Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environmental Emissions
• Environmental Protection, Natural Resources and Use of Resources
• Social
• Health and Work Safety
• Employee Development and Training
• Care for Employee and Team-building Initiatives
• Employment Ordinance and Enforcement Standards
• Supply Chain Management
• Product Quality Control and Responsibility
• Anti-corruption, Anti-bribery and Anti-fraud
• Community Investment

Environmental Achievements

• Emission indexes for major emitted pollutants reached or outperformed China’s environmental emission standards
• Improved gas emission performance through added equipment to sewage treatment process
• New power supply units under construction designed to meet ultra-low emission requirements and reduce production costs
• 7 tons of standard coal saved each day through methane incineration and heat value supply to thermal power plant
• Wastewater reuse system implemented to recycle water resources
• Green office practices in place (recycled paper, energy-efficient lights)
• Samson Paper Company Limited awarded the “CarbonCare Label” for 2017.

Social Achievements

• Paper manufacturing business named “A Production Safety Advanced Work Unit in Xuecheng District for 2017” and awarded the title of “Worker Pioneer”
• Comprehensive staff salary assessment system, salary increase system, and sales commission mechanism implemented
• Additional subsidies and benefits offered to employees, along with performance-linked bonuses
• Long service award scheme in place
• Regular physical checkups for employees, publication of environmental safety data, and appropriate protective measures implemented in paper manufacturing business
• Safety department and committee established, safety risk control system implemented, and monthly safety reporting meetings held
• Regular safety, fire, environmental protection, energy conservation, and knowledge prize-giving contests held
• Group-wise or regional cultural and sport entertainment competitions and team-building trips organised
• Free accommodation, shuttle bus service, and work meals provided for employees in paper manufacturing business
• Free access to basketball courts and table tennis boards in the plant

Governance Achievements

• Professional audit department regularly conducts day-to-day management and auditing of subsidiaries, as well as auditing of special projects
• Anti-corruption policy set out in employee manual and comprehensive whistleblowing channels established

Climate Goals & Targets

Environmental Challenges

• Increasing paper prices and additional operating costs burden on customers’ business
• Price volatility of paper products and credit exposure on customers
• Concerns whether customers were able to withstand soaring paper prices while facing environmental scrutiny
• Banks tended not to ease liquidity for customers for their working capital uses
• Intensifying and changing competition among supplies in consumable product market
• Gradually rising cost in operations including human resource and logistics
• Rapidly changing consumer behaviors in consumable product market
• Higher paper costs might exert a heavy burden on customers’ operating costs and thus affects the sustainability of their business

Mitigation Strategies

• Measures to mitigate the effect of price volatility and credit exposure by keeping less stocks and carrying out more indent sales while monitoring closely the working situation of customers
• Cautious manner on various sales and procurement strategies in line with the various situation among different regions in China with an aim to achieve higher profitability and low risk in credit as well as not pursuing for the increase in market share
• Stringent credit policy and close monitoring of customers’ liquidity and business situation
• Credit insurance coverage on accounts receivable of paper business in Hong Kong and the PRC
• Conservative approach to make provision for doubtful debts
• Low level of stocks maintained to minimize risk exposure of stock value against paper price
• Innovatively procurement strategy implemented to increase direct import product portfolio, leading to margin improvements and product variety diversification
• Enhancement on supply chain to fulfill higher service standard on delivery and product quality control
• Closely monitoring and assessing the customers’ operation to lower down the credit risks
• Sales strategies with an intention keeping less stocks and obtaining more indent orders to mitigate the volatility of paper prices
• Upgrading production facilities and power plant to attain cost savings in manufacturing segment

Supply Chain Management

Supplier Audits: Annual assessment on delivery schedules, delivery quality and services as well as the safe production and environmental protection standards of the suppliers

Responsible Procurement

• System for controlling qualified suppliers for selecting, evaluating and controlling suppliers

Climate-Related Risks & Opportunities

Awards & Recognition

• CarbonCare Label for 2017

Environmental Metrics

ESG Focus Areas

• Environmental protection
• Employee health and safety
• Employee development and training
• Supply chain management
• Anti-corruption

Environmental Achievements

• Improved energy-saving measures and implemented energy-saving transformation
• Upgraded and transformed paper production lines, improved environmental pollution treatment, and controlled pollution emissions and resource consumption
• Achieved 100% training for all employees in the paper manufacturing business

Social Achievements

• Provided free accommodation and shuttle bus services for employees
• Provided free working meals for employees
• Organized cultural, sports, and entertainment competitions for employees
• Implemented a three-shift system in the production department to allow sufficient rest time for employees

Governance Achievements

• Established a sound and honest internal control management system
• Regularly organized anti-corruption education and training for directors and employees
• Established comprehensive whistleblowing channels

Climate Goals & Targets

Environmental Challenges

• Downward pressure on the domestic paper manufacturing industry
• Overall weak sales market
• Impact of regional pandemic control and logistics disruption
• Decrease in the cost of major raw materials being slower than the drop in the products’ selling price
• Unexpected and prolonged overhaul and downtime of production equipment caused by the regional epidemic control

Mitigation Strategies

• Developed new products and explored new production processes
• Reduced energy consumption and production costs
• Optimized production efficiency
• Exploited the market and increased the proportion of direct sales customers
• Expanded customer bases in the markets of the Yangtze River region, Beijing, and Tianjin
• Formulated a comprehensive emergency plan to cope with extreme weather events
• Implemented risk assessment practices to identify and mitigate climate-related risks

Supply Chain Management

Supplier Audits: Annual evaluation of over 160 suppliers

Responsible Procurement

• Supplier files for all suppliers meeting local government policies and environmental protection requirements
• Strict supplier investigation before establishing cooperation
• Priority given to suppliers with quality environmental and occupational health and safety management systems or certifications (ISO9001/ISO14001/ISO45001)

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events (typhoons, rainstorms, storms, extreme cold or hot weather)
• Logistics interruptions due to power grid or communication infrastructure damage

Transition Risks

• Stringent environmental laws, regulations, and policies
• Shift towards more environmentally friendly operations and use of renewable and low-carbon technologies

Reporting Standards

Frameworks Used: Appendix 27 — Environmental, Social and Governance Reporting Guide to the Rules Governing the Listing of Securities

Certifications: ISO9001, ISO14001, OHSAS18001, FSC, ISO50001

Third-party Assurance: RSM Hong Kong

Awards & Recognition

• A Production Safety Advanced Work Unit in Xuecheng District for 2017
• Worker Pioneer by Xuecheng District General Union
• Advanced Enterprise of Safe Production in Shandong Province
• Advanced Enterprise of Energy Conservation in Shandong Province
• Advanced Collective of Water Diversion from South to North in Shandong Province
• Qualified Enterprise of Clean Production
• Charity and Love Enterprise of Zaozhuang City

Environmental Metrics

ESG Focus Areas

• Environmental protection
• Employment and labor practices
• Product responsibility
• Anti-corruption
• Social responsibility

Environmental Achievements

• Achieved year-on-year reduction in greenhouse gas emissions
• Obtained ISO 14001 Environmental Management System certification
• Implemented energy-saving transformation and improved energy-saving measures
• Upgraded and transformed paper production lines, improved matching adjustment, production process and production capacity
• Annual emissions of air pollutants were lower than the target value
• COD and ammonia nitrogen emissions in wastewater were lower than target values
• Achieved solid waste management target of 100% classified disposal rate
• Obtained ISO50001 Energy Management System Certification
• Achieved electricity, steam, and oil saving targets
• Used a total of 1.78 million tonnes of grey water and achieved the water conservation target
• Obtained “FSC Chain of Custody Certification”

Social Achievements

• No work-related fatalities in the past three years
• Implemented a comprehensive safety management system
• Provided extensive and targeted learning and training opportunities for employees
• Achieved 100% training for all employees in paper manufacturing business
• Accumulated 10,766 training hours
• Established a comprehensive supplier assessment system
• Maintained strong cooperative relationships with major suppliers

Governance Achievements

• Established a scientific management structure, clear rules and regulations and an effective ESG internal control system
• Engaged professional and independent third-party institutions to conduct comprehensive risk assessment and internal audit every year
• Embedded ESG concepts into company culture
• Actively communicated sustainable development concepts to employees
• Complied with the mandatory disclosure requirements and the “comply or explain” provisions set out in the ESG Reporting Guide

Climate Goals & Targets

Environmental Challenges

• Weak market demand
• Release of new production capacity
• Zero tariffs on imported paper products
• Increase in raw material costs
• Potential impacts of climate change on business operations (physical risks like extreme weather and transition risks like regulatory changes)

Mitigation Strategies

• Adjusting business strategies
• Fostering a new corporate culture
• Promoting energy conservation, reducing consumption, and increasing productivity
• Actively exploring the market to enhance market recognition
• Implementing cost-saving measures
• Conducting market research and developing new markets
• Improving cost structure
• Aligning with national energy strategy and “Dual Carbon” goals
• Promoting energy conservation and consumption reduction
• Adapting to policy development requirements
• Developing comprehensive emergency plans for extreme weather events
• Establishing an emergency leadership team
• Setting up emergency material reserves
• Adjusting production plans
• Conducting regular flood emergency drills
• Having its own power supply system
• Actively monitoring industry trends and market changes
• Enhancing technological research and development efforts
• Promoting the application of green and low-carbon technologies
• Closely monitoring changes in domestic and international environmental regulations
• Actively participating in communication with governments and industry associations

Supply Chain Management

Supplier Audits: 43 qualified suppliers, annual assessments

Responsible Procurement

• Established a “Qualified Supplier List”, rigorous background checks for new suppliers, on-site assessments and inspections, technical testing of raw materials, prioritizing suppliers with ISO9001/ISO14001/ISO45001 certifications, promoting suppliers to fulfil environmental and social responsibilities

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events (typhoons, heavy rainfalls, storms)

Transition Risks

• Regulatory changes
• Technological advancements
• Market shifts towards environmentally friendly operations and renewable energy

Reporting Standards

Frameworks Used: ESG Reporting Guide to the Rules Governing the Listing of Securities

Certifications: ISO 14001, ISO 50001, OHSAS 18001, ISO 9001, FSC Chain of Custody

Third-party Assurance: RSM Hong Kong

Awards & Recognition

• A Production Safety Advanced Work Unit in Xuecheng District for 2017
• Worker Pioneer by the Xuecheng District General Labour Union
• Advanced Enterprise of Safe Production in Shandong Province
• Advanced Enterprise of Energy Conservation in Shandong Province
• Advanced Collective of Water Diversion from South to North in Shandong Province
• Qualified Enterprise of Clean Production
• Charity and Love Enterprise of Zaozhuang City
• Green Factory in Shandong Province
• Specialized and Innovative Small and Medium-sized Enterprise in Shandong Province
• National “High-tech Enterprise”