction
• Supply Chain Management
• Community Development

Environmental Achievements

• Comprehensive energy consumption per RMB 10,000 of output value decreased by 18.27% year on year
• Comprehensive energy consumption per RMB 10,000 of value added decreased by 20.95% year on year
• Total water consumption decreased year-on-year 15.12%
• CO2 emissions decreased year-on-year
• SO2 emissions decreased year-on-year

Social Achievements

• Improved training system with targeted programs for talent development
• Organized various cultural activities for over 50,000 employees
• Improved customer service network to protect customer information and improve satisfaction
• Carried out targeted poverty alleviation work
• Labor contract signing rate of 100%
• Social security coverage rate of 100%
• Physical examination coverage rate of 100%
• New employee training coverage of 100%

Governance Achievements

• Improved governance structure with five Board Committees
• Conducted compliance training and built a compliance culture
• Established and improved the strategic framework of overall risks
• No incident of corruption reported
• Improved investor communication mechanism

Climate Goals & Targets

Environmental Challenges

• Market changes and operational risks
• Energy utilization and waste emission in production
• Work safety accidents (one fatality)
• Hypertension problem in counties

Mitigation Strategies

• Established and improved the strategic framework of overall risks and carried out evaluation and internal audit of risks
• Optimized energy utilization structure, improved production process, and fostered energy-saving technology development
• Improved occupational health and safety management system
• Launched the “Hypertension Control Station” project

Supply Chain Management

Responsible Procurement

• Strict quality standards
• Policies and systems for responsible procurement

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRI Standards, Guideline for Central Enterprises to Fullfill Social Responsibilities by SASAC of the State Council, China Corporate Social Responsibility Reporting Guidelines (CASS-CSR4.0), CR Corporate Citizenship Construction Guide, CRPG Social Responsibility Work Management Measures

Certifications: ISO 9001

Awards & Recognition

• Five-Star Enterprise in the Chinese Industrial Corporations Sustainability Transition Assessment and Rating System (CR Double-Crane)
• China Green-Benefit Enterprise:Green Responsibility Award (CR Sanjiu)
• Five-star evaluation at the China Social Responsibility 100 Forum (CRPG)
• Quality Management Award by the People's Government of Beijing (CR Double-Crane)
• 2017 Social Responsibility Poverty Alleviation Award (Dong-E-E-Jiao)
• Gold Award for Quality Control (Dong-E-E-Jiao)

Environmental Metrics

ESG Focus Areas

• Economic Responsibility
• Employee Responsibility
• Customer and Partner Responsibility
• Environment Responsibility
• Safety Responsibility
• Community Responsibility

Environmental Achievements

• Reduced energy consumption per RMB 10,000 of output value by 2%
• Reduced coal consumption by 72% (CR Double-Crane)
• Reduced sulfur dioxide emissions by 50% year-on-year (CR Double-Crane)
• Achieved comprehensive utilization of medicine residue (CR Sanjiu and Dong-E-E-Jiao)
• Dong-E-E-Jiao included in the Ministry of Industry and Information Technology (MIIT) Third "Green Manufacturing List", named "Green Factory"

Social Achievements

• Launched "Healthcare China Tour for Poverty Alleviation" and "CRPG YAO Action"
• Improved employee satisfaction rate to 97% (Dong-E-E-Jiao)
• 100% labor contract signing rate
• 100% social insurance coverage
• Zero work-related fatalities
• Implemented various employee training programs, with 100% training coverage and an average of 47.8 training hours per employee

Governance Achievements

• Established a sound corporate governance system
• Improved information disclosure mechanism
• Implemented effective checks and balances
• Strengthened internal control system
• Conducted independent inspections of internal control, finding no material defects
• Handled 11 cases of violation with no incidents of corruption

Climate Goals & Targets

Environmental Challenges

• Challenges in the market due to structural reform in the healthcare industry
• Stricter supervision in the pharmaceutical industry
• Need to adapt to industry environment and market demands
• Potential risks in EHS management

Mitigation Strategies

• Optimized resource allocation
• Accelerated innovative transformation
• Improved organizational skills
• Deepened reforms and acquired high-quality resources
• Implemented the CRPG EHS Risk Management Information Project (PEPSI)
• Strengthened risk management concept and promoted its use by all affiliated enterprises

Supply Chain Management

Responsible Procurement

• Justice, openness, and fairness
• Integration of social responsibility into purchasing process
• Environmental protection requirements integrated into contract terms
• On-site audit to major suppliers

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: HKEx Environment, Society and Governance Reporting Guide, Guideline for Central Enterprises to Fullfill Social Responsibilities by SASAC of the State Council, China Corporate Social Responsibility Reporting Guidelines (CASS-CSR4.0), China Resources Group Social Responsibility Management Measures, CRPG Social Responsibility Management Measures

Certifications: Domestic GMP and GSP certifications, GB/T19001 system certification, FDA, EU cGMP, and WHO certifications (some affiliates)

Awards & Recognition

• Hang Seng Corporate Sustainability Benchmark Index
• Outstanding Corporate Social Responsibility (The Mirror in Hong Kong)
• Various awards listed in the report

Environmental Metrics

ESG Focus Areas

• Corporate Governance
• Operation Management
• Investors’ Rights and Interests
• Co-building a Responsible Supply Chain
• Environmental Management
• Protecting Employees’ Rights and Interests
• Community Co-Building

Environmental Achievements

• Overall energy consumption per RMB 10,000 of output value decreased by 4.96%
• Environmental protection investment increased by 31.73%
• Completed VOCs treatment projects as planned in all manufacturing units, reducing non-methane hydrocarbon emission concentration

Social Achievements

• Launched the “Gatekeeper of Children’s Health” program, training over 600 grassroots pediatricians
• 100% staff training coverage rate
• Zero work-related fatalities
• Supported 1,221 employees in need, including poverty alleviation efforts

Governance Achievements

• No significant corruption case in 2019
• No major legal dispute in 2019
• Improved internal control system with added assessment procedures

Climate Goals & Targets

Environmental Challenges

• Not disclosed

Mitigation Strategies

• Not disclosed

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Supplier management systems, evaluation and incentive mechanisms, strategic partnerships with key suppliers, promoting capacity building, online bidding platform

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: GRI Standards, CASS-CSR4.0, HKEx ESG Reporting Guide

Certifications: CNAS Certification (Drug Analysis Center, TCM Granules Testing Center)

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Listed Enterprise of the Year, Enterprises of the Year by Bloomberg Businessweek, Golden Bull Best Investment Value Award, BDO “ESG Report of the Year Award”, “Best in ESG Award”, Green Management Award – Gold, National Green Factory

Environmental Metrics

ESG Focus Areas

• COVID-19 Response
• Poverty Alleviation
• Drug Quality and Safety
• Environmental Management
• Employee Well-being
• Supply Chain Management
• Innovation
• Community Engagement

Environmental Achievements

• Five factories won the honorary title of National-level Green Factories.
• Completed 137 environmental protection targets set in 2018 with a total investment of RMB 200 million.
• Dong-E-E-Jiao and CR Sanjiu Jinchan built distributed photovoltaic power plants, reducing CO2 emissions by an average of 12,586 tons per year.
• CR Sanjiu Jinchan saved 80 tons of water per day.

Social Achievements

• Launched the CR Healthy Village Program, providing online training to over 1.6 million primary-level and village-based practitioners.
• Assisted the construction of three village clinics and donated drugs and devices.
• Implemented a variety of cultural activities and established a comprehensive talent training system.
• Customer satisfaction rates of CR Sanjiu and CR Jiangzhong reached 100%.

Governance Achievements

• Established the ESG Committee in 2020.
• Implemented the Code of Business Conduct of China Resources (Holdings) Co., Ltd.
• No significant corruption cases in 2020.
• Improved the development of the audit system and made progress in audit supervision, risk management, and internal control evaluation.

Climate Goals & Targets

Environmental Challenges

• COVID-19 pandemic disrupted business operation and management.
• Policy of volume-based procurement and shrinking end markets.
• Climate change impacts on the cultivation and growth of Chinese medicinal herbs.
• Quality incidents in a subsidiary.

Mitigation Strategies

• Established a pandemic response working group and ensured stable supplies of anti-virus materials.
• Implemented measures to improve quality and boost benefits, advanced the integration of informatization and industrialization and facilitated digitalization reform.
• Implemented eco-protection measures, including the protection of herb varieties.
• Initiated drug recall procedures and carried out self-inspections to actively reduce and eliminate hazards.

Supply Chain Management

Supplier Audits: 39,889 suppliers audited in 2020

Responsible Procurement

• Transparent and responsible procurement of environmentally friendly raw materials.
• Supplier social responsibility performance appraisal system.
• Quality assurance commitment letters with suppliers.

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events impacting herb cultivation.

Reporting Standards

Frameworks Used: GRI Standards, Environment, Society and Governance Reporting Guide (HKEx), Guidelines to the Central State-owned Enterprises Directly under the Central Government on Fulfilling Corporate Social Responsibilities (SASAC), Guidelines on Corporate Social Responsibility Reporting for Chinese Enterprises (CASS-CSR4.0)

Certifications: GMP, GSP, CNAS

Awards & Recognition

• ESG Responsibility Practice Award (2020 DIA GOLD)
• Green Development Award of the 15th People’s Corporate Social Responsibility Award
• 2020 China Pharmaceutical Enterprise Social Responsibility Award - the EHS Social Responsibility Award
• Top 100 Pharmaceutical Enterprises in China 2019

Environmental Metrics

ESG Focus Areas

• Climate Change
• Health Care Access
• Quality and Safety
• Supply Chain Management
• Employee Well-being
• Community Development
• Corporate Governance
• Innovation

Environmental Achievements

• 8.6% year-on-year decrease in comprehensive energy consumption per RMB 10,000 of industrial units
• 64.83% year-on-year reduction in SO2 emissions
• 18.49% year-on-year decrease in hazardous waste
• Achieved 18.59MWp installed PV capacity and annual electricity output of 20,000MWh
• Six national-level green factories

Social Achievements

• Launched Healthy Village Program, offering medical training for over 200 rural doctors and free clinical diagnoses for over 2,500 villagers
• Invested RMB 15.485 million in staff training with 100% staff coverage
• Created 10,761 new jobs
• Invested RMB 20.35 million in public welfare and donations
• 100% customer complaint resolution rate

Governance Achievements

• Zero major corruption incidents
• Improved long-term compliance management mechanism
• Formulated Administrative Measures for Discipline Inspection Agencies to Clarify False Reports and Accusations
• Upgraded MSCI-ESG Rating to BBB
• Ranked No.1 in the 2021 China Corporate Social Responsibility Development Index for the pharmaceutical and biological manufacturing industry

Climate Goals & Targets

Environmental Challenges

• Climate change risks (physical and transitional risks)
• Supply chain management challenges
• Maintaining high quality standards across subsidiaries

Mitigation Strategies

• Strengthening carbon management, implementing energy conservation and emission reduction strategies, and building a green supply chain
• Developing a transparent and scientific quality management system for suppliers, conducting regular audits, and providing training
• Implementing comprehensive quality management system across product lifecycle, including regular audits and staff training

Supply Chain Management

Supplier Audits: 51,922

Responsible Procurement

• Administrative Measures for Suppliers and Integrity Agreement
• Transparency Declarations with suppliers
• Prioritizing suppliers with capacity of large-scale artificial cultivation of medicinal herbs

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events

Transition Risks

• Regulatory changes
• Market shifts

Reporting Standards

Frameworks Used: GRI Standards, HKEx ESG Reporting Guide, SASAC Guidelines, CASS-CSR4.0

Certifications: ISO 14001, ISO 45001, ISO 9001, CNAS

Awards & Recognition

• Central State-Owned Enterprise ESG Pioneer 50 Index (Excellent rating)
• 2021 Top 100 Chinese Enterprises Award
• First place in the Pharmaceutical and Bio-Manufacturing Industry Social Responsibility Development Index (2021)

Environmental Metrics

ESG Focus Areas

• Climate Change
• Innovation
• Health Accessibility
• Product Quality and Safety
• Employee Well-being
• Rural Vitalization
• Community Development
• Supply Chain Sustainability
• Governance

Environmental Achievements

• Ongoing improvements in energy conservation, environmental protection, and carbon reduction indicators
• Completed distributed PV power generation projects, increasing renewable energy share
• Reduced carbon dioxide emissions by approximately 3,041.59 tons and other pollutants by 967.04 tons through various initiatives at CR Double-Crane
• Completed distributed PV power generation projects at various locations, generating millions of kWh of clean electricity
• Achieved better-than-expected results in environmental management goals (energy consumption per RMB 10,000 turnover, added value, and carbon dioxide emission intensity)

Social Achievements

• Launched Healthy Village Program to promote fair sharing of health services and build a rural medical system
• Maintained an A-level MSCI-ESG rating and led in Hang Seng ESG ratings in the industry
• Selected into the list of “ESG Pioneer 100 Index of Central State-owned Enterprises”
• Increased employee safety training hours year-on-year
• Achieved 100% labor contract signing rate and 100% social insurance and company welfare coverage
• Promptly dealt with employee complaints and implemented suggestions
• Organized staff cultural activities with over 190,000 participants
• Offered financial aid totaling RMB 1 million to needy employees
• Provided scholarships to children of plasma donors

Governance Achievements

• Implemented anti-corruption and anti-bribery management systems
• Conducted integrity risk assessments and regular audits
• Organized special rectification of unethical practices and corruption
• Implemented Compliance Management System
• Improved internal control system covering all business processes
• Strengthened risk prevention and control
• Created a culture of compliance
• No concluded corruption cases involving the Company or its employees in 2023

Climate Goals & Targets

Environmental Challenges

• Climate change impacts on human health and business operations
• Supply chain disruptions due to extreme weather events
• Increasing energy consumption and costs
• Intensifying water scarcity
• Rising sea levels threatening company buildings
• Stricter carbon reduction policies influencing corporate energy consumption
• Growing stakeholder awareness of climate issues
• Inadequate disclosure of carbon neutrality goals and data

Mitigation Strategies

• Incorporated green and low-carbon strategies into the 14th Five-Year Plan
• Established a three-tier governance mechanism to address climate risks
• Developed short-, mid-, and long-term plans for energy conservation, emissions reduction, and carbon reduction
• Crafted a green supply chain and improved the carbon disclosure system
• Continuously assess climate-related risks and opportunities
• Developed new low-carbon products and services
• Increased the use of clean energy and reduced reliance on fossil fuels
• Adopted new technologies to enhance energy efficiency

Supply Chain Management

Supplier Audits: 1,388/year

Responsible Procurement

• Code of conduct
• Supplier sustainability requirements
• ESG scoring items added in procurement and bidding evaluation
• Priority given to qualified suppliers and products meeting environmental protection requirements
• Transparent Declarations signed by suppliers
• Integrity documents signed by procurement review personnel

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events
• Damage to buildings, equipment, and facilities
• Supply chain disruptions
• Increased production costs
• Property losses
• Intensifying water scarcity
• Rising sea levels

Transition Risks

• Stricter carbon reduction policies
• Shifting input costs and output requirements
• Reduced demand and revenue due to shift in customer preference
• Increased research and development expenditures
• Reduced revenues due to insufficient raw material supplies
• Heightened capital costs
• Rising insurance premiums
• Inadequate disclosure of carbon neutrality goals and data

Opportunities

• Development of energy-efficient products and services
• Expansion into new energy fields
• Adoption of new technologies for energy management
• Seizing market opportunities from new diseases related to climate change

Reporting Standards

Frameworks Used: GRI Standards: 2021, HKEX, Main Board, Appendix C2: Environmental, Social and Governance Reporting Guide, AA1000AS V3

Certifications: ISO 14001, ISO 45001, ISO 9001, ISO 27001, ISO 50001

Third-party Assurance: British Standards Institution

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• New low-carbon products and services tailored to emerging diseases and consumer preferences
• Green and environmentally friendly products with low energy consumption

Awards & Recognition

• A-level MSCI-ESG rating
• Top ranking in Hang Seng ESG ratings
• Selected into the “ESG Pioneer 100 Index of Central State-owned Enterprises”
• 2023 China Philanthropy Enterprise
• Best Practice Case award at the “2023 Campaign for Best Rural Vitalization Practices of Public Companies”
• 2023 Jiangxi Rural Vitalization Demonstration Village award