Sokan New Materials Group Co., Ltd.
2024 Environmental, Social and
Governance (ESG) Report
CONTENTS
2024 Environmental, Social and
Governance (ESG) ReportReport Preparation Instructions
Chairman’s Message
Benchmark Index Table
About Sokan
1.1 Company overview 07
1.2 Main business and products 09
1.3 Highlight performance for 2024 11
Topic Materiality Assessment
2.1 Dual materiality analysis process 12
2.2 Communication with 13
stakeholders and due diligence
2.3 Conclusion of topic 15
materiality analysis
2.4 ESG Management 17
Resource Symbiosis Based onLow-Carbon Development
3.1 Climate change tackling 18
3.2 Energy usage 22
3.3 Usage of water resources 25
Protection of Green Mountainsand Clear Water through Greenand Complaint Operations
4.1 Environmental compliance 26
management
4.2 Emissions management 29
4.3 Circular economy 32
Consolidation of the Foundationof Corporate Governance byCompliance and Integrity
7.1 Corporate Governance 65
7.2 Protection of the Rights and 66
Interests of Investors
7.3 Risk control and compliant 68
operations
7.4 Business ethics 71
ESG Data Tables and NotesEnvironmental performance 74Social performance 75Corporate governance performance 78
Innovation-driven Quality andSafety Management
5.1 Quality management of 33
products and services
5.2 R&D and innovation 38
5.3 Data security and customer 44
privacy protection
5.4 Supply chain management 47
People-Oriented Demonstrationof Corporate Responsibility
6.1 Rights, interests and benets 49
of employees
6.2 Employee training and 54
development
6.3 Occupational health and safety 58
6.4 Chemical safety management 62
6.5 Contributions to the society 64
and Rural revitalization
0102
Report Preparation Instructions
This report is the first Environmental, Social, and Governance (ESG) report of Sokan New Materials Group Co., Ltd. Itaims to disclose to stakeholders the Company’s philosophy on ESG topics, the management approaches established,the work implemented, and the results achieved in its operations.Report Scope
The Report scope covers Sokan New Materials Group Co., Ltd. and its affiliated companies (hereinafter referredto as “Sokan” or “the Company”). Unless otherwise stated, the Report scope is consistent with the scope of theconsolidated financial statements of Sokan (stock code: 688157.SH) for the same period.
Reporting PeriodThe reporting period of this report is from January 1, 2024, to December 31, 2024. Unless otherwise specified, all datain this report corresponds to this period.Basis for Report Preparation
This report has been prepared based on the Guidelines No. 14 of the Shanghai Stock Exchange for Self-Regulationof Listed Companies—Sustainability Report (Trial) (April 2024) (hereinafter referred to as the Guidelines), the RulesGoverning the Listing of Stocks on the STAR Market of the Shanghai Stock Exchange (April 2024), and the GuidelinesNo. 2 of the Shanghai Stock Exchange for Self-Regulation of Listed Companies on the STAR Market—VoluntaryInformation Disclosure (January 2022).Data ExplanationThe data and cases in this report are sourced from the Company’s official records of actual operations.All financial data in this report is denominated in RMB. In case of any discrepancies between the financial data andthe Company’s annual financial report, the latter shall prevail.How to Obtain the Report
This report is published in electronic format in both Chinese and English versions. In case of any discrepanciesbetween the two versions, the Chinese version shall prevail.The Chinese electronic version of this report can be viewed or downloaded on the website of the Shanghai StockExchange (hereinafter referred to as “SSE”) (www.sse.com.cn), or on the official website of Sokan New MaterialsGroup Co., Ltd. (www.sokan.com.cn). The English electronic version can be viewed or downloaded on the officialwebsite of Sokan New Materials Group Co., Ltd. ( www.sokan.com.cn).Contact Us
Contact address: No. 777, Sanhuan North Road, Ningxiang City, Changsha City, Hunan ProvinceContact phone: 0731-87877770Contact email: zqb@sokan.com.cn
Explanation of Abbreviations Used in the Report
AbbreviationFull Name
Sokan, the CompanySokan New Materials Group Co., Ltd.Songrun New MaterialsChangsha Songrun New Materials Co., Ltd.Gull Hash ChemistryDongguan Gull Hash Chemistry Co., Ltd.Beichi TechnologyGuangxi Beichi Automotive Technology Co., Ltd.Huatu ChemicalHuatu Chemical (Jilin) Co., Ltd.Sandi Digital CoatingHunan Sandi Digital Coating Systems Co., Ltd.
Sokan VietnamSokan New Materials (Vietnam) Co., Ltd.
Sokan USASokan New Materials Americas LLC and Songjing Property Holdings LLCNingxiang Park
Ningxiang Park is the location of the Company’s headquarters, Songrun NewMaterials, and Hunan Sokan Advanced Surface Treatment and FunctionalCoating Research Institute Co., Ltd., and is also the Company’s main
production and R&D base.
0304
Principles for Report PreparationMaterialityThe Company has identified the material topics related to its operations that are of concern to each stakeholder, whichare the focus of this report. While reporting on these material topics, this report also considers the characteristics ofthe industry and business operations of the Company. The process and results of the materiality analysis are detailedin the “Topic Materiality Assessment” section of this report. AccuracyThis report strives to ensure the accuracy of the information. For quantitative information, the data scope, calculationbasis, and assumptions have been stated to avoid misleading the report’s users due to any calculation errors. Detailedquantitative information and notes can be found in the ESG Data Table and Notes section of this report. The Board ofDirectors guarantees the content of the report, affirming that there are no false records, misleading statements, ormaterial omissions. BalanceThe content of this report reflects objective facts, providing unbiased disclosure of both positive and negativeinformation related to the Company. During the reporting period, the Company did not identify any significant negativeincidents that should have been disclosed but were not. Clarity
This report is published in Simplified Chinese and English. In case of any inconsistencies between the Chinese and Englishversions, the Chinese version shall prevail. The report includes tables, model diagrams, and other information as supplementaryto the text, aimed at helping stakeholders better understand the content of this report. To facilitate stakeholders’ access toinformation, the report provides a table of contents and a Benchmark Index Table for ESG standards.
Quantification and Consistency
This report discloses key quantitative performance indicators and, where possible, historical data. This reportmaintains consistency in the statistical and disclosure methods of the same indicator across different reportingperiods. Any changes in the statistical or disclosure methods will be fully explained in this report’s notes to enablestakeholders to conduct meaningful analysis and assess the development trends of the Company’s ESG performance. Completeness
The scope of disclosure in this report is consistent with the scope of the Company’s consolidated financialstatements. TimelinessThis report is an annual report, covering the period from January 1, 2024, to December 31, 2024. It is publishedsimultaneously with the Company’s 2024 annual report, providing timely information for stakeholders’ decision-making. Verifiability
The cases and data in this report are sourced from the Company’s actual operational original records or financialreports. The sources and calculation processes of the disclosed quantitative data are traceable and can supportexternal verification and audit work.
0506
Chairman’s Message
Advocating “prosperity and growth, striving for great achievements”, the Company, as a modern enterprise drivenby innovation, has always integrated the concept of sustainable development into its overarching strategy. Wefirmly believe—and actively uphold—that only by working together with our customers, employees, and societyto build an industrial ecosystem, continually innovating, and striving for further technological breakthroughsin the field of new functional coating materials, can we realize a collaborative, mutually beneficial, and shareddevelopment model. In 2024, we advanced the integration of ESG practices into our operations by establishing asound ESG management system, embracing the philosophy of green development, and deepening stakeholdercollaboration, in an effort to achieve symbiotic success in both economic returns and social value.Strengthen the foundations of governance and safeguard the baseline for developmentWe have always regarded the enhancement of governance efficiency as a core safeguard for sustainabledevelopment. We have established a sound and standardized governance structure in which the roles andresponsibilities of the Shareholders’ Meeting, Board of Directors, Board of Supervisors, and Senior Managementare clearly defined, operating in a coordinated, efficient, transparent, and regulated manner. Meanwhile, weattach great importance to the timeliness and transparency of information disclosure, maintaining positiveinteraction with investors through diversified communication channels, and continuously improving thestandard of corporate governance. We have continued to strengthen our risk prevention and control capabilitiesby building an internal control system that covers the entire business process, strictly enforcing codes ofprofessional integrity, and regularly conducting compliance training and supervision to effectively protect therights and interests of investors.Protect the ecological environment and practise the philosophy of “carbon peaking and carbonneutrality”
Tackling climate change and protecting the ecological environment are inescapable responsibilities endowedby the era to enterprises. We embed the philosophy of green development throughout the entire productionand operational process, reducing greenhouse gas emissions through the development of environmentallyfriendly materials and the implementation of energy-saving and carbon-reduction measures. We strictly complywith national environmental protection laws and regulations, strengthen the control of pollutant discharge, andpromote the reduction and resourceful treatment of waste. Looking ahead, the Company will continue to deepenits green transformation and steadily advance towards carbon neutrality, contributing our corporate strength toglobal climate governance.
Join hands with partners to build a responsible ecosystem
We consistently uphold our core value of “customer centricity”, and have established a rigorous qualitymanagement system and continuously increasing investment in R&D to drive technological upgrades andproduct iteration, thereby delivering safe and reliable products and services to our customers. At the same time,we have strengthened our data security protection mechanisms to effectively safeguard customer privacy. Insupply chain management, the Company adheres to the principle of shared responsibility. While ensuring supplychain security, we work with our partners to jointly enhance standards in environmental protection, workplacesafety, and professional integrity, striving together to build a sustainable industrial value chain.Care for employee development and give back to societyWe uphold the people-oriented philosophy, providing employees with a fair employment environment, acompetitive compensation and benefits system, and well-structured career development pathways to fullyprotect their lawful rights and interests. Through a robust health and safety management system and diversetraining programmes, we are committed to enhancing employees’ professional capabilities and overallcompetencies, supporting their growth alongside the Company’s development. In the field of social welfare, theCompany actively fulfills its corporate citizenship responsibilities by continuously promoting rural revitalizationinitiatives and delivering positive social impact through concrete actions.Look ahead and struggle forward with determinationLooking ahead, Sokan will advance ESG practices to higher standards and embed the concept of sustainabledevelopment deeply into the Company’s DNA. We firmly believe that only by transforming a sense ofresponsibility into conscious action can we navigate the evolving era with stability and forge lasting progress,creating enduring value for society, the environment, and all stakeholders.
Ling YunjianChairman of the Board of Sokan
0708
About Sokan
1.1 Company overview
Sokan (688157.SH), established in 2009, is an internationally leading enterprise in the new functional coating materialindustry. With the markets of high-end consumer electronics, passenger cars, and special equipment as its targets,the Company adopts an “interactive” independent R&D model and a “customized flexible manufacturing” approachto provide customers with multi-category systematic solutions for coatings, inks, adhesives and other materials. TheCompany was listed in June 2020 and is the first A-share listed enterprise on the STAR Market of the Shanghai StockExchange with advanced new functional coating materials as its core business.
The Company has consistently adhered to its “single focus + multiple fields” development strategy known as the “threeverticals and three horizontals”. On the horizontal product system, it has built a multi-category, integrated platform ofadvanced functional coating materials encompassing coatings, inks, and adhesives. In terms of the vertical businesslayout, the Company actively expands its presence across three key business sectors—high-end consumer electronics,passenger cars, and special equipment—striving for leadership through technological excellence and aiming to becomea global leader in the field of new functional coating materials.
“Prosperity and growth, striving for great achievements”, Sokan’s corporate philosophy is closely aligned with its name.The Company firmly believes that only by setting high aspirations, building a symbiotic and prosperous ecosystem, andcontinuously innovating to create exceptional platforms and develop cutting-edge technologies, can it achieve greatersuccess. Over more than a decade of development, the Company has accumulated numerous outstanding culturalelements, which have been refined into the distinctive “‘Sharp Culture”. This culture serves as the guiding principle for theCompany’s daily business operations and management. It not only reflects the enterprising and unstoppable character traitsof the Company’s employees, but also forms the fundamental guarantee for the Company’s sustainable development.
Company Profile of Sokan
Sokan’s Medium- and Long-Term Development Strategy
Sokan’s Corporate Culture
Chinese name松井新材料集团股份有限公司English nameSOKAN NEW MATERIALS GROUP CO.,LTD.Stock listing location and marketSTAR Market of the Shanghai Stock ExchangeListing dateJune 9, 2020Stock abbreviation松井股份Stock code688157.SHCompany headquarters location
No. 777, Sanhuan North Road, Economic and Technological Development Zone,Ningxiang City, Hunan Province
Key Qualifications and Certifications of Sokan
NationalEnterpriseTechnologyCenter
NationalSpecialized, Fined,Peculiar, andInnovative GiantEnterprise
NationalTechnologyInnovationDemonstrationEnterprise
NationalIndustrial ProductGreen DesignDemonstrationEnterprise
PostdoctoralInnovation &EntrepreneurshipPractice Base
Enterprise withNational IntellectualPropertyAdvantages
National Green
Factory
Development and expansionof key business
Exploration and cultivationof future business
Vision
To become a globalleader in the field ofnew functional coating
materials
Mission
Continuouslysurpassing andcreating exciting
scenes
Corporate cultureSharp Culture:
Achieve customers with
sharp qualityEmpower employeeswith a Sharp platformAchieve the future with
Sharp innovation
Return
Time
Maintainance and consolidationof core business
First level
Second
level
Thirdlevel
Cost control, eciency improvement,contribution to revenue and prot
Focus
Rapid growth through buildingcore capabilities
Focus
Reservation of new technologies
and establishment of viable busi-
ness models
Focus
3C (computers, communications,and consumer electronics) industries
Target application industry
3C industries,Automotive industry3D printing coating equipment
Target application industry
3C industries,
Automotive industry
Special equipment
Advertising inks
PCB (printed circuit board)
Target application industry
0910
1.2 Main business and products
In the field of high-end consumer electronics, the Company focuses on its target market and has establishedpartnerships with numerous globally renowned downstream terminal customers. Currently, the core terminal customersthat have been served by the Company or incorporated into the Company’s customer system include major NorthAmerican consumer electronics customers such as Microsoft, Google, HP, Amazon, Meta, Logitech, domestic Hcustomers, Honor, Xiaomi, VIVO, OPPO, and many other internationally well-known terminal brands. The Company’s self-developed products, including tactile coatings, PVD coatings, water-based coatings, appearance coatings, and otherfunctional coatings and ink products, are industry-leading or at an advanced level. Among them, the water-based seriescoatings, water-based screen printing inks, and water-based spray inks offer lower VOC emissions, making them moreenvironmentally friendly and in line with national development strategies and industry trends.In the field of passenger cars, the Company leverages its technological advantages and brand influence accumulatedin the field of high-end consumer electronics to achieve dual breakthroughs in both technology and market through adifferentiated competitive strategy. The core customers that have been served by the Company or incorporated into theCompany’s customer system include: BYD, North American T companies, NIO, Li Auto, Geely, GAC, SAIC-GM-Wuling,XPeng Motors, FAW Hongqi, Valeo, Yanfeng, Minth Group, XIN QUAN AutoMative, and other well-known domestic andinternational automobile manufacturers and automotive parts suppliers. The Company’s self-developed PVD coatingsfor automotive parts and anti-fog coatings for automotive headlamps are industry-leading. Among them, the automotivePVD coatings based on vacuum ion sputtering plating technology are pollution-free and can replace water electroplating(chromium) products with high environmental impact, making them more environmentally friendly and widelyrecognized in the downstream market.In the field of coatings for special equipment such as rail transportation, aerospace, and marine equipment, theCompany is focusing on cutting-edge technologies related to surface treatment, functional coatings, adhesives, andother relevant areas as its R&D direction. The Company is actively carrying out technical research and applicationstudies. In the aerospace field, the Company continues to advance its collaboration with downstream customers, withits airworthiness certification currently in a critical stage.
The Company continues to build a global, multi-dimensional service network, establishing R&D, production, sales, andtechnical service facilities in regions where key terminal brands and major manufacturers are located. In the domesticmarket, the Company has established technical and marketing service centers in cities such as Beijing and Shanghai,enabling it to provide timely services for terminal brand customers and major manufacturers. Overseas, the Companyhas set up operations in the United States and Vietnam, creating a dual-hub structure that serves the North Americanand Southeast Asian markets. This global positioning ensures the Company’s ability to respond swiftly to the demandsof downstream market customers such as terminals and manufacturers.
Consumer electronics coating solutions
Passenger car coating solutions
Special equipment coating solutions
1112
1.3 Key Performance for 2024
1,901
Thousands RMBTotal environmental protection investment
kilogramsAmount of carbon black extracted from wastetires used
Environmentalperformance
32.56
%Proportion of R&D personnel
14.14
%Proportion of R&D Investmentto Total Revenue
itemsNumber of newly grantedpatents
88.61
points/81.40pointsSatisfaction score of manufacturing/terminal customers
itemsTotal Number of AuthorizedPatents
%
Proportion of suppliers signing the Integrityand Honesty Agreement
Socialperformance
81.85
pointsEmployee satisfaction score
%Employee trainingcoverage rate
7.87
%Proportion of shares held by employeesin total share capital
Thousands RMBTotal employee trainingexpenditure
%Timely completion rate of occupationalhealth check-ups
35.7
hoursAverage employee trainingduration
Employeeperformance
%Proportion of employees receiving training on anti-commercial bribery and anti-corruption
24,494.7Thousands RMBCash dividends distributed for 2023
%Proportion of directors receiving training on anti-commercial bribery and anti-corruption16,013.3Thousands RMBAmount spent on share repurchase
Corporate gover-nance performance
Topic Materiality Assessment
2.1 Dual materiality analysis process
The identification of material topics is a crucial component of the Company’s ESG management, helping the Companyfocus on key areas and clarify the ESG strategic planning and priorities. In 2024, Sokan strictly followed the relevantrequirements for “Topic Materiality Analysis” outlined in the Guidelines of SSE, while also referring to the GuidelinesNo. 4 of the Shanghai Stock Exchange for Self-Regulation of Listed Companies—Sustainability Report Preparation toconduct a “Dual Materiality Identification and Analysis” for sustainability topics.The Company, taking into account the characteristics of the industry it is in and its own business operations, identifiesthe short-term, medium-term, and long-term financial impacts of the topics on the Company, as well as the actualand potential economic, social, and environmental impacts of the Company’s performance in each topic. The specificanalysis process is illustrated in the diagram below.
Dual Materiality Analysis Process for Topics of Sokan in 2024
Analyze the Company’sinternal activities andbusiness relationships,including sustainability-related impacts across thevalue chain, both upstreamand downstream.Identify and categorizethe key stakeholders mostaffected, including bothinternal and external relatedparties.
Conduct due diligencethrough interviews orsurveys with the Company’sManagement, departments,and stakeholders. Basedon the Guidelines of SSE,identify, screen, and denesustainability topics relatedto the Company throughpolicy analysis, industrystandards and trends, andpeer benchmarking, nallyforming a list of 19 relevanttopics.
Combine the dualmateriality assessmentresults for all topicsand the materialitythreshold standardsto produce a list of“material” topics, andform a dual materialityanalysis matrix toclearly present theassessment results.
Set appropriate assessmentmethods and establishmateriality thresholdsbased on the Company’soperational managementcapabilities. Combine thedue diligence results toassess the impact andnancial materiality of eachtopic, and rank the topicsbased on their importance.
Backgroundidentification and
understanding
Topic identification
Topic materialityassessment
Topic review andconfirmation
1314
2.2 Communication with stakeholders and due diligence
Effective Communication with stakeholders is an important foundation for the Company’s ESG management. Sokan,based on the characteristics of the industry it is in and its own business operations, identifies and classifies six keystakeholders: Shareholders and investors, government and regulatory agencies, customers, suppliers and partners,employees, and community and the public.The Company values the demands and expectations of its stakeholders and maintains regular communication withkey stakeholders. Through regular communication, surveys, and other channels, the Company gathers opinions andexpectations regarding its sustainable development and engages in targeted discussions and responses. During thereporting period, the Company proactively communicated progress on key topics with stakeholders and receivedfeedback to enhance management practices and sustainable value.
For the 19 identified topics, the Company conducted due diligence to identify and assess the impact of each topic on theeconomy, environment, and society in the short term (0-2 years), medium term (3-5 years), and long term (6-10 years),as well as ensuing risks and opportunities for the Company’s daily operations and business decisions. In this report, theCompany responds in detail on how to control these impacts, mitigate risks, and seize opportunities.Sokan’s Methods for Communication with Stakeholders and Key Topics of Concern
Sokan’s Topic List for 2024 and Impacts DefinitionKey Stakeholders
Key Stakeholders
Key Topics of Concern
Key Topics of Concern
Communication and Response
Communication and Response
Protection of therights and interestsof investorsCorporategovernanceBusiness ethics
Risk control andcompliant operationsR&D and innovationQuality management ofproducts and services
Financial reports orannouncementsShareholders’ meetingsPerformance briefingsRoadshows andreverse roadshowsBroker strategymeetings
AnalystcommunicationmeetingsOn-site researchcommunicationsShanghai StockExchange e-interactionInvestor hotlineInvestor RelationsWeChat public accountShareholders and
investors
R&D and innovationQuality management of products and servicesData security and customer privacy protectionBusiness ethics
Industry forums andexhibitionsAudit and factoryinspectionsStrategic cooperationInteractive R&D
Customer communi-cation and complaintchannelsCustomer satisfactionsurveysWhistleblowing andsupervision channelsCustomers
Supply chain managementQuality management of products and servicesR&D and innovationBusiness ethics
Supply chain assess-ment and auditsSupplier conferencesIndustry-university-re-search collaborationprojectsExchange visits
Strategic cooperationprojectsIndustry conferencecommunicationsWhistleblowing andsupervision channels
Suppliers and
partners
Environmentalcompliance man-agementEmissions manage-mentEnergy usageUsage of waterresources
Climate change tacklingQuality management ofproducts and servicesChemical safety man-agementCorporate governanceBusiness ethics
Information disclosureFiling or approvalRegular reporting
Meetings or exchangevisitsStandard policy com-municationSpecial inspections
Government andregulatory agencies
Energy usageUsage of waterresourcesEmissionsmanagement
Climate change tacklingContributions to thesociety and ruralrevitalization
Environmentalinformation disclosureCommunity publicwelfare projects
Volunteer activitiesCompany website
Community and
the public
Rights, interestsand benefits ofemployeesEmployee trainingand developmentOccupational healthand safety
Chemical safetymanagementRisk control andcompliant operationsBusiness ethics
Professional titleevaluationCompany website andintranetManagement meetingsand employee meetings
Employee care activi-tiesInternal and externaltrainingWhistleblowing andsupervision channelsEmployees
No.CategoryTopicImpact PeriodAffected Stakeholders
Environment
Climate change tackling
Short-, Medium-, and Long-term
CustomersGovernment and regulatory agenciesCommunity and the public
Environmental ComplianceManagement
Short- and Medium-term
Government and regulatory agenciesCommunity and the public3Energy usage
Short-, Medium-, and Long-term4Usage of water resourcesShort- and Medium-term5Emissions managementShort- and Medium-term6Circular economyMedium- and Long-term
Social
Supply chain management
Short-, Medium-, and Long-term
Government and regulatory agenciesCustomersSuppliers and partners
Quality management of productsand services9R&D and innovation
Rights, interests and benefits ofemployees
Medium- and Long-term
Employees
Employee training anddevelopment12Occupational health and safety
Contributions to the society andrural revitalization
EmployeesCommunity and the public
1516
No.CategoryTopicImpact PeriodAffected Stakeholders
Social
Data security and customerprivacy protection
Short-, Medium-, andLong-term
EmployeesSuppliers and partnersCustomers
Chemical safety manage-ment
Short-, Medium-, andLong-term
Gover-nance
Corporate governance
Short-, Medium-, andLong-term
Government and regulatory agenciesShareholders and investors
Protection of the rights andinterests of investors
Medium termShareholders and investors
Risk control and compliantoperations
Medium- and Long-term
Government and regulatory agen-ciesShareholders and investorsEmployeesCustomersSuppliers and partners19Business ethics
Short-, Medium-, andLong-term
Matrix of Sokan’s Materiality of Topics in 2024Very important
Very important
Impact on the Company’s Finances
Not important
Emissions managementOccupational health and safety
Quality management of products and servicesSupply chain managementCircular economy, business ethicsBusiness ethics
Climate change tacklingRights, interests and benefits of employeesData security and customer privacy
protection
Contributions tothe society andrural revitalization
Protection of the rights and interests of investorsEmployee training and development
Corporate governanceChemical safetymanagement
Usage of water resources
Energy usage
Environmental compliance managementRisk control and compliant operations
R&D and Innovation
Topics with both financialmateriality and impactmateriality
Topics with both financialmateriality and impactmateriality
Topics with financialmateriality but no impactmateriality
Topics with financialmateriality but no impact
materiality
Topics with impactmateriality but no financialmateriality
Topics with impactmateriality but no financial
materiality
Topics with neitherfinancial materiality norimpact materiality
Topics with neitherfinancial materiality nor
impact materialitySokan’s List of Topics with Dual Materiality in 2024
Emissions managementOccupational health andsafetyQuality management ofproducts and servicesR&D and InnovationClimate change tackling
Energy usageEnvironmental compliancemanagementRisk control and compliantoperations
Supply chain managementCircular economyBusiness ethicsData security and customerprivacy protectionContributions to the societyand rural revitalizationProtection of the rights andinterests of investorsRights, interests and benefitsof employeesEmployee training anddevelopmentCorporate governanceChemical safety management
Usage of water resources
2.3 Conclusion of topic materiality analysis
Based on the identified topic list, Sokan invited key stakeholders and external experts to assess the materiality of thetopics from the dual perspectives of impact materiality and financial materiality. The final results were presented in amatrix format, showing the degree of materiality of each topic.In 2024, Sokan identified 19 topics of materiality. Among these, 5 topics have dual materiality, 3 topics have onlyfinancial materiality, 10 topics have only impact materiality, and 1 topic has neither financial materiality nor impactmateriality.
Impact on the economy, environment and society
1718
2.4 ESG management
Sokan places great emphasis on ESG management and operations. In accordance with external requirements suchas the Guidelines, the Company has established a top-down ESG management structure of “Decision-Making -Management - Execution”, integrating ESG principles into various business operations. The Board of Directors, as thehighest decision-making body for ESG management, is fully responsible for overseeing the Company’s ESG matters.The Senior Management is responsible for coordinating and managing all ESG matters, while each department andsubsidiary is tasked with implementing and executing ESG initiatives under the coordination of the Senior Management.The collaboration across all levels ensures the efficient operation of ESG matters within the Company.
ESG Management Structure and Responsibilities at Each Level of Sokan in 2024
Analysis of Sokan’s Response to Climate Risks and Opportunities
Decision-making level: Oversee the Company’s sustainabledevelopment and outlook; review and approve the Group’s ESGmanagement policies, strategies, objectives, and annual workplan, including the assessment, prioritization, and managementof key ESG issues, risks, and opportunities.
Management level: Develop ESG managementguidelines, strategies, and objectives; define theresponsibilities of each department, branch andsubsidiary; coordinate the implementation of ESGpolicies, while ensuring compliance with relevantlaws and regulatory requirements.
Execution level: Implement and ex-ecute the Group’s ESG managementstrategy, guidelines, plans, and workobjectives based on actual work con-ditions; comply with ESG-related pol-icies and local laws and regulations;promote the execution of variousESG-related tasks.Departments, branches and subsidiaries
Senior Management
Board ofDirectors
Resource Symbiosis Based on Low-Carbon Development
3.1 Climate change tackling
The Company’s current greenhouse gas emissions primarily come from direct emissions (fuel and diesel used by ownedvehicles) and indirect emissions (purchased electricity and steam). Following the “Governance - Strategies - Impacts,Risks, and Opportunities Management - Indicators and Targets” climate information disclosure framework specified inSSE’s Guidelines, the Company has established and continuously improved its climate change management system,strengthening its capacity to address climate change.GovernanceTo strengthen climate change management, the Company has developed the Greenhouse Gas Control ManagementSystem and the Energy Resource Management System to regulate the control and monitoring of greenhouse gas andenergy emissions. Additionally, the Company’s EHS (Environmental, Health, and Safety) Department is responsible foridentifying and assessing climate change-related risks and opportunities, formulating climate change-tackling strategiesfocusing on energy conservation, emission reduction, and low-carbon products, and implementing relevant measures.Strategy
To systematically tackle the challenges of climate change, the Company combines industry trends and businesscharacteristics, conducts regular climate risk and opportunity identification and assessment through cross-departmentalcollaboration and expert consultation, and incorporates the results into its strategic decision-making system.
RiskRisk DescriptionImpact ScopeFinancial ImpactPhys-icalrisks
Acute physical risks
Extreme weather incidents (such as oods and extremeheat) may cause damage to factory equipment and rawmaterial storage facilities, and disrupt supply chain lo-gistics.
Short termDecreasedoperating revenueIncreased operatingcostsChronic physicalrisks
The Company may face risks to normal production andoperations due to chronic climate disasters such as ris-ing temperatures and sea levels.
Long term
Tran-sitionrisks
Policy and legalrisks
Investment is required to upgrade environmentalprotection equipment to meet VOCs emission limits;failure to meet VOCs emission standards may resultin regulatory penalties.
Short- andMedium-term
Increasedprocurement costsIncreased non-operating expensesMarket risks
The growing demand for low-carbon coatings is squeez-ing the market for traditional solvent-based products. Ifthe Company fails to introduce bio-based inks or low-VOCs coatings, it may be replaced by competitors.
Short-, Medium-and Long-term
Decreasedoperating revenueReputation risks
If the Company or its suppliers use high-carbon emis-sion materials, it could trigger a brand trust crisis.
Short- andMedium-term
Decreasedoperating revenue
1920
OpportunityOpportunity DescriptionImpact ScopeFinancial ImpactEnergy source opportunities
With the growth in capacity of clean energy technolo-gies such as photovoltaics and biomass energy and thegradual maturation of low-cost technological routes,adopting clean energy in the long term can reduce tradi-tional energy expenses.
Long term
Reduced operatingcostsMarket opportunities
The carbon peaking and carbon neutrality goals aredriving a surge in demand for coatings in wind powerand new energy vehicles. Early layout of a low-carbonproduct line can seize market opportunities.
Short-, Medium-and Long-term
Increased operatingrevenueAdaptability opportunities
Real-time monitoring of climate risks in raw materialsourcing locations enhances supply chain resilience;collaborating with research institutions to develop cli-mate-adaptive resin materials can reduce the long-termphysical risk impact.
Medium-andLong-term
Increased operatingrevenueReduced operatingcosts
Sokan’s Climate Change Tackling Strategy
Sokan’s Main Measures for Climate Change Tackling
Emergencyresponse mech-anism
Product carbon foot-print analysisIndustry collabo-ration
Energy consumptionreduction in productionand operations
R&D of environ-mentally friendlycoatings
Impacts, risks, and opportunities managementTo fully tackle climate change risks and effectively seize opportunities, the Company has established a climate changetackling system that balances mitigation and adaptation. The system strengthens management at the production andoperational levels, continuously improving the Company’s climate change management capabilities.
Emergency response
mechanism
Closely monitor meteorological forecasts and early warning information to stay informedabout the dynamics and impact range of extreme weather incidents such as typhoons andfloods. Preemptively inspect production facilities and emergency supplies to ensure thestability and safety of production facilities, minimizing the impact of extreme weather onproduction facilities.In the event of a disaster, initiate the emergency response mechanism, promptly activatethe preliminary disposal plan, report to the relevant local departments, and proceed withhandling the situation.
Product carbon foot-print analysis
Actively build a green materials platform and green product evaluation standards. Basedon product carbon footprint analysis using lifecycle assessment, evaluate the carbonfootprint of products throughout their lifecycle, from raw materials, resin synthesis, solvents,monomers, pigments, and transportation, to final product packaging and storage. Specialfocus will be given to controlling the carbon footprint of critical elements, such as rawmaterials, resins, and solvents, which are most sensitive to carbon footprint.
R&D of environmental-ly friendly coatings
Develop water-based material products. The low VOCsproperties of water-based materials can reduce greenhousegas emissions.Develop bio-based material products, which can reducecarbon emissions generated during the production processof chemical raw materials used in traditional solvent-basedcoatings. The Company has seven bio-based coatingscertified by UL for bio-based content.
UL Certificate for Bio-basedContent Validation
Energy conservation andconsumption reduction inproduction and operations
Reduce energy consumption and carbon emissions by implementing intelligent control ofhigh-energy consumption equipment and regulating employees’ daily electricity usage.
Industry collaboration
Collaborate with research institutions, universities, and others to develop low-carbonproducts and strengthen the industry’s collective ability to tackle climate change.
2122
Sokan Collaborates with South China Agricultural University to Develop Bio-based Light-curing Coatings
The Company has collaborated with South China Agricultural University on the research and industrialization of theproject “Key Technologies for the Green Conversion of Vegetable Oils and High-value Applications”. The Companyhas adopted an efficient chemical conversion method using bio-based tung oil acid, soy oil acid, and other modifiedgrafts to develop bio-based light-curing coatings, providing solutions for sustainable, green, and low-carbon economicdevelopment in the Guangdong, Hunan, and Jiangxi regions. This project was awarded the Second Prize of GuangdongProvincial Science and Technology Progress Award in 2023.
Indicators and targetsTo ensure the effective implementation of climate change management measures, the Company regularly tracksgreenhouse gas emission indicators and continuously optimizes the management mechanisms based on progress. In2024, based on the current development status, the Company has set a goal for greenhouse gas emissions in Scope 1and Scope 2 to increase by no more than 30% compared to 2023.
Sokan’s Climate Change Tackling Indicators
Sokan’s Energy Usage Management System
Analysis of Risks and Opportunities Related to Sokan’s Energy Usage
IndicatorUnitProgress in 2024Greenhouse gas emissions(Scope 1 and Scope 2)
tCO
e
8,713.34
(Achieved the goal)
3.2 Energy usage
The Company is a low-energy consumption enterprise, with the main types of energy used being purchased electricityand purchased steam. The Company complies with laws and regulations such as the Energy Conservation Law ofthe People’s Republic of China, establishes awareness of energy conservation, and promotes energy-saving andconsumption-reduction measures, in an effort to jointly build a green enterprise.Governance
The Company places great emphasis on energy management and has established management systems such asthe Energy Resource Management System and the Energy Consumption Management System for the Science andTechnology Innovation Building to standardize the management of energy use. The Company has improved its energymanagement system, clarified the responsibilities of each department, and achieved systematic management of energy-saving and consumption-reduction efforts.
Designate a responsible person to conduct dailyinspections and keep inspection records.
Designate a responsible person to conduct 6Sinspections and check electricity usage in each area,and be responsible for the energy consumption ofthe assigned floor.
Equipment Engineering DepartmentUse departments in each area
Strategy
The Company constantly focuses on the far-reaching impact of energy management on society and is fully aware thatenergy conservation in enterprises contributes to the achievement of the national carbon peaking and carbon neutralitygoals. At the same time, the Company reviews energy consumption, summarizes energy-saving and emission-reductionexperience, identifies risks and opportunities related to energy usage, and develops corresponding response strategies.
RiskRisk DescriptionImpact ScopeFinancial ImpactPolicy and legal risks
The government’s regulatory efforts on energy useare continually strengthened, and related regulationsare becoming more stringent. If the Company fails toadapt to these changes in a timely manner, it may facenes or other forms of penalties.
Medium- andLong-term
Increased non-operating expensesDecreased operatingrevenue
OpportunityOpportunity DescriptionImpact ScopeFinancial ImpactEnergy sourceopportunities
By adopting clean energy technologies, the Companycan reduce traditional energy consumption costs, mit-igate the risks of traditional energy price uctuations,and also benet from clean energy subsidies.
Medium- andLong-term
Reduced operatingcosts
Certificate of Science and Technology Progress Award of Guangdong Province
2324
Sokan’s Energy Usage Response Strategy
Sokan’s Main Measures for Energy Usage in 2024
Production eciency
improvement
Logistics transporta-tion optimization
Intelligent control
Equipment usage stan-
dardization
Impacts, risks, and opportunities managementThe Company uses an intelligent system to monitor and automatically control the energy consumption of high-energyequipment, strictly setting start-stop conditions for equipment and regulating employee energy usage behaviors.Besides, the Company optimizes logistics transportation route planning and improves product yield through advancedmanufacturing technologies to achieve indirect energy savings, ensuring that energy-saving and consumption-reductionmeasures cover all business and operational processes.
Install building automation modules for air conditioning systems and set timers to turn off the system.Launch an AI-based comprehensive IoT management platform for Ningxiang Park to monitor energy consumption in real time.
Intelligent control
Plan logistics transportation routes systematically to reduce unnecessary gasoline and diesel consumption caused byinefficient route planning.Logistics transportation optimization
Set air conditioning temperatures to no lower than 26°C in summer and no higher than 20°C in winter.Use sensor-based escalators that run when people are present and automatically stop when no one is around.Reduce the brightness of underground parking lights during non-working hours.
Equipment usage standardization
Use advanced intelligent manufacturing technologies to improve production efficiency while ensuring product quality, andreduce energy consumption per unit during the production process.Production efficiency improvement
In addition, the Company has established a comprehensive reward and punishment system to encourage employees topractice energy-saving and consumption-reduction behaviors. The Employee Reward and Punishment System has beenimplemented, which includes regular checks on the status of equipment shutdowns and electricity usage, as well asreporting and punishment of deliberate wasteful behaviors.Indicators and targets
The Company’s overall target is to reduce unnecessary energy consumption. The Company has established energyusage indicators to monitor the progress and results of its energy-saving and consumption-reduction actions.
Indicators Related to Sokan’s Energy Usage
IndicatorUnit2024Total energy consumption Tons of standard coal
1,997.90
2526
3.3 Usage of water resources
The water resources used by the Company mainly come from municipal water supply systems for office and productionpurposes. The Company strictly complies with laws and regulations such as the Water Law of the People’s Republicof China, the Water Pollution Prevention and Control Law of the People’s Republic of China, and the Regulation onthe Administration of the License for Water Drawing and the Levy of Water Resource Fees. It has established internalsystems such as the Runoff, Leakage, and Drip Control System and the Rainwater Management System to regulatewater resource usage.The Company uses water-saving equipment and designs, promotes water-saving initiatives, and continually strengthensemployees’ awareness of water conservation to reduce the consumption of water resources in business and operationalactivities.
The Company sets water resource usage goals to encourage employees to implement water-saving measures andenhance the Company’s water resource usage capabilities.
The Company continues to advance the establishment and certification of its environmental management system,actively promoting internal system improvements through external evaluations and audit certifications. Duringthe reporting period, Sokan and Songrun New Materials were certified under the ISO 14001:2015 EnvironmentalManagement System, with the certification valid until September 2025.
Sokan’s Main Measures for Usage of Water Resources in 2024
Sokan’s Environmental Compliance Management Structure
Renovate the drip irrigation system in greenbeltareas to improve irrigation efficiency and reducewater waste from drip irrigation.
Post water conservation slogans next to faucets inoffice buildings, employee dormitories, and otherareas.
Water-saving equipment usageWater-saving advocacy
Sokan’s Targets for Usage of Water Resources in 2024IndicatorUnitAnnual TargetAchievement StatusAverage monthly municipal water usage(Ningxiang Park)
Tons≤12,000
9,427
(Achieved the goal)
Protection of Green Mountains and Clear Wa-ter through Green and Complaint Operations
4.1 Environmental compliance management
The Company places great importance on environmental compliance management and has established a database ofenvironmental regulations. It monitors changes in laws and regulations such as the Air Pollution Prevention and ControlLaw, the Water Pollution Prevention and Control Law, and the Solid Waste Pollution Prevention and Control Law in realtime, with a particular focus on updates regarding VOCs limits and hazardous waste lists. In 2024, the Company did notexperience any significant administrative penalties from environmental or related departments, nor was it held criminallyaccountable due to environmental incidents.GovernanceThe Company has developed internal systems and procedures such as the Environmental Factors Identification andEvaluation Control Procedure, the Environmental Protection Operation Control Procedure, and the EnvironmentalManagement Material Control Standards. It has established a management structure, clarified the responsibilitiesof each relevant department, and ensured the orderly implementation of the Company’s environmental compliancemanagement efforts.
EHS Management Committee
Establish the Company’s environmental management organizational structure, set environmental management policies,goals, and medium- to long-term plans, approve environmental management proposals submitted by the EHS managementdepartments, and ensure funding investment.Hold quarterly meetings on environmental compliance work and organize monthly environmental compliance inspectionsacross the Company.
EHS DepartmentEstablish and improve the Company’s environmental compliance management system, and be responsible for the dailyinspections of the system’s operations.Plan and organize environmental compliance training for EHS personnel before they take the job and during the job process,and for emergency response teams.Investigate and handle environmental-related accidents or emergencies within the Company.
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ISO 14001:2015 Environmental Management System
Certification Certificate for Sokan
ISO 14001:2015 Environmental Management System
Certification Certificate for Songrun New Materials
StrategyThe Company, led by the EHS Department, conducts the identification of environmental compliance-related. Basedon the identification results, the Company develops response strategies to reduce the likelihood of environmental riskincidents.
Impacts, risks, and opportunities managementThe Company identifies environmental risks such as the generation of hazardous waste, the emission of organicexhaust gases, and potential chemical spills, and confirms environmental hazards, related hazardous substances, andthe expected environmental harm they may cause. To address environmental risks, the Company has developed theEmergency Plan for Sudden Environmental Incidents, established an emergency leadership team, and regularly conductsenvironmental management-related meetings, inspections, and training. These efforts aim to reduce the probability ofenvironmental risk incidents and ensure effective emergency handling of such incidents.Analysis of Risks and Opportunities Related to Sokan’s Environmental Compliance Management
Sokan’s Identification of and Response to Major Environmental RisksRiskRisk DescriptionImpact ScopeFinancial ImpactPolicy and legal risks
If the Company fails to comply with relevant environ-mental laws and regulations, it may face fines andlegal liabilities.
Short- andMedium-term
Increased non-operating expenses
OpportunityOpportunity DescriptionImpact ScopeFinancial ImpactReputation opportunity
Effective environmental management can enhancebrand image, earning the trust and support of custom-ers.
Medium- andLong-term
Increased operatingrevenue
Sokan’s Environmental Compliance Management Response Strategy
Environmental protec-
tion training
Regular inspections
Environmental risk
identication
Emergency
response
Major Environmental
Risks
Environmental RiskSubstances
Environmental HarmEmergency Measures
Generation of hazardous
waste
Hazardous waste
Pollution of air, waterbodies, soil, etc.
The hazardous waste storage warehousehas a cement-hardened oor, with corrosionand seepage prevention treatment, and isequipped with diversion ditches and bufferpools.Emission of organicwaste gases
Organic waste gasesRegular inspections and maintenance
2930
Emergency responseRegular inspectionsEnvironmental protection training
Sokan’s Main Measures for Environmental Compliance Management in 2024Establish an emergency lead-ership team, and develop theEmergency Plan for SuddenEnvironmental Incidents based onactual risks, which has been ledwith the competent environmen-tal departments.Conduct three emergency drills tocontinuously improve all employ-ees’ emergency response capabil-ities for crisis incidents.
Hold four specialized meetings onenvironmental compliance work,analyze the Company’s environ-mental compliance managementsituation, and study signicantpolicy measures for the Compa-ny’s environmental compliancemanagement.Organize a company-wide envi-ronmental compliance inspectiononce a month. For any identiedissues and risks, coordinate andsupervise the relevant depart-ments to promptly implementcorrective actions.
Organize one environmental pro-tection training for all employees,with the training content includingenvironmental laws and regula-tions, industry standards, opera-tion and maintenance of pollutioncontrol equipment during produc-tion, hazardous waste classica-tion and handling methods, andemergency handling of environ-mental incidents.
Indicators and targetsThe Company has established environmental compliance management targets, while strengthening the supervision andcontrol of responsible departments over environmental compliance, and making every effort to prevent environmentalpollution incidents.
Sokan’s Indicators and Targets for Environmental Compliance ManagementIndicatorUnitAnnual TargetAchievement StatusNumber of environmental pollutionincidents
Times0
(Achieved the goal)
Pass rate of environmental compliancetesting
%100
(Achieved the goal)
4.2 Emissions management
The air pollutants generated by the Company mainly include volatile organic compounds (VOCs), toluene, xylene,particulate matter, etc. The types of wastewater are primarily domestic sewage, with water pollutants mainly includingchemical oxygen demand (COD), ammonia nitrogen, suspended solids (SS), etc. The waste primarily includes solvent-contaminated waste, domestic garbage, and paint-cleaning solvents.The Company places great emphasis on the management of pollutants and waste, strictly complying with laws andregulations such as the Solid Waste Pollution Prevention and Control Law of the People’s Republic of China, the AirPollution Prevention and Control Law of the People’s Republic of China, and the Water Pollution Prevention and ControlLaw of the People’s Republic of China, ensuring the legal and compliant discharge of pollutants and treatment of waste.During the reporting period, the Company’s pollutant discharge and waste disposal did not result in any significantadministrative penalties or criminal liabilities.
GovernanceThe Company has developed internal systems such as the Waste Gas Management System, Wastewater ManagementSystem, and Solid Waste Management System to achieve full-chain compliance management of emissions, from sourcecontrol to end treatment. The Company’s emissions management structure is aligned with its environmental compliancemanagement structure, ensuring the effective implementation of emissions management measures.StrategyThe Company deeply recognizes its environmental protection responsibilities. Non-compliant pollutant discharge couldharm the health of local residents. Therefore, the Company actively identifies risks related to emissions and developsresponse strategies.
Analysis of Risks Related to Sokan’s Emissions Management
Sokan’s Emissions Management Response Strategy
RiskRisk DescriptionImpact ScopeFinancial ImpactPolicy and legal risks
Violating pollutant discharge or waste disposal regula-tions may lead to regulatory penalties.
Short- andMedium-term
Increased non-operating expensesReputation risks
If the Company is publicly exposed for violating emis-sion regulations, it may lead to a decline in reputation.
Short-, Medium-and Long-term
Decreased operatingrevenue
Waste gas emission
treatment
Use of low-pollutionraw materials
Wastewater
dischargetreatmentHazardouswastetreatment
Regularmonitoring
Generalsolid waste
disposal
3132
Impacts, risks, and opportunities management
The Company manages emissions throughout the entire product lifecycle. In the product development phase, it useslow-pollution raw materials to reduce pollutant generation at the source. In the production phase, it employs closedproduction processes to minimize pollutant leakage. In the emissions disposal phase, advanced treatment processesare used to reduce the concentration of emissions, ensuring the compliance of pollutant discharge with standards andthe proper treatment of waste.
Indicators and targetsThe Company has established goals and indicators for emissions and monitors the progress and results of emissionsmanagement to verify the effectiveness of pollution prevention measures, and continuously ensure the compliantdischarge of all pollutants and waste.
Sokan’s Measures for Emissions Management in 2024
Use of low-pollution raw materialsUse water-based resins, high-solid-content coatings, and other low-VOC raw materials to reduce the use of benzene-seriescompounds, thereby reducing pollutant generation at the source.
Waste gas emission treatmentReplace workshop exhaust hoods with enclosed exhaust hoods to improve exhaust gas collection efficiency, reduce harmfulgas concentrations in the workshop, and decrease pollutant discharge.Install negative pressure gas collection systems in the mixing, spraying, and filling stages to ensure VOCs collection efficiency.Use the “Adsorption Concentration + RCO Incineration” high-efficiency treatment technology to ensure that emissionconcentrations are below national limits.Wastewater discharge treatment
Have kitchen wastewater initially treated by an oil separator, and domestic wastewater treated by a septic tank before beingdischarged into the Wastewater Treatment Plant in Ningxiang Economic and Technological Development Zone.General solid waste disposalDeliver waste to the Waste Treatment Plant in Ningxiang Park for recycling and disposal.Hazardous waste treatmentSet up a leak-proof hazardous waste temporary storage area, clearly label the types of hazardous waste, and establish ahazardous waste management ledger.Entrust a qualified unit to dispose of and treat hazardous waste.Regular monitoringEvery month, entrust a third-party qualified professional organization to monitor the Company’s rainwater, waste gas, andnoise emissions, and to provide a testing report. Ensure that emission standards comply with the Emission Standards forAtmospheric Pollutants in the Coating, Ink, and Adhesive Industries (GB37824-2019). Upload the testing results to the nationalpollutant discharge permit management information platform - enterprise end and the national pollution source monitoringinformation management and sharing platform in a timely manner.
Relevant Indicators and Targets for Sokan’s Emissions Management
Sokan’s Recycling-related Targets and Indicators
IndicatorUnitAnnual TargetAchievement Status
Hazardous waste compliance disposalrate
%100
(Achieved the goal)
IndicatorUnitAnnual TargetAchievement Status
Proportion of carbon black extractedfrom waste tires used
%20
(Achieved the goal)
4.3 Circular economy
Sokan deeply integrates the concept of circular economy into the entire production and operational process and iscommitted to building a sustainable development model focused on efficient resource usage and waste reduction.The Company has established a classification recycling mechanism covering all production stages, strengthening itscapacity for the resourceful usage of waste. It also enhances product lifecycle management, improving recyclability andenvironmental compatibility from the design end.
The Company has set quantitative targets around the circular economy, establishing the proportion of carbon blackextracted from waste tires as the core indicator for recycling. A regular monitoring and evaluation mechanism has beenestablished to continuously improve resource usage efficiency and waste reduction, contributing to the construction ofa green production system.
Sokan’s Main Recycling Measures in 2024Extract carbon black from waste tires and reuse it in ink manufacturing; in 2024, 300 kilograms of carbon blackextracted from waste tires were used.Introduce solvent distillation equipment, which can distill and purify solvents from cleaning agents for recycling andreuse.
3334
Innovation-driven Quality and SafetyManagement
5.1 Quality management of products and services
The Company consistently upholds its core value of “customer centricity” and continuously improves customersatisfaction through high-quality products and services. The Company strictly adheres to national standards such asGB/T 1723-1993 Determination of Viscosity of Coatings, and GB/T 1740-2007 Determination of Resistance to Heat andHumidity of Paint Film, and requirements from ISO 9001 Quality Management System, IATF 16949 Automotive QualityManagement System, EN/AS9100 Aerospace Quality Management System, and QC080000 Hazardous SubstanceManagement System. This ensures that quality control in the entire production and manufacturing process complieswith the standards and management system requirements. During the reporting period, the Company did not experienceany major safety or quality incidents related to products or services.GovernanceThe Company has developed internal systems such as the Continuous Improvement Control Procedures, Non-conforming Product Control Procedures, Customer Complaint, Quality-based Return, Quality Claim Handling Procedures,and the Customer Satisfaction Measurement Control Procedures. These systems comprehensively ensure product andcustomer service quality from the perspectives of product quality control, non-conforming product recall, complainthandling, and satisfaction management. The Company has established a top-down quality management structurefor products and services, clarifying the responsibilities and boundaries at each level, forming a full-loop system fromstrategic decision-making to execution.
Sokan’s Quality Management Structure for Products and Services
Strictly implement national and departmental qualitylaws, regulations, and standards to ensure compli-ance management.Decide on the Company’s quality policies, goals, anddevelopment plans, and improve system reviews.Standardize process construction, promote ad-vanced quality management tools, and establish aninformation platform.Plan, review, and approve the Company’s majorquality improvements and other significant qualityactivities, and coordinate the Quality ManagementDepartment for implementation.
Lead ISO/IATF/AS system certication maintenance, pro-mote process standardization and manage internal audits.Be responsible for formulating quality targets and man-agement plans, inspecting and supervising the formulationand implementation of targets, indicators and manage-ment plans in each unit, and reporting progress to theQuality Management Committee.Establish raw material/process and nished product test-ing mechanisms, and conduct hazardous substance iden-tication, and data traceability analysis.Implement closed-loop management of customer com-plaints and non-conforming products, and promote con-tinuous improvement of the Group’s quality managementlevel.
Quality Management CommitteeQuality Management Department
The Company conducts international quality management system certification to identify gaps in its qualitymanagement system, and continuously improves its quality management system to achieve comprehensivemanagement of its product quality. Sokan has passed the ISO 9001 Quality Management System Certification, IATF16949 Automotive Quality Management System Certification, EN/AS9100 Aerospace Quality Management SystemCertification, and QC080000 Hazardous Substance Management System Certification, with all relevant certificatesactively maintained.
Sokan’s ISO 9001:2015 Quality Management System
Certification
Sokan’s EN/AS9100 Aerospace Quality Management
System Certification
Sokan’s IATF 16949:2016 Automotive Quality Management
System Certification
Sokan’s QC080000 Hazardous Substance Management
System Certification
3536
Strategy
The Company deeply understands that product and service quality helps ensure customer production stability, enhancecustomer satisfaction, and contribute to the production efficiency of the supply chain. Therefore, the Company identifiesrelated risks and opportunities to provide a basis for formulating the response strategy for quality management ofproducts and services.Analysis of Risks and Opportunities Related to Sokan’s Quality Management of Products and Services
Sokan’s Response Strategy for Quality Management of Products and Services
RiskRisk DescriptionImpact ScopeFinancial ImpactResponsibility risks
If product quality issues or safety hazards arise, the Com-pany may need to conduct large-scale product recalls andface compensation.
Short- andMedium-term
Decreased operatingrevenueIncreased operatingcostsReputation risks
If product quality issues occur frequently, it may reducecustomer trust in the Company, leading to customer loss.
Short-, Medium-,and Long-term
Decreased operatingrevenue
OpportunityOpportunity DescriptionImpact ScopeFinancial ImpactMarket opportunity
Establish a market reputation for high-quality products andservices to attract more customers.
Short-, Medium-,and Long-term
Increased operatingrevenue
Product quality controlCustomer service optimization
Quality monitoringProper handling of customer complaints
Quality audits
Rapid responseContinuous improvement
Satisfaction surveys and improvementsProduct recall
Impacts, risks, and opportunities management
Product quality management
The Company ensures product quality through measures such as quality monitoring and measurement, quality audits,and continuous improvement. If customers receive non-conforming products, the Company will handle the situationaccording to the product recall process to ensure the stability of customer production. This, in turn, enhances customertrust and loyalty, driving market expansion and reputation building.
Customer service optimizationThe Company leverages its rapid response advantage to actively collaborate with customers on R&D and production.Through satisfaction surveys, it understands customer demands and ensures continuous improvement, optimizingcustomer service effectiveness and enhancing customer loyalty.
Sokan’s Main Measures for Product Quality Management in 2024
Verify and confirm the raw and auxiliary materials according to the Material Receipt Management Regulations, and perform
testing according to the quality inspection plan to ensure the quality of raw and auxiliary materials. Handle non-conforming
products according to the Non-Conforming Product Control Procedures.
Implement the production process in strict accordance with the Production Process Control Procedures. Supervise and
randomly inspect operators’ standardization in process execution, record making, and operation by process engineers in the
Production Technology Department.
Conduct performance testing for finished products according to the APQP Control Procedures and specific requirements of the
testing outline.
Quality monitoring
Apply a process-based approach to audit the entire quality management system, with key processes audited annually and key
projects audited selectively.
Conduct product audits by randomly sampling products from the warehouse according to the implementation plan.
Take testing outlines or finished product inspection plans, as well as packaging specifications, and applicable technical
specifications and standards as the basis for product audits to determine product defect levels.
Quality audits
Perform data statistics and analysis on the completion of the previous year’s operational plan and targets, identify issues and
risks, and select key projects for continuous improvement in the current year.
Determine the direction for continuous improvement following the guidelines of minimizing product scrap, rework, and repairs,
and well responding to customer complaints.
Continuous improvement
Sign a Supplementary Quality Agreement with suppliers, requiring them to establish and obtain quality system certification,
with comprehensive product quality and safety control processes in place.Supplier quality control
Sokan’s Product Recall Process
Return application
submission
Return processing
Disposal plan formulationReturned products disposalFollow-up on disposalresults and closure
Review and approval
Return acceptance and
verification
3738
Sokan’s Main Customer Service Measures in 2024
Sokan’s Customer Complaint Handling Process
Provide on-site technical services to customers, fa-cilitating direct communication of technical solutionsto improve R&D and production eciency.Lease nearby warehouses for fast inventory turnover,ensuring timely replenishment of raw materials forcustomers.Establish prototyping centers in East China andSouth China to provide localized sampling and quick-ly respond to customer needs.
Regularly conduct customer satisfaction surveys,with survey results composed of performance dataon relevant internal processes such as on-time de-livery rates and quality complaint rates, and addresscustomer dissatisfaction and make targeted im-provements in service.
Rapid responseSatisfaction surveys and improvements
The Company values customer feedback and has established a customer complaint handling process and formed arapid response team to address urgent customer issues, ensuring that customer demands are effectively responded to.
Customer feedbackacceptance & on-site
issue confirmation
Complaint process
submission
Formulation of corrective& preventive actions
On-site immediatehandling and verification
Complaint classification
Measures / reportreviewCustomer complaint
follow-upComplaint issue closure
Implementation ofcorrective ActionsFollow-up verification/ standardized output
Indicators and targets
To achieve the strategic target of “becoming a quality benchmark in the coating materials industry”, Sokan, orientedat customer value, comprehensively manages quality risk prevention capabilities by monitoring core indicators suchas customer satisfaction and the completion rate of corrective actions as planned, the Company comprehensivelymanages quality risk prevention capabilities. This provides internal momentum for building brand trust based on thedual-driving forces of “technology + quality”.
Targets and Indicators Related to Sokan’s Quality Management of Products and Services
Sokan’s R&D and Innovation Management Structure
IndicatorUnitAnnual TargetAchievement Status
Manufacturing customers’ satisfactionPoint≥80
88.61
( Achieved the goal)Terminal customers’ satisfactionPoint≥80
81.40
( Achieved the goal)Completion rate of corrective actions asplanned
%≥90
( Achieved the goal)
5.2 R&D and innovation
The Company is primarily involved in the R&D and innovation of new functional coating products for coating, inks, andadhesives. It complies with laws and regulations such as the Law of the People’s Republic of China on Scientific andTechnological Progress, and the Regulation on Computers Software Protection, as well as national standards suchas GB 30981, GB 24409 and GB 38507, and customer-required standards like the Restriction on the Use of CertainHazardous Substances in Electrical and Electronic Equipment (“RoHS”), and the Registration, Evaluation, Authorisationand Restriction of Chemicals (“REACH”). While ensuring the legality and compliance of the product developmentprocess, the Company actively innovates to become a global leader in the field of new functional coating materials.GovernanceThe Company has established internal systems such as the APQP Control Procedures, Product Design and DevelopmentControl Procedures, Design and 5M1E Change Control Procedures, R&D Process Management System, and R&DInvestment Accounting Management System. Vertically, a top-down R&D and innovation management structure hasbeen built, while horizontally, product-oriented application R&D centers for coatings, inks, and adhesives have beenestablished, fully implementing the R&D and innovation strategy.
Implement the Group’s strategy for new technologies and new products, and promote R&D management.Review the annual new product development plans submitted by the Group’s R&D institutions.Be responsible for initiating and reviewing new product R&D projects within the Group, and guiding the resolution of technicalchallenges during the new product development process.Organize and hold the Group’s technical joint meetings and other meetings of the technical committee.
Technical Management Committee
3940
Collect and analyze relevant development technology information from both domestic and international sources.Develop the Company’s medium- and long-term (3-5 years) and annual technology and product plans.Be responsible for new product formulations, processes, packaging design, and preparation of product material lists and othertechnical materials.
Central Research Institute
Be responsible for the medium- and long-term (3-5 years) and annual technology and product plans for the areas under theirjurisdiction.Be responsible for managing the entire process of new product development projects.Be responsible for patent searches, preparation of application materials, and subsequent management for R&D of newproducts.
Coatings/inks/adhesives application R&D centers
Strategy
The Company develops new products through R&D and innovation to meet customer demands and fulfill investors’expectations for the Company’s growth potential, bringing positive impacts to stakeholders. At the same time, theCompany identifies R&D risks and innovation opportunities, and by implementing R&D and innovation strategies, itcreates differentiated competitive advantages and sustained innovation momentum.
Analysis of Risks and Opportunities Related to Sokan’s R&D and InnovationRiskRisk DescriptionImpact ScopeFinancial Impact
Market risk
The downstream application fields are rapidly changing. If theCompany is unable to provide product solution capabilities, inno-vate in a timely manner, master relevant technologies, and launchdifferentiated innovative products to continuously meet customerdemands, the Company’s market competitiveness and sustainedprotability will be weakened.The Company’s core technical personnel are all key participants inexisting patents, non-patent technologies, research projects, etc. Ifthese personnel leave the Company, resulting in a loss of technicalstaff, it will adversely affect the progress of ongoing projects andthe condentiality of existing intellectual property.
Short-, Medium-,and Long-term
Decreased operatingrevenueIncreased operatingcosts
OpportunityOpportunity DescriptionImpact ScopeFinancial ImpactMarketopportunity
The market scale of downstream elds such as new energy vehi-cles and high-end consumer electronics is growing increasingly,and these industries are rapidly updating and iterating, continu-ously placing new demands on coatings and ink products.
Short-, Medium-,and Long-term
Increased operatingrevenueThe Company adheres to the R&D concept of “demand-oriented, forward-looking planning, highlighting characteristics,and proactive iteration”, and considers it as the guiding principle throughout the entire process of technology researchand product development. By establishing a regular communication mechanism integrating R&D, marketing, and supply
chain, the Company closely monitors customer demands and market trends. With forward-thinking strategic planning,the Company reasonably plans, makes early deployments, and advances in an orderly manner. At the same time, theCompany uses new technologies and innovative approaches to proactively iterate on products, thereby stimulating R&Dand innovation with distinctive “Sokan characteristics”.
Sokan’s R&D and Innovation Response Strategy
Innovation culture
development
R&D reservesenhancement
R&D team development
R&D facility investmentoptimization
Sokan’s Honours Related to R&D and InnovationNational EnterpriseTechnology Center
National Development andReform Commission of thePeople’s Republic of ChinaNational Postdoctoral
Research StationNational PostdoctoralManagement Committee
National Technology InnovationDemonstration Enterprise
Ministry of Industry andInformation Technologyof the People’s Republic of
ChinaSpecialized, Fined, Peculiar, andInnovative Giant EnterpriseIndustry and InformationTechnology Department ofHunan Province
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Impacts, risks, and opportunities managementTo achieve the strategic goal of “becoming a global leader in the field of new functional coating materials”, the Companyhas built an innovative culture, implemented a comprehensive R&D team-building mechanism, and deepened the reserveof forward-looking technological R&D. The Company has made breakthrough progress in several key areas, providinginnovative coating solutions for industries such as high-end consumer electronics and new energy vehicles.
Sokan’s Main Measures for R&D and Innovation in 2024Innovation culture developmentIn February, the Group’s first technical annual meeting was held, where technical personnel from different business areasof the Company conducted 32 technical presentations and displayed over 20 research achievement posters. Thirty-onetechnical talents with outstanding contributions and excellent performance at the annual meeting were honoured.In May, the 2024 Science and Technology Workers’ Day & First Craftsmanship Day event was held. Holiday gifts were providedto science and technology workers from the Central Research Institute, various application R&D centers, Gull Hash ChemistryPark, Ningxiang Park, and other locations, enhancing the cohesion of the scientific and technological workforce.The Company participated in the China International New Materials, New Processes, and Colour (CMF) Exhibition and theChina Coatings Exhibition, where a set of CMF trends was launched and roadshow promotions were conducted for the designand engineering departments of customers.The Research Institute conducted more than 20 internal training sessions, each lasting 1-2 hours, with over 50 participantsper session. Throughout the year, more than 20 employees participated in external training, including 20 technical professionaltraining sessions and one project management training session.R&D team developmentA dual-incentive mechanism was established for basic R&D and mass production outcomes through methods such asphased completion rewards for innovative R&D projects and patent awards to encourage patent application.The talent development mechanism was continuously improved, aiming to build a strong career development platform foremployees. Through the internal title evaluation system, 12 outstanding R&D personnel stood out and successfully receivedpromotions.R&D facility optimization
A Global R&D Center was built and officially launched in Ningxiang Park. The center includes research laboratories with multi-technology integration and multi-product platforms, equipped with internationally advanced instruments and equipment.It covers the entire R&D chain, including formulation development, colour design, pilot testing, inspection and analysis, andprocess validation, effectively enhancing the efficiency of the Company’s R&D projects.R&D reserves enhancementThe Company has a rich pipeline of ongoing projects, covering fields such as high-end consumer electronics, passengervehicles, and special equipment. The Company is conducting forward-looking R&D for various new functional coatingproducts, including water-based coatings, special resins, inks, and adhesives.
Launch Ceremony of Sokan’s Global R&D Center
First Technical Annual MeetingScience and Technology Workers’ Day & First Craftsman
Day Event
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Sokan’s Main R&D and Innovation Achievements in 2024Systematic Solution for Power Battery Insulation Coating Material: In terms of performance, while ensuring high insulationperformance, the solution also provides excellent aging resistance in complex operating environments. This effectivelyprevents risks such as battery shell rust, leakage, or breakdown short circuits, thereby further enhancing the battery’s safetyand reliability. In terms of implementation process, compared to traditional coating processes, digital coating technology cansignificantly improve the production efficiency of power battery insulation coatings, with better environmental performance.In terms of cost control, by optimizing the coating process, material consumption and energy waste can be reduced, creatingsignificant economic benefits for the enterprise.Sintered Ink: A special ink that achieves curing and adhesion through sintering. Based on addressing industry pain points, newproduction processes are adopted to reduce production steps (such as pre-sintering lines), shorten overall production time,lower unit energy consumption, and improve production efficiency and yield. This product has a wide sintering temperaturerange and an appropriate expansion coefficient, making it suitable for use in automotive glass, home appliances, aerospace,and other fields. It enhances aesthetics while providing protective performance.AF Products: Traditional AF products have extremely stringent requirements for wear resistance, weather resistance, andconstruction performance. The Company’s new AF products not only surpass international benchmark performance standardsbut also significantly optimize construction processes.Integrated Circuit Chip-related Inks: This kind of chips mainly includes PCB solder mask inks (solder mask photoresist) andPCB character inks (marking inks), which adopt the digital inkjet printing technology. Compared to traditional screen printing,the digital inkjet printing technology has obvious advantages in simplifying processes, improving efficiency, saving materialsand production costs, and environmental protection. At the same time, the digital inkjet printing technology offers excellentviscosity stability, jet stability, superior hardness, solder resistance, and other performance advantages.
Excimer Coating Materials: An innovative solution that integrates raw materials with excimer curing technology, achievingexcellent CMF performance and pioneering in the industry.Imprinted Coating Materials: These coating materials can achieve a triple breakthrough in new materials, new processes, andnew colours, which not only provide unique textured three-dimensional beauty but also offer differentiated features such as asilky touch.Automotive Exterior Transparent PVD Technology: Wave-Transparent PVD Technology for Automotive Exterior: ensuringefficient radar signal penetration and delay-free transmission. It supports real-time perception and precise operation ofvehicle intelligent driving systems. Additionally, it offers highly realistic metallic aesthetics, greatly enhancing the luxury qualityand visual appeal of automobiles. It is also a truly green process, effectively solving the environmental pollution and energyconsumption issues associated with traditional processes.Light-Transparent PVD Technology for Automotive Exterior: This technology performs excellently and stably in terms of lighttransmittance, high-pressure water impact resistance, weather resistance, water resistance, corrosion resistance, and stoneimpact resistance. It has also pioneered the application of “family-style facial makeup” design in automotive aesthetic trends.
Inks
Coatings
Indicators and targetsTo achieve the strategic vision of technological innovation, the Company sets its overall target as enhancing corecompetitiveness and maintaining technological leadership. It establishes and tracks quantitative indicators such as the
Indicators Related to Sokan’s R&D and Innovation
IndicatorUnitProgress in 2024R&D investment as a proportion ofoperating revenue
%
14.14
Proportion of R&D Personnel%
32.56
5.3 Data security and customer privacy protection
The data security and privacy protection processes within the Company primarily include the technical, operational, andmanagement secrets, as well as production and financial data of the Company itself, its customers, suppliers, and otherpartners.The Company strictly adheres to laws and regulations such as the Cybersecurity Law of the People’s Republic of China,the Tort Law of the People’s Republic of China, and the Personal Information Protection Law of the People’s Republicof China, along with related requirements. The Company has established internal procedures such as the InformationClassification Management Procedures, Information Security Risk Management Procedures, and PII Privacy HandlingControl Procedures, to comprehensively manage information security and privacy protection for the Company andits partners. At the same time, the Company has established a top-down information security and privacy protectionmanagement structure to ensure that information security efforts align with the Company’s business development needs.
Sokan’s Data Security and Customer Privacy Protection Management Structure
Be responsible for organizing the classication man-agement of various types of information.Be responsible for reviewing the acquisition of per-sonally identiable information (PII), overseeing theuse of PII privacy information, and approving theremoval of PII privacy information.
Be responsible for identifying the privacy require-ments of employees, suppliers, and customers, andproviding technical support for obtaining, using,managing, and exiting privacy contracts or agree-ments, while monitoring and reviewing privacy com-pliance and requirements during the PII processing.
Information Security Management GroupIT Group
proportion of R&D investment to operating income and the proportion of R&D personnel. The Company’s applicationR&D centers also set specific targets. For example, the Ink Application R&D Center has established success rateindicators for new product R&D projects and upgraded R&D projects, effectively ensuring the efficiency of technologicalbreakthroughs and the ability to transform innovative results, thereby laying the foundation for building marketcompetitiveness through innovation.
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The Company has established an information security management system that covers four key dimensions:
Organizational, personnel, physical, and technological security, through the implementation of information securitymanagement system standard certification. This system strengthens risk control capabilities in areas such as dataleakage prevention and secure coding, enhancing business continuity and customer trust. The Ningxiang Park of theCompany has obtained ISO/IEC 27001 Information Security Management System Certification, valid until December2026.
The Company has built a multi-dimensional protection system for data security and customer privacy protection.Through core measures such as information security risk assessments, access authority control, and employee privacytraining, the Company safeguards the security of its information systems and ensures the confidentiality, completeness,and availability of customer information, providing compliance assurance for building strong customer relationships.
The Company has established an overall information security target, with the short term target being “no majorinformation security incidents”, the ultimate target being “achieving zero damage to information assets”, and the ongoingtarget throughout the Company’s business activities being “ensuring the continuous and reliable operation of businesssystems”. At the same time, the Company has set measurable targets to monitor the management of data security andcustomer privacy protection.
ISO/IEC 27001: 2022 Information Security Management System Standard for Sokan
Sokan’s Main Measures for Data Security and Customer Privacy ProtectionA risk assessment team has been established to conduct risk assessments on all important assets. The assessment considersfactors such as threats, vulnerabilities, probability of the occurrence of threat incidents, potential impact on assets if suchincidents occur, and measures already taken. The findings are documented in the Information Security Risk Assessment Report.Information security risk assessment
To ensure the secure transmission of PII, access authority must be strictly limited to authorised personnel. The requirementsfor PII transmission control can be included in contracts with customers. If no such contractual requirements exist, customeradvice should be sought before transmission.Access authority control
Daily and weekly backups are performed according to the information backup strategy.
Information backup
In the event of an emergency, the procedures outlined in the Information Network System Emergency Response Plan arefollowed.Emergency response
All customer devices are equipped with desktop management software (IPguard), which controls USB drive access, enablesthe software center, and restricts the installation of unauthorized software.Information system protection
In 2024, two information security training sessions were organized for all employees, covering issues such as the interpretationof information security regulations, and the publicity of cybersecurity and privacy protection knowledge.Information security training
PII is not used for marketing and/or advertising purposes without the explicit consent of the data subject. Any requests for PIIdisclosure that are not legally binding are rejected. Before disclosing any PII, customer consent must be obtained.Temporary files containing PII that have not been used within the designated time frame are deleted, and periodic verificationis conducted.
PII protection
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Targets and Indicators Related to Sokan’s Data Security and Customer Privacy Protection in 2024
Sokan’s Main Measures for Supply Chain Security Management
IndicatorUnitAnnual TargetAchievement StatusNumber of company information security leakage incidentsTimes0
(Achieved the goal)Number of customer information security leakage incidentsTimes0
(Achieved the goal)Number of days of data loss in core business systemsDay0
(Achieved the goal)
5.4 Supply chain management
The Company’s suppliers mainly include suppliers of raw and auxiliary materials such as resins, additives, pigmentpastes, and solvents, suppliers of packaging and consumables, suppliers of engineering equipment installation services,as well as suppliers of production, monitoring, and R&D equipment. The Company has established a Supply ChainCenter, which is responsible for coordinating supplier development and procurement management.Supply chain securityTo standardize supplier management, the Company has developed the Supplier Development and Management ControlProcedures, which strictly regulates the qualification review of suppliers. Additionally, the Company signs long-termframework contracts with key raw material suppliers and actively develops backup suppliers to prevent situations whereproduction utilization rates decrease or production is interrupted due to supply shortages.
Supply chain sustainability managementThe Company attaches great importance to managing suppliers in areas such as occupational health, environmentalprotection, and integrity in professional conduct, striving to build a sustainable supply chain.
Conflict minerals managementThe Company’s raw materials, such as pearlescent pigments, involve the use of conflict minerals. The Company strictlyadheres to relevant international and industry regulations and does not accept or use “conflict minerals” sourced fromthe Democratic Republic of the Congo (DRC) and its surrounding countries and regions. The Company has establishedthe Management Measures for the Control of Conflict Minerals, requiring suppliers to investigate the source of thematerials they supply and provide a Commitment to Not Use Conflict Minerals and a Conflict Minerals Survey Form.This ensures that materials containing gold (Au), tantalum (Ta), tin (Sn), and tungsten (W) comply with the ResponsibleMinerals Initiative (RMI), the OECD’s Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas, or equivalent and recognized due diligence frameworks.If the investigation reveals that the materials contain conflict minerals from the DRC or its surrounding regions, suppliersconcerned will be required to provide a written explanation and immediately cease procuring and using conflict mineralsfrom the DRC or its surrounding regions. They must select new mineral sources and provide valid evidence that the newsources meet the conflict-free requirements for the DRC. Additionally, they should develop corresponding corrective andpreventive measures to ensure compliance with the DRC’s conflict-free metal requirements.Strictly regulate the qualifica-tion review and nancial statusassessment of suppliers toensure that suppliers’ produc-tion processes are compliantand that they have the ability toprovide continuous supply.
Qualification review
Adopt a “long-term frameworkcontract + orders” procurementmodel with key resin suppliersand metallic pigment suppli-ers to ensure the bulk supplyof critical raw materials, withsuppliers failing to supply asagreed being required to paycompensation.
Framework agreements
Actively expand backup suppli-ers and procure raw materialsfrom backup suppliers whenexisting suppliers are unableto supply, thereby preventingproduction interruptions.
Backup suppliers
Sokan’s Main Measures for Supply Chain Sustainability Management
Occupational health and environmental protection
Send the Notication to Stateholders in Environmental Protection/Occupational Health and Safety to suppliers, urging them to
achieve safety production by ensuring environmental protection and occupational health.
Require suppliers to sign the Environmental Quality Agreement, ensuring that the harmful substance content in the products
they provide complies with the Company’s Hazardous Substance Control Standards.
Integrity in professional conduct
Require suppliers to sign the Integrity and Honesty Agreement, resisting commercial bribery and unfair competition, and
stipulating liability for breach of contract.
In 2024, 100% of suppliers signed the Integrity and Honesty Agreement.
The Company has issued the Conict Minerals Survey Form to
suppliers, achieving a
100%
coverage rate.None of the existing suppliers are involved in the use of mineral resources from conflict regions.
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People-Oriented Demonstration ofCorporate Responsibility
6.1 Rights, interests and benefits of employees
Employee recruitment and employmentSokan strictly adheres to domestic laws and regulations such as the Labour Law of the People’s Republic of China andthe Labour Contract Law of the People’s Republic of China. The Company’s overseas operations also strictly complywith the laws, regulations, and policy requirements of the respective locations. The Company regulates the managementof recruitment and dismissal, working hours, holidays, and other aspects, following the principles of fair distributionaccording to work and equal pay for equal work, while legally protecting employees’ legitimate rights and interests.The Company has developed internal management systems such as the Human Resource Management Procedures,Recruitment Management System, and Protected Employee Management System. Additionally, the Company uses theMercer Job Evaluation Tool to assess the value of internal positions. This clarifies the human resource managementprocesses for the Company’s various functional centers, research institutes, and subsidiaries, standardizing humanresource management and enhancing compliance, coordination, and work efficiency.
Sokan’s Main Policies for Employee Recruitment and EmploymentThe Company does not discriminate against any employee on the grounds of race, age, gender, sexual orientation, ethnicity,disability, religion, political affiliation, trade union membership, military service, nationality, marital status, pregnancy, healthcondition, or any other status protected by national law.
Anti-discrimination
Employment of individuals under the age of 16 is prohibited: The Company implements reliable age verification measures,such as using ID verification devices to confirm authenticity or checking through the Internet or local government resources.Remediation plan: If an employee aged below 16 is inadvertently hired, the Company will provide transportation costs to helpthe employee return home or educational fees to support his/her study. If the employee faces significant financial difficulties,daily necessities and living expenses will be provided until the employee reaches the age of 16.Protection of adolescent employees: The Company strictly limits the employment of employees under the age of 18, complieswith applicable laws that restrict or regulate the work of minors aged below 18, and ensures that all operations and locationsare inspected by safety professionals to identify and prevent any conditions that may pose a danger to adolescent workers.
Prevention of child labour and protection of adolescent employees
Sokan’s Main Measures for Employee Recruitment and Employment in 2024
Comprehensively summarize and review the employ-ee lifecycle management process (including recruit-ment, hiring, contract signing, probation, attendanceand leave, compensation and benefits, manage-ment of female employees during their pregnancy,maternity, and lactation periods, and resignationmanagement) to identify potential labour risk points.Gradually enhance the risk awareness of various de-partments through property publicity and guidance.
Successfully opened two overseas recruitment chan-nels, laying the foundation for the future introduction ofoverseas talent.Optimize internal policies and streamline and improveexternal policies to attract overseas and high-level talent.Expand headhunting resources by ten agencies, buildinga talent pool of over 100 headhunted professionals.Based on an analysis of the Company’s operationalbackground, develop the Three-Year Strategic Planningfor Human Resources of Sokan to clarify specic targets,key tasks, and measures for talent selection and em-ployment.
Prevention of labour risksStrategic talent assurance
During the reporting period, the Company undertook a series of measures to optimize its recruitment and employmentpractices, laying a talent foundation for the Company’s long-term operations.
In 2024, all employees of the Company were full-time employees under labour contracts, including foreign employeesemployed both at home and abroad. There were no incidents of penalties from relevant authorities due to violations oflabour laws or regulations concerning employee recruitment and dismissal, compensation, working hours and holidays,or any violations related to forced labour or child labour.Protection of the rights and interests of employeesThe Company has established management systems such as the Wages and Benefits Management System andthe Attendance and Leave Management System. These systems, along with the Human Resources ManagementProcedures document, clearly define various provisions to safeguard the diverse rights and interests of employees.Additionally, employee representative meetings are held regularly to effectively protect employees’ legal rights andinterests and statutory benefits from being infringed upon, while reflecting the core values of the Company’s corporateculture, which focuses on the mutual growth of the Company and its employees.
Remuneration
Adhere to the principle of equal pay for equal work, regularly survey external remuneration information, conduct comparativeanalysis of internal and external remuneration, and design remuneration structures that align with job positions, capabilities,and performance, ensuring internal fairness and external competitiveness of the remuneration system.For positions with performance assessments, bonuses are calculated and distributed based on corresponding incentivepolicies and performance assessment results.
Working hours
Employees cannot work more than six consecutive days, and the weekly working hours must not exceed 40 hours, with actualworking hours (including overtime) limited to no more than 60 hours per week.Forced overtime or unauthorized overtime is prohibited. All overtime must be voluntary, and approval from the departmenthead and verification by the Human Resources Department is required.
Sokan’s Policy for Guaranteeing the Rights and Interests of Employees
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Holidays
Employees are entitled to statutory holidays, annual leave, marriage leave, bereavement leave, work injury leave, sick leave,maternity leave for female employees, breastfeeding leave for female employees, paternity leave for male employees,compensatory leave, and other paid leave.Protection of female employeesFemale employees are not assigned to work at heights, in low temperatures, or in cold water, or work with a third-levelphysical labour intensity as defined by the country during their menstrual period.Female employees are not assigned to work with third-level physical labour intensity or to work prohibited during pregnancyas defined by the country.Female employees are not assigned to work with third-level physical labour intensity or to work prohibited during the lactationperiod if the infant is under one year old.Anti-harassment and anti-abuseNo form of harassment is allowed in the workplace. Employees will not be penalized or retaliated against for reportingharassment or abuse incidents. All employees, supervisors, and managers must participate in anti-harassment training.During the reporting period, the Company legally entered into labour contracts with all employees, achieving a100% labour contract signing rate. Four employee representative meetings were held, during which collective wagenegotiations were conducted, and relevant documents such as the Collective Wage Agreement, Collective Contract, andCollective Contract for the Protection of Female Employees’ Rights were signed.In 2024, the Company revised the Employee Issue, Suggestion, Whistleblowing and Complaint Handling Procedures.Through various initiatives, the mechanism for handling employee issues, suggestions, whistleblowing and complaintswas standardized and improved, with feedback channels, processing procedures, and liaison points clarified. Thesemeasures were implemented to promote the efficient resolution of issues, while ensuring that all employees are awareof the reporting mechanism and that the privacy and rights of whistleblowers are protected. This has ensured effectivecommunication between the employees and the Company’s leadership.
As of the end of the reporting period, the Company had not experienced any serious violations of the rights and interestsof employees, nor had it been subjected to administrative or judicial penalties for infringing upon the rights and interestsof employees, and all employee complaints had been properly resolved.Employee careThe Company provides a variety of benefits to all employees, including inclusive benefits, special benefits, andallowances. In addition, to enrich employees’ extracurricular life, the employee activity associations regularly organizecultural and recreational activities, fostering a united, friendly, progressive, and harmonious corporate atmosphere. Thishas effectively enhanced employees’ sense of happiness and belonging.
Sokan’s Employee Issue, Suggestion, Complaint or Whistleblowing Management System
Sokan’s Whistleblowing and Complaint Handling Process in 2024
Whistleblowing/complaint reception
Follow-up andfeedback handling
Determination of
responsibility
Request for disposalAppeal tracking
Company PresidentHandle employee complaints or whistleblowing related to the Human Resources Department.Company Trade Union
Collaborate in accepting whistleblowing or complaints that involve employees’ legal rights andinterests.
Human Resources
Department
Be responsible for collecting, summarizing, and providing feedback on employee issues andsuggestions, as well as accepting, investigating, determining, coordinating, and responding toemployee complaints or whistleblowing.All personnel of the Human Resources Department are responsible for accepting employeecomplaints or whistleblowing and collecting employee issues and suggestions. They are alsoresponsible for recording, communicating, handling, and responding to related tasks.
Responsibledepartments
Cooperate with the Human Resources Department or the trade union in investigations, providinghandling suggestions, and assisting with communication and coordination with employees.
Sokan’s Employee Care Measures
The Company makes timely and full contributions to various statutory social insurances and benefits, including basic pensioninsurance, basic medical insurance, unemployment insurance, work injury insurance, maternity insurance, and housingprovident fund, achieving a 100% coverage rate.The Company provides group accident insurance for all employees and offers medical mutual aid for employees in Changsha.The Company provides benefits such as year-end bonuses, meal and accommodation subsidies, health check-ups, birthdaygifts, holiday gifts and cash, and daily necessities.
Inclusive benefits
Additional benefits are provided in specific circumstances, including high-temperature allowances, hardship allowances,expatriate allowances, internal training remuneration subsidies, and company guide allowances.
Special benefits
The Company offers allowances for confidentiality, seniority, education, and skills.
Allowance benefits
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The Company has built indoor facilities such as badminton courts, cinemas, and gyms, and established seven activityassociations, including badminton, basketball, billiards, table tennis, fishing, fitness, and running clubs, with regular activities held.The Trade Union Committee regularly hosts activities such as “Singing the Strongest Voice of Sokan”, “Shaping the Future withTechnology through Unlimited Innovation” on the Science and Technology Workers’ Day, and “Love in Sokan, Unity in Action” onthe Family Day.
Cultural and recreational activities
On International Women’s Day, female employees receive holiday allowances and are given time off.Female employee care
The Company has set up a mutual aid fund to provide financial support to employees and their families facing difficulties dueto illness, disability, or other hardships.Care for employees with difficulty
Sokan’s Employee Care Activities in 2024
“Love in Sokan, Unity in Action” - The 3rd Annual Family Day
“Sing the Strongest Voice of Sokan”Work Commencement Karaoke Activity
“First Quarter Employee Birthday Party”Production Department of Changsha Factory
Basketball Tournament
The Company’s mutual aid fund has provided assistance to
employees and their family members who were ill, witha total of RMB
26,354
in medical subsidies disbursed.
Each year, the Company conducts employee satisfaction and engagement surveys through questionnaires or discussionsessions. These surveys assess satisfaction across multiple dimensions, including the Company as a whole, the workitself, and the workgroups. Based on the survey results, the Company makes real-time improvements and adjustments.During the reporting period, the Company had a total of 31 departments, of which 29 participated in the survey. Theaverage employee satisfaction remains at a high level, and the engagement scores for both the departments andemployees have increased year on year.
Sokan’s Employee Satisfaction Survey
202220232024
81.9
81.8
81.75
81.67
81.85
81.7
81.6
81.5
Satisfaction score
6.2 Employee training and development
Employee trainingThe Company places great emphasis on employees’ career development and has established internal regulations,including the Training Management System. This has led to the development of a comprehensive talent developmentsystem, which includes learning maps for core positions, research projects, and training programs for mid-to senior-levelmanagement, such as the Executive Master of Business Administration (EMBA) and Executive Development Programs(EDP), as well as special management enhancement training camps. The Company also boasts a complete team of
5556
internal trainers. This talent development system continually cultivates a diverse range of international management andtechnical talents in alignment with the Company’s strategic targets, providing significant human capital support for theachievement of these targets.
The Human Resources Department is the designated responsible department for training, responsible for the planningof the training system, the organization and implementation of company-level training, and the guidance, assistance,and inspection of department-level training implementation. The department head is the primary responsible person forimproving the competence of employees within the department, responsible for the development and implementationof the department’s training plan. The quality, EHS, and other relevant departments are responsible for the planning ofspecial training in areas such as quality and EHS.
During the reporting period, the Company conducted 211 “mandatory skills training” sessions and 98 “enhancementand development training” sessions through onsite training, online training, and a combination of both. The total trainingexpenditure for the year amounted to RMB710,000, with a total training duration of 20,833 hours. The average trainingduration per employee was 37.5 hours, and the training coverage rate was 100%.
Curriculum system planningTraining categoriesTraining effectiveness evaluation
Sokan’s Employee Training System
Sokan’s Employee Training Management Structure
Sokan’s Employee Promotion Job Families
Based on the Job Description, ISO9001 standards, ISO 14001 stan-dards, IATF 16949 standards, EHSmanagement system standards,QC 080000 management systemstandards, and AS 91000D qualitymanagement system require-ments, the Human ResourcesDepartment organizes relevantpersonnel to conduct researchand discussions, and establishesthe Company’s training curricu-lum system.
Training for work license for spe-cial work types/processesOnboarding training for newemployees and employees trans-ferred to new positionsMandatory skills training for cur-rent employeesEmployee enhancement and de-velopment training
The evaluation of organizers andinstructors is conducted throughquestionnaires or interviews,while the evaluation of traineesincludes written exams, on-sitepractical assessments, etc.Evaluation criteria: For those withqualification certificates, suchcertificates serve as proof; forthose without certicates, a com-bination of qualitative and quanti-tative assessments is used.
Center heads, subsidiaries’ general manager
Review and approval of training programs.
Department headsFormulation and implementation of departmental train-ing plans.
Quality Department, EHS Department, etc.
Planning of special training programs.
Human Resources Department
Planning of the training system, and organization andimplementation of company-level training.Guidance, assistance, and inspection of department-leveltraining.
Employee developmentThe Company follows the principle of a virtuous cycle, which states that “the excellent are promoted, the mediocreare demoted, and those who violate rules are punished; promotion or demotion is possible in the Management, andemployees can join or leave as needed.” The Company has established systems such as the Performance ManagementSystem, Employee Promotion and Demotion Management System, and Employee Reward and Punishment System,continuously guiding and encouraging employees to improve their performance levels. The Company has alsoestablished a position, salary, and incentive system centered around ability, performance, and value contribution.The Company creates multiple career development paths for employees, establishing ten major job families. Employeescan choose a career development path based on their interests and personality traits.
The Company implements a position-based salary system, where employees’ salaries consist of basic wages, overtimepay, performance bonuses, allowances, subsidies, and other components. The performance bonus is awarded based onthe employee’s daily performance evaluations, with higher bonuses given to employees who demonstrate outstandingperformance in their daily work. Additionally, the Company has set up incentive awards to reward employees who makesignificant contributions in different areas, fully motivating employees’ initiative and engagement.
Quality controlWarehousingTSBMPM
Marketing
Technicalapplications
AdministrationFinanceEquipmentProduction
Sokan’s Incentive Awards Setup in 2024
AspectsAwardsQuarterly excellenceawards
Star PerformerPatent AwardLotus Award
Sales Breakthrough AwardOutstanding Review ProjectOutstanding Project
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AspectsAwards
Annual excellence
awards
Outstanding Part-Time Committee MemberGold Medal Corporate Culture ExecutiveAdvanced WorkerBo Le AwardInnovation AwardAnnual Task Completion AwardCustomer Development Breakthrough Award
Outstanding Job OperatorQuality ModelEHS ModelTechnical Invention AwardOutstanding Contribution to New TechnologyAwardSales Increment Contribution AwardCenter/subsidiary- levelteam awards
Outstanding ProjectStar ProjectOutstanding R&D TeamOutstanding Amoeba
Advanced Cost Reduction TeamHigh-Quality Support TeamOutstanding Sales TeamSales Target Achievement AwardGroup-level individual
awards
Technological Innovation AwardSales Champion AwardOutstanding Management AwardStock Option Award
Outstanding Technical Innovation AwardSales Elite AwardDistinguished Management AwardRising Star AwardGroup-level team awards
President Quality AwardCorporate Culture Practice Model UnitHigh-Performance Team
6S Demonstration UnitAmoeba Management Demonstration UnitIn 2024, the Company promoted employee development and drove continuous progress and innovation through suchmethods as mechanism improvement and equity incentives.
Sokan’s Main Measures for Employee Development in 2024
Sokan’s Safety Production Management StructureBy revising systems such as the Group ExcellenceEvaluation Plan, Performance Management System,Employee Promotion and Demotion ManagementSystem, Employee Reward and Punishment System,and developing the Backup Talent Cultivation Plan,the Company has completed the review and updateof incentive policies for key positions, essentially es-tablishing an incentive framework and model.The Company achieved 100% coverage of perfor-mance evaluations for key entities, ensuring full im-plementation.The promotion channel for the research institute hasbeen opened up.
Approved by the Shareholders’ Meeting, the 2024 Re-stricted Stock Incentive Plan has been implemented,initially granting incentives to 68 individuals, coveringthe Company’s directors, Senior Management, keytechnical personnel, and core employees.
Mechanism improvementEquity incentives
Sokan’s Employee Shareholding Situation in 2024 (As of the End of 2024)IndicatorUnit2024Number of employees holding sharesPerson
Proportion of employees holding sharesin the total number of employees
%
3.77
Employee shareholding quantityTen Thousand Shares
879.68
Employee shareholding quantity as aproportion of total share capital
%
7.87
Note: The above shareholder information is based on the shareholder register provided by China Securities Depository and Clearing Corporation Limited,covering the top 200 registered shareholders as of the end of the reporting period.
6.3 Occupational health and safety
As a manufacturing enterprise, the Company has always regarded occupational health and safety management as akey element in cultivating core competitiveness, placing the highest priority on safe production. The Company activelyimplements control and protective measures to manage risks across the entire production and operational process,ensuring the physical and mental well-being of its employees.GovernanceThe Company strictly adheres to relevant laws and regulations, such as the Work Safety Law of the People’s Republicof China, the Law of the People’s Republic of China on the Prevention and Control of Occupational Diseases, and theFire Protection Law of the People’s Republic of China. The Company has established and improved 16 proceduraldocuments, including the Occupational Health Operation Control Procedures and the Safety Production OperationControl Procedures, as well as eight management systems such as the Work Injury Handling Measures and PressureVessel Safety Management Regulations. Additionally, 48 operational documents, including the Safety InspectionManagement System and Occupational Disease Hazard Monitoring and Evaluation Management System, have beenformulated. This forms a comprehensive occupational health and safety production management structure, and theCompany continues to advance the construction of its safety production system.InstitutionsMembersResponsibilitiesEHSManagement
Committee
The Chairman serves asthe Director, with vice pres-idents, department heads,full-time EHS managers, andemployee representatives asmembers
The Committee mainly organizes the implementation of national and local gov-ernment laws and regulations related to EHS, as well as customer-specic EHSrequirements. Moreover, the Committee promotes the development of safetyculture and holds quarterly EHS-focused meetings to guide and coordinate theCompany’s EHS management work. Additionally, it organizes a company-wideEHS inspection every month, coordinating and supervising relevant depart-ments to ensure timely rectication of identied issues and hazards.EHSDepartment
Safety engineers, and EHSengineers
The EHS Department is responsible for managing safety, environmental protec-tion, occupational health, re safety, security, and other related areas.
The Company continues to advance the establishment and certification of its occupational health and safetymanagement system. The key manufacturing facilities of Sokan and Songrun New Materials in the Ningxiang Park havesuccessfully passed the ISO 14001 Environmental Management System and ISO 45001 Occupational Health and SafetyManagement System certifications (valid until September 2025).
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Strategy
In 2024, the Company proactively identified and assessed potential occupational health risks and opportunities in itsdaily operations and manufacturing processes. A comprehensive analysis was conducted on various risk sources andthe potential impacts they may bring.
Impacts, risks, and opportunities managementIn 2024, the Company signed annual responsibility agreements with all employees, from the Chairman to frontlinestaff, in accordance with systems and documents such as the Environmental Protection, Occupational Health, andSafety Management Responsibility System. Through daily rewards and punishments, regular performance evaluations,and annual excellence awards, the Company continuously enhances employees’ safety awareness, strengthens theideological defense line, and improves the safety management system with high standards and strict requirements,aiming to build an intrinsically safe enterprise.
ISO 45001 Certification Certificate for SokanISO 45001 Certification Certificate for Songrun New Materials
Analysis of Risks and Opportunities Related to Sokan’s Occupational Health and SafetySokan’s Main Measures for Occupational Health and Safety Management in 2024RiskRisk DescriptionImpact ScopeFinancial ImpactMarket risk
Improper storage or insucient electrostatic protectionmay lead to accidents, causing direct economic losses.If employees develop occupational diseases due toprolonged exposure to harmful volatile organic com-pounds, the Company may face compensation risks.
Short- andMedium-term
Decreased revenueIncreased operatingcostsPolicy risk
Violations of laws and regulations on occupationalhealth or hazardous chemical safety management mayresult in nes and administrative penalties.
Short-, Medium-,and Long-term
Decreased revenueReputational risk
Media exposure of occupational diseases or safety pro-duction accidents may trigger a public trust crisis andincrease employee turnover.
Short- andMedium-term
Increased operating
costsOpportunityOpportunity DescriptionImpact ScopeFinancial ImpactMarket opportunity
Passing stringent customer EHS (Environmental,Health, and Safety) audits may bring opportunities inhigh-end markets.
Short-, Medium-,and Long-term
Increased revenue
Sokan’s Response Strategies for Occupational Health and Safety
Occupationalhealth and safety
investment
Safety trainingand awarenessbuilding
Risk identicationand hazard gover-nance
Development andimplementation ofsafety standards
Occupationalhealth and safetyinvestment
Invest RMB3,526,400 as a special fund for safety production.Pay work injury insurance as per regulations, covering all employees, and pay safety productionliability insurance in a timely manner.Provide frontline operators with standard protective equipment according to regulations andsupervise the correct usage of such equipment during daily work.
Risk identification
and hazard
management
Revise and upgrade the Dual Prevention Mechanism Summary Report, covering risk control duringproduction, storage, and other operations in the Ningxiang Park, and develop targeted control andprotective measures.Fully revise the Emergency Plan Production Safety Accidents, forming one comprehensiveemergency plan, seven specific emergency plans, and four on-site handling plans. Conduct a total of28 comprehensive inspections, special inspections, and holiday inspections.Develop corrective plans for 235 identified hazards and conduct re-inspection of the correctiveresults, with all the 235 hazards being already corrected.Organize nine drills, including fire drills, personnel evacuation, elevator accidents, chemical accidents,and confined space accidents, as per the Annual Emergency Drill Plan.
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Development andimplementation ofsafety standards
For occupational health risks caused by improper storage or leakage of hazardous chemicalsand long-term exposure to volatile organic compounds, organize occupational health check-upsfor employees in hazardous posts before they start work, annually during employment, and uponleaving the post.Organize annual health check-ups for other employees, with a 100% coverage rate.Ensure 100% certification rate for special operation personnel and special equipment operators.
Safety trainingand awareness
building
Organize no less than 72 hours of three-level safety education and training for new employees,and no less than 20 hours of safety production knowledge training, special operations monitoringtraining, and emergency rescue training, covering a total of 13 sessions.Entrust professional medical staff to train employees in first aid knowledge and skills, such as theHeimlich maneuver and CPR, with 317 employees trained.Install promotional display boards, banners, notice boards, posters, and warning signs at prominentlocations within the park and work areas.
Indicators and targets
The Company actively implements safety policies and sets annual safety management targets and indicators at thebeginning of each year. During the Reporting Period, no major production safety accidents, work-related injuries, oroccupational disease incidents occurred, nor was the Company punished by relevant authorities or judicial bodies due toissues related to occupational health and safety of employees.
Indicators and Targets Related to Sokan’s Occupational Health and Safety in 2024
Sokan’s Hazardous Chemicals Management Requirements
TypeIndicatorUnitTargetAchievement Status
Safetyproduction
Minor injury accidentsCase≤3
(Achieved the goal)
Work injury accidentsCase0
(Achieved the goal)Fire accidentsCase0
(Achieved the goal)Chemical leakage accidentsCase0
(Achieved the goal)Pass rate of annual inspection of specialequipment
%100
(Achieved the goal)Certification rate of special operationpersonnel
%100
(Achieved the goal)
Occupationalhealth
Diagnosed occupational disease casesCase0
(Achieved the goal)Timely completion rate of occupationalhealth check-ups
%100
(Achieved the goal)Pass rate of occupational disease hazardfactor detection
%100
(Achieved the goal)
6.4 Chemical safety management
The resins, solvents, and other raw materials used by the Company are mostly flammable liquids and hazardouschemicals. The nine types of solvents with the highest usage are stored in a tank area (10 vertical storage tanks, each witha capacity of 50 cubic meters), which does not constitute a major hazard. Sokan and Gull Hash Chemistry are hazardouschemical production enterprises, and in accordance with national and local regulations, they have obtained safetyproduction licenses and hazardous chemicals usage registration certificates. All produced products have chemical safetydata sheets and safety labels.The Company fully implements the entity responsibility for the safety production of hazardous chemicals as a hazardouschemical production enterprise. It has established the Hazardous Chemicals Management System and, in 2024, revisedand improved it in line with the latest company organizational structure, and duty and authority requirements. The systemmanages the entire process of chemical procurement, transportation, storage, use, and disposal. The Company organizesat least one chemical safety training and one chemical leakage emergency drill each year to enhance the Company’semergency rescue capabilities, while also testing the feasibility, effectiveness, and compliance of the emergency responseplan for hazardous chemical leakage accidents.
When introducing new chemicals, all departments must select substances that comply with the Environmental ManagementMaterial Control Standards, prioritizing chemicals with low risk and low hazard. All chemicals used by the Company must beaccompanied by a chemical safety data sheet in Chinese, with content and format in line with national standards. All originaland repackaged containers must be labeled with chemical identifiers; hazardous chemicals must also bear safety labels thatmeet applicable national standards.
Introduction requirements
Procurement quantity should align with production needs to ensure safety. Suppliers must use certified vehicles fortransporting hazardous goods and ensure that the drivers and escorts hold valid licenses. Preventive measures againstleakage, fire, and explosion must be taken during transportation.
Procurement
Transportation must be entrusted to carriers with the appropriate hazardous goods transport qualifications. Incomingvehicles must pass five mandatory checks. Handling personnel must follow labeling instructions during loading/unloadingand wear suitable protective equipment based on the nature of the hazardous chemicals, ensuring gentle handling.Transportation and handling
Storage warehouses must be equipped with ventilation, fire protection, combustible gas detection, explosion-proofing, anti-static, and lightning protection facilities, along with protective equipment and emergency devices. Compatible containersmust be regularly inspected for integrity and must be stored separately by warehouse, zone, and classification.
Storage
Prominent safety warning signs must be displayed at relevant workplaces and on safety facilities and equipment. Duringproduction and use, safety measures must be taken based on the type and properties of the hazardous chemicals, includingmonitoring, ventilation, temperature regulation, fire prevention, explosion-proofing, anti-static, corrosion resistance, leakageprevention, or isolation operations.
Production and use
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Waste hazardous chemicals must be treated as hazardous waste and disposed of in accordance with the Solid Waste Man-agement System. Scrapped chemicals used in operations must be transferred by the relevant department to the hazardouswaste warehouse.
Scrap
In the event of an accident involving hazardous chemicals during storage, transport, use, or disposal, emergency responsemust be carried out in accordance with the Emergency Preparedness and Response Control Procedures and relatedemergency plans. If the impact of an accident is beyond the control of the Company, it must be reported to emergencymanagement departments, as well as environmental protection, public security, and competent health departments.
Emergency response
The Company fully recognizes the potential hazards that hazardous chemicals may pose to the surroundingenvironment, communities, and employees at its production sites. It remains committed to reducing the use ofhazardous chemicals through measures such as process optimization and substituting existing raw materials with non-hazardous alternatives. These efforts aim to minimize environmental and social impacts without compromising productquality or performance.
During the reporting period, the Company did not experience any major accidents involving chemical fires or explosions,leakage or poisoning, chemical reactions, or equipment and operational failures. No penalties were imposed by relevantauthorities or judicial bodies due to chemical safety issues.
Sokan’s Main Measures to Reduce the Use of Hazardous Chemicals
In response to environmentalconcerns and requirementsfrom downstream customercompanies, the Company hassigned agreements explicitlyprohibiting the use of cobaltcatalysts in production.
Prohibition of cobalt catalysts
To meet customer require-ments for reducing perfluo-roalkyl and poly-fluoroalkylsubstances (PFAS) in products,the Company has actively de-veloped fluorine-free siliconerubber coatings, which havenow entered mass production,replacing fluorinated siliconerubber coatings.
Replacement of fluorinatedsilicone rubber coatings
To meet the lithium batteryindustry’s requirements forinsulating coating applications,the Company has developedUV inkjet printing technology,which does not use solventsand significantly reduces thedemand for hazardous chem-icals in the production of lith-ium battery products such aspower batteries.
UV inkjet technology
Sokan actively responds to the national rural revitalization strategy and continuously upholds the philosophy of “sharedresponsibility, shared value” in promoting rural revitalization. Under the broader context of urban-rural integration andcommon prosperity, the Company advances rural development. In 2024, it supported poverty alleviation and agriculturalassistance initiatives through concrete actions, enhancing employees’ sense of mission, increasing farmers’ income,and shaping the Company’s image as a “responsible and compassionate” enterprise.
6.5 Contributions to the society and rural revitalization
Sokan has always actively given back to society and is committed to exploring long-term mechanisms for contributionsto the society. While ensuring the Company’s long-term healthy development and sustained brand value growth, it alsopromotes harmonious social development. In 2024, the Company invested a total of RMB60,200 in dedicated funds forcontributions to the society, creating a dual empowerment model of “social value – business value”.
During the reporting period, the Company donated RMB
10,000
to support activity expenses for Xinshan PrimarySchool in Yutang Subdistrict.
During the reporting period, the Company participated in Ningxiang City’s “Poverty Alleviation and AgriculturalAssistance” program through a “city-enterprise cooperation” approach, purchasing agricultural products worthRMB47,200
in total, which were all distributed to employees.
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Consolidation of the Foundation of CorporateGovernance by Compliance and Integrity
7.1 Corporate governance
The Company strictly complies with the Company Law of the People’s Republic of China (the “Company Law”), theSecurities Law of the People’s Republic of China (the “Securities Law”), the Rules Governing the Listing of Stocks onthe STAR Market of the Shanghai Stock Exchange (the “Listing Rules”), and other applicable laws, regulations, andrelevant provisions. The Company continuously improves its corporate governance structure and builds and optimizes agovernance structure comprising the Shareholders’ Meeting, the Board of Directors, the Board of Supervisors, and SeniorManagement, to ensure the Company’s sustained, regulated, and healthy development.
In 2024, the Company further enhanced efficient and standardized operations through organizational restructuring andsystem improvements.
The Company continuously improves the remuneration system for directors, supervisors, and Senior Management.The remuneration of Senior Management is determined by the Remuneration and Appraisal Committee of the Boardof Directors and submitted to the Board of Directors for approval. The remuneration of directors and supervisors isreviewed and approved by the Board of Directors and the Board of Supervisors, and subsequently submitted to theShareholders’ Meeting for approval. The annual work reports of the Board of Directors and the Board of Supervisorsmust be submitted to the Shareholders’ Meeting for review, and independent directors are required to present theirannual performance reports at shareholders’ meetings.The Company has formulated the Connected Transactions Management System and other related system documentsto regulate connected transactions, minimize unnecessary transactions, and ensure that decision-making regardingconnected transactions is fair and just for all shareholders.
Sokan’s Governance Structure
Shareholders’Meeting
The Shareholders’ Meeting is the Company’s highest authority, legally responsible for deciding onthe Company’s business policies and investment plans.In 2024, six shareholders’ meetings were held, during which 23 proposals were reviewed.
Board of Supervisors
The Board of Supervisors exercises supervisory authority to safeguard the rights and interestsof shareholders and investors, protect the Company’s interests, and uphold the lawful rights andinterests of employees.As of the end of 2024, the Board of Supervisors comprised three members, including one employeerepresentative.In 2024, nine meetings of the Board of Supervisors were held, during which 26 proposals werereviewed.Management
The Company’s Management fulfils its responsibilities in accordance with laws, regulations, andinternal policies, and strictly implements all resolutions passed by the Shareholders’ Meeting and theBoard of Directors, thereby promoting the Company’s stable and sustainable operations.
Board of Directors
The Board of Directors is the highest governance body of the Company and is responsible for theShareholders’ Meeting. The Board of Directors has four special committees, namely the AuditCommittee, the Nomination Committee, the Remuneration and Appraisal Committee, and theStrategy Committee. Each special committee performs its own duties to ensure the standardization,scientificity and effectiveness of the Board’s decisions.The Board of Directors is responsible for the Shareholders’ Meeting. Directors serve a term of threeyears and may be re-elected. Independent directors may serve for no more than six consecutiveyears.The Board of Directors has a diverse background, with members possessing professional expertiseand industry knowledge in areas such as auditing, financial management, human resourcesmanagement, and the new materials industry, along with experience in large-scale corporatemanagement.As of the end of 2024, the Company’s Board of Directors comprised seven members, including threeindependent directors.In 2024, the Board of Directors convened 13 meetings and reviewed 61 proposals. The specialcommittees held 15 meetings, with a 100% attendance rate from directors.
Shareholders’ Meeting
Board of Supervisors
Nomination CommitteeStrategy Committee
Audit CommitteeRemuneration and Appraisal CommitteeBoard SecretaryBoard of Directors
Management
Organizational restructuringSystem improvements
Enhancement of the duty performanceability of independent directorsSokan’s Corporate Governance Measures in 2024
Based on the Company’s actualcircumstances, adjust the numberof Board members from nine toseven to enhance decision-mak-ing eciency.Successfully completed the elec-tion and appointment of the Boardof Directors, Board of Supervisors,and Senior Management.
In line with the latest legal andregulatory requirements and theCompany’s operational practices,revise and improve a series ofsystems, including the Articles ofAssociation, Rules of Procedurefor the Shareholders’ Meeting,Rules of Procedure for the Boardof Directors, and Working Rulesfor Independent Directors.
Organize onsite visits for inde-pendent directors to conduct eldresearch and engage in in-depthexchanges with the managementteam, thereby supporting theBoard’s strategic decision-makingcapabilities.
7.2 Protection of the rights and interests of investors
Information disclosure
The Company strictly complies with the Company Law, Securities Law, Listing Rules, Measures for the Administration ofInformation Disclosure by Listed Companies, and other applicable laws, regulations, and normative documents. It hasestablished systems such as the Information Disclosure Management System and the Regulations on StandardizedInformation Disclosure and Internal Control Baselines to ensure that disclosed information is truthful, accurate, andcomplete. These measures are designed to ensure investors are promptly informed of material matters and to safeguardthe interests of minority investors.
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The Company actively improves its channels for communication with investors by disclosing information via the officialwebsite of the SSE and other statutory media designated by the China Securities Regulatory Commission. It adopts acombination of mandatory and voluntary disclosures to maintain sound communication with the capital market andinvestors, and to continuously enhance the transparency of its information disclosure.In 2024, the Company disclosed a total of 171 announcements, including 87 ad hoc announcements and four periodicreports. No incidents of regulatory penalties due to information disclosure violations occurred, nor were there anyinstances of selective or non-compliant disclosures.Investor communicationThe Company strictly adheres to the Securities Law, the Work Guidelines for the Investor Relations Management ofListed Companies, and other relevant laws, regulations, and normative documents. It has established internal systemssuch as the Investor Relations Management System, and implements various investor relations measures based on theprinciples of fairness, impartiality, and transparency to safeguard the legitimate rights and interests of all investors.The Company has established an investor relations management system in which the Chairman assumes primaryresponsibility, the Board Secretary acts as the person in charge, and the Securities Affairs Department serves as themain executing body. Through multiple channels, the Company responds to investors’ concerns on major issues,provides comprehensive interpretations of key highlights and long-term strategies, and delivers feedback from thecapital markets to directors, supervisors, and Senior Management, thereby enhancing effective communication with thecapital market.The Company has developed a two-way communication mechanism and platform for investors, using official channelssuch as the corporate email, the WeChat public account “Sokan Investor Relations”, investor hotline, Shanghai StockExchange e-interaction, and performance briefings to regularly and occasionally respond to investor queries. After therelease of periodic reports, the Company routinely holds performance briefings and actively participates in investorengagement meetings organized by the CSRC Hunan Office for listed companies within the jurisdiction of HunanProvince, thereby strengthening communication with a broad base of investors. In 2024, the Company held threeperformance briefings, responded to 54 investor queries on the Shanghai Stock Exchange e-interaction platform with a100% response rate, and received more than 120 investor visits and queries.Return for investorsSokan actively responded to the SSE’s Initiative on the Special Campaign to Enhance Quality and Efficiency, andEmphasize Returns for SSE-Listed Companies. In line with the “investor-oriented” development philosophy, the Companyformulated and implemented the 2024 Action Plan for Enhancing Quality and Efficiency and Emphasizing Returns, withthe aim of delivering tangible benefits to investors.The Company attaches great importance to providing reasonable returns to shareholders and actively implementsa prudent cash dividend policy. It has developed the Three-Year Shareholder Dividend Return Plan (2023–2025) toclarify and stabilize profit distribution expectations, thereby enhancing investors’ sense of gain. In 2024, the Companydistributed a cash dividend of RMB2.20 (tax included) per ten shares to each shareholder, amounting to a total ofRMB24,494,700 (tax included), accounting for 30.20% of the consolidated net profit attributable to shareholders of listedcompanies for 2023.
The cumulative dividend amount of the company from 2020 to 2023 reached RMB
million, with the annualcash dividend accounting for more than30%
of the consolidated net profit attributable to shareholders of listedcompanies each year.The Company also actively explores share repurchase as a means of stabilizing its share price. In 2024, the Companyconducted its first share repurchase, with a total repurchase amount of RMB16,013,300 (excluding stamp duty,transaction commissions, and other transaction-related fees), repurchasing 426,900 shares, accounting for 0.38% of theCompany’s total share capital. This effectively safeguarded investor rights and interests, stabilized investor confidencein the Company, and enhanced investor recognition of the Company’s value.
7.3 Risk control and compliant operations
GovernanceSokan adheres to the principle of lawful and honest operation and places great emphasis on risk control. In accordancewith the Company Law, the Guidelines for Evaluation of Enterprise Internal Controls, the Guidelines for Auditing ofEnterprise Internal Controls, and the Code of Corporate Governance for Listed Companies, and other relevant laws,regulations, standards and specifications, the Company has formulated system documents such as the ManagementMeasures for Internal Audit of Sokan Group, and the Authorization Manual of Sokan Group. A risk control and compliantoperation system has been established, with the Audit Committee of the Board of Directors as the guiding and decision-making body and the Audit and Supervision Department as the main department responsible for daily management.The responsibilities of each department regarding risk control and compliant operation are clearly defined, therebysupporting the Company’s stable operation and development.
StrategyThe Company has established and continues to improve management processes related to risk control and compliantoperations. It proactively identifies the impacts, risks, and opportunities in these areas and implements targetedresponse measures based on the results, in order to mitigate the impact of risk events on business operations andensure compliant and standardized corporate governance.
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Analysis of Risks and Opportunities Related to Sokan’s Risk Control and Compliant Operations
Sokan’s Response Strategies for Risk Control and Compliant Operations
RiskRisk DescriptionImpact ScopeFinancial ImpactLiability risk
Inadequate monitoring and control of risks may lead to theoccurrence of potential risk incidents, adversely affectingthe Company’s financial condition. Improper compliancemanagement may result in legal violations and financialrisks such as litigation or regulatory penalties.
Short-, Medium-,and Long-term
Increased operatingexpensesIncreased non-operating expensesPolicy risk
Failure to adequately monitor risks and policies may resultin an inability to keep pace with policy changes, potentiallyleading to regulatory penalties.Reputational risk
Poor risk or compliance management may result in dam-age to the Company’s brand image.
OpportunityOpportunity DescriptionImpact ScopeFinancial Impact
Market opportunity
Effective risk and compliance management can signifi-cantly reduce the Company’s operating costs and enhanceits protability.
Medium- andLong-term
Reduced operatingcosts
System im-provements
Risk and compli-
ance review
Risk and compliancetraining
Impacts, risks, and opportunities managementBased on the identification of impacts, risks, and opportunities, the Company actively implements measures such assystem improvements, risk and compliance reviews, and risk and compliance training. These efforts aim to proactivelyidentify and address potential risk factors in the course of operations, promote standardized operations, and support theCompany’s long-term and stable development.
Indicators and targetsTo achieve stable and standardized development, the Company has established a series of targets related to risk controland compliant operations. These targets are designed to guide relevant departments and personnel in their work, and toenhance the Company’s awareness and capability in risk mitigation and standardized management.
Sokan’s Measurement Measures for Risk Control and Compliant Operations in 2024
Revise the ManagementMeasures for Internal Audit ofSokan Group to further clarifythe responsibilities of eachposition in light of systemoperations.
System improvements
Establish an internal controland risk management eval-uation framework coveringcontract management, assetmanagement, informationsystems, and financial man-agement. Identify 71 internalcontrol risk points and proposecorresponding risk mitigationmeasures.
Risk and compliance review
Conduct one internal compli-ance training session coveringall Sokan employees, effec-tively enhancing complianceawareness and legal knowl-edge.Incorporate compliance man-agement content into onboard-ing training for new employeesto reduce the risk of non-com-pliant behaviour due to lack ofawareness.
Risk and compliance training
Indicators and Targets Related to Sokan’s Risk Control and Compliant Operations in 2024IndicatorUnitAnnual TargetAchievement StatusNumber of major compliance incidentsTimes0
(Achieved the goal)
Number of company-wide compliancetraining sessions
Times1
(Achieved the goal)Establishment of internal control and riskmanagement evaluation frameworks foreach business segment by 2026
?
Complete framework establish-ment for contract management,asset management, informationsystems, and nancial manage-
ment
Completed
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7.4 Business ethics
Anti-corruption and anti-commercial bribery
Sokan upholds the principle of “adhering to the rule of law, safeguarding fairness and justice, ensuring the healthyand sustainable development of the enterprise, and protecting the interests of shareholders, employees, and thegeneral public”. The Company strictly complies with the Criminal Law of the People’s Republic of China, the CompanyLaw, and other relevant laws and regulations. It has established system documents such as the Employee Rewardand Punishment System and the Code of Professional Ethics Control Procedures, thereby constructing a top-downsupervision and management system for anti-corruption and anti-commercial bribery.
The Audit and Supervision Department serves as the daily management units for the Company’s anti-corruption and anti-commercial bribery efforts. Based on the internal control and risk management evaluation framework, the Departmenthas identified key corruption and bribery risk points, critical positions, and key processes. It conducts regular supervisoryinspections and periodic audits of key departments and roles, formulates preventive measures, and improves systemsand mechanisms accordingly.In terms of anti-bribery management for suppliers, the Company has issued the Integrity and Honesty Agreementof Sokan Group and the Integrity and Honesty Requirements for Suppliers of Sokan. The Company regularly reviewssuppliers’ adherence to anti-bribery commitments. Upon discovery of any violation involving corruption, bribery, orrelated misconduct in any form, the Company will take immediate and strict disciplinary action. Through measuressuch as signing integrity agreements with suppliers, conducting anti-bribery due diligence, and providing anti-corruptiontraining, the Company fosters a “fair, impartial, clean, and honest” cooperative relationship, thereby building a long-termand stable supply ecosystem.Regarding whistleblowing management, the Company encourages employees and business partners to whistleblowany violations of integrity and self-discipline regulations, or acts of fraud, corruption, or bribery. The Company hasestablished the Employee Issue, Suggestion, Whistleblowing and Complaint Handling Procedures and provides multiple
During the reporting period, the Company was not subject to any administrative or judicial penalties related to corruption,bribery, fraud, or similar misconduct.
Whistleblowing ChannelsSokan’s Anti-Corruption and Anti-Commercial Bribery Management StructureThe Audit Committee of the Board of Directors is responsible to lead the Company’s anti-corruption and anti-commercialbribery efforts, formulate relevant policies and targets, approve related management systems, and supervise theimplementation of related work.
Audit Committee of the Board of Directors
The Audit and Supervision Department is responsible for the execution of anti-corruption and anti-commercial briberyinitiatives, and for handling clues involving disciplinary or legal violations related to corruption and bribery in accordance withrelevant regulations.
Audit and Supervision Department
whistleblowing channels, including telephone and email, to receive complaints or whistleblowing. These whistleblowingchannels are published on public platforms to ensure that employees, external partners, and other stakeholders are fullyinformed of the whistleblowing channels and procedures. After an incident whistleblowed is verified, the Company willorder the concerned violator to return the improper benefits obtained and bear corresponding responsibilities.The Company places a high priority on the confidentiality of the whistleblowing process and has adopted strictconfidentiality measures to protect whistleblowers from any form of retaliation. All whistleblowing information will behandled exclusively by the designated personnel or departments within the Audit and Supervision Department, withwhistleblowing contents thoroughly investigated and findings promptly communicated to the whistleblower.
sj@sokan.com.cnEmail
186-7562-9856/0731-87187777-8011
Phone
Sokan’s Management Measures for Anti-Corruption and Anti-Commercial Bribery in 2024Anti-corruption andanti-commercialbribery review
Review key positions and critical processes, and implement correction and mitigation measures foridentified risk points.
Integrity culture
development
Send “Integrity Reminder Letters” to employees via email and the Company’s official WeChatplatform, outlining potential forms and consequences of corruption and bribery, and providingwhistleblowing channels to help employees prevent such behaviour.Develop integrity culture based on relevant festivals, incidents or activities such as the InternationalAnti-Corruption Day, further enhancing employees’ awareness of anti-corruption and anti-commercial bribery.Integrate anti-corruption and anti-commercial bribery content into compliance training sessionsconducted for all employees, with full participation from directors and Senior Management.
Supplier anti-bribery
measures
By the end of 2024, all suppliers had signed the Integrity and Honesty Agreement of Sokan Group.The Company conducted anti-corruption reviews of suppliers, and no incidents of corruption orbribery involving suppliers were reported.
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Anti-unfair competition
Sokan strictly complies with the Anti-Unfair Competition Law of the People’s Republic of China, the Anti-Monopoly Lawof the People’s Republic of China, the Interim Provisions on Anti-Unfair Competition on the Internet, and other relevantlaws and regulations. The Company firmly prohibits unfair practices such as false advertising, infringement of tradesecrets, and fraudulent sales, and upholds fair and legitimate market competition.
During the reporting period, the Company was not subject to any administrative or judicial penalties for unfaircompetition practices such as monopolistic behaviour, false advertising, or infringement of trade secrets.
Sokan’s Anti-Unfair Competition Measures in 2024
Ensure that all announcements, product or activityinformation and other contents published throughthe Company’s official website, WeChat publicaccount and other channels, are approved bythe heads of relevant departments before beingpublished, and any content not complying with therequirements of relevant laws and regulations ismodified and resubmitted for approval, or directlynot published.
Sign confidentiality agreements with employees,interns, and suppliers to prevent the leakage of tradesecrets.
Prohibition of false advertisingProhibition of trade secret infringement
ESG Data Tables and Notes
Environmental performance
Performance Table for Greenhouse Gas Emissions and Resource Usage
Disclosure ItemUnit202220232024Climate change tackling?Total greenhouse gas emissions
Tons of CO
e5,710.507,111.448,713.34-Scope 1 Greenhouse gas emissionsTons of CO
e0.000.000.00-Scope 2 Greenhouse gas emissionsTons of CO
e5,710.507,111.448,713.34Greenhouse gas emission intensity perunit of revenue
Tons of CO
e/ millionRMB
11.4412.0611.59Energy usageComprehensive energy consumption
Tons ofstandardcoal
1,308.841,630.441,997.90-Direct energy consumption
Tons ofstandardcoal
0.000.000.00-Indirect energy consumption
Tons ofstandardcoal
1,308.841,630.441,997.90Purchased electricityMWh10,642.0013,241.1016,219.49Purchased steam
GJ057.0090.54Comprehensive energy consumptionintensity per unit of revenue
Tons ofstandardcoal/ millionRMB
2.622.762.68Usage of water resourcesTotal water intake volumem
124,652.00135,368.00136,450.71-Municipal water supplym
123,652.00134,368.00135,450.71-Collected and stored rainwater
m
1,000.001,000.001,000.00Total drainage volume (via sewer system)m
118,419.00128,599.00129,628.10Total water consumption
m
6,233.006,769.006,822.61Water consumption intensity per unit ofrevenue
m
/ millionRMB
12.4911.489.15
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Performance Table for Environmental Compliance and Emissions Management
Disclosure ItemUnit202220232024Environmental compliance managementTotal environmental protection invest-ment
RMB10,000236.38275.81190.10Penalty amount for major administrativesanctions related to environmental inci-dents
RMB10,0000.000.000.00Emissions management
Total waste air emissions10,000 m
65,025.00 64,125.00 65,250.00-Total volatile organic compounds(VOCs) emissions
kg3,677.29 4,688.643,311.40Total wastewater discharge
m
13,383.0014,890.0016,951.00Total hazardous waste
Tons304.69348.08481.82Total non-hazardous wasteTons18.8018.6019.20Note 1: In 2022–2023, the Company introduced environmental protection equipment. As the equipment entered stable operation in 2024, the totalenvironmental protection investment decreased accordingly.Note 2: The data on emission management is based on the operations of Ningxiang Park.Note 3: During the production process in Ningxiang Park, no industrial wastewater is discharged externally, and the total amount of wastewater dischargedonly includes domestic wastewater.Note 4: The hazardous waste generated by the Company primarily includes spent activated carbon, packaging drums, paint buckets and paint waste.
Note 1: Calculation method: Proportion of R&D Personnel = Number of R&D personnel / Total number of employees × 100%.Note 2: Calculation method: R&D investment as a proportion of main business revenue = R&D investment amount / Operating revenue × 100%.
Social performancePerformance Table for R&D and Innovation
Performance Table for Quality Management of Products and Services
Performance Table for Data Security and Customer Privacy Protection
Disclosure ItemUnit202220232024Number of R&D personnelPerson199241268Proportion of R&D personnel
%29.7031.7532.56R&D investment amountRMB10,0007,452.169,028.5910,544.50R&D investment as a proportion of mainbusiness revenue
%14.9315.3114.14Number of patent applications during thereporting period
Item356559-Number of invention patent applica-tions among them
Item324545Number of patents granted during thereporting period
Item292452-Number of invention patents grantedamong them
Item251819Number of valid patents during the re-porting period
Item119143195Number of invention patents applied tomain business
Item118142194
Disclosure ItemUnit202220232024Amount involved in major safety and qualityliability accidents related to products andservices during the reporting period
RMB10,000000
Disclosure ItemUnit202220232024Amount involved in data security inci-dents
RMB10,000000Amount involved in customer privacyleakage incidents
RMB10,000000
Disclosure ItemUnit202220232024Circular economyRecycled waste volume
kg——300
Note 1: Total greenhouse gas emissions represent the sum of Scope 1 and Scope 2 emissions. As the Ningxiang Park does not use natural gas, petrol, ordiesel, Scope 1 emissions are zero. Scope 2 emissions refer to indirect emissions from purchased electricity and steam. The emission factor for purchasedelectricity is based on the national average electricity carbon dioxide emission factor of 0.5366 tCO
/MWh, as published in December 2024 by the Ministryof Ecology and Environment and the National Bureau of Statistics in the Notice on the Publication of the 2022 Electricity Carbon Dioxide Emission Factors.The emission factor for purchased steam is sourced from the Guidelines for Accounting and Reporting Greenhouse Gas Emissions from Enterprises ofOther Industries (Trial) (2015), issued by the National Development and Reform Commission.Note 2: In the Company's operation, direct energy mainly involves the transportation link. The main types are diesel and gasoline, but the consumptionis relatively small and has not been included in the statistics for the time being. In the future, the Company will further improve the statistical criteria forenergy consumption.Note 3: In 2023–2024, the Company introduced purchased steam to support the R&D and production needs of new technologies.Note 4: Rainwater collection and storage volumes are Company estimates.Note 5: Calculation method: Total water consumption = Total water intake volume – Total drainage volume.Note 6: The recycled waste during production primarily refers to carbon black refined from used tyres.
7778
Performance Table for Employee Training and Development
Performance Table for Occupational Health and Safety of Employees
Disclosure ItemUnit202220232024Employee training coverage rate
%100100100Average employee training duration
、
Hour32.6015.2935.70Total training expenditure
RMB10,00041.74133.2171.00Number of training sessionsTimes347305340
Disclosure ItemUnit202220232024Proportion of employees covered by workinjury insurance
%100100100Proportion of employees covered by worksafety liability insurance
、
%43.2838.2135.24
Performance Table for Contributions to the Society and Rural Revitalization
Disclosure ItemUnit202220232024
Amount of investment in rural revitaliza-tion
RMB10,0003.681.834.72Amount of charitable donationsRMB10,000001.30
Note 1: Calculation method: Employee training coverage rate = Number of employees participating in training during the reporting period / Total number ofemployees at the end of the reporting period × 100%.Note 2: Calculation method: Average employee training duration = Total employee training duration during the reporting period / Total number of employees atthe end of the reporting period.Note 3: In 2023, there were no significant changes to training practices. The decrease in data was due to organizational restructuring, resulting in sometraining records not being captured. Current data is based on recorded entries only, thus appearing lower than in 2022 and 2024.Note 4: In 2023, the Company organized targeted training projects for key personnel, resulting in a notable increase in training expenditure compared to 2022.
Note 1: Calculation method: Proportion of employees covered by work injury insurance = Number of employees covered by work injury insurance / Totalnumber of employees × 100%.Note 2: Calculation method: Proportion of employees covered by work safety liability insurance = Number of employees covered by work safety liabilityinsurance / Total number of employees × 100%.Note 3: Work safety liability insurance covers all employees of the Company's subordinate units involved in the production and operation of hazardouschemicals.
Note 1: Calculation method: Proportion of employees receiving anti-commercial bribery and anti-corruption training = Number of employees receiving anti-commercial bribery and anti-corruption training / Total number of employees × 100%.Note 2: Calculation method: Proportion of directors receiving anti-commercial bribery and anti-corruption training = Number of directors receiving anti-commercial bribery and anti-corruption training / Total number of Board members × 100%.Note 3: Calculation method: Proportion of management personnel receiving anti-commercial bribery and anti-corruption training = Number of managementpersonnel receiving anti-commercial bribery and anti-corruption training / Total number of management personnel × 100%.
Corporate governance performancePerformance Table for Business Ethics
Disclosure ItemUnit202220232024
Proportion of employees receiving an-ti-commercial bribery and anti-corruptiontraining
%100100100Proportion of directors receiving an-ti-commercial bribery and anti-corruptiontraining
%100100100Proportion of management personnelreceiving anti-commercial bribery andanti-corruption training
%100100100Amount involved in litigation or major ad-ministrative penalties due to the compa-ny’s unfair competition practices duringthe reporting period
RMB10,000000
Note 1: Calculation method: Employee Turnover Rate = Number of Departed employees during the reporting period / Total number of employees at the endof the reporting period × 100%.
Performance Table for Employee Employment and Rights and Interests of Employees
Disclosure ItemUnit202220232024
Total number of employeesPerson670759823By gender
Male employeesPerson507598655Female employeesPerson163161168
By age
Employees agedbelow 30
Person172145170Employees aged30–50
Person467584611Employees agedabove 50
Person313042Employee turnover rate
%12.3014.0313.50
Disclosure ItemUnit202220232024Amount of investment in work Injury In-surance
RMB10,00026.9037.7442.92Amount of investment in work safety lia-bility insurance
RMB10,00015,12015,12013,608
7980
Benchmark Index TableIndex Table of Guidelines No. 14 of the Shanghai Stock Exchange for Self-Regulation of ListedCompanies—Sustainability Report (Trial)
TopicCorresponding Section in This Report
Topics required to be disclosed under the GuidelinesClimate change tacklingClimate change tacklingPollutant dischargeEmissions managementWaste disposalEmissions managementEcosystem and biodiversity protection
Not applicable. The Company’s operational sites are not located in key protectedareas, and its production and business activities do not have significant negativeimpacts on ecosystems or biodiversity. Therefore, this topic is not applicable.Environmental compliance managementEnvironmental compliance managementEnergy usageEnergy usageUsage of water resourcesUsage of water resourcesCircular economyCircular economyRural revitalizationContributions to the society and Rural revitalizationContributions to the societyContributions to the society and Rural revitalizationInnovation-drivenR&D and InnovationEthics of science and technology
Not applicable. The Company is engaged in the manufacture of chemical rawmaterials and products and does not operate in fields considered sensitive in termsof science and technology ethics. Therefore, this topic is not applicable.Supply chain securitySupply chain managementEqual treatment to small and medi-um-sized enterprises
Not applicable. As of the end of the reporting period, the Company’s accounts pay-able (including notes payable) did not exceed RMB30 billion and did not account formore than 40% of total assets. Therefore, this topic is not applicable.
TopicCorresponding Section in This Report
Safety and quality of products and ser-vices
Quality management of products and servicesData security and customer privacy pro-tection
Data security and customer privacy protectionEmployees
Rights, interests and benets of employees
Employee training and development
Occupational health and safetyDue diligenceCommunication with stakeholders and due diligenceCommunications with stakeholdersCommunication with stakeholders and due diligenceAnti-commercial bribery and anti-corrup-tion
Business ethicsAnti-unfair competitionBusiness ethicsVoluntarily disclosed topics under Article 5 of the GuidelinesChemical safety managementChemical safety managementCorporate governanceCorporate governanceProtection of the rights and interests ofinvestors
Protection of the rights and interests of investorsRisk control and compliant operationsRisk control and compliant operations