Environmental, Socialand Governance Report
2021 Environmental, Socialand Governance Report
/
About Zhonghuan Semiconductor 03Social Recognition and Honors 04
Social Responsibility Management System 05
Communication with Stakeholders andAnalysis of Material Topics
[Topic] Identifying Climate Change Risks andOpportunities
Pooling Team Strength 26Co-building a Better Society 33
Corporate Governance 36Risk Management and Control 38ESG Key Quantitative Performance 40Benchmarking Index Tables 43Definitions of Proper Nouns and Acronyms 47Report Preparation Instructions 48
Promoting green transformation throughtechnological innovation
Practicing Low-carbon Smart Operation
CONTENTS
关于中环股份 01环境、社会与公司治理体系 02ESG关键量化绩效 53获得荣誉 54对标索引表 55报告编制说明 56
推动低碳转型 10
应对气候变化 10创新绿色产品 12低碳智慧运营 13
创造社会价值 14凝聚团队力量 15共建美好社会 16
夯实经营管理 17
公司治理 18风险管控 19
Environmental, Social andGovernance System
Facilitating Low-carbonTransformation
Creating Social ValuesConsolidating Business
Management05082636
2021 Environmental, Socialand Governance Report
/
About ZhonghuanSemiconductor
Social Recognitionand Honors
Tianjin Zhonghuan Semiconductor Co., Ltd. (hereinafter referred to as "Zhonghuan Semiconductor" or the "Company", Stock Code002129) is a company integrating scientific research, production, operation and venture capital investment in the semiconductormaterial industry and the new energy photovoltaic industry, which has been listed in Shenzhen Stock Exchange. The Company has tenhigh-tech subsidiaries, six R&D centers at provincial and ministerial levels, one post-doctoral research station, and staffs over 10,000employees.Focusing on the "green, low-carbon and sustainable development", the Company practices the concept of automatic, intelligent andsmart manufacturing, and advances innovation in technology and product specification constantly in semiconductor material and newenergy photovoltaic industries with a view to giving back to shareholders and society while propelling its own rapid development andthe overall progress of the industry. Its products are widely applied in industries such as integrated circuits, consumer electronics, gridtransmission, wind power generation, rail transportation, new energy vehicles, 5G, artificial intelligence, photovoltaic power generationand industrial control.
◎General Information of Zhonghuan Semiconductor
Chinese Corporate Name天津中环半导体股份有限公司English Corporate NameTianjin Zhonghuan Semiconductor Co., Ltd.Major Business Lines
Semiconductor materials, new energy photovoltaic silicon wafers, photovoltaiccells and componentsHeadquarters
No. 12 East Haitai Road, Huayuan Industrial Zone (Huanwai), Hi-tech IndustrialPark, Tianjin
Main operating locations of thecompany and its subsidiaries
Tianjin Municipality, Inner Mongolia Autonomous Region, Jiangsu Province,Ningxia Autonomous RegionOwnership and Legal FormListed on Shenzhen Stock Exchange (Stock Code 002129)Organization Size13,371 employeesMembership of the Association
China Association for Public Companies, China Photovotaic IndustryAssociation(Executive Director), China Semiconductor Industry Association,China Electronics Materials Industry Association, Tianjin New EnergyAssociation
AwardAwarderForbes, 2021 The China's Most Innovative CompanyForbes Media GroupForbes, 2021 The China’s Most Sustainable EmployerForbes Media Group2021 Top 500 Chinese Brand Influencers
China Enterprise News Group and the Organizing Committee ofReleasing China Brand Influence Evaluation ResultsTop 50 Enterprises in China's Electronic Materials IndustryChina Electronics Materials Industry AssociationTop 10 Professional Suppliers of Semiconductor Materials China Electronics Materials Industry AssociationEnterprise with Standard Conditions in the Photovoltaic
Manufacturing Industry
Department of Electronic Information under the Ministry of
Industry and Information Technology2021 Top 500 Chinese ESG Excellence EnterprisesSina FinanceThe Second Batch of Intelligent Photovoltaic Pilot Demonstration
Enterprises
Department of Electronic Information under the Ministry of
Industry and Information TechnologyIndustrial Internet Benchmark Factory ProjectIndustry and Information Technology Department of JiangsuIntelligent Manufacturing Demonstration Factory ProjectIndustry and Information Technology Department of Jiangsu
2020 PVBL Top 20 Module Brand with the Most ValuePhotovoltaic Brand Lab (PVBL)
National High-tech Enterprise
Tianjin Municipal Science and Technology Bureau, JiangsuProvincial Department of Science and Technology/Departmentof Finance of Jiangsu Province/Jiangsu Provincial Tax ServiceEnterprise with Specification Announcement in the Photovoltaic
Manufacturing Industry
Department of Electronic Information under the Ministry of
Industry and Information TechnologyTianjin Leading Cultivation Enterprise in Science and TechnologyTianjin Municipal Science and Technology BureauTianjin New Little Giant with Professional, Proficient and Special
Features
Tianjin Industrial and Information Technology Bureau2021 Leading Enterprise in Wuxi Key Industrial ClustersWuxi Bureau of Industry and Information Technology
Municipal Enterprise R&D CenterHohhot Bureau of Science and Technology2021 High-tech Enterprise Selected for CultivationWuxi Bureau of Science and Technology
Hohhot Enterprise R&D CenterHohhot Bureau of Science and Technology
2021 Environmental, Socialand Governance Report
/
The Company pursues the corporate vision of " Environmental friendliness, Employee support, Social respect and Customer trust ", andpractices reform to bring work and life with more dignity to all employees and stakeholders.Integrating environmental and social responsibilities into strategic business activities, the Company prudently manages environmentaland social risks, improves the management system, strengthens supply chain management, reduces resource consumption andenvironmental emissions, facilitates innovation-driven development and cultivates innovative talents to contribute to global progress.Social Responsibility Management System
Communication with Stakeholders and Analysis of Material Topics
Effective social responsibility management is attributed to the emphasis by the senior management and the establishment of agovernance system. The Company has built a social responsibility management system that is involved by the management, iscoordinated among functional departments horizontally, and covers subsidiaries vertically. And the working team of the system iscomposed of the heads of functional departments.
According to industrial features and operating characteristics of the Company, and benchmarking the experience and practice of theindustry at home and abroad, the Company identifies shareholders, customers, employees, governments and regulatory agencies,partners, communities and the public as major stakeholders, and actively communicates with them through such channels and modesas the website, media, meetings, reports and activities.
◎Social Responsibility Management Framework of Zhonghuan Semiconductor
◎Main Stakeholders of Zhonghuan Semiconductor and Major Modes of Communication with Them
ConcernsEco-environment-ESocial responsibility-SCorporate governance-G
Responsible departments
Project ManagementDepartment, StrategicPlanning Department,Compliance ManagementDepartment, R&D Centerand Production Department
OrganizationDevelopmentDepartment andParty-Mass ServiceDepartment
Board of Directors and SeniorManagement
Items to be managed
? Managing environmentalrisks in the whole valuechain? Producing productsthat are more resource-intensive with lesspollution
? Prompting employeegrowth? Facilitating innovationand customersatisfaction? Supporting communityprosperity
? Proposing the sustainabledevelopment vision of theCompany? Developing a socialresponsibility plan of theCompany? Disclosing goals andmanagement progressinformationGoal to be pursuedThe common development of economy, environment and society
Key stakeholdersTopics of concernCommunication and response
Shareholders and senior management
Performance appraisal ofexecutives, industry development,protection of investor rights andinterests, anti-corruption
General Meeting of Shareholders,financial reports, performancereports, road shows, etc.
Customers
Customer service, product quality,R&D and innovation
Product exhibitions, customersurveys, technical seminars, B2B(e.g., E-tapeout system, WIP reportand WAT report), customer servicehotlines, customer satisfactionsurveys, etc.
Employees
Employee recruitment, talenttraining, employee retention andsafety production
Employee activities, employees'congress, corporate intranet,employee training, employeeself-service system, employeehandbook, internal corporatepublications, etc.
Governments and regulatory agencies
Compliance management,emissions management,environmental management anduse of water resource
Inspections, correspondences,policy implementation, informationdisclosure, etc.
Partners
Industrial development and greenproducts
Public bidding meetings, strategiccooperation negotiations,exchanges and mutual visits, etc.
Communities, the public and media
Community development, socialwelfare and rural revitalization
Volunteer activities in communities,social welfare projects, targetedpoverty alleviation and projectssupporting other socialundertakings
Environmental, Social andGovernance System
2021 Environmental, Socialand Governance Report
/
In 2021, the Company fulfilled inspections specific to social responsibility topics according to the Sustainability Reporting Standards(GRIStandards), domestic and international policies and standards, and considering the focuses of internal and external stakeholders, peerbenchmarking analysis results, industrial features, and strategic directions.Following the procedures of identification, evaluation and selection, the Company, cooperating with professionals, defined 20 socialresponsibility topics with strong materiality as the focuses of its actions and reports, and prioritized these 20 topics by the currenturgency.In 2021, in order to better cater to the development needs of the industry, the Company strengthened compliance managementto ensure the orderly business development and the return on investment of investors. In line with the newWork Safety Law of thePeople's Republic of China, the Company launched an information management platform for safety production, and built a dualprevention mechanism of managing and controlling safety risks by levels and identifying and tackling potential hazards to fulfill safetyresponsibility for all employees. Following low-carbon development, the Company stepped up carbon emission inspection and moreaccurate disclosure to facilitate the construction of green factories. Moreover, the Company actively expanded the achievements ofpoverty alleviation and responded to the call for rural revitalization to serve the prosperity and harmonious development of societycontinuously.
◎Table for Analysis of ESG Material Topics of Zhonghuan Semiconductor in 2021
[Topic] Actively Responding to Climate ChangeClimate change mitigation and adaptation has become one of the most pressing issues of the 21st century. Global warming continuesto increase the frequency of extreme weather events and is bringing about new policy changes globally, driving technologicalinnovation and progress across industries, and influencing a shift in green thinking among consumers and investors. Mitigating climatechange is important for companies themselves and for the world. To this end, the company is identifying its own climate change risksand opportunities, improving energy efficiency in its production processes to achieve energy savings and reduce emissions, while alsocontributing to the goals of“emissions peak and carbon neutrality”.
Facilitating Low-carbonTransformation
GovernanceStrategy
Risk management
Performanceand goals
Identifying Climate Change Risks and Opportunities
Global climate change not only results in various extreme weather phenomena, but also affects economic and social activities seriously.Paying attention to global climate change trends, the Company has identified risks and opportunities of climate change referring tothe recommendations proposed by the Task Force on Climate-related Financial Disclosures (TCFD) under the Financial StabilityBoard (FSB), and improved management according to identification results to minimize carbon footprint generated in production andoperation activities.
Stakeholders/urgencyLowMiddleHigh
InvestorsIndustrial development
Performance appraisal ofexecutivesAnti-corruption
Protection of investor rightsand interestsCompliance management
CustomersCustomer serviceProduct qualityR&D and innovation
EmployeesEmployee recruitmentTalent cultivation
Employee retentionSafety production
EnvironmentEnvironmental managementWaste management
Green productsUse of water resourceCarbon emissionmanagement
SocietySocial welfareCommunity developmentRural revitalization
2021 Environmental, Socialand Governance Report
/
Governance
Riskmanagement
Performanceand goals
Strategy
? The Company takes topics concerning climate change mitigation and adaptation as its ESG focuses.? The Board of Directors reviews climate and energy policies, and annually deliberates the analysis
and quantitative performance disclosure of climate change topics in theEnvironmental, Social andGovernance Report of the Company.? The General Manager reviews and analyzes the climate change-related affairs of the Company regularly,
summarizes the low-carbon development trend and reports the trend to the Board of Directors, andarranges guidance and resources required by relevant topics to the environmental managementdepartment of the Company.? Multiple departments of the Company work together, forming a proper organization for managing climatechange topics.? The Company identifies and analyzes major climate-related risks and opportunities, and evaluates theirpotential impact on its operation and finance.? Business units take management actions in terms of low-carbon operation, response to climate change
and natural disasters, and support for clean energy development.? The Company identifies potential risks and opportunities in its business and operational activities
referring to the TCFD risk analysis framework.? The Company identifies and defines the materiality of risks and opportunities based on their probability of
occurrence and severity of impact.? The Company works out measures for elimination, mitigation, transfer or control of different types of risks
and opportunities.? The Company collects data related to greenhouse gases emission activities regularly every year, makes
peer benchmarking and inter-annual comparison, and discloses results in the ESG Report to evaluate its
climate change management performance and formulate improvement plans.
In order to better cope with potential risks and opportunities of climate change, the Company identifies the risks and opportunities ofclimate change related to its own operation through policy survey, peer benchmarking, and reference to expert opinions, and evaluatesthe impact of risks and opportunities on its financial situation.
Climate change risks identified by the Company include three types of transition risks: policy and law risks, technical risks and marketrisks, and acute and chronic physical risks. Main opportunities include products and services, adaptability, energy source and resourceefficiency.
◎Analysis Process of Climate Change Risks and Opportunities
◎Identi?cation Matrix of Climate Change Risks and Opportunities
? Identify climate change
risks and opportunitiesrelated to the businessand operation of theCompany under the TCFDframework.
? Evaluate the impact ofclimate change risksand opportunities on thefinance and strategy ofthe Company accordingto expert opinions.
? Analyze the level ofimpact and probabilityof occurrence ofclimate change risksand opportunities, anddetermine the priorities ofrisks and opportunities.
Identi?cationEvaluationAnalysis
High
LowHighProbability of risks and opportunities
Impact of risks and opportunities
Climate-related risks
Climate-related opportunities
Acute physical risksPolicy and legal risksProducts and services
Energy source
Chronic physical risksAdaptability
Resource e?ciency
Technology risks
Physical risksTransition risks
Opportunities
Market risksReputation risks
2021 Environmental, Social
and Governance Report
/
Main risks of climate change identifiedMeasures
Risks
Transitionrisks
Policy and legal risksIncreased compliance cost to meet regulatory requirements, orlawsuits and penalties if the Company fails to meet regulatoryrequirements in environmental management.
? Take climate change asa key topic which shouldbe communicated withstakeholders through ESGreports and other channels.? Track applicable laws,regulations and policiesevery year, and make datastatistics of greenhousegas emissions everyyear to respond to policyrequirements timely.? Observe national laws andregulations in corporateactivities and throughoutthe process of productsand services, strengthensource control, facilitatethe construction of smartfactories, implement cleanproduction, develop greenand environmentally-friendly products, makerational use of resources,dispose "waste water,exhaust gas and solidwaste" responsibly, preventand control pollution.? Manage energy and waterconsumption statisticallyevery year, and implementenergy-saving projects.? Work out response plans forenvironmental emergenciesto improve the emergencyresponse capacity of theCompany.
Technology risksDirect impact of technological advancement related to cleanenergy on the business and products of the Company as a cleanenergy solution provider under the influence of climate change.
Market risks
Foreign customers raise requirements for sustainabledevelopment management and greenhouses gas emissionmanagement, as the Company develops business in bothdomestic and foreign markets. Therefore, the greenhouses gasmanagement results of the Company affect the judgment anddecision-making of customers when they engage in businesswith the Company.Reputation risksWith the transition to a low-carbon economy, stakeholdersexpect that the Company takes proactive management actionsand improves information transparency when responding toclimate change. If the Company fails to properly respond tothese demands, its reputation will be impaired.
Physicalrisks
Acute physical risksClimate change is signaled by extreme weather conditions whichbecome more severe and more frequent. The production basesof the Company in Tianjin, Wuxi, and Hohhot may be affectedby typhoons, rainstorms, ice and snow accompanied by poweroutage and flood, which may cause safety production accidentsor production suspension.Chronic physical risksClimate change will lead to global warming and rising sea levelso that the Company encounter a risk of shortage in watersources needed for production.Main opportunities of climate change identifiedMeasures
Opportunities
Opportunitytypes
Main descriptions——Products andservices
With favorable policies of carbon neutrality, the green andlow-carbon products and solutions of the Company will bepreferred by consumers better, meet the emerging needs ofcustomers, and bring more room for performance growth.
? Continue to invest in
R&D of green and low-carbon products, anddevelop energy-saving andenvironmentally-friendlyproducts and solutions tohelp customers reduce theircarbon footprint.Adaptability
The Company keeps investing in the development of low-carbon products and solutions, and works with suppliers andcustomers to build a green and low-carbon ecosystem inorder to improve its adaptability to climate change.Resourcee?ciency
The Company facilitates energy conservation and emissionreduction by improving resource use efficiency to cut itsoperating cost.Energy source
The Company replaces traditional high-carbon energy withclean energy and low-carbon energy to cut energy cost in thefuture.
Energy Management
Responding to the national strategic goals of " emissions peak and carbon neutrality" actively, the Company analyzes the energyconsumption structure of its production bases through carbon inventory. In 2021, the company conducted energy accounting in 10new energy photovoltaic and semiconductor materials subsidiaries. According to the results of the accounting, electrical energy wasthe main source of energy at each production site, accounting for more than 95% of the overall energy use. Clean energy accounts formore than 2% of all energy use.Based on the accurate analysis of energy consumption structure, the Company has implemented process improvement, equipmentoptimization and upgrading, new material R&D, and replacement of traditional materials with new ones in terms of production energy,innovating low-emission or no-emission technologies continuously in the production process. For power energy, all production bases,focusing on energy conservation in technology, management and structure, make improvements through waste heat recovery, use ofnatural resources for air conditioning and refrigeration, and equipment energy efficiency enhancement in order to reduce electricityconsumption and carbon emissions.
◎Key Energy Conservation E?orts and Achievements in 2021
Optimization of production energy consumption? Improve the process, upgrade silicon wafers to be thinner and bigger, and further thin
diamond wire saws to improve the wafer output rate? Upgrade production equipment
Optimization of energy consumption? Equip transformers with capacitor compensation cabinets additionally? Make refrigeration free of charge: Upgrade piping systems, and adopt plate heat
exchangers without power sources to enable refrigerators to short-circuit, leavingrefrigerators to stop run? Conduct frequency conversion retrofit for water pumps, exhaust fans and refrigerators
Achievement4 million
kWh electric savedthroughout the yearElectric power saved throughoutthe year
70,000 kWh
5.17 million
kWh electricsaved throughout the year
2.72 million
kWh electricsaved throughout the year1 millionkWh electric savedthroughout the year
Achievement
Source Identification of Greenhouse Gas Emissions
In 2021, the Company invited third-party organizations to conduct greenhouse gas emissions accounting in accordance withISO14064-1:2018 Greenhouse gases—Part 1: Specification with guidance at the organization level for quantification and reporting ofgreenhouse gas emissions and removals.According to the result, Scope 1 emission are mainly from fuel combustion, fugitive emissionsand process emissions. Scope 2 emissions are mainly from purchased electricity, heating consumption, steam consumption andcooling consumption.
Greenhouse gas emissions (Scope 1)Greenhouse gas emissions (Scope 2)fuel combustion, fugitive emissions and process emissions
purchased electricity, heating consumption, steam consumption
and cooling consumption
2021 Environmental, Socialand Governance Report
/
◎Social Recognition and Honors in Technological Innovation
AwardsAwardeesAwarders
National Awards
National High-tech Enterprise
Tianjin Huanzhi New Energy Technology
Co., Ltd.
Tianjin Municipal Science and Technology
Bureau,Top 50 Enterprises in China's ElectronicMaterials Industry (The Second Place )
Zhonghuan Semiconductor
China Electronics Materials Industry
AssociationTop 10 Professional Suppliers ofSemiconductor Materials (The Second
Place )
Zhonghuan Semiconductor
China Electronics Materials Industry
AssociationNational High-tech Enterprise
Zhonghuan Advanced Semiconductor
Materials Co., Ltd.
Jiangsu Provincial Department of Science
and Technology/Department of Financeof Jiangsu Province/Jiangsu Provincial
Tax ServiceMunicipal AwardsHohhot Enterprise R&D CenterZhonghuan GCL
Hohhot Bureau of Science and
TechnologyMunicipal Enterprise R&D Center
Inner Mongolia Zhonghuan AdvancedSemiconductor Materials Co., Ltd.
Hohhot Bureau of Science and
Technology2021 High-tech Enterprise Selected for
Cultivation
Zhonghuan Advanced Semiconductor
Materials Co., Ltd.
Wuxi Bureau of Science and Technology
Green energy application: Install solar panels on the roof of existing workshops with installed capacity totaling 1.2 MW,generating 290,000 kWh renewable energy, a share of 10.9% of the total electric power consumption by buildings.Automatic control: Optimize the control systems of PCW water pumps, which enables automatic control of PCW according
to the actual demand, cutting electric power consumption by 120,000 kWh throughout the year.LED lamp upgrade: Replace ordinary lamps in the workshops with energy-saving LED lamps, cutting electric powerconsumption by 170,000 kWh throughout the year.
Refrigeration free of charge: Take cooling water as a free cold source in winter to supply cooling water to equipment thatneeds cooling throughout the year, reducing the energy consumption of water chilling units in winter and cutting electricpower consumption by 2.09 million kWh throughout the year.
Tianjin Advanced Semiconductor Materials - Semiconductor Materials Business Unit: Take multiple measures,
saving 2.67 million kWh electric power throughout the year
Promoting green transformation through technological innovationDriven by China's goals of carbon peaking by 2030 and carbon neutrality by 2060, and the Paris Agreement, the global energystructure is transforming from high-carbon fossil energy to green, low-carbon renewable energy. As an important part of renewableenergy, photovoltaic power will be also taken as major energy by China in the future, embracing a sustained and rapid developmentstage. It will function as a strong impetus for the achievement of " emission peak " and "carbon neutrality". The Company is committedto realizing the rational price of photovoltaic power in global power grids by promoting the continuous reduction of photovoltaic powergeneration LCOE (levelized cost of energy) and the optimization of BOS cost based on technological innovation.
Optimization of power energy consumption? Apply green energy and lay photovoltaic cells on roofs? Upgrade LED lamps? Enable automatic control? Apply green energy and lay photovoltaic cells on roofs
610,000
kWh electric savedthroughout the year510,000
kWh electric savedthroughout the year120,000
kWh electric savedthroughout the year390,000
kWh electric savedthroughout the year
Achievement
2021 Environmental, Socialand Governance Report
/
Huansheng Imbricated Module 3.0
Extreme Clean Energy Solution
In 2021, amid the LCOE reduction and sustainable development in the photovoltaic industry, large-size and high-power products sawstrong demands and popularity in the market. Seizing the opportunity of global clean energy development, the Company consolidatedits product technology advantages, and enhanced its global competitiveness, with the development and integration of two majorplatforms of G12 large-size silicon wafer and efficient imbricated module technology as its focus.Semiconductor MaterialsFirmly adhering to the strategy of " Domestic leading, global catch-up ", the Company comprehensively benchmarking itself againstadvanced international manufacturers, continuously expanding its product lines, constructing a global marketing network in order to a"leading" brand in the global market. Zhonghuan Advanced Semiconductor Materials Co., Ltd. was awarded the 2021 Jiangsu ProvinceIndustrial and Information Industry Transformation and Upgrading Special Funds (Third Batch) Project by the Jiangsu ProvincialDepartment of Industry and Information Technology and the Provincial Department of Finance, and the Zhonghuan SemiconductorWafer Factory invested by Zhonghuan Advanced Semiconductor Materials Co., Ltd. was evaluated as the Industrial Internet BenchmarkFactory Project.In 2021, the 8-12-inch silicon wafer project of Company in Wuxi was put into production rapidly, consolidating its national industriallayout based on its manufacturing bases in Inner Mongolia, Tianjin, and Jiangsu. By the end of 2021, it achieved its set targets of themonthly production capacity of 750,000 8-inch wafers and 150,000 12-inch wafers.
New Energy Photovoltaic MaterialsIn 2021, the photovoltaic industry chain saw intensified competition. As a leader in the new energy photovoltaic silicon wafer industry,the Company has cut costs and improved unit production efficiency through technological innovation. In the production of siliconwafers, the Company has advanced wafer thinning applications and enhanced the yield of Grade A silicon wafers significantly relyingon advanced thinning and slice production experience and technology accumulation and cooperating with downstream customers. Inthe production of crystals, the Company has reduced the consumption rate of silicon materials per unit product by nearly 3% on year-on-year basis through a series of technological advancements, rising the utilization rate of silicon materials, and has eased the costpressure of downstream customers relying on G12 differentiated product advantages.
Combining advantageous resources of Inner Mongolia, Tianjin and Jiangsu, Zhonghuan Semiconductorplans to manufacture semiconductor materials, and put the project into production by 2023, with expectedmonthly production capacity reaching
1.1
million silicon wafers sized
-inch or below,
million 8
-inchsilicon wafers, and
700,000
-inch silicon wafers.
G12 solar silicon wafer products are the world's ?rst 210mm G12 ultra-large solar monocrystalline silicon wafers(diameter: 295 mm, i.e., 12 in), with the area increasedby 80.5% compared to that of conventional M2 products.As a result, the generated output per cell hits 10.01W, nearly twice the power generated by conventionalproducts. Additionally, efficient battery technology isadopted, which reduces LCOE by over 6%, and increasescomponent power up to 600 W. The Company continuesto facilitate the dual-platform technology application of"G12 + imbrication". G12 photovoltaic silicon wafers andimbrication products have become the key and effectiveproducts to realize the rational price of photovoltaic powerin global power grids.
Industrial Bases of Zhonghuan Semiconductor Materials Co., Ltd. in Jiangsu, Tianjin and Inner Mongolia
The 7 MWp Roof Distributed Photovoltaic Power Project of National Exhibition and Convention Center (Phase I) wasfully connected to the grid on January 30, 2021. The project fully adopts Huansheng high-power imbricated modules,and enables the annual average power generation capacity to reach 14.7284 million kWh, which saves 4,830.92 tonsof standard coal and reduces coal dust emissions of 4,006.12 tons, carbon dioxide emissions of 14,684.22 tons, sulfurdioxide emissions of 441.85 tons, and nitrogen oxide emissions of 220.93 tons, equivalent to new 707.55 trees.
The covered area is about
134.65 square meters.
It adopts Huansheng high-powerimbricated monocrystallinephotovoltaic modules.
2021 Environmental, Social
and Governance Report
/
Stick to R&D and InnovationAdhering to the business concept of "long-distance running" competition, the Company practices a new business mode ofcomplementing advantages each other, cooperating with powerful partners and pursuing common development globally. Furthermore,it highly respects intellectual property around the world, strives to form an independent intellectual property system by activelypromoting its independent innovation. To this end, it has launched intensive innovation, integrated innovation, joint innovation,collaborative innovation and other innovation activities in terms of technologies, products, and business activities, developing into aninternational company initially.The Company has 1 national technology center, 6 provincial and ministerial R&D centers, 2 provincial and ministerial key laboratories,10 high-tech subsidiaries, and 1 national technology innovation demonstration subsidiary. The Company has a R&D team with 1,000-odd members, including 2 with doctoral degree or above and 111 with master degree or above, a share of 11% of total technicians. Inaddition, it has employed several international expert teams and engineer teams.The Company has always stressed cooperation among enterprises, universities and research institutes. It actively builds tieswith universities and scientific research institutes in various forms, strengthens exchanges and cooperation with domestic andforeign counterparts, and effectively organizes and applies social resources to serve its own innovation and advance technologicaldevelopment and innovation of the industry.
Protect Intellectual Property
The Company values the protection of intellectual property, strengthens the use of patent information, improves innovation, and activelyapplies for patents by establishing a full-time patent team, establishibng a patent management system, and working out effective workprocedures. It also invests more fund and personnel in protecting intellectual property in order to enhance the quantity and qualityof independent intellectual property, and form an effective patent layout on core technologies and basic products dominated by corepatents for invention and based on utility model patents.In order to ensure technological innovation, and lower or avoid intellectual property control risks, the Company focuses on thetechnological investment and process innovation of imbricated module products protected by intellectual property and supported byindustry-leading technology when developing its photovoltaic module business. Also, it adopts G12 platform technology to maintain itsleading position in the performance of differentiated products.By December 31, 2021, the Company has had 975 authorized intellectual property items, including 154 patents for invention, 797 utilitymodel patents, 1 design patent, 21 integrated circuit layout designs, and 2 software copyrights, and had 613 patents under application,including 475 patents for invention and 138 utility model patents.
Improve Quality Management
Referring to the international leading quality management concept, the Company has established a quality management systemcovering the whole customer service process in its production bases, and worked out quality control procedures considering fivemain factors affecting product quality, namely personnel, machines, raw materials, methods and environment to ensure quality controlfully. By the end of 2021, the Company has passed ISO9001 quality management system certification for its ten subsidiaries includingZhonghuan Photovoltaic, Zhonghuan GCL, Zhonghuan Applied Materials, Huanou Semiconductor Materials Technology, Huanzhi NewEnergy Technology, Zhonghuan Advanced Semiconductor Materials, Huansheng Photovoltaic and Huansheng New Energy.
◎Enterprise-University-Research Institute Cooperation Programs
◎Assignment of Responsibilities in the Customer Quality Center
? The two sides cooperate to implement analog simulation and set up a laboratory. The Company verifies the
simulation results and optimizes the process according to the results acquired by optimizing parameters insimulation based on the field test results timely.
? The two sides cooperate to mainly study crystal growth, monocrystal defects, silicon wafer polishing, and
silicon wafer testing technology,etc.
The Company cooperates with Shandong University on processoptimization of "G12 large-sized silicon wafer" products.
The Company cooperates with Hebei University of Technology onR&D of silicon crystal growth technology.
Enhance Customer Service ExperienceBased on the corporate strategy of "developing into a global leader in semiconductor photovoltaic materials, and catching up andbeyond strategy in semiconductor materials", the Company set up the Customer Quality Center in 2021. Focusing on customerquality service and product standard management, the Center conducts intensive quality management in the life cycle of productsfor a balance between internal/external quality and the manufacturing link in order to enhance product quality, speed up response tocustomers, and improve customer service quality and customer experience.
? Make product quality
improvement? Conduct product changemanagement and control? Plan product quality standards? Decrease external customercomplaints
? Identify product improvement
directions? Organize standard changes? Provide technical support? Formulate product shipment
and internal control standards
? Communicate with customersregularly? Communicate external customerinformation to the internal? Conduct client-side datamonitoring and communicatemonitored results to the internal? Track customer complaints in aclosed loop
? Work out customer qualityimprovement plans? Guide factories to prepareimprovement measures? Organize internal evaluation? Hold quality analysis meetings? Evaluate BU targets
Associate Quality DirectorChief Engineer
Account Manager
? Review and file standardchanges? Optimize standards regularly? Check the implementation of BU
standards
Standard Manager
? Identify and analyze product
quality problems? Collect customer quality data? Maintain and develop customerrelationship
Resident Engineer
Product Quality Manager
2021 Environmental, Socialand Governance Report
/
In the process of customer quality service, the quality team of the Customer Quality Center, the responsible department of the factoryand the sales team carry out a series of rapid responding measures such as internal closed-loop verification at the customer informationplatform according to customer complaints, entrusted survey feedback, customer quality agreements, special customer requirementsand potential customer quality requirements identified. They work to respond to single and individual problems, and collect and tacklegeneral quality problems to continuously enhance product quality. Moreover, the Company adjusts the quality management framework,delivers quality customer service before, in and after sales in the full cycle covering order, technical review, manufacturing supervision,on-site installation, and even safety training in order to improve customer service quality. Furthermore, the Company takes preventiveactions to speed up response to customers and reduce customer complaint rate for better customer satisfaction. The results of returnvisits to customers in 2021 showed that customer satisfaction was higher than 90%.Consolidate Internal Quality Management CompetenceFocusing on the development strategy of "catching up and surpassing", the Company conducted quality management competitivenessanalysis from multiple dimensions in 2021 to explore opportunities for improving the quality system, supply chain quality, processquality, customer service quality and reliability monitoring. With these efforts, the Company has developed and implemented a strictproduct standard management process in order to ensure continuous improvement and upgrade of product standards, acquire cutting-edge technology information and customer needs timely, and improve product quality and process control. In 2021, the Companydeveloped standards for wafer and crystal products, and updated over 10 standards covering the full range of G12 products.
◎Products Standard Management Process
◎Social Recognition and Honors in Low-carbon Smart Operation
? Focus on identifying the potential product needs of customers accurately, and
try to strike the balance between the business indicators of the Company andits product performance.? Introduce new technologies, new products and new equipment to facilitatestandard changes according to customer quality feedback, peer benchmarkingresults, and the latest changes in policies, laws and regulations.? Share information through the customer information platform and the externalinformation sharing platform in the process of product standard design andmaintenance.? Allow factories to participate in the standardized evaluation of plans, andidentify, improve and optimize Loopholes.? The Customer Quality Center is responsible for approval and filing managementof standards, and each BU is responsible for publicizing and implementingstandards, and working out standards for product shipment and internalcontrol.
Identi?cation of customer needs, frontier policies, laws and regulations,and introduction of new technologies
Product standard management Product development control procedures
Product shipment standard Product internal control standard
AwardsAwardeesAwarders
Green Factory of the Year 2021 (National)Tianjin Zhonghuan Advanced
Tianjin Institute of Industry andInformation TechnologyGreen Factory of the Year 2021 (National)Huanxin
Tianjin Institute of Industry andInformation TechnologyWuxi Green FactoryZhonghuan Applied Materials
Wuxi Bureau of Industry and
Information Technology107 Efficient Imbricated Solar Cell Module
Intelligent Workshop
Huansheng
Wuxi Bureau of Industry and
Information TechnologyWuxi Intelligent FactoryZhonghuan Advanced
Wuxi Bureau of Industry and
Information Technology2021 Wuxi Intelligent WorkshopZhonghuan Applied Materials
Wuxi Bureau of Industry and
Information TechnologyGreen FactoriesAdhering to the concept of“Environmental friendliness, Employeesupport, Social respect and Customer trust”, the Company keepsits leading position in innovation worldwide of automation technologyapplication, recycling technology application, low-emission or no-emission technology in the production process in order to cut costs,improve product quality, and implement manufacturing with less labor.To achieve safety and environmental protection goals, the Companyimplements applicable laws, regulations, rules and normative documentsconcerning safety production, operates the ISO14001 environmentalmanagement system effectively, practices the "target + process" dualevaluation mechanism for safety and environmental protection, and takeseffective measures to reduce energy consumption and wastes.The Company entrusts a qualified third party to monitor all pollutantsdischarged annually according to the requirements specified inthe pollutant discharge permit. The local environmental protectiondepartment also conducts supervisory environmental inspectionsregularly. In 2021, there was no illegal pollutant discharge in theproduction bases of the Company.In 2021, the Company deployed 15 production plants in four productionbases in Tianjin, Jiangsu, Inner Mongolia and Ningxia. Ten out of themhave passed ISO14001 environmental management system certification,and three are undergoing system certification. Besides, two productionplants have been rated as national-level green factories and oneproduction plant has been rated as municipal-level green factories.
Practicing Low-carbon Smart Operation
As a new energy enterprise with the vision of "keeping environmentally friendly", the Company is obliged to support the achievementof two goals, emissions peak and carbon neutrality. For one thing, the Company strives to lessen energy consumption for production,cut emissions generated in production, better resource recycling and utilization, and take other measures to reduce carbon emissionsin the given production and operation process. For another, the Company continues to promote intelligent manufacturing, upgradeand introduce new technologies, and facilitate the application of Industry 4.0 production modes in order to enhance flexible and leanmanufacturing capacity, and contribute to environmental protection and low carbon depending on intelligent technologies.
2021 Environmental, Socialand Governance Report
/
Water Resource Management
Valuing sustainable use of water resources, Zhonghuan Semiconductor adopts an external tool - the Aqueduct Water Risk Atlas of theWorld Resources Institute (WRI) to evaluate water pressure for 15 production plants that have been put into operation nationwide.As shown by WRI data, a total of 15 production plants that have been put into operation, including 2 located in areas with extremelyhigh water pressure and 3 in areas with high water pressure for the Semiconductor Materials Business Unit, as well as 4 in areas withextremely high water and 6 in areas with high water pressure for the New Energy Photovoltaic Business Unit.
In order to weaken the dependence on local water resources, allproduction bases have made efforts to reuse water resourcesthrough collection and reuse, reuse by equipment, andwastewater regeneration. The Company has 6 production plantsthat are subject to major pollution discharge control by the localenvironmental protection department, including 5 plants thathave been announced as the pollution discharge bases underkey control for water environment. Within the above productionbases are equipped with sewage treatment stations. Theproduction waste water is treated by an independent systemuntil the treated water meets discharge requirements and thenis discharged to the local sewage treatment stations for furthertreatment.
◎Analysis of Water Pressure in the Areas Where the In-serviceProjects of Zhonghuan Semiconductor are Located
Water pressureHighExtremely high
Semiconductormaterials
New energyphotovoltaic
◎Water Conservation E?orts and Achievements of the Semiconductor Photovoltaic Business Unit
Reuse by equipment
? Water-saving renovation of the overflow tank of the washing machine for waterconservation purpose, which cuts tap water consumption by 500 tons throughoutthe year
Waste water regeneration? Regenerate production waste water
Achievement
Achievement
◎Water Conservation E?orts and Achievements of the New Energy Materials Business UnitCollection and reuse? Recycle waste water for toiletflushing? Recycle condensate water
Waste water regeneration? Recycle concentrated water? Recycle rinse water
Reuse by equipment? Recycle washing water
through Litian sand carbonfilters
Achievement
Achievement
Achievement
500 tonswater savedthroughout the year
60,000 tons
water savedthroughout the year50,000 tons
water savedthroughout the year
30,000 tons
water savedthroughout the year
180,000 tons
water savedthroughout the year260,000 tonswater savedthroughout the year180,000 tonswater savedthroughout the year
2021 Environmental, Socialand Governance Report
/
◎Pollutant Emission Management
Emission ManagementProduction bases treat exhaust gas generated in the production process in exhaust gas treatment systems before emission. Exhaustgas treatment equipment comes with two categories: organic exhaust gas treatment equipment, and acid-base exhaust gas treatmentequipment. Substances discharged from exhaust pipes after treatment meet theIntegrated Emission Standard of Air Pollutants.Hazardous wastes generated by production bases of the Company mainly include acid-containing waste liquid, waste packagingmaterials such as empty barrels, waste fillers such as waste activated carbon, waste rubber and rubber-containing waste such asplastic barrels, waste engine oil, waste mineral oil and other oily wastes. The Company employs qualified service suppliers to treathazardous wastes said through neutralization, physical and chemical process, recycling, land-filling, incineration and regeneration.General wastes generated in the production process include sludge after water treatment, silicon sludge, waste silicon wafers, wastesilicon rods and other waste products, as well as diamond wire, waste crucibles and other consumables. The Company entrustsqualified service suppliers to treat these wastes through composting, land-filling and recycling.
CategoriesTreatment
Exhaust gas
Acid and alkaline exhaust gas
Discharge exhaust gas that meets the discharge standardafter purifying and absorbing treatment in scrubbingtowers, and discharge waste water generated to thesewage treatment systemAlkaline exhaust gas (ammonia mainly)Purify exhaust gas in scrubbing towersOrganic exhaust gas
Conduct catalytic combustion for organize exhaustgas after absorbing treatment by activated carbon orconcentrating treatmentDust exhaust gas (fine silica particles mainly)Treat exhaust gas by dust control unitsWaste water
Ph (hydrogen ion concentration), COD (chemicaloxygen demand), ammonia nitrogen and fluorinion
Discharge waste water that meets the discharge standardinto the designated urban sewage pipe network aftertreatment in the sewage treatment systemGeneralwastes
Sludge after water treatment
Employ a qualified service supplier for treatment(composting or land-filling)Waste products (such as silicon sludge, wastesilicon wafers and waste silicon rods)
Employ a qualified service supplier for treatment (recycling)Consumables (such as diamond wire and wastecrucibles)
Employ a qualified service supplier for treatment (recycling)
Hazardouswastes
Acid-containing waste liquid
Employ a qualified service supplier for treatment
(neutralization and physical and chemical treatment)Waste packaging materials (such as empty barrels)Employ a qualified service supplier for treatment (recycling)Waste fillers (such as waste activated carbon)
Employ a qualified service supplier for treatment (land-
filling, incineration and regeneration)Rubber-containing waste (such as waste rubberand rubber barrels)
Employ a qualified service supplier for treatment
(incineration)Oily waste (such as waste engine oil and wastemineral oil)
Employ a qualified service supplier for treatment
(incineration and recycling)
Intelligent Factories
Apart from labor and cost reduction, intelligent manufacturing also involves a necessary path to the next generation of products andsolutions with better quality. Sticking to the concept of "Intensive innovation, integrated innovation, joint innovation, collaborativeinnovation", the Company continues to facilitate the construction of industrial automation, intelligent logistics, industrial big dataplatforms, and promote the application of Industry 4.0 production modes in the operation process and operation scenarios of itsbusiness sectors. All these efforts are made to enable its intelligent manufacturing mode, enhance its leading quality control ability andtechnical cooperation ability fully, and help it develop into a benchmark that affects the industry, leading industrial transformation andupgrading with advanced manufacturing and intelligent manufacturing to promote high-quality development of the industry.In 2021, the Company was granted five honors in the "Guang Neng Bei" Photovoltaic Industry Evaluation initiated by SOLARBE,including "Photovoltaic 'Beacon' Award", "2021 Excellent Product", "The Most Influential Photovoltaic Enterprise", "The Most InfluentialPhotovoltaic Intelligent Manufacturer" and "The Most Influential Photovoltaic Module Enterprise".
Under the background of Industry 4.0 Production, the Company improves the "Stereotype" and "Deep Blue AI" learning models of the wafermanufacturing process constantly, relying on digitization, automation and intelligence, and enhances its flexible manufacturing ability toachieve manufacturing transformation. The intelligent manufacturing progress, and lean and flexible manufacturing enhancement of theCompany contribute to the significant rise of labor productivity, continuous fall of factory operation cost, constant rise of product quality andconsistency, and effective improvement of comprehensive utilization of resources.In 2021, the company launched high-efficiency solar ultra-thin silicon monocrystalline wafer intelligent factory project of Tianjin Huanou NewEnergy Technology Co., Ltd. for the purpose of building the G12 factory following the concept of designing a intelligent chemical factory in anew generation. At the same time, in order to promote the matching of crystal production capacity, the Company has launched high-efficiencysolar ultra-thin silicon monocrystalline wafer intelligent factory project whose annual production capacity reaches 25GW ("DW Phase III") andhigh-purity solar ultra-thin silicon monocrystalline material intelligent factory project whose annual production capacity reaches 30GW ("DWPhase IV"). ("DW Phase IV"). All of these projects are designed as industrial 4.0 intelligent plants to accelerate large-scale production andlarge-scale applications of company G12 single crystal silicon products, and will create share value with upstream and downstream industrialchains.In addition, the Company designs a new production base following the Industry 4.0 system, empowering the industry with the "Deep Blue"intelligent manufacturing model, to build a benchmark factory for intelligent manufacturing. In 2021, the 3GW efficient imbricated solar cellmodule intelligent factory invested and constructed by Huansheng New Energy an intelligent manufacturing demonstration factory.
◎2021 "OPTICAL ENERGY CUP" Honors
Photovoltaic Beacon Award
The Most Influential PhotovoltaicIntelligent Manufacturer
The Most Influential Photovoltaic
Module Enterprise
2021 Excellent Product - Type-P Ultra-thinSilicon Wafer with Mass Production
The Most Influential PhotovoltaicMaterials Enterprise
2021 Environmental, Socialand Governance Report
/
◎Industry 4.0 Construction
"Stereotype" takes engineers as the core. It worksto form a process model and an operation modelrelying on practical experience and incident handlingexperience, and establish monitoring factor parameterlibrary and a stereotype model database.Combined with the "Deep Blue" learning model, theCompany enables the "adaptation" of the "stereotype"optimal solution and strengthens the flexiblemanufacturing abilities to realize flexible productionlines, flexible supply chains and flexible marketing.
Relying on the integrated management and control platform, Zhonghuan Semiconductor Silicon Wafer Factory practicesintelligent factory, information-based management and lean manufacturing to establish an information-based, digital andintelligent semiconductor wafer internet industrial benchmark factory.
Huansheng New Energy has built a new efficient imbricated solar cell modulesmart factory featuring digital, information-based, integrated and intelligent.The factory involves simulation design, an intelligent equipment platform, digitalintelligent production workshops, artificial intelligence technology application,Internet of Things construction among workshops, an intelligent informationmanagement and control platform, data collection and analysis, an advancedcontrol system, and 5G network in workshops in order to realize intelligentmanufacturing.
Focusing on Industry 3.0 and overall product qualitymanagement, the Company improves granularityin product management, and establishes a qualitymanagement system to enable traceability and controlin the product life cycle.The Company strives for lean flexibility. It continuesto propel flexible manufacturing and integrate flexibleproduction lines, flexible supply chains and flexiblemarketing under the guidance of lean managementconcept.
Zhonghuan Advanced Semiconductor Materials Co., Ltd.: An Industrial Internet Benchmark Factory
Huansheng New Energy: An Intelligent Manufacturing Demonstration Factory
? Improved management efficiency based on information: Set up MES, PLM, ERP and other systems building on platformsand work with intelligent equipment to enable optimization in production site, production management, and operationmanagement.? Whole process optimization for a new business mode: Optimize products, assets and business throughout the process,
empower intelligence into industrial equipment, production process, and better safety and environmental protectionmanagement to achieve an innovative model of business based on intelligent production.
? Flexible manufacturing in sticking, wire cutting,
degumming and cleaning, inspection and other links
? Production of thin slices, and silicon cost reduction
by 11.8%;? Rise in labor productivity by 300%
Intelligent production measuresAchievement
With employment and promotion based on abilities, a well-established pay system, employee benefits, long-term talent developmentstrategies, and characteristic cultural activities, the Company strives to help employees adapt to changes and embrace multiplechallenges actively in the future, and sticks to the“people-oriented”concept to promote the steady and quality development ofZhonghuan Semiconductor for a long term. Thanks to its sustainable business strategy and technological innovation strength, theCompany was titled“Forbes, 2021 The China’s Most Sustainable Employer”.
Pooling Team Strength
Employee Recruitment and RetentionAdhering to the people-oriented concept, the Company has worked out theRecruitment Management Procedures, theEmployeeManagement Regulationsand other regulations in accordance with applicable laws and regulations such as theLabor Law of thePeople's Republic of Chinaand theLabor Contract Law of the People's Republic of Chinato ensure that employees enjoy equal rightsin recruitment, employment, compensation, benefits, training and promotion regardless of ethnicity, gender and religious belief.The Company redoubles its efforts to protect the safety and health of female employees and minors during production. Referring totheSpecial Regulations on Labor Protection of Female Employees and theLaw of the People's Republic of China on the Protectionof Minors, the Company has formulated theSpecial Protection and Management Regulations of Female Employees and Minors.Thedocument prohibits the recruitment of minors under the age of 16 by verifying the valid identity certificates of applicants by variousmethods in employee recruitment, entry approval, entry registration and other links, and specifies labor taboos and legitimate rightsof female employees in special physiological periods such as menstruation, pregnancy and lactation period. Besides, the Companyprohibits forced labor and ensures that all employees enjoy rest days in accordance with the policies of the Company and national lawsand regulations.
Compensation and Incentive MeasuresThe Company concludes collective contracts and collective negotiation agreements on wages every year with all employees,and purchases social insurances fully for employees, including endowment insurance, medical insurance, work injury insurance,unemployment insurance and maternity insurance. The collective negotiation agreement on wages concluded in 2021 clarified theincrease of total wages and per capita wages by 13% and 17% respectively.The Company keeps improving its medium and long-term incentive mechanism and its benefit sharing mechanism between employeesand the employer to ensure the Company, its shareholders and employees share consistent interests so that all parties focus onthe long-term development of the Company and create value for shareholders. Furthermore, the Company upgrades the corporategovernance structure, and betters the long-term and effective incentive and restraint mechanism to ensure its stable and sounddevelopment for a long term, fully mobilize the enthusiasm and creativity of employees, attract and retain excellent management talentsand business talents, and enhance cohesion among its employees and its competitiveness.
Creating Social Values
Intelligent Manufacturing Factory
2021 Environmental, Socialand Governance Report
/
Bene?ts and Activities
In addition to statutory benefits such as "five social insurances and one housing fund" and "paid leaves" in accordance with nationalregulations, the Company has also developed a complete employee welfare system, including annual physical examination, holidaybenefits, employee birthdays, greetings to employees in case of marriage, childbirth, disease and retirement, and condolences toemployees in case of their deaths or the deaths of their direct relatives. Also, the Company cooperates with well-known domesticshopping platforms in in-house purchase activities among employees, allowing employees to enjoy exclusive preferential policies, inorder to improve their sense of happiness.What's more, the Company reconstructed dormitories in 2021, and completed the renovation of dormitories in Yixing and Tianjin plantsas planned. To be specific, Yixing Plant has provided 642 white-collar apartments for 562 employees and 668 blue-collar apartmentsfor 1,900 employees. Tianjin Plant has upgraded 521 rooms in the dormitory, accommodating 1,424 employees.
TheSecond Employee Stock Ownership Plan (Draft) and its Summary Proposaladopted by the Company on February1, 2021 approved the implementation of the second employee stock ownership plan. Employees participating in thisplan did not exceed 464 in total, including 7 directors, supervisors, and senior executives, and 457 other key employeesin management, technology, and marketing. Employees participating in the employee stock ownership plan totals 461,holding stocks amounting to RMB91,102,800.On 29 September 2021, the Company considered and passed the "Proposal on the Allocation of Reserved Shares of theSecond Employee Stock Ownership Plan", which proposed to allocate RMB3,987,000 of incentive fund and 7,974,000shares of the Second Employee Stock Ownership Plan to 47 incentive recipients.
In June 2021, the Company formulated and passed2021 Employee Stock Ownership Plan (Draft). In the plan, the specialincentive fund did not exceed RMB 324,120,000. The number of underlying stocks that could be purchased and heldwas capped to approximately 10.6689 million, accounting for 0.35% of the total share capital of the Company currently.Employees participating in this plan did not exceed 815, including 11 directors, supervisors and senior executives, and804 other employees at most.
In June 2021, the Company formulated and passed 2021 Stock Option Incentive Plan (Draft). In this plan, 34 employeesincluding directors, senior executives and core business (technical) employees who worked in the Company and itssubsidiaries when the plan was announced were granted 4,856,800 stock options as an incentive, accounting for 0.16%of the total share capital of the Company at that time by the exercise price of the stock options granted RMB30.39 pershare.
The Second Employee Stock Ownership Plan
2021 employee stock ownership plan
2021 Stock Incentive Plan
White-collar Apartment in Yixing Plant
The Company attaches great importance to the work-life balance of employees. In 2021, its labor unions at all levels organized 80employee activities in various forms, including vocational skills competitions, sports events, activities for festivals, fellowship activities,family day activities and interest club activities, which enhanced the cohesion among employees, increased communication amongemployees and spread Zhonghuan culture.
Building on the corporate culture accumulation of 63 years, the Company has established a corporate culture system coveringthe "people-oriented" core concept, the original aspiration of "long-lasting growth of Zhonghuan Semiconductor", the vision of "Environmental friendliness, Employee support, Social respect and Customer trust ", and the core value of "engineer-respectedculture, entrepreneurship mindset, three Don'ts, and change being better". Based on the corporate culture system, theCompany has defined business management concepts, talent management principles, organizational management principlesand business management principles. The culture system, together with concepts and principles, works to regulate and guidethe positive and negative conducts of employees.In addition, the Company makes efforts to operate its WeChat official account "Happy Zhonghuan", promote the outstandingdeeds of model figures by launching an interview column "Zhonghuan Figures", better the corporate culture IP system byupgrading Zhonghuan IP Image 2.0 Version and creating IP character derivative emojis, organize corporate cultural activities,such as "Three Cups of Coffee", peripheral products of corporate culture and Family Day activities, to provide younger andbenchmark-based communication channels, and implement clear and effective practices. Guided by the corporate culture,Zhonghuan Semiconductor strives to simulate organizational vitality, enhance the happiness of employees, and inject newmomentum into its high-quality development.
Spreading Zhonghuan Culture
Employee Group Activities, IP Zhonghuan Emoji Image
2021 Environmental, Social
and Governance Report
/
In August 2021, the labor union of the Companyorganized a vocational skills competitionthemed as "dream with ingenuity, innovationwith competition, and technological progressfor a better future". Focusing on operation andproduction, this competition included nine events,such as wire cutting for wire net, grooved sheavereplacing, furnace disassembly and cleaning,remote crystal pulling, wire disconnection by all-in-one machines. Nearly 600 participants fromTianjin, Inner Mongolia and Yixing competedfiercely on the field, with 72 front-line employeeswith excellent skills winning prizes. Thecompetition reflects the craftsmanship spirit oftechnical talents to keep improving and pursueexcellence and stimulates the vitality of theemployees in creativity and innovation fully. Theyare all contributors to the quality development ofthe Company.
Advocating the Spirit of Craftsmanship
Vocational Skills Competition
Talent CultivationIn order to establish a sound training system, inherit the corporate culture, and support the achievement of strategic goals, theCompany has set up Zhonghuan Training Center, including four sectors with eight major training courses. Four sectors include CrystalManagement College, Crystal Intelligence College, Crystal Materials College and Crystal Skills College. Building on common strategicgoals, the Management Training focuses on leadership cultivation by developing talents and overall corporate culture. The IntelligenceTraining, Materials Training and Skills Training pay attention to professional competence cultivation. Moreover, Zhonghuan TrainingCenter is provided with a number of resource sharing libraries, including lecturer library, evaluation center, course library and caselibrary, to help the Company gather experience. The online learning platform of Zhonghuan Training Center is an important move tofoster a learning organization, and shares resources with the industries/companies.
Inheriting the corporate culture and supporting the
achievement of strategic goals
Crystal Management
College
Crystal Intelligence
College
Crystal Materials
College
Crystal Skills CollegeLeadershipProfessional competence
Strategic consensus
Resourcesharing
Talent cultivationCorporate culture
Intelligent manufacturingLean manufacturing
Semiconductor materialsDevices
Team heads
New employee orientation
Platform Co-buildingOnline Learning Platform of Zhonghuan Training Center
Lecturer library
Internal trainers,college professorsand industry experts
Evaluation centerOnline + o?ine toolsEvaluation technology
certi?cation
Course libraryExternal andinternal courses
Case library
Managementand productiontechnology
◎Online Learning Platform Architecture ofZhonghuan Training Center
2021 Environmental, Socialand Governance Report
/
Increase More Talent Training Channels
In order to facilitate the growth and development of employees, to help employees to improve themselves , the Company has providedvarious talent training channels, including university-enterprise cooperation to attract talents, management training programs tocultivate new talents, and new manager training programs for talent growth.
? The Company has signed university-enterprise cooperation agreements with 5 universities, namely
Tianjin University, University of Chinese Academy of Sciences, Jiangsu University of Science andTechnology, Inner Mongolia University and Nankai University, aiming to establish scholarships, set uptraining practice bases, customize training, implement intern programs or part-time exercise programs,build student career development think tank resources, and provide employment recommendations.? In the future, the Company plans to launch university-enterprise cooperation with 35 undergraduatecolleges and 28 vocational colleges to expand talent recruitment and training channels.? One-year growth plan: The one-year training plan works to enable graduates to deeply understandthe corporate culture of the Company, integrate into the organization, grasp the role cognitionas newbies, master communication and coordination skills and improve self-management skillsso that they are able to work independently after one year. The training emphasizes on theresponsibility of graduation students for their own personal development, and values the roleof self-motivation and growth aspirations in their development. According to Rule 721 of adultlearning, the plan covers various training modes for graduates, including learning in work practicesand learning from role models (tutors), and learning in courses.? 1+X training mode:
? It is a new manager training program dedicated to internal promotion and external introduction.
The program helps new managers inherit corporate culture, improve management abilities,promote the implementation of corporate strategies, and transfer from key business employeesto managers in order to cultivate managers who are able to master strategies, pass on cultureand lead teams.? The new manager training system is characterized by normal, rolling and systematic training,and enables experiential learning and action learning to cultivate all-round talents from multipledimensions.
Intensive management and control in course learning: Strengthen supervision of learningprocess, arrange learning tasks monthly, work out learning goals and plans, and conduct scoringmanagement.Talent evaluation: Conduct evaluation every 6 months and 12 months, grant outstandinggraduates bonus as an incentive according to evaluation results, and select top 30% trainees inthe year-end elevation to join the Elite Training Camp directly.Interpersonal connection of graduates: introduction before employment, induction training, mid/final training, and "tree hole" feedback mechanism of graduates;Graduate training review mechanism: Organize the company-level graduate training reviewquarterly.Allow subsidiaries to arrange tutorial teaching, regular training interviews, symposiums and othertraining courses and other diversified growth training accompaniment independently to facilitate thegrowth of trainees.
University-enterprisecooperation
Managementtrainingprogram
New managertrainingprogram
Safety Production
The Company adheres to the safety management policy of "observing lawsand regulations, putting people first, practicing safety production and reducingoccupational risks", and complies with theWork Safety Law of the People'sRepublic of China, theLaw of the People's Republic of China on the Preventionand Control of Occupational Diseasesand other applicable national occupationalhealth and safety production laws, regulations and standards. And it hasestablished an occupational health and safety management system accordingto GB/T45001-2021, and obtained ISO45001 Occupational Health and SafetyManagement System certificates for its eight production bases.In line with occupational health and safety production laws, regulations andstandards, the Company has formulated theSafety Management Manualand 27management regulations to define safety production goals, and keeps monitoringand measuring systems by process methods to ensure its effective operation andcontinuous improvement. In 2021, the Company achieved all safety productiongoals successfully. And its 11 production subsidiaries carried out 709 safetytraining activities and 271 safety drills totally.
In 2021, the newWork Safety Law of the People's Republic of China came into force. This new version specifies information-based construction, establishment of a dual prevention mechanism involving management and control of safety risks by levels andidentification and response of potential hazards, and improvement of the risk prevention and removal mechanism. The Company furtherimproves its internal safety management system according to the above requirements.The Company has launched a safety production information management platform, providing interfaces for the Group, regions,sectors, and the Company. It includes 38 sub-modules out of 10 management modules with 80 specific work tasks. This platformhas achieved six major functions: the visualization of basic management information for safety production standardization; real-timepushing of plans/tasks and real-time tracing in the whole process; professional risk identification and control for establishment of a riskdatabase; potential hazard identification/dynamic management and control of special operations; real-time collection of dynamic safetyinformation by the system for establishment of a database; regular identification of safety production laws, regulations and standards bythe expert team for establishment of a safety think tank. The key and difficult problems in real-time safety supervision, trend analysis ofpotential hazard data and other aspects in factories were thus solved.The Company invites safety experts to promote the dual prevention mechanism of managing and controlling safety risks by levels andidentifying and tackling potential hazards, and organizes on-site training and exchanges related to the dual prevention mechanism inthe production bases of Hohhot, Yixing and Tianjin. Also, it identifies the management and control performance of safety risks by levelsin all areas, working procedures and positions to ensure that safety risk management and control is implemented fully. Moreover, itorganizes meetings on problem rectification and improvement to clarify identification methods of risks and formulating principles ofmanagement and control measures to practice identification, management and control of risks in place.
100%
100%
100%
Rate of employees' participation in
safety training
Rate of identification and rectification ofpotential security hazard
Rate of employees' participation in theemergency plans of production safety accidents
2021 Environmental, Socialand Governance Report
/
Fostering a Responsible Value Chain
In order to ensure sustainable and sound business cooperation with partners for virtuous circle, and build cooperative relationship on thebasis of trust, honesty, frankness and integrity, the Company has formulated theSupplier Management Regulations, theSupplier AuditManagement Regulations, and the Code of Conduct for Partners of Zhonghuan Semiconductor, resulting in normalized management andprocess of supplier introduction, audit, quality management and improvement. Besides, the Company has established compliance standardsand moral requirements for its business. With a clear division of duties, the Strategic Management Department, Procurement Departmentand production subsidiaries of the Company jointly participate in supplier management and audit.In supplier audit, the Company pays attention to the performance of suppliers in quality, on-time delivery rate, cost advantage,environmental protection and labor safety. For new suppliers, the Company reviews their certification of ISO14000, OHSAS18000and other environmental and occupational safety systems, and their management of hazardous substances. For existing suppliers, theCompany organizes annual supplier audits and quality audits. If suppliers are found not to meet the requirements of the environmentalsystem or the management requirements of the Company in labor and goodwill during auditing or cooperation, the Company will urgethem to rectify. If they still fail to meet the management requirements of the Company within the rectification time, the Company willstart the supplier knockout procedure.
◎Classi?cation and Quality of Raw and Auxiliary Materials Provided by Suppliers in 2021
◎Supplier Audit Principles
Class of raw and auxiliary materialsScopeQuantity
Class A
Materials, components and parts that have significantimpact on product quality
Class B
Auxiliary materials and inner packaging materials other thanClass A and Class C
Class C
Outer packaging materials and auxiliary materials that havelow impact on product quality
Consider the following aspects when selecting suppliers to be audited:
(1) Suppliers providing key materials, especially Class A materials;
(2) Suppliers with a high supply share of materials in each class, and those with insufficient supply capacity;
(3) Suppliers with frequent quality problems, and those with quality feedback that cannot be closed for a long time;
(4) Suppliers with a score less than 65 points in the annual supply evaluation.
In principle, suppliers providing Class A materials should be audited on site at least once every three years.Where suppliers do not meet the requirements of the environmental system or the management requirements of the Company inlabor and goodwill, the Company will urge them to rectify. If they still fail to meet the management requirements of the Companywithin the rectification time, the Company will start the supplier knockout procedure.
In 2021, the Company organized on-site audits for 30 qualified suppliers in such aspects as compliance with laws and regulationsrelated to environment, labor and ethics, quality management systems, and management of toxic and hazardous substances. Therewere no serious violations of laws and regulations.
Management of Con?ict Minerals
Raw materials provided by the Company’s suppliers, a semiconductor and new energy photovoltaic manufacturer, may involvemineral materials from conflict minerals. Hence, the Company requires its suppliers to fill in the Supplier Basic Information Form. Ifmineral materials from conflict minerals are involved, it is needed to investigate whether the source of mineral materials fails to meetRMI requirements referring to the updated content at the Responsible Minerals Initiative (RMI) website. If tin materials are needed inproduction, the Company requires its suppliers to provide certificates of origin if they supply tin materials to the Company to ensure thatthe tin materials used by the Company are not conflict minerals. Upon investigation, the tin materials purchased by the Company are allmined and processed in China, and there are no suppliers failing to meet the requirements.Contributing to Social ProsperityIn 2021, the first year of embracing a moderately prosperous society in all respects, the Company actively responded to expandingpoverty alleviation fruits, promoting rural revitalization and consolidating poverty relief achievements by targeted assistance. As oneof ten major targeted poverty alleviation projects determined by the State Council, poverty alleviation through photovoltaic programsplays a positive role in social development and industrial drive. With a innovative mechanism and standardized operation, the Companypractices photovoltaic programs for poverty alleviation, driving the development of labor and material resources in underdevelopedareas. Its efforts integrate new energy utilization, energy conservation and emission reduction into poverty alleviation, fully pushing therural revitalization strategy.The Company actively implements national policies, such as theOpinions of China Securities Regulatory Commission on Giving FullPlay to the Role of the Capital Market in Serving the National Poverty Alleviation Strategy, theOpinions of the National Developmentand Reform Commission on Poverty Alleviation by Photovoltaic Power Generation, and theGuiding Opinions on the Implementationof the 13
th Five-Year Plan for Renewable Energy Development.As a response, it launches poverty alleviation by photovoltaic powergeneration in Inner Mongolia, Hebei, Yunnan, Sichuan and other regions. Considering the industrial characteristics and resourceadvantages of different regions, Zhonghuan Semiconductor selects poverty-stricken regions meeting photovoltaic constructionconditions, and actively carries out photovoltaic power generation projects for poverty alleviation, driving local development
Social and environmental changes affect the development of the Company. In the context of a community with a shared future formankind, the Company upholds a responsible development attitude, and pays attention to social development. In internal operation, theCompany builds a responsible production value chain, and strengthens cooperation and management of its partners to jointly promotesustainable development. In external communication and response, the Company remains a high sense of social responsibility,contributes to society whiling developing its main business, and strives for a better society with communities.
Co-building a Better Society
2021 Environmental, Socialand Governance Report
/
Fighting Against the Epidemic with Full EffortsAfter the outbreak of the epidemic, the Company has taken combined measures for epidemic prevention and control to collectinformation concerning epidemic situation, predict and control epidemic situation properly, and minimized risks timely. At the beginningof the epidemic, the responsible department has formulated the management plan of leading cadres, the emergency plan for the supplychain, and the management plan for the personnel in the epidemic area and those passing through the epidemic area during COVID-19prevention and control period. According to deployment, the Company has made great efforts to strengthen epidemic prevention andcontrol among employees, and do a good job in workplace disinfection to ensure the personal safety of employees and the normalprogress of production and operation. Besides, the Company strives for epidemic prevention and safety, production and construction,and normal life of employees, sticking to the people-oriented concept, so as to truly implement the corporate vision of " Environmentalfriendliness, Employee support, Social respect and Customer trust ".Responding to the call of the state, the Company rises to the challenge by shouldering important responsibilities for epidemicprevention and control and industrial development. It redoubles efforts to fight against the epidemic, stabilize investment, and drivedevelopment by making steady progress in the global layout of its business sectors, which shows its firm determination to scientificepidemic prevention and the management accumulation of lean production and manufacturing capabilities, and the fulfillment ofcorporate responsibility.
scientifically and effectively. For one thing, the Company leverages land and light resources for electric power generation to improvethe regional environment and power supply structure. For another, it helps poverty-stricken population with revenue from powergeneration to contribute to the fight against poverty. Moreover, following the principle of "employing local talents", the Companyrecruits local graduates and professionals in electric power, numerical control and other relevant majors to engage in operation andmaintenance of power plants, and employs local labor force from poor families to weed and clean photovoltaic panels in power plants,solving some employment problems according to local conditions.By the end of the reporting period, the Company has constructed 6 photovoltaic power plants for poverty alleviation, which are allground-based centralized power plants, with project investment amounting to 1,055.8124 million yuan. The photovoltaic powergeneration projects implemented by the Company stably increase the income of the impoverished people to get out of poverty,effectively protect the ecological environment, and create a "multi-benefit" effect in terms of actively promoting supply-side structuralreform in the energy sector.
Corporate GovernanceAn effective governance system helps ensure the sound and continuous operation of the Company, and plays an incentive role withmore effect, allowing the internal and external members of the Company to enhance thorough understanding of the Company with aview to coordinated development. Valuing the rights and interests of investors, the Company discloses information through multiplechannels and communication modes. Furthermore, the Company works out scientific procedures for remuneration and performanceappraisal of the senior management, safeguards their rights and interests that are consistent with those of the Company, andstrengthens their enthusiasm to contribute to the Company constantly with their abilities.Protection of Investor Rights and InterestsThe Company actively discloses and communicates information to shareholders and creditors to ensure that all investors are informedof major developments affecting the business conditions of the Company timely and have access to information about the Company.To this end, the Company releases information to investors through conferences, publications and online platforms, includingannual general meetings of shareholders, extraordinary general meetings, annual and interim reports issued regularly as well asannouncements, briefings and press releases.The Board of Directors of the Company attaches great importance to the management and maintenance of relations with investors.It has established a good IRM operation system extending the responsibility of investor relations management to the Company'scontrolling shareholders, management and sponsor institutions, and deepening the scope of investor relations management to varioustypes of investors such as institutional investors, strategic investors, small and medium investors, including controlling shareholders,management and sponsor institutions. It maintains continuous communication with the capital market through various forms suchas investor hotlines, the interaction platform of Shenzhen Stock Exchange, online performance briefings, receptions of investors forsurvey.In 2021, the Company convened 4 general meetings of shareholders or extraordinary general meetings. For major projects, theCompany held investor briefings and media briefings to safeguard investor rights and interests. For major matters, the Companycommunicated with investors effectively through on-site exchanges, and Q&A meetings for media and related institutions. Besides, itorganized investors to visit the Company for survey, and attend strategy meetings, roadshows, and reverse roadshows of securitiescompanies. It answered more than 3,300 calls from investors, answered nearly 400 questions raised by investors on the interactionplatform, held 7 briefings on corporate performance and special matters, and received more than 2,000 investors.
Performance Appraisal of ExecutivesThe Company practices strict decision-making procedures for the remuneration of its senior executives. The Remuneration andAppraisal Committee is responsible for formulating the remuneration plan for senior executives, and the remuneration and performanceappraisal of senior executives should receive deliberation and approval by the Board of Directors before implementation. Theremuneration and performance appraisal of directors and supervisors should be reviewed and approved by the Board of Directors andthe General Meeting of Shareholders. In addition, the Board of Supervisors and independent directors, as a supervisory body, shouldexpress their opinions on whether the remuneration plan is conducive to the sustainable development of the Company, and whetherthere is any situation that obviously impairs the interests of the Company and all its shareholders.
Consolidating BusinessManagement
2021 Environmental, Social
and Governance Report
/
Evaluation Management
An effective performance appraisal mechanism is an important guarantee for improving the remuneration system. The Companyhas introduced a systematic and scientific performance management system to provide an evaluation basis for the remunerationof senior executives. The Company integrates KPI and CPI effectively in performance appraisal. Guided by corporate culture, CPIworks to strengthen the work style and core competence of cadres and the professional spirit of employees. KPI is mainly related toorganizational performance and personal key tasks to realize the common development of the organization and employees.
Determination Basis? Basis for Performance-related Remuneration
The Company determines remuneration according to position value and personal ability oriented to charge and value creation mainly,and performance appraisal results as a supplement. With practicing the corporate culture, the Company strengthens the responsibilityand result orientation in performance appraisal, advocates that "all resources are easily accessed by contributors ", and adopts a salarystructure of "salary + bonus + long-term incentives".? Basis for stock option incentivesIn addition to performance-based remuneration and benefits, a stock option incentive plan has been deliberated and approvedby the General Meeting of Shareholders to improve the effective incentive and restraint mechanism for a long term and better theremuneration evaluation system of the Company. The Company has introduced the stock option incentive plan dedicated to directors,senior management, middle management and core technical (business) employees. The plan functions to grant the groups saidstock options, and relate the performance results to the exercise of rights in order to motivate the work enthusiasm and creativity ofemployees.
? Remuneration and performance appraisal managementThe Company organizes the year-end evaluation for senior executives according to its operating conditions and individual performance,and determines their annual income according to evaluation results.? Stock option incentive evaluation managementThe evaluation for the stock option incentive plan mainly involves corporate performance and individual performance. The corporateperformance is the basic condition to exercise stock options and the precondition of individual performance appraisal. The Companyformulates and revises the performance appraisal indicators of all positions every year, and determines the weight and target valueof each performance appraisal indicator according to the importance of each indicator. Then, the Company makes statistics on thecompletion of performance appraisal indicators, and finally figures out the performance appraisal results of individuals.
Compliance ManagementTo practice corporate compliance governance by law, the Company fulfills a series of compliance tasks, compliance trainingand popularity in such aspects as market and trading partner compliance, protection of corporate intellectual property and corecompetitiveness, financial and tax compliance, information security, safety and environmental protection, labor employment, listingcompliance and quality control. Besides, according to the corporate strategy and the characteristics of the rapid development stage,the Company has gradually established an audit supervision, prevention and control system covering prevention before incidents,management and control during incidents, and supervision after incidents. In line with applicable laws and regulations, the Companyconducts audits in related transactions, guarantee business, fund raising, foreign investment and major engineering projects to ensurethe legality and compliance of corporate business and the truthfulness and integrity of information disclosed.Markettransactionand businesspartnercomplianceSafety andenvironmentalprotectioncomplianceInformationsecuritycompliance
Compliancetraining and
publicity
Labor safety
? To meet the needs of foreign customers on supply chain traceability, the Company employs a law firm tolaunch the supply chain traceability investigation and establish the traceability mechanism.? With the ever-increasing national supervision and punishment for monopolistic actions, the Company
gives risk warnings for anti-monopoly declaration in the legal support of projects, and cooperates withbusiness units to make anti-monopoly declarations.? In accordance with theLaw of the People's Republic of China on the Prevention and Control of SolidWaste Pollution, the Company sorts out solid waste treatment procedures and documents to improve itssolid waste treatment mechanism.? The Company works out the information security strategy based on the trade secret protection system,
and develops the data security management requirements for its digital transformation departmentpursuant to theData Security Law of the People's Republic of China.? The Company revises its corporate management regulations in terms of competition restrictions, anti-
corruption, anti-malfeasance, faithful performance of duties and personal information protection, andalso incorporates these aspects into theEmployee Handbook.? The Company works out the competition restriction management requirements and work plans for itshuman resource department.? The Company organizes the employees of all departments to receive compliance training on exportcontrol and economic sanctions, and helps the human resource department carry out training on laborprotection and competition restrictions.? The Company teams up with its subsidiaries to conduct compliance publicity focusing on trade secret
protection and learning of theConstitution.
Risk Management and ControlAs risk weaknesses restrict the overall progress of the Company to a certain extent, the Company focuses efforts on risk managementwhile developing constantly, and observes applicable compliance regulations. Furthermore, the Company has worked out a series ofregulations and rules to regulate corporate operation, reduce risks in operation procedures and moral constraints, and promote itssteady development.
2021 Environmental, Social
and Governance Report
/
Anti-corruptionThe Company makes efforts to improve Party conduct andcombat corruption, following the guideline of "addressingboth symptoms and root causes, valuing both punishmentand prevention, and giving priority to prevention". To thisend, the Company has formulated a series of supervisionand management regulations related to compliance withdisciplines and laws, including anti-corruption, such as theWorking Rules on Honesty and Self-discipline of Leading GroupMembers, theMeasures for Deepening and Standardizing theImplementation of Combating Corruption and Upholding Integrityin the Company, theManagement Regulations of ZhonghuanSemiconductor on Combating Commercial Bribes, theCodeof Conduct for Zhonghuan Semiconductor Partnersand theManagement Measures for Punishing Employees Receiving Gifts,and has released them on its intranet for popularity.In order to strengthen internal control, prevent operation risksand moral risks, and encourage, integrity of employees inkey positions, the Company has formulated the managementmeasures for employees in key positions to strengthenmanagement and rotation of key positions, supervise leaders,cadres, and employees in key positions to fulfill their duties, andhold any violators accountable. There are 2,027 employees inkey positions who have signed the Employee Integrity and Self-discipline Commitment. In addition, the Company triggers anintegrity index survey, with 3,240 participants. In the survey,the participants are asked to score the overall performanceof Zhonghuan Semiconductor, their own business sector, andfunctional departments/business modules. As a result, theintegrity index score exceeds 9 points (out of 10).
In order to build a fine Party culture and a corruption-freeParty among suppliers, prevent and control integrity risks, andenhance the awareness of integrity and self-discipline betweenthe Company and its suppliers, the Company has worked outthe Code of Conduct for Zhonghuan Semiconductor Partners
pursuant to theContract Law of People's Republic of China,theAnti-Unfair Competition Law of the People's Republic ofChina, theCriminal Law of the People's Republic of China
and other applicable laws and regulations based on the CPCCentral Committee’s eight-point decision on improving Partyand government conduct and requirements in work with honestyand integrity. A total of 632 partners have signed theCode ofConduct.In order to regulate complaint and report management, theCompany provide clear reporting channels such as e-mails,hotlines and mailboxes, and encourages employees and externalparties to report corruption cases of both enterprises andindividuals in business operation to the internal audit departmentor the audit committee, such as bribery, extortion, fraud, moneylaundering and other illegal conducts.
For protection of informers, the Company is responsible for justice and equity of the reporting process and results, and protects the personalprivacy and reporting materials of informers.
Reporting Hotline and Email of Zhonghuan
SemiconductorReporting Hotline: 23789766-3228Discipline Inspection Email: jiwei@tjsemi.com
◎Anti-corruption Supervision and Reporting Procedures
Register thereported casesimmediately.
Arrange full-timeemployees or setup a special teamto follow up andinvestigate reportedcases, and collectevidence.
Complete theinvestigation andevidence collectionwithin the prescribedtime, draw preliminaryconclusions, and reportconclusions to themanagement.
Hold meetings toreview reportedcases andinvestigation results,and work outhandling plans.
Sendconclusions toinformers.
12345
ESG Key Quantitative PerformanceTopicsItems for quantitative disclosureUnit20212020
Economy
Total assets at the end of the period100 million yuan779.79587.2Operating revenue100 million yuan411.05190.57Net profit100 million yuan40.3010.89Earnings per shareYuan1.31620.3770Cash dividends10,000 yuan35,549.0718,197.56Cash dividend plan10,000 yuan
1.1 yuan for every
10 shares
0.6 yuan for every
10 sharesR&D investment10,000 yuan257,653.9290,921.98
R&D
Proportion of R&D expenditure inoperating revenue
%6.274.77Proportion of R&D employees in totalemployees
%88.64Number of patentspiece 975732Number of patents for inventionpiece 154127Number of utility model patentspiece 797582Number of patent under applicationpiece 613518Product quality
First pass yield of products%9693Quality feedback frequencytime9401,042General quality feedback frequencytime414705Major quality feedback frequencytime50Batch feedback frequencytime1,173807
Resourceconsumptio
Electric power consumptionMWh4,414,449.083,067,424.01Natural gas consumptionm
2,880,687.82806,550.70Steam consumptionm
99,613.5527,594,561.30Water consumptionm
29,410,08814,195,157.56Including: consumption of water fromthe municipal water supply network
m
10,677,1127,299,259.31Recycle/reused water consumptionm
562,662,54716,774,292Total volume of packaging materialsused for the shipment of finishedproducts
Ton119,787,670.47Recycling volume of packagingmaterials used for the shipment offinished products
Ton289.3185.4
2021 Environmental, Social
and Governance Report
/
TopicsItems for quantitative disclosureUnit20212020
Emissions
Exhaust gas emissions10,000 m
403,632.85499,187.54Nitrogen oxide (NO
x) emissionskg95,866.2916,464.16Sulfur dioxide (SO
) emissionskg0408.35Greenhouse gas emissions (Scope 1 &scope 2)
Ton of carbondioxide equivalent
3,774,5150Of which, Greenhouse gas emissions
(Scope 1)
Ton of carbondioxide equivalent
20,597/Greenhouse gas emissions(Scope 2)
Ton of carbondioxide
3,753,918/Waste water discharge10,000 m
1,122.62941.901Non-hazardous waste dischargeTon75,208.5067,020.49Total hazardous waste dischargeTon1,050.212,968.88
Employeerecruitment
Number of employeesNo. of ppl13,37110,258Proportion of male employees%81.2779.26Proportion of female employees%18.7320.74Proportion of female executives%3030Proportion of employees under the ageof 30
%6,3864,904Proportion of employees aged 30 to 50%6,8515,236Proportion of employees over the ageof 50
%134118Proportion of employees with the Hannationality
%12,3599,572Proportion of employees with ethnicminorities
%1,012686Average wage growth rate%87.73Number of employees in need receivingassistance
No. of ppl2933
Employee
Proportion of trained employees in totalemployees
%64.9524.3By gender, Male employees%82.6376.3
Female employees%17.3723.7By function, Management%4.4841.6
Professional%44.792.5
Technology%40.6324.2
Marketing%2.201
Operation%7.9030.7
TopicsItems for quantitative disclosureUnit20212020
Employee
training
Average training hours of all employeesHour/person28.7826.8By gender, Male employeesHour/person28.0626.2
Female employeesHour/person32.1628.9By function, ManagementHour/person20.0933.4
ProfessionalHour/person1.5422.3
TechnologyHour/person1.3624.2
MarketingHour/person0.5128.2
OperationHour/person314.6020.3Number of courses at the onlinelearning platform
No.1,093910Number of traineesNo. of ppl136,47684,968
Health andsafety
Coverage of physical exam%100%100%Number of employees who died causedby work injuries
No. of ppl00Number of work injuriescase727Total working days lost due to workinjuries
Day5401,977Frequency of safety education andtraining activities
time709413Frequency of emergency drillstime271112
Corporategovernance
Number of directors in the Board ofDirectors
No. of ppl99Number of female directors in the BoardNo. of ppl44Proportion of female directors in theBoard of Directors
%44%44%Number of independent directors in theBoard of Directors
No. of ppl33Proportion of independent directors inthe Board of Directors
%33%33%Number of general meetings ofshareholders
time44Number of meetings by the Board ofDirectors
time1722Number of meetings by the Board ofSupervisors
time912Number of meetings by specialcommittees of the Board of Directors
time1623Anti-corruption
Number of completed corruptionlawsuits filed against the issuer or itsemployees
case00Number of employees receiving anti-corruption training
No. of ppl1,300270
1. Source of statistical data: Tianjin Zhonghuan Semiconductor Co., Ltd. and its subsidiaries. Such data is consistent with that in the consolidated statements
of the Annual Report. Among them, the statistics of greenhouse gas emissions are Tianjin Zhonghuan Advanced Materials Technology Co., Ltd., TianjinHuanou Semiconductor Materials Technology Co., Ltd., Huanxin Technology Development Co., Ltd., Tianjin Huanzhi New Energy Technology Co., Ltd.,Zhonghuan Advanced Semiconductor Materials Co., Ltd., Wuxi Zhonghuan Applied Materials Co., Ltd., Huansheng Photovoltaic (Jiangsu) Co., Ltd., InnerMongolia Zhonghuan Advanced Semiconductor Materials Co., Ltd., Inner Mongolia Zhonghuan GCL Photovoltaic Materials Co., Ltd., Inner MongoliaZhonghuan Photovoltaic Materials Co., Ltd.
2. In 2021, the consumption of resources (electric power consumption, natural gas consumption, water consumption, and packaging materials used for the
shipment of finished products) increased significantly compared with that in 2020 as the Company expanded its production with rising production capacity.
3. The GHG emission statistics for the GHG categories include CO
, CH
, N
O, HFCs, PFCs, SF
, NF
and follow theISO 14064-1:2018 Greenhouse gases— Part 1: Specification with guidance at the organization level for quantification and reporting of greenhouse gas emissions and removals.
2021 Environmental, Social
and Governance Report
/
Benchmarking Index TablesTheGuidelines for Social Responsibilities of Listed Companiesissued by Shenzhen StockExchangeArticles of theGuidelines for Social Responsibilities ofListed Companiesissued by Shenzhen Stock Exchange
Chapters in the ReportChapter 1 General ProvisionsArticle 2Social Responsibility Management SystemArticle 3Social Responsibility SystemArticle 4Risk Management and ControlArticle 5Social Responsibility Management SystemChapter 2 Protection of the Rights and Interests of Shareholders and CreditorsArticle 7Corporate GovernanceArticle 8Corporate GovernanceArticle 9Corporate GovernanceArticle 10Corporate GovernanceArticle 11Corporate GovernanceArticle 12Corporate GovernanceChapter 3 Protection of the Rights and Interests of EmployeesArticle 13Pooling Team StrengthArticle 14Pooling Team StrengthArticle 15Pooling Team StrengthArticle 16Pooling Team StrengthArticle 17Pooling Team StrengthArticle 18Pooling Team StrengthArticle 19Pooling Team StrengthChapter 4 Protection of the Rights and Interests of Suppliers, Customers and ConsumersArticle 20Promoting green transformation through technological innovationArticle 21Promoting green transformation through technological innovationArticle 22Promoting green transformation through technological innovationArticle 23Co-building a Better SocietyArticle 24Risk Management and ControlArticle 25Risk Management and Control
Articles of theGuidelines for Social Responsibilities ofListed Companiesissued by Shenzhen Stock Exchange
Chapters in the ReportArticle 26Promoting green transformation through technological innovationChapter 5 Environmental Protection and Sustainable DevelopmentArticle 27Promoting green transformation through technological innovationArticle 28Practicing Low-carbon Smart OperationArticle 29Practicing Low-carbon Smart OperationArticle 31Practicing Low-carbon Smart OperationChapter 6 Public Relations and Social Welfare UndertakingsArticle 32Co-building a Better SocietyArticle 33Co-building a Better SocietyArticle 34Co-building a Better SocietyChapter VII System Development and Information DisclosureArticle 36Report Preparation Instructions
TheMain Board Information Disclosure Business Memorandum - No. 1 Document: MattersRelated to Disclosure in Periodic Reports issued by Shenzhen Stock ExchangeContent inMain Board Information Disclosure BusinessMemorandum - No. 1 Document: Matters Related to
Disclosure in Periodic Reports
Chapters in the Report
1. Overview
Briefly state the purpose and concept of fulfilling socialresponsibilities by the Company.
Social Responsibility Management System
2. Fulfillment of Social Responsibilities
(1) Protection of the rights and interests of shareholders and
creditors
Corporate Governance
(2) Protection of the rights and interests of employeesPooling Team Strength
(3) Protection of the rights and interests of suppliers,
customers and consumers
Co-building a Better Society
(4) Environmental protection and sustainable development
Addressing Climate ChangePromoting green transformation through technological innovationPracticing Low-carbon Smart Operation
(5) Public relations and social welfare undertakingsCo-building a Better Society
(6) Targeted poverty alleviationCo-building a Better Society
2021 Environmental, Socialand Governance Report
/
GRISustainability Reporting Standards (GRI Standards)Indicators in GRI
Standard
Chapters in the Report
Generaldisclosure
102-1About Zhonghuan Semiconductor102-2About Zhonghuan Semiconductor102-3About Zhonghuan Semiconductor102-4About Zhonghuan Semiconductor102-5About Zhonghuan Semiconductor102-6About Zhonghuan Semiconductor102-7About Zhonghuan Semiconductor102-8About Zhonghuan Semiconductor102-12
Social Responsibility ManagementSystem102-13
Social Responsibility ManagementSystem102-16
Social Responsibility ManagementSystem102-18Corporate Governance102-20
Social Responsibility ManagementSystem102-21
Social Responsibility ManagementSystem102-22Corporate Governance102-29
Social Responsibility ManagementSystem102-30Risk Management and Control102-31
Social Responsibility ManagementSystem102-32
Social Responsibility ManagementSystem102-33
Communication with Stakeholders andAnalysis of Material Topics102-35Corporate Governance102-36Corporate Governance102-37Corporate Governance102-38Corporate Governance102-39Corporate Governance102-39Corporate Governance102-40
Social Responsibility ManagementSystem102-41
Social Responsibility ManagementSystemPooling Team Strength102-42
Social Responsibility ManagementSystem
Indicators in GRI
Standard
Chapters in the Report
Generaldisclosure
102-43
Social Responsibility ManagementSystem102-44
Social Responsibility ManagementSystem102-45Report Preparation Instructions102-46Report Preparation Instructions102-47
Social Responsibility ManagementSystem102-48Report Preparation Instructions102-49Report Preparation Instructions102-50Report Preparation Instructions102-51Report Preparation Instructions102-52Report Preparation Instructions102-53Report Preparation Instructions102-54Report Preparation Instructions102-55
Sustainability Reporting Standards(GRI Standards)Management
method
103-1Corporate Governance103-2Corporate Governance103-3Corporate Governance
Economicperformance
201-1Corporate Governance201-2Addressing Climate Change201-3Pooling Team StrengthAnti-corruption
205-1Risk Management and Control205-2Risk Management and Control205-3Risk Management and Control
Management
method
103-1
Promoting green transformationthrough technological innovationPracticing Low-carbon SmartOperation103-2
Promoting green transformationthrough technological innovationPracticing Low-carbon SmartOperation103-3
Promoting green transformationthrough technological innovationPracticing Low-carbon SmartOperation
Indicators in GRIStandard
Chapters in the Report
Materials
301-1
Practicing Low-carbon SmartOperation301-2
Practicing Low-carbon SmartOperation301-3
Practicing Low-carbon SmartOperation
Energy
302-1
Practicing Low-carbon SmartOperation302-2
Practicing Low-carbon SmartOperation302-3
Practicing Low-carbon SmartOperation302-4
Practicing Low-carbon SmartOperation302-5
Practicing Low-carbon SmartOperation
Water resourceand wastewater
303-1
Practicing Low-carbon SmartOperation303-2
Practicing Low-carbon SmartOperation303-3
Practicing Low-carbon SmartOperation303-4
Practicing Low-carbon SmartOperation303-5
Practicing Low-carbon SmartOperation
Emission
305-1ESG Key Quantitative Performance305-2ESG Key Quantitative Performance305-3ESG Key Quantitative Performance305-4ESG Key Quantitative Performance305-5Building Green Factories305-6ESG Key Quantitative Performance305-7ESG Key Quantitative PerformanceSewage and
waste
306-1ESG Key Quantitative Performance306-2ESG Key Quantitative Performance306-3ESG Key Quantitative Performance306-4ESG Key Quantitative Performance306-5ESG Key Quantitative PerformanceEnvironmentalcompliance
307-1ESG Key Quantitative Performance
Indicators in GRI
Standard
Chapters in the Report
Managementmethod
103-1Co-building a Better Society103-2Co-building a Better Society103-3Co-building a Better SocietySupplierenvironmentalevaluation
308-1Co-building a Better Society308-2Co-building a Better SocietyManagementmethod
103-1Pooling Team Strength103-2Pooling Team Strength103-3Pooling Team StrengthEmployment
401-2Pooling Team Strength401-3Pooling Team Strength
Occupational
health andsafety
403-1Pooling Team Strength403-2Pooling Team Strength403-3Pooling Team Strength403-4Pooling Team Strength403-5Pooling Team Strength403-6Pooling Team Strength403-7Pooling Team Strength403-8Pooling Team Strength403-9Pooling Team Strength403-10Pooling Team StrengthTraining andeducation
404-1ESG Key Quantitative Performance404-2Team Strength PoolingDiversityand equalopportunity
405-1Team Strength PoolingAnti-discrimination
406-1Team Strength PoolingFreedom ofassociationand collective
bargaining
407-1Team Strength PoolingChild labor408-1Team Strength PoolingForced orcompulsory
labor
409-1Team Strength PoolingLocalcommunity
413-1Co-building a Better SocietySupplier socialevaluation
414-1Co-building a Better Society
414-2Co-building a Better Society
2021 Environmental, Socialand Governance Report
/
Definitions of Proper Nouns and AcronymsProper nouns/acronymsDe?nitions
tapeout
It refers to the final result of the design process for integrated circuits (IC) or printed circuit boards(PCB) before they are sent for manufacturing.WIP(Working In Progress
It is also known as workshop production management. It refers to a product in process, an assemblyline, or a work-in-progress area of the work center to store raw materials, finished products andsemi-finished products. Usually, it means raw materials claimed that have undergone some, not all,manufacturing procedures, or that are not put into warehouses of finished products as they have notreceived quality inspection.WAT(Wafer AcceptanceTest)
It refers to the test of the special test pattern, and the application of electrical parameters to monitorwhether each process keeps normal and stable.LCOE(Levelized Cost ofEnergy)
It refers to the levelized cost of energy (power generation), generally measured in megawatt hours(MWH). It is often used to compare and evaluate the comprehensive economic benefits of electricpower generation relying on renewable energy (photovoltaic energy, wind energy, bio-energy andgeothermal energy) compared with traditional electric power generation modes (coal, natural gasand large hydro-power stations).BOS (Balance of System)cost
BOS cost refers to the cost of the system other than photovoltaic modules. It mainly covers the costof main equipment such as inverters, brackets and cables, the cost of civil engineering, installationengineering, project design, engineering acceptance, and related cost at the early stage.Imbricated moduletechnology
Imbricated module technology refers to a technology in which cells are sliced and then welded intostrings with dedicated conductive adhesive materials. Cells that are connected by imbrication haveno metal grid lines on the surface, and no gap between them. This technology makes full use of theusable surface area of modules and reduces the loss of traditional metal grid lines, thus improvingthe conversion efficiency of modules greatly.PCW(Process CoolingWater)
It refers to a process cooling water system that is mainly used for cooling process equipment.The PCW system is equipped with a chilled water system and a cooling water system that workindependently. Chilled water is provided by chillers, and exchanges heat with cooling water to coolequipment by reducing the temperature of cooling water.MES(ManufacturingExecution System)
The manufacturing execution system, as a management system for workshop production, works totransmit information to optimize production activities during the process from the issuance of thework order to the completion of the finished product.PLM(Product LifecycleManagement)
Product lifecycle management is applied within an enterprise with a single workplace or multipleworkplaces, and between enterprises with collaborative relationship in the product R&D filed. Itsupports a series of application solutions, such as information creation, management, distributionand application throughout the product life cycle. It can integrate human resources, processes,application systems and information related to products.ERP(Enterprise ResourcePlanning)
Enterprise resource planning refers to a management platform that provides decision-making andoperation means for the decision-makers and employees of an enterprise, following systematicmanagement ideas and relying on information technology.IRM(Investors RelationManagement)
Investors relation management functions to maximize the value of relevant stakeholders, win widerecognition from investors as scheduled, regulate the operation of the capital market, enable theexternal to engage in constraint on and incentive of corporate operation, maximize the value ofshareholders, protect the interests of investors, and ease pressure from regulators by managinginformation communication content and channels between a company and the financial communityor other circles according to the principles of financial communication and marketing.
Report Preparation Instructions
Time FrameThe Report is an annual report and ranges from January 1, 2021 to December 31, 2021. Some text information may be beyond thisscope and has been explained accordingly.Reporting BasisThe Report is prepared in accordance with theGuidelines for Social Responsibilities of Listed Companiesand theMain BoardInformation Disclosure Business Memorandum - No. 1 Document: Matters Related to Disclosure in Periodic Reports.The Report is prepared based on some indicators in GRISustainability Reporting Standards(GRI Standards 2016) (For details, pleaserefer to the index tables).Data InterpretationThe data and cases in the Report come from the original records or financial reports acquired from the actual business of the Company.The financial data in the Report are denominated in RMB. If the financial data here in conflicts with that in the annual financial report ofthe Company, the annual report shall prevail.
Report ScopeThe Report covers Tianjin Zhonghuan Semiconductor Co., Ltd. and its subsidiaries. Unless otherwise specified, this scope keepsconsistent with that in the consolidated financial statements of the Annual Report of Zhonghuan Semiconductor (Stock Code: 002129).
Full name of companyAbbreviation of this reportInner Mongolia Zhonghuan Photovoltaic Materials Co., Ltd.Zhonghuan PhotovoltaicInner Mongolia Zhonghuan GCL Photovoltaic Materials Co., Ltd.Zhonghuan GCLInner Mongolia Zhonghuan Advanced Semiconductor Materials Co., Ltd.Inner Mongolia Zhonghuan AdvancedWuxi Zhonghuan Applied Materials Co., Ltd.Zhonghuan Applied MaterialsTianjin Huanou Semiconductor Material Technology Co., Ltd.HuanouTianjin Huanzhi New Energy Technology Co., Ltd.HuanzhiTianjin Zhonghuan Advanced Material Technology Co., Ltd.Tianjin Zhonghuan AdvancedTianjin Huanxin Technology Development Co., Ltd.HuanxinZhonghuan Advanced Semiconductor Materials Co., Ltd.Zhonghuan AdvancedHuansheng Photovoltaic (Jiangsu) Co., Ltd.HuanshengHuansheng New Energy (Tianjin) Co., Ltd.Huansheng New Energy
Reliability AssuranceZhonghuan Semiconductor undertakes that there are no false records, misleading statements or major omissions in the Report, andthe Board of Directors of the Company is responsible for the authenticity, accuracy and integrity of the Report.Contact InformationTianjin Zhonghuan Semiconductor Co., Ltd.Tel.: +86-022-23789766Email: tjsc@tjsemi.comFax: +86-022-23789786For more information concerning the social responsibilities of the Company, please visit the official website of ZhonghuanSemiconductor (https://tjsemi.solarbe.com/).
关于中环股份 01环境、社会与公司治理体系 02ESG关键量化绩效 53获得荣誉 54对标索引表 55报告编制说明 56
推动低碳转型 10应对气候变化 10创新绿色产品 12低碳智慧运营 13
创造社会价值 14凝聚团队力量 15共建美好社会 16
夯实经营管理 17公司治理 18风险管控 19
Address: No.12 East Haitai Road, Huayuan Industrial Park, Hi-tech Industrial Zone, TianjinPostal code: 300384Tel: 022-23789787Email: investment@tjsemi.comWebsite: https://www.tjsemi.com