Climate Change Data

Environmental Metrics

ESG Focus Areas

• Climate Change and Carbon Neutrality
• Corporate Governance
• Supply Chain Management
• Employee Safety
• Community Involvement

Environmental Achievements

• Installation of solar power generation devices on factory roofs (in progress)
• Green development concept introduced in Chengdu plant design
• Implementation of ISO9001, QC080000, ISO14001, ISO45001
• Reduced hazardous waste by using automated production equipment

Social Achievements

• Compliance with labor laws in Hong Kong and PRC
• Employment of 35 disabled employees
• Annual health checks for PRC employees
• Promotion of work-life balance through various activities
• Charitable donations of over HK$180,000

Governance Achievements

• Established ESG risk management team
• Regular ESG communication meetings
• Zero-tolerance policy towards corruption
• Whistle-blowing channel in place
• Adoption of a code of conduct on securities transactions by directors and employees

Climate Goals & Targets

Environmental Challenges

• Market risk - increase in raw material costs due to stricter energy saving and emission reduction requirements for suppliers
• Transitional risks, such as changing policies, potential increment in energy costs, and the need for green materials
• Geopolitical conflict and global inflation
• Supply chain tension and market competition
• COVID-19 pandemic disruptions

Mitigation Strategies

• Continuous monitoring of foreign exchange exposure and consideration of hedging
• Vigilant measures to minimize potential impact of geopolitical conflict and inflation
• Contingency plans and response plans with suppliers to maintain supply chain stability
• Pandemic prevention taskforce to monitor and review control measures
• Flexible work arrangements to maintain productivity during the pandemic

Supply Chain Management

Supplier Audits: Regular audits performed on a regular basis

Responsible Procurement

• Supplier sustainability requirements
• Code of conduct
• Declaration that packing material and BOM contains no hazardous substance

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather
• Earthquake

Transition Risks

• Changing policies
• Increased energy costs
• Need for green materials

Opportunities

• Reduction in operating costs due to higher energy usage efficiency

Reporting Standards

Frameworks Used: Environmental, Social and Governance Reporting Guide (Appendix 27 of the Listing Rules)

Certifications: ISO 14001, OHSAS 18001, ISO 9001, IATF 16949, QC 080000, ISO 45001

Third-party Assurance: KPMG

Awards & Recognition

• Wastewi$e Certificate
• Happiness-at-work Promotional Scheme logo (10 consecutive years)
• Good Employer Charter
• 2022 “National Intellectual Property Demonstration Enterprise” (Varitronix (HY))

Environmental Metrics

ESG Focus Areas

• Climate change
• Carbon neutrality
• Social responsibility
• Green supply chain management

Environmental Achievements

• Installed solar power generation devices to reduce carbon emission and power consumption
• Constructed a decentralized photovoltaic power station generating 25,455.5 kWh in June 2023, reducing 14.52 tCO2 emissions.
• Working with customers and suppliers to meet net zero ambition by proposing the use of environmental-friendly materials and avoiding the use of hazardous materials.

Social Achievements

• Not disclosed

Governance Achievements

• Board’s Oversight and Management’s Role in climate governance
• Participated in ESG Academy webinar on climate-related disclosures.
• Formulated a climate change policy.

Climate Goals & Targets

Environmental Challenges

• Impact of price adjustment in the NEV market
• Additional costs incurred for the preparation and construction of new manufacturing facilities
• Peak impact of COVID-19 quarantine measures impacting production efficiency and costs
• Geopolitical conflict, inflation, energy crisis, downturn of global economy, and increase of interest rate in Europe
• Similar economic challenges in Korea and America

Mitigation Strategies

• Continuous striving for better supply chain management and optimizing production efficiency
• Developing overseas markets with top PRC and global automotive manufacturers
• Setting up local sales teams to respond promptly to customer needs
• Developing new technology to meet market needs
• Emphasis on emerging businesses such as automotive system business and CMS
• Working with suppliers to achieve asset-light operation to reduce overall costs

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Supplier CSR (Social Responsibility) Agreement
• Requirements for suppliers to establish a CSR management system with reference to ISO14001/ISO45001/IPC1401

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather
• Earthquake

Transition Risks

• Policy changes
• Increased energy costs
• Demand for green materials

Opportunities

• Reduction in operational costs due to increased energy efficiency

Reporting Standards

Frameworks Used: Appendix 27 of the Rules Governing the Listing of Securities on the Stock Exchange

Certifications: ISO14064 (expected in August 2023), ISO14001/ISO45001/IPC1401 (supplier requirements)

Third-party Assurance: KPMG

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Not disclosed