Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environmental Protection
• Corporate Social Responsibilities

Environmental Achievements

• Reduced CO2 emission from 103,618.6 kg to 72,663.1 kg
• Reduced energy consumption from 170,313.9 kWh to 157,249.0 kWh
• Reduced paper disposed for recycling from 1,203.2 kg to 1,157.9 kg

Social Achievements

• Established a safe and healthy working environment for all employees
• Provided on-the-job trainings for new employees
• Organised training sessions and seminars relating to sustainable development and information security

Governance Achievements

• Established relevant standards and complied with laws and regulations, prohibiting employees from receiving any benefits from the suppliers, customers or any party having business or commercial relationship with companies under the Group or offering benefits to the same.

Climate Goals & Targets

Environmental Challenges

• Significant decrease in demand of the Group’s product amid COVID-19 pandemic
• Substantial decrease in purchase orders from a major customer headquartered in the USA and from customers of the Group in Japan due to the weak consumer sentiment caused by COVID-19 pandemic

Mitigation Strategies

• Solicited not less than three new middle to high end fashion brands
• Expanded its PRC office to facilitate the production management of the Group’s products and adapt to the specific requirements by customers of the Group
• Implemented cost control measures to reduce the operating costs of the Group
• Developed and created more promotion samples to cater to the existing and potential customers’ needs
• Actively promoted its products in various ways including e-promotion, business referrals, video conferences, sales visits and private exhibitions

Supply Chain Management

Responsible Procurement

• Required suppliers to comply with relevant laws and regulations relating to environmental, labor, social and safety

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: ESG Reporting Guide (Appendix 27 to the Listing Rules)

Environmental Metrics

ESG Focus Areas

• Environmental Protection
• Social Responsibility
• Corporate Governance

Environmental Achievements

• Zhong Yi certified as “The First Green Development Demonstration Enterprise in TCM Manufacturing Sector” by China Quality Certification Center.
• WLJ Great Health Nansha Base completed construction, striving to build itself as a paradigm for the green industry in Nanshan.
• 20% reduction in the density of greenhouse gas emissions, 20% in comprehensive energy consumption intensity, 20% in wastewater discharge intensity and water consumption intensity, 15% in hazardous waste discharge intensity and 15% harmless wastes discharge intensity by 2023 (compared to 2022).

Social Achievements

• Supported Guangdong Province’s “High-quality Development Program for Rural Vitalization”, promoting brands like Ci Ning Ji and Li Xiao Ji.
• Implemented expired drug recycling program for over 20 years.
• Launched various public welfare activities such as medication donations, free medical consultations, and health education campaigns.

Governance Achievements

• Revised the Management Rules of Independent Directors and Implementation Rules for the Nomination and Remuneration Committee.
• Issued the Work Rules for the Special Meeting of Independent Directors.
• Established enterprise risk management (ERM) system.

Climate Goals & Targets

Environmental Challenges

• Climate change risks including extreme weather events, rising temperatures, water scarcity, rising sea levels, regulatory changes, market shifts, and litigation risks.
• Supply chain risks due to extreme weather and stricter regulations for responsible sourcing.

Mitigation Strategies

• Analyzing climate change risks and formulating control measures.
• Shoring up research on low-carbon technologies.
• Scaling up clean energy use, reducing fossil fuel use, and optimizing energy structure.
• Developing new energy sources such as photovoltaic power generation.
• Improving supply chain contingency plans and reserving more materials in good harvest years.
• Establishing plantation base management system of Chinese medicinal materials and GAP production management cloud platform system.

Supply Chain Management

Responsible Procurement

• Established a complete procurement and supply management system.
• Implemented quality assessment and assurance, performance evaluation and auditing.
• Carried out suppliers training on product safety and quality, environmental protection and work safety systems, socio-environmental risk prevention, and ESG management and practice.
• Centralized auditing for all suppliers.

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events
• Floods
• Typhoons
• Rising temperatures
• Water scarcity
• Rising sea levels

Transition Risks

• Regulatory changes related to energy use and carbon emissions.
• Stricter requirements for responsible and sustainable sourcing.
• Litigation risks

Opportunities

• Developing new technologies such as intelligent energy management system.
• Developing, producing and selling medicines that treat new diseases.
• Innovation in and development of low-carbon products and services.

Reporting Standards

Frameworks Used: GRI Sustainability Reporting Standards, Environmental, Social and Governance Reporting Guide issued by Stock Exchange of Hong Kong Limited, Guidelines on the Preparation of Corporate Social Responsibility Reporting issued by Shanghai Stock Exchange, Guidelines for Environmental Information Disclosure of Listed Companies on the Shanghai Stock Exchange, Guidelines to the State-owned Enterprises on Better Fulfilling Corporate Social Responsibilities and Reference of ESG Indicators System for ESG Reports of Listed Companies Controlled by Central State-Owned Enterprises released by the State-owned Assets Supervision and Administration Commission of the State Council (SASAC), Guidelines on Corporate Social Responsibility Reporting for Chinese Enterprises (CASS-ESG 5.0)

Certifications: ISO 14001

Sustainable Products & Innovation

• Paper made from herb residues (research stage)

Awards & Recognition

• Included in the 2023 Excellent ESG Practical Cases of Listed Companies by the China Association of Listed Companies
• Included in Excellent Cases in Research Report on ESG of State-owned Enterprises in Guangzhou
• Selected by “China ESG Listed Company Greater Bay Area Pioneer 50”
• Listed among “Listed Companies of State-owned Enterprises. Vanguard 100 Index”
• Ranked 16th in the ESG Development Index of Stated-owned Enterprises in the Great Bay Area
• Listed among Top 100 ESG Listed Companies in China by the Securities Times
• Awarded the 2023 ESG Model Enterprise of Listed Companies by the Time Weekly
• Won the News 2023 “Gold Medal Award” ESG Disclosure Officer of the Year by the Jiemian