About This ReportThis is the second ESG (Environmental, Social and Governance)report released by Midea Group, focusing on information relatedto our economic, social and environmental sustainability. MideaGroup hopes this report will provide an opportunity to promotecommunication with our stakeholders so that we can build a betterfuture together.Reporting PeriodThe reporting period is January 1 2022 to December 31 2022.Moreover, certain events mentioned in this report, whether frombefore or after the aforesaid period, are included for the sake ofcontext and detail.Scope of the ReportThe report covers Midea Group and its subsidiaries. For theconvenience of expression, references to "Midea", "the Company"or "we" that appear in the report refer to "Midea Group".Nature of the DataThe data and cases used in the report are summarized andcounted from Midea's official documents, statistical reports andother documents.Contents of the ReportThis report is free of misrepresentations and misleadingstatements, and Midea Group guarantees the truthfulness,accuracy and integrity of its contents. The amounts disclosed inthe report are expressed in RMB unless otherwise indicated.Standards of ReportingThis report has been prepared in accordance with the SustainabilityReporting Standards (GRI Standards) issued by the GlobalReporting Initiative (GRI). Please refer to "GRI Content Index" onpage 82 for the disclosure of each indicator used in this report.Access to the ReportThis report can be downloaded from the official website of MideaGroup. If you have any suggestions and comments concerning thisreport, simply send an e-mail to ir@Midea.com. Your input will beappreciated.
Chairman'sMessage02About MideaGroup03ESGManagement05Awards81Report Index82
Address Climate Change
GovernanceStrategy and Risk Management
EnvironmentalManagement
Green StrategyMoving Towards CarbonNeutralityGreen DesignGreen ProcurementGreen ManufacturingGreen LogisticsGreen RecyclingGreen Services
R&D and Innovation
R&D SystemInnovation Capacity BuildingCommercialization ofScientific and TechnologicalAchievements
CommunityContributions
Giving Back to the LocalCommunityCare about Science andTechnology EducationSupporting Rural Revitalization
Supply ChainManagement
Responsible ProcurementConflict MineralsManagement
Quality and Services
High-quality ProductsHigh-quality Services
Talent Training & Development
Employee Rights and CareEmployee CareEmployee CommunicationEmployee Growth and DevelopmentEmployee Health and Safety
Compliance Management
Governance MechanismShareholder's InterestsCompliance with the LawAnti-corruption
2022 was destined to be an extraordinary year for Midea. In theface of great changes unseen in a century, such as the COVID-19pandemic crisis, the "dual carbon" goal challenge, marketfluctuations and emerging technologies, Midea kept up with thetrend of the times and followed its own development laws, withan eye for the present. While adhering to the corporate vision of"Bring Great Innovations to Life", we made adjustment to businessdeployments, highlighted core businesses and products, returnedto operational essence, and achieved innovation-driven growthin the face of adversity. In 2022, Midea Group ranked the 245thamong the Fortune Global 500, and 36th among Brand FinanceTech 100.During operation, Midea developed a strong sense of responsibility,actively assumed its responsibilities for environment, society andgovernance. Midea was committed to contributing to societythrough innovative products and services, and worked togetherwith suppliers to create a better life and future for consumers. Inthe meantime, we incorporated self-discipline and the sense ofresponsibility into our corporate culture and unswervingly trekkedthe path of healthy growth and sustainable development.Guided by carbon neutrality goals, Midea constantly prioritizedscientific and technological innovation, paved the way fordigital transformation, stayed firmly committed to the greenand sustainable path, continued to enhance cooperation andadvance technological innovation for the shareholders, employeesand society, and created long-term value for partners. Tobecome a global tech-driven company with five major businesssegments, namely Smart Home, Building Technologies, IndustrialTechnologies, Robotics & Automation and Digital Innovation,Midea has been devoted to the strategic focuses of "TechnologyLeadership, Direct to Users, Digitalization & Intelligence Driven andGlobal Impact", and actively worked on and invested in cutting-edge technologies. We clung to innovation and change, constantlybroke new grounds, and for ToC business, pushed forwarddigitalization and intelligence, accelerated intelligent upgradingof products and continued to develop the entire smart homebusiness. Besides, we started a second engine for developingwithout hesitation, developed ToB business in multiple sectors,areas and forms, placed equal emphasis on the ToB and ToCbusinesses, fostered new opportunities amidst crises, and openedup new horizons on a shifting landscape.When it comes to environmental governance, Midea took the"green strategy" as the core, actively advocated the concept ofgreen development, and promoted energy saving and emissionreduction throughout the entire industrial chain. In 2021, MideaGroup released its "green strategy" for the first time, committed to"reaching internal carbon peaking by 2030 and achieving carbonneutrality by 2060", integrated. "Midea has integrated itself into the
Chairman's Message
The ESG rating results released by China Securities Index are divided into 10 grades from high to low: AAA, AA, A, BBB, BB, B, CCC, CC, C and D, used to reflect theESG performance of the evaluated objects compared with their peers in the industry.
national strategy of "carbon peak and carbon neutrality", with itsefforts revolving the six pillars of "green design, green purchase,green manufacturing, green logistics, green recycling and greenservices". In May 2022, Midea Group set up an ESG Committeeto take charge of ESG related work at the group level, clearlyspecified ESG issues and included them into key annual work plansof each department, with an aim to continuously advance greendevelopment, incorporate the concept of green environmentalprotection into the full lifecycle of products, and propel greendevelopment of the industrial chain. In 2022, Midea Group receivedan "AA
" ESG rating as released by China Securities Index.In terms of social responsibility, as a responsible corporate citizen,Midea actively shared the fruits of its development to users,employees and the public while pursuing self-development.Adhering to the user-centered approach, we created a betterlife experience for users by providing high-quality products andservices, adopted an open staffing system, promoted employeediversity, formed a fair, open and inclusive organizational culture.We cared about the development of local communities, gave backto society with concrete actions, and created sustainable value in aresponsible manner.In terms of corporate governance, Midea upheld the basicprinciples of integrity, law-abiding, honesty and compliance, builta modern corporate governance mechanism, safeguarded theinterests of shareholders, and kept itself running soundly and well.We fully incorporated ESG management in business operationand management by seeing it as part of our developmentstrategies. With regard to compliant governance, we continuedto introduce changes to governance and incentive mechanisms,and strengthened compliant management with an aim to createa simple, transparent, fair and just company environment, andbuild an efficient corporate governance system. Meanwhile, weintegrated the concept of social responsibility organically withsupply chain management to form a sustainable supply chainsystem, and collaborated with our suppliers to create a better lifeand future for consumers.This ESG report of 2022 aims to realize effective communicationwith the stakeholders, receive more public oversight, and makeprogress and go hand in hand with stakeholders for a brighterfuture.Green development is not only a frontier issue when it comes tothe world's growth, but also an important factor for a businessfirm's high-quality development. On the journey to sustainabledevelopment, while building consensus and enhancing cooperationon green development, and promoting green scientific andtechnological innovation, Midea Group is willing to work togetherwith all of its employees, users, shareholders and partners for agreener and more beautiful future!
2022·MIDEA ESG REPORT
Chairman's Message
About Midea Group
Upon 54 years of development since it was founded in 1968 in Foshan City, Guangdong Province,Midea has grown into a global technologies group with five major business segments, namelySmart Home, Industrial Technology, Building Technologies, Robotics & Automation, and DigitalInnovation. At present, Midea Group has 35 R&D centers and 35 major production bases aroundthe world with approximately 160,000 employees, including nearly 40,000 overseas employees.With a number of well-known subsidiaries like Midea, Little Swan, TOSHIBA, WAHIN, BUGU,COLMO, Clivet, Eureka, KUKA, GMCC, Welling, WINONE , and WDM, the Group's products andservices benefit around 500 million users in more than 200 countries and regions worldwide.In 2022, Midea Group achieved a total revenue of RMB 345.7 billion. Over the past six years,the Group's cumulative tax payment exceeded RMB 94 billion, and its business performancecontinued to improve. In 2022, Midea Group ranked the 245th among the Global Fortune 500,moving up 43 places from the 2021 ranking. It also ranked 36th among Brand Finance Tech 100.In the context of dual circulation, domestic products replacing foreign ones and industrialupgrading, Midea Group upheld the new strategic focuses of "Technology Leadership, Directto Users, Digitalization & Intelligence Driven, Global Impact". Under the business philosophy of"Creating a Better Life through Technology", we actively worked on and invested in cutting-edgetechnologies, placed equal emphasis on the ToB and ToC businesses, and cumulatively investedR&D funds of more than RMB 5 billion in the past five years. During operation, while activelyassuming ESG responsibilities, Midea was committed to contributing to society through innovativeproducts and services, and worked together with suppliers to create a better life and future forconsumers.
Philosophy of Midea
Value
MissionVision
Embrace what's next
Aiming HighCustomer firstTransformation andInnovationTolerance and partnership
Dedication andcommitment
Integrate with theworld, to inspire your
futureBring great innovations
to life
In 2022, Midea issued green bonds of USD 450 million for the first time to facilitate theimplementation of its Green Strategy. As of December 31, 2022, 20.5% of the net funds raisedfrom the USD 450 million green bonds had been allocated to eligible green assets as defined inMidea's green financing framework. The table below shows the distribution of raised funds to eacheligible green asset category. For case details, refer to the case descriptions in this ESG report.
Eligible Green AssetCategory
Amount of Funds
Allocated
Amount of Funds NotAllocated
Environmental Benefits of Eligible Green AssetsRMB(RMB 100million)
USDEquivalent(USD 100million)
RMB(RMB 100million)
USDEquivalent(USD 100million)
Eco-efficientproduct design anddevelopment
2.950.4211.431.63
1. Midea took the lead in developing new and efficient R454B environmentally
friendly refrigerants. In 2022, it obtained the world's first efficient R454B refrigerantcertification issued by AHRI, and China's first UL Safety Certification for R454Brefrigerant. The Company also has been technically prepared for launching R454BACs.
2. With Midea's frequency conversion technology of small-volume refrigerators,
calculated based on Midea's annual sales volume of refrigerators within 300L, 325million kWh of electricity and 130,000 tons of coal consumption would be saved and324,000 tons of CO
emissions would be reduced after frequency conversion.
3. The annual performance factor (APF) of Midea's new class I energy efficiency R290
air conditioner is as high as 5.29, which is better than the national new class I energyefficiency standard (the APF is 5). This air conditioner has obtained the first sanitaryand health certificate in the R290 product industry.Energy-efficientand eco-efficientmanufacturingand processtransformation
1.920.277.441.06
Chongqing Plant of Midea Building Technologies (MBT) obtained the PAS 2060Carbon Neutral Certification; the application of frequency conversion technology suchas inverter air compressors and fans allows for an annual emission reduction of 103t;the installation of energy-efficient air conditioners with evaporative cooling systemsincreases energy efficiency by 56%.PV power plantoperation andrenewableenergy projectdevelopment
0.50.071.940.28
Phase I of the rooftop distributed PV power generation project at Midea Refrigerator'sJingzhou Industrial Park can raise the green power rate of the new plant park toover 17%. When put into operation, the project can reduce about 4,849 tons of CO
emissions each year, cutting a total of 121,200 tons of CO
emissions throughout itswhole lifecycle of 25 years.R&D, productionand projectdevelopment forcore components ofnew energy vehicles
1.090.164.230.60
Midea Welling Auto Parts' new-generation eco-friendly and energy-saving CO
ElectricCompressor adopts industry-recognized ultimate eco-friendly refrigerant R744 (CO
).At -30℃, the COP of the heat pump can be greater than 2, saving 100% more energythan a regular solution in the industry. The compressor has been designated by globalbenchmark automobile companies and will be mass-produced for vehicles in 2024.Total6.460.9225.043.58/
2022·MIDEA ESG REPORT
About Midea Group
ESG Management
SustainableDevelopment ConceptAgainst the background of rapid changes in social and business environment, Midea Groupbelieves that the establishment and perfection of an Environmental, Social and Governance(ESG) system can be beneficial to its sustainable development. We have fully incorporatedESG management into business operation and management by seeing it as part of ourdevelopment strategies. In May 2022, Midea Group set up an ESG Committee to takecharge of ESG related work at the group level, clearly assigned these work to the heads offunctional departments and included them into key annual work plans of each department.In the future, Midea will continue to advance ESG management and practice in an effortto become a long-termist on the path of sustainable development. In 2022, Midea Groupreceived an "AA" ESG rating as released by China Securities Index.
Midea Group adheres to the concept of"creating a better life for everyone in theworld", takes "Bring Great Innovationsto Life" as its vision, always stays honestand responsible, , pursues healthy andscientific development, integrates theconcept of sustainable development intoevery aspect of enterprise productionand operation, and is committed tocreating shared value together with itsstakeholders.
Environmental
Social
Governance
Midea takes the "greenstrategy" as the core, activelyadvocates the concept ofgreen development, andpromotes energy saving andemission reduction throughoutthe entire industrial chain.
Midea pays attention to the growthand development of employees,cares about community construction,brings better products and services tocustomers through scientific researchand innovation, and actively fulfills itscorporate social responsibility.
Midea upholds the basic principlesof integrity, law-abiding, honesty andcompliance, builds a modern corporategovernance mechanism, safeguardsthe interests of shareholders, andkeeps itself running soundly and well.
2022·MIDEA ESG REPORT
ESG Management
ESG Key Issues AnalysisCommunication with StakeholdersTo further improve the effectiveness and scientificity of ESG management and moreaccurately respond to the requests of stakeholders, Midea Group carried out ESG key issuesanalysis with reference to the analysis approach of substantive topics proposed by GlobalReporting Initiative (GRI). Through procedures like sustainable development backgroundanalysis, stakeholder identification, topic identification and questionnaire survey, MideaGroup identified 26 key ESG topics, including 8 environmental topics, 12 social topics and6 governance topics. These 26 topics were scored according to their importance in twodimensions: "the importance of economic, environmental and social impacts" and "theimpact on stakeholder assessment and decision-making" to form the ESG key topics matrixas the basis for the annual review of ESG performance.
Midea Group attaches great importance to the communication with stakeholders while fulfilling its social responsibilities. In its dailyoperation, Midea Group has established a mechanism for routine communication and interaction with stakeholders, and responds to thedemands of stakeholders in an open and transparent manner.
Influence on stakeholder assessments & decisions
Significance of economic, environmental, & social impacts
Governance level
Corporate governanceBusiness ethics and moralityCompliance with the lawBoard governanceShareholder equityAnti-corruption
Environmental level
Carbon emissionClimate changeResource saving/recyclingWaste managementWater resource utilizationGreen operationsGreen productsE-waste
Social level
Social responsibility management ofthe supply chainEmployee health and safetyEmployee training and developmentRemuneration and benefitsDiversity and equal opportunitiesInformation security and privacyprotectionScience and technology innovationClient experienceAccessibility of products andservicesProduct quality and safetyIntellectual property managementPromotion of industry development
Operation in compliance with laws andregulationsRespond to national policiesAbide by business ethicsCreate job opportunitiesPromote energy conservation and emissionreductionConstruct green factoriesResearch and development of energy-savinggreen products
Compliance with the lawTax payment according to lawsAnti-corruptionEmployment securityGreen development
Improve risk management and performanceevaluation mechanismOptimize governance structureTransparency in information disclosureProtection of shareholders' rights andinterests
Corporate governanceInformation disclosureShareholder equity
Protect the rights and interests of employeesProvide competitive remuneration andbenefitsRespect the diversity of the workplaceenvironmentImplement measures to ensure theoccupational health and safety of employeesBuild a sound career development channel
Legitimate rights and interestsRemuneration and benefitsDiversity and equalityHealth and safetyCareer development
Optimize the business procedureProvide intelligent proactive servicesEstablish systems and processes to protectcustomer privacyImprove product accessibilityProduct and service experience PrivacyprotectionProduct accessibility
Push forward the construction of a greenprocurement systemImprove the supplier admission andassessment mechanismSupplier social responsibility reviewPromotion of industry development
Fair procurementCommon developmentMutual benefit and win-win result
Sharing development achievementsBuild a community of shared interest withpartnersPromotion of industry developmentGood-faith cooperationFair and justIndustry development
Response and communicationExpectations and demandsStakeholder
Governments and regulators
Investors and shareholders
Employees
Customers
Suppliers
Partners
2022·MIDEA ESG REPORT
ESG Management
LOW-CARBON AND
ENVIRONMENTALLY
FRIENDLY DEVELOPMENT
Today, there are severe challenges in climate change and globalwarming is happening at an unprecedentedly fast rate. It is ashared goal of the international community to address climatechange, and governments, businesses and social organizations aretaking positive actions to significantly reduce global greenhousegas (GHG) emissions. In June 2022, China released the NationalStrategy for Climate Change Adaptation 2035, aiming to implementthe Paris Agreement
and fully integrate climate change adaptationinto economic and social development.Climate change not only affects the survival and developmentof human beings but also brings risks and obstacles to thesustainability of businesses. In response to the national strategy toadapt to climate change and in order to avoid its adverse effects,Midea has referred to the suggestions disclosed by the Task Forceon Climate-Related Financial Disclosures (TCFD) under the FinancialStability Board (FSB). By analyzing the relevant work undertaken toaddress climate change in terms of governance and strategy andrisk management, and initially identifying climate change risks andresponses, Midea strives to become a player and contributor in thelong-distance race against climate change.
Address ClimateChange
01"
To address climate change, 197 countries adopted the Paris Agreement atthe UN Climate Change Conference (COP21) in Paris on December 12, 2015.The agreement, which entered into force within a year, aims to keep a globaltemperature rise this century well below 2℃ and to pursue efforts to limit thetemperature increase even further to 1.5℃. The Paris Agreement, which tookeffect on November 4, 2016, is a legally binding international treaty.
Governance
To improve its ability to address climate change, Midea has included climate change risksinto its overall risk assessment and management system. In May 2022, Midea establishedthe ESG Committee to implement its tasks related to sustainable development. Withthe efforts of the ESG Committee, the MG Board of Directors established processes andmechanisms for climate-related risk management, clarifying the role of the Managementin assessing and managing climate risks. At the same time, the Board of Directors tookclimate risk as a specific topic to regularly discuses and review the risks posed by climatechange to the Company's business.Midea integrated the concept of addressing climate change into its Green Strategy and itscarbon peak and carbon neutrality targets. Its Green Strategy Promotion Team acted ascoordinator by regularly monitoring the dynamics of climate change risks and reporting tothe Board of Directors. In addition, a Green Strategy Construction Organization composedof various departments has been set up under the Green Strategy Promotion Group tomanage and implement regular climate change-related work and urge all departments toidentify relevant risks, take countermeasures, and include these tasks into their key annualwork plans.
2022·MIDEA ESG REPORT
Address Climate Change
Strategy and Risk ManagementThe uncertainty caused by climate change is mainly from physical risks and transition risks, of which physical risk refers to the risk of directdamage brought by climate change to economic activities, and transition risk refers to the risk that arises from a company's transition to bemore sustainable.Midea attaches great importance to the physical and transition risks that climate change will bring to its business, and continues to payattention to the impact of these risks on corporate financing capacity and cash flow. In 2022, Midea preliminarily identified and analyzed thepotential physical risks and transition risks brought by climate change and formulated countermeasures to improve its ability to adapt toclimate change.Climate Change Risks
Climate Change RisksMidea's Countermeasures
Midea's Countermeasures
Acute risks: Extreme weather such as droughts, heavy rainfall, floods, typhoons, etc. caused by climate change
Policy and legal risks
Market risks
Chronic risks: Persistent heat, drought, sea level rise, etc.
·Damage to infrastructure
·More strict government regulatory requirements
· Changes in consumption concepts
·Adapting R&D to market demands
·Increased raw material costs
·Improving sales chain management
·Hampered sales chains
· Following policies and regulations
·Carbon allowances declining year by year
·Developing green and low-carbon technologies
·Enhancing green supply chain management (SCM)
·Tightened EU packaging policy
·Strengthening information disclosure
·Increased labor costs ·Selecting sites with climate in mind
·Increased electricity costs ·Improving production lines
·Energy shortages ·Implementing energy management
·Developing emergency response plans
·Improving facility resilience
Sudden natural disasters caused by climate change can damagevarious infrastructure facilities in office areas, production parks, etc.,which may not only leads to direct economic losses and additionalcosts for operation and maintenance but also undermine thefunctions and services that the infrastructure can provide, therebyreducing its potential to generate revenue or expected socio-economic benefits.
With the implementation of the national green developmentstrategy and a series of carbon peak and neutrality policies,the government's regulations on emissions and environmentalinformation disclosure have become more stringent, which willincrease the compliance cost of businesses.
Consumers' awareness and demand for green products are raiseddue to the impact of global warming on human beings. Companiesmay lose market share and economic revenue if they fail to copewith market changes.
Stick with Green Strategy, promote green design, and developgreen and low-carbon technologies and products to meet theexpectations of the market and consumers.Climate change will directly lead to a shortage of resources andenergy, causing increasing costs of raw materials for products.
Continuously innovate technologies, reshape the service systemvia digitalization, empower and train suppliers to improve themanagement of the entire sales chain and address the sales chainrisks posed by climate change by multiple measures.Extreme weather will hamper the distributors' sales chain such asphysical stores and goods transportation, leading to economic lossand additional costs throughout the whole sales chain.
Pay continuous attention to laws and policies about climatechange and carbon peak and neutrality, and adjust operationsplans according to the latest policies and trends to adapt to theregulation situation in a timely manner. In addition, keep track ofthe development, carbon allowances and prices in the carbonmarkets at home and abroad, and develop reasonable emissionreduction plans.With the establishment and improvement of carbon emissiontrading market in China, the competent authorities may graduallycut down the issuance of carbon allowances or bring up its priceto push for the emission reduction targets, This will increasethe emission control costs and production costs of businessesand supply chains, and affect their production plans and energyconsumption structure.
Develop and apply green and low-carbon technologies throughoutthe product lifecycle, continuously improve energy efficiencyand the proportion of clean energy, and reduce the energyconsumption per unit of product, so as to fundamentally cutMidea's carbon emissions and better adapt to domestic andforeign carbon market supervision.Continuously increase the awareness of green SCM, specifycorporate social responsibility requirements for suppliers in theprocess of procurement, manufacturing, sales, recycling andlogistics, to effectively control the possible risks of the supply chainin the environment, society and other aspects and build a greensupply chain system.
As the EU vigorously develops a circular economy, the laws andregulations on product packaging become increasingly strict, suchas restricting the use of plastic in packaging of certain productsand imposing tax on disposable plastic packaging. This mayincrease businesses' costs of product packaging and export.
Disclose environmental information in accordance with domesticand international compliance requirements, regularly publish ESGreports with reference to international frameworks and standardsfor sustainable information disclosure, and strengthen stakeholdercommunication.
Extreme climate conditions may be unfavourable for employees'work (such as heatstrokes caused by a prolonged stretch of heat),which may affect labor capacity, reduce productivity, and increaselabor costs.
When selecting the location of office areas and production parks,consider natural conditions such as geography and climate, andevaluate the possible impact of natural factors on production,warehousing, and employee working environment, in a bid tominimize the possibility of production being disturbed by climate.On the power production and supply side, if the operating costsincrease due to the power system being affected by naturalstressors such as extreme temperature and long-term watershortage, electricity prices may rise, resulting in increasedelectricity costs for businesses.
Reduce the impact of human and natural factors on productionefficiency by adopting automation/digital equipment and improvingproduction operation processes, etc. to ensure the stability andconsistency of the production process, thus enhancing productionefficiency and cutting production costs.Resource shortages caused by climate change may disrupt energysupplies, affecting the production and business continuity of thecompanies. Besides, if abnormal weather affects the renewablepower generation facilities such as photovoltaics and wind energywhich play a major role in the energy transition, businesses will alsobear higher costs in their clean energy deployment.
Pay continuous attention to the energy structure of businessoperation areas, promote electricity saving measures, attachimportance to the development and application of energy-saving and emission-reduction technologies, improve the energyefficiency of office areas and factories, and reduce operating costs.
Comprehensively assess the impact of possible sudden naturaldisasters on infrastructure during daily operations, and improveemergency response capabilities by formulating emergencyresponse plans and carrying out equipment safety inspections andemergency drills.Include climate risks into the early planning, design, construction,operation and maintenance of infrastructure, and improve theadaptability of infrastructure to climate change with advancedtechnologies such as digitalization and intelligence.
Physical risks
Transition risks
2022·MIDEA ESG REPORT
Address Climate Change
Climate Change RisksClimate Change RisksMidea's CountermeasuresMidea's CountermeasuresTechnical risksReputational risks
·Technological transformation in the industry ·Negative feedback from stakeholders ·Strengthening technology R&D ·Proactively communicating with stakeholders
·Increased R&D costs ·Compliance risks in information disclosure ·Evaluating R&D risks
Climate change brings challenges to product quality assurance,and technological transformation is necessary to ensure productquality. At the same time, as climate change issues push peercompanies to innovate technologies, businesses may facesetbacks in their core competitiveness.
As society continues to focus on climate change issues, businesseslagging behind in addressing climate change or failing to discloseinformation related to the management of climate changerisks timely may have to face reputational risks for not meetingstakeholders' expectations.Establish globally competitive R&D capabilities and safeguardmechanisms based on a sustainable innovation and R&D system.Systematically train talents to build leading capabilities and maketechnological breakthroughs while promoting the technologystandardization strategy.
Attach importance to communication with stakeholders in theprocess of fulfilling social responsibility, establish a mechanismfor routine communication and interaction, and regularly respondto the demands of each stakeholder in an open and transparentmanner.The uncertainty caused by climate change may interrupt acompany's original R&D plans or lead to failure of investment innew technologies, causing the company to bear greater economiclosses in its green transformation.
A company's failure to disclose ESG information in a compliantmanner or its insufficient low-quality disclosures may affectinvestors' reasonable judgment of the company, which then mayhinder its compliant and robust operation.Establish project risk control mechanisms and managementmethods for R&D, to effectively identify, assess, transform,supervise and control risks and achieve commercial and technicalobjectives in R&D.
Transition risksTransition risks
2022·MIDEA ESG REPORT
Address Climate Change
Based on the mission of "building a green global supply chain,providing green products and services, and jointly building a greenplanet", Midea integrates the concept of sustainable developmentinto every step of its production and business operation. Itdeepens environmental management under the guidance of itsGreen Strategy, leads the industry to reduce the impact on theenvironment while focusing on developing environmentally friendlytechnologies and products, and works with stakeholders to build agreen and low-carbon society.
EnvironmentalManagement
02"
Green StrategyIn 2021, Midea unveiled its Green Strategy, unswervingly pushing forward the green transformationof the industry with a focus on six aspects of green development: Green Design, Green Purchasing,Green Manufacturing, Green Logistics, Green Recycling, and Green Service. In 2022, Mideacontinued to promote its Green Strategy. On the basis of building a green technology standardsystem and operation management, it applied digitalization to upgrade green manufacturingmodels.
Midea's Green Strategy
Create a green global supply chain,and provide green products and services to build a green
and better home for mankindPromote the "3060" strategy to have carbon peaking
by 2030 and achieve carbon neutrality by 2060
GreenDesign
Vision
andObjec-tives
GreenPurchase
GreenManufac-turing
GreenLogistics
GreenRecycling
GreenServicesEnergy saving, water saving, material saving, land saving, low carbon, environment-friendly, new energy, recycling, ecology, healthy, safe and sustainableEstablish a green technology standard system
SixPillarsSystemFoun-dation
Performance Highlights
1101.036
142.15
National and industry greenstandards that Midea hasparticipated in the development
Used home appliances recycled
National green plantsAnnual PV power generation
Up 48.06% over 2021
million kWh
million units
2022·MIDEA ESG REPORT
Environmental Management
Moving Towards Carbon Neutrality
In response to the national strategy of"carbon peak and neutrality", Midea Groupaims to peak company-wide carbonemissions by 2030 and achieve carbonneutrality by 2060. To realize its carbonpeak and neutrality goals, Midea hasdivided the carbon neutrality path intofour stages, and will gradually promotecarbon peaking and carbon neutralitytasks in a cycle of every 10 years from2021.The 14th Five-Year Plan period is criticalfor China to peak carbon emissions. Inthis context, Midea has formulated a four-stage strategy for its green developmentbefore 2030 based on its own carbonneutrality path, which requires it to checkits emission status, formulate standards,review results, conduct strict appraisals,and ensure goal achievement.Controlling energy consumption andreducing GHG emissions from the sourceare essential for Midea to move towardcarbon neutrality. It follows the principleof "prioritizing green power generationwhile cutting emissions with carbon offsetas supplement", and builds "zero-carbonplants" with a variety of methods. In 2022,three of Midea's plants were granted acarbon neutrality certificate.
Midea's Four-stage Strategy for Green Development
Green Manufacturing Organizational Planning (2021-2022)
·All entities' plants check their carbon emissions and be clear about theircarbon status ·Set low-carbon development goals·Establish rules related to carbon peak and green plants construction, andspecify the management mechanism
Green Manufacturing System Building (2022-2023)
·Establish a mechanism for carbon emission management, plan andimplement low-carbon development paths by value chain, and peakcarbon emissions ahead of schedule·Continuously monitor relevant indicators and parameters and improvecarbon emission control models ·Adopt digital management system
Green Manufacturing Compliance and Applications (2023-2025)
·Peak carbon emissions according to regional requirements, ensurecompliance and apply for green plants ·Facilitate early carbon peaking of other regional plants·Participate in/lead the development of green standards in the homeappliance sector
Green Manufacturing Capacity Building (2025-2030)
·Build green plant capabilities and offer services ·Explore carbon neutrality roadmap and implementation plans for Midea·Seek broader cooperation in the field of carbon neutrality and producesoftware and hardware solutions
Chongqing Plant of Midea Building Technologies (MBT) obtained thePAS 2060 Carbon Neutral CertificationChongqing Midea General RefrigerationEquipment Co., Ltd. (hereafter referred to as"Chongqing Plant") formulated carbon emissionmanagement plans based on carbon emissiondata, and achieved most of the carbon reductiongoals through active methods such as innovatingenergy-saving technologies, increasing theproportion of renewable energy utilization, andimplementing digital energy management. Forthe part of emissions that could not be reducedfor the time being due to process reasons,Chongqing Plant adopted carbon offset toensure zero emissions and finally received thePAS 2060 Carbon Neutral Certification.
Three Zero Carbon Actions of Midea's Chongqing Factory
1.System-level process improvement + digital and intelligent energy management
2.Carbon managemen
3.Green transformation of energy structure
·The application of frequency conversion technology such as inverter aircompressors and fans allows for an annual emission reduction of 103t· With high-frequency sensor technology and low-temperature pretreatmentcleaning technology replacing or reducing the combustion of fossil fuel, theannual emission reduction reaches 264t·The installation of energy-efficient air conditioners with evaporative coolingsystems increases energy efficiency by 56%·More than 500 lighting spots have been replaced with LED energy-savinglighting applications, reducing the lighting energy consumption of thewhole plant by 25% year-on-year·· The introduction of digital energy management and carbon managementmodules increases energy efficiency by 10%·BIPV solutions adopted in office buildings enable independent powersupply for office lighting·The application of solar street lights allows for near-zero carbon emissionsof outdoor lighting in the park·A 3MW PV power generation system has been introduced, and it is possiblethe capacity will be enlarged in the later stage·For the part where full emission reduction is impossible (such as carbonemissions caused by the combustion of fossil fuels and employeeactivities), new energy green power, digital management, and employeecarbon credit management are adopted to ultimately achieve the carbonneutrality goal.
Carbon Neutral Certification of
Midea Chongqing Plant
Midea Chongqing Plant2022·MIDEA ESG REPORT
Environmental Management
Green DesignGreen ProductsGreen Technology
Guided by the strategic focus ofTechnology Leadership and GreenStrategy, Midea sticks to green design andis committed to comprehensively reducingcarbon emissions throughout the wholelifecycle of products by developing green,advanced technologies and productsand participating in the formulation ofrelevant standards for green design, etc.,thus improving the green and low-carbonlevel of the industry and driving greenconsumption.
Taking theGeneral Rules for Green Product Evaluation (GB/T 33761-2017)as a guideline, Midea integrates green concepts into thewhole lifecycle of its products. To meet the needs of every user for a comfortable, intelligent and low-carbon life, the Company innovatestechnologies and develops products based on user needs, and its upgrades are in line with the highest energy efficiency and greenstandards.In 2022, Midea focused on promoting technological innovation and green technologies andwas dedicated to leading the green design concept by expanding research on green andlow-carbon technologies. In line with its technology strategy, Midea implemented a numberof green technology projects such as ultra-efficient components, environmentally friendlyrefrigeration technology, energy storage technology, green materials and heat pumps, andcontinued to deepen the research and application of green technologies.
Mass production of new class I energy efficiency R290 air conditioners
CO
electric compressor of Auto Parts
Frequency conversion technology of small-volume refrigerators
To reduce the harm caused by traditional refrigerants to the environment, the application of new environmentally friendlyrefrigerants has become a significant topic in refrigeration and air conditioning. Hydrocarbon refrigerant R290 is known asan "environmentally friendly refrigerant with the most potential" because it is fluorine-free, chlorine-free, low-carbon, andenvironmentally friendly in nature. As one of the first companies in China to research on the application of R290 refrigerant in airconditioning, Midea has been studying on R290-related technology since 2008. On September 7, 2022, Midea's new class I energyefficiency R290 air conditioners rolled off the production line in MG AC's Wuhu Plant, marking the birth of the world's first mass-produced new class I energy efficiency product in the field of R290. The annual performance factor (APF) of Midea's new class Ienergy efficiency R290 air conditioner is as high as 5.29, which is better than the national new class I energy efficiency standard (theAPF is 5). This air conditioner has obtained the first sanitary and health certificate in the R290 product industry.
To facilitate the green development of the electric vehicle industry, Midea'sWelling Auto Parts has developed a green product — CO
rotor electriccompressor based on the traditional fuel vehicle air conditioning system. Thisis a heat pump electric compressor using natural refrigerant carbon dioxide.As an innovative technology for efficient heating in low temperature, thiscompressor allows for a more energy-saving solution with a longer cruisingrange for the thermal management of the cockpit, the battery and drivesystem. Compared with traditional heat pumps, new energy vehicles equippedwith carbon dioxide heat pump air conditioners can maintain energy-efficientheating in an environment below -30°C, which increases its cruising rangeby 20%. In addition, as a natural green refrigerant, carbon dioxide can meetthe low-carbon and environmental protection needs in the field of car airconditioning.
Among refrigerator products, inverter refrigerators are popular amongmore and more consumers because they can effectively reduce energyconsumption. However, there are not many small-volume inverterrefrigerators within 300L, and the main bottlenecks facing them are costs andinstallation space. To provide consumers with more diversified energy-savingrefrigerators, Midea has been improving the frequency conversion technologyof small-volume refrigerators and has created three frequency conversioncontrol platforms, i.e., mini, micro and nano by refrigerator volume. In addition,Midea adopted 12-slot, 8-pole permanent magnet synchronous motors tooptimize the efficiency and size of the compressor, and ensured the smallsize and low cost of the entire frequency conversion control system byadopting an integrated compressor control design. For energy conservationand emission reduction, calculated based on Midea's annual sales volume ofrefrigerators within 300L, 325 million kWh of electricity and 130,000 tons ofcoal consumption would be saved and 324,000 tons of CO
emissions wouldbe reduced after frequency conversion.
CO
Electric Compressor of Midea's Welling Auto Parts
Midea's Green Product Implementation Pathe
Greenproducts
Resource saving
Quality improvement
Energy utilization
Environment protection
Reduction and recyclingof materials, packaging
Product durability, health
issue, etc.
Efficiency improvementand energy saving duringmanufacture or usage
Strictly control the hazardous
materials and pollutionsgenerated during usage
Midea Launching Ceremony of the World's First New Class I
Energy Efficiency R290 Air Conditioner
Production Line of Midea R290 ACs
2022·MIDEA ESG REPORT
Environmental Management
Guided by carbon peak and neutralitypolicies, Midea aims to provide low-carbon solutions at the product leveland attaches great importance to themanagement of product carbon footprint
.It sets up platforms for calculating productcarbon footprint to ensure its traceabilityand provide accurate information onproduct carbon footprint to quantifyoutcome of carbon reduction measures.In addition, Midea builds partnerships onproduct carbon footprint methodologiesto facilitate the establishment ofstandards and rules, thus creating a levelplaying field in the industry. In 2022, the"Carbon Footprint" Theoretical Researchand Demonstration Application Projectjointly promoted by Midea and ChinaNational Institute of Standardization hasyielded phased results as the first projectin the industry to systematically completethe carbon footprint and carbon reductionevaluation of typical air conditionerproducts.In terms of green product certification,Midea actively advances greencertifications such as national greenproduct certification, national greenbuilding materials certification, and low-carbon product certification. In 2022,Midea's ACs, washing machines andrefrigerators were granted the NationalGreen Product Certificate. Many of itsproduct categories such as VRFs, floor-standing ACs, and split wall-mounted ACswere granted the National Green BuildingMaterials Certificate, and its householdACs, VRFs, washing machines, microwaveovens and other product categoriesobtained the Product Carbon FootprintCertificate.
Developing low-carbon and green refrigerators
Releasing the world's first environmental productdeclaration (EPD) for air conditioner
Midea joined hands with Covestro, a world-renowned material manufacturer,to launch two low-carbon and green refrigerators (models BCD-439WFPZMand BCD-516WFGPZMA) in 2022, which adopt low-carbon footprintpolyurethane certified by ISCC PLUS
as the insulation material. Containingup to 60% of biomass-based raw materials, this low-carbon footprintpolyurethane can reduce carbon emissions by 60% compared with fossil-based polyurethanes. In terms of performance, both BCD-439WFPZM andBCD-516WFGPZMA meet the relevant requirements of energy-saving (reachingclass I energy efficiency) and health (containing no more than 1,000 mg/kg ofharmful substance), and have obtained the China Green Product Certification.The cooperation between Midea and Covestro on low-carbon, greenrefrigerators marked the entry of low-carbon footprint polyurethane productsinto the green consumption market. Following the sustainable developmenttrend of this era, Midea is committed to strengthening cooperation on low-carbon materials and bringing green products to more families.
Working with the trustedinternational authorizationorganization T?V S?D, Mideahas registered and published theworld's first EPD for air conditioningproducts on September 26, 2022.Based on lifecycle assessment,EPD shows the environmentalimpact of a product or serviceon non-renewable resources,ecosystems, human health, etc.throughout its lifecycle. As aninternationally recognized "green IDcard", this EPD provided by Mideato consumers and purchasingagents is transparent and verifiedby multiple parties, and is able tomeet the needs of stakeholders.
Midea's Green, Low-carbonRefrigerators
Green Product Certificate for Midea's
Refrigerators
Midea's EPD on AC
Product carbon footprint covers the totalamount of GHG emissions generated by aproduct throughout its lifecycle from raw materialmining to end-of-life.
International Sustainability and CarbonCertification (ISCC) PLUS is the most widelyrecognized certification in circular economyand bioeconomy. Companies demonstrate thetraceability of recycled and bio-based materialswith ISCC PLUS. In the mass balance approach,raw materials derived from biomass or wasteare mixed with fossil raw materials and thenmathematically distributed to end products toreduce greenhouse gas emissions.
Green Standards
Guided by its Standardization Strategy and Green Strategy,Midea continues to advance green standards, contribute to theimprovement of green standards and push for the commonprogress of the industry. In 2022, Midea led and participated inthe development of 110 national and industry green standardscovering carbon emissions, ESG and green product evaluation.At the same time, by referring to relevant national and industrystandards, Midea has formulated green standards for 16 productcategories to help push forward the green transformation of theindustry. In 2022, Midea was selected as an Enterprise StandardsFrontrunner by China National Institute of Standardization forfive consecutive years, and 37 of its standards were awarded asEnterprise Standards Frontrunner.For standardization honors, Midea won one 2022 China StandardInnovation and Contribution Award granted by the StateAdministration for Market Regulation and the StandardizationAdministration of China, one Organizational Standard InnovationAward and one Individual Standard Innovation Award at the 3rdScience and Technology Award selection of the China Society forthe Promotion of Science and Technology Commercialization. Itwas also recognized as a Standardization Demonstration Enterprisein the field of industrial informatization in Anhui Province, andwas selected as the one of the first group of InternationalStandardization Expert Studio Projects in Foshan City.
Midea was granted the first Enterprise Standards Frontrunner
certificate in the air conditioning industry
2022·MIDEA ESG REPORT
Environmental Management
Green Procurement
Energy Conservation and Carbon Emission Reduction
Hazardous Substance Control
Midea integrates the concept of sustainable development into its procurement strategy and related business processes and is dedicated tocreating a green procurement system with a focus on reducing environmental impact and improving resource efficiency. It continues to pushforward green procurement from four dimensions: social responsibility review, hazardous substances control, energy saving and emissionreduction, and green manufacturing empowerment.In 2022, Midea released the Green Development Initiative targeting its supply chain partners, calling on suppliers to carry out greenpractices in energy management, green product standards, green logistics, etc. with an aim to push forward the green development of theindustrial chain. In addition, two of Midea's subsidiaries (GD Midea Heating &Ventilating Equipment Co., Ltd. and Chongqing Midea GeneralRefrigeration Equipment Co., Ltd.) were selected as 2022 National Green Supply Chain Companies by the Ministry of Industry and InformationTechnology.
To reduce product energy consumption and improve its product environmental friendliness,Midea actively works together with suppliers to innovate new materials and new processesand open up energy-saving and emission-reduction paths such as applying environmentallyfriendly materials and consuming less energy in material distribution.
Hazardous substance control is an important part of Midea's implementation of greenprocurement. The Company requires all purchased raw materials and components tocomply with regulatory requirements, including theRestriction of Hazardous SubstancesDirective(RoHS) from the EU,Regulation concerning the Registration, Evaluation,Authorization and Restriction of Chemicals(REACH) from the EU, and China'sAdministrativeMeasures for the Restriction of the Use of Certain Hazardous Substances in Electricaland Electronic Products.The Company also requires suppliers to provide substance testreports to ensure that raw materials and components comply with relevant environmentalprotection regulations.In terms of processes control, the Company strictly controls suppliers from the dimensionsof new parts control, mass production parts control, and supplier HS system control (onlinerefined control that is traceable with fast accident handling) to further secure green andsafe procurement.
Conducting carbon emission check training for suppliersTo ensure the smooth progress of the suppliers' carbon emission check.Midea also organized carbon emission check training for suppliers. In 2022,the Company organized two green strategy training sessions for its suppliers,covering topics such as the concepts of carbon peaking and carbon neutralityand policy communication, explaining Midea's green strategy, and the toolsand methods for carbon emission check. Over 1,000 suppliers attended thetraining sessions. At the same time, Midea shares the training materials as wellas other methods and tools with all suppliers via its supply chain cooperationplatform to better help them grasp the knowledge concerning carbonemission check.
Training Session on Carbon Emission Check for Suppliers
Method
Path
Co-developmentSupplier recommendations
Better materials and
processLow-carbon andsustainable materials
High utilization rate ofmaterialsNew materials
Target
Energy Conservation and Carbon Emission Reduction
Guided by carbon peak and neutrality policies, Midea includes supplier carbon emissionmanagement into its green procurement system and organizes suppliers to carry outcarbon emission checks to strengthen the carbon emission management of its supplychain. For major bulk suppliers under strong state control, such as steel and petrochemicalsuppliers, Midea has conducted a carbon emission data check to respond to the policies.For non-bulk suppliers, Midea has prepared the Supplier Carbon Emission Check (Template)to help the supply chain teams of the entities in supplier carbon emission checks.In 2022, Midea collected and checked the carbon emission data of 4,324 suppliers,including direct GHG emissions (emissions from stationary combustion, emissions frommobile combustion, direct fugitive emissions, etc.) and indirect GHG emissions from energy(emissions from the use of purchased electricity, heat, cold and compressed air).
2022·MIDEA ESG REPORT
Environmental Management
Green Manufacturing
The
th Five-Year Plan for Industrial Green Developmentproposed to comprehensivelyimprove green manufacturing capability and help achieve carbon peak and neutrality in theindustrial sector. Aiming to be a contributor and leader in industrial green development,Midea is committed to building green plants in five directions: low-carbon energy, harmlessraw materials, clean production, wastes recycling and intensive land use. By the end of2022, Midea has owned 14 national green plants.In 2022, Midea's total GHG emissions(Scopes 1 and 2)
stood at 1,505,876.81TCO
e, of which 129,399.61 tons were Scope 1 GHGemissions, and 1,376,477.20 tons were Scope 2 emissions. The intensity of GHG emissionswas recorded at 0.0436TCO
e/RMB 10,000.
Midea ensures the safe, stable and efficient use of the energy system via information-based, energy-saving and intelligent energy management. Meanwhile, the Companyhas formulated energy-saving standards and targets to increase the proportion of newenergy use and promote energy-saving and low-carbon technologies, thus effectivelyimplementing carbon reduction actions. In 2022, 35 of Midea's plants obtained energymanagement system certification.According to the Green Manufacturing Carbon Neutral Master Plan, the Company hasformulated a detailed five-year plan (2020-2025), which plans to achieve a 20% reduction inenergy consumption per unit of GDP in 2025 compared to 2020 and reduce CO2 emissionsper unit of GDP by 25% compared to 2020, with clean energy accounting for more than10%.Midea focuses on empowering energy-saving management through technology.Starting from the special projects of key energy-consuming equipment, the Companypromotes refined energy management in light of energy efficiency benchmarking,review on management, equipment management, process breakthrough, etc. Besides,the Company has established a technological expert group and carried out cross-departmental collaboration and empowerment-based management. This is to ensure theeffective implementation of energy-saving technologies while keeping innovation andbreakthroughs. In 2022, the Company carried out eight energy conservation and carbonreduction projects, saving energy through an energy management system, injectionmolding, spraying, electronic methods, compressing air, solar and storage projects, centralair conditioning and lab energy improvement. Midea has invested over RMB 100 million inthese projects.For digital energy management, Midea has established an energy management platformFEMS to transform and upgrade the energy efficiency management of over 30 plants withdigital technologies. Midea FEMS is an intelligent data collection system composed of22,455 devices, which collects data on plants' energy, water, electricity and gas through theunderlying IoT platform, and conducts energy collection and analysis, exception monitoring,energy quality assurance, energy consumption planning and early warning with cloudcomputing and blockchain technologies, thus fully enabling digital management of energyconsumption. In 2022, Midea upgraded its FEMS system, included carbon managementinto its plant green manufacturing management system, and controlled the total amountand intensity of carbon emissions in real-time, promoting the transformation and upgradingof green manufacturing driven by the carbon peak and neutrality goals.
For operational energy use, Midea actively deploys the use of clean energy, aiming toachieve 10% of green power in 2025 and 30% of green power in 2030. As of March 2023,Midea's R&D innovation centers and more than XX plants have built distributed PV powergeneration systems, with an installed capacity of 274.64 MW (including projects underconstruction). In 2022, Midea's PV power generation capacity was 215 million kWh, anincrease of 48.06% over 2021. In the future, Midea will continue to expand its PV andenergy storage projects to ensure the supply of clean energy in parks and accelerate theconstruction of a clean, low-carbon, safe and efficient energy system.
In the era of Industry 4.0 featuring "Internet + intelligent manufacturing", Midea continuesto advance industrial automation, improve production efficiency with digital technologies,and reduce energy consumption in the production process. As a representative of Industry
4.0, Midea's KUKA brand has decades of experience in automation, process management
and cloud-based services, covering basically all application scenarios of industrialmachines. Based on its development needs for intelligent manufacturing and KUKA'stechnological advantages, Midea's plants are steadily promoting automation solutions. In2022, Midea's robot use rate was 470 units per 10,000 persons, indicating that robots playsan indispensable role in reducing raw material losses and improving the comprehensiveutilization of energy.
Energy Management
Promoting Energy Saving Management
Deploying Clean Energy
Digitalization Driven
Total GHG emissionsGreenhouse gas emissions per unit of
output value
Midea's PV Power Generation in thePast Three Years
Tons of CO
Equivalent(Tons of CO
Equivalent)/ RMB 10,000
100 Million KWh
20202020
2020
20212021
2021
20222022
2022
1,564,414.000.0666
1.32
1,712,766.000.0600
1.46
1,505,876.810.0436
2.15
Integrated solar and storage demonstration projectFor green energy, Midea actively develops distributed solar and storageprojects and key technologies for energy storage. In November 2022, theintegrated solar and storage project of Midea's Microwave & CleaningAppliance Industrial Park (hereinafter referred to as "MCA") was officiallyconnected to the grid, which was the first integrated solar and storage projectin Guangdong and the first 10 kV high-voltage grid-connected project sincethe release of Midea's Green Strategy.Midea MCA's distributed PV power generation system adopts the modelof self-generation and self-consumption with surplus electricity suppliedto the grid, allows for on-site consumption of PV power generated on theplant roofs and vacant land, reducing equipment investment and power lossalong power lines. The project's average annual electricity supplied to thegrid is about 5,397,000 kWh, which can save about 1,646 tons of standardcoal per year compared with a thermal power plant with the same powergeneration capacity (thermal power plant's coal consumption is calculatedbased on national thermal power plant unit's standard power supply coalconsumption of 306 g/kWh). In view of the intermittency and volatility of PVpower generation, the project is equipped with an energy storage system forpeak-load shifting to ensure power supply stability. In addition, Midea MCAhas installed a PV energy storage management system with functions formonitoring and optimizing distributed power supply/energy storage/load,which further improves the reliability of green power supply.
KUKA's Automated Production Line
Midea MCA's Integrated Solar and Storage Demonstration Project
The Company's Scope 1 GHG emissions are from natural gas and Scope 2 GHG emissions are frompurchased electricity.
2022·MIDEA ESG REPORT
Environmental Management
Water Resources Management
Waste Management
Midea strictly complies with laws and regulations such as theWaterPollution Prevention and Control Law of the People's Republicof Chinaand theWater Pollution Prevention and Control ActionPlanand has established a corresponding wastewater dischargemanagement system. In addition, Midea insists on promoting waterconservation in all aspects and continuously explores effectivemeasures for wastewater treatment and water reuse.All subsidiaries of Midea classify and manage wastewater:
domestic wastewater is pretreated to the standard by septic tanksand other means, and industrial wastewater is pretreated to thestandard by factory sewage treatment stations before they aredischarged to municipal sewage treatment network and sewagetreatment plant. At the same time, the plants also actively promotethe diversion of rainwater and sewage from the old plants, updatethe sewage treatment equipment and optimize the existingprocess to reduce the overall sewage discharge through anintegrated approach.
All plants of Midea strictly abide by theLaw of the People's Republic of China on thePrevention and Control of Environmental Pollution by Solid Wasteand other relevantregulations to treat waste. For hazardous waste, the plants stipulate the requirements forwaste collection, storage, transportation, disposal, etc., and entrust qualified hazardouswaste disposal agencies to dispose of waste. General waste is collected and disposedof by resource recycling manufacturers after classification in a factory. Domestic waste isentrusted to local sanitation departments for disposal.For e-waste disposal, Midea strictly abides by theAmendment of the Basel Conventionanddoes not export e-waste to any non-OECD countries. At the same time, Midea vigorouslypromotes theNotice on Encouraging Household Appliance Manufacturers to Carry outRecycling Target Responsibility System Actionsto implement the extended producerresponsibility system. Midea cooperates deeply with third-party dismantling enterpriseswith corresponding qualifications, formulates and implements e-waste dismantlingprograms, and dismantles recycled old machines in a compliant way through the greenrecycling channels.
PCR stands for post-consumer recycled. PCR materials are raw materials for industrial production obtainedfrom physical or chemical recycling of waste plastics generated after circulation, consumption and use. Theapplication of PCR materials not only helps to reduce plastic waste in the environment but also facilitatesresource recycling.
The Global Recycled Standard (GRS) is an international, voluntary, full product standard that setsrequirements for third-party certification of recycled content, chain of custody, social and environmentalpractices, and chemical restrictions. GRS is designed to meet the needs of companies that want to validaterecycled content of their products (finished and semifinished products) and verify its responsible social,environmental and chemical practices in their production.
Piloting recycled materials to contribute to the circular economyWhile practicing compliance management and environmentally friendlydisposal of electronic waste, Midea actively cooperates with renewableresource companies to promote the use of recycled materials in its productsand facilitate the recycling of waste resources.For recycled plastics, Midea has established a partnership with INEOSStyrolution, a leading global styrenics producer, to develop PCR
materials.Modified from waste from Midea's recycled home appliances, the materialis suitable for a range of sustainable household appliances, including ACs,refrigerators and water dispensers. In 2022, Midea, after adequate testingand verification, successfully piloted the application of PCR materials in thefront shell of its water dispenser products. Besides, to ensure compliancewith Global Recycling Standard (GRS)
, Midea tracked the circulation of PCRmaterials in the factory to ensure compliance throughout the process.
Launching Ceremony of Midea's First Product Adopting PCR Materials
Six Water-saving Measures
Apply water-saving
equipment
Recycle condensate
water
Apply reclaimed waterfrom sewage treatmentstations in toilet flushingand landscaping
Develop spray-free, oil-spray-free, and cleaning-free processes to reducewater use
Renovate oldplants with fullcoverage ofdiversion ofrainwater andsewage to collectand use rainwater
Purify and recycle
test water
2022·MIDEA ESG REPORT
Environmental Management
Green Logistics
Green Transportation
Green Storage
Creating an Intelligent Vehicle Scheduling System
Promoting New Energy Vehicles (NEVs)
Midea attaches great importance to green and low-carbon logistics and unswervinglyfollows its green and smart logistics strategy. It has established a green and intelligentlogistics system that integrates green transportation, green warehousing and greenpackaging, to help the whole industrial chain improve quality and efficiency and reducecarbon emissions.Midea leverages IoT, cloud computing, AI and other technologies to optimize transportationroutes and reduce transportation mileage and times, thus achieving the goals of energyconservation and emission reduction. In addition, the Company actively promotes greenand low-carbon transportation vehicles and advances the building of a green and intelligenttransportation system in many ways.
Midea takes "digital intelligence" and "energy saving and consumption reduction" as the entry point to promote its construction of a greenstorage system. With the support of big data and artificial intelligence technology, etc., Midea implements measures such as optimalallocation of storage resources, intelligent packaging and automatic sorting to greatly improve storage and transfer efficiency. In addition,Midea continues to improve special measures such as automation and energy saving, paperless office and intelligent parks to buildintelligent logistics parks.
Midea has established an intelligent vehicle scheduling system to systematically allocatefreight transport routes and transport capacity resources to accurately match vehiclesand goods, thus lifting transportation efficiency and lowering carbon emission across thewhole chain from products, warehouses to stores/customers. With the advantages of corealgorithms, Midea's intelligent vehicle scheduling system effectively optimizes its logisticssystem in terms of cost, efficiency and management. In terms of costs, the system reducesthe total number and mileage of vehicles with various constraints and implements vehiclemodel matching with the optimal vehicle turnover rate. In efficiency, the system greatlyshortens vehicle scheduling time from an average of 3 hours to 5 minutes and speedsup warehousing and distribution by optimizing warehouse operations. In management,the system visually presents drivers' actual transportation routes and vehicles in transit,to improve the quality of transportation decision-making and meet the customer'srequirements for timeliness.
Midea is committed to promoting the application of NEVs in the field of transportation anddistribution and gradually replacing traditional fuel vehicles in short-distance transportationwith NEVs, thus effectively reducing the exhaust emissions generated by distributionvehicles, and reducing the impact of the transportation process on the environment. In2022, the Company launched an urban green freight demonstration project. It encouragedthe Group and suppliers to adopt new energy logistics vehicles through governmentsubsidies and right-of-way measures and cooperated with NEV manufacturers to accelerateNEV application. By the end of 2022, Midea branches had a total of 427 NEVs, and 70% ofits logistics supplier applied NEVs.
Automatic energy conservationPaperless officeSmart parkReduce energy consumption forlogistics while saving costs
Reduce resource consumption andadvance the digital warehousingprocess
Build a smart logistics park facilitatingthe flows of cargoes, persons andinformation
Fully automatic three-dimensional intelligent warehouse process of Midea's
Malong Plant
Fully Automatic Three-dimensional Intelligent Warehouse
Entry
Inbound with pallets
Scattered container inbound
Inbound and outbound conveying
Storage
Outbound handlingPicking
·Vehicle reservation and intelligent scheduling ·Intelligent park management ·Intelligent security check
·Auto code scanning and pallet stacking ·Auto conveying ·Auto pallet separation
·Auto stretch film wrapping ·Cargo shape detection ·Auto palletizing
·41 loop rail guided vehicles ·Auto rail change
·Auto put away and removal by stacker crane ·No. of stacker crane: 25 ·Rack height: 22m
·21 Automated guided vehicles ·Intelligent path planning ·Pallet conveyor·Auto pallet stacking andseparation machines
2022·MIDEA ESG REPORT
Environmental Management
Green Packaging
Midea innovates and reforms packaging and supply chains from the aspects of packaging design, production and supply to create a circulargreen packaging ecosystem.Development, production and supply of green packaging
Packaging Allocation & Recycling
For packaging development, Midea considers the quality assurance of parts and finished products, environmental protection andother elements in the design process, and puts the packaging size in mind to ensure the packaging is compatible with the container intransportation, warehousing and other processes. For packaging production and supply, Midea provides end-to-end logistics services frompackaging leasing to recycling by adopting integrated circular packaging and transportation mode. In addition, Midea also actively exploresrecyclable environmentally friendly materials to improve the recycling rate of packaging materials.
Midea has set up a product equipment management center for the allocation of circularpackaging equipment and tools for various parts at the supplier end. At the same time,Midea has established cooperation with recycling companies and leverages its warehousingnetwork advantages to recycle used cartons, achieving recycling in the green circularpackaging ecosystem.Intelligent Recyclable Packaging Alternative
In 2022, Annto Logistics Technology Co., Ltd., a subsidiary of Midea, worked with a recycling appliance packaging supplierto create an intelligent recyclable packaging alternative for transformer products of Midea's Shunde Microwave Oven Plant(hereinafter referred to as "Shunde Plant"). With circular packaging design and packaging and transport integration mode, thealternative solution allows for the green recycling of packaging materials and carbon reduction in logistics processes.For circular packaging design, the project adopts the overall circular packaging solution featuring PP injection pallet box andblister laminate to replace the packaging solution based mainly on disposable materials such as cartons, cardboards andwooden pallets, which reduces packaging materials consumption and meets the needs to adapt to factory automation andstandardization from the aspect of packaging size, thus improving the overall operational efficiency. According to preliminaryestimates from a third-party organization, with circular packaging, carbon emissions can be reduced by about 1,098 tons annually.To address the difficulties in circular packaging management, the packaging and transport integration mode ensures thestandardization, circulation and digital intelligence of logistics packaging units to improve the whole process of the supply chainincluding upstream and downstream transportation, storage, loading and unloading. Shunde Plant Project fully spreads theapplication of standard pallets and packaging boxes to integrate products into standardized container units and improves thelogistics and transport networks based on products, routes, node warehouses, the rhythm of production, etc., to ensure greencircular packaging.
Before ImprovementAfter Improvement
·Recyclable materials are adopted·The automatic loading needs aremet ·Disposable materials are used·Manual packaging handling isrequired
Comparison of Transformer Packaging before and after Improvement
Carton Recycling ProjectBased on its direct delivery of all categories of products to users, Midea haspiloted green recycling projects in Zhongshan and Shenzhen. With a focus onthe recycling of cartons for its product packaging, the Company has recycleda total of 2 million cartons with a total weight of about 10,000 tons by theend of 2022. To further expand the green recycling range, Midea promotesthe pilot operation model of packaging station co-building and recycling atoutlets in areas such as Guangzhou, Foshan, northern Anhui, Henan, Fujian in2023. It will expand the recycling scale via its own product delivery channelsto recycling based on communities to build a carton recycling service networkclose to users and continue to enlarge the carton recycling range.
2022·MIDEA ESG REPORT
Environmental Management
The selection of "2022 EPR Public Dialogue Pioneer" was led by China Household Electric Appliances Research Institute and participated by Peking University.Candidate companies that have made outstanding contributions to green transformation and industry upgrading are selected according to the evaluation results oftheir production and responsibility fulfillment based on the information they disclose.
Green Recycling
Green Services
Green recycling of used home appliances is an important part of Midea's response to the
nationalImplementation Plan for the Extended Producer Responsibility Systemand the
fulfillment of resource and environmental responsibility. Guided by the vision of ensuring
users' peace of mind in replacing new products, convenient recycling channels and
traceability of dismantling and scrapping, Midea has set up a green recycling business
department and actively built a green recycling system. In 2022, Midea recycled 1.036
million units of used home appliances, which was far more than its annual target of 400,000
units. Midea also won the honor of the 2022 EPR Public Dialogue Pioneer
for its excellent
performance in EPR information disclosure. In addition, Midea has also reached cooperation
with 56 dismantling companies to further advance resource recovery and reuse.
Midea has built a nationwide recycling network via online and offline platforms. Users can
realize the old machine recycling and trade-in through the offline dealer stores, and also
return used appliances for recycling through channels such as Midea's WeChat Official
Account, Meiyunshou (Midea Cloud Recycling) Mini Program, and the 400 Customer Service
Hotline. In the recycling process, a unique barcode will be generated for each used machine
to ensure the traceability of the used machine information throughout the recycling process
from the user to the recycling service provider. On this basis, Midea actively cooperates
with dismantling companies with professional qualifications and sends sorted used home
appliances to its partner green dismantling plants for dismantling treatment in line with
regulations, so as to ensure the reuse of resources and promote energy conservation,
emission reduction and green circular economy development.
Focusing on green energy and smart buildings in its green services, Midea providessolutions integrating "buildings, intelligence, and energy" for the group and its customers.With the technical paths of green energy, contracted energy, and low carbon developmentbased on digital intelligence, the Company has created an integrated green service modelwith product technology innovation as the basis, platform digital capabilities as the hub,and green consulting services as the top-level design.
Midea's "Internet + Recycling" system
--"Midea Cloud Recycling"
Midea Green ActionMidea continues to promote its trade-in services and vigorously conducts"Midea Green Action" publicity to guide consumers to develop a reasonablesense to adopt and replace items, and to recycle and dispose of used homeappliances in a formal and environmentally friendly way. The "Midea GreenAction" covers promotional activities such as green trade-in coupons, cross-category trade-in and 365-day replacement, providing purchase subsidiesfor users requiring trade-in services. The Company carried out the "MideaGreen Action" Roadshow nationwide in 2022. With the digital promotion of theevent, the number of registered users for used appliance recycling exceeded400,000, and the number of online trade-in appliances exceeded 350,000units.
Poster of Midea Green Action
"Midea Green Action and Green Trade-in" 2022
The green energy layout isachieved through servicesand hardware such asintegrated power supplymodules, power storageand heat managementmodules, and intelligentmicrogrids
End-to-end green servicesare provided by creatinghigh-efficiency machinerooms, integrated energystations and generalcontracting of new energy
General energy-savingalgorithms are deployedand control algorithmsare optimized to establishdigital and intelligentsystems for energymanagement and carbonmanagement
Midea's Three Technical Paths for Green Services
Digital andintelligentlow-carbonmanagement
Greenenergy
Contracted
energy
2022·MIDEA ESG REPORT
Environmental Management
In 2022, Midea launched the "MBT Green and Low-Carbon" service that covers green and low-carbon consulting, digital intelligenceoperation products, and energy conservation and emission reduction projects, including business such as zero-carbon consulting, energy-saving transformation consulting and smart carbon management system. Midea strives to work with the customers in building a sustainablesmart space with low carbon and intelligence as the core.
Energy-saving renovationconsultancy
Energy audit service
Smart carbon managementsystem
Zero-carbon consultancy
Green certification
Smart energy management
Provide services such asimprovement of equipment/system efficiency , optimizationof energy structure, and digitaland intelligent O&M by taking thefive steps of technical proposal,commercial proposal, constructionand debugging, result verification,and O&M management to helpcustomers achieve energyconservation and emissionreduction.
Generate an energyaudit report after surveyand analysis with theenvironmental parameters,energy consumption dataand operation data collected,and propose suggestionson the pathway of energyconservation and carbonreduction.
Manage the lifecycle carbonemissions with the corefunctions of carbon emissionoverview, carbon emissionanalysis, carbon neutralityanalysis and carbon footprintverification reporting.
Customize zero-carbonbuildings for customersthrough the four-step zero-carbon pathway: carboncheck, energy conservationand emission reduction,digital operation, andachieving neutrality.Assist buildings in obtainingdomestic and internationalgreen certification in the foursteps of assessment andplanning, verification andregistration, constructionand debugging, documentsubmission and formalcertification.
Achieve real-time diagnosticsand analysis of key energyconsumption equipmentthrough monitoring analysis,diagnostic analysis, optimalcontrol, and collaborativecontrol, and realize smartenergy managementwith cloud-based digitaltechnologies.
Midea Group MBTGreen and low-carbon services
Midea joined hands with Douyin's Volcengine to embark on anew journey of building digitalization
Midea launched iBUILDING, a one-stop carbon managementsystem for business
In 2022, Midea partnered with Volcengine for the intelligent transformation of Shanghai Douyin's office park in New JiangwanCity, which covered an area of 280,000 square meters. This cooperation would integrate Midea's iBUILDING and Volcengine'spublic cloud platforms, connecting data between cloud platforms and between different devices. As for applications, the twoparties will create smart environmental regulation systems, smart elevator management systems, energy management systems,smart fire protection systems, smart parking systems and other products covering all scenarios of digital parks for the fulldigitalization and intelligence of park management. In the future, Midea will continue to explore innovative development paths,build the world with a digital vision, and create low-carbon, intelligent buildings for the future.
The national 14th Five-Year Plan proposed to strengthen thestrategic research as well as technology integration and innovationin key frontier fields such as artificial intelligence and digital twins,to boost urban data resource systems and data brains. Mideaconstantly integrates and associates building data and has creatediBUILDING, a digital building platform that integrates digital twins,AI, BIoT and other technologies. Based on digitalization and theenergy conservation and carbon reduction capabilities, Mideastrives to solve problems in the field of intelligent buildings, suchas interconnection of facilities and equipment, energy conservationand carbon reduction.In December 2022, Midea released the iBUILDING carbonmanagement system, which aims to provide companies with one-stop carbon management solutions and help accelerate theirzero-carbon pathways through digitalization. The system providescustomers with professional and efficient carbon managementtools from four core dimensions: organizing carbon checks,product carbon footprint, carbon emission reduction management,and carbon asset management. The system allows for equipment-specific quantified carbon emission management, which enablesrefined tracing of the causes of high carbon emissions and efficientallocation of carbon calculation solutions to help enterprises carryout scientific carbon management. To meet the needs of differentfields and industries, Midea continuously improves iBUILDING,and has identified hundreds of emission sources and formed afactor database with 1,000+ selected emission factors, providingprofessional carbon-checking tools for industrial parks, officeparks, buildings and other businesses.
Midea's green HVAC solutions help facilitate a sustainable FIFA World CupAs the biggest venue for the FIFA World Cup Qatar 2022, LusailStadium can accommodate over 40,000 spectators. To achieve thesustainability goal of this sports event, the venue needs a stableand reliable central air-conditioning system and low-carbon, greeninfrastructure.With years of experience and technical strengths in serving venuesfor large events, Midea MBT tailored green HVAC solutions forLusail Stadium, providing the venue with equipment and systemsthat are able to adapt to Qatar's hot climate, accurately controlthe temperature and humidity, and ensure energy saving and lowcarbon in complex spaces. In addition, Midea's core products suchas VRFs, floor-standing ACs, and rooftop packaged ACs have beenapplied in several venues for the World Cup Qatar, which coverscenarios such as security check centers, media centers, andauxiliary venue facilities, providing athletes, volunteers, spectators,etc. with a green, comfortable and safe breathing experience.
Midea's Green HVAC Solutions for FIFA World Cup
Qatar
iBUILDING Ecosystem Overview
2022·MIDEA ESG REPORT
Environmental Management
SOCIAL
CONTRIBUTIONS
Product quality and safety are the lifelines of Midea. The Groupbuilds an intelligent quality management system to continuallyenhance its core competitiveness in quality, and sticks to productinnovation driven by technology and product strategies. Undera user-centered philosophy, it brings a more comfortable lifeexperience to every user by offering high-quality products.
Quality andServices
03"
Performance Highlights
3+N
30%98.14%
Establish a systematic "3+N" quality responsibility mechanism
Increase the full-processservice efficiency by 30%
Achieve a customersatisfaction rate of 98.14%
High-quality Products
Strategic Quality ManagementMidea, while remaining steadfast in pushing ahead quality revolutions and improvement, under the guidance of its quality strategy, hasformed a pan-safety management mechanism with product defect prevention management, information security and privacy protection asits core, thus guaranteeing quality and safety across full scenarios and meeting users' needs for a better life.To implement the national strategy of building China into a manufacturer of quality and the "14th Five-Year Plan", Midea Group, based on theoverall strategic objectives, combined with customer demands and other internal and external factors analysis, has clarified the quality vision,quality strategy and quality culture of Midea, and unswervingly promoted quality revolutions and improvement.In 2022, Midea continued to practice an intelligent quality management model with global-oriented quality safety management and control,and constantly provided users with trustworthy products and services through a refined, quantitative and efficient total reliability systemmethodology.
Quality strategyBuild a global intelligentquality management systemto provide users with goodproducts that are green, safe,intelligent, easy to use anddurable
Quality cultureFull participation, qualityproducts, true cause pursuit,essential improvement,source flow management,reissue prevention
Development Stages of Quality and Safety ManagementQuality and safety 1.0Quality and safety 2.0Quality and safety 3.0·Compliant with the Product Safety Law,the Product Quality Law, and other lawsand regulations.·Higher-than-industry-standard reliabilitydesign and manufacturing, with safetyreview from "six dimensions"
·Safety defect management under non-mandatory safety standards·Physical safety: Prevention andimprovement of safety defects
·Information and cybersecurity: obtainedthe declaration of conformity of T?VS?D's ETSI EN 303 645 (V2.1.1)·Established a global OBM system forquality and safety compliance andprevention, created compliance mapsfor multiple scenarios, and implementedglobal quality and safety compliantoperationSafety review + Device attenuationcontrol + Process PL review
Physical safety
InformationsecurityScenarios analysisHazard identificationRisk assessmentRisk evaluationRisk mitigation
Information securitysystem + Privacyprotection systemimplementation review +Emergency responseMandatory/recommended safety control
Pan-safety control
Global quality and safety control
Quality visionProvide trustworthyintelligent products andservices to the world andcreate a better intelligent lifefor users
2022·MIDEA ESG REPORT
Quality and Services
·Testing capacity building ·Examining qualifications·Recording intelligenttraceability
Quality Assurance
To effectively implement the quality strategy and culture, Midea has built a systematic "3 +N" quality responsibility mechanism (3 refers to three layers of strategy layer, organizationlayer, and implementation layer, N refers to all kinds of major quality responsibilityaccountability, etc.): the group vice president serves as the chief quality officer, andthe first person in charge of the five business sectors or business groups, business unitpresident is primarily responsible for quality and safety, and implements the goals andKPIs of the quality and safety responsibility system. At the same time, a documentedquality management system covering the whole life cycle of marketing, R&D, procurement,manufacturing, logistics and after-sales has been established.Based on the six dimensions of quality and integrity, Midea has established a four-dimensional quality and integrity model, signed theEnterprise Quality and IntegrityManagement Commitmentand carried out integrity supervision. All of these eventuallyformed an honest and trustworthy quality self-discipline mechanism. Meanwhile,Midea has established a quality management system covering the whole organizationoperation process, such asAdministrative Measures for Quality Responsibility Traceability,Administrative Measures for Quality Responsibility System , Quality Internal Control Manual,
etc. by deepening the "Five Precision" project (precise planning, exquisite R&D, leanmanufacturing, sincere service and high-quality) of the whole value chain. With respectto quality system construction, Midea has obtained certifications of ISO9001, ISO14001,ISO45001, BSCI, C-TPAT, etc., which not only improves its competitive advantages, but alsoboosts safety management and helps the Company keep up with international standards.Product safety and quality compliance are always top priorities of Midea Group. In 2022,it exercised control over safety compliance from nine dimensions such as product safetyand compliance system and monitoring, compliance with regulations and standards, andcompliance management of new products, and constantly improved product quality whileadhering to the basic red lines of compliance. Based on a holistic system, Midea attachedgreat importance to the identification and prevention of quality and safety hazards,established control rules and verification methods in accordance with system requirementsand product quality and safety elements, and implemented quality and safety supervisionand evaluation on all staff throughout the whole process. It supervised continuousimprovement based on the evaluation results, and promoted quality assurance workimprovement through daily audits (supervision and sampling, business self-inspection) andquality internal control management.
QualityandIntegrity
Integrity incentives
Integrity inspection
Integrity educationRecall mechanism
Integrity assessment
After-sales service
·Integrity rewards ·Integrity appraisal
·Promotion of integrity culture ·Special training on integrity ·Refinement of integrity responsibility
·Defect assessment andmanagement·Management measures forrecall ·Material incident management
·Quality credit points ·Quality performance assessment
·Standardized installment ·After-sales service network·Replacement instead of repairservice within 365 days
Six Dimensions of Quality and Integrity
Quality and Safety
Dedicated to safety risk control from the design source, Midea has carried out comprehensive assessments of each product at the stage ofproposal design, implemented safety risk control throughout the whole process of product development, trial production and market launch,and guaranteed product safety by compliance review of design and development, as well as careful control.
Besides continuous safety reviews, Midea never stops the management and control of design and development certifications so as toconstantly improve the core competitiveness of its product quality. Products sold in the domestic market are required to pass certificationtesting and obtain relevant certificates before mass production. Those to be sold overseas must pass certification testing before massproduction and obtain corresponding certificates upon finished product inspection after the first batch production. Otherwise, noshipments shall be allowed. In the decision-making process for quick launch of new products, Midea organizes relevant quality personnelfor countersignatures, focusing on confirming product certification, product safety, environmental protection and compliance with localregulations, for the sake of ensuring product quality and safety.Thanks to the quality strategy and management, Midea's products haveobtained multiple product safety certifications from many countries around the world.
All-around safety review
Safety certification management and control
At the proposal design stageAt various stages throughout the entire processExperts from various fields are brought in for professional reviewsof the proposal design, with comprehensive assessments fromaspects of structure, performance, electric control, appliance,safety rules, reliability, manufacturability, transportation, storageand new materials, to generate a comprehensive productassessment report and control risks from the design source.
Safety reviews are conducted according to safety rules, withperformance testing based on the comprehensive test plans forthe new products, physical testing result confirmation at the trialproduction stage before mass production verification, output ofproduct compliance review as per the regulations governing themarket region, and final compliance confirmation of new productsthrough product certification.Product development frameworkProductplanning
Comprehensiveproposal review
Proposal
design
Trial production
Productprototyping
Market launchdecision
Massproductionverification
Safety certification list of Midea products
2022·MIDEA ESG REPORT
Quality and Services
High-quality ServicesMidea Group continuously improves user experience by adhering to the user-centeredservice philosophy. From the perspective of optimizing business process, the Companylocated pain points of the service system in an all-around manner, eradicated the waste ofservice process and business operations and enhanced service efficiency with referenceto industry benchmarks. In 2022, it improved the full-process service efficiency by 30% andreduced 100 items from its workload.
Better User Experience
Enhanced Digital Service
Midea put itself in the user's shoes, and constantly improved the service process with thecommitment to providing users with better service experience. In 2022, its user satisfactionrate reached 98.14%.
Intelligence and digitalization were the keywords for services provided by Midea in 2022.Based on big data analysis, Midea transitioned from passive service to active service, andameliorated customers' interactive experience with the use of robots.
More transparent service process
Build an intelligent proactive service matrix
Rely on digital guarantee of spare parts supply
In 2022, Midea restructured its former service process and raised service quality by invitingusers to participate and supervise. The Company issued professional reports on the servicecontent after completing basic services, so as to maintain information symmetry for users.Moreover, service charges were also restructured from the user's perspective to achievefull-process transparency.
In order to improve active service rate and self-solving rate of simple problems, Mideapredicted user demands based on big data, constructed an intelligent active service matrixof "1v1 butler service + ubiquitous intelligent robots + WeChat enterprise account human-robot collaborated operation + big data-based user demand prediction", introducedhundred-million private traffic and built a common private domain 1.0 operation platformat the group level. In 2022, Midea supported modularized flexible configuration and thelaunch of 33 active service scenarios through various channels, and provided active servicesof more than 5.2 million times.
By implementing the projects of intelligent stock replenishing and warehousing networkoptimization, Midea Group continually improved the efficiency of spare parts supply andboost lean operations. In 2022, Midea built a big data-based intelligent stock replenishingmodel, and enhanced efficiency and accuracy of spare parts planning by gradually reducingthe reliance on human experience, and achieving an over 80% participation of the model.
User Satisfaction Rate202020212022
98.00%
98.10%
98.14%
1v1 butler
service
Ubiquitousintelligentrobots
WeChat enterpriseaccount human-robot collaboratedoperation
Big data-baseduser demandprediction
5.2
Active services
million times
More densely distributed service network
More intelligent service experience
Based on a network distribution of suite service outlets, Midea enforced service standardsby highlighting business performance and integrating all-category service capabilities ofsuite service outlets. In 2022, Midea had 2,183 suite outlets, with 2,700 full-skilled workersand 9,249 multi-skilled workers for door-to-door categories. At the same time, Midea builta self-service system across all scenarios of home appliance, met different user needs withself-service and remote services, provided responsive, professional and convenient servicesto users and made its services more easily accessible.Regarding customers' interactive experience, Midea assigned more services to robotsby expanding access channels of robots and optimizing the reception procedure.In cooperation with Shanghai AI Innovation Center on the independent research ofindividualized TTS, robot FAQs, error correction and autocomplete of address, Mideaupgraded user experience of communication and interaction with robots in an all-aroundmanner. In 2022, voice and text robots processed 9.52 million online requests.In 2022, Midea also pushed ahead with user services centered on "agent authorization",and delegated power to frontline employees to facilitate online resolution rate and solveproblems for users more promptly. In the same year, Midea granted the authorizations ofdirect delivery of spare parts to users and rapid handling of compensation, etc.2022 Key work for agent authorizationDirectdelivery ofspare parts
Onlineauthenticationand replacement
Rapidcompensation
PoorexperiencecompensationCustomercomplaintescalationby level andhierarchy
Doubleindemnityfor arbitrarycharges
Streamline the self-service replacement of 19 kinds of parts,such as remote control and filter, so that the user's problem canbe solved end to end without the task being assigned to anyemployee.
Customer service representatives at the frontline can directlypromised replacement under feasible scenarios, thus effectivelyreducing the processing time with engineer authentication out ofthe picture. In 2022, Midea issued 5,262 orders of authenticationand replacement, and raised the user satisfaction rate to 97.61%.
Rapidly compensate customers in case of appearance flaws,product color difference and unpleasant odors, etc.
The poor experience compensation covers 18 complaintscenarios, where customer service representatives at thefrontline can directly compensate users with gifts. In 2022, Mideacompensated a total of 9,000 users, with the NPS (Net PromoterScore) of complaining users increasing from 39.8% to 58.9%, andthe repurchase rate up 105.9%.The Company reconstructed the escalation leveling andhierarchical model of the service system and established anescalation mechanism direct to headquarter decision makingby categorizing customer complaints, sorting out escalationchannels, and assigning responsible persons, so as to achieveaccurate sorting, rapid accessibility and efficient processing ofmassive complaints.With unified charging standards, regulated charging process andtransparent breakdowns, Midea promises "double indemnity forarbitrary charges" for adequate protection of users' rights andinterests.
Intelligent active service matrix
2022·MIDEA ESG REPORT
Quality and Services
Customer Privacy Protection
Midea respects the privacy of every customer, and regulates the use and processing of personal information strictly pursuant to relevantlaws and regulations on the safety protection of personal information. For effective protection of customer privacy, Midea introduced theprivacy number, data security and risk management mechanism, and obtained the certifications of ISO/IEC 27701:2019 Privacy InformationManagement System and GB/T22080-2016/ISO/IEC27001:2013 Information Security Management System.
Midea's core strategy for privacy information management
Reduce the organization'scompliance risks
Improve its own data securitycapabilities and risk management
Place trust in authentication ofpersonal identity informationSpecify compliance goalsof privacy protectionmanagement and reducecompliance risks byclarifying privacy protectionrequirements for processorsof personal identityinformation.
Through process analysis,identify, analyze and verify privacyprotection requirements duringinput, output and control of theprocess to convey the value ofprivacy protection, and reduce oreven eliminate the risk of privacyleakage.
Customers or partnersprovide relevant evidenceto the processors ofpersonal identity informationto facilitate the privacymanagement system of dataprocessing and use.
2022·MIDEA ESG REPORT
Quality and Services
Midea sticks to the "Technology Leadership" strategy and hasbeen dedicated to building a globally competitive R&D andinnovation mechanism. With a scientist system and a three-leveltechnical committee, Midea has formulated and implementedthe technology strategy to continuously improve its capabilitiesof making breakthroughs and becoming the leader in coretechnologies.
R&D andInnovation
04"
Performance Highlights
12.619
1,500+4,000
20,782
Total R&D investments
Participation in theformulation and revision ofover 1,500 external technicalstandards
More than 4,000 inventionpatents granted worldwide
Number of R&D personnelRMBbillion
R&D SystemMidea Group has created a sustainable innovation and R&D system for better support ofR&D, and laid a solid scientific and technological foundation through talent training andstrategic deployment.Scientific and technological development won't be possible without the support of talents.Midea has set up 35 research centers with more than 20,000 R&D staff and over 500 seniorforeign experts in 12 countries. By virtue of the "2+4+N" global R&D network, the Companygains advantages from R&D on a large scale. In the past 5 years, Midea invested morethan RMB 50 billion in R&D, and up to RMB 12.619 billion in 2022. Moreover, Midea activelyadvanced the construction of its innovation platform. In 2022, Midea obtained the approvalfor three national innovation platforms, including a National Key Lab and a National AIOpen Innovation Platform by the Ministry of Science and a Technology and Cross-Industryand Cross-Field Industrial Internet Platform by the Ministry of Industry and InformationTechnology, demonstrating the Company's high-quality and high-level construction ofscientific and technological innovation platforms. As of 2022, Midea has over 85 nationalplatforms such as the national certified enterprise technology center, national industrialdesign center, and national postdoctoral research station, as well as innovation platformslike the provincial key lab and engineering technology center.Midea continues to accelerate and deepen its global technological ecosystem. At home,Midea takes the Global Innovation Center in Shunde HQs and the Shanghai GlobalInnovation Center as the core, while overseas it owns research centers in the USA, Germany,Japan and Italy as its main force of research and development to fully exploit to the regionaltechnological advantages of each center, integrate global R&D resources, form a globaltechnology R&D ecosystem with complementary advantages, and systematically build aglobal R&D landscape with talent density and pool guided by the "Technology Leadership"strategy.In the year when digitalization was flourishing, Midea continued to deepen its digitalizationprocess and created a connected ecosystem benchmarked under the directions of initialDTC (direct to consumer) digital platform, AIoT equipment interconnection and industrialhuman-machine connection in the fields of smart home, smart building and smart logistics,etc. As for R&D digitalization, the Company built digital capabilities in four domains (digitalbusiness planning, technological innovation, digital development and experience upgrading)in 2022, with 15 items of digital systems, including product launch innovation, best-sellercreation, modular development and simulation tools, to boost the R&D efficiency by 30%.Total R&D investments
Number of R&D staff
RMB billion
persons
2021
2021
12,02
18,105
+5.03%
+14.79%
12.619
20,782
2022
2022
2022·MIDEA ESG REPORT
R&D and Innovation
Innovation Capacity BuildingTo further promote the "Technology Leadership" strategy, Midea released the "3+1"standardization strategy of "Innovation Patentability, Patent Standardization, StandardInternationalization and Midea Standard Goes Out", and established a two-levelstandardization management system for Midea and its business divisions. In 2022,Midea continued to deepen the technical standardization strategy, with an aim to furthercontribute to the advanced technology standards of the industry in an all-around mannerand create more value for its users, partners and the industry.Up to 2022, Midea has more than 60 core standard staff, including 14 full-timestandardization engineers and over 50 technical standard experts from home and abroad.By the end of 2022, Midea participated in 1,500+ external technical standards, including50+ international standards, 500+ national standards, 200+ industry standards, and 700group and local standards. In 2022, Midea participated in 314 technical standards, including11 international standards, 65 national standards, 22 industry standards, and 216 local andgroup standards.Research cooperation with universitiesAdhering to the "Technology Leadership" strategy, Midea actively promotedR&D capabilities fostering and technological deployment both at home andabroad. In China, Midea launched strategic cooperation with universitiesincluding Shanghai Jiao Tong University, Xi'an Jiaotong University, TsinghuaUniversity (Future Laboratory) and East China Normal University, and setup joint technology labs with Zhejiang University, Huazhong University ofScience and Technology, South China University of Technology and Xi'anJiaotong University, for explorative research on privacy computing, advancedmanufacturing, advanced preservation technology, and energy efficiencytechnologies, etc. Meanwhile, Midea is cooperating with overseas universitiessuch as Massachusetts Institute of Technology, and the University of Illinois interms of anti-corrosion, green and environmentally friendly materials, indoorair quality and refrigerant substitutes, etc.In the Solar Decathlon China (SDC) 2022, Midea joined hands with fiveuniversities (Tianjin University, Tsinghua University, Chongqing University,Harbin Institute of Technology and Beijing Jiaotong University) to build fivesmart, environmentally friendly and low-carbon "Future Home", among whichthe R-CELLS new energy home jointly developed with Tianjin Universityscored No.1 in the SDC competition, securing 8 first prizes and a second prizein the ten sub-competitions. The cooperation with other partner universitiesalso achieved good results.
Commercialization of Scientific and TechnologicalAchievementsUnder the guidance of a sustainable innovation and R&D system and centered on userneeds, Midea developed innovative products through multiple channels, built globalproduct platforms, improved product efficiency with group business planning anddevelopment model, and realized capabilities of technology leadership. In 2022, Midealaunched a multitude of innovative products, and synchronously created a product familyimage for KUKA AMR, Hiconics and Servotronix toward corporate users based on multipleToC brands. The brand-new appearance iteration and interactive upgrading have thuscompleted. In 2022, Midea had 62 technologies verified as reaching the internationalleading level, and undertook 17 scientific research projects, with an accumulation of morethan 270 internationally leading and advanced technologies.While engaging in core technology research, Midea pays even greater attention to thecommercialization and protection of R&D achievements. By the end of 2022, Midea(including TLSC) was granted with more than 4,000 invention patents worldwide, andobtained more than 80,000 patents and licenses. During the selection of the 23rd ChinaPatent Awards in 2022, Midea won multiple awards including six excellence awardsfor patents such as "Recommended Methods, Systems and Big Data Servers for AirConditioners and Their Running Parameters".Mobile air sterilizing purifier
New flat built-in refrigerators
Amid COVID-19, Midea released its first mobile air sterilizing purifier, theProtector. This product innovatively adopts dual disinfection factors ofplasma and hypochlorous acid, capable of quickly sterilizing 99.9% airbornecoronavirus in 30 minutes by allowing circulating air flowing through plasmafriction power grid, and actively releasing and settling hypochlorous acid todisinfect bacteria and viruses on the surfaces of door handles, ground andwalls, so as to provide a truly healthy and safe space. Protector not onlyreaches the industry leading level in terms of purification energy efficiencywith particle CADR
up to 600m
/h and formaldehyde CADR up to 140m
/h,but also provides convenient user experience because it can be repeatedlyused after regular cleaning of primary efficiency filter and self-friction filter.
The flat built-in refrigerator launched by COLMO, apremium AI-powered home appliance brand of Midea,is designed with forward-in forward-out bottom square-shaped heat sink, gull-wing orbit-transfer hinge with28 patent certificates, and middle evaporator with 25patents. The refrigerator is 600 mm thick with a 2 mmmargin at each side edge, so that its front, two sidesand back can be fully built in and integrated with thehome space. The refrigerator door adopts the firstquick-removable panel design in the industry to achieveinstant panel customization and allow users to replacethe panel based on their preferences. The trackinghandle, which can identify the user's intention to openthe refrigerator door, provides a more convenientintelligent tech experience for users.Furthermore, the five-dimension technology mix of"temperature, humidity, air, light and purification"may create an ecological environment with constanttemperature and humidity and low oxygen, thuseffectively regulating the metabolism of fruit andvegetable so they can be preserved for a longer periodof time. It can also multiply deficient nutrients for humanbeings, such as anthocyanin and polyphenol.
Clean Air Delivery Rate (CADR) is the rate at which an air cleaning device delivers clean purified air measured according to strict testing standards of the Associationof Home Appliance Manufacturers (AHAM). The higher the CADR number for each pollutant, the faster the device filters the air.
Internationally leading technologies
Midea x Harbin Institute
of Technology
Modular Sustainable
Magic Box
Midea x TianjinUniversityR-CELLS
Midea x TsinghuaUniversityArk on Grassland
Midea x ChongqingUniversityTilted House
Midea x BeijingJiaotong UniversityBBBC
Midea flat built-inrefrigerator
2022·MIDEA ESG REPORT
R&D and Innovation
MG takes talents as the core competitiveness for corporatedevelopment, adopts an open staffing system, and has formed thetalent concept of "be people-oriented, drive employee diversity,and promote fairness, openness and inclusiveness". Mideacontinuously improves its talent structure required for its strategictransformation in the new development stage and builds a soundtalent system with respect to the employee's rights, development,occupational health and safety, etc., to facilitate talent growth.
Talent Training &Development
05"
Performance Highlights 1
1,051,611 228
1,700
Granted awards of overRMB 1 million to individualemployees at the TechnologyForumM-Learning received1,051,611 views
The total investment in EHSreached RMB 228 million
Provided assistance fundsof over RMB 17 million foremployeesRMB
RMB
RMB million
million
million
Employee Rights and Care
Equal Employment
Remunerations
Treating every employee equally with respect, MG is committed to safeguarding andprotecting the legitimate rights and interests of its employees, providing them withcompetitive remunerations and benefits, and creating a company with humanistic care tomake employees feel cared for and motivated.
Adhering to the equal employment principle, MG implements equality during employmentand secures their basic rights and interests in its global operations through a soundemployment compliance management system. Midea signs labor contracts with itsemployees in accordance to the law and strictly prohibits any discrimination againstnationality, region, race, ethnicity, gender, age, etc. to ensure that the rights and interestsof employees around the world are under the protection of local laws, regulations, termsand guidelines. In addition, it also prohibits the use of child labor and forced labor andproactively protects the rights and interests of female employees.
Midea abides by the local laws and regulations of all countries and regions, secures equalpay for equal work for its employees, and provides them with competitive remunerations.With value contribution and professional capability as the basis, Midea provides employeeswith competitive remunerations in the industry based on their job responsibilities and skilllevels and puts forward salary increase plans on an irregular basis according to its financialperformance and employees' development and contributions. To ensure performance-oriented remunerations and incentives for employees, Midea distributes annualperformance bonuses based on its own performance and the employee's performance toshare its development achievements with employees.Meanwhile, under the Technology Leadership strategy, Midea offers special awards forinnovation projects beyond regular remunerations and incentives to encourage innovationand breakthroughs. It has established a full-process innovative incentive mechanism formanagement, operation, and technology projects, which covers numerous dimensionsincluding the innovation sources, processes, and achievements, with flexible and diverseincentive forms, including project rewards, salary subsidies, and tilted benefits. Mideacommends scientific and technological innovation projects at its Technology Forumannually and rewards those who have made significant scientific research contributions tothe Company. By the end of 2022, the highest reward amount for award-winning scientificand technological innovation projects at Midea Technology Forum has reached RMB 5million, and the highest reward amount for award-winning individuals has exceeded RMB 1million, with the cumulative reward amount of the event exceeding RMB 450 million.
Midea Technology Forum Awards Ceremony
2022·MIDEA ESG REPORT
Talent Training & Development
Employee Care
"May I" Support Funds offers more care to employees
To better convey the warmth of the company to employees and enhancetheir sense of belonging, Midea established the "May I" Support Funds in2007, which aims to assist employees suffering from economic difficultiesdue to critical diseases, accidental injuries, or other particular incidents. Allemployees of MG can apply for aid funds for themselves or their immediatefamily members over medical expenditures on critical diseases or accidents.The assistance fund is granted annually upon approval of the application. Along-term support mechanism of the assistance funds has been establishedover the years, creating a loving, considerate and warm company environment.In 2022, the Funds helped a total of 179 employees, giving out support fundsof over RMB 17 million.
Besides protecting the basic rights and interests of employees, Midea provides employees with benefits and care covering health, finance,risks and other aspects. As the Company further develop and employee needs continue to change, Midea constantly improves its employeebenefits system, rewards employees for their efforts, and enhances their sense of gain and belonging. Midea's welfare system currentlycovers six sections: Guarantee, Enjoy Work, Enjoy Life, Love Your Family, We Care, and Specific Welfare
.
The welfare programs that employees enjoy are differentiated with the specific conditions of the region or country where they work, fully reflecting Midea'stolerance and respect for regional and employee diversity.
GuaranteeSecuring the basic
rights and interestsof employees
·Five insurances and the housingprovident fund, statutoryholidays, and other benefits areprovided for employees.
Enjoy WorkDiversifying
employees' work
benefits·Benefits are provided indining, commuting, and duringbusiness trips, etc. to eradicateobstacles for employeesin their respective workingscenarios.
Enjoy LifeEstablishing an
employee care
mechanism·Benefits are provided so theemployees can feel cared for,including festival bonuses, healthbenefits, risk protection, andholiday subsidy.·Midea attaches huge importanceto employees' health. Exceptfor the annual medical checkup,it also offers facilities such asprofessional sports venues,Chinese medicine physiotherapyhalls and infirmaries, and providesfree-of-charge psychologicalcounseling hotlines.
MG Legal Aid Center for EmployeesMidea established the MG Legal Aid Center for Employeesin August 2019 to provide employees with professional legaladvice and assistance concerning house purchase and leasing,consumer rights protection, loan disputes, traffic accidents,marriage and family, medical disputes, etc. After several yearsof development and improvement, Midea has enabled thefull-process online operation for the center, which significantlyenhanced the efficiency of legal aids for employees. Inaddition, Midea invites employees to rate their satisfactionwith the center in terms of timeliness, professionalism,accessibility, and willingness to recommend, to continuouslyimprove the services of the center. In 2022, the center handled531 requests from employees, securing a satisfaction rate of
4.8 points (out of 5 points).
Number of Requests Handled by MG Legal Aid Center for
Employees from 2019 to 20222019
2020
2021
2022
Love FamilyCare for the
employee's family
members
·Midea provides benefits tothe families of employees forimportant occasions of theirlives, such as getting married,having children, and taking thecollege entrance examination.·The Company also providescommercial insurance foremployees' family members toprotect their beloved ones.
We CareBuilding Midea
into a friendly
enterprise·Midea provides specialsubsidies and assistance fundsfor employees in need.
Specific WelfareCaring for
employeesin multipledimensions
·Midea provides specific"tailored" benefits for employeesin different categories.·Accommodation criteria andlabor intensity criteria are setand night shift subsidies areprovided for skilled employees.·Relevant training, informationguidance, insurance, safetyprotection, etc. are provided forexpatriate employees.
5556
2022·美的集团ESG报告人才培养与发展
Midea advocates "efficient work and happy life" while constantlyimproving employee benefits, and has created a diverse employeeactivity system. It organizes a variety of activities every year toshow its care for the employees, activities such as family day,photography competitions and group weddings, which not onlyenrich the leisure time of employees but also create a lively andwarm corporate environment. MG and all entities regularly holdthemed activities for employees to experience an open andinclusive office culture, including the International Women's DaySalons focusing on female employees' self-expression and self-appreciation and the Retirement Ceremonies to appreciate thosewho have worked in Midea for a long time before retirement.
Family Day
Retirement CeremonyAutumn Fair
International Women's Day Salon
Group WeddingPhotographyCompetition & Exhibition
Employee hobby-based activities to boost work-life balance
Midea supports and encourages employees to engage themselves in diverse activities during their spare time. At theGroup level, there are nine hobby-based associations for employees including badminton, basketball, singing and dancing,photography, frisbee, tennis, volleyball, swimming, and running associations. These associations organize activities on a regularbasis to help employees find like-minded partners for their interests, providing conditions for employees to balance their workand life.
The 8th Midea "Unite and Share" Badminton Team Competition 2022
Daily Activities of the Frisbee Association The Wage Earners Band of the Singing and Dancing
Association participated in the Radio Foshan City FolkMusic Competition on behalf of MG
2022·MIDEA ESG REPORT
Talent Training & Development
Employee Communication
Midea values the communication with its employees and is committed to shatteringthe barriers that hinder communication between different levels. Open and equalcommunication platforms have been built to encourage employees to take ownership atwork and help push forward the development of Midea.For more employees to make suggestions for the Company's development, Mideahas set up feedback channels such as Direct to Chairman and Direct to HR Directorwhere employees can directly communicate with the senior management. It also holdsemployee seminars from time to time to listen to employees' ideas and voices. Mideaalso continuously operates and upgrades "Midea Shuoba", a community communicationplatform for employees to post questions or suggestions in every dimension of products,services, life, etc. by using their real or anonymous names. Moreover, Midea has createdan internal publicity platform with content concerning the Company's operations andemployees' lives. Sections such as "Information Center", "Midea TV" and "EmployeeBenefits" have been set up to deliver the corporate concept and culture to employeesthrough diverse content.
Employee SeminarEmployee Seminar
Midea ShuobaInformation CenterMidea pays attention to employees' requests and feedback, and aims to improve employeeengagement from the three aspects of empowerment, burden reduction and development:
Empowerment
Burden
reduction
Development
With digital systems, tools, reports, etc., Midea improvesthe work efficiency of employees, reduces low-value andrepetitive work, and allows employees to have more timeand space to tap their potential.Midea reduces links required for communication andreporting by streamlining the processes and layersand reducing unnecessary meetings and PowerPointpresentations, thus allowing employees to concentratetheir time and energy on solving problems.Midea has established fair, just and open promotion anddevelopment channels for employees through serializedtraining programs, well-defined development paths, and clearpromotion evaluations so that employees can have their ownideas, expectations, and plans for their future in Midea.
We believe that a meaningful employer brand - Be the game changer - can only be established through care and trust for every talent. Mideais a global game changer with a spirit of discovery and transformation and offers a "lever" to move the world - talent will be able to grow,innovate, and transcend on Midea's global platform. Together, we will define the frontier of technology and make the world a better place.Employee Growth and Development
Career DevelopmentMidea provides a career development system for employees toboost their professionalism. It guarantees the career developmentchannels of employees from the system level and clarifies thepromotion channels and corresponding qualifications throughtheAdministrative Measures for Midea Group Grade System
andAdministrative Measures for Midea Group Job QualificationSystem. Meanwhile, Midea also established a set of goal-orientedperformance evaluation and responsibility systems, whichcomprehensively cover performance targets and plan formulation,communication and counseling, phase review, evaluation andfeedback, improvement plan, etc. to help employees improvethemselves. Since 2021, Midea has internally promoted theOKR
tool to encourage employees to speak their mind, inspireinnovation from the bottom up, and train self-driven employees.Midea also puts in place a diversified long-term incentivemechanism to create a broader development space for itsemployees and help them tap into their potential in deliveringchallenging and creative work. It has launched long-termincentive schemes for nine consecutive years since 2014. For keymanagement personnel, partner incentive schemes have beenput in place to encourage entrepreneurship and create internalentrepreneur family; and with respect to other key employees,
stock option and restricted share incentive schemes featuringemployee alignment and value sharing are established to drivecommon growth under a long-lasting incentive mechanism. Toensure compliance in the incentive system, Midea has compiledperformance incentive management rules and carries out regularcompliance checks on internal control to implement standardizedwhole process management and monitoring for policy design,resource decision, standard setting and payroll accounting.Stabilizing employment is a major issue mentioned in the 14thFive-Year Plan on ensuring people's livelihood. MG actively fulfillsits social responsibilities and provides job opportunities for freshgraduates. To have better connections with the students, Mideaadopts online and offline recruitment presentations to introducethe positions, company environment, career developmentprospects and other aspects for graduates. During the globalcampus recruitment period in August 2022, Midea adopted livelyand interesting online recruitment presentations and live-streamedmore than 20 recruitment presentation sessions. The specialsessions for overseas students from the United States, Germanyand other countries registered over 500,000 views, providingtargeted career development support for graduates.
Incentive Stock
Option PlanRestricted Stock
Partner StockOwnership Plan
·9 rounds of incentive stockoption plans·Granted to approx. 12,500employees·Targeted at R&D and othersci-tech personnel
·6 rounds of restricted stocks·Granted to approx. 1,800employees·Targeted at senior executiveswith major responsibilities inBUs and key management ortechnical backbones
·8 rounds for Global Partners·5 rounds for BusinessPartners·Targeted at global partnersand key executives
Objectives and Key Results (OKR) is a set of management tools and methods to clarify and track objectives and their completion.
2022·MIDEA ESG REPORT
Talent Training & Development
Employee Training
Committed to creating a corporate culture that encourages lifelong learning, Midea has established a sound talent training system tocontinuously tap the potential of employees and improve their professional and general skills. Midea's talent training system consists ofthree layers: Midea College, Business Group/Business Division/Platform HRs, and BU/Factory/Department HRs. Based on the company'sstrategies and business needs and the employee's demands, while taking into account the different development stages and challengesthe employees are facing at work, the talent training system provides corresponding training programs for employees, such as employeeorientation training, job skill training and management skill improvement training.
·Professionalcourses·Digitalizationcourses·Globalizationcourses ·Retail courses
Academy ofProfessionals
·Navigator ·Voyager ·Sailor ·Explorer
Leadership Academy
·CEIBS onlinelectures·"Office RechargeStation" ·Language classes
UniversalityAcademy
·Online gamificationcourses ·Offline courses/activities·Tutor and partnersystem
Academy of NewRecruits
Midea College Structure
M-learning platformIn-house lecturer platform
Located in Midea Global Innovation Center, Midea College is a talent empowerment center established by MG to promote talent cultivation.For more than a decade, Midea College has positioned itself as "a corporate university dedicated to the lifelong growth of Mideans". Inthe face of complex and ever-changing requirements for talent development and skillsets, Midea College focuses on building a platformcombining "employee growth, strategic promotion, and knowledge management" and has taken the lead to build five empowermentcenters:
Midea provides orientation trainingand specialized job skills trainingor coaching for new employees.It also helps new employees fit inquickly and familiarize themselveswith the corporate culture andvalues through newcomer trainingprograms such as Juchuangmei,Huimei, Jumei, and the FreshGraduate Training Camp. In 2022, 63relevant programs were organized,where 9,071 new employees weretrained for a total of 74,936 man-hours.
Midea has created a managertraining system and formed a soundVoyager Series (sailor-voyager-explorer-navigator) training modefor the frontline, middle and seniormanager training. In 2022, 37manager training programs werecarried out, where 3,561 employeeswere trained for a total of 65,778man-hours.
Based on Midea's strategyand business features, thesecenters facilitate the diversifieddevelopment of global talents aswell as the skill improvement ofindustrial skilled workers and talentsspecialized in R&D, manufacturing,and information technology. In2022, Midea carried out a total of68 special empowerment programsbased on the actual businessneeds.
Newcomer Empowerment CenterLeadership Empowerment CenterGlobalization Empowerment
Center, Intelligent ManufacturingEmpowerment Center, Digital andIntelligent Empowerment Center
Professional skill training
Sailor
Voyager
Explorer
Navigator
Fit in as a newcomerIndividual contributor
Become a leaderFrom individualcontributor to manager
The leader of managersFrom leading others toleading managers
The leader of FDsFrom leading a team toleading an independentbusiness
The leader ofindependent businessesFrom leadingindependent businessto leading integratedbusiness
In addition, Midea's professional online learning platform - M-Learning empowers all Midea employees through unique learning courses andpractical learning functions for their growth. As of the end of 2022, 5,898 lectures have been available on M-Learning with 1,051,611 visits anda total of 425,266 hours being broadcasted.
Midea Leadership Development Stages and Training Programs
Employee training
2022·MIDEA ESG REPORT
Talent Training & Development
Employee Health and Safety
EHS Management
Adhering to the principle of "employees first", Midea attaches importance to employees' occupational health andsafety. Strictly abiding by related laws and regulations, Midea constantly improves the working environment ofemployees to effectively protects their occupational health and safety.
Midea aims to "create an excellent EHS system with zero accidents, controllable risks, and full participation of allemployees" to continuously improve the level of occupational health and safety management. Safety committeeshave been set up in the headquarters as well as each subordinate business division and product company totake on the management of production safety and occupational health of the Group and its subordinate businessdivision. The divisions and their subordinate factories prepared and revised the EHS management manual andprocedure documents of the divisions according to the Group's EHS guidelines and the Group's manual of the EHSmanagement control framework, and based on the actual situations of the divisions. Meanwhile, according to therequirements of the universal production safety responsibility system in theProduction Safety Law of the People'sRepublic of China, each functional department of Midea's factories takes the lead in setting up factory safety sub-committees, such as equipment protection and upgrade safety sub-committee and logistics safety sub-committee,to consolidate the safety responsibility system. In 2022, MG employed 320 full-time EHS management personnel,with an overall EHS cost at RMB 228 million. The lost time injury rate per 200,000 hours was 0.072 (down 25.9% year-on-year), and there was no general production safety accident in Midea.While continuously improving its EHS management system, Midea vigorously promotes the dual preventionmechanism of safety compliance, risk identification and hidden danger management and encourages employeesto submit proposals for tackling dangerous hazards to ensure the effective implementation of safety managementsystem, forming an all-round and full-coverage grid-based management model. In 2022, Midea conducted 620,658inspection tasks, identified and rectified 402,920 hidden hazards, and accepted and handled 471,895 potentialhazards reported by employees.As for equipment safety management, Midea keeps improving the safety and reliability of equipment operation andreducing the hazards that arise in the process of equipment operation, maintenance and repair, thus ensuring thesafe, stable and long-term operation of equipment. In 2022, Midea formulated its first group-levelEquipment SafetyTechnical SpecificationsandGeneral Equipment Safety Standard Checklist, launching the safety standardization ofautomation equipment targeting high-risk equipment (automation business lines and robots), and the regulatedmanagement and control of unconventional operation processes.Regulated forklift management
Forklifts play an important role in the routine operation of Midea's warehouses and factories, and due toforklifts' high mobility, high danger, and intermittent operation, there are many safety hazards in the use ofthem, which also makes their routine and supervision management more difficult.Midea has formulated standards for forklift standardization and continuously strengthens theimplementation of relevant safety management rules to effectively prevent and promptly control accidentsand ensure the safety of drivers. In 2022, the number of forklifts that needed to be standardized was1,191, of which 1,104 had already been standardized, a completion rate of 92.70%. What's more, Mideaseparates people from vehicles to the greatest extent to ensure workplace safety in accordance with themethodology for ensuring safety at locations prone to explosion in export logistics and the requirementsfor standard scenario management.
overall EHS cost
millionRMB
To further improve its EHS management capability, Midea adopted IT-based approaches and has establishedan EHS information management platform and an EHS digital twin factory to collect and process EHS data andreduce the workload of the safety and environmental departments of production companies, thus regulating EHSmanagement. On such basis, the factory can realize rapid perception and control, real-time monitoring and control,advance warning and pre-control, linkage disposal and control, and system evaluation and self-control. Finally, thefactory can achieve integrated management of safety, environment, and consumption to prevent problems beforethey occur. In 2022, there were 3,046 equipment measurement points and the total number of new equipmentonline was 536.
Safety TrainingMidea has established a comprehensive healthand safety management and training system toprovides strong support for every employee.With a vision of "securing zero incidents at workfor employees", it continuously strengthenshealth and safety training for employees. TheCompany requires all front-line employees toreceive orientation training, and production safetytraining is listed as a part of the job orientation.Focusing on accident prevention and in-processrisk control, the Company has established a soundMBS Improvement Week methodology, and allbusiness divisions have reached a consensuson carrying out specific improvement tasks withMBS Improvement Week as a tool and conductedspecial improvements concerning logistics safetyand chemicals. In 2022, Midea's employee safetybehavior observation course received a total of95,512 views, and the safety procedures coursewas viewed 127,689 times.For the safety training system, Midea hasdeveloped and recorded courses such asEquipment Safety Protection Standards, SafetyBehavior Observation, Environmental Protectionand Chemical Management, andInterpretationof EHS System Operation Manual, reaching outto 2,516 employees in 2022. Besides, to furtherimprove employees' EHS management awarenessand skills, Midea organized the first batch ofEHS talent certification, where EHS managementcompetency is divided into two levels of the blackbelt and green belt. A total of 11 employees haveobtained the EHS black belt certification, and 142obtained the green belt certification.
Midea EHS specialist training
2022·MIDEA ESG REPORT
Talent Training & Development
Midea pays attention to the actual needs of the local communitieson a long-term basis and continues to carry out community-based public welfare activities in the field of education and ruraldevelopment. The Company has been giving back to the societywith practical actions and fulfilling the social responsibility ofcorporate citizens in the process of conducting business.
CommunityContributions
06"
Performance Highlights 10 10,000
Donated RMB 10 million toQiandongnan Prefecture inGuizhou province to promotethe development of localculture and education
Launched the "Mobile GreenBox" public welfare scienceeducation activity that hadbenefited nearly 10,000teachers and students
RMBNearlymillion
Giving Back to the Local Community
Midea Group will go all out to support the development of theEast China Normal University Affiliated Shunde Midea School ona long-term basis and make greater contributions in supportinghigh-level talents settling in Beijiao.
-- Paul Fang, Chairman & President of Midea Group
Headquartered in Beijiao Town, Shunde District, Foshan, Guangdong, Midea attachesimportance to the education development of local communities while seeking its owndevelopment in the district. Since 2021, Midea has supported the construction of the EastChina Normal University Affiliated Shunde Midea School ("Shunde Midea School" in short)by donating funds and building resource platforms. On August 31, 2022, Shunde MideaSchool was put into use. Students enrolled in the first year fell into 12 classes, including 10first-grade classes and 2 second-grade classes, with a total of more than 440 students. Theschool adopts a small class size to focus on the all-around development of each student.In the future, Midea will join hands with the People's Government of Shunde and East ChinaNormal University to continuously innovate in the school-running model and make full useof educational resources, striving to build Shunde Midea School into a regional benchmarkschool for compulsory education.
Opening Ceremony of the East China Normal University Affiliated Shunde Midea School
Campus of the East China NormalUniversity Affiliated Shunde MideaSchool
2022·MIDEA ESG REPORT
Community Contributions
Care about Science and Technology Education
For children's science and technology education, Midea focuses on left-behind children inrural areas, hoping to engrave Midea's concept of a "smart life and smart city" in the mindsof children and guide them to develop a green and low-carbon outlook on life. In October2022, MBT joined hands with the Science for All Fund of China Charities Aid Foundation forChildren to launch the "Mobile Green Box" public welfare activity. With "Digital TechnologyLeads a Green Future" as the theme and several researchers from the Chinese Academyof Sciences as scientific advisors, the project has built the first mobile science classroomin containers for schools in rural mountainous areas and regions with ethnic minorities,advocating the integrated "digital + green" development philosophy.The project has been implemented in Mubin Middle School, Jinxiu School, Ningtang MiddleSchool in Xingning, Guangdong Province. With an original science popularization modelfeaturing "experimental interaction and video lectures", it vividly presents cutting-edgetechnologies and urban development results to nearly 10,000 teachers and students,allowing them to experience the charm of green technology and green buildings up close.Besides, Midea has worked with LONGi Green Energy to equip the project with a supportingphotovoltaic power generation system to popularize green energy knowledge amongstudents with practical applications and boost the development of green technologyeducation.
"Mobile Green Box" PromotionalPoster
"Mobile Green Box" Science Class
Supporting Rural Revitalization2022 was a key year for China to consolidate and expand the positive results achieved inthe battle against poverty and effectively transit to rural revitalization. Midea continues toplow deeper into the area of rural revitalization on top of more than 200 existing projectsas a way to actively respond to the country's rural revitalization strategy. In August 2022,Midea donated RMB 10 million to Qiandongnan Prefecture in Guizhou Province to promotethe development of local culture and education. It actively supports the local governmentin offering a series of vocational skills training and implementing relevant measures forassuring businesses and stabilizing employment, to further improve the employmentstability and professional competence of migrant workers in Qiandongnan and facilitate thehigh-quality development of the local economy and society.
Donation Ceremony of MideaSupporting the Developmentof Qiandongnan Prefecture
2022·MIDEA ESG REPORT
Community Contributions
ROBUST COMPLIANCE
MANAGEMENT
Robust corporate governance is the cornerstone of corporatedevelopment. Regarding compliance with laws and regulationsas the premise of all business activities, Midea has establisheda sound governance mechanism to fully implement the codeof conduct in board governance, compliance management, riskmanagement, anti-corruption and other aspects, so as to lay asolid foundation for the steady development of the Company.
ComplianceManagement
07"
Performance Highlights50% 86.7
200+
Independent directorsaccounted for over 50%
Distributed cash dividends ofRMB 86.8 billion in total
Conducted over 200 integritytraining sections
billionRMB
Governance MechanismGovernance Structure and Policy
Board Governance
Midea has been dedicated to building an open, transparent andefficient corporate governance system. In accordance with theCompany Law, the Securities Law and relevant laws and regulationsrequired by the China Securities Regulatory Commission, Midea hasestablished a corporate governance structure composed of theShareholder's Meeting, Board of Directors, Board of Supervisorsand the Management, and formed a coordination and balancemechanism that runs as regulated with well-defined powers andresponsibilities among the authority, decision-making, supervisory
Midea's Board of Directors is responsible to the shareholders,implements the resolutions issued by the Shareholder's Meeting,and exercises the decision-making authority on the Company'ssignificant matters. To ensure the diversity and rationality of theBoard's decision-making, the Board of Directors consists of 8members with expertise in different fields and diverse professionalbackgrounds, including 5 directors, 3 independent directors and 1female director. There are five special committees under the Boardof Directors, namely the Strategy Committee, Remuneration andAppraisal Committee, Nomination Committee, Audit Committee,and ESG Committee. Over 50% of the directors at the specialcommittees are independent directors, which ensures theprofessionalism and efficiency of the Board of Directors when itcomes to deliberations and making decisions. For the supervisionof the board governance, the Company has set up a Board ofSupervisors composed of 3 members, which supervises significantmatters of the Company and offers independent opinionsaccording to the Rules of Procedure for the Board of Supervisorsand other requirements, to protect the shareholders' rights andinterests.
organs and the management. For governance regulations, Mideahas established a series of normative documents such as theRulesof Procedure for the Board of Supervisors,Rules of Procedurefor the Board of Director Special Committees Working Rules forthe Board of Directors Secretaries, as well as theAdministrativeMeasures for Information Disclosure, Management Rules forRegistration of Recipients of Inside Information, andInternal AuditRules, to continuously improve its corporate governance policy.
During the reporting period, Midea convened 6 general meetingsof shareholders, 10 board meetings and 10 meetings of thesubcommittees of the Board of Directors (including 3 meetings ofthe Audit Committee, 3 meetings of the Nomination Committee,3 meetings of the Remuneration and Appraisal Committee, 1meeting of the Strategy Committee), and 5 meetings of the Boardof Supervisors.Midea constantly improves its incentive and restraint mechanismfor directors and senior executives. The Remuneration andAppraisal Committee manages the remunerations of theManagement according to the Remuneration ManagementRules for the Directors, Supervisors and Senior Executives andcontinuously strengthens the standardization and effectivenessof the Board of Directors' operation. The appraisal indicators ofthe Company's directors and senior executives are related tothe overall performance of the Company, and the performanceappraisal results of the business segments under their chargeare also taken into consideration to ensure the integrity of theindicators. The appraisal mechanism of Midea's Managementensures that directors and senior executives are fully motivated tofulfill their responsibilities, binding the responsibilities of the coremanagement team and the Company's long-term growth value.
Midea Corporate Governance StructureShareholder's Meeting
Board of Directors
Board ofSupervisorsStrategy Committee
Remuneration andAppraisal Committee
NominationCommitteeManagement
Audit CommitteeESG Committee
2022·MIDEA ESG REPORT
Compliance Management
Shareholder's Interests
Investor Communication
Shareholder Returns
Fully considering the investors' position, Midea takes effective measures to protectthe investors' legitimate rights and interests. The Company has established relevantmanagement rules for information disclosure in accordance with the law, uncloggedchannels for online and offline investor communication and interaction, and strives toimprove information transparency for its investors while maintaining sound operations,reasonably formulating dividend plans and continuing to give back to the shareholders.
Giving high priority to the communication with investors, Midea follows the communicationprinciples of compliance, equality, proactivity, honesty, and integrity and disclosescompany-related information through annual reports, ESG reports, and company websitesto protect the investors' right to know. In addition, the Company has set up an investorrelations department and assigned full-time personnel to handle related affairs. Mideacommunicates with investors about its development strategy and current situation throughchannels such as shareholder's meetings and business performance briefings to realizetwo-way communication and positive interaction with investors.
Since its listing in 2013, Midea has been giving back to the shareholders and has formulateda sustainable and stable dividend policy and share repurchase policy. By 2022, Midea hasdistributed cash dividends of RMB 86.7 billion(includes the 2022annual dividend plan),with 58.2% of the net profit attributable to Midea's shareholders being distributed as cashdividends every year. To ensure a consistent and stable profit distribution policy and protectinvestor interests, Midea reviews its shareholder return plan at least every three years.While stabilizing its dividend payout, Midea has implemented a series of share repurchaseplans. Following the completion of an RMB 4 billion share repurchase in 2018, Midealaunched a repurchase plan in 2019 for its equity incentive schemes/employee stockownership schemes to maintain the stability of Midea's market value and the interests of allshareholders. As at 31 December 2022, the Company has used over RMB 2.6 billion for theshare repurchases during the year, with a total share repurchase reaching RMB 27.1 billion.To align the interests of the Company, shareholders and employees, Midea has beenadopting various stock incentive tools since 2014. By 2022, it has launched nine StockOption Incentive Schemes, six Restricted Share Incentive Schemes, eight Global PartnerStock Ownership Schemes and five Business Partner Stock Ownership Schemes. Mideanot only established a governance structure aligning the interests of senior managementand core business backbones with that of all shareholders but also formulated an incentivemechanism combining long and short-term incentives and restraints.
Adhering to the principle of "Legally Compliant Development of Midea", the Company regards law-abiding and compliant operation asan important prerequisite for its steady development and has built a compliance management system from three aspects: managementstructure, management policy and operation mechanism, and culture development.Compliance with the Law
Compliance Organizational StructureMidea's Board of Directors and top management attach great importance to compliance risk prevention and control. Three lines of defensehave been established to build a compliance system and continuously improve corporate compliance governance capabilities. Whenbuilding the second line of defense- a specialized compliance organization, Midea has set up the Group Legal Compliance Center to studyrelevant laws and regulations, as well as supervisory policies, coordinate Midea's compliance management, and provide business divisionswith guidance on proactively conducting compliance management. The Company has set up special compliance task groups under theGroup Legal Compliance Center, including Anti-bribery, Anti-monopoly, Trade Compliance, Data Compliance Task Groups, to improve itscompliance system in all aspects. To effectively implement its various compliance policies, the Group also appoints compliance officers andcompliance representatives in each business division to manage its routine compliance tasks, promptly report major compliance risks, andactively carry out compliance training and publicity. In addition, Midea has established a three-tiered compliance organizational structureand keeps enhancing the execution of compliance risk identification, assessment, prevention and control by continuously empowering itsbusiness units.
Midea Group's Three Lines of Defense for Compliance Management
Midea Group's Three-tiered Compliance Organizational Structure
First line of defenseSecond line of defenseThird line of defense
·Manager ·Employees
·Specializedcomplianceorganization
·Audit ·Investigation ·Inspection
010203
·Business managementand internal control bycompliance risk ownersand managers
·Risk guarantee ·Continuous improvement ·Compliance risk control·Others (includingquality, safety andfinancial control)
合规专项工作组Anti-corruption Task Group
Anti-monopoly Task GroupTrade Compliance Task GroupData Compliance Task GroupOther Compliance Task Groups
Tier 1
Tier 2
Tier 3
Group Legal Compliance CenterSpecial Compliance Task Group
Business Division Compliance
Officers
Business Department/Branchand SubsidiaryFactory ComplianceRepresentatives
2022·MIDEA ESG REPORT
Compliance Management
Compliance in Key Areas
Compliance Awareness
For management rules and operation mechanisms, Midea has established managementrules and control procedures in six key compliance areas, namely anti-unfair competition,anti-monopoly, data compliance, trade compliance, anti-commercial bribery and anti-money laundering. At the same time, the Company keeps up with the regulatory trendsboth at home and abroad and updates relevant rules. In 2022, since the new version of theAnti-monopolyLaw came into effect and theAnti-unfair Competition Law (Revised Draftfor Comments)was released, the Company, based on the "risk map" summarized globally,has actively organized the interpretation of laws and regulations, gap analysis and thematicseminars, and consulted external consultants when appropriate, to effectively implementrelevant laws, regulations and regulatory requirements.For data compliance, Midea has set up a data protection office and the Data ComplianceTask Group to lead its data compliance control. In 2022, the Company set up a data exportsecurity assessment project team, established several data approval processes accordingto theAdministrative Measures for Data Safety, Administrative Measures for PersonalInformation Protectionand other rules that had already been launched, and ensured datacompliance through a series of initiatives. In addition, the Company continued the datacompliance self-inspection of its apps, mini-programs, overseas official website, and ITsystem to reinforce data and personal privacy protection of related intelligent products.For the anti-unfair competition, anti-monopoly, and trade compliance areas, the Companysupplemented theAdministrative Measures for Anti-monopoly Compliance,AdministrativeMeasures for Trade Control Compliance, Compliance Guidelines for Advertising andPromotion Behaviorsin 2022, and has provided more concrete guidelines for complianceoperation in different business scenarios with reference to the typical cases announcedby regulatory authorities, further consolidating its compliance management foundation.Besides, the Group Legal Compliance Center worked closely with the Group's functionaldepartments, business divisions and other stakeholders to continuously improvecompliance rules and operation mechanisms for the compliance operations of routinebusiness and the management and control of third-party compliance risks.
Committed to internal compliance culture development, Midea publicizes relevantcompliance requirements among all employees through compliance newsletters, videocourses, special training, etc., to enhance their compliance awareness. The Company hasestablished an online training system covering all current employees, and provides basiclegal compliance training for all new employees. In 2022, Midea released more than 60compliance newsletters, covering current news, legal hotspots, new law express, caseanalysis, group policy analysis, etc. Meanwhile, the Company continuously steps up thetraining in key compliance areas. In 2022, it carried out nearly 50 thematic training sessionsin trade control, data compliance, foreign-related contracts and other areas and organizedthe third special training camp for data compliance workshops to constantly cultivatecompliance professionals.Series events of the first Midea Group CompliancePublicity Month
In March 2022, Midea officially launched its Compliance Publicity Monthevents. The presidents of business divisions and platforms signed theCompliance Commitment, undertaking compliance as their own responsibilityon behalf of its top management while securing the compliance of Midea.Chairman Paul Fang accepted the Compliance Commitments of all BUs onbehalf of the Group. BUs held events in sub-venues according to their actualbusiness situations, covering topics such as export control and sanctions,anti-money laundering, anti-corruption, anti-commercial bribery, taxationcompliance, anti-monopoly, intellectual property compliance and datacompliance. To further enhance employees' compliance awareness, theCompany held the first compliance knowledge competition as part of theseries of events during the Compliance Publicity Month. A total of 14 teamsfrom different BUs participated in the competition online, creating a goodinternal compliance atmosphere.
Compliance CertificationMidea actively responds to nationalpolicies and has been working extensivelyin the field of compliance for years.Pursuant to laws, regulations andinternational standards, the Companyimplements compliance rules basedon risk appetite and business priorities,by areas and phases. So far, Midea haspassed many compliance certificationssuch as TRUSTE, ISO 27001, ISO 37301and APEC CBPR.In 2022, Midea further improved its riskevaluation process, identified complianceobligations specified in anti-monopolyand data protection-related laws andregulations, and strengthened digital andsystematic management to integratecompliance obligations into the planning,operation and management of itscompliance management system, thuscontinuously improving its capability inthis respect.
Midea carries out business activities in strict accordance with all applicable laws andregulations, abides by high standards of business ethics and integrity, and prohibits anyform of commercial bribery. Based on theCode of Business Conduct of Midea Group,Midea has stipulated a code of conduct in business ethics including anti-corruption andformulated corresponding norms and procedures on such basis to continuously improve itsanti-corruption management system.To improve employees' awareness of integrity and compliance and enhance theeffectiveness of corruption control, Midea has established a reporting system andregulations such asAdministrative Measures for Rules on Reporting and Disposal of GiftsReceived and Integrity and Reporting. In the mean time, the Company has set up a tieredinvestigation mechanism for whistleblowing to ensure that the investigation is doneindependently and objectively, and the accountability stays fair and just, striving to improvethe consistency of accountability within business organizations and create a simple,transparent, fair and just business environment.Midea continues to carry out anti-corruption and integrity education and publicity onits employees through internal information platforms, integrity training sessions, routinepromotion and other channels and methods. For example, Midea releases integrity posterson important holidays to spread the concept of integrity among employees and holdsintegrity and anti-corruption activities such as integrity video filming and integrity indexsurvey to create a culture of corporate integrity. In 2022, Midea released graphic contentsuch as interpretations of integrity rules and case analysis on its internal informationplatform, which received a total of 191,379 views. It also organized more than 200 integritytraining sessions to improve the integrity awareness of all employees from multiple anglesand in all aspects.
ISO 37301: International StandardCertification of Compliance Management
Anti-corruption
Employee integrity training
2022·MIDEA ESG REPORT
Compliance Management
Regarding the supply chain as its lifeline, Midea organicallyintegrates the concept of social responsibility with supply chainmanagement, striving to create a compliant, green and sustainablesupply chain system.
Supply ChainManagement
08"
Performance Highlights100%4,324
1,000
Completed the socialresponsibility review on 100%newly introduced suppliers
4,324 existing supplierspassed the socialresponsibility self-assessmentand reviewOrganized green strategy training sessions on over 1,000 suppliers
Responsible Procurement
Review System
While practicing the responsible procurement principle, Midea continues to createsustainable value along the supply chain through a sound supplier review mechanism andthe building of the supplier performance capacity.
Midea has established a social responsibility review system for its suppliers in accordancewith ISO 14001, ISO 45001, IPC 1401 and other international standards for socialresponsibility management systems, as well as national laws and regulations relatedto safety, environmental protection, occupational health and fire protection, whileconsidering the actual situation of the Company. Midea, based on five aspects of laborrights, occupational health and safety, environmental protection, business ethics, andmanagement system, manages and supervises all direct trading suppliers (including OEM/ODM product assembly suppliers, parts suppliers, and raw material suppliers), includingthe evaluation of suppliers' CSR management system, conflict minerals, social responsibilitygoals and action plans, and other related contents.
2022·MIDEA ESG REPORT
Supply Chain Management
Review ProcessTo ensure the suppliers comply with its rules of social responsibility review, Midea hasestablished a supplier admission and assessment mechanism covering pre-eventmanagement, in-event management and post-event management. In 2022, Mideacompleted the social responsibility review on 100% of its newly introduced suppliers, and4,324 of the qualified existing suppliers in the system passed the social responsibility self-assessment and review.
Pre-event management
In-event management
Post-event management
·Review the suppliers' EHS qualifications·Conduct admission assessment on the suppliers according to thesupplier social responsibility review system·Clarify the fulfillment of social responsibility and accountabilityrequirements of the suppliers when introducing them and builda self-assessment mechanism to urge them to conduct socialresponsibility self-inspection
·Conduct evaluations on qualified suppliers on a regular basisaccording to the supplier social responsibility review system·Based on the routine evaluation results and the overallperformance of the suppliers, classify and grade the suppliers'social responsibility risks, and conduct on-site evaluations ofsome high-risk suppliers
·Establish six red lines for suppliers to fulfill their social responsibilitiesand incorporate them into Midea's Material Supplier CooperationAgreement and the Midea Supplier Code of Conduct.·For those who violate the red lines, restrict their supply ratio, cancelthe cooperation or impose other punishments according to theseverity of the circumstances. The use of child labor and forcedlabor is a veto item, and the cooperation will be terminated oncefound.
Midea takes the issue of conflict minerals seriously. The Company publicly declares thatit will not purchase or support the use of any conflict minerals that directly or indirectlyfinance or support areas affected by armed conflicts. To avoid conflict or human rightsviolations caused by the minerals procured, Midea explicitly requires the suppliers tosign a "Conflict-free Minerals Pledge" covering raw materials such as tantalum, tin, goldand tungsten. Meanwhile, relevant evaluation clauses have been established for supplieradmission and day-to-day evaluation, The Company also conducts due diligence on theuse of conflict minerals in the supply chain using the RMI-CMRT questionnaire.Midea actively uses information technology to trace the origin of incoming materials forproduction. It uses the global supplier cloud (GSC) platform to manage the number andgeographical location of suppliers in real-time, requires suppliers to report the materials'attributes concerning their origins, and avoid purchasing raw materials from regionsinvolved in human rights violations, illegal trade, financing violence and other issues. Mideahas been dedicated to creating a safe, reliable and conflict-free supply chain.
Six red lines for suppliers of Midea Group to fulfill their responsibilities
Prohibit the use of any form of childlabor, forced labor, and any formof violence, verbal abuse, corporalpunishment or sexual harassmentagainst employees.
Prohibit any serious safety andenvironmental incidents, such aswork-related accidents, majorfire and explosion accidents, andserious environmental pollutionaccidents.
Prohibit the payment of employees'wages below the local minimumwage standard.
Prohibit any serious mass incidents.
Prohibit any form of bribery,extortion and kickbacks.
Prohibit the enterprise's restrictedreviews, suspended production andrectification, project termination,among others, as ordered by thegovernment due to the enterprise'sviolation of relevant national lawsand regulations.
Conflict Minerals Management
Midea Supplier Admission and Assessment Mechanism
2022·MIDEA ESG REPORT
Supply Chain Management
Awards
Award NameAwarding Unit
Top 20 "Listed Companies in Green Governance in the Greater BayArea"2022 ESG Industry Synergy Award2022 Forbes China Sustainable Development Industrial EnterprisesTop 50
Shenzhen Research Association ofCorporate GovernanceAlpworksForbes
Environ-mentalawards
Ranked 6th in 2022 Top 100 Chinese Large Enterprises in InnovationMidea's Intelligent Manufacturing Research Institute won the honorof "2022 China's Top Ten Scientific and Technological Advances inIntelligent Manufacturing" (key technologies of intelligent injectionmolding factory)Midea Biomedical was awarded the title of 2022 Enterprise StandardFrontrunnerMidea's Meysion won the 2022 Habitat Elite Summit "Science andTechnology Award"Ranked 13th in 2022 Top 500 Private Enterprises in R&D InvestmentRanked 2nd in 2022 Top 500 Private Enterprises in Invention PatentsIDC Future Enterprise Awards for China
China Enterprise Confederation / ChinaEnterprise Directors AssociationJiangsu Provincial Government, Ministryof Industry and Information Technology,Chinese Academy of Engineering, ChinaAssociation for Science and TechnologyEight ministries and commissions includingthe State Administration for MarketRegulation, Development and ReformCommission, and Ministry of Science andTechnologyOrganizing Committee of Habitat EliteSummit, China Real Estate Chamber ofCommerce, Elite Habitat DevelopmentFoundationAll-China Federation of Industry andCommerceInternational Data Corporation (IDC)
Sci-techinnovationawards
Silver Award at the 23rd China Patent Awards selection in 2022(dishwasher, subcooling and preservation controlling method of meat,controller and refrigerator)2022 China Standards Innovation Contribution AwardStandard Contribution Award at the 3rd Science and TechnologyAward selectionForbes 2022 World's Best Employers2022 Industry Leader2022 Annual Global Influential Chinese Brand Award
China National Intellectual PropertyAdministrationState Administration for Market RegulationChina Society for the Promotion of Scienceand Technology CommercializationForbes21st Century Business Herald, SouthernFinance Omnimedia Corp.PR Newswire
Social
awards
The 17th Golden Round Table Best Board Award among ListedCompanies in China2022 Best Practices of Boards of Directors' Office AwardTop 100 ESG Listed Companies in China at the 16th Awards of ChineseListed Companies Value2022 Influential Listed Company on the Annual Golden Rankingsconducted by Xueqiu.com
China Association for Public CompaniesChina Association for Public CompaniesSecurities TimesXueqiu.com
Gover-nance
awards
35 Red Dot Design Awards58 iF Design Awards28 International Design Excellence Awards11 Good Design (G-Mark) Awards
German Design Council.iF Industrie Forum DesignIndustrial Designers Society of AmericaJapan Institute of Design Promotion
Design
awards
Report Index
GRIStandards
Disclosure ContentPosition in the ReportPage
GRI 2: General DisclosuresG2-1Organization Details
About Midea Group; Giving Back to the Local Community;Governance Mechanism;
3,66,72G2-2
Entities Included in theOrganization's Sustainability Report
About this ReportCover 2G2-3
Reporting Period, ReportingFrequency, & Contacts
About this ReportCover 2G2-6
Activities, Value Chain and OtherBusiness Relationships
About Midea Group; Green Procurement; Shareholder's
Interests; Responsible Procurement; Conflict Minerals
Management
3,25,73,78,80G2-7EmployeesAbout Midea Group3G2-9
Governance Structure andComposition
Governance Mechanism;72G2-12
Supervision Role of the HighestGovernance Body in Terms ofManagement Influence
About Midea Group; Governance Mechanism; Shareholder's
Interests; Compliance with the Law
3,72,73,74G2-13
Authorization for ManagementInfluence
ESG Management; Address Climate Change5,12G2-14
The Role of the HighestGovernance Body in SustainabilityReporting
ESG Key Issues Analysis; Communication with Stakeholders7,8G2-15Conflict of InterestGovernance Mechanism; Shareholder's Interests72,73G2-16
Communication of Important Issuesof Concern
ESG Key Issues Analysis; Communication with Stakeholders;
Governance Mechanism;
7,8,72G2-17
Common Knowledge of the HighestGovernance Body
ESG Management; Address Climate Change; Green Strategy;Moving Towards Carbon Neutrality; Governance Mechanism
7,12,18,19,72G2-18
Performance Evaluation of theHighest Governance Body
ESG Management; Governance Mechanism;5,72G2-19Remuneration PolicyEmployee Rights and Care; Governance Mechanism;54,72G2-20
Procedures for DeterminingRemuneration
Employee Rights and Care54G2-22
Statement on the SustainableDevelopment Strategy
Executive's Message2G2-23Policy CommitmentConflict Minerals Management80G2-24Integration Policy CommitmentESG Management; Compliance with the Law5,74G2-26
Mechanism for Seeking Advice &Raising Concerns
Executive's Message; Communication with Stakeholders2,8G2-29
Stakeholder EngagementApproaches
Communication with Stakeholders8GRI 3: Substantive IssuesG3-1
Process of Determining SubstantiveIssues
ESG Key Issues Analysis7G3-2Substantive Issues ListESG Key Issues Analysis7
G201: Economy
G3-3Management of Substantive IssuesG201-1
Economic Value Directly Generatedand Distributed
About Midea Group; Shareholder's Interests3,73G201-2
The Financial Impact of ClimateChange and Other Risks andOpportunities
About Midea Group; Address Climate Change3,13G201-3
Obligated Defined Benefit Plansand Other Retirement Plans
Employee Rights and Care55
2022·MIDEA ESG REPORT
Report Index
G203: Indirect Economic Impact
G3-3Management of Substantive IssuesG203-1
Infrastructure Investment andSupport Services
Supporting Rural Revitalization68G203-2
Significant Indirect EconomicImpact
Giving Back to the Local Community; Supporting Rural
Revitalization
66,68G205: Anti-corruptionG3-3Management of Substantive IssuesG205-2
Communication and Trainingon Anti-corruption Policies andProcedures
Compliance in Key Areas; Anti-corruption75,76G301: MaterialsG3-3Management of Substantive IssuesG301-2Recyclable Materials are AdoptedGreen Manufacturing Green Logistics30,33G301-3
Recycled Products and TheirPackaging Materials
Green Logistics; Green Recycling33,35G302: EnergyG3-3Management of Substantive IssuesG302-1
Energy Consumption Within theOrganization
Green Manufacturing27G302-3Energy IntensityGreen Manufacturing27G302-4Reduction of Energy ConsumptionGreen Manufacturing27G302-5
Decline in Energy Demand forProducts and Services
Green Design21G303: Water Resources and WastewaterG3-3Management of Substantive IssuesG303-1
Interaction of the Organization withWater as a Shared Resource
Green Manufacturing29G303-2
Managing Drainage RelatedImpacts
Green Manufacturing29G305: EmissionsG3-3Management of Substantive IssuesG305-1Direct GHG Emissions (Scope 1)Green Manufacturing27G305-2
Indirect GHG Emissions fromEnergy (Scope 2)
Green Manufacturing27G305-4Intensity of GHG EmissionsGreen Manufacturing27G306: Sewage and WasteG3-3Management of Substantive IssuesG306-5
Management of Significant Waste-Related Impacts
Green Manufacturing27G308: Supplier's Environmental AssessmentG3-3Management of Substantive IssuesG308-1
New Suppliers Selected Based onEnvironmental Assessment
Responsible Procurement79
G401: Employment
G3-3Management of Substantive IssuesG401-2
Benefits Offered to Full-timeEmployees (not IncludingTemporary or Part-time Employees)
Employee Rights and Care55G403: Occupational Health and SafetyG3-3Management of Substantive IssuesG403-1
Occupational Health and SafetyManagement System
Employee Health and Safety63G403-2
Hazard Identification, RiskAssessment and IncidentInvestigation
Employee Health and Safety63G403-3Occupational Health ServicesEmployee Rights and Care55G403-4
Occupational Health and SafetyMatters: Worker Participation,Consultation and Communication
Employee Health and Safety63G403-5
Occupational Health and SafetyTraining for Employees
Employee Health and Safety64G403-6Promoting Worker HealthEmployee Rights and Care54G403-7
Prevention and Mitigation ofOHS Impacts Directly Related toBusiness Relationships
Employee Health and Safety63G403-9Work-related InjuryEmployee Health and Safety63G403-10Work-related Health IssuesEmployee Health and Safety63G404: Training and EducationG3-3Management of Substantive IssuesG404-2
Employee Skill EnhancementProgram and Transition AssistanceProgram
Employee Growth and Development60G408: Child LaborG3-3Management of Substantive IssuesG408-1
Operating Sites and Suppliers withSignificant Risks of Child LaborIncidents
Responsible Procurement78G409: Forced or Compulsory LaborG3-3Management of Substantive IssuesG409-1
Operating Sites and Supplierswith Significant Risks of Forced orCompulsory Labor Incidents
Responsible Procurement80G413: Local communitiesG3-3Management of Substantive IssuesG413-1
Operational Sites with LocalCommunity Engagement, ImpactAssessment and DevelopmentPlans
Giving Back to the Local Community; Supporting Rural
Revitalization
66,68
G414: Supplier's Social Assessment
G3-3Management of Substantive IssuesG414-1
New Suppliers Selected Based onSocial Assessment
Responsible Procurement79
2022·MIDEA ESG REPORT
Report Index
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