2023
Stock code: 300037
Environmental, Socialand Governance (ESG) Report
About the ReportMessage From ChairmanAbout Capchem
ESG Highlights in 2023UN SDGs Performance and Responses
Multi-level Governance:
Complete and Robust ESGGovernance SystemESG GovernanceESG Management
Corporate GovernanceAnti-corruption and OperationComplianceRisk ManagementInformation Security and PrivacyProtection
Sustainable Operations:
A Compliant and RobustGovernance Framework0102
Environmental ManagementPollution and Resource ManagementAddressing Climate Change
R&D LeadershipQuality AssuranceCommitment to Green ProductCustomer Services
Innovation-driven:
Industry-leading Products andServices
Ecological Protection:
Green Environmental Practices inProduction and Operations
Collaborative E?ciency:
A Robust and ReliableSupply Chain
Supply Chain Management SystemBuilding A Resilient Supply ChainBuilding A Sustainable and Low-carbon Supply Chain
Chemical ManagementOccupational Health and Safety
Safety First:
Diverse and ComprehensiveSafeguards
Talent IntroductionTalent Development and IncentiveEmployee Rights, Interests andBene?ts
People-Oriented Philosophy:
The Development Environment ofHarmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive Communities
Addressing Social DemandPartnering with Communitiesfor Shared Development
Appendix126
Quantitative ESG Performance TablesIndicator IndexesIndependent AssuranceReaders Feedback Form
Table of Contents
About the ReportIntroductionWelcome to the 2023 Environmental, Social and Governance (ESG) Report of Shenzhen Capchem Technology Co.,Ltd. ("Capchem") (hereinafter referred to as the "Report"). Since 2020, the Company has been disclosing its perfor-mance in sustainability and social responsibility. In 2023, the Company upgrades the social responsibility report toESG report. The Report is an inaugural ESG report of the Company, which discloses ESG-related management sys-tems, working progress and performance in detail.
Reporting Period
Reporting Boundaries
The Report covers the period from January 1, 2023 to December 31, 2023 (hereinafter referred to as the "ReportingPeriod"). To ensure the completeness of the Report, part of content may go beyond the Reporting Period.
Unless otherwise speci?ed, the Report covers Shenzhen Capchem Technology Co., Ltd. , its subsidiaries of consoli-dated ?nancial statements, and its holding companies.
References
To facilitate the expression and reading, "Shenzhen Capchem Technology Co., Ltd." in the report is expressed as"Capchem" or "the Company". The above references may also include Shenzhen Capchem Technology Co., Ltd. sub-sidiaries of consolidated ?nancial statements,and its holding companies. The following are some of the subsidiariescovered in the report, and their abbreviations are as follows:
Shenzhen Capchem refers to Shenzhen Capchem Technology Co., Ltd.Sanming Hexa?uo refers to Sanming Hexa?uo Chemicals Co., Ltd.Huizhou Capchem refers to Huizhou Capchem Chemicals Co., Ltd.Jiangsu Hicomer refers to Jiangsu Hicomer New Materials Co., Ltd.Nantong Capchem refers to Nantong Capchem Electronic Materials Co., Ltd.Suzhou Novolyte refers to Novolyte Battery Materials (Suzhou) Co., Ltd.Nantong Capchem Technology refers to Nantong Capchem Technology Co., Ltd.Nantong Top refers to Nantong Top Electronic Materials Co., Ltd.Shanghai Hexa?uo refers to Hexa?uo Chemicals (Shanghai) Co., Ltd.Fujian Hepta?uo refers to Fujian Hepta?uo New Materials Co., Ltd.Hunan Fluopont refers to Hunan Fluopont New Materials Co., Ltd.Jiangsu Seals refers to Jiangsu Seals Electronic Materials Co., Ltd.Jingmen Capchem refers to Jingmen Capchem New Materials Co., Ltd.Tianjin Capchem refers to Tianjin Capchem Electronic Materials Co., Ltd.Chongqing Capchem refers to Chongqing Capchem New Materials Co., Ltd.Yichang Capchem refers to Yichang Capchem Technology Co., Ltd.Capchem Hong Kong refers to Capchem (Hong Kong) Co., Ltd.Capchem USA refers to Capchem Technology USA Inc.Capchem Poland refers to Capchem Poland Sp.z o.o.Capchem Europe refers to Capchem Europe B.V.Capchem Singapore refers to Capchem Singapore PTE.LTD.
Con?rmation and ApprovalThe Report is prepared by the ESG reporting teamof Capchem, and is released after the confirma-tion of management and approval of the Board ofDirectors.
Sources of InformationAll information and data disclosed in the report are sourced from our statistical data or o?cial documents.
Access and Response to the ReportThe Report is available in both simpli?ed Chineseand English for readers. If there is any discrepancybetween the Chinese version and the English ver-sion, the Chinese version shall prevail.
Basis of PreparationThe Report is compiled in accordance with theShenzhen Stock Exchange Social Responsibility Instructions to ListedCompanies, the Global Reporting Initiative Standards (GRI Standards), theSustainability Reporting Standards(Version2021), Sustainability Accounting Standards Board Standards (SASB Standards), the UN Sustainable DevelopmentGoals (SDGs), the Morgan Stanley Capital International Environmental, Social and Governance ("ESG") Rating (MSCIESG Rating), and theBasic Framework of Guidelines on Corporate Social Responsibility Reporting for Chinese Enter-prises(CASS-ESG 5.0).Reporting Principles
The Company identifies material issues with im-pacts on corporate business and internal and exter-nal environment of stakeholders' concern, to reportESG matters which may have material impacts onstakeholders. Please see "ESG Management" for theanalysis process and results of the issues.
Materiality
The Report discloses the ESG quantitative KPIs during theReporting Period and strives to explain the criteria, calcu-lation methods and parameters used to disclose the data.Quantitative
The content disclosed in the Report is object in na-ture, ensuring the impartial reporting of the Compa-ny's ESG performance during the Reporting Period.Impartiality
If there is any change in the statistics and disclosure meth-ods in the Report, it shall be fully explained in the annota-tions.Consistency
Sustainable Operations:
A Compliant and RobustGovernance Framework
Ecological Protection:
Green Environmental Practicesin Production and OperationsInnovation-driven:
Industry-leading Productsand Services
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive CommunitiesCapchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
Message From Chairman
ChairmanJohnson Qin
2023 was a year of steady progress for Capchem.With the rapid expanding of the gloabal electronicchemical market, Capchem remains committed toits core businesses and the innovation of new prod-ucts. Adhering to a diversified development strat-egy focused on electronic chemicals, we strive tobecome a global leader in electronic chemicals andfunctional materials, covering battery chemicals,organic ?uorine chemicals, capacitor chemicals, andsemiconductor chemicals.Environmental, Social, and Governance (ESG) is anadvanced concept for e?ective balance of the eco-nomic, environmental and social high-quality de-velopment. It has gradually become a crucial factorfor companies in reducing operational risks and en-hancing competitiveness. Capchem has, for the ?rsttime, upgraded its corporate social responsibility(CSR) report to an ESG report, which extensively re-fers to the United Nations Global Compact (UNGC),SDGs, guidelines from international and domesticorganizations, as well as issues of high concerns toall stakeholders, to a certain extend, to reduce sus-tainability risks that may have impacts on corporateoperations. By embracing outstanding practices inenvironmental, social, and corporate governance,we are gaining momentum for development tocreate a better future with electronic chemicals andfunctional materials.
Building a multi-level governance structure and creatinggreen valueCapchem is implementing a well-thought-out plan to incorporate theconcept of sustainable development into all aspects of operations.Upholding the sustainable development policy, we have establisheda multi-level, coordinated ESG governance framework from top tobottom to align sustainability with business development. In 2023, theStrategy Committee proudly embraced its new identity as the Strat-egy and Sustainable Development Committee. The Company alsosystematically identifies and prioritizes 18 material ESG issues and en-hances internal management, with a focus on corporate developmentstrategy and major concerns of all stakeholders. We have developedtheSustainable Development Policy of Capchemand implement theSDGs and corresponding risk management work, so that we haveproactively responded to the expectations of all stakeholders and sig-nificantly enhanced our ESG capabilities.Consolidating governance foundation and promotingsustainable operationsBuilding on robust and high-quality corporate governance, Cap-chem has consistently delivered returns to shareholders and inves-tors. We are also actively improving the construction of "three gov-ernance bodies" of the General Meeting of Shareholders, the Boardof Directors, and the Board of Supervisors. In our commitment torisk control, we have implemented the "Three Lines of Defense"and prevented compliance risks with a top-down approach to en-sure the ful?llment of responsibilities and obligations to investors.At Capchem, the principle of compliance is deeply ingrained inour daily operations. In 2023, the Company successfully achieveda 100% signing rate of theIntegrity Agreement or Integrity Clausefor suppliers. The Company achieved a 100% participation rate inanti-corruption training for all employees and a 100% signing rateof theCommitment Letter of Integrity.Pursuing innovation ceaselessly and improving services withtechnology
Capchem adheres to the concept of pursuing technological innova-tion-driven development, and drives green product innovation anddelivers high-quality customer services through approaches such asindustry-university-research cooperation and cooperation within theindustrial chain. We also integrate the advantages of the industrialchain to realize a green industry featuring green products, green pro-cesses, and green factories. By doing so, we have contributed remark-ably to green innovation in society. Upholding a customer-focusedand quality-first approach, we have implemented a comprehensivemanagement system tailored to customer needs. We actively encour-age and value customer opinions and feedback to consistently en-hance satisfaction with our products. In 2023, the Company investedRMB476.565 million in R&D and improved quality management bypursuing both domestic and international quality system certifica-tions, while also digitizing its quality management. As a result, ourproducts achieved a first pass yield of 99.43% for finished products.Embracing green practices and unleashing ecological potential
In response to the national "carbon peaking and carbon neutrality"goals, Capchem is committed to building an internationally renownedbrand that leads the industry with high-quality green products.Following standards such as ISO 14001、ISO 14064、ISO 45001、ISO 50001, we have established an Environment, Health, and Safety(EHS) management framework and an energy (carbon) managementframework. The two frameworks feature a clear definition of authorityand responsibility, ensuring institutional support for environmentalmanagement, climate change mitigation, and carbon management.The Company make relentless efforts to address climate risks andtransition risk while taping into its sustainability potential with thehelp of environmental impact testing and auditing, carbon emissioninventories, and other initiatives. In 2023,100% of chemical productionsites in operation had obtained ISO 14001 environmental manage-ment system certification. The cost of waste treatment per ton and theannual total input both significantly decreased. The Company alsocompleted carbon inventories and verified product carbon footprintsat key operation locations.
Safeguarding the safety red line and constructing a safetycultureCapchem takes the safety production responsibility system as thecarrier, the occupational health and safety management systemas the core, carries out in-depth construction of safety culture,continuously strengthens the construction of safety managementorganization, actively relies on scienti?c and technological powerto build and operate the safety information platform, guards thered line of safety, and builds the intrinsic safety of the electronicchemicals and functional materials which covers the whole pro-cess, the whole chain, and the whole lifecycle, so as to promote theenterprise's high quality development. The high safety promotesthe high-quality development of the enterprise. The company con-trols the risk of introducing hazardous substances from the source,systematically carries out hazard assessment, actively researchesand develops new substitution products, and gradually phases outhigh-risk chemicals. In 2023, 75% of our hazardous chemical pro-duction bases passed the ISO 45001 certi?cation.Building a resilient supply chain and creating a sustainablesystemBy virtue of a mature industry chain system, Capchem has createdan "e?cient, stable, ?exible, and agile" end-to-end integrated sup-ply chain, aiming to enhance supply chain resilience and strength-en the capability to create a sustainable and low-carbon supplychain. By continually upgrading supplier full lifecycle managementprocesses, successfully setting up and implementing a digitizedsupply chain management system, and building a more risk-resist-ant, flexible, and agile supply chain, we guide the industry chaintowards sustainable transformation. In 2023, 100% of our supplierssigned agreements and pledged to comply with theSupplier Codeof Conduct Management Systemand 100% of suppliers involvedin lithium production signed theHuman Rights Compliance andCon?ict-Free Minerals Declaration. The Company launched carbonmanagement status study assessments on suppliers that accountfor 90% of total annual deliveries.
Empowering talent growth and driving industry developmentCapchem, with an open and inclusive attitude, encourages all em-ployees to develop together with the Company. We o?er diverseplatforms and channels for talents to create value and share loveamid development. In 2023, the Company empowered employeesfrom diverse backgrounds with training programs, which totaledover 0.227 million hours. Young talents bene?t from a comprehen-sive qualification system and promotion mechanism. To retaincore and key talents, we offer performance-based bonuses andover 10.11 million shares of equity incentives. During various em-ployee communication meetings, we precisely address employeeexpectations. Our aim is to align talent growth with corporate de-velopment and ensure the "select, develop, nurture and retain".Participating in public welfare and creating social value
Capchem maintains positive interactions with society and activelyparticipates in social welfare activities. In 2023, the Company invest-ed RMB3.4286 million to support youth education and disadvan-taged groups. In recognition of our commitment to public welfare,we were awarded the title of "Outstanding Enterprise in Ful?llingSocial Responsibility". To contribute to community developmentboth at home and abroad, we organized various cultural and sportsactivities and contributed to popular science education in commu-nities. These e?orts have not only improved our corporate imageamong the government, communities, and the public but alsodemonstrated our commitment to ful?lling corporate citizenshipresponsibilities through tangible actions.Looking ahead, Capchem will remain dedicated to solidifyingand enhancing corporate competitiveness across seven majordirections, including operation compliance, product responsibility,ecological protection, safety production, win-win cooperation,people-oriented approaches, and charitable initiatives. Upholdingthe ESG principles, we will explore more sustainable developmentpaths and lead the industry towards high-quality development.
Sustainable Operations:
A Compliant and RobustGovernance Framework
Ecological Protection:
Green Environmental Practicesin Production and OperationsInnovation-driven:
Industry-leading Productsand Services
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive CommunitiesCapchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
About Capchem
Shenzhen Capchem Technology Co., Ltd.("Capchem") is committed to becominga leading global enterprise specializedin electronic chemicals and functionalmaterials. Founded in 2002, Capchem isformerly known as Shenzhen CapchemCo., Ltd. established in 1996. In 2010,Capchem was listed on the ShenzhenStock Exchange (stock code: 300037),with its headquarter in Shenzhen, China.Since establishment, Capchem is com-mitted to creating a better future withelectronic chemicals and functional ma-terials. Its main products include batterychemicals, organic fluorine chemicals,capacitor chemicals and semiconductorchemicals, and they are used in the ?eldssuch as new energy vehicles, consumerelectronics, urban rail transit, biomedi-cine, digital infrastructure, photovoltaicand industry manufacture.The vision of Capchem is to be a globalleader of electronic chemicals and func-tional materials. All the employees willadhere to the core value of "Innovationfor Application, Progress with Integrity",as well as the business philosophy of"Professional, Excellent, Solid, Thor-ough", and persevere in pursuit of excel-lence.
Business Philosophy STEP
Professional, Excellent, Solid and ThoroughThe business philosophy of "Professional, Excellent, Solid and Thorough" iscalled "STEP" for short, meaning one step one footprint, step by step.
Mission
Electronic Chemicals and Func-tional Materials for a Better Future
Vision
To Be a Global Leader of ElectronicChemicals and Functional Materials
Core Value
"Innovation for Application"Truth-Seeking, Sustaining Inno-vation, Customer-Orientationand Value-Creation"Progress with Integrity"Safety & Compliance, Sharing,Globalization, Sustainability
Innovation for Application, Pro-gress with Integrity
Focus on mainbusiness, cultivatecraftsmanship foremployees andprofessionalismfor the manage-ment, and assumethe industrialleadership for thecompany
Professional
Foster advantagesin technology,quality, marketand service
Excellent
Execute e?ectiveintegration ofindustrial chainaround the mainbusiness
Solid
Achieve econo-mies of scale andcost-advantagewhile upgradingproducts
Thorough
1011
Sustainable Operations:
A Compliant and RobustGovernance Framework
Ecological Protection:
Green Environmental Practicesin Production and OperationsInnovation-driven:
Industry-leading Productsand Services
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive CommunitiesCapchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
The Company is headquarted in Pingshan District, Shenzhen, with production basesspreading across Guangdong, Hunan, Fujian, Hubei, Tianjin, Jiangsu, Poland andother regions. At present, we have 28 wholly-owned (holding) subsidiaries suchas Huizhou Capchem, Nantong Capchem, Sanming Hexafluo. We also have whol-ly-owned (holding) subsidiaries in Hong Kong, the United States, Poland, Singapore,as well as o?ces in Japan and South Korea.
At present, we have wholly-owned(holding) subsidiaries such asHuizhou Capchem, NantongCapchem, Sanming Hexa?uo
+SitesWorldwide
4000
+Employees
China
North America
Capchem Technology USA Inc.Europe
Capchem Poland Sp.z o.o.Capchem Europe B.V.
East Asia
South Korea O?ceJapan O?ceSoutheast Asia
Capchem Singapore PTE.LTD.
Shenzhen Capchem Technolo-gy Co., Ltd. (HQ)Huizhou Capchem ChemicalsCo., Ltd.Nantong Capchem Electron-ic Materials Co., Ltd.Nantong Capchem Technolo-gy Co., Ltd.Sanming Hexa?uo ChemicalsCo., Ltd.Fujian Hepta?uo New MaterialsCo., Ltd.
Hexafluo Chemicals(Shanghai)Co., Ltd.Jiangsu Hicomer New MaterialsCo., Ltd.Jiangsu Seals Electronic Mate-rials Co., Ltd.Novolyte Battery Materials (Su-zhou) Co., Ltd.Hunan Fluopont New MaterialsCo., Ltd.Jingmen Capchem New Materi-als Co.,Ltd.
Tianjin Capchem Electronic
Materials Co.,Ltd.
Nantong Top Electronic Materi-
als Co.,Ltd.
Chongqing Capchem New Ma-
terials Co., Ltd.
Yichang Capchem Technology
Co., Ltd.
Capchem (Hong Kong) Co., Ltd.
Capchem Supply Chain
1213
Sustainable Operations:
A Compliant and RobustGovernance Framework
Ecological Protection:
Green Environmental Practicesin Production and OperationsInnovation-driven:
Industry-leading Productsand Services
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive Communities
Capchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
Economic Performance
ESG Highlights in 2023
EnvironmentalPerformance
Social PerformanceCorporate Governance
7,483.95million
Operating Income
1,010.67millionNet pro?t
1.36
RMB per shareEarnings per share
17,624.31million
Weighted average return on equity
11.57
%Weighted average return on net assets
RMB
39.4
million
Environmental investment888,779.59 tCO
eCarbon dioxide emissions
120,938,036.57 kWhElectricity consumption
RMB
millionR&D investment
6.37
%R&D investment as a per-centage of total revenue
4,133Total workforce
%Percentage of female employeesOver
0.227
million hoursEmployee training hours
Number of independent directors
Number of female directors
%Coverage of integrity andcompliance training
Number of board meetings
%Board memberparticipation rate
Please refer to Appendix: Quantitative ESG Performance Tables for statistics.
1415
Sustainable Operations:
A Compliant and RobustGovernance Framework
Ecological Protection:
Green Environmental Practicesin Production and OperationsInnovation-driven:
Industry-leading Productsand Services
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive CommunitiesCapchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
UN SDGs Performance and ResponsesCapchem actively responses to SDGs and enhances capabilities for sustainability performance, committed to building a sustainable future.
Capchem is committed to operating our business in an e?ective, responsible, and transparentway. We consistently promote the compliance and integrity culture, eliminating all forms ofcorruption and bribery. We enhance privacy and information security measures, internalizingthe pursuit of high-quality corporate governance as a driving force for the Company's sustain-able development.
Capchem continuously strengthens technological research and development by increasing R&Dexpenditure, enhancing the construction of R&D teams, fostering collaborations in scienti?c re-search, and improving technological capabilities and industrial core competitiveness. The Com-pany rigorously controls product quality and safety, emphasizes green and low-carbon design,continuously optimizes processes and energy efficiency. We endeavor to achieve sustainablemanagement and e?cient utilization of natural resources, and deliver innovative, reliable, andgreen products.
Capchem actively promotes sustainable procurement, striving to achieve sustainable resource manage-ment and e?cient utilization. The Company incorporates climate change measures into the suppliermanagement process to continuously enhance the sustainability of the supply chain.
Capchem adheres to giving back to society with compassion and considers emphasizing so-cial responsibility and being an excellent corporate citizen as an integral part of corporate cul-ture. While creating economic value, the Company actively engages in various social welfareactivities, consolidating achievements in poverty alleviation and assistance. Through partic-ipation in charity and community exchange activities, the Company promotes the educationand dissemination of health knowledge, reduces inequality, collaborates with various stake-holders to build strong partnerships, and achieves the unity of corporate interests and socialbene?ts.
Capchem is committed to creating an equal, diverse, and inclusive workplace, eliminatingchild labor, forced labor, and all forms of discrimination, and promoting gender equality. TheCompany leverages the talent development philosophy of "Participate, Develop, Undertakeand Share" to ensure that employees are equally accessible to the skills needed for decentwork, facilitating the mutual growth and future creation of each employee and the Compa-ny. Through multi-dimensional human care and support arrangements, the Company helpsemployees achieve a balance between work and life, promoting both physical and mentalwell-being.
Capchem relentlessly advances chemical management and safety production management. By adopting clean and environmentally friendly technolo-gies, the Company enhances safety in the production process, reduces potential risks of hazardous chemicals to the life, health, and safety of employ-ees and on-site personnel, and creates a compliant, safe, and stable working environment.
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Compliant
an
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Governanc
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Framew
o
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Approaches:
Industry-leading
Products
and
Services
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Operations
Safety
First:
Diverse
and
Comprehensive
Safeguards
People-Oriented
Philosophy:
The
Development
Environment
of
Harmonious
Coexistence
Enga
gement
in
Public
Welfare:
Comm
itments
to
Div
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r
se
and
Inc
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Response to SDGs
Capchem adheres to the comprehensive integration of green and environmental protection concepts into all our production andoperations. By improving resource utilization e?ciency, adopting cleaner energy, technologies, and processes, the Companyenhances production sustainability. The Company actively addresses global climate change, strengthens the capacity to resistand adapt to climate change, vigorously promotes energy conservation and emissions reduction, facilitates resource recyclingand reuse, reduces waste generation and water pollution, and enhances the e?ciency of energy and resource utilization, therebyful?lling environmental protection responsibilities e?ectively with tangible actions.
1617
Capchem Enviromental, Social and Governance (ESG) Report
ESG ManagementIdentify
material ESG issuesDevelop Capchem Sustainable DevelopmentPoliciesIncorporate the performance of the company'sESG issues into the senior management's re-muneration evaluation system
ESG GovernanceBuild a top-down, three-tiered ESG governanceframework and rename the Strategy Committeeas the Strategy and Sustainable DevelopmentCommitteeFormulate the Commitment to Sustainable De-velopment
Multi-level Governance:
Complete and Robust ESGGovernance System
ESG, one of the important topics of global concern, has graduallybeen important consideration for corporate future development.Capchem has been always committed to its mission of "ElectronicChemicals and Functional Materials for a Better Future", fully inte-grating the sustainability development philosophy into businessdevelopment. Capchem builds and improves ESG governanceframework, conducts identification and analysis of material ESGissues, and strengthens communication with stakeholders. Cap-chem makes tangible efforts for ESG management improvementand action implementation, thus providing support to achieve sus-tainable operations and social sustainability.
Ecological Protection:
Green Environmental Practicesin Production and Operations
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive Communities
Sustainable Operations:
A Compliant and Robust
Governance Framework
Innovation-driven:
Industry-leading Productsand ServicesMulti-level Governance:
Complete and RobustESG Governance SystemCapchem Enviromental, Social and Governance (ESG) Report
Multi-level Governance:
Complete and RobustESG Governance System
Sustainable Operations:
A Compliant and RobustGovernance Framework
Ecological Protection:
Green Environmental Practicesin Production and OperationsInnovation-driven:
Industry-leading Productsand Services
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
1819
Engagement in Public Welfare:
Commitments to Diverse andInclusive Communities
Capchem Enviromental, Social and Governance (ESG) Report
Commitment to Sustainable DevelopmentWe abide by laws and regulations, strictly enforce business principles and codes of conduct, and proactively ful?ll our social re-sponsibilities. We focus on frontier technologies in new energy and new materials. We continuously invest, carry forward ?ne tradi-tions and strive for creativity. We practice excellence, serve the society and advance development and progress.
Technolog
ica
l
Innovation
O
p
e
r
ate
wit
h
In
t
e
g
rity
Safety
ProductionOccupational
Public
Welfare
Health
Go
Green
We gain insight into customer needs, explore innovation-based growth points, and keep develop-
ing and o?ering new products and services.
We comply with national and regional laws, regulations and policies.We make e?orts to re?ne corporate policies and processes. We adopt azero-tolerance approach to corruption and bribery.
We realize green development through technology empower-ment and provide environmentally friendly products in highquality.
We adhere to the safe development concept "people oriented,life ?rst".
We continuously improve the working environment, prevent and con-trol occupational disease hazards, and ensure the occupational healthof employees.
We actively participate in social public welfare undertakings to contribute forces to social harmo-
ny and progress.
ESG Governance
In order to better implement ESG management strategies and integrate ESG into corporate business operation systems, the Com-pany has built a top-down, three-tier ESG governance framework covering board level, management level and executive level andformulatedCapchem Sustainability Management System, which clari?es the management responsibilities of various levels acrossthe Company in relation to ESG matters.The Board of Directors sits at the highest decision-making level for ESG matters. In order to align with corporate strategy and sus-tainable development, improve the corporate governance structure, standardize ESG governance work, and achieve corporatesustainable development goals, the Company has taken a series of measures. During the Reporting Period, the Company formallyrenamed the Strategy Committee as the Strategy and Sustainable Development Committee and authorized the Strategy and Sus-tainable Development Committee to manage ESG work. The Company has set up an ESG Management O?ce, which is tasked withsupervising and managing the implementation of the Company's ESG agendas as it serves as the main management departmentfor ESG-related work at Capchem. The Company has mobilized the departments at headquarters and bases to establish regular/irregular ESG Working Group, whose responsibilities are to implement speci?c ESG-related work in various ?elds. Capchem carriesout complete ESG closed-loop management through the synergistic cooperation at di?erent levels to ensure that each departmentintegrates ESG concepts into daily work and improves the Company's ESG management level in an all-round way.
●The highest decision-making level on corporate ESG matters.●Lead and supervise the implementation of corporate ESG strategy.●Review and approve corporate ESG strategy, ESG report, etc.●Review the Company's ESG governance strategies and ESG risk identi?cation and assessment results, and con?rmcontrol actions on ESG issues with high risks.
●
Responsible for ESG governance supervision, including supervising and checking the process of identi?cation, as-sessment and management of issues related to the Company's ESG governance activities, the implementation ofrelevant indicators and the progress of goals, and approving ESG development plans and action plans.●
Review the annual ESG report, control the quality of the report and promote disclosure improvement.
●Other ESG-related powers and functions granted by the Board of Directors.
●Actively cooperate with and respond to short-, medium- and long-term corporate ESG development proposals, ESG
management systems, ESG system construction, ESG objectives, etc., and implement ESG management of majorissues in their respective areas of expertise to ensure full integration of ESG management normalized work.●Lead (cooperate with) the development of the annual ESG working program for relevant issues, including the direc-tion of the current year's focus on improvement, assessment methods of objectives, and the achievement of thereward and punishment mechanism, etc.●Regularly report to the ESG Management O?ce on the current management status of each major issue, the opera-tion of the system and mechanism, the setting of objectives, the achievement of milestones, and the operation ofthe ESG reward and punishment mechanism, and continuously improve the performance of the Company's respon-sibilities under each ESG issue through the implementation of e?ective ESG action plans and the implementation ofa follow-up, evaluation and improvement mechanism.
●
Cooperate with the regular ESG information disclosure work, including but not limited to assisting in the preparationof the Company's ESG report, organizing the collection and aggregation of qualitative and quantitative data, andparticipating in ESG training.
●Formulate ESG governance plans and action plans, and coordinate and promote the implementation of ESG govern-ance of the Company.●Formulate the Company's ESG governance objectives and sub-objectives, set medium- and long-term objec-tives and annual objectives, and formulate assessment systems for ESG objectives.
●Summarize the work plans and implementation status of each ESG team, assess the completion of ESG objectives,ensure the e?ectiveness of the follow-up, evaluation and improvement mechanism of ESG action plans, summarizethe completion status of the objectives and report to the Strategy and Sustainable Development Committee.
●Regularly prepare and publish the annual ESG report of the company, and disclose ESG-related information to the public
in a timely manner.
Board of Directors
Strategy andSustainableDevelopmentCommittee
ESG ManagementO?ce
ESG Task Force
Multi-level Governance:
Complete and RobustESG Governance System
Sustainable Operations:
A Compliant and RobustGovernance Framework
Ecological Protection:
Green Environmental Practicesin Production and OperationsInnovation-driven:
Industry-leading Productsand Services
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
2021
Engagement in Public Welfare:
Commitments to Diverse andInclusive CommunitiesCapchem Enviromental, Social and Governance (ESG) Report
ESG Management
By identifying material ESG issues andlistening to the opinions and suggestionsof stakeholders, Capchem fully integratesinternal and external concerns into ESGmanagement, providing scientific guid-ance and direction for the Company toimprove ESG practices.
To identify the priority of ESG management work, the Company has identified and sorted out material ESG issues relatedoperations, and through peer benchmarking analysis, external policy research, domestic and international capital market re-quirements sorting, and stakeholder questionnaire surveys, etc., it has screened and formed potentially important issues thatwill have an impact on the Company's business situation and the internal and external environments. Based on this, Cap-chem further analyzed and screened 18 material ESG issues, including 6 environmental issues, 8 social issues and 4 corporategovernance issues, and drew a materiality issue matrix, taking into account the current status of sustainable development ofthe Company and the industry in which it operates, as well as the priority issues of concern to various stakeholders.Capchem has also clarified the management responsibilities and indicators for these 18 ESG issues at all levels and depart-ments. The company has set relevant assessment indicators for the board of directors and management, including but notlimited to environmental compliance, occupational health and safety, chemical safety, etc., and has incorporated the perfor-mance of the company's ESG issues into the senior management's remuneration evaluation system, urging the fulfilment ofthe company's commitment to sustainable development.
Material ESG Issues
Capchem further analyzed andscreened material ESG issues
including environmental issues
social issues
corporate governance issues
Form the material issue matrix
Using the results of the stakeholder questionnaire as an importantbasis, and taking into account the opinions of internal and externalexperts, the issues of concern to peers and corporate business devel-opment, assess the materiality and priority of the issues, form a listof material issues, and draw a matrix of material issues.
Screen comprehensive ESG issue poolScreen potentially important issues affecting the Company's business and in-ternal and external environments through peer benchmarking analysis, externalpolicy research, domestic and international capital market requirements sorting,and stakeholder questionnaire surveys.
Report material issuesMake reports to the Board of Directors after reviewing and con?rming the issuematrix in alignment with the Company's strategic plan and disclose it in the ESGreport.
Analysisprocess ofmaterialissues
Analysis process of material issues
Multi-level Governance:
Complete and RobustESG Governance System
Sustainable Operations:
A Compliant and RobustGovernance Framework
Ecological Protection:
Green Environmental Practicesin Production and OperationsInnovation-driven:
Industry-leading Productsand Services
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
2223
Engagement in Public Welfare:
Commitments to Diverse andInclusive Communities
Capchem Enviromental, Social and Governance (ESG) Report
Material issue matrix of Capchem
Environmental issuesSocial issuesCorporate governance issues
After identifying and prioritizing material ESG issues, the Company formulatedCapchem Sustainable Development Policies. ThePolicies speci?es how Capchem will carry out ESG management work centering on the 18 material issues, in a bit to comprehen-sively improve the Company's ESG management. At the same time, Capchem also encourages suppliers and partners to complywith and refer toCapchem Sustainable Development Policies to jointly promote the sustainable development of the industry.
Management of Material ESG Issues
Importance to CapchemLow
High
High
Importance to stakeholders
Environmental compliance
Greenhouse gas and energy management
Occupational health and safety
Address climate change
Chemical safety
Employee career development
Employer rights, interests and bene?ts
Community engagement
Product quality and compliance
Customer service and satisfactionR&D, innovation and intellectual property
Privacy and information security
Business ethics and operation compliance
Corporate governanceSupply chain management
Water utilization
Green products
Emissions and waste management
StakeholdersIssues of key concernsCommunication approachesInvestors
Corporate governanceBusiness ethics and operation compliance
Investor research activ-itiesResults presentationsCompany announce-mentsInteraction platforms
The general meetingof shareholdersRoadshowsHotlineEmail
Regulators
Corporate governanceBusiness ethics and opera-tion complianceEnvironmental compli-anceAddress climate change
Greenhouse gas and energymanagementEmissions and waste Man-agementWater utilizationChemical safety
Irregular communicationInformation disclosureCompany o?cial website
Customers
Green productsProduct quality and complianceCustomer service and satisfactionR&D, innovation and intellectual propertyPrivacy and information Security
HotlineEmailWechat o?cial accountCompany o?cial web-site
Customer VisitsSatisfaction SurveySales and CustomerService
Suppliers andpartners
Supply chain managementR&D, innovation and intellectual propertyBusiness ethics and operation compliance
Supplier managementtrainingBusiness visitsCompany o?cial web-site
Wechat o?cialaccountHotlineReporting and com-plaint
Employees
Employee rights, inter-ests and bene?tsOccupational health andsafetyBusiness ethics andoperation compliance
Employee career develop-ment
Sta? meetingEmployee activitiesEmployee satisfactionsurveys
Employee symposi-umsSenior managementmeetingsReporting and com-plaintCommunitiesand the public
Emissions and waste managementCommunity engagement
Emission compliancePublic welfare activitiesCommunity exchange programs
Media
Address climate changeGreen productsCommunity engagementR&D, innovation and intellectual property
Public welfare activitiesNews reportPublic open day
Capchem is committed to building sound partnerships and reciprocal relationships with internal and external stakeholders, and strivesto realize a win-win with joint e?orts. The major stakeholders of Capchem include investors, regulators, customers, suppliers and part-ners, employees, communities and the public, media. During the Reporting Period, Capchem actively maintained communication withstakeholders, understood the demands and concerns of each stakeholder and made positive responses through practical actions.
Stakeholder Communication
2425
Capchem Enviromental, Social and Governance (ESG) Report
Anti-corruption and Operation Compliance
Zerocorruption-related cases
100%
of the Company's employees en-rolled in anti-corruption courses, and
100%
have signed theCommitment Letter of Integrity
Require
100%
of the Company's suppli-ers signed theIntegrity Agreementor integ-rity articles
GovernanceHeld
general meetings of shareholders,
board meetings and
supervisory board meetings to guarantee the standardized corporateoperation and scienti?c and e?ective decision-making on major mattersReceived the highest
"A"grade (excellent) for information disclosurefrom the Shenzhen Stock Exchange for two consecutive yearsOrganized and held
results presentations and released "Achievingprogress while maintaining stability with dedication and hard work --A Glimpse of the 2022 Annual Report of Capchem" through Capchem'sWechat o?cial account to introduce the main information of the annualreport to the investors, and to increase the readability and practicability ofthe annual report, with a
100%
of investor interaction response rate
No
signi?cant negative media coverage of the company
Information Security and Privacy ProtectionEstablished the Privacy ManagementO?ceObtained ISO 27001 Certi?cationRisk ManagementThoroughly implemented the internal "three lines of defense" risk man-agement
Sustainable Operations:
A Compliant and RobustGovernance Framework
Sound corporate governance is the cornerstone for an enterpriseto achieve long-term success. By establishing a sound governancestructure and making continuous improvements, Capchem pro-motes the construction of a culture of compliance and integrity,and enhances the protection of privacy and information security.Capchem has internalized the pursuit of high-quality corporategovernance into the driving force of its sustainable business.Capchem takes eight Principles of "Persistence" as guidelines,consolidates the moral cornerstone, continues to strengthen theCompany's governance framework and value distribution system,and drives the construction of the enterprise brand with excellentcorporate governance to create a new situation of high-qualitydevelopment.
Ecological Protection:
Green Environmental Practicesin Production and Operations
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive CommunitiesSustainable Operations:
A Compliant and RobustGovernance Framework
Innovation-driven:
Industry-leading Productsand ServicesMulti-level Governance:
Complete and RobustESG Governance SystemCapchem Enviromental, Social and Governance (ESG) Report
Capchem Poland
2627
Ecological Protection:
Green Environmental Practicesin Production and Operations
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive Communities
Capchem Enviromental, Social and Governance (ESG) Report
Corporate Governance
Based on Capchem's core values of "Innovation for Application, Progress with Integrity", the Company has put in place a soundcorporate governance system and framework, continues to improve the standardization, timeliness, integrity, accuracy and trans-parency of the Company's disclosure of information, maintains smooth communication with investors, and e?ectively safeguardsthe interests of all shareholders and the general public, so that the Company can achieve stability and sustainability.
Capchem abides by the requirementsof theCompany Law of the People'sRepublic of China, theSecurities Law ofthe People's Republic of China and oth-er laws and regulations, and complieswith its internalArticles of Associationtobuild up a corporate governance frame-work comprising the General Meetingof Shareholders, the Board of Directors,the Board of Supervisors, its specificcommittees and the management, so asto safeguard the rights and interests ofshareholders and investors, and to laysolid organizational foundation for theCompany's scienti?c and e?cient oper-ation. During the Reporting Period, theCompany held a total of 4 general meet-ings of shareholders, 10 board meetingsand 10 supervisory board meetings.
Solidifying the Foundation of Corporate Governance
Corporate governance structure of Capchem Company
General Meetingof Shareholders
Board of Directors
Board of Supervisors
Strategy and SustainableDevelopment Committee
Remuneration andEvaluation Committee
Nomination CommitteeAudit Committee
Overview of the responsibilities of "Three Governance Bodies"
●
The highest authority of the Company.●
The main responsibilities include deciding on the Company's business policies and investment plans, re-
viewing and approving reports from the Board of Directors/Supervisor, reviewing and approving the annual
?nancial budget/?nal account plans, reviewing and approving pro?t distribution and loss recovery plans,
and exercising decision-making authority on material issues such as the election and replacement of direc-
tors/supervisors, equity incentives, and hiring/dismissing accounting ?rms.
GeneralMeeting ofShareholders
●
The main responsibilities include convening shareholder meetings, deciding on the Company's businessplans and investment proposals, formulating the annual ?nancial budget and ?nal accounts, developingpro?t distribution and loss recovery plans, handling matters such as external investments, asset acquisi-tions, external guarantees, and related transactions within the authorized scope of shareholder meetings,appointing or dismissing the president and board secretary as well as appointing or dismissing senior exec-utives based on the president's nominations , etc.
Board of
Directors
●
Main responsibilities include reviewing and making written recommendations on the Company's periodicreports, inspecting the Company's ?nances, and supervising the performance of directors and senior man-agement, etc.
Board ofSupervisors
Please ?nd more details in theArticles of Association of Capchem at https://static.cninfo.com.cn/?nalpage/2023-11-30/1218480159.PDF.
Eight persistences in the strategy of Capchem Company
Adhere to a specializedpath with a focus onelectronic chemicals andfunctional materials.
Prioritize contributors,embody the value distri-bution system of "Partici-pate, Develop, Undertakeand Share".
Uphold the strategic posi-tioning of the company intechnological innovation.
Adhering to the Group's over-all plan, strengthening syner-gy, and optimise the businesssystem of the division, contin-uously improve the efficiencyof the company and stimulatethe company's strength.
Maintain a business modelof "products + solutions" .
Uphold the branding of asuperior quality enterprise,pursue internationalization,and advance both internaland external cycles withdual-drive strategies.
Maintaining the basic stabilityof the shareholding ratio of thebene?cial owner and the corpo-rate governance structure.
The eight Principles of"Persistence"
Pursue integrity and operationcompliance, adhere to a long-term perspective, embracegreen and low-carbon prac-tices, and follow the path ofsustainable development.
Sustainable Operations:
A Compliant and RobustGovernance Framework
Innovation-driven:
Industry-leading Productsand ServicesMulti-level Governance:
Complete and RobustESG Governance System
Capchem Enviromental, Social and Governance (ESG) Report
2829
Multi-level Governance:
Complete and RobustESG Governance System
Sustainable Operations:
A Compliant and RobustGovernance Framework
Ecological Protection:
Green Environmental Practicesin Production and OperationsInnovation-driven:
Industry-leading Productsand Services
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive CommunitiesCapchem Enviromental, Social and Governance (ESG) Report
The Board of Directors of the Companyhas set up the Strategy and SustainableDevelopment Committee, the Remuner-ation and Evaluation Committee and theNomination Committee, which providescienti?c and professional advice to de-cision-making of the Board of Directorsfrom various perspectives and ensure thescience-based, compliant and transpar-ent decision-making and managementwithin the Company.
Capchem has always been committed tobuilding a diversified, inclusive, profes-sional and compliant board of directorsand senior management talent team.The Company selects directors and seniormanagement talents based on variousdimensions such as competence, pro-fessional experience, educational back-ground and vocational skills, etc. Mean-while, the Company continuously paysattention to the diversity of the board
structure, which brings diversi?ed perspec-tives to the Company's decision-making.During the Reporting Period, the Com-pany's Board of Directors consisted of 9directors, including 3 independent direc-tors and 1 female director, all of whomhave rich experience in accounting, law,chemical industry and other industries.
The composition of sixth Board of DirectorsNameTitleGenderTenure(year)
Professionalbackground
Professional competenciesIndustryexperience
Accounting
Riskmanagement
Johnson QinChairmanMale15ManufacturingYesZhou DawenDirector, PresidentMale15ManufacturingYesZhengZhongtian
Vice ChairmanMale15ManufacturingYesZhongMeihong
DirectorFemale15ManufacturingYesZhou Aiping
Director,Executive Vice President
Male9ManufacturingYesXie WeidongDirector, Vice PresidentMale4
Manufacturing,
Finance andAccounting
Yes
Wang YongIndependent directorMale1InvestmentYesYesMeng HongIndependent directorMale3
Education andChemicals
YesZhangXiaoling
Independent directorMale9
Finance andLaw
Yes
The Company highly values the construction of a modern enterprise system, and establishes and improves management and op-eration systems in accordance with the scope of the concept of social responsibility. These e?orts have standardized the corporategovernance, provided institutional safeguards for the protection of the rights and interests of the stakeholders, as well as the basis forcorporate sustainability.During the Reporting Period, the Company, in accordance with the latest requirements of relevant laws and regulations, formulat-ed and revised seven corporate governance systems, including theArticles of Association, theAllowance Management System forDirectors and Supervisors, theTrading Management System for Financial Derivatives, theFutures Hedging Business ManagementSystems, theAppointment Systems for Accounting Firms, theWork Systems for Independent Directors, and theWork Rules forStrategy Committee
of the Board of Directors. These e?orts further clarify the responsibilities and obligations of relevant parties,thus safeguarding the legal rights and interests of both the Company and its shareholders.
In 2023, the Company organized various training sessions for the directors, supervisors, and senior executives, including the Train-ing for Independent Directors (Follow-up Training), Follow-up Training for Board Secretaries, Initial Training for Directors, Supervi-sors, and Senior Executives, as well as Training for Directors, Supervisors, and Senior Executives. These training sessions aimed tocontinuously enhance compliance awareness and performance capabilities of directors, supervisors, and senior executives, as wellas safeguard the legal rights and interests of both the Company and its shareholders.
Establishing a Sound Governance System to Safeguard the Legal Rights andInterests of the Company and Shareholders
Conducting Compliance Training for the Directors, Supervisors, and Senior Executivesto Continuously Strengthen Compliance Awareness and Performance Capabilities
During the Reporting Period, Capchem's independent directors conducted on-site inspections of major investment, production,and construction projects at Sanming Hexa?uo and Fujian Hepta?uo, as part of the e?orts to fully leverage the supervisory and ad-visory role of independent directors in corporate governance and ensure their e?ective ful?llment of responsibilities.
Independent Directors Conduct On-site Inspections at Sanming Hexa?uo and FujianHepta?uo
In September and December 2023, the independent directors of the Company actively participated in the 134th and 137th TrainingSessions (Follow-up) Training for Independent Directors of Listed Company by Shenzhen Stock Exchange, respectively. The trainingsessions aimed to help them better understand theOpinions on the Reform of the Independent Director System of Listed Compa-niesissued by the General O?ce of the State Council and theMeasures for the Administration of Independent Directors of ListedCompanies, as well as the reform directions and requirements outlined in the self-discipline regulation guidelines of the exchange.The independent directors will be able to adapt to the changes in the reform and enhance their compliance awareness and perfor-mance capabilities.
The 134th and 137th training sessions for independent directors of listed companies by Shenzhen Stock Exchange
The Company strives to help its subsidiaries standardize the decision-making mechanisms of their Boards of Directors and ensuretheir proper operation and scienti?c decision-making. Besides adhering to the responsibilities outlined in theRules of Procedureof the Board of Directors of Subsidiaries, each subsidiary is also required to enhance system management through the secretariesof their Boards of Directors. Furthermore, Capchem, through the process reshapement project, implemented annual operationalplanning and training activities for the General Meeting of Shareholders, the Board of Directors, and the Board of Supervisors for itssubsidiaries. This initiative aims to strengthen internal coordination and management as well as enhance the standardized opera-tion and decision-making of its subsidiaries.
Standardizing Decision-making Mechanisms, Improving the Operation of the Board ofDirectors, and Enhancing Governance Systems of Subsidiaries
3031
Multi-level Governance:
Complete and RobustESG Governance System
Sustainable Operations:
A Compliant and RobustGovernance Framework
Ecological Protection:
Green Environmental Practicesin Production and OperationsInnovation-driven:
Industry-leading Productsand Services
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive CommunitiesCapchem Enviromental, Social and Governance (ESG) Report
Anti-corruption and Operational Compliance
Anti-corruption and compliance are thefoundation of corporate business op-erations. Capchem always handles allbusiness relationships and transactionsin the spirit of integrity and strictness, andsticks to business ethics and complianceoperations in an orderly manner, commit-ted to creating a clean, transparent andcompliant business environment for allstakeholders.Capchem insists on compliant manage-ment while upholding fundamental princi-ples and adopts a zero-tolerance approachfor corruption, bribery, fraud and othermisconducts. The Company strictly abidesby theCivil Code of the People's Republicof China, the Criminal Law of the PeoplesRepublic of China, the Anti-Unfair Competi-
tion Law of the People's Republic of China,and the laws and regulations applicableto the places where it operates. On thisbasis, the Company has formulated inter-nal management regulations such as the
Anti-Corruption Regulations and the Auditand Supervision Reward and PunishmentManagement Measures.The Companyestablishes and continues to improve theinternal compliance corporate governanceframework, thus providing guidelinesfor the smooth implementation of an-ti-corruption, bribery and other businessethics-related work. During the reportingperiod, there were no lawsuits againstunfair competition practices, antitrust andantimonopoly practices, or against corruptpractices.
In terms of corporate governance, the Au-dit Committee and the Compliance Com-mittee under the Board of Directors are incharge of the Company's anti-corruptionand compliance work. The Company hasestablished the Audit Committee, which isresponsible for the overall guidance andsupervision of anti-corruption work, andthe Compliance Committee, which is incharge of the leadership, decision-making,guidance and coordination of compliancemanagement work. The Audit and Super-vision Department and the Compliance Of-?ce act as the executive bodies to promoteregular compliance audits and daily man-agement of corporate compliance to en-sure compliance in all business operationsof the Company, including all engineeringprojects and subsidiaries.Capchem's compliance management framework
●
Responsible for the development and implementationof systems related to business ethics and anti-corruptionwork, and reporting to the Audit Committee on the riskof non-compliance and improvement plans●
To establish a sound anti-fraud mechanism, and payreasonable attention to and check possible fraud in theaudit process
●
Responsible for publicity, education and training on an-ti-corruption and integrity policies●
Organize compliance anti-corruption audits covering alloperations across the Company on a three-year cycle
Audit and Supervision Department
●
Under the leadership of the Compliance Committee, carryout compliance management and implement the compa-ny's compliance management policies and requirements●
Organise the formulation and improvement of the com-pany's compliance management systems and regulations,and supervise and check the implementation of compli-ance management plans and tasks
●
Responsible for publicity, education and training on com-pliance management
●
Organise compliance management supervision and in-spection, report risks of non-compliance and improvementplans to the Compliance Committee, and notify and investi-gate risks of non-compliance and incidents
Compliance O?ce
●
Management body responsible for managing businessethics and corruption matters●
Guide and oversee anti-corruption and compliance work
Audit Committee
●
Comprehensively in charge of the leadership, decision-mak-ing, guidance and coordination of compliance managementwork●
Review the Company's compliance management policies,objectives and master plans●
Researching, deciding, deploying, guiding and coordinat-ing the company's compliance management work
Compliance Committee
Capchem strictly complies with relevant laws and regulations, including theShen-zhen Stock Exchange GEM Listing Rules, the Guidelines No. 2 of the Shenzhen StockExchange for the Self-regulation of Listed Companies—Standard Operation of Com-panies Listed on the Main Board, to perform information disclosure obligations. TheCompany has developed the Information Disclosure Management Policies, contin-uously enriches the content and form of information disclosure for enhancing thetransparency of information, and guarantee that information disclosure is lawful,compliant, true, accurate, and complete in a timely manner.During the Reporting Period, the Company disclosed a total of 196 announcements,including resolutions of meetings, periodic reports, profit distributions, and othermajor matters. With excellent disclosure performance, the Company has receivedthe highest "A" grade (excellent) for information disclosure from the Shenzhen StockExchange for two consecutive years.In addition to public information disclosure, the Company has put in place an arrayof communication channels for investors. The Company has developed theManage-ment Systems for Investor Relations, builds and improves communication channelssuch as investor research activities, results presentations, company announcements,interaction platforms, the general meeting of shareholders, roadshows, hotline andemail to listen to and respond to a wide range of issues of concern to investors. Whileenhancing the economic benefits, we strengthen and standardize the informationcommunication with our investors and potential investors, develop a long-term, sta-ble and harmonious positive interactive relationship and guarantees to keep inves-tors informed.During the Reporting Period, the Company adheres to principles of "compliant dis-closure of information, full disclosure of information, equal opportunity for investors,honesty and integrity, e?ciency and low consumption, and proactivity." We held 4results presentations. The Company responded to 44 questions from the ShenzhenStock Exchange's "Easy Interaction" platform, achieving a 100% response rate to in-vestor interactions.During the Reporting Period, by virtue of sound corporate governance, Capchemwon multiple awards from During the Reporting Period, China Securities Journal andother authoritative organizations, including "TOP 20 in Board Governance for ListedCompanies in the Greater Bay Area", "TOP 20 in Corporate Governance for ListedCompanies in the Greater Bay Area", and "Golden Bull Award of most Valuable Invest-ment". The Company was included in the indexes of MSCI and FTSE Russell indices.
Information Disclosure and Investor Relations Management
TOP 20 series of award for listed companies in the greater bay area
During the Reporting Period, the Companydisclosed a total of announcements
The Company responded to questionsfrom the Shenzhen Stock Exchange's "EasyInteraction" platform100%Achieving a response rate to investorinteractions
3233
Multi-level Governance:
Complete and RobustESG Governance System
Sustainable Operations:
A Compliant and RobustGovernance Framework
Ecological Protection:
Green Environmental Practicesin Production and OperationsInnovation-driven:
Industry-leading Productsand Services
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive CommunitiesCapchem Enviromental, Social and Governance (ESG) Report
Business ethic culture publicityactivities at Capchem
●
Organize "Information Security Management" compliance training for new hires
●
Mobilize cadres to take the Integrity Oath and conduct integrity presentations at annual planning meetings
●
Organize the signing of theIntegrity AgreementorIntegrity Articlesfor contractors
●
Regularly publish positive and negative cases in relation to corruption through the OA Integrity o?cial account●
Annual anti-corruption and compliance training
The Company has established a comprehensive reporting and complaint mecha-nism to encourage employees, suppliers and other stakeholders to make reports orcomplaints of the Company's violations of laws and disciplines in the course of op-erations by means of WeChat o?cial account, telephone, internal OA system, email,letter, and among others, anonymously or in real name. This endeavors to maintaina clean and honest business environment. In accordance with theProtection andIncentives Measures for Whistleblowers, the Company provides cash incentives forwhistleblowers who make reports with their real names according to the e?ective-ness of the information provided and the nature of the case. The Company also strict-ly keep the whistleblowers' personal information and all the information provided bythe whistleblower, and strictly prohibit any retaliation against the whistleblowers.The Company also requires 100% of its suppliers to sign theIntegrity AgreementorIntegrity Articlesto jointly build a clean supply chain.
The Company ?rmly promotes anti-corruption and compliance awareness publicity. The Company has listed anti-corruption andcompliance training as a mandatory course for all employees. With the help of channels such as OA, wechat public account, com-pany bulletin boards and company multimedia platforms, the Company conducts regular integrity publicity for employees. Mean-while, the Company requires all employees to sign the Commitment Letter of Integrity. During the Reporting Period, 100% of theCompany's employees enrolled in anti-corruption courses,and 100% have signed theCommitment Letter of Integrity.
100%The Company also requires itssuppliers to sign theIntegrityAgreementorIntegrity Articles
Channels for complaints and reporting
The Company's employees have signed theCommitmentLetter of Integrity100%
During the reporting period
Wechat O?cial Account: Integrity CapchemTel: +86 0755-89923410Email: audit@capchem.com
Address: The Audit and Supervision Department,
20/F, Capchem Plaza, Changye Road,Pingshan District, Shenzhen, ChinaZip code: 518118
3435
Multi-level Governance:
Complete and RobustESG Governance System
Sustainable Operations:
A Compliant and RobustGovernance Framework
Ecological Protection:
Green Environmental Practicesin Production and OperationsInnovation-driven:
Industry-leading Productsand Services
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive CommunitiesCapchem Enviromental, Social and Governance (ESG) Report
Information Security and Privacy Protection
Information security and privacy pro-tection are extremely important for thecompany's operations. Capchem strictlyadheres to the laws and regulationsof the country and region where theCompany is located, such as theCyber-security Law of the People's Republicof China,theData Security Law of thePeople's Republic of China,thePersonalInformation Protection Law of the Peo-ple's Republic of China.As the Companygradually expands its business overseas,it will face more diverse requirementsand challenges. Therefore, the Companywill continue to promote informationsecurity and privacy protection during itsoperations, and strive to build an infor-mation security and privacy protectionmanagement system that covers regu-latory requirements of both domesticand overseas business operations by
improving the organization, system andmanagement initiatives.The Company has set up a special Con?-dentiality Management O?ce to cooper-ate with all departments and subsidiariesto protect the information security of theCompany and customers. The Companyhas established a comprehensive infor-mation security and privacy protectionmanagement system based on applica-ble laws and regulations as well as bestindustry practices. The Company has for-mulated a series of internal policies suchas theInformation System Security Man-agement Rules and the Business SecretManagement Rules, and e?ectively incor-porated information security and privacyprotection requirements and measuresinto the Company's entire business pro-cesses and information systems, so as to
standardize and strengthen informationand data protection, reduce risks such asdata destruction and data leakage, andenhance the Company's overall infor-mation security management and riskresponse capabilities.In order to protect the Company's infor-mation assets, Capchem has adoptedthe best and most applicable informa-tion security and data protection tech-nologies, including purchase and installauthorized and intellectual property-pro-tected software and information systems,access control, asset encryption, virusprotection systems, log security auditing,data backup, and leakage prevention tobuild a reliable security infrastructure,reduce information security risks, andstrengthen sustainability in safeguardingits business operations.
Protecting corporate information secu-rity and individual privacy is the respon-sibility and obligation of Capchem. TheCompany adopts a series of measuresto protect the information security andprivacy of not only itself and its custom-ers, but also its suppliers. The Companyrequires suppliers to sign a privacy poli-cy protection statement to enable themto understand the protection policy andprecautions of Capchem for informationsecurity and the data privacy for suppli-ers. During the Reporting Period, Cap-chem did not experience any incidents
of information leakage or complaintsrelated to infringement of customer pri-vacy and loss of customer data.Backed by the above measures, the Com-pany has achieved certain results in infor-mation security and privacy protection.Capchem and its subsidiaries, HuizhouCapchem, Nantong Capchem havebeen quali?ed by ISO 27001 informationsecurity system certi?cation and passedthe annual review by the third-party au-dit authority.
Measures for information security management
DescriptionsAccess controlDeploy Internet behavior management systems to control access to network of the Company.Asset encryption
Use ?le encryption systems to automatically encrypt con?dential computer documents with-
in the Company to prevent unauthorized access and acquisition.Virus protection
Utilize Tianqing antivirus software system to protect computers at the Company's offices
from virus.Attack and defense drill
Conduct annual IT attack and defense drills for high-risk IT assets exposed to the public net-
work.Data backup
Adopt technical measures such as online and o?ine backups to secure the core electronic
data of the Company.Data leakage prevention
Intelligently detect and warn data transmission behaviors with leakage risks based on de-
?ned control policies.Employee trainingCarry out information security training for all employees every year.Disaster recovery
Establish a disaster recovery plan and backup management system to prevent data loss in
the event of a disaster.Intellectual property protectionPurchase genuine business-related software for employee use.
Capchem regards risk management as a priority in corporate management. We deeply implement the internal "three lines of defense"risk management framework. The Legal A?airs and Compliance Department serves as the Risk Management Department. The AuditCommittee, Audit and Supervision Department, external independent directors, and external audit ?rms constitute the Risk SupervisionDepartment. We proactively adapt to external regulatory requirements and changes in segment markets. We also continuously carry outrisk identi?cation, assessment, response, and supervision. Besides, we jointly and systematically advance risk management and re?neinternal risk control processes by virtue of institutional updates and process optimization. By doing so, we consistently pursue compliantoperations while growing together with our business partners.Capchem's "Three Lines of Defense" risk management system
Risk Management
Each business and functional de-partment manages its own risks.
The Legal Affairs and ComplianceDepartment in conjunction withfunctional departments, conductssystematic risk identi?cation, assess-ment, and response.
The Audit Committee, Audit and Su-pervision Department, external inde-pendent directors, and external audit?rms carry out supervision.The ?rst line of defense
The second line of defense
The third line of defense
Certi?cate of ISO 27001
The risks facing the Company mainly include safety and environ-mental risk, product quality risk, accounting tax risk, labor andemployment risk, intellectual property risk, trade control risk, over-seas operation risk, corporate governance risk, and informationsecurity risk. The Company has systematically compiled lists oflegal obligations for each type of risk. After identifying various risks,we categorize them into high risk, medium risk, and low risk basedon their frequency of occurrence and impact.
In terms of external collaboration, the Company regularly or irregu-larly engages third-party professional consulting agencies to inter-pret newly released/revised regulations, consult on organizationalupgrade, and guide process optimization. Furthermore, they assistin identifying and addressing relevant risks, enhancing the profes-sionalism of risk management, and improving the e?ectiveness ofrisk response. Meanwhile, the Company's independent directorsare involved in corporate governance and carry out supervisionof the Company on a regular or occasional basis through variousprofessional committees and external auditors. We continuouslysummarize experience and issues, improve the risk managementsystem, and enhance executive capabilities and work efficiency.Moreover, the Company ?rmly ful?lls risk management responsi-bilities and imposes clear rewards and penalties, thereby ensuringthe e?ective operation of the risk management system.
Risk identi?cation
In terms of internal management, in response to various types ofrisks, each functional department of the Company improves itsmanagement model and reduces management risks at all levelsby developing systems, forming teams, establishing regulations,and optimizing processes. Additionally, we formulate relevantresponse plans and contingency plans based on risk levels andfactors such as cost and time. This approach aims to minimizepotential risks in operations and ensure the smooth operation ofthe Company.
We engage in implementing risk management measures, pro-moting risk management systems, applying risk managementprocesses, conducting training on risk management, facilitatingthe exchange on risk management, as well as carrying out au-dits and supervision of risk management. In this process, theCompany has fostered a corporate culture of risk managementand raised employees' awareness of risk management. Throughpersistent e?orts towards risk management and the active par-ticipation of all employees, we have gradually established ane?ective mechanism for risk management.
Internal control
External collaborationCulture building
3637
Capchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
R&D HighlightsR&D investment of RMB
476.565
million
training sessions on R&D and intellectual property rights1,108
patents submitted and
trademarks registered
Green ProductsHuizhou Capchem adopts a green produc-tion process for carbonate solvents and con-tributes to the reduction of carbon dioxideemissions
Quality Assurance
99.43%
of ?rst pass yield for ?nished products
Zeromajor product quality incidents
enrollments in quality management training, em-ployees, with the average number of training hour peremployee reaching
8.4
hours
Customer ServicesOverall customer satisfaction score of over
for yearsBuilt a 360-degree customer-focused man-agement system
Innovation-driven:
Industry-leading Productsand Services
Capchem continuously strengthens technological R&D, enhancescore competitiveness of the industry, and rigorously controls prod-uct quality and safety. We prioritize green and low-carbon designwhile consistently improving process and energy efficiency. Ourultimate goal is to deliver innovative, reliable, and eco-friendlyproducts and solutions. In timely response to customer needs, wealso keep improving our customer service capabilities and custom-er service systems to create more value for customers.
Ecological Protection:
Green Environmental Practicesin Production and Operations
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive Communities
Sustainable Operations:
A Compliant and Robust
Governance Framework
Innovation-driven:
Industry-leading Prod-ucts and ServicesMulti-level Governance:
Complete and RobustESG Governance SystemCapchem Enviromental, Social and Governance (ESG) Report
Capchem R&D Labs
3839
Sustainable Operations:
A Compliant and RobustGovernance Framework
Ecological Protection:
Green Environmental Practicesin Production and OperationsInnovation-driven:
Industry-leading Prod-ucts and Services
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive CommunitiesCapchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
R&D Leadership
Innovation is the core driver for corporate development. Capchem continuously explores innovation to adapt to market changes,meet customer demands, and maintain a competitive advantage. By remaining at the forefront of domestic and international tech-nological developments, we focus on product innovation, process optimization, and product performance enhancement to reducecosts. We also consistently stimulate the innovative vitality of R&D sta? and improve our R&D management system. Further e?ortsare made to promote cooperation and exchange with universities, research institutes, and enterprises in the industry chain, as wellas to protect intellectual property rights. Our goal is to promote the high-quality development of the Company.
R&D LayoutCapchem is committed to becomingworld-leading company specializingin electronic chemicals and functionalmaterials and has prioritized R&D andinnovation since its foundation. Leverag-ing significant technological tasks andmajor engineering projects, the Compa-ny strengthens the integrated allocationof innovation elements such as projects,talents, bases, and funds. We have,promoted technological upgrading andlarge-scaled application, and enhancedour innovation capabilities. This, in turn,promotes the high-quality development
of the Company, the industry chain, andthe whole industry. By leading industryinnovation with technological innovationand R&D management processes, theCompany drives high-quality develop-ment across the entire industry chain.The Company has established a R&Dmanagement structure under the lead-ership of the Executive Committee.This structure consists of various R&Dmanagement entities such as researchinstitutes, business divisions, subsidiar-ies, production bases, and other subor-
dinate departments. These entities areresponsible for product R&D, technicalsupport, testing and validation, as wellas information management. This ap-proach provides robust organizationalsupport for the implementation of re-search activities.In pursuit of technological innova-tion-driven development, we continue tofoster profound technological innovationto drive technological advancementsand cultivate talent.
Capchem Research Institute
Certi?cation by CNAS
With the aim to stimulate the innovative motivation and potential of R&D personneland maintain a stable R&D team, Capchem has established an incentive mechanismwhich combines remuneration and benefits. By offering incentives such as equityincentives, year-end bonuses, project bonuses, and patent bonuses, this mechanismaims to motivate R&D personnel. Through these incentive measures, we stimulatethe enthusiasm and creativity of R&D personnel and improve the quality and e?cien-cy of technological R&D. This, in turn, enables us to maintain a competitive edge inthe intense market competition.
Shenzhen Enterprise Post-doctoral WorkstationShenzhen Academician Workstation
4041
Sustainable Operations:
A Compliant and RobustGovernance Framework
Ecological Protection:
Green Environmental Practicesin Production and Operations
Innovation-driven:
Industry-leading Prod-ucts and Services
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive Communities
Capchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
To further strengthen the expertise of R&D personnel and enhance their scienti?c innovation capabilities and R&D managementskills, the Company continuously o?ers relevant training. During the Reporting Period, Capchem organized 120 training sessionson R&D and intellectual property rights across various departments of the Research Institute, which totaled 151 hours.
R&D incentivesRemuneration incentivesNon-remuneration incentives●
Equity incentive●
Year-end bonus
●
Monthly performance-based
bonus
●
Incentive for R&D patent application
●
Project bonuses (such as the Excellent Project Bonus and the ProjectApproval Bonus)●
Patent bonuses
●
Monthly and quarterly evaluation bonuses
In order to refine the R&D process,achieve full lifecycle R&D management,and guide R&D innovation, the CapchemResearch Institute organized a varie-ty of thematic R&D activities in 2023,covering R&D management processes,the compliance and evidence chain ofprocess execution, project reviews, andexperience sharing. At these activities,the Technical Management Departmentand R&D personnel reviewed and ana-lyzed the execution of the R&D process,improved R&D management processes,and provided solid support for R&D inno-vation.
R&D management training at Capchem
R&D management training case
accounted for thetotal operatingrevenue
6.37%
the Company had a R&Dworkforce over
and a R&D investment ofRMB
476.565
millionDuring the Reporting Period
R&D Innovation MechanismThe innovation mechanism empowers Capchem to pursue innovative development and fully leverage new advantages. The Com-pany continuously improves the science and technology innovation system to lay a solid foundation for achieving strategic plans.In terms of industry exchanges, the Company actively cooperates with universities, industry associations, and peers to facilitateresource sharing and win-win cooperation among multiple sides.
While pursuing steady and e?cient development, Capchem is committed to serving as a bridge between universities and enter-prises. Through strategic partnerships with renowned domestic and international universities and research institutes, we aim tofoster collaboration in talent development and technological research. Our goal is to seamlessly integrate industry, university, andresearch, drive technological advancements, nurture talent, and facilitate the commercialization of research outcomes.
IPD process
01 Concept
02 Design
03 Development05 Release
04 Validation
06 Life cycleDesign and integra-
tion system
Analysis and testing
systemElectrolyte formula-tion system
Electrolyte testingsystemMaterial puri?ca-
tion system
New product
New process
New technology
New standard
Capchem's R&D innovation mechanism
Furthermore, the Company actively joins industry associations and builds a platform-based ecosystem that optimizes resourceallocation together with industry experts. In partnership with industry alliances and clusters, we also promote the low-carbon, re-source-e?cient, circular, and intelligent upgrade of the industry. These e?orts have strengthened our position in the ?eld of newmaterials.
China Industrial Association of Power SourcesChina Electronic Components AssociationChina Super Capacitor Industry AllianceNew Materials Branch, China Battery Industry Association
China Association of Fluorine and Silicone IndustryGuangdong Battery Industry AssociationShenzhen Modern Material Association
Institute of Energy Storage Engineering of the ChemicalIndustry and Engineering Society of ChinaMembership in industry associations
4243
Sustainable Operations:
A Compliant and RobustGovernance Framework
Ecological Protection:
Green Environmental Practicesin Production and OperationsInnovation-driven:
Industry-leading Prod-ucts and Services
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive Communities
Capchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
On October 21, 2023, the 13th ChineseManagement World Forum and the Chi-nese Management Model OutstandingAward Ceremony, hosted by the Organ-izing Committee of the Chinese Man-agement World Forum and the ChineseManagement Model 50+ Forum (C50+),were held in Shenzhen. Capchem, withits endeavors to innovation and explora-tion in management, was honored withthe Chinese Management Model Innova-tion Award.Capchem embodies qualities such as
the "Chinese entrepreneurial spirit","digital and intelligent reshaping power","long-termism strategy integrated intotop-level design", "aggregation, symbio-sis, and altruism", and "conscience-driv-en business creation and managementinnovation". It re?ects the resilience andstrength inherent in Capchem's corpo-rate culture and management philoso-phy. This is why Capchem has receivedthe Chinese Management Model Innova-tion Award.As the only award winner in Shenzhen,
Capchem adheres to the business philos-ophy of "Solid, Thorough, Excellent, andProfessional (STEP)" and the core valueof "Innovation for Application, Progresswith Integrity" in pursuit of excellence.Capchem also insists on "establishingthe brand through quality, enhancing thebrand through technology, and main-taining the brand through integrity". Thisapproach has helped Capchem reinforceits good brand image in the electronicchemicals and functional materials in-dustry.
Capchem wins the Chinese Management Model Innovation Award with the business philosophy of STEP
IPR Protection
Capchem always prioritizes integrat-ing its intellectual property right (IPR)strategy with the overall corporatemanagement strategy. The Companyadheres to the knowledge managementpolicy of "forward-looking planning,scienti?c management, Strict Protection,and efficient operation". Upholding thefundamental principles of "respectingintellectual property and encouragingtechnological innovation", we activelyadvance the IPR protection and manage-ment to facilitate the innovative develop-ment of the Company.
The Company continues to refine itsIPR-related management systems andprocesses and promote the e?ective op-eration of the IPR management systems.In 2023, we carried out the IPR Manage-ment and Innovation Achievement Pro-cess Reshaping Project to comprehen-sively review and standardize IPR-relatedbusiness processes. In a concerted e?ortto bolster IPR protection, the Companyhas developed the Intellectual PropertyManagement System (IPMS). Besidesenabling the full lifecycle managementof IPR business, this effort aims to real-
ize the systematized, platform-based,and digitized IPR management, therebyimproving efficiency and quality in IPRmanagement.Capchem focuses on four major researchdirections, with an emphasis on address-ing bottlenecks in electronic chemicalsand functional materials. We havesuccessfully bridged the gap betweenresearch outcomes and commercial-ization of engineering technologies,thus facilitating the implementation ofseveral projects related to innovativeachievements.
At Capchem, we continuously strengthen employees' awareness of IPR protection and build a corporate culture of "respectingknowledge, advocating innovation, pursuing integrity and compliance, as well as encouraging fair competition". During the Re-porting Period, the Intellectual Products and Information Research Department conducted multiple training sessions. The trainingcovered basic IPR-related knowledge, the cultivation of IPR awareness, practical skills, and case studies.
Cases of commercialization of innovative achievementsCarbonate Solvent for Lithium-ion
Battery Electrolytes
New Additive for Lithium-ion Bat-
tery ElectrolytesNew Film-forming Additive for Lithium-ion
Battery ElectrolytesPatented technologies
R&D advantagesR&D advantagesR&D advantages
Capchem's ECOSIP? Technology.
The carbonate solvent produced usingthis technology boasts high purity, lowenergy consumption, and mild conditionsfor reaction.
This new film-forming additive signifi-cantly improves the high-temperaturestorage and cycle performance of bat-teries. The technology is mature, tech-nologically advanced, and reliable, thusensuring excellent product quality.
The technology process is mature withminimal waste water, waste gas and solidwaste, signi?cantly improving the low-tem-perature and cycle performance of batter-ies.
The product holds core and formula pat-ents for intellectual property rights.
The product holds core and formula patentsfor intellectual property rights, with over tenpatents filed, including theNon-aqueousElectrolyte for Lithium-Ion BatteriesandLithi-um-Ion BatteriesandA Type of Non-aqueousElectrolyte for Lithium-Ion BatteriesandLithi-um-Ion Batteries.
Patented technologiesPatented technologies
Sanming Hexa?uo wins the title of "Model Enterprise in China's Fluorosilicone Industry"
The 16th Chinese Management ModelInnovation Award (2023)
2023 Gaogong Golden Globe Award Sanming Hexa?uo receives the
"Outstanding Achievement Awardof China's Fluorosilicone Industry"
4445
Sustainable Operations:
A Compliant and RobustGovernance Framework
Ecological Protection:
Green Environmental Practicesin Production and Operations
Innovation-driven:
Industry-leading Prod-ucts and Services
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive CommunitiesCapchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
"Intellectual Property Day" thematic activity at Capchem
Intellectual Property Day held by the Capchem Research Institute
The company's Research Institute organized the Intellectual Property Day on the 23rd World Intellectual Property Day to imple-ment the Company's IPR management policy and empower technological innovation. During the event, managers of the Intel-lectual Property Department provided a special lecture and Q&A session on intellectual property, thus strengthening employees'awareness of IPR protection and promoting the construction of an intellectual property culture.Capchem regards leading product quality as the driving force for long-term success. We rigorously control the quality and safety ofall products. Our quality policy is "accurately understanding customer needs, strictly implementing quality standards, continuouslyimproving quality services, ensuring the success of the ?rst delivery in every time, and pursuing perfect customer satisfaction". Wealso strive to provide better product and service quality and establish a quality management ecosystem with the characteristics ofCapchem.
Quality Assurance
Quality System
Capchem has established a quality management structure support by the Quality Assurance Center and Business DepartmentQuality Control, SQE and Base Quality Control. This comprehensive structure is designed to facilitate the e?cient operation of Cap-chem's quality systems. The Quality Assurance Center is responsible for formulating quality management strategies and plans inline with the Company's operational strategic goals. The Business Department Quality Control proposes requirements for qualitystrategy planning based on the actual needs of their respective products. SQE is tasked with overseeing the quality of suppliers andraw materials, while the Base Quality Control implements production control and ensures compliance testing at the base level.Overview of Capchem's quality systems
Process & standard
R&D qualityProduct qualityCustomer demandCustomer service
Product
Productprocess
Customer
Operationspeci?cationQuality inspection
Process controlException handlingQuality recti?cation
System managementSupervision and
inspection
Rule formulationProduct complianceContinuousimprovement
支
持
协
作BusinessDepartmentQualityControl
Base QualityControlQualityAssuranceCenter
SupplierSupplier qualityRaw material qualityRaw material
Collaboration between Quality Assurance
Center, Business Department Quality Control,
and Base Quality Control
SQE
Capchem make relentless e?orts to strengthen the awareness of IPR protection and foster a working environment that respectsinnovation.As of December 31, 2023, the company has submitted 1,108 patent applications, including 777 domestic patent appli-cations, 160 overseas invention patent applications and 171 PCT international patent applications.There were 334 domestic patentgranted, 78 overseas invention patent granted. In addition, the company has obtained 220 domestic and overseas registered trade-marks cumulatively.
Support
and
supervisionSupport
and
supervisionSupport
an
d
s
u
p
e
r
v
is
io
n
S
u
p
p
o
r
t
a
n
d
S
u
p
p
o
r
t
a
n
d
c
o
o
p
e
ra
ti
o
n
co
o
p
e
r
at
ion
Supervise
production
and
delivery
at
the
base
level
4647
Sustainable Operations:
A Compliant and RobustGovernance Framework
Ecological Protection:
Green Environmental Practicesin Production and Operations
Innovation-driven:
Industry-leading Prod-ucts and Services
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive CommunitiesCapchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
Capchem attaches great importance toproduct quality management and hasestablished a comprehensive qualitymanagement system throughout theproduct lifecycle, covering R&D, supplychain, and mass production. The systemsencompass various procedures such astheNon-Conforming Product ControlProcedure, theInternal Audit Procedure,
theCustomer Complaint ManagementProcedure, and theRegulations on Quali-ty Incident Escalation and AccountabilityManagement. The Company conductsmonthly or annual assessments of qual-ity by using indicators such as the qual-ification rate of raw materials, first passyield of ?nished products, and customercomplaints. For failed projects, the Com-
pany requires departments in chargeto conducts cause analysis and makingcorrections. This approach ensures thefull product lifecycle management fromdimensions such as R&D quality man-agement, supplier quality management,production quality management, andcustomer quality.
Flow chart of the full product lifecycle quality management of Capchem
Introduction to the full product lifecycle quality management of Capchem
R&D quality
Supplier qualityProduction qualityCustomer quality
Continuous improvement
Quality systemmanagement
Based on the actual R&D scenarios, R&Dquality management adopts the AdvancedProduct Quality Planning (APQP) devel-opment process. It utilizes quality controltools such as design matrix, Design FailureMode and E?ect Analysis (DFMEA), ProcessFailure Mode and E?ect Analysis (PFMEA),and special feature management. Fivemajor quality gates are also implementedto ensure the quality of the R&D process.
R&D quality management
Through means such as supplier development, admission audits, small-scale trial use, Produc-tion Part Approval Process (PPAP), abnormality handling, performance evaluation, change con-trol, special improvement, corrective actions, and phase-out, this approach ensures the qualityof raw materials and realize the full lifecycle quality management of suppliers.All raw material suppliers are required to sign theAgreement for Quality and EnvironmentalProtection, the Environmental Compliance Declaration,and theInvestigation Form of Envi-ronmental Control Substanceto ensure that ?nished products meet the requirements of theEU RoHS, REACH, and customer standards.
Supplier quality management
Utilizing statistical Process Control (SPC)tools and integrating information systemssuch as Manufacturing Execution System(MES), Distributed Control System (DCS),Programmable Logic Controller (PLC),and Laboratory Information ManagementSystem (LIMS), this approach comprehen-sively controls the factors of personnel,machines, materials, methods, environ-ment, and measurements throughout theproduction process, ensuring the consist-ency of the products.
Process quality management
A competent customer service teamcomposed of quality, technical, andsales professionals is set up. This teamis dedicated to providing customizedsolutions for customers and continu-ously improving customer satisfaction.
Customer quality management
Adhering to the principles of lean man-agement, this approach involves QualityControl Circle (QCC), Total ProductiveMaintenance (TPM), and team building.The goal is to eliminate waste, enhancethe quality awareness and innovation ca-pabilities of all employees, and improvethe overall quality.
Continuous improvement management
Through means such as annual performance evaluations of quality objectives, internal audits, external audits and management reviews,this approach seeks to continuously optimize and improve the quality management system. It also ensures its conformity, adequacy, ande?ectiveness, thereby maintaining the stability and e?ciency of the system operation.
Quality management system
Quality Management
System ISO 9001
Shenzhen CapchemHuizhou CapchemNantong CapchemSuzhou NovolyteJingmen CapchemSanming Hexa?uoNantong TopHunan FluopontJiangsu HicomerCapchem Poland
Shenzhen CapchemHuizhou CapchemNantong CapchemSuzhou NovolyteJingmen CapchemSanming Hexa?uoCapchem Poland
Shenzhen CapchemHuizhou Capchem
Automotive Quality ManagementSystem IATF 16949
Hazardous Substance ProcessManagement System QC 080000
Quality certi?cates of Capchem
Capchem guarantees product quality through internal and external audits. The Company conducts regular internal audits of thequality management system based on ISO9001 and IATF16949. These audits are designed to assess the conformity, adequacy,and e?ectiveness of the quality management system, thus providing insights into the current quality management for continuousimprovement. Furthermore, we engage the third parties to conduct external audits. During the Reporting Period, the Company ob-tained various certi?cations, such as the Quality Management System ISO 9001, the Automotive Quality Management System IATF16949, the Hazardous Substance Process Management System QC 080000, and the China National Accreditation Service for Con-formity Assessment (CNAS).
CoverageCoverageCoverage
4849
Sustainable Operations:
A Compliant and RobustGovernance Framework
Ecological Protection:
Green Environmental Practicesin Production and OperationsInnovation-driven:
Industry-leading Prod-ucts and Services
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive CommunitiesCapchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
Capchem Poland has successfully passedthe certi?cation audits for IATF16949 LOCand ISO9001. The thorough examinationand evaluation were conducted by anaudit team consisting of both Chinese andPolish auditors.
The Company is dedicated to digitizing product quality management by establishing an information system architecture thatcomprehensively monitors quality data at every stage from suppliers to customers. To ensure product quality, various informationsystems such as CRM, SRM, LIMS, MES, OA, and SAP have been used and promoted to build a complete digital quality managementsystem. The company controls the quality of raw materials, monitors the production process, analyzes data from product inspec-tion and sales, thus guaranteeing product quality in all aspects. With the synergy of these systems, the company is able to identifyproblems and make timely improvements at all stages, thus reducing the defective rate and improving customer satisfaction. Withthe support of the collaboration of these systems, Capchem can identify and promptly address issues at each stage, thereby reduc-ing defect rates and enhancing customer satisfaction.
Group photo of Capchem Poland passing IATF16949 LOC and ISO9001 Certi?cation
Capchem Poland Sp.z o.o. obtains IATF16949 LOC, ISO9001 Certi?cation
MarketingautomationCustomermanagementSales managementCRM
Comprehensive suppliermanagementRaw material traceability
SRM
Capchem's information system architecture
Laboratory information
management
Inspection
SPC……LIMS
Nonconforming productreviewAcceptance reviewOA
Inspection standardBasic material-relateddataQuality decision-making
......
SAP
Raw materialinspectionIncoming inspectionIn-process inspectionFinished productinspection......
MES
The ?rst pass yield of ?nished products reached There were major quality incidents
99.43%
zero
During the Reporting Period
The Company has formulated theIncoming Inspection Procedure, the Production Process Inspection Procedure, and theFinishedProduct Inspection Procedure. These procedures involve inspecting materials at various stages of production to ensure that theymeet quality standards and customer requirements.
In the event of nonconformity, the Company will control nonconforming items in accordance with theNonconformity Control Proce-dure. Each year, we will analyze quality issues identi?ed inside and outside the Company. A dedicated quality improvement team isset up to address these issues by adopting the Quality Control Circle (Quality Control Circle).
Raw material incoming inspectionIn-process control inspection
Finished product andshipment inspectionFlow chart of product inspection
Product inspection and nonconformity management
Quality Culture
Capchem believes that the long-term operation of the quality system is underpinned by quality culture. In order to continuouslyimprove quality management, we actively conduct training on quality management. We also develop internal and external trainingcourses to improve employees' theoretical knowledge and practical methods regarding product quality management.During the Reporting Period, Capchem organized 10 quality management training sessions, covering topics such as system certi?-cation, project management, product design, and quality improvement tools. The training recorded 591 enrollments, with an aver-age training duration of 8.4 hours per employee.
Quality Month activities
The Company planned and organizedthe Quality Month activities. ShenzhenCapchem, along with ten other com-panies including Huizhou Capchemand Nantong Capchem, jointly car-ried out the Quality Month activitieswith the theme of "Enhancing QualityAwareness and Promoting High-Qual-ity Development". The event involvedknowledge training, knowledge contests,special inspections, improvement work-shops, and quality essays.
The launch conference of Capchem's Quality Month activities
Nonconformity control procedure
Nonconformityidenti?cation
Nonconformitydisposal
NonconformityimprovementNonconformityMRB reviewNonconformity la-beling and isolation
5051
Sustainable Operations:
A Compliant and RobustGovernance Framework
Ecological Protection:
Green Environmental Practicesin Production and OperationsInnovation-driven:
Industry-leading Prod-ucts and Services
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive Communities
Capchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
Lean management
The Company rigorously controls product quality to ensure product stability and reliability, so the company's product quality hasbeen recognized by many parties. As of the end of the Reporting Period, we received the nomination for the Shenzhen Mayor'sQuality Award, the Huizhou Quality Award, and outstanding supplier awards from customers.
Internal auditor training for ISO 9001 and IATF 16949The Company organized joint learning ses-sions for departments including the Pro-curement and Logistics Center, ProductTechnology Center, Engineering Tech-nology Center, Quality Assurance Center,Base Quality Control, and Research In-stitute. These training sessions aim tofamiliarize employees with the QualityManagement System ISO 9001, the Au-tomotive Quality Management SystemIATF 16949, and audit techniques.
Group photo of internal auditor training for ISO 9001and IATF 16949
Under the leadership of the Company, allbases engaged in a series of lean manage-ment activities, including the Eagle EyeAction, Woodpecker Action, improvementworkshops, as well as regular competi-tions and evaluations. Some bases suchas Sanming Hexafluo, Huizhou Cap-chem, and Jingmen Capchem analyzedthe problems identified in the businessmanagement process and summarizedknowledge such as the checklists andcase libraries for error prevention, as partsof e?orts in response to the requirementsof the Company.
Posters for Woodpecker Action and Eagle Eye Action of Capchem
Commitment to Green Product
Capchem keenly understands that in a sustainable society, it's an inevitable choice to promote the transformation and upgradingof the traditional chemical industry towards green and sustainability This transformation requires advanced technology and inno-vation, but more importantly, it involves integrating green concepts into the Company's operation philosophy.Based on the mission of "Electronic Chemicals and Functional Materials for a Better Future", Capchem has promoted the "FourGreen" development strategy. This strategy involves exploring green products through advanced technology and innovation;adopting green processes by delving into production processes to reduce and eliminate pollution at the source; promoting theconstruction of green factories with rigorous standards and requirements; as well as creating a green future with green chemistryand contributing to the green transformation of the industry chain.
Green productGreen process
Green industryGreen factory
5253
Sustainable Operations:
A Compliant and RobustGovernance Framework
Ecological Protection:
Green Environmental Practicesin Production and OperationsInnovation-driven:
Industry-leading Prod-ucts and Services
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive Communities
Capchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
The ?uorinated coolant is a highly stable and fully ?uorinated liquid with a zero ozone- depletion potential (ODP) and a low globalwarming potential (GWP). This product is suitable for directly immersed cooling solutions. Besides ensuring the safe and e?ectiveoperation of electronic equipment, it can reduce energy consumption and minimize dependence on natural resources.
Per?uoroisobutyronitrile is a new-generation, eco-friendly power insulting gas with low global warming potential (GWP) value.A complete replacement of the sulfur hexa?uoride (SF6) could reduce more than 100 million tons of equivalent carbon emissioneach year.
The ?uorinated cleaning agent features moderate solubility and excellent material compatibility. With a zero ozone- depletion po-tential (ODP) and low global warming potential (GWP), it has been used in various ?elds, including medicine, electronics, opticallenses, new energy.In October 2023, Shenzhen Hexafluo was invited to attend the2023 ALDC Summit.At the Summit, Shenzhen Hexafluo also exhibited the fully-im-mersed phase change cooling model. As a typical applicationequipment of fluorinated coolants, the fully-immersed phasechange liquid cooler adopts the HEXAFLUO Boreaf
TM, the im-mersed phase change liquid cooling technology. This technol-ogy is capable of facilitating safe and reliable operation of theequipment as well as reducing energy consumption and carbonemissions.
In October 2023, Sanming Hexa?uo attended the 10th ChinaInternational Fluorosilicon Material Industry and ApplicationExhibition (CIFSIE 2023).At this exhibition, Sanming Hexa?uo showcased its full rangeof products and solutions as well as its product advantagesacross the entire organic ?uorine industry chain. By highlight-ing typical application scenarios of green products, it alsoexhibited Capchem's technical strength in the field of fluo-rine-containing chemical applications.
Fluorinated coolant
Per?uoroisobutyronitrile
Fluorinated cleaning agent
Green ProductsAdhering to the principle of sustainability, Capchem incorporates the green concept of "e?cient use of resources, energy conservation,environmental protection, and healthy and safe production" throughout the full product lifecycles. We have step up R&D e?orts to in-crease the "green content" of our products and also actively respond to national environmental protection policies for production andproducts. Capchem diligently implements various environmental management systems, contributing to environmental protection withoutstanding green products.Our product portfolio includes battery chemicals, organic ?uorine chemicals, capacitor chemicals and semiconductor chemicals. Theseproducts are applied in areas such as new energy vehicles, consumer electronics, urban rail transportation, biomedicine, digital infra-structure, photovoltaic energy storage, and industrial manufacturing.●Capchem's battery chemicals can be grouped under three main categories, namely electrolytes for lithium-ion batter-ies (including lithium-ion battery electrolytes, additives, new lithium salts, carbonate solvents), super-capacitor chemi-cals, primary lithium battery chemicals.●These products are used in industries such as new energy vehicle batteries, digital product batteries, and distributedenergy storage.
●Capchem is dedicated to addressing key issues related to long cycle life and good performance at both high and low tem-peratures. To date, the Company has achieved a number of outstanding results in the independent development of newadditives and formulations. Ethylene Oxide to Carbonate Solvents Integrated Process (ECOSIP
TM), empowered by the Carboncapture, use, and storage (CCUS) technology, is able to convert the carbon dioxide generated by petrochemical enterprisesinto the core material of the new energy industry—carbonate solvents. It is expected to consume 100,000 tons of carbon di-oxide annually.
Battery chemicals
●
The organic ?uorine chemicals produced and operated by Capchem are mainly downstream ?uorinated ?ne chemicals ofhexa?uoropropylene and downstream ?uoropolymer products of tetra?uoroethylene. Our main products include ?uorinat-ed pharmaceutical and pesticide intermediates, fluororubber vulcanizing agents, fluoropolymer modified comonomers,?uorinated surfactants, ?uorinated gases for power insulation.●These products are used in pharmaceutical industry, pesticides, textiles, electronics, machinery, automobiles, and other ter-minal consumption sectors.●Capchem aims to provide customers with a wide range of safe, eco-friendly, and high-performance organic ?uorine chemicals.
Organic ?uorine chemicals
Shenzhen Hexa?uo invited to attend the 2023 ALDC SummitSanming Hexa?uo attends the CIFSIE 2023
Capchem attends the China Materials ConferenceIn July 2023, Capchem was invited to attend the China Mate-rials Conference 2022-2023 (CMC) and the International NewMaterial Research Instrument and Equipment Exhibition.Capchem showcased innovative technologies of its majorfour business segments, namely battery chemicals, organic?uorine chemicals, capacitor chemicals etc. during the event.This also fully demonstrated the Company's strength in greenproducts.●
Semiconductor chemicals can be mainly classi?ed into high-purity chemicals, functional chemicals.●The downstream ?elds of semiconductor chemicals are mainly concentrated in display panels, solar photovoltaic, integrat-ed circuits and so on.●With more than twenty years of experience accumulation and technical advantages in deep cultivation of ?ne electronicchemicals, the company relies on innovative process technology, high-quality products and sound quality management sys-tem to win the trust of customers, and stable batch supply of mainstream customers in the industry.
Semiconductor chemicals
●
Capacitor chemicals include aluminium electrolytic capacitor chemicals, aluminium foil chemicals, tantalum capacitor
chemicals and functional materials. The main series of products include electrolytes and chemicals for aluminium electro-
lytic capacitors, chemicals for aluminium wound solid state capacitors, chemicals for aluminium foil, chemicals for alumini-
um laminated capacitors and chemicals for tantalum capacitors.●
These products are used in capacitor aluminum foil processing, aluminum electrolytic capacitors, and solid-state capacitors.●
With major breakthroughs in high pressure resistance and long service life, Capchem strives to properly solve the main is-
sues related to high voltage, long service life and high temperature resistance of capacitors in products such as, new energy
vehicles, and smart homes.
Capacitor chemicals
5455
Sustainable Operations:
A Compliant and RobustGovernance Framework
Ecological Protection:
Green Environmental Practicesin Production and Operations
Innovation-driven:
Industry-leading Prod-ucts and Services
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive Communities
Capchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
In its commitment to creating a better future with electronic chemicals and functional materials, Capchem continuously promotesthe innovation of green technologies and the development of eco-friendly industries. These industries include new energy, newmaterials, petrochemicals, light industry, textiles, and information technology. The Company consistently leads industry-widegreen and low-carbon transformation through continuous product and technology innovation.Green Industry
Capchem incorporates the concept of "innovation-driven, green development" into the development of new products as well as theoptimized design of production lines. This approach enhances the eco-friendly production process and re?ects the Company's commit-ment to green processes.Green Processes
Capchem is actively working towardslow-carbon production and the con-struction of green factories. We have con-tinuously intensi?ed e?orts towards theR&D and application of environmentalprotection technologies and equipment.Besides, we integrate the concepts of"more eco-friendly principles, cleanerprocesses, and more energy-efficientequipment" into various stages such as
product design, R&D, and production.This approach aims to reduce carbonemission and energy consumption in theproduction process as well as contributeto the realization of China's goals for car-bon neutrality and carbon peaking.In 2023, Sanming Hexa?uo and HuizhouCapchem were awarded the Green Fac-tory for their outstanding performance
in the ?eld of green sustainable develop-ment and green factory construction.In the future, Capchem will further en-gage in the construction and certi?cationof green factories, aiming to promotesustainable development, enhance en-vironmental protection, and foster thebalanced development of the economy,society, and environment.
Green Factories
Industry forapplication
Related technology, equip-
ment, and product
Product advantageGreen energy
R&D and production of invert-er control system
Capchem's battery chemicals, capacitor chemicals, and organic ?uorinated chem-icals are applied in solar inverters.
Petrochem-icals (newmaterials)
Fluorosilicone rubber
Vulcanized ?uororubber products feature superior properties such as compressiondeformation resistance, chemical corrosion resistance, and thermal stability.Fluorinated lubricant
Per?uoropolyether lubricants and vacuum pump oil feature heat resistance, oxida-tion resistance, radiation resistance, corrosion resistance and non-combustibility.These products are used in the sectors of chemicals, electronics, electrical appli-ances and machinery industry.Replacement for ozone-deplet-ing substances (ODS) with azero ozone- depletion potential(ODP) and low global warmingpotential (GWP)
The ?uorinated coolant produced by Capchem boasts excellent thermal conduc-tivity, electrical insulation, chemical stability, and non-combustibility. The productalso has excellent dielectric constant, ideal chemical inertia, thermal conductivity,zero ozone depletion potential (ODP), low global warming potential (GWP), andpower usage e?ciency (PUE) below 1.1.R&D and application of newtechnology for e?cient utiliza-tion of carbon dioxide
Huizhou Capchem has realized the systematic innovation of ionic liquid catalyst-re-actor-process through technological breakthroughs, and built an ionic liquid-cata-lyzed carbon dioxide synthesis carbonate industrial plant, which can realize greenand e?ective utilization of the greenhouse gas carbon dioxide.
Light industry
Semi-solid-state and all-solid-state lithium-ion batteries
Capchem actively taps into semi-solid-state lithium-ion batteries, all-solid-statelithium-ion batteries, and other new types of batteries, such as sodium-ion batterychemicals and solid-state battery chemicals. Shenzhen Capchem TechnologyCo., Ltd., a joint venture of the Company, is engaged in the R&D and marketing ofsolid-state battery materials and adhesives. Besides ensuring stable production ofsolid electrolytes, other categories of solid electrolytes have entered the samplingand collaborative testing phase.
Fluoroethylene carbonate(FEC)
The lithium-ion battery electrolyte produced by Capchem is mainly composed ofcarbonate solvents, various additives, and solute lithium salts. The additives in-clude vinylene carbonate (VC) and ?uoroethylene carbonate (FEC). FEC plays a rolein improving the electrochemical performance of the electrolyte and has a signif-icant impact on promoting the stability, ?ame retardancy, overcharge protection,and rate characteristics.Currently, Jiangsu Hicomer is responsible for the R&D, production, and sales ofadditives for lithium-ion battery electrolytes. Its FEC and VC additives are stablysupplied to domestic and international battery customers.TextilePolytetra?uoroethylene (PTFE)
Capchem's ?uoropolymers are primarily produced using tetra?uoroethylene andvarious perfluoromethyl vinyl ethers as raw materials. Polytetrafluoroethylene(PTFE), melt-processable polytetrafluoroethylene (PFA), perfluorosulfonic acid(PFSA), and other ?uoropolymers are manufactured through polymerization.
Informationindustry
Polymer solid capacitor
Capchem's dispersion agents for solid capacitors are water-based, eco-friendlypolymers. Through continuous technological iterations, this product features su-perior properties such as low impedance, high voltage resistance, surge resistance,and temperature resistance. It can help to improve capacity performance andreduce energy consumption, and is applied in areas such as new energy vehicles,industrial power supplies, laptops, and TVs.Supercapacitors
The chemicals for super-capacitors are mainly used in super-capacitors. Super-capacitors have characteristics such as high discharge power, a wide range ofapplicable temperatures, and long cycle life. Hence, they are used in ?elds such assmart meters, wind power generation, hybrid electric vehicles.
Supplementary raw materials
Process Route
Recycling of solvents, mother liquidsEquipment
Selection of high-performance, low-energy-consumption equipmentduring production processSelection of non-toxic, low-toxicand environmentally friendlySupplementary raw materials suchas water and carbonate solvents
CatalystSelection of e?cient catalysts
Economical atomsSafe and reliableLow energy con-sumptionEnvironmentallyfriendly and lowemissionQuality Assurance
Green andsustaina-ble devel-opmentOutputProcessInput
Adopt airtight measuresto prevent the escape of
waste gas and liquid
Recycling of coolingwater, energy
Resource Utilization ofOther Wastes
5657
Sustainable Operations:
A Compliant and RobustGovernance Framework
Ecological Protection:
Green Environmental Practicesin Production and OperationsInnovation-driven:
Industry-leading Prod-ucts and Services
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive CommunitiesCapchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
Capchem always adheres to the customer-focused concept when serving customers across all links. The Company constantlyimproves and standardizes the service process, reforms and innovates the service mode, builds an information-based customerservice management system, continuously creating value for customers, and assisting the high-quality development of enterprisesand industries. The Company won the "Internationally Reputable Brand" Award by the United Nations Industrial Development Or-ganization.
Customer Services
Customer Service SystemsCapchem has established a worldwidemarketing network and service systemaround the focus of customers, providingcustomers with stereoscopic servicesfor the whole life cycle of products. Weprovide customers with high-qualityproducts and services with innovativeproducts, nearby supply, internation-alized quality, professional tempera-ture-controlled logistics system for haz-ardous chemicals, and on-site service,etc., which greatly enhance customersatisfaction.
The Company has built a set of customerservice Management System and Pro-cess,
IncludingManagement of CustomerGrading and Classi?cation, Managementof Customer Visits, Management of Cus-tomer Technical Solutions, Managementof Customer Special Needs, CustomerSatisfaction Survey and Follow-up,Handling of Customer Complaints, Sta?Training, Internal Evaluation and Contin-uous Improvement Mechanismand soon. We have constructed a 360-degreecustomer-centered management system,
built a series of information technologyplatforms such as CRM, SRM, LIMS, DCS,MES, PLC, SAP, etc., and realized the dataintegration and information sharingbetween CRM and ERP, OA, and realizeda unified management platform for thewhole process of files, business oppor-tunities, sales, etc., and continuouslyoptimized the system according to theactual business needs, so as to improvebusiness e?ciency and improve servicequality.
InputImportCollectCollectCollect
SystemSystemInterfaceInterface
InterfaceInputInput
PortalPortal
PortalPortal
Input
Customer Relation-ship Managementsystem
BusinessOpportunityDevelopmentCustomer
visit
ContractSales targetCompetitorsSupplyDownstreamCustomersInformationMarket In-formationCustomerhierarchyCustomerpro?le
Invoicingand collec-tion
Sales outreceipt
Customerregistration
Customerfeedback
Sales order
Quotation
Demandplanning
TechnicalServices
Digital management platforms
Capchem actively responds to the con-cept of responsible marketing, startingfrom product design and development,to process control and product deliveryin full compliance with laws and regu-lations, and adopting environmentallyfriendly materials. The company for-mulates internal product labeling man-agement standards and methods, andclassifies products in accordance withGHS, customer requirements and otherclassi?cation methods, provides custom-ers with detailed information on productingredients, product composition, safe
use and disposal methods, and providescustomers with professional trainingservices on the safe use of chemicals. Wealso empower our customers to achievehigh-quality growth and sustainabledevelopment through exchanges andsharing of technology R&D and marketdevelopment research, and cooperationon key projects.In order to improve the quality of cus-tomer service, according to the type ofpersonnel serving customers, Capchemhas set up a competence certificationsystem for marketing sequence, tech-
nical service sequence and customerservice sequence, clari?ed the quali?ca-tion standards and competence modelsfor various positions, and through the "Capchem Management College", builtan online course system, combinedwith o?ine expert training, job rotation,teacher-take-apprentice approach, dif-ferentiated competence enhancementinitiatives for di?erent people, as well asregular experience-sharing and review,combined with the evaluation and rank-ing mechanism, to continually improvethe overall level of customer service.
Marketing Transformation Strategy Program
Customer Demand Analysis and Responses
The company establishes a scientificand reasonable customer grading mod-el, classifies and manages customers,provides customized and differentiatedservices for the specific needs of differ-ent customers in order to satisfy theirneeds to the maximum extent. In thestage of customer demand identi?cation,
the company insists on customer-cen-teredness, takes technological innova-tion as the guide, provides customerswith high-value products and solutions,and helps customers to make technolog-ical iteration and progress. In the prod-uct delivery stage, the company guidesthe order commitment and execution
process of the supply chain by settingefficient and standardized standards,and setting reasonable delivery times ac-cording to the di?erent needs of di?erentcustomers. Thus, it provides customerswith e?cient and high-quality technicalservices and improves customer satisfac-tion.
5859
Sustainable Operations:
A Compliant and RobustGovernance Framework
Ecological Protection:
Green Environmental Practicesin Production and Operations
Innovation-driven:
Industry-leading Prod-ucts and Services
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive CommunitiesCapchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
After-sales Services and Customer CommunicationCapchem established a well-improved after-sales service system and customer complaint-handling mechanism. After receiving acomplaint, the Company will immediately start theCustomer Complaint Handling Procedure, actively respond to the complaint,answer customer questions within 0.5 days, and take measures within 24 hours.After continuous exploration and improvement, Capchem has formed a customer-focused and operable customer satisfactionevaluation system. The Company evaluates and manages customer satisfaction and engagement with reference to the process oftheManagementofCustomer Satisfaction and Engagement, analyzes the survey results of customer satisfaction and engagement,understands the current and future needs and expectations of customers, examines its current management de?ciencies and ad-justs timely to continuously improve customer satisfaction and engagement.
0.5
daysAnswer customer questions within
hoursTake measures within
After summarizing the customer satisfaction questionnaire and the statistical resultsof performance data, the Company made theStatistical Analysis Report on CustomerSatisfaction Surveywhich showed the key contents a?ecting satisfaction, the Company'scompetitive advantages and room for further improvement, thus providing a basis forthe Company's product innovation and service promotion. In addition, the MarketingCenter will also describe the satisfaction survey method in the report, put forwardimprovement requirements and consummate for the problems existing in the surveyanalysis results. According to the customer sampling rules, the customer satisfactionsurvey covers VIPs and other customers, with about 200 participants. The Company'soverall customer satisfaction score has remained above 90 for many years. And thecompany has been honored with excellent supplier awards from domestic and inter-national customers.
Premise variable
Result variableQuality perceptionCustomer complaint
Loyalty
Brand
SatisfactionValue perception
Expected quality
Customer satisfaction survey model
The Company's overall customer satis-faction score has remained above90+
for many years
6061
Capchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
Ecological Protection:
Green EnvironmentalPractices in Production andOperationsCapchem is committed to comprehensively integrating the greenenvironmental philosophy into every aspect of its productionand operations. The Company actively addresses global climatechange, vigorously promotes energy conservation and emissionsreduction, continually optimizes the management of "waste gas,waste water, waste solid" and resources, practices green andlow-carbon operations, and effectively fulfills its environmentalprotection responsibilities.
Environmental Management SystemRMB
39.4443
million of environmental investmentRMB
4.15
million of total Investment in energy-savingtechnological transformation
Water Resources ManagementAchieved the reuse of reclaimed water,amounting to83,098.47 tonsThe reuse rate of reclaimed water reached
28%
Emissions and Waste ManagementPollutant emissions (NOx, PM, SOx, VOCs) from key discharge units below
23.5%
of the relevant standard limits.The total recycling and reuse rate of general waste reached reached
7.1%
Ecological Protection:
Green Environmental Practicesin Production and Operations
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive CommunitiesSustainable Operations:
A Compliant and RobustGovernance Framework
Innovation-driven:
Industry-leading Productsand ServicesMulti-level Governance:
Complete and RobustESG Governance SystemCapchem Enviromental, Social and Governance (ESG) Report
6465
Sustainable Operations:
A Compliant and RobustGovernance Framework
Ecological Protection:
Green Environmental Practicesin Production and Operations
Innovation-driven:
Industry-leading Productsand Services
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive Communities
Capchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
Environmental Management
Capchem is committed to continuously enhancing the environmental management system. Based on the characteristics of rawmaterials, processes, products, "waste gas, waste water, waste solid ", and the principles of reduction, resource utilization, andrecycling in the production process, the Company rationalizes the control of resource and energy consumption, optimizes wastemanagement, and strives for green development through technological empowerment. The Company insists on selecting moreenvironmentally friendly raw materials, adopting cleaner processes, and using more energy-e?cient equipment to build an inter-nationally reputable brand with leading in?uence in the era and industry, providing high-quality green products.The Company has established a comprehensive environmental management system in accordance with the ISO 14001 system. Asof the end of the Reporting Period, all bases in operation had obtained 100% certi?cation for ISO 14001 system, except for the new-ly built sites, which are required to obtain relevant permits for trial production according to laws and policies before certi?cation.The Company has implemented complete environmental management system audits on bases with stable operations in compli-ance with the ISO 14001 system.
Adhering to the philosophy of "safety ?rst, environmentally friendly, and resource conservation", the Company has con-structed a well-de?ned and responsible EHS management structure. This structure oversees decision-making, supervi-sion, and management of EHS-related issues, including addressing climate change, greenhouse gas and energy manage-ment, emissions and waste management, water resource utilization, and more.The Board of Directors serves as the highest decision-making body for corporate operations and EHS management. It isresponsible for major EHS decisions and supervises various EHS work. The Board of Directors establishes an ExecutiveCommittee to coordinate the implementation of EHS decisions. The EHS Management Committee, under the leadershipof the Board of Directors and the Executive Committee, is responsible for executing EHS decisions and tasks, deployingand guiding the Company's EHS work, formulating EHS policies, and organizing inspections and assessments. The EHSCenter assists the EHS Management Committee in supervising and managing the EHS work of each production base, en-suring the implementation of various EHS-related tasks at each production base.
Certi?cates of ISO 14001 certi?cation certi?cates for bases of Capchem
EHS management structure
Board of DirectorsExecutive Committee
EHS CenterEHS ManagementCommittee
Subsidiaries
●Responsible for major decisions regarding various Environmental, Health, and Safety (EHS)initiatives, overseeing all EHS activities within the Company.● Responsible for coordinating and advancing the implementation of EHS decisions across The Company.●Responsible for executing EHS decisions and tasks, deploying and guiding the Company's EHSinitiatives, specifying EHS policies, organizing inspections, and conducting assessments.●Responsible for assisting the EHS Management Committee in supervising and managing EHSactivities at various production sites.● Responsible for implementing various EHS-related tasks.
The Company actively enhances the environmental management through measures such as green technological innovation. Withoutstanding environmental governance performance and sustained and robust growth, the Company has received numerous hon-ors, including "Top 10 in Green Governance for Shenzhen Listed Companies", and "TOP 20 in Green Governance for Listed Compa-nies in the Greater Bay Area".
Sustainable Operations:
A Compliant and RobustGovernance Framework
Ecological Protection:
Green Environmental Practicesin Production and Operations
Innovation-driven:
Industry-leading Productsand Services
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive Communities
Capchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
Based on business development and op-erational conditions, Capchem has estab-lished environmental goals to continuallyenhance environmental management. TheCompany strives to prioritize ecology andpromote green development throughoutthe entire production and operational pro-cesses, aiming to increase the proactive-ness of its environmental management.In 2023, the Company has set relevantgoals for energy management, waste-water discharge management, and haz-ardous waste management, with 2022as the baseline year. The details of goalsetting and achievement are as follows:
Environmental Goals
Capchem strictly complies with laws andregulations such asthe EnvironmentalImpact Assessment Law of the Peo-ple's Republic of Chinato complete theenvironmental impact assessment forconstruction projects. Regular workplaceenvironmental risk assessments are con-ducted for all production bases to ensurethat the Company's environmental ef-forts comply with standards. All environ-mental facilities are operated normally,and pollutant emissions meet regulatorystandards.During the Reporting Period, all produc-
tion bases of the Company conductedenvironmental impact monitoring ontheir own or through third-party testinginstitutions with quali?cations in accord-ance with legal requirements, to monitorthe company's wastewater, waste gas,noise, etc., and ensure the authenticityand e?ectiveness of monitoring data.On an annual basis, the Company con-ducts environmental compliance reviewsand inspections at all locations ofoperations. This includes checks forlegal and regulatory compliance, integ-rity inspections of the environmental
management system and internal en-vironmental management procedure,as well as monitoring and auditing ofenvironmental emissions. During theReporting Period, the Company carriedout annual and semi-annual environ-mental impact monitoring throughmethods such as work inspections andEHS quarterly inspections. In conjunc-tion with system certi?cation and cus-tomer requirements, we also cooperatewith external organizations to conductannual or periodic monitoring of envi-ronmental impact factors such as emis-sions.
Environmental Monitoring and Auditing
Goal setting (compared with 2022)2023 goal achievementEnergy consumption3%reduction in energy consumption perunit of product
Achieved
Achieved
Achieved
Wastewater generation5%reduction in wastewater genera-tion per unit of productHazardous waste generation5%reduction in hazardous wastegeneration per unit of product
Capchem places high importance onthe prevention and response to suddenenvironmental incidents, striving toachieve the goal of zero environmentalemergencies across the entire company.The Company continuously enhancedthe awareness of environmental man-agement and environmental protectionamong employees, and carried outspecialised environmental protectiontraining on a regular basis. During the re-porting period, the Company carried outtraining on environmental compliancemanagement, identi?cation and evalua-tion of environmental factors, standard-ised management of waste gas, stand-ardised management of solid waste andother specialized training.
The Company has signed anEmergencyRescue Mutual Assistance Agreementfor Environmental Pollution SuddenIncidentswith relevant enterprises andnational hazardous chemical emergencyrescue bases to further strengthen theemergency preparedness and responsecapabilities for environmental emergen-cies.For speci?c situations such as chemicalleaks, hazardous waste leaks, and en-vironmental emergencies derived fromproduction safety accidents, the Com-pany has formulated anEmergency Re-sponse Plan for Sudden EnvironmentalIncidents. Regular joint drills and trainingsessions are conducted with government
agencies, dedicated enterprise fire andemergency rescue teams, and other ex-ternal and internal stakeholders.To enhance employees' emergency re-sponse capabilities and reduce potentialhazards from sudden environmental in-cidents, the Company conducted variousemergency drills during the ReportingPeriod. These included drills for domes-tic sewage treatment plant sewage leaks,hazardous waste leaks in production andstorage areas, and emergency drills formalfunctioning air pollution control facil-ities.
Environmental Emergency Responses and Publicity
Throughout the Reporting Period
over
the Company conductedenvironmental emergency drills
100%
The pass rate for environmental management training assessments reached
2600 individuals
with the participation ofmore than
more than
specialized environmental managementtraining sessions were conducted
individuals
with the participation of more than
6869
Sustainable Operations:
A Compliant and RobustGovernance Framework
Ecological Protection:
Green Environmental Practicesin Production and Operations
Innovation-driven:
Industry-leading Productsand Services
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive CommunitiesCapchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
Pollutant typesMain emission typesTreatment methodsOptimization measuresWastewaterIndustrial wastewater, domestic sewage
Treated through wastewatertreatment processes for reuse orstandard discharge
Optimization of wastewatertreatment and reclaimed waterutilization processesAir emissions
Nitrogen oxides (NO
x), particulate matter(PM), sulfur oxides (SO
x), volatile organiccompounds (VOC
s), odor, sulfuric acid mist,hydrochloric acid mist, non-methane totalhydrocarbons, etc.
Absorption method, condensationmethod, heat storage combustionmethod
Activated carbon adsorption,installation of regenerative thermaloxidizer (RTO), alkaline sprayHazardous waste
Waste organic solvents, used ?lters, wastepackaging materials, waste activated carbon,waste molecular sieves, production wasteliquid, wastewater treatment sludge, wasteorganic resins, residue from precisiondistillation, waste mineral oil, incinerationresidues, etc.
Entrusted to third-party quali?edorganizations for harmlesstreatment; Some hazardous wasteis incinerated
Use sludge drying agents toreduce sludge moisture content;Optimize product and raw materialpackagingGeneral waste
Common solid waste (such as householdgarbage, kitchen waste) and reusable solidwaste (such as waste wood, waste steel)
Entrusted to third-party quali?edorganizations for recycling;Entrusted to sanitation stations fortreatment
Recycle waste cardboard, productpackaging barrels, etc., to reducewaste generation
Pollutant and Resource Management
Capchem consistently adheres to green operations, strictly complying with the pollution emission standards stipulated by the op-erating locations. The Company ensures high-standard disposal and management of various emissions and waste generated dur-ing the production and operational processes. The Company continuously enhances its green environmental management, re?n-ing the management of emissions and waste, soil and groundwater, raw materials, and other environmental and resource aspects.E?orts are made to propel green development to become the everlasting foundation of The Company's growth.
Capchem strictly adheres to laws andregulations such as thePeople's Republicof China Solid Waste Pollution Preventionand Control Law,thePeople's Republicof China Water Pollution Prevention andControl Law, the People's Republic of Chi-na Soil Pollution Prevention and ControlLaw, the National Catalog of HazardousWaste,theMeasures for the Administra-tion of the Transfer of Hazardous Waste,theMeasures for the Management of Au-tomatic Monitoring of Pollution Sources,and other relevant legal, regulatory, stand-ard, policy, and technical documents. TheCompany actively ful?lls its environmen-tal protection responsibilities, ensuringthe compliant discharge of various typesof waste.
In order to ensure compliance manage-ment of pollutant emissions and waste,the Company has formulated a series ofinternal management systems such asthePollution Control Procedure, theSolidWaste Classi?cation Method, theHazard-ous Waste Management Procedure, andtheEnvironmental Target Indicator Man-agement. These systems aim to stand-ardize the proper disposal of various pol-lutant emissions. We also adopt relevantmeasures to reduce emissions of variouspollutants, thereby minimizing the envi-ronmental impact of pollutant emissions.The Company focuses on the reductionand resourceful treatment of the "wastegas, waste water, waste solid". First,
through process optimization and theclassification and collection of liquidwaste by concentration, we manage torecycle high-concentration waste liquid.Further measures such as sludge dryingand concentration are implemented to re-duce hazardous waste. Second, processessuch as triple-effect evaporation andwastewater deep treatment are adoptedto enable complete industrial wastewaterreuse and achieve net zero discharge.Third, multi-stage condensation is appliedto recycle high-concentration organicwaste gases. The solvents recycled arereused, thus reducing emissions of airpollutants from waste gases.
Emissions and Waste Management
Capchem places high importance onsoil and groundwater protection e?orts,strictly adhering to relevant policies andstandards such as the People's Republicof China Soil Pollution Prevention andControl Law, the People's Republic ofChina Water Pollution Prevention andControl Law,the Guidelines for HazardInvestigation of Soil Pollution in KeySupervised Units (Trial),the TechnicalGuidelines for Environmental Impact As-
sessment of Soil (Trial), andthe Techni-cal Guidelines for Environmental ImpactAssessment of Groundwater. To ensurethe timely identification and resolutionof potential issues related to soil andgroundwater protection, reducing therisk of soil and groundwater pollution,the Company has carried out systematicassessment of soil and groundwater,scientifically delineated the monitoringpoints and conducted regular monitor-
ing during the phases of project environ-mental assessment, construction, andoperation. During the Reporting Period,the Company did not experience anysignificant environmental events im-pacting soil and groundwater. During theReporting Period, the Company did notexperience any signi?cant environmentalevents impacting soil and groundwater.
Soil and Groundwater Protection
Adhering to the philosophy of "green and environmentally friendly, low-carbon operation", the Company insists on selecting green,safe, and environmentally friendly raw materials and supporting services to minimize the environmental impact of production andoperations at the source.The Company has established systems such asthe Environmental, Health, and Safety (EHS) Management Agreement,Suppli-er Environmental Compliance Declaration, andSupplier Environmental Management Material Survey Form. These systemsrequire raw material suppliers to minimize the use of substances and materials harmful to the environment, encourage theuse of recyclable and reusable packaging materials, and reduce environmental impact. Additionally, the Company regularlyorganizes suppliers to conduct EHS assessments, hazardous substance process management system reviews, carbon emis-sion reviews, and actively assists suppliers in implementing energy-saving and carbon-reducing actions (such as shorteningtransportation distances for supplied materials), ensuring that suppliers practice the philosophy of "green and environmen-tally friendly, low-carbon operation" in their processes and deliveries. Furthermore, the Company strives for reduced, recy-cled, and harmless raw material management through green product design and optimized manufacturing processes.
Raw Material Management
Water Resource UtilizationCapchem places high importance onthe management of water resource inits production and operational process-es. The Company strictly adheres to therequirements of laws and regulationssuch asthe Water Law of the People'sRepublic of Chinaandthe Water Pollu-tion Prevention and Control Law of thePeople's Republic of China, continuallyimproving water resource manage-ment. Through multiple measures suchas process optimization, technological
upgrades, and waste water recycling,the Company aims to reduce waterresource consumption and enhancewater resource utilization e?ciency.All water resources consumed by Cap-chem are sourced from municipal watersupplies, and the Company's activitiesdo not involve direct or indirect signifi-cant impacts on water resource throughwater extraction, consumption, or dis-charge. The primary water usage for the
Company is in the production processes.For wastewater with good quality, theCompany employs methods such assand filtration, carbon filtration, andultrafiltration for thorough treatment,ensuring it meets the standards for re-used water. This reclaimed water is thenreused in industrial processes, green irri-gation, road watering, etc., contributingto increased efficiency in the utilizationof industrial wastewater.
7071
Sustainable Operations:
A Compliant and RobustGovernance Framework
Ecological Protection:
Green Environmental Practicesin Production and OperationsInnovation-driven:
Industry-leading Productsand Services
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive Communities
Capchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
During the Reporting Period, the total water consumption of Capchem was 1,264,986.05 tons, with 294,047.94 tons of waste waterdischarge, achieving a water reuse of 83,098.47 tons. The water reuse rate (ratio of reuse of reclaimed water to total wastewater vol-ume) stood at 28%.
Key water conservation projects for Capchem in 2023Production baseWater conservation projectWater conservation bene?ts
Hicomer Base
Construction of a new triple-e?ect evaporation and wastewaterdeep treatment process, enabling complete wastewater reuseand achieving net zero emissions
Saving 600 to 700 tons of tap water consumptionper monthSanming Hexa?uoAdoption of condensed water reuse technology
Saving approximately 350 tons of tap water con-sumption per month
Packaging Material Management
The Company classifies packagingmaterials into regular packaging andhazardous chemical packaging basedon product characteristics. It has for-mulated and continuously optimizeddocuments such asDesign Standards
andIncoming Inspection Speci?cationfor Packaging Materialsto ensure thatthe management of packaging mate-rials complies with relevant domesticand international laws and regulations.The Company actively promotes greenpackaging material management, ad-hering consistently to the principles ofrecyclability, degradability, and light-weight use of packaging materials. Thisensures the environmental friendliness
of packaging materials and contributesto achieving energy savings and emis-sion reduction goals. The Company hasoptimized packaging material man-agement through various measures,including designing maximum light-weight solutions for disposable pack-aging materials, cleaning and reusingreusable packaging materials, enhanc-ing the utilization rate and lifespan ofpackaging materials. The recycling rateof packaging materials is included inthe assessment indicators of relevantdepartments.The current packaging materials used bythe Company include ISO tanks, stainlesssteel drums, plastic drums, renewable
paper products, wooden products, etc.The Company has achieved long-termand multiple reuses of packaging ma-terials for over 90% of its materials andproducts.Meanwhile, the Company actively coop-erates with customers to continuouslyoptimize packaging materials, providinggreen packaging material solutions interms of reuse, energy conservation,carbon reduction, cost reduction, and ef-?ciency improvement. We also work to-gether with customers to advance green,low-carbon, and eco-friendly packagingmaterial management.
Packaging and transportation materials for Capchem's productsCerti?cates of ISO 50001 energy management system certi?cation for production bases of Capchem
Capchem Energy (Carbon) Management Committee
PresidentEnergy (Carbon) Management Committee
Subsidiaries
EHS Center
Addressing Climate Change
Capchem proactively takes on its environmental responsibilities, actively engages in energy and carbon emission management,and promotes green and low-carbon o?ce practices. The Company also fully leverages its industrial chain synergy to reduce car-bon emissions, capitalizes on the advantages of production base layout, and provides customers with green and clean products,contributing to the low-carbon transformation of the industry chain and society.
Capchem strictly adheres to the laws and regulations ofthe People's Re-public of China on energy conservation. It has formulated managementsystems such asthe Capchem Energy (Carbon) Management Procedureandthe Greenhouse Gas Emission Management Procedure. The Compa-ny implements a "top-down, headquarters leading the base" energy (car-bon) management model and establishes an Energy (Carbon) Manage-ment Committee at the board level. This structure further enhances themanagement of energy and greenhouse gas emissions in the processesof production, procurement, and o?ce operations.
Energy and Greenhouse Gas Management
The Company has established a management system and conducted energy management activities in accordance with the ISO50001 Energy Management System. As of the end of the Reporting Period, Shenzhen Capchem, Huizhou Capchem, Sanming Hex-a?uo and Suzhou Novolyte had obtained ISO 50001 Energy Management System certi?cation.
CNAS C015-MMANAGEMENT SYSTEM
GB/T23331
CNAS C015-MMANAGEMENT SYSTEMGB/T23331
7273
Sustainable Operations:
A Compliant and RobustGovernance Framework
Ecological Protection:
Green Environmental Practicesin Production and OperationsInnovation-driven:
Industry-leading Productsand Services
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive CommunitiesCapchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
Capchem has implemented a series of measures, including enhancing the energy management platform, implementing ener-gy-saving technological improvements, and increasing the proportion of green energy usage, to reduce energy consumption andgreenhouse gas emissions.Capchem's major emission reduction measures
●Huizhou Capchem has establishedan energy management platformthat enables real-time and detailedmonitoring of energy usage. Thisplatform provides data support forenergy-saving e?orts.
●The installation of energy-savingdevices at the boiler's tail enablesthe secondary utilization of wasteheat, enhancing boiler thermalefficiency and reducing energyconsumption.●Optimizing the layout of steamsystem pipelines facilitates cas-caded utilization of steam.
●Installation of solar streetlights tofully utilize renewable energy.●Gradual increase in the proportionof green electricity usage in the lith-ium battery business segment. Thisis achieved through purchasinggreen electricity and green electric-ity certi?cate to enhance the overallgreen energy usage ratio.
Establishment of EnergyManagement Platform
Advancing Energy-SavingTechnological Transformation
Increasing the Use ofRenewable Energy
Installation of solar panels for the photovoltaic power generationproject at Capchem Plaze
Solar PV Street Lights at Sanming Hexa?uo
Capchem initiated the Distributed Photovoltaic Power GenerationProject at Shenzhen Capchem. The project officially signed the contractfor construction in July 2018. With a total investment of RMB800,000,the project covers an area of 430 square meters with solar panels. Thedesigned total installed capacity is 63 kW, and it includes 210 efficient300W monocrystalline silicon double-glass photovoltaic modules.After completion, the project is expected to generate approximately63,000 kWh of electricity annually. The power generation is utilized forself-consumption, and any surplus electricity is fed back to the grid.The generated electricity is connected to the public grid through thelow-voltage side, meeting the self-use requirements, and the excesselectricity is sold to the power supply department.This project meets the requirements of corrosion resistance and windresistance for over 25 years. It is expected to achieve an average annualenergy consumption savings of 7.74 tons of standard coal and reducecarbon dioxide emissions by approximately 33.21 tons.
Sanming Hexafluo actively responds to the national "carbon peakingand carbon neutrality" target and helps the company to achieve greentransformation and sustainable development. The company usesphotovoltaic lamps to replace traditional lamps, effectively optimizingthe energy consumption structure, using renewable energy instead ofnon-renewable energy, reducing non-renewable energy inputs, anddeveloping in the direction of energy decarbonization and cleanliness.
Shenzhen Capchem - Distributed Photovoltaic Power Generation Project
Sanming Hexa?uo – Implementing Solar PV Street Lights
Carbon Emission Accounting and Carbon Reduction in the Industrial Chain
The Company is steadily advancingthe work of carbon emission inventoryand verification. In accordance withthe guidance and requirements of ISO14064, the Company has conductedcarbon emission inventory and verifi-cation for eleven o?ces or productionbases, including Shenzhen Capchem,Huizhou Capchem, Sanming Hexa?uo,Nantong Capchem, Jiangsu Hicomer,and Hunan Fluopont. The Companyhas also conducted ISO 14067 ProductCarbon Footprints inventory and veri-fication for lithium battery electrolyteproduced in the Huizhou base, enhanc-
ing the transparency of product carbonemissions information.To strengthen the awareness and pro-fessional skills of management andemployees in carbon management,and enhance the importance of carbonmanagement in various functional de-partments and production bases, TheCompany has organized multiple car-bon empowerment training sessions.As of the end of 2023, a total of 30 em-ployees had obtained quali?cations ascarbon audit internal auditors.
Carbon Veri?cation Internal AuditorQuali?cation Certi?cate
In 2022, Huizhou Capchem initiated asolvent expansion project, focusing onthe production of Ethylene Carbonate(EC), Dimethyl Carbonate (DMC), DiethylCarbonate (DEC), and Ethyl Methyl Car-bonate (EMC). The project adopts thegreen carbonate solvent productionprocess known as Ethylene Oxide toCarbonate Solvents Integrated Process(ECOSIP?), which is an environmentallyfriendly integrated technology for theproduction of carbonate solvents fromethylene oxide. Using carbon dioxide asa raw material, this process substitutesmore toxic materials such as phosgene,
chloromethane, and chloroacetic acidmethyl ester, making it applicable toindustries like lithium batteries, environ-mental coatings, and organic synthesis.Through this green process, the projecttransforms carbon dioxide into greenand high-tech fine chemical materials,removing approximately 19,582 tons ofcarbon dioxide in 2023. This initiative sig-nificantly contributes to carbon dioxidereduction, aligning with the Company'scommitment to green environmentalpractices.
19,582 tons
removing carbon diox-ide in 2023
Huizhou Capchem's green carbonate solvent production process
Capchem has prominent advantages in carbon reduction, including its integrated product layout and production base distribution. Cap-chem delves into the carbon reduction potential in production processes, actively explores opportunities for carbon reduction collabora-tion and innovation, and enhances the level of carbon emission management.In terms of product and base distribution, Capchem covers the production of electrolytes, upstream solvents for electrolytes, additives,lithium salts, and more, forming a global base layout to support collaborative carbon reduction along the industrial chain. In productionprocesses, the Company vigorously promotes innovative green processes to achieve carbon reduction and lower the product carbonfootprint. Additionally, through initiatives such as green factory construction, carbon sequestration forest construction, and green o?cepractices, the Company comprehensively realizes green and low-carbon production operations.
approximately
7475
Sustainable Operations:
A Compliant and RobustGovernance Framework
Ecological Protection:
Green Environmental Practicesin Production and Operations
Innovation-driven:
Industry-leading Productsand Services
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive CommunitiesCapchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
Capchem actively implements the "carbon peak-ing and carbon neutrality" strategy and practicesthe concept of green development. In 2021, San-ming Hexa?uo coorperated with relevant organ-isation to build a carbon sequestration forest too?set carbon dioxide emissions. The project wascompleted in 2022, with approximately 28,400Chinese ?r, Schima superba Gardner and Champthunbergii with strong carbon sequestration ca-pabilities planted, totalling 158 mu. It is expectedto absorb more than 3,000 tons of carbon dioxideannually.
Capchem carbon neutrality demonstration forest
Sanming Hexa?uo collaborates with relevant units to build a carbon sequestration forest
Sanming Hexa?uo collaborates with external entities to build a carbon-neutral demonstration forest, contributing to the realizationof the "carbon peaking and carbon neutrality" goals.
Green Practice –Sanming Hexa?uoGreen Practice – Huizhou CapchemSanming Hexafluo places high importance on greenfactory management and has established a GreenFactory Leadership Group and a Green Factory Man-agement Office to promote the management and im-plementation of green factories. Sanming Hexafluo isdedicated to providing extensive ideas for the construc-tion of green factories in the context of carbon peakingand carbon neutrality, implementing green concepts inevery production process and operational aspect, andtaking multiple measures to achieve green production.
Based on the four principles of "harmonious coex-istence", "ecological efficiency", "lifecycle", and "hightechnology, high e?ciency", Huizhou Capchem takesgreen and sustainable development as the guidingdirection. The Company has increased investment ingreen transformation, actively created green factories,and achieved signi?cant results in sustainable devel-opment, energy conservation, emission reduction,low-carbon development, circular economy, andgreen product design.
While implementing energy-saving measures at production bases, the Company actively promotes green o?ce practices. Strictregulations are in place for o?ce energy consumption and water resource usage. The Company encourages employees to embracea green and low-carbon philosophy in their daily work and lives, making e?orts to reduce the carbon footprint associated with rou-tine o?ce activities.
Capchem World Environ-ment Day campaign
Capchem Introduces Expense Control Platform of Huilianyi Network to reduce carbon dioxide emissions in o?ces
●
Maximizing the use of natural lighting and implementing policies like "lightso? when not needed" to eliminate unnecessary lighting during daylight hours●Implementing smart controls such as sound, light, and motion sensorsto manage the switching of lights●Implementing temperature control for air conditioning, setting indoortemperatures no lower than 26 degrees Celsius in summer and no higherthan 20 degrees Celsius in winter
●Using water-saving faucets and encouraging employees to promptlyturn o? faucets after use to prevent unnecessary water wastage●Promoting the use of unmanned forklifts and electric forklifts●Providing electric buses for employees●Encouraging green commuting and organizing low-carbon walking ac-tivities●Adopting paperless office practices and promoting the Green Officeplatform for document management
Capchem's green o?ce initiatives
7677
Capchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
Occupational Health and SafetyThe Company has cumulatively invested RMB
46.21
million in ensuring employees' occupational health and safetyHuizhou Capchem, Nantong Capchem, Sanming Hexa?uo, Suzhou Novolyte, Jingmeng Capchem and Hunan Fluo-pont have obtained ISO 45001 system certi?cationNo general or higher-level safety production accidents have occurred, no suspected occupational diseases and nocon?rmed cases of occupational diseasesThe Company has conducted
safety drills,
safety training sessions, involving3,133 participants ,total-ing98,847hours and with an average of
31.55
training hours per employee
Chemical ManagementAdhering to strict management processes and standards, comprehensive management of chemicals, highly haz-ardous substances, and environmentally harmful substancesPlanned elimination and reduction of harmful chemicals, such as Fluorochlorinated hydrocarbons Trifluorotrichlo-roethane (f113)The Company actively researches and develops new additives to replace propane sultone (PS) and puts them intomass productionSanming Hexa?uo researches and develops ?uorinated surfactants, serving as green alternatives to PFOS and PFOA
Safety First:
Diverse and ComprehensiveSafeguardsCapchem has always regarded safety as the lifeline, red line, andbottom line of the Company's development. It rigorously imple-ments requirements for the management of substances and chem-icals, and carries out occupational health and safety managementwith strictness. The Company controls the introduction of hazard-ous substances and risks from the source, e?ectively ensuring thephysical health and safety of employees and all individuals work-ing on-site at Capchem. It strives to deliver chemical products thatare healthy, safe, and harmless to society, comprehensively safe-guarding the health and safety of employees and the community.
Ecological Protection:
Green Environmental Practicesin Production and Operations
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive CommunitiesSustainable Operations:
A Compliant and RobustGovernance Framework
Innovation-driven:
Industry-leading Productsand ServicesMulti-level Governance:
Complete and RobustESG Governance SystemCapchem Enviromental, Social and Governance (ESG) Report
Huizhou Capchem
7879
Sustainable Operations:
A Compliant and RobustGovernance Framework
Ecological Protection:
Green Environmental Practicesin Production and OperationsInnovation-driven:
Industry-leading Productsand Services
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive CommunitiesCapchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
● The Safety Production Law of the People's Republic of China● The Environmental Protection Law of the People's Republic of China
●
Regulations on the Safety Management of Hazardous Chemicals●
...
Chemical Management
The Company strictly follows domesticand international laws, regulations, andindustry standards related to chemicalmanagement, ensuring effective imple-mentation of the management process-es for Substances of Very High Concern(SVHC), environmental hazardous sub-stances, and chemical control at all stag-es such as research and development,registration, and production.Capchem is committed to controlling theintroduction of hazardous substances atthe source and rigorously implementingchemical safety management. The Com-pany has established a series of strict in-ternal regulations, including theEnviron-mental Management Substance ControlProcedure, theEnvironmental SubstanceManagement Guidelines, theSupplierEnvironmental Compliance Declaration,and theSupplier Environmental Sub-stance Survey Form. These measuresensure that all relevant regulations are100% applied to the entire lifecycle man-agement process of all chemicals, chem-ical substances, and products involved inthe production process.
In the product development process, the Company places a high emphasis on theanalysis of process risks and identification of hazards. It conducts hazard assess-ments in various critical stages, including the introduction of products and raw ma-terials. During the introduction of new materials and the selection of raw materialsupply chain, the Company promptly extends relevant management requirementsto the content of supplier management. It conducts compliance inspections throughorganizational investigations. Additionally, for existing suppliers involved in this as-pect of management requirements, the Company monitors the e?ectiveness of theirhazardous substance management. It requires them to regularly submit suppliedmaterials for third-party testing and share the test results. In the trial production andformal mass production processes, the Company actively conducts evaluations andpreparations at each stage, rigorously managing all aspects involving the use or pro-duction of chemicals. This is done to reduce the negative impact on the environmentand society resulting from improper chemical application.As of the end of the Reporting Period, the Company had diligently carried out allchemical management activities during production and operations. It ensures com-pliance with internal policies of Capchem, regulations in the countries where cus-tomers are located, and industry standard requirements. The Company collaboratesregularly with internal and external professional teams, reviewing, inspecting, anddisclosing the regulatory registration status of all chemicals in a compliant manner.
Domestic Laws, Regulations, and Standards
International Laws, Regulations, and Standards● EU REACH (Registration, Evaluation, Authorization, and Restriction of Chemi-
cals)●
GHS (Globally Harmonized System of Classi?cation and Labeling of Chemi-cals)● RoHS (Restriction of Hazardous Substances)● Halogen-Free● U.S. TSCA-PBT (Toxic Substances Control Act - Persistent, Bioaccumulative,and Toxic substances)● ...
Reaction Heat Safety Risk Assessment Report
On this basis, Capchem has planned to abolish and reduce harmful chemicals systematically. Through the development of envi-ronmentally friendly products, the Company aims to provide high-quality, environmentally friendly, and healthy products to cus-tomers and society. Using research and development as a starting point, The Company gradually eliminates high-risk chemicals,replacing them with more environmentally friendly alternatives in accordance with relevant laws and regulations. As of the endof the Reporting Period, the Company had eliminated chemicals identi?ed as high-priority substances of very high concern andrelated chemicals, actively engaging in alternative development work. The Company responds and adheres to the EU REACH reg-ulations, particularly in relation to proposals for restrictions on PFAS (per/poly?uoroalkyl substances). The Company proactivelyresponds, conducts a comprehensive product review across the group, identi?es relevant exemption categories, and their applica-ble periods based on the characteristics of di?erent products. Additionally, The Company continuously monitors the managementdynamics of other PFAS chemicals in response to the PFAS proposal. Under this framework, Hexa?uo has developed and launchedseveral environmentally friendly alternatives to PFAS chemicals such as PFOS and PFOA, which are regulated bythe StockholmConvention on Persistent Organic Pollutants (POPs).
The Company is well aware that chemical safety management requires a thorough understanding of the hazardous characteristicsof chemicals and their mixtures. It should fully and comprehensively identify their classi?cations, refer to their hazard classi?ca-tions, carry out compliance management, and ensure that throughout the entire process of applying chemicals, potential envi-ronmental, health impacts, and safety data are known. The Company timely organizes the compilation of Safety Data Sheet ForChemical Products (SDS) for various chemicals, detailing their harmful characteristics, usage speci?cations, operation guidelinesand notices, and emergency disposal methods. The Company regularly organizes internal training to strengthen the awarenessand capabilities of operational sta?, ensuring that they correctly understand the chemicals they use, wear protective equipmentproperly, and understand and master emergency response procedures.
The Company has eliminated Fluorochlorinated hydrocarbons Trifluorotrichloroethane (f113), which has beenbanned for use as a solvent.According to the product review system of customers and relevant regulatory agencies, propane sultone (PS) is con-sidered a substance of very high concern under the European REACH regulation and has carcinogenic properties. TheCompany has developed a new additives as a replacement for PS, and it has been fully put into production by the endof the Reporting Period.Hexa?uo has developed ?uorine-containing surfactants, serving as green alternatives to PFOS and PFOA.
Capchem's preparation for chemical safety assessment at various stages
●Require regular third-partytesting of supplied materialsby raw material suppliers andshare the test results●Conduct occasional surveysof all suppliers, continuouslymonitor the introduction ofhazardous substances, andconduct investigations andcontrols on prohibited andrestricted substances●Ensure that all products fromsuppliers comply with the EURoHS restrictions on ten keyhazardous substances, as wellas the requirements of rele-vant regulations and industrystandards in the customer'scountry
●Review of the Trial ProductionPlan
● Veri?cation of the Implemen-tation of Various Measures● Environmental Impact As-sessment
● Safety Pre-assessment● Occupational Hazard Pre-as-sessment●Facility Design for ControlSafety in Construction Pro-ject●Facility Design for ControlOccupational Hazard in Con-struction Project●Other Regulatory ApprovalDocuments
● Completion of Environmen-tal Protection Acceptancefor Construction Projects
● Safety Acceptance Evalua-
tion●Evaluation of Occupational
Disease Hazard Control
E?ectiveness
ProcurementEvaluation Preparation
Research and DevelopmentDesign EvaluationPreparation
Evaluation preparationbefore trial production.
Preparation for Pre-production Evaluation
Capchem's actions on the elimination of substances of very high concern:
8081
Sustainable Operations:
A Compliant and RobustGovernance Framework
Ecological Protection:
Green Environmental Practicesin Production and OperationsInnovation-driven:
Industry-leading Productsand Services
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive CommunitiesCapchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
For the use of toxic chemicals, the Company provides employees with complete protective equipment and detailed operating pro-cedures. Emergency plans have been formulated for potential risks such as chemical leaks, ?res, and explosions, and professionalemergency supplies have been con?gured.
Each laboratory is equipped with an emergency medicine box, PE gloves, nitrile gloves, activatedcarbon masks, and half-face masks. For hydrofluoric acid, the laboratory is equipped with full-body protective suits and safety mask
Capchem's toxic chemicals management initiativeManagement measures
Management measures
Detailed description
Detailed description
Protectiveequipment
Operatingprocedures
MSDS ?ashcards are pre-pared for each reagent
Each department has reg-ulations for the manage-ment and use of chem-icals, especially hazardchemicals
Each type of experimenthas operating StandardOperating Procedures(SOP) to avoid chemicaloperation errors
To ensure the safety of various aspects such as chemical storage, use, transportation, and production, the Company regularlyorganizes chemical safety-related training. The training courses are mainly divided into basic knowledge and practical operationcategories, covering areas such as chemical regulations, basic chemical knowledge, and chemical ?rst aid.Training on chemical safety
Basic knowledge training on chemical engineering processesTraining on chemical substance management system
Training coursesTraining content
Updates of new chemical environ-mental management regulationsSDS -related knowledge trainingChemical enterprise leak preventionmanagementBasic knowledge of hazardouschemicals and accident responsestrategiesFirst aid for chemical burnsSpecialized training for accidentsinvolving hazardous chemicals
Training on new regulations such as the registration method for the environmentalmanagement of new chemicalsVarious parts of SDS, key points in writing, crucial information, etc.Use of various leak prevention tools such as wooden plugs, internally sealed leak bags,externally sealed leak bags, metal leak plugs, adhesive leak sealing tools, etc.
Hazardous chemical ?res, explosions, environmental pollution, harm to human body,classi?cation, packaging, transportation, emergency rescue, etc.Emergency handling and precautions for chemical burns, such as hydrofluoric acidburnsPractical training on the use of self-contained breathing apparatus and protectiveclothing
8283
Sustainable Operations:
A Compliant and RobustGovernance Framework
Ecological Protection:
Green Environmental Practicesin Production and OperationsInnovation-driven:
Industry-leading Productsand Services
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive Communities
Capchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
Safety in production is one of the fundamental prerequisite for all operational activities of Capchem. The Company adheres to acomprehensive safety management mechanism and e?ective occupational safety management, embodying the safety develop-ment philosophy of "people ?rst, life ?rst". It strictly observes the red line of safety production, safeguarding the physical and men-tal health of employees from multiple perspectives.
Capchem consistently regards safety in production as the lifeline and bottom line of corporate development. It strictly complieswith laws and regulations such asthe People's Republic of China Production Safety Law. The Company has established and con-tinuously optimized a ?ve-level management structure, including the board of directors, Executive Committee ,EHS ManagementCommittee, EHS Center, and various subsidiaries. The goal is to achieve the intrinsic safety of the entire process, full chain, andentire lifecycle of electronic chemicals and functional materials manufacturing.
Occupational Health and Safety
Occupational Health and Safety System
Safety management structure of CapchemBoard of Directors
EHS ManagementCommittee
EHS CenterSubsidiaries●
Deploy and guidesafety productionwork●
Research andpropose majorpolicies on safetyproduction, ad-dressing signi?-cant issues●
Coordinate emer-gency responsework for safetyproduction-relat-ed incidents
●
Assist the EHSManagementCommittee inmanaging safetyproduction workat bases
●
Adhere to lawsand regula-tions as well asheadquarters'requirements.Responsible forthe Company'sproduction andoperational work
●
The highestresponsible bodyfor the Company'ssafety productionwork
Executive Committee●
Responsible forcoordinatingthe implemen-tation of thecompany'swork safety andoccupationalhealth andsafety decisions
Key safety management systems of Capchem (Partial)
During the Reporting Period, six of the Company's chemical production units, namely Huizhou Capchem, Nantong Capchem, San-ming Hexa?uo, Suzhou Novolyte, Jingmen Capchem, and Hunan Fluopont, have all obtained ISO 45001 certi?cation. Additionally,each production base, considering local regulatory requirements and its industry attributes, actively applied for the China WorkSafety Standardization Certification. Currently, Huizhou Capchem, Nantong Capchem, Suzhou Novolyte, and Jiangsu Hicomerhave passed the Work Safety Standardization Certi?cation Level 2 Enterprise Certi?cate. Sanming Hexa?uo, Jingmen Capchem,and Nantong Top have passed the Work Safety Standardization Certi?cation Level 3 Enterprise Certi?cate.
Capchem has established and continuously optimized an internal occupational health and safety management system in accord-ance with the ISO 45001 system. The Company has implemented various occupational health and safety management procedures,including theEHS Operation Control Procedure, theLegal and Regulatory Compliance Assessment Management Procedure, theOccupational Disease Protective Equipment Management System, theOccupational Disease Hazard Monitoring and AssessmentManagement System, and theHazard Identi?cation, Risk Assessment, and Control Procedure. Through clear and e?ective internalmanagement systems, safety production responsibilities are implemented at each level.
ISO 45001 certi?cates for site of CapchemCerti?cates of work safety standardization certi?cation forproduction site of Capchem (partial)
EHS Accident (Incident) ClassificationStandards
It establishes uni?ed accident/incident assessment standards forquantifying safety performance.Risk Classification Control, Unsafe-condi-tion Investigation (Trial)
It provides institutional support for risk classi?cation control, haz-ard investigation, and governance work.Emergency Response Plan for SuddenEvents of Shenzhen Capchem TechnologyCo., Ltd.
It provides technical and management guidance for e?ectively re-sponding to various sudden events, ensuring the safety of compa-ny employees' lives and property, and minimizing casualties andproperty losses caused by sudden events.Contractor EHS Management ProcedureIt manages the safety of on-site contractors.Hazardous Chemical Management Proce-dure
It manages the entire process of procurement, storage, transpor-tation, use, sale, and disposal of controlled chemicals, includingexplosive, toxic, and monitored chemicals.
8485
Sustainable Operations:
A Compliant and RobustGovernance Framework
Ecological Protection:
Green Environmental Practicesin Production and OperationsInnovation-driven:
Industry-leading Productsand Services
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive CommunitiesCapchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
Capchem consistently adheres to a risk-based environmental and safety management philosophy, emphasizing a risk assessmentprocess of "Prevention ?rst, proactive discovery, active precaution". The Company regularly conducts normalized safety risk as-sessments. In EHS operational management, ?rstly, it focuses on Process Safety Management (PSM) as the core, using a risk-basedcontrol system and identifying and addressing hidden dangers. Through tools and methods such as Hazard and Operability Study(HAZOP) and Job Safety Analysis (JSA), the Company systematically identi?es risks related to materials, processes, equipment, andwaste, implementing targeted control measures and closed-loop improvements to ensure manageable risks; secondly, the imple-mentation of responsibility systems is crucial, with monthly EHS performance assessments at the subsidiary level and quarterlyEHS performance assessments at the corporate level. This ensures the accountability of departments, individuals, and key per-sonnel in each base, contributing to the establishment of a risk pre-control system; ?nally, Capchem emphasizes lean productionmanagement by conducting special improvement initiatives, organizing training and education, hosting themed competitions,and emergency drills to enhance risk awareness and control skills at all levels.In 2023, the Company introduced the Business Continuity Management (BCM) system
，on the basis of the existing ISO 45001system. It systematically reviewed EHS-related risks affecting the Company's continuous operational capability. The Companycompiled, updated, and publishedthe Shenzhen Capchem Technology Co., Ltd. Emergency Response Plan for Sudden Incidents,systematically addressing various emergency measures, accident reports, and emergency procedures.The Company aligns with theGuidelines for the Implementation of Process Safety Management in Chemical Enterprises, continu-ously conducts specialized training, enhances internal risk identi?cation and control capabilities, and regularly assesses the e?ec-tiveness of its work. This e?ort resulted in the development of theKey Equipment Risk Control Listand theKey Process OperationRisk Control List.During the Reporting Period, the company implemented e?ective management measures for identi?ed risks associated with keyequipment and key process operations.
Safety Risk Control
BCM: Business Continuity Management (BCM) is a comprehensive management process that enables businesses to recognize potential crises and their related impacts, anddevelop response, business, and continuity recovery plans.
Capchem continues to strengthen its safety foundation.Each year, taking into account the actual operating con-ditions and the achievements of previous safety produc-tion work, the Company formulates health and safetygoals for the current year. The Company comprehen-sively applies safety risk control, special improvement,information construction, supervision, performancemonitoring, and other methods to steadily implementsafety goals from multiple perspectives.As of the end of the Reporting Period, the Company hadinvested over RMB46.21 million in ensuring employees'occupational health and safety. All occupational healthand safety goals have been successfully achieved, and nomajor safety accidents resulting in casualties occurred.
Occupational Health & Safety Management
Occupational health and safety goals of CapchemAs of December 31, 2023, for the existing production and operation projects:
general or higher-level work safety accidents occurred
suspected or con?rmed cases of occupational diseases occurred
No
No
Capchem has established a comprehensive safety performance monitoring mechanism. Each subsidiary appoints dedicatedpersonnel to record and report safety performance, and the EHS center regularly analyzes these records and reports, providingimprovement suggestions. The Board of Directors and the EHS Management Committee also organize regular meetings to discussthe Company's safety performance, make strategic decisions, and provide guiding advice.In terms of reviewing safety performance, the Company carries out cross-supervision and inspection of production safety of pro-jects under construction and those already in operation in an organized and planned manner based on a sound internal safetyaudit mechanism, with the top and bottom working together to create a safe and compliant operating environment. The companyregularly carries out production safety performance review work, and has established a work incentive and punishment mecha-nism.
Safety Performance Monitoring
In 2023, Capchem invested nearly RMB 5 million in accordance with the notice issued by thePilot Construction Plan for "In-dustrial Internet + Hazardous Chemical Safety Production". The Company piloted the construction of the "Industrial Internet +Hazardous Chemical Safety Production" information platform in Huizhou Capchem, covering risk monitoring and early warn-ing, major hazard source management, intelligent inspection, risk classi?cation control and hidden danger investigation andgovernance, training and education, personnel positioning, special operations, energy management, and more. Various bases,including Sanming Hexa?uo, Hunan Fluopont, Jiangsu Hicomer, Nantong Capchem, Jingmen Capchem, have completed theconstruction of safety information systems, including risk monitoring and early warning, risk classi?cation control, and hiddendanger investigation and governance, as required by the government.
Safety Information Technology Construction
Capchem actively implemented the construction of safety in-formation platforms in all production bases. In 2023, HuizhouCapchem and Nantong Capchem established a uni?ed safetyinformation database and information platform. This platformcollects and consolidates data related to production basebasic information, dual-prevention data, major hazard sourcedata, video surveillance, access control, and personnel po-sitioning, providing data support for real-time monitoring ofconstruction site safety conditions for the headquarters andeach production base.In the future, Capchem will continue to explore and promotethe application of safety information platforms, gradually en-hancing the level of safety production management.
Construction of safety information management model
Screenshot of the safety production informatization platform
8687
Sustainable Operations:
A Compliant and RobustGovernance Framework
Ecological Protection:
Green Environmental Practicesin Production and OperationsInnovation-driven:
Industry-leading Productsand Services
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive CommunitiesCapchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
Capchem extends its pursuit of health and safety to cooperation with contractors. While implementing its own safety productionwork, The Company continues to follow up on contractor system formulation, technical disclosure, training for workers in specialtrades, and other safety management tasks. The focus is on preventing potential safety risks and safeguarding the safety of con-tractor employees. As of the end of the Reporting Period, no work-related fatalities and injures occurred among Capchem's con-tractors during the service process.
Capchem takes "caring for and actively safeguarding the health and safety of employees" as the main theme, continuously imple-ments safety production responsibilities, enriches the content of corporate safety culture, improves the mechanism for reportingsafety hazards, and deeply instills the production philosophy of "safety ?rst" into everyone's minds.
Contractor Safety Management
Safety Culture Construction
Safety culture promotion for contractors
EHS Policy of Capchem:
Safety ?rst, with preventionas the focus
Scientific management for con-tinuous improvementPeople-oriented, striving forgreen excellence
Compliance with laws andregulations, life above all
Capchem uses the safety production responsibility system as a carrier to e?ectively reduce production safety accidents caused by unsafebehaviors, and focuses on addressing the problem of inadequate transmission of safety production responsibilities within the enterprise.Safety responsibilities are implemented at each level to safeguard the life safety and occupational health of employees from top to sub-stratum.In accordance with safety production laws, regulations, and relevant standards, the Company clari?es the production safety re-sponsibilities of personnel at all levels and positions based on the nature, characteristics, and speci?c job content of each position.Through education, training, and management assessments, the Company reinforces employee awareness, ensuring that safetyproduction work is "responsibility at every level, everyone is responsible, and each undertake their own responsibilities".
Construction of Safety Production Responsibility System
Capchem's measures for the implementation of the safety production responsibility system
Capchem has established a three-tier safety education system at the factory level, workshop level and group level. Tailored safetytraining is conducted for employees at di?erent job levels, systematically promoting safety culture from top to substratum. Thiscomprehensive approach aims to enhance employees' safety awareness, risk identi?cation abilities, and con?ict resolution skills.Safety Education and Culture Promotion
Capchem's three-tier safety education system
●At the factory level, the safetyeducation program involvesexplaining the importance andnecessity of safety productionfor the Company's long-termdevelopment●It provides an overview of theCompany's safety productionsituation, including produc-tion characteristics, factoryequipment distribution, safetyproduction goals, and majortasks for the current year
●At the workshop level, thesafety education programinvolves organizing the studyof safety production systemdocuments, safety operationregulations, and emergencyresponse procedures relevantto di?erent job levels andpositions
●At the group level, the safetyeducation program is tailoredto the speci?c conditionsof each position. It aims tofurther strengthen the re-sponsibilities associated witheach role, and experiencedemployees provide safetyoperation demonstrations
Factory levelWorkshop level Group level
●Capchem formulates and implements a comprehensive all-employee safety production education and trainingplan to e?ectively implement the safety production responsibility system.●Capchem associates safety production responsibilities with employee performance, systematically advancing thesupervision and assessment mechanism for safety production responsibilities. The Company provides appropri-ate rewards and penalties based on the safety assessment results of employees with di?erent job ranks.
Strengtheneducationand trainingEnhancemanagement
assessment
8889
Sustainable Operations:
A Compliant and RobustGovernance Framework
Ecological Protection:
Green Environmental Practicesin Production and OperationsInnovation-driven:
Industry-leading Productsand Services
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive CommunitiesCapchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
According to the actual production base, the company organizes a series of thematic training on production safety. In 2023, in orderto build the company's safety culture atmosphere, the company carries out a series of ways such as teaching by external lecturers,organizing to watch warning videos, holding safety knowledge contests, carrying out forklift truck skills competitions, visiting trainingbases and so on.
In 2023, the headquarters of Capchem organized training for HAZOP LEADER (Chair of Hazard and Operability Analysis) training andthe ?rst Hazard and Operability Analysis Chairperson Workshop. The purpose of this event was to enhance the professional skillsof personnel in their respective positions, instill a sense of safety responsibility, and cultivate high-quality talents who understandboth the process and safety aspects.
Safety training
Motorized Forklift Truck Skills Competition
HAZOP LEADER training
Summary meeting for "Violation of regulations, Violation of commands,Violation of labor discipline" phase
In 2023, the Company conveyed the corporate safety culture through diverse safety training and emergency drills, helping em-ployees understand its safety regulations and emergency response mechanisms to enhance overall safety awareness. During theReporting Period, the Company conducted 459 safety drills and 547 safety training sessions, involving 3,133 participants, totaling98,847 hours and with an average of 31.55 training hours per employee.
the Company conducted safety drills
safety training sessions
During the Reporting Period
Capchem has developed and implemented a safety hazard reporting system based on relevant laws and regulations, consideringits speci?c situation. The Company has established a comprehensive procedure for reporting hazards, encouraging employeesto promptly report any safety issues identi?ed during work processes. A well-established safety hazard reporting system requiresactive participation from employees at various levels and positions in building a safety culture. Employees play a crucial role indiscovering, reporting, and overseeing potential safety hazards in their daily work, preventing the recurrence of similar risks, andcollectively creating an atmosphere where "everyone is a safety guarder".
Safety Hazard Reporting System
Woodpecker activity poster screenshot
In 2023, Initiated the "Woodpecker" (Violation of regulations, Violation of commands,Violation of labor discipline) Action, implementing measures such as monthly "An-ti-Violation Vest" circulation activities, leadership-led inspections, and inter-depart-mental mutual inspections to regulate employee behavior. These actions aimed tocultivate a safety habit among all employees, promoting compliance with regulationsand procedures, and eliminating instances of "Violation of regulations, Violation ofcommands, violation of labor discipline" behavior.
Woodpecker action
Capchem's safety emergency drillsCapchem's safety emergency drills
In 2023, Capchem focused on potential emergency safety events such as hazardous chemical leaks, ?res, and extreme weather. TheCompany organized and conducted emergency drills to thoroughly test the operability of emergency response plans. This initiativee?ectively enhanced employees' awareness of the risks associated with emergency events and their ability to respond appropriately.
Safety emergency drills
9091
Sustainable Operations:
A Compliant and RobustGovernance Framework
Ecological Protection:
Green Environmental Practicesin Production and OperationsInnovation-driven:
Industry-leading Productsand Services
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive Communities
Capchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
Capchem diligently ful?lls its responsibility for occupational disease prevention and control. Aligning with ISO 45001 requirementsand industry best practices, the Company has established comprehensive control systems such as theWorkers' OccupationalHealth Monitoring and File Management System, theOccupational Disease Hazard Monitoring and Evaluation Management Sys-tem, and theOccupational Disease Protection Facility Maintenance and Inspection Systemto standardize occupational healthmanagement. In the development of new products and the introduction of new materials, the Company chooses low-toxic ornon-toxic materials to protect the physical health of every employee from the source. Annually, places with occupational diseasehazards undergo regular identi?cation and testing of occupational disease hazard factors. Employees exposed to such factors re-ceive occupational health examinations before starting work, during employment, and upon leaving, as required by regulations.Periodic assessments of the current status of occupational disease hazards are conducted according to regulatory requirements.As of now, the Company has not suspected or con?rmed cases of occupational diseases.Capchem has established theOccupational Disease Protection Articles Management System, setting procurement standards forlabor protection articles and providing articles that meet national or industry standards. The Company has also formulated theOccupational Disease Hazard Emergency Rescue and Management Systemand theEmergency Plan for Employee OccupationalHealth Disposal,enhancing the Company's emergency response and management for occupational disease hazards in a timely, ef-fective, and compliant manner. Additionally, through occupational health and safety training, the Company enhances employees'awareness of occupational diseases, aiming to minimize and eliminate all potential occupational disease hazard factors present inthe operational processes.
Occupational Disease Prevention
Identi?cation
Management
Capchem's measures for identi?cation and management of occupational disease hazard factors
Table Lookup Method re?ects the occupational disease hazards existing and generated by the Company through the use of risk factor tables applicable to the chemical industry.Empirical Method identi?es occupational disease hazards of the evaluated object intuitively based on relevant professional knowledge and practical work experience.Analogy Method uses data from occupational health monitoring, supervision, and statistical analysis of completed and operational similar or identical projects for comparison.
●Capchem Chemicals diligently studies and comprehends theClassi?cation Catalog of Occupational Disease HazardFactors. The identi?cation process involves methods
such as table lookup method, empirical method, and analogymethod, etc., to identify harmful factors generated in the Company's production and operational processes.
●Capchem strictly implements relevant management regulations, conducting comprehensive inspections and regular-ly publicizing the results for workplaces with occupational hazards.●Capchem is committed to the health and safety of its employees, and tracks employee health through medical ex-aminations. As of the end of the Reporting Period, all newly hired, existing, and departed employees in positions ex-posed to occupational disease hazards at Capchem had undergone occupational health examinations.●Capchem consistently implements job hazard analysis and publicizes the results to make employees aware of safetyrisks and potential hazards in their positions.
●Considering di?erent positions, Capchem provides employees in positions with potential occupational disease haz-ard factors with appropriate personal protective equipment and labor protection supplies. Additionally, the Companyequips them with various tools, equipment, and emergency materials required during the production and disposal ofchemicals.
In 2023, Capchem coordinated vari-ous occupational health and safetyactivities using Occupational DiseasePrevention Week and Safety Produc-tion Activity Month as platforms. TheCompany, its subsidiaries, and holdingcompanies regularly organized occupa-tional health knowledge competitions,painting contests, essay competi-tions, and related training programs.Through engaging and informativeformats, these activities aimed to en-hance employee awareness of health,safeguarding their well-being. As ofthe end of the Reporting Period, 100%of the Company's employees receivedregular occupational health and safetytraining.
Occupational health training100%of the Company's employees received regu-lar occupational health and safety training
As the end of the Reporting Period
9293
Capchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
Building A Sustainable and Low-carbonSupply Chain100%of suppliers have signed agreements andpledge to comply withSupplier Code of ConductManagement System
All
raw material suppliers have obtained ISO9001Quality Management System Certi?cate or ISO14001Environmental Management System Certi?cate, orISO45001 Occupational Health and Safety Manage-ment System Certi?cateCarbon management research was conducted forsuppliers that account for 90%of total annualdeliveries100%
of suppliers involved in lithium productionhave signedHuman Rights Compliance and Con-?ict-Free Minerals Declaration
Supply Chain Management SystemUpgrade the supplier full lifecycle managementprocessProvide
quality-related training sessions tosuppliersEstablish and successfully operate ERP, SRM, andOA systemsBuilding A Resilient Supply ChainMulti-regional and multi-Source supply for
100%of key raw materialsA flexible stock management mechanism wasbuilt based on di?erent production models (Maketo Order and Make to Stock)Adopting an information system to achieve visi-bility in the supply chain which rapidly identifyand response to potential risksBuilding strategic partnerships with businesspartners of core materials
Collaborative E?ciency:
A Robust and ReliableSupply ChainAs a crucial link in the industrial chain, Capchem provides high-qualityproducts and services to numerous global and domestic customers.The Company has built an "e?cient, stable, ?exible, and agile" end-to-end integrated supply chain, laying a solid foundation for manufactur-ing to meet customers' high standards and expectations for productsand services. At the same time, leveraging its in?uence, the Companycontinually drives collaborative e?orts with partners to create a moresustainable, low-carbon, and responsible industrial chain, contribut-ing to the overall sustainable development of the industry.
Ecological Protection:
Green Environmental Practicesin Production and Operations
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive CommunitiesSustainable Operations:
A Compliant and RobustGovernance Framework
Innovation-driven:
Industry-leading Productsand ServicesMulti-level Governance:
Complete and RobustESG Governance SystemCapchem Enviromental, Social and Governance (ESG) Report
9495
Sustainable Operations:
A Compliant and RobustGovernance Framework
Ecological Protection:
Green Environmental Practicesin Production and OperationsInnovation-driven:
Industry-leading Productsand Services
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive CommunitiesCapchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
Supply Chain Management System
Adhering to the philosophy of "building a competitive supply chain and creating the optimal cost and service value for customers",The Company has formulated and continuously improved the Supply Chain Management System, including processes and systemsof supplier management and supply chain risk manegemnt to rigorously standardizes the supply chain. The Company extend therequiremets from suppliers to their upstream suppliers thereby driving high-quality development throughout the entire industrychain. The Company integrates the full-process supply collaboration system from "order to delivery" deeply into actual businessoperations, creating an integrated, collaborative, and e?cient full-lifecycle supply chain management mechanism to enhance thee?ciency and agility of supply chain management.
The Company continuously upgrades the supplier's full lifecycle management processes, comprehensively reviewing supplierdevelopment, management, supervision, and assessment requirements through the ?ve key stages of "resource development –certi?cation – evaluation – maintenance – elimination". The Company conducts a key performance assessment of suppliers fromdi?erent dimensions such as quality, cost, delivery, service, technology, management, sustainability, etc. It establishes a databasefor objective data analysis, guiding suppliers to make positive improvements based on the results of objective data analysis. Thisenhances the overall quality of suppliers, providing a solid guarantee for The Company's production and manufacturing processes.
Enhancing Full Lifecycle Management
Supply chain management stagesSupplier statusKey contents
Resourcedevelop-ment
Enterprise registration/●Invite new suppliers to register basic information in the SRM systemSample certi?cation
Potential supplier
●Conduct quality certi?cation for supplier productsCerti?cationQuali?cation review
●Perform basic quali?cation review●Conduct system audits on quality, hazardous substances management,EHS, carbon management, etc●Sign agreements covering procurement, quality, integrity, con?dentiality, etcEvaluation
Small batch trial use
Trial supplier
●Develop trial plans and validate product continuity and stability throughmultiple batches.Admission review
●Conduct on-site system and process audits. After passing the audits, anadmission review for trial supplier will be initiated to judge whether toenter quali?ed supplier management.
Mainte-nance
Performance evaluation
Quali?ed supplier
●Establish a supplier performance evaluation model, evaluating supplierperformance in six dimensions: management, quality, cost, service, tech-nology, and sustainability. Publish the evaluation results and implementrewards and penalties.
●Conduct supplier classi?cation and grade management based on perfor-mance evaluation results and mutual bene?ts.Supplier recti?cation
●Require improvement or guidance for suppliers that need improvement.In case of unquali?ed recti?cation, Supplier Elimination ManagementProcess will be activated.EliminationSupplier eliminationEliminated supplier●Eliminate suppliers that fail to meet the required standards.
Supplier Full Lifecycle Management Stage Process Table
9697
Sustainable Operations:
A Compliant and RobustGovernance Framework
Ecological Protection:
Green Environmental Practicesin Production and OperationsInnovation-driven:
Industry-leading Productsand Services
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive CommunitiesCapchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
The Company categorizes suppliersinto raw material, indirect material pro-curement, engineering, and logisticssuppliers based on business modules.Supplier performance results are usedfor suppliers' grade management. Withconsidering the mutual bene?ts of bothsupply and demand sides, the Compa-ny further classi?es suppliers into stra-tegic, preferred, and qualified catego-ries. For different supplier categories,The Company applies differentiatedmanagement based on the evaluation,admission, grade and classification,and elimination methods outlined inSupplier Management Procedure andSystems, in conjunction with the actualbusiness operation scenarios.Quality evaluation is emphasized dur-ing the admission and performanceevaluation stages. For admissionreview, the quality accounts for 45%of total scores, and a "quality one-vote veto system" is enforced. For
performance evaluation, the Companymonitors and assesses the monthlyand annual quality level and qualitymanagement capabilities of suppliersfrom different dimensions such as in-coming material quality, process qual-ity ?nding, ?nished product abnormalfeedback, effectiveness of improve-ments, quality service response, andenvironmental compliance. All ?rst-tiersuppliers and key secondary suppliersmust meet the Company's stringentstandards for qualifications, qualitytesting, certification, on-site audits,quality systems, admission, and perfor-mance.The Company regularly monitors sup-plier basic quali?cations, performance,Environment, Health, and Safety(EHS), Corporate Social Responsibility(CSR), and continuous improvement.In addition to routine monitoring, theCompany makes an annual on-site au-dit plan covering quality management
element such as system operation andprocess control. All quali?ed suppliersare expected to undergo one audit atleast every three years, and suppliersrequired improvement shall be auditedin the current year. The Company em-ploys various quality control methodsto guide and supervise the operationalstatus of supplier quality, preventingunexpected quality risks.For key suppliers with unqualifiedperformance evaluations and on-site audits, the Company's qualityteam provides training through onlineplatforms, technical benchmarks, oron-site residency. Leveraging theirexpertise, the team assists suppliers informulating, implementing, reviewingimprovement plans to enhance thequality of supplier deliveries. In 2023,the Company provided a total of 71quality-related training sessions forsuppliers, covering 355 individuals.
The Company has established a Busi-ness Continuity Management program,conducting business impact analysiswithin the supply chain department.Critical resources and activities are
expected to undergo risk assessmentand management, and risk mitigationmeasures are developed for high-riskprojects. For key resources and activi-ties, the Company has built emergency
response procedures, ensuring compli-ance with the Recovery Time Objective(RTO) requirements and aligning withthe Company's development needs.
Guided by a customer-focused philos-ophy, the Company has successfullyestablished and operated ERP, SRM,and OA systems, achieving end-to-endonline closed-loop management fromdemand to procurement, procurementto production, and production to deliv-ery. The Company's digital transforma-tion of the supply chain aims to estab-lish an efficient and stable system. Bycontinuously exchanging informationand data within and outside the supply
chain, it breaks down information silos,enhances supply chain collaborationperformance, and ensures the agilityand reliability of the supply chain.In Capchem, the digitalized supplychain system enables data analysisacross di?erent dimensions of procure-ment and quality, real-time monitoringof contracts and orders, tracking of de-livery and payment discrepancies, andsupplier full lifecycle management.
The system presents managementreports to various levels of managers,facilitating the timely identification ofproblems and risks in different areas.This allows continuous improvementby business personnel, forming aclosed-loop management system ande?ectively enhancing the level of sup-ply chain management.
Collaborating With Suppliers for Quality Improvement
Enhancement of Business Continuity Management (BCM)
Digital System Transformation for Empowerment
Building A Resilient Supply Chain
In the present world, there is an increas-ing manifestation of VUCA characteris-tics, namely Volatility, Uncertainty, Com-plexity, and Ambiguity. Supply chains areconfronted with numerous unforeseenrisks that could lead to disruptions. TheCompany deeply understands the emer-gent risks faced by the supply chain inthe VUCA era and actively establishes a
resilient supply chain system, enabling itto recover to its original state or an evenmore ideal state after disruptions.Starting from strategic planning, TheCompany continuously deepens supplychain cooperation, enhances the opti-mization of the supply chain structure,establishes safety stock reasonably,
and consistently identifies and controlssupply chain risks to prevent disrup-tions. This ensures the stable supply ofstrategic resources and comprehensivelyenhances the supply chain's resilienceto risks. It strengthens the ?exibility andagility of the supply chain, creating a re-silient supply chain.
Develop a resilient supply chain plan,comprehensive identi?cation, andmanagement of potential risks
Deepen strategic cooperation andstrengthen industry collaboration
Optimize supply chain structure andstrengthen localized and diversi?edsourcing
Establish adequate safety stock forensuring continuous and stablesupply chain
Continuously identify risk points toenhance supply chain sustainability
●The Company is implementing astrategic supply chain plan by inte-grating processes across produc-tion, supply, and distribution. Thisapproach involves a comprehensiveidentification of key control pointsand risks in the supply chain. TheCompany formulates key perfor-mance indicators (KPIs) and emer-gency plans for various processesto enhance the visibility, agility, andsustainability of the supply chain
●Based on their respective advantages, the Company deepen strategic cooperation withsupply chain partners through long-term cooperation agreements and regular reviews ofcapacity rationality, to ensure a stable supply of strategic resources●Taking the self-supply of carbonate solvents in Huizhou as an example, based on thelarge chemical industry foundation of Huizhou Daya Bay Petrochemical area, the Com-pany strengthen industry collaboration to achieve "wall-separated supply" of carbonatesolvents in Huizhou, which reduces supply distances and improves supply e?ciency
●The Company continuously optimizesits supply chain structure, with 94.17%of spending on important raw mate-rials coming from local suppliers. Ad-ditionally, the Company consistentlyestablishes a diversi?ed supply chain,achieving proximity in supply throughmultiple suppliers and bases. Thisapproach shortens transportationdistances, saves transportation time,accelerates supply chain responsive-ness, and enhances overall supplychain agility
●The Company, considering the produc-tion and sales situations of suppliersand bases, collaboratively sets upappropriate safety stock with suppli-ers and internally. This ensures that,even in situations of material short-ages or urgent demands, the supplychain can maintain continuous andstable supply
●The Company, through excellentoperations, continuously identifies,analyzes, responds to, and monitorsrisks at stages of the supply chain.This ensures the sustainability of thesupply chain
Management measures for supply chain resilience
9899
Sustainable Operations:
A Compliant and RobustGovernance Framework
Ecological Protection:
Green Environmental Practicesin Production and OperationsInnovation-driven:
Industry-leading Productsand Services
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive Communities
Capchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
Assessing Supplier Sustainability
The Company has formulated and continuously improved theSupplier Code of Con-duct Management System, conducting ESG assessments and management of sup-pliers from dimensions such as environmental protection, integrity, and protectionof labor rights. This ensures that suppliers shoulder both environmental and socialresponsibilities in the process of providing products and services. In 2023, 100% ofCapchem's suppliers signed agreements and pledge to comply with this code. TheCompany is committed to strengthening the capacity building for the sustainabledevelopment of suppliers, collaborating with them to accelerate the race, and drivingthe carbon reduction of the Capchem value chain to reduce climate change risks.
Building A Sustainable and Low-carbon Supply Chain
Under the "carbon peaking and carbon neutrality" goals, sustainable procurement is gradually becoming a key element for com-panies to achieve sustainable development strategic goals and create new growth engines. Capchem incorporates the concept ofsustainable development into the supply chain management systems, focusing on the sustainable development, low-carbon de-velopment, and con?ict-free mineral development of the supply chain. This guides the sustainable transformation of the industrychain, contributing to the sustainable transformation of whole society.
ESG evaluation dimensions in theSupplier Code of Conduct Management SystemEnvironmental
MeasuresEnvironmentalmanagementsystem
●All suppliers are required to sign an Environmental, Health, and Safety (EHS) manage-ment agreement during the admission phase, outlining speci?c environmental man-agement requirements
●Conduct on-site audits of suppliers according to the audit plan
Green andlow-carbonoperations
●Actively engage in green design, innovate green manufacturing processes, useeco-friendly materials, promote green packaging, and implement green transportation
●Strive to create a green workplace and promote the green upgrade of industry infra-structure
Carbon emissions
●Assist core suppliers in collecting carbon emission data to understand the carbon foot-print of the entire supply chain and collaborate with suppliers on energy-saving andemission reduction actions
100%Capchem's suppliers signed agreementsand pledge to comply with this code
In 2023
100%raw material suppliers of Capchem obtained ISO9001 Quality Management System Certi?ce or ISO14001 Environmental Manage-ment System Certi?cate and ISO 45001 Occupational Health and Safety Management System Certi?cate. This e?ective measuresolidi?es the sustainable development capabilities of the supply chain.
In 2023
Social
Corporategovernance
Measures
Measures
Labor rights
Fair trade, advertis-ing, and competition
●Periodically review suppliers for child labor, forced labor, and other labor rights violations
●Adhere to antitrust laws and fair competition standards
●Abide by fair trade, advertising, and competition standards
Business ethics
●All suppliers must sign a Integrity agreement that includes anti-corruption content
●Establishthe Whistleblower Protection and Reward Systems, encouraging suppliersand all employees to actively report corrupt practices, providing protection and re-wards for whistleblowers
Intellectualproperty rightsInformationsecurity
●Suppliers must protect all intellectual property rights owned by Capchem●Suppliers must respect the intellectual property rights of third parties●Require suppliers to sign a procurement framework agreement that includes con?den-tiality requirements
●Require suppliers to properly safeguard information from Capchem, adhering to con?-dentiality agreement requirements
Con?ict minerals
●For minerals, especially lithium, suppliers are required to sign theHuman Rights Com-pliance and Con?ict-Free Minerals Declaration, aiming for a 100% signing rate amonglithium-related suppliers
100101
Sustainable Operations:
A Compliant and RobustGovernance Framework
Ecological Protection:
Green Environmental Practicesin Production and OperationsInnovation-driven:
Industry-leading Productsand Services
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive CommunitiesCapchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
Partnering with Suppliers for Low-carbon ManagementCapchem regards supporting supplierlow-carbon management as a crucialstep in promoting upstream green,clean, and sustainable practices. TheCompany, together with key suppliers,is involved in building carbon emis-sion management capabilities. It as-sists the parties involved in collectingcarbon-related data such as energyusage and consumption management,urging them to establish their owngreenhouse gas control systems. Thisincludes monitoring and verifyingreports, strengthening internal talentreserves, actively improving green-house gas management, and achievinglow-carbon production, transportation,and disposal.In 2023, the Company selected 20key suppliers for the first-round keyselected enterpries and collected com-prehensive data on their energy usageefficiency, potential carbon emissionsfrom raw material purchases, trans-portation distances, etc. The Company
assessed their internal low-carbon ac-tions through a questionnaire, gaininginsights into their green low-carbonaction capabilities. An evaluation ofsuppliers' foundational aspects suchas carbon management architecture,top management commitment, inter-nal system development, quantitativeemission reduction targets, renewableenergy application, third-party carboninventory certi?cation, and informationdisclosure was conducted. The Com-pany also provided targeted guidanceand capacity building to ensure effec-tive greenhouse gas management.Simultaneously, the Company plans toexpand the scope of supplier carboninventory and questionnaire surveysgradually. This aims to transfer greenresponsibility from the Company itselfto the entire supply chain, thus col-laborating with more key suppliers todrive the low-carbon transformation ofthe Company's supply chain.
Dimensions considered in supplier carbon emission-related information survey questionnaire
Carbon emissionreduction target
Specialized departments
DisclosurePolicies & Regulations
Energy Management
Carbon Trading / Quotas
External Certi?cation
……
In 2023
Con?ict-free Minerals Management
Capchem actively avoids purchasingminerals from conflict regions, highlyrespects the labor rights in mining are-as, and seeks to reduce even eliminateany potential social and environmentalimpacts caused by conflict minerals.The conflict mineral potentially in-volved in the Company's supply chainis lithium, with potential sourcing con-centrated in Congo, Australia, Argenti-na, Chile, and China.
The Company believes that eliminatingconflict minerals requires collaborativeefforts within the supply chain. In 2023,100% of suppliers involved in lithiumproduction signed theHuman RightsCompliance and Conflict-Free MineralsDeclaration, successfully ensuring thatall products supplied to Capchem andits affiliated companies are conflict-freeminerals.
Con?ict MineralsSpeci?c Actions
As of the end of the Reporting Period, relevant suppliers of Capchem, based on the Company's theHuman Rights Compliance andCon?ict-Free Minerals Declaration, had diligently conducted their own supply chain investigations. This ensures that metals suchas Gold (Au), Tantalum (Ta), Tungsten (W), Cobalt (Co), Tin (Sn), and Lithium (Li) are not obtained through illegal means or smug-gling by non-state armed groups. Additionally, these metals are con?rmed not to originate from con?ict regions, including theDemocratic Republic of the Congo. Furthermore, the metals used by the Company's suppliers do not come from sources that vio-late the "con?ict-free" standards, particularly those originating from Congolese mines as recognized by the United Nations SecurityCouncil.
●Conflict Mineral Locations: DemocraticRepublic of the Congo (DRC), Rwanda,Uganda, Burundi, Tanzania, Kenya●Con?ict Mineral Types: Gold (Au), Tanta-lum (Ta), Tungsten (W), Cobalt (Co), Tin(Sn), Lithium (Li)
● Commit to abide by relevant United Nations sanctions resolu-tions●Adhere to domestic and international laws enforcing suchresolutions, such asthe OECD Due Diligence Guidance forResponsible Supply Chains from Con?ict-A?ected and High-Risk Areas and the China Responsible Mineral Supply ChainManagement Guidelines●Commit not to engage in any activities that would providesupport for con?icts related to human rights and other issues
Key contents inthe Human Rights Compliance and Con?ict-Free Minerals Declarationof Capchem
100%Suppliers involved in lithium produc-tion signed theHuman Rights Com-pliance and Con?ict-Free MineralsDeclaration
In 2023
key suppliers for the ?rst-round key se-lected enterpries
102103
Capchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
Talent GrowthThe total workforce was4,133, with 891 new hiresThe turnover rate of full-time employees was
8%
Talent Development and IncentiveA total investment of RMB
3.5477
million in trainingA total of
0.227
million training hoursThe average number of training hours per employee over
hours
Employee Rights, Interests and Bene?tsThe satisfaction survey of the Companycovered
100%
of full-time and part-timeemployees, and the employee satisfactionwas rated "Good"
People-OrientedPhilosophy:
The Development Environ-ment of Harmonious Coex-istence
As an R&D-driven high-tech enterprise, Capchem understands thatemployees serve as the driver of its development. The Company iscommitted to building an equal, diverse, and inclusive working envi-ronment, and takes the "Participate, Develop, Undertake and Share"talent development philosophy as the e?ective means to help eachemployee achieve shared growth and promising future together withthe Company.
Ecological Protection:
Green Environmental Practicesin Production and Operations
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive CommunitiesSustainable Operations:
A Compliant and RobustGovernance Framework
Innovation-driven:
Industry-leading Productsand ServicesMulti-level Governance:
Complete and RobustESG Governance SystemCapchem Enviromental, Social and Governance (ESG) Report
Training Camp of Capchem Bangjing Program
104105
Sustainable Operations:
A Compliant and RobustGovernance Framework
Ecological Protection:
Green Environmental Practicesin Production and OperationsInnovation-driven:
Industry-leading Productsand Services
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive Communities
Capchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
Capchem's talent development philosophy
At Capchem, the talent development philosophy has e?ectively integrated into the genes and blood of corporate operation and develop-ment. The Company understands that empowering employee growth and setting up a stage for each like-minded partner to display theirtalents is to drive employee growth together with the corporate development, shoulder responsibilities with solidarity, achieve break-throughs, and creating sustainable value for both parties.
Employees are encouraged todevelop together with the Companyand to shoulder responsibilities,tackle challenges and achievebreakthroughs
Perfect training system and dual-channel career development path,
empowering employees to grow
A value distribution systemfor sharing business results isimplemented to pay value creators
To provide each employee with theopportunity and platform to display his orher talents to the fullestParticipateDevelop
UndertakeShare
Talent Introduction
Capchem, in accordance with theLabor Law of the People's Republic of Chinaand other applicable laws and regulations of domesticand overseas operation locations, as required by the UN Sustainable Development Goals (SDGs) and theUniversal Declaration of HumanRights (UDHR), formulates and constantly updates the relevant internal systems such as theEmployee Recruitment and Assessment Sys-temsto actively establish and maintain harmonious and stable employment relations.Capchem fully respects the rights and interests of employees, sets up a fair and just stage for them to achieve value, and positively buildsan employer brand widely trusted by employees for synchronous talent growth and corporate development. The Company puts an endto child labor and forced labor employment under any circumstances and announces zero tolerance for any discrimination and har-assment based on race, gender, skin color, religious belief, age, nationality, and physical condition. During the Reporting Period, neitherchild nor forced labor employment was found at the Company.
Equal employment opportunity
Compliant employment
●No child or underage employees
●Taking a stand against any form of forced labor and arranging work legally with employees' consent●Strictly guarding against illegal employment such as human tra?cking
●Prohibiting discriminatory recruitment conditions●Prohibiting any physical contact with employees that may cause physical or mental injury●Prohibiting any verbal threats harmful to employees' physical or mental health●Prohibiting disciplinary actions such as physical punishments
106107
Sustainable Operations:
A Compliant and RobustGovernance Framework
Ecological Protection:
Green Environmental Practicesin Production and OperationsInnovation-driven:
Industry-leading Productsand Services
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive CommunitiesCapchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
Capchem coordinates the annual regular talent demand forecast based on the core requirements of corporate development andgradually develops plans for the campus recruitment in 2024. In 2023, Capchem communicated with college graduates face to faceon industry development frontiers, technology development trends, career development and other topics through the online cam-pus recruitment platforms and o?ine campus career talks to enhance reserve of talents with high potential.
Campus recruitment
2024 Campus recruitment
Employee Training
At Capchem, it is an important element of training schemes to tailor training plans for more employees throughout their careerdevelopment life cycle and help them grow at di?erent levels and grades. It also inexhaustibly drives long-term corporate develop-ment. The Company attaches importance to the resources needed by employees in each growth stage, breaks down the strategictalent objectives and development requirements, and accelerates iteration in institutional systems, curriculum setting, lecturercultivation and detailed evaluation, thus boosting employee nurture and team building.
Supported by institutional construction, Capchem has continuously improved a series of internal management systems, such astheEmployee Training Management Procedureand theInternal Trainer Management Systems, and made full use of teaching chan-nels such as Capchem Management College and o?ine internal trainer teaching to provide institutional and technical support formulti-channel and multi-dimensional regular employee training.Training System
Screenshot of online courses of Capchem Management College
Talent Development and Incentive
High-quality talents are always the cornerstone and driving force for the development of Capchem. The company focuses on thethree dimensions of "incentive, development and culture", and empowers the growth of employees through the crisscrossing dif-ferentiated training system, clear and de?nite career development paths and multi-level incentive mechanism, and endeavours toachieve the goal of "making the best use of talents" in the cultivation and development of talents, and development goals.
Stressing both professional ability and moral integrity, Capchem carries out socialrecruitment, campus recruitment and school-enterprise cooperation in an all-roundway, builds a talent pool diligently, and widely absorbs strategically necessary talentsfor business development. In 2023, the Company organized more than 30 campusrecruitment events, which e?ectively solved the shortage of technical and manage-ment talents in enterprises through regular social recruitment and integrated cam-pus recruitment.In pace with overseas business development, the Company has steadily acceleratedthe internationalization process and continuously promoted local recruitment. Localrecruitment is one of the priorities in preparing the U.S. and Poland facilities. Fullyconsidering the project cycle, the Company shortens the completion and produc-tion cycle of the facilities relying on the diverse skills of local talents. The Companystrengthens the toolkit of international talents through internal mobilization, techni-cal support and other ways.
The Company organized campus re-cruitment events more than
In 2023
108109
Sustainable Operations:
A Compliant and RobustGovernance Framework
Ecological Protection:
Green Environmental Practicesin Production and OperationsInnovation-driven:
Industry-leading Productsand Services
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive CommunitiesCapchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
Relying on years of practical experience, Capchem has developed more than 3,000quality training courses categorized by the depth of courses and formed a person-alized growth graph based on the growth needs of employees in di?erent ranks andbusiness departments to promote their career development. During the ReportingPeriod, the Company invested RMB3.5477 million for more than 0.227 million hoursof training in total, with an average of more than 55 hours of training per employee.
Curriculum Design
Capchem Talent Development Roadmap
Empowering themiddle and seniormanagement byclarifying theirmissions and for-mulating and im-plementing strate-gic goals to makebreakthroughs inmanagement.
Nurturing thefrontline andmiddle-levelmanagement byformulating andimplementing thecompetency train-ing plan for themcentering on "rolechange, capabilityenhancement andteam leadership".
Continuouslypromoting themanagementcompetencies offunctional person-nel and improvingthe professionallevel of functionalplatforms.
Formulating train-ing plans for pro-ject managementand other specialskills for R&D per-sonnel to enhancetheir professionalR&D capabilities.
Enhancing mar-keters' negotiationskills and marketresearch capa-bilities throughtraining to build an"Iron Force" salesteam.
RMB
3.5477
millionthe Company invested of train-ing in total
During the reporting period
Integration and DevelopmentLong-term Career Planning
OnboardingCon?rmation (or Pro-bation Completion)
1 Year3-5 Years5-10 Years
Onboarding ProgramCareer DevelopmentProfessional DevelopmentCore ForceRealization of Self-worth
Coaching programs,mentorship support;Campus recruitmentemployees: BangjingPlan;Social recruitmentemployees: Onboardingtraining
Work plans:On-the-jobpractice; General andspecialized training
Middle and high-level leadershipdevelopment: BangjiePlan; Regionaltransfers, cross-department rotations,special appointments,etc.Basic and Middle-level managementdevelopment:
Bangying Plan;IDP practice,cross-departmentrotations, etc.Specialized learning map;Challenging tasks; Rotationopportunities, job positionchanges, external training,
etc.
Empowerment
for middle-level and seniormanagement
Training forfrontline andmiddle-levelmanagement
Professionalenhancementfor functional
Professionalenhancementfor R&Dpersonnel
Professionalenhancementfor marketers
Personalized Growth Map
In 2023, the Company empowered fresh graduates, functional personnel, R&D personnel, sales teams, and front-line, middle andsenior management through the "Capchem Series" training programs to help employees be competent for their jobs, understandand identify with company culture, unite team strength, and meet future challenges enthusiastically.
The "Capchem Bangjing Program" helps fresh graduates in-tegrate into the Company through systematic training andchange their role from "students" to "workers", thus reservingtalents for the Company. By the end of this Reporting Period,the Company has carried out 13 sessions of Capchem BangjingProgram.
Following the "721" cultivation concept, Capchem transformsmiddle management from "Handling of work matters" to"Leading the team" by combining practices with training. Bythe end of this Reporting Period, Company For three consecu-tive years, the company has organized the Bangying Program,conducted more than 30 empowerment trainings, and thereserve talent pool rate has reached 90%.
Based on the internal leadership model, Capchem comprehen-sively considers the personalized development and commonneeds of employees, systematically promotes the transforma-tion of the middle and senior management from "leaders" to"operators" and deepens the construction of talent pipeline.
Capchem Bangjing Program
Capchem Bangying Program
Capchem Bangjie Program
Training Camp of Capchem Bangjing Program
Training Camp of Capchem Bangying Program
Training Camp of Capchem Bangjie ProgramTrainer Cultivation
To gather and pass on valuable internal experience and management skills, Capchem continues to strengthen the construction ofan internal trainer team under the guidance of theInternal Trainer Management Systems, so as to accumulate teacher resourcesfor the plan for promoting employees' subsequent capacity development. As of the end of the Reporting Period, the Company hadmore than 30 experienced practical internal trainers.
110111
Sustainable Operations:
A Compliant and RobustGovernance Framework
Ecological Protection:
Green Environmental Practicesin Production and OperationsInnovation-driven:
Industry-leading Productsand Services
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive CommunitiesCapchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
Senior
SeniormanagementMiddlemanagement
Veteran /Expert
Basicmanagement
Chief
Employee Development
Capchem e?ectively discovers, nurtures and reserves talents through well-improved systems and standards and clear career de-velopment channels for employees. In this way, we enhance the sense of belonging of talents with high-potential that meet thedemands of corporate development strategies and keep creating corporate value.Capchem has established multiple career development channels including 4 sequences and 54 channels, and a talent promotionmechanism twice a year.The Company has formed a vertical development channel for professional talents and a horizontal devel-opment model for corresponding talents by the well-improved quali?cation system promoted, to encouraging employees to tacklechallenges and achieve breakthroughs.
Focusing on employee competency evaluation and performance demonstration, the Company has systematically established asupporting rank promotion system for employee career development and promotion to ensure an annual rank promotion cover-age rate exceeding 50% from the constitutional level, so that everyone has an opportunity and a possibility to be promoted. Thus,more employees gain a sense of career development identity and actively pursue richer career growth opportunities. Meanwhile,the Company constantly improves the quali?cation system including career development channels, quali?cation level standardsand certi?cation evaluation management systems to encourage, respect, recognize and reward talents in professional channelsand management channels.
Dual Talent Development Channels at Capchem
Composition of Capchem's personnel ability development channel
●R&D Sequence
●Professionals Sequence
●Marketers Sequence
●Managers Sequence
channels for R&D engi-neers and product devel-opers,etc.
channels for projectmanagement, ?nance andhuman resource manage-ment,etc.
channel for managementsequence quali?cationstandards
channels for marketingand customer service
Grass-roots
Back-bone
Incentive, attraction and retention mechanisms for employees of Capchem
Retaining Talents
with Career
RetainingTalents withTreatment
RetainingTalents withCulture
In 2023, based on a perfect quali?cationsystem and promotion mechanism,Capchem focuses on promoting youngtalents, promoting the rejuvenation ofcadres. As of the end of the ReportingPeriod, approximately 40% of the Com-pany's management were 35 or younger.
Quali?cation level certi?cation defense at Capchem
Employee Incentives
Capchem regards fair and competitivecompensation and incentives as the cor-nerstone to stimulate employees. Start-ing from "Retaining talents with career,treatment and culture", the Companyhas established a scientific assessmentmechanism, a perfect compensation sys-tem and a diversified incentive systemto "select, develop, nurture and retain"talents.
Quali?cation System for Positions
Career development
pathway
Quali?cationlevel standards
Certi?cation and evaluationmanagement systemQuali?cation System for Positions
112113
Sustainable Operations:
A Compliant and RobustGovernance Framework
Ecological Protection:
Green Environmental Practicesin Production and OperationsInnovation-driven:
Industry-leading Productsand Services
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive Communities
Capchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
10.119
million incentive sharesFirst batch of incentive objects in 2023
Organizational performance
IndicatorsTarget values
Strategic planning (next 3-5 years)
Strategic objectivesStrategic initiatives
Annual operational planning (current year)
Annual
objectivesKey work
Outcome targetsKey initiativesPeople managementCompetence enhancement
Individual performanceSelection of key indicatorsIdentify indicators and targetvalues for the year
Disaggregated to current year
Select priorities to fall intoindividual performance
Strategic initiatives fall into individualperformance objectives for unit man-agementCore, measurable objectives instrategic plan form organizationalperformance
Fall into individual performance
The Company continuously optimizes the Performance Appraisal Mechanism driven by "Organizational Performance and Individ-ual Performance", with clear strategic and business planning,e?ectively routinizes performance culture, closed-loops performanceapplication, and di?erentiated performance rewards and punishments, several methods help to improve the quality of perfor-mance management level in a multi-dimensional way, and promote the learning and growth of the team.
Capchem drives talent development with performance. Short-term incentives and medium-and-long-term incentives as well asmaterial incentives and spiritual incentives that complement each other have been put in place at Capchem. The Company allo-cates performance-based bonus distribution and equity incentives for all kinds of employees, closely linking talents' interests withthe sustainable corporate success.
Capchem associates employees' income with the corporate operating performance and individual performance and provides em-ployees with a mixed variable compensation plan including monthly performance awards and year-end awards to achieve a win-win situation. As of the end of the Reporting Period, the mixed variable compensation plan at Capchem has covered all employees.
The Company sets equity incentives as a long-term and sustainablebene?t-sharing mechanism, to drive long-term development and pro?tgrowth by key and core talents for enhanced brand value and market in-?uence. As of the end of the Reporting Period, the Company has carriedout periods of equity incentives in total, with 646 incentive recipients and
10.119 million incentive shares in 2023.
Performance-based Bonus Distribution
Equity Incentives
HolidaysActivities
Employee Bene?ts
Capchem helps employees achieve work-life balance through multi-dimensional humanistic care and supporting arrangements to con-tinuously improve their psychological well-being and satisfaction.Adhering to the talent development philosophy of "Participate, Develop, Undertake and Share", the Company continuously improves theemployee bene?ts system from bene?ts, vacations and activities and actively helps employees relieve their worries about housing andhouse purchase by providing mandated bene?ts such as ?ve major social insurance programs and housing provident fund, as well ascomprehensive and sound non-compensation bene?ts. The Company also regularly sends festival condolences and enriches employ-ees' spare time life through Reading Clubs, Family Day, Carnival Events and other activities, expressing its care and concern for employ-ees in every possible way.
Employee Rights, Interests and Bene?ts
As a caring enterprise, Capchem accurately targets the common needs of employees and strives to meet the reasonable ones bycommunicating with and caring for employees to help them feel warmth.
InterestAssociation
HolidayActivities
PhysicalExercise
Birthday
Party
TeamBuilding
OtherActivities
AnnualMeeting
CarnivalReading
Bonanza
AnnualPhysicalExaminationSelf-operatedcanteen/mealsubsidy
Telephone
SubsidySingle roomdormitory/room
subsidy
BusinessInsurance
Holiday
SympathyRecruitment
Transfer
Maternity
Leave
BreastfeedingLeave
Travelling
Leave
ParentalLeave
Nursing CareLeave
OtherHolidays
Paid AnnualLeave
Paid Leave ofAbsence
Wedding
Leave
Bene?ts
Bene?t Packages of Capchem
Performance Management System of Capchem
114115
Ecological Protection:
Green Environmental Practicesin Production and Operations
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive Communities
Capchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
Photos of employees participating in activities
Jingmen Capchem sent flowers, fruits, prepaid cards andother holiday gifts to female employees on InternationalWomen's Day to convey its blessings and show its care andconcern.
Care for female employeesTo recognize and appreciate female employees, on Interna-tional Women's Day in 2023, Capchem organized the Floricul-ture Salon Themed "Flowers as a Gift for Appreciation" andthe "Meet WENDY" heart-to-heart project to help female em-ployees relax and deeply understand their demands, showinghumanistic care within the Company.
Floriculture Salon themed "Flowers as a Gift for Appreciation" on International Women's Day
Capchem prioritizes the humanistic care for female employees and needy employees. The Company insists on building an inclu-sive and equal workplace for female employees and guarantees their rights and interests to equally enjoy bene?ts by setting up ababy care room and regularly carrying out special activities for women on International Women's Day on March 8th. Meanwhile,the Company provides economic assistance for needy employees in terms of their actual di?culties and needs. The Companycares about the physical and mental health of employees and provides psychological health counseling for employees to conveyconcern and warmth to them.
To help employees exercise, and create apositive corporate atmosphere, HuizhouCapchem organized a 10-kilometer char-ity marathon in July 2023, enhancing thefriendship among employees throughhealthy and happy running.
Huizhou Capchem Charity Marathon
Sustainable Operations:
A Compliant and RobustGovernance Framework
Innovation-driven:
Industry-leading Productsand ServicesMulti-level Governance:
Complete and RobustESG Governance SystemCapchem Enviromental, Social and Governance (ESG) Report
116117
Sustainable Operations:
A Compliant and RobustGovernance Framework
Ecological Protection:
Green Environmental Practicesin Production and OperationsInnovation-driven:
Industry-leading Productsand Services
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive CommunitiesCapchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
Eager to meet the needs of employees, Capchem deeply implemented the care activities in 2023, namely "kindly caring for presentlife of needy employees, carefully understanding the needs of employees, and patiently promoting the humanistic work of theCompany", to convey concern and warmth to needy employees.
Care for needy employees
Employee CommunicationAt Capchem, employees enjoy the freedom of association and expression and are encouraged to carry forward their sense of own-ership to put heads together for the Company to continuously optimize its business and environment. The Company managementdiscovers demand of employees based on their individualized demands through workers' congress and communication meetings,and accurately responds to their expectations.
Maincommunicationchannels
Annual key tasksWorkers' congress
Carnival events
Employeecommunicationmeetings
Capchem carries out up-bottom democratic management through the workers' congress, uni-formly collecting, following up and solving the di?culties of employees in their work and life.Capchem communicates with employees continuously through various employee communi-cation meetings. In 2023, the Company organized new employee seminars, welcome meet-ings and executive meet-and-greet events to help create a democratic, positive and coopera-tive corporate atmosphere.Capchem e?ectively promotes employees' and their families' understanding of corporate culturethrough carnival events and corporate culture salons. In 2023, the Company organized the secondsession of Carnival and Corporate Culture Salon, hosting more than 350 participants includingemployees and their families, which uni?ed employees in a happy and harmonious atmosphere.
In 2023, Capchem carried out executive meet-and-greet events involving executives and fresh graduates. This event e?ectivelydealt with the doubts of fresh graduates and built a bridge for deepening communication between employees and o?cers throughtraining review, career planning and Q&A.
Executive meet-and-greet events
To further consolidate democratic management achievements, the Company regularlyconducts employee satisfaction surveys, tracks the current situation of employees in realtime, and timely solves the problems of employees at work. In 2023, the Company car-ried out an employee satisfaction survey in terms of career development, training anddevelopment, compensation and bene?ts, working environment, communication andcooperation and service quality based on the needs of employees, and analyzed and im-proved the shortcomings in the operation process in the light of the survey result. As ofthe end of the Reporting Period, the employee satisfaction survey covered all employeesincluding part-time employees), with the employee satisfaction rated "Good".
Capchem's executive Meet-and-Greet events
New employee seminarWelcome meetingCarnival event for employees
As of the end of the Reporting Period
rated
"Good"
of the employee satisfaction surveycovered all employees
118119
Capchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
Community EngagementDuring the Reporting Period, Capchem has invested a total ofRMB
3.4286
million in supporting public welfareDuring the Reporting Period, Capchem's contributions in scholarship pro-grams and education donations had reached a total of RMB
2.87
millionCapchem was honored with 2022
"Outstanding Enterprisein Ful?lling Social Responsibility"
Award
Engagement in PublicWelfare:
Commitments to Diverseand Inclusive Communities
Committed to giving back to society with love and care, Capchemsees social responsibility and being an outstanding corporate citi-zen as an integral part of the corporate culture. Capchem activelyengages in social welfare initiatives while creating economic value.The Company, driven by the philosophy of reciprocity, aligns cor-porate interests with social welfare by ful?lling social responsibilityin charity and community activities, bene?ting more people withlove and care.
Ecological Protection:
Green Environmental Practicesin Production and Operations
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive CommunitiesSustainable Operations:
A Compliant and RobustGovernance Framework
Innovation-driven:
Industry-leading Productsand ServicesMulti-level Governance:
Complete and RobustESG Governance SystemCapchem Enviromental, Social and Governance (ESG) Report
Capchem Poland Community Involvement
120121
Sustainable Operations:
A Compliant and RobustGovernance Framework
Ecological Protection:
Green Environmental Practicesin Production and OperationsInnovation-driven:
Industry-leading Productsand Services
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive CommunitiesCapchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
Fully leveraging industry advantages, Capchem undertakes public welfare programs focusing on youth education, support for dis-advantaged groups, and domestic and international community development, thus contributing its due share of contributions forimproving social welfare and residents' happiness.
RMB
3.4286
millionDuring the Reporting Period, Capchem has invested a total of
Capchem's priorities in public welfare
Capchem'spriorities inpublic welfareYouth educationPublic welfareDomestic andinternationalcommunitydevelopment
Support fordisadvantagedgroups
Addressing Social Demand
As an enterprise that brings warmthand shoulders responsibilities, Cap-chem always keeps a close eye on so-cial issues, focusing on education andrural development. By virtue of eco-nomic and industrial strengths, Cap-chem actively demonstrates the socialvalue of an enterprise through tangibleactions, consolidates achievements inpoverty alleviation, and partners withvarious sectors of society to create abetter future.
Committed to youth development, Capchem has made charitable donations for education to universities and local communitiesnationwide, providing ?nancial support for boosting the development of regional education.
Capchem's charitable donations for education
Capchem makes charitable donations for education
●The Capchem headquarters has setup scholarship programs in a numberof colleges and universities, encour-aging graduates to continually pushboundaries of their potential. As ofthe end of the Reporting Period, Cap-chem had donated a total of RMB3.8million.
●Sanming Hexa?uo contributed RMB1.87million for education to the Society forthe Advancement of Education in MingxiCounty in Sanming City, Fujian Prov-ince, as well as RMB300,000 to SanmingUniversity Education DevelopmentFoundation, signi?cantly improving localteaching and learning conditions.
●Tianjin Capchem has donatedRMB100,000 to the International Schoolof Tianjin (IST) for improving campusgreen landscape.
The scholarship donation and signingceremony of Shenzhen Capchem
Sanming Hexa?uo Chemicals make donationsTianjin Capchem's certi?cate of donation
for public welfare
122123
Sustainable Operations:
A Compliant and RobustGovernance Framework
Ecological Protection:
Green Environmental Practicesin Production and OperationsInnovation-driven:
Industry-leading Productsand Services
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive Communities
Capchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
Research Excellence Award in ElectrochemicalEnergy Storage (EES Award), 2021 Capchem USAhas donated USD20,000 to the Research ExcellenceAward in Electrochemical Energy Storage (EESAward). This award mainly recognizes the out-standing scholars who have made significant orig-inal contributions to research and development inthe field of electrochemical energy storage, with anaim to promote research in electrochemical energystorage and energy transition, as well as to con-tribute to carbon reduction and carbon neutralityworldwide.
In October 2023, Huizhou Capchem donated RMB50,000 to Huizhou Da Ya Wan Charity Federation as the Special DevelopmentFund for Rural Revitalization in Qinglong County, consolidating achievements of local rural revitalization e?orts.
In April 2023, Capchem, partnered with Shenzhen SME Industry In-novation Association, Shenzhen SME Entrepreneurs Association andSMEA Qingwawa Charity Foundation under the Shenzhen CharityFederation, initiated the "Walking for Love · Capchem Cup" ShenzhenSME Entrepreneur Spring Charity Walk. The initiative aims at givingback to society by raising social awareness and support for childrenwith hematologic tumors from underprivileged families. During theevent, the Chairman of Capchem received a certi?cate of honor fromthe SME Service Bureau of Shenzhen Municipality.
Capchem also remains committed to the welfare of the disabled andpolice o?cers in distress. In 2023, Jiangsu Hicomer improved the livingconditions of these groups and their families through charitable dona-tions, demonstrating love and care through concrete actions.Group photo of the director of Capchem USA and the Awardwinner Meng Ying
Group photo of "Walking for Love"
Capchem USA advances studieson industrial technology
Huizhou Capchem contributes to rural revitalization
Caring about the disadvantaged groups
In December 2023, Sanming Hexa?uo organized a voluntary blood donation event, putting into practice the core value of "Innova-tion for Application, Progress with Integrity." In this event, 133 donors passed the medical test and donated blood, contributing acombined volume of 42,300 milliliters.
Dedication to social welfare initiatives
Blood donation event organized by Sanming Hexa?uo Chemicals
124125
Sustainable Operations:
A Compliant and RobustGovernance Framework
Ecological Protection:
Green Environmental Practicesin Production and OperationsInnovation-driven:
Industry-leading Productsand Services
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive Communities
Capchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
Partnering with Communities for Shared Development
Capchem strives to establish positive interactions with local communities surrounding its operational sites. The Company endeav-ors to address the needs of the communities and to build connections through various events, including cultural and sports activi-ties and awareness-raising education, fostering harmonious, friendly, and sustainable community ties.
Taking the needs of communities and concernsof residents into consideration, Capchem usesactivities for popularization of science to promotesafety and health awareness among residents,building a positive corporate image.In September 2023, Nantong Capchem was invitedto organize a lecture on "Home Fire and DisasterPrevention", attended by over 50 residents andproperty management personnel. This event wasdesignated to popularize knowledge about fireand disaster prevention through images, videos,and other forms, e?ectively enhancing the safetyawareness of community residents.
Huizhou Capchem friendly basketball match
Community exchange highlights launched by Capchem in 2023Capchem open day for residents
Capchem badminton match
"Home Fire and Disaster Prevention" lecture
Raising residents' safety and health awareness
Capchem, actively engaged in sports,demonstrates a spirit of teamwork andfortitude in events such as basketballand badminton matches, strengthen-ing communication with stakeholdersincluding surrounding communities,corporations, and governments.In November 2023, Capchem's basket-ball team competed in the first "LowCarbon Super Cup" basketball gamefor enterprises at Pingshan InnovationSquare and won third place.
Honoring corporate social responsibility, Capchem Poland focuses on safe production and the development of local youth andshares its development achievements with local communities.In 2023, Capchem Poland organized the Capchem Cup youth football matches, and funded the eco-friendly bus stop onCh?apowski Road. The Company also collaborated with the local police in conducting safe holiday campaigns and road safetyactivities. Furthermore, the Company engaged in educational cooperation with the Pysz?ca volunteer ?re brigades and WOPR, par-ticipating in volunteer services like water emergency response in?rem City. These e?orts signi?cantly supported children's charityevents in local communities. With a total donation exceeding RMB 350,000, Capchem successfully built a positive corporate image.
Capchem's employees volunteering
"Low Carbon Super Cup" basketball game for enterprises
Uniting with communities to initiate cultural and sporting activities
Overseas community development activities
126127
Sustainable Operations:
A Compliant and RobustGovernance Framework
Ecological Protection:
Green Environmental Practicesin Production and OperationsInnovation-driven:
Industry-leading Productsand Services
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive CommunitiesCapchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
Appendix
Quantitative ESG Performance TablesCorporate Governance PerformanceDisclosure indicatorUnit2023
Corporate governanceConstruction of "three governance bodies"Number of shareholder meetings/4Number of board meetings/10Number of supervisory board meetings /10Information disclosure indicatorResponse rate of investor interactions%100Number of regular result presentations/4Number of major negative new reports/0Anti-corruption and operation compliance
Rate of employee
enrollment in anti-corruption courses%100Signing rate ofCommitment Letter of Integrity by employees%100Signing rate ofIntegrity AgreementorIntegrity Clausewith suppliers%100Corruption cases/0R&D leadershipR&D workforceperson900+R&D investmentRMB100 million4.77R&D investment as a percentage of total revenue%6.37Accumulative number of patents submitted/1,108Accumulative number of trademarks registered/220Total R&D and IPR training sessions session120Total R&D and IPR training hourshour151Social Performance
Disclosure indicatorUnit2023Safety ?rst
Total investment in health and safetyRMB million46.21Lost days due to work injurieshour1,431
Covering full-time employees, part-time employees and contractors.
The statistical caliber covers Shenzhen Capchem, Huizhou Capchem, Sanming Hexa?uo, Nantong Capchem, Suzhou Novolyte, Jingmen Capchem, Jiangsu Hicomer, HunanFluopont, Nantong Top, Tianjin Capchem and Fujian Hepta?uo; The data of the "total investment in health and safety" excludes Fujian Hepta?uo.
Disclosure indicatorUnit2023People-centric
Total workforceperson4,133New hiresperson891Number of employees by gender
Male employeesperson3,138Female employeesperson995Number of employees by age
29 and belowperson1,12930-50person2,75151 and aboveperson253Number of employees by rank
Executive Management Team (EMT)person10Other management (Basic-to-middle level, and middle-to-senior level)person555Frontline employeesperson3,568Number of employees bynationality
China person4,060Overseasperson73Percentage of female employees
%24
Disclosure indicatorUnit2023Resident supply chain
Total number of suppliers/5,382Number of suppliers from Chinese mainland/5,253Number of suppliers from Hong Kong, Macao, Taiwan regions andoversea suppliers
/129
Disclosure indicatorUnit2023Total recordable occupational health and safety incidents
/17Total recordable incidence rate（TRIR）
N/A0.47Work-related fatalities/0Occupational disease cases/0The percentage of production units for hazardous chemical passing theISO 45001 certi?cation
%75%Number of safety drills/459Number of safety training sessionssession547Number of employees trainedperson3,133Total number of safety traininghour98,847
The recordable occupational health and safety incidents herein refer to the recordable injury incidents de?ned by the Occupational Safety and Health Administration (OSHA).
For the calculation of this indicator, total working hours do not include those of Fujian Hepta?uo, resulting in a slightly in?ated calculation result.
The data in this section includes total full-time employees of Capchem Poland and Shenzhen Capchem
..
Calculation formula: Percentage of female employees = (number of female employees/total number of employees in the category) * 100%.
128129
Sustainable Operations:
A Compliant and RobustGovernance Framework
Ecological Protection:
Green Environmental Practicesin Production and OperationsInnovation-driven:
Industry-leading Productsand Services
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive CommunitiesCapchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
Disclosure indicatorUnit2023
By rank
Board of Directors (Joint-Stock Companies only)%11.1Executive Management Team (EMT)%20.0Other management (Basic-to-middle level, and middle-to-senior level)%46.8Frontline employees%24
Employee turnoverEmployee turnover rate
%8Total number ofemployees left
person336Employee development and incentivesTotal investment in trainingRMB million3.5477Total training hours for employeeshour227,939.48Training hours per employee
hour/person55.15Training per employee by gender
Male employeeshour/person55.34Female employeeshour/person51.27Training per employee by rank
Executive Management Team (EMT)hour/person13.7Other management (Basic-to-middle level, and middle-to-senior level)hour/person47.79Frontline employeeshour/person55.48Total number of employees trainedperson4,133
Percentage of employees covered by training
%100Employee promotion rate
%17Percentage of employeesaccepting performance evaluation
%100Employee rights, interests and bene?tsEmployee social insure coverage %100Percentage of employees entitled to variable performance-based pay%100EquityIncentives
Number of employees receiving incentives in 2023person646Number of incentive shares in 202310,000 shares1,011.9
Percentage = Female employees in the group/total number of employees in the group
Calculation formula: Employee turnover rate = (number of employees left / total number of employees) * 100%.
Calculation formula: Training hours per employee = Total training hours for employees/total number of employees in each category.
The total number of employees who have participated in at least one training session as of December 31, 2023.
Calculation formula: Percentage of employees trained in each category = (Number of employees trained in each category/number of employees in that category) *100%.
Employee Promotion Rate: Percentage of Full-Time Employees Promoted as a Percentage of All Employees in Capchem.
Unless otherwise speci?ed, the statistical caliber of environmental performance covers Shenzhen Capchem, Huizhou Capchem, Sanming Hexa?uo, Nantong Capchem,Suzhou Novolyte, Jingmen Capchem, Jiangsu Hicomer, Hunan Fluopont, Tianjin Capchem, and Fujian Hepta?uo.
Environmental Performance
Disclosure indicatorUnit2023Environmental managementThe percentage of stable operating bases obtained certification for ISO 14001 environmentalmanagement system
%100Investment in energy conservation and technology improvementRMB million 4.15Environmental investmentRMB million39.4443Implementation of environmentalcompliance training
Specialized environmental management trainingsessions24Number of environmental management training enrollments/603Implementation ofemergency drills
Environmental emergency drillssessions74Number of environmental emergency drills enrollments/2,632The pass rate for environmental management training assessments%100Environmental protection training and activities enrollmentssessions32Number of environmental protection training and activities /797Investment in environmental protection training and activitiesRMB41,100Waste gas emissionsTotal air pollutant emissionsTon13.81VOCsTon6.12PMTon0.87NO
x
Ton5.29SOxTon0.35Waste dischargeHazardous wasteTon8,757.16General wasteTon1,476.36Recycling of general wasteTon105.55Waste water discharge
Disclosure indicatorUnit2023
Community engagement
Total investment in social welfareRMB million3.4286Investment by charitable ?elds
Education donationRMB million2.87Support for disadvantaged groupsRMB153,600OthersRMB405,000Voluntary services
Total hourshour48Total participantsperson412
130131
Sustainable Operations:
A Compliant and RobustGovernance Framework
Ecological Protection:
Green Environmental Practicesin Production and OperationsInnovation-driven:
Industry-leading Productsand Services
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive Communities
Capchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
Total waste water dischargeTon294,047.94Water consumptionTotal water withdrawal
Ton1,264,986.05Total water consumption (withdrawal -displacement)Ton970,938.11Water consumption per unit revenueTon/RMB 10,000 in revenue1.30Reuse of reclaimed waterTon83,098.47Reuse rate of reclaimed water%28greenhouse gas emissionsTotal greenhouse gas emissions
tCO
e888,779.59Scope 1 greenhouse gas emissions tCO
e16,558.40Greenhouse gas removalstCO
e19,582.25Scope 2 greenhouse gas emissions tCO
e172,445.60Scope 3 greenhouse gas emissions tCO
e719,357.84Scope 1 and Scope 2 emission intensity
tCO
e/RMB 10,000 in revenue0.23
Disclosure indicatorUnit2023
Statistics cover Shenzhen Capchem, Huizhou Capchem, Sanming Hexa?uo, Nantong Capchem, Suzhou Novolyte, Jingmen Capchem, Jiangsu Hicomer, Hunan Fluopont ,Tianjin Capchem and Fujian Hepta?uo.
Total greenhouse gas emissions include Scope 1, 2 and 3 greenhouse gas emissions. The types of gases include carbon dioxide (CO
), methane (CH
), nitrous oxide (N
O),and hydro?uorocarbons (HFCs). The data covers the Shenzhen Capchem, Huizhou Capchem, Sanming Hexa?uo, Nantong Capchem, Suzhou Novolyte, Jiangsu Hicomer,Jingmen Capchem, Hunan Fluopont and Tianjin Capchem. The calculation of Scope 1, 2 and 3 greenhouse gas emissions refers to as theAccounting Methods and ReportingGuidelines for Emission of Greenhouse Gas by Industrial Enterprises in Other Industries (Trial)published by the National Development and Reform Commission (NDRC) in2015, and the2006 IPCC Guidelines for National Greenhouse Gas Inventories (2006 IPCC Guidelines)published by the Intergovernmental Panel on Climate Change (IPCC) andthe Ministry of Ecology and Environment (MOE).
The greenhouse gas emission intensity of Scope 1 and Scope 2 (with GHG removals) is 0.23 tCO2e/RMB 10,000 in revenue. The greenhouse gas emission intensity of Scope 1and scope 2 (without GHG removals) is 0.25 tCO2e/RMB 10,000 in revenue.
Calculated with reference to the General Principles for Calculation of Comprehensive Energy Consumption (GB/T 2589-2020), covering energy types such as natural gas,diesel, gasoline, purchased steam and purchased electricity; Statistics cover the Shenzhen Capchem, Huizhou Capchem, Sanming Hexa?uo, Nantong Capchem, SuzhouNovolyte, Jingmen Capchem, Jiangsu Hicomer, Hunan Fluopont and Tianjin Capchem.
TypesUnit2023
Energy consumption
Comprehensive energy consumption
tec53,161.85Comprehensive energy consumption intensitytec/ RMB 10,000 in revenue0.07Direct energy consumption
Natural gasm
5,919,642.33Dieselkg69,410.70Gasolinekg131,284.36
Indirect energy consumptionPurchased steamGJ883,092.96Purchased electricitykWh120,938,036.57
Indicator IndexesShenzhen Stock Exchange Social Responsibility Instructions to Listed Companies IndexesContentsHeadingsNo.2
ESG GovernanceCorporate GovernanceNo.3
ESG GovernanceCorporate GovernanceNo.4
Anti-corruption and Operation ComplianceInnovation-drivenNo.5
About the ReportESG GovernanceNo.6 About CapchemNo.7
Corporate GovernanceNo.8No.9No.10No.11No.12No.13Talent Development and IncentiveNo.14Employee Rights, Interests and Bene?tsNo.15Occupational Health and SafetyNo.16Employee Rights, Interests and Bene?tsNo.17Talent IntroductionNo.18Talent Development and IncentiveNo.19Employee Rights, Interests and Bene?tsNo.20
Innovation-driven
Customer ServicesNo.21
Quality AssuranceNo.22No.23
Quality Assurance
Supply Chain Management System
132133
Sustainable Operations:
A Compliant and RobustGovernance Framework
Ecological Protection:
Green Environmental Practicesin Production and OperationsInnovation-driven:
Industry-leading Productsand Services
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive CommunitiesCapchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
ContentsHeadingsNo.24
Anti-corruption and Operation ComplianceBuilding A Sustainable and Low-carbon Supply ChainNo.25
Information Security and Privacy ProtectionBuilding A Sustainable and Low-carbon Supply ChainNo.26
Customer ServicesSupply Chain Management SystemNo.27
Environmental ManagementInnovation-drivenNo.28
Environmental ManagementPollution and Resource ManagementCommitment to Green ProductNo.29
Commitment to Green ProductEnvironmental ManagementPollution and Resource ManagementNo.30Pollution and Resource ManagementNo.31Environmental ManagementNo.32Partnering with Communities for Shared DevelopmentNo.33Addressing Social DemandNo.34ESG ManagementNo.35
About the ReportESG GovernanceNo.36
About the ReportESG GovernanceQuality AssuranceEnvironmental ManagementEmployee Rights, Interests and Bene?tsPartnering with Communities for Shared Development
GRI content index
GRI Standards DisclosureHeadings
GRI 2: GeneralDisclosures 2021
2-1Organizational details
About the Report2-2Entities included in the organization's sustainabilityreporting2-3Reporting period, frequency and contact point2-4Restatements of informationNot applicable2-5External assuranceIndependent Assurance2-6Activities, value chain and other business relationshipsAbout Capchem2-7EmployeesTalent Introduction2-8Workers who are not employees
Collaborative E?ciency: A Robust and
Reliable Supply Chain2-9Governance structure and compositionCorporate Governance2-11Chair of the highest governance body Corporate Governance2-12
Role of the highest governance body in overseeing themanagement of impacts
Corporate Governance2-13Delegation of responsibility for managing impacts
Corporate Governance
ESG Governance2-14
Role of the highest governance body in sustainabilityreporting
About Capchem
Message From Chairman
ESG Governance2-16Communication of critical concerns Corporate Governance2-18
Evaluation of the performance of the highest governancebody
Multi-level Governance: Complete and
Robust ESG Governance System
Corporate Governance2-22Policy commitments
Multi-level Governance: Complete and
Robust ESG Governance System2-27Compliance with laws and regulations
No severe illegal punishment during the
reporting period2-28Membership associations R&D innovation mechanism2-29Approach to stakeholder engagementESG ManagementGRI 3: Material Topics2021
3-1Process to determine material topicsESG Management3-2List of material topicsESG Management3-3Management of material topics ESG ManagementGRI 201: EconomicPerformance 2016
201-1Direct economic value generated and distributed ESG Highlights in 2023201-3
De?ned bene?t plan obligations and other retirementplans
Employee Rights, Interests and Bene?tsGRI 203: IndirectEconomic Impacts 2016
203-1Infrastructure investments and services supported
Partnering with Communities for
Shared Development203-2Signi?cant indirect economic impacts
Partnering with Communities for
Shared DevelopmentGRI 204: ProcurementPractices 2016
204-1Proportion of spending on local suppliers Building A Resilient Supply Chain
Statement of use
Capchem has reported the information cited in this GRI content index for the period 2023.1.1 to 2023.12.31 with referenceto the GRI Standards.GRI 1 usedGRI 1: Foundation 2021
134135
Sustainable Operations:
A Compliant and RobustGovernance Framework
Ecological Protection:
Green Environmental Practicesin Production and OperationsInnovation-driven:
Industry-leading Productsand Services
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive Communities
Capchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
GRI Standards DisclosureHeadingsGRI 205: Anti-corruption2016
205-1Operations assessed for risks related to corruption
Anti-corruption and OperationCompliance205-2
Communication and training about anti-corruptionpolicies and procedures
Anti-corruption and OperationCompliance205-3Con?rmed incidents of corruption and actions taken
Anti-corruption and OperationComplianceGRI 206: Anti-competitive Behavior2016
206-1
Legal actions for anti-competitive behavior, anti-trust, andmonopoly practices
Not happened during the reportingperiodGRI 301: Materials 2016
301-2Recycled input materials used Packaging material management301-3Reclaimed products and their packaging materialsPackaging material management
GRI 302: Energy 2016
302-1Energy consumption within the organization
Addressing Climate ChangeQuantitative ESG performance tables302-2Energy consumption outside of the organization302-3Energy intensity302-4Reduction of energy consumption
Commitment to Green ProductQuantitative ESG performance tables302-5
Reductions in energy requirements of products andservices
Commitment to Green ProductQuantitative ESG performance tablesGRI 303: Water andE?uents 2018
303-1Interactions with water as a shared resource
Pollution and Resource ManagementQuantitative ESG performance tables303-2Management of water discharge-related impacts303-3Water withdrawal303-4Water discharge303-5Water consumption
GRI 305: Emissions 2016
305-1Direct (Scope 1) GHG emissions
Quantitative ESG performance tables305-2Energy indirect (Scope 2) GHG emissions305-3 Other indirect (Scope 3) GHG emissions305-4GHG emissions intensity305-5Reduction of GHG emissions305-6Emissions of ozone-depleting substances (ODS)305-7
Nitrogen oxides (NOx), sulfur oxides (SOx), and othersigni?cant air emissionsGRI 306: Waste 2020
306-1Waste generation and signi?cant waste-related impacts
Pollution and Resource Management
Quantitative ESG performance tables306-2Management of signi?cant waste-related impacts306-3Waste generated306-4Waste diverted from disposal306-5Waste directed to disposalGRI 308: SupplierEnvironmentalAssessment 2016
308-1
New suppliers that were screened using environmentalcriteria
Building A Sustainable and Low-carbon
Supply Chain308-2
Negative environmental impacts in the supply chain andactions takenGRI 401: Employment2016
401-1New employee hires and employee turnover
Talent Introduction
Quantitative ESG performance tables401-2
Bene?ts provided to full-time employees that are notprovided to temporary or part-time employees
Employee Rights, Interests and Bene?ts401-3Parental leaveEmployee Rights, Interests and Bene?ts
GRI Standards DisclosureHeadings
GRI 403: OccupationalHealth and Safety 2018
403-1 Occupational health and safety management system Occupational Health and Safety403-2
Hazard identi?cation, risk assessment, and incidentinvestigation
Occupational Health and Safety403-3 Occupational health services Occupational Health and Safety403-4
Worker participation, consultation, and communication onoccupational health and safety
Occupational Health and Safety403-5 Worker training on occupational health and safety Occupational Health and Safety403-6 Promotion of worker health Occupational Health and Safety403-7
Prevention and mitigation of occupational health andsafety impacts directly linked by business relationships
Occupational Health and Safety403-8
Workers covered by an occupational health and safetymanagement system
Occupational Health and Safety403-9Work-related injuriesOccupational Health and Safety403-10Work-related ill health Occupational Health and SafetyGRI 404: Training andEducation 2016
404-1Average hours of training per year per employee
Talent Development and Incentive
Quantitative ESG performance tables404-2
Programs for upgrading employee skills and transitionassistance programs
Talent Development and Incentive404-3
Percentage of employees receiving regular performanceand career development reviews
Talent Development and Incentive
Quantitative ESG performance tablesGRI 405: Diversity andEqual Opportunity 2016
405-1Diversity of governance bodies and employees Talent IntroductionGRI 406: Non-discrimination 2016
406-1Incidents of discrimination and corrective actions takenTalent IntroductionGRI 407: Freedom ofAssociation and CollectiveBargaining 2016
407-1
Operations and suppliers in which the right to freedom ofassociation and collective bargaining may be at risk
NoneGRI 408: Child Labor 2016408-1
Operations and suppliers at signi?cant risk for incidents ofchild labor
NoneGRI 409: Forced orCompulsory Labor 2016
409-1
Operations and suppliers at signi?cant risk for incidents offorced or compulsory labor
NoneGRI 411: Rights ofIndigenous Peoples 2016
411-1
Incidents of violations involving rights of indigenouspeoples
NoneGRI 413: LocalCommunities 2016
413-1
Operations with local community engagement, impactassessments, and development programs
Partnering with Communities for
Shared Development413-2
Operations with signi?cant actual and potential negativeimpacts on local communities
NoneGRI 414: Supplier SocialAssessment 2016
414-1New suppliers that were screened using social criteria
Building A Sustainable and Low-carbon
Supply Chain414-2Negative social impacts in the supply chain and actions taken Building A Resilient Supply ChainGRI 416: CustomerHealth and Safety 2016
416-1
Assessment of the health and safety impacts of productand service categories
Chemical Management416-2
Incidents of non-compliance concerning the health andsafety impacts of products and services
NoneGRI 417: Marketing andLabeling 2016
417-1
Requirements for product and service information andlabeling
Customer Services417-2
Incidents of non-compliance concerning product andservice information and labeling
None417-3
Incidents of non-compliance concerning marketingcommunications
NoneGRI 418: CustomerPrivacy 2016
418-1
Substantiated complaints concerning breaches ofcustomer privacy and losses of customer data
Information Security and Privacy
Protection
136137
Sustainable Operations:
A Compliant and RobustGovernance Framework
Ecological Protection:
Green Environmental Practicesin Production and OperationsInnovation-driven:
Industry-leading Productsand Services
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive CommunitiesCapchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
SASB content indexTopic Metric Topic Metric CodeHeadings
GreenhouseGas Emissions
Gross global Scope 1 emissions, percentage covered underemissions-limiting regulations
RT-CH-110a.1
Addressing Climate ChangeQuantitative ESGperformance tablesDiscussion of long- and short-term strategy or plan tomanage Scope 1 emissions, emissions reduction targets,and an analysis of performance against those targets
RT-CH-110a.2Addressing Climate ChangeAir Quality
Air emissions of the following pollutants: (1) NO
X(excludingN
O), (2) SO
X
, (3) volatile organic compounds (VOC
s
), and (4)hazardous air pollutants (HAPs)
RT-CH-120a.1
Pollutions and ResourcesManagementESG performance tablesEnergy Management
(1) Total energy consumed, (2) percentage grid electricity, (3)
percentage renewable and (4) total self-generated energy
RT-CH-130a.1
Addressing Climate ChangeQuantitative ESGperformance tablesWaterManagement
(1) Total water withdrawn, (2) total water consumed;
percentage of each in regions with High or Extremely HighBaseline Water Stress
RT-CH-140a.1
Pollutions and ResourcesManagementQuantitative ESGperformance tablesNumber of incidents of non-compliance associated withwater quality permits, standards and regulations
RT-CH-140a.2NoneDescription of water management risks and discussion ofstrategies and practices to mitigate those risks
RT-CH-140a.3
Pollutions and ResourcesManagementHazardous Waste ManagementAmount of hazardous waste generated, percentage recycledRT-CH-150a.1
Pollutions and ResourcesManagementESG performance tablesCommunity Relations
Discussion of engagement processes to manage risks andopportunities associated with community interests
RT-CH-210a.1N/AWorkforce Health & Safety
(1) Total recordable incident rate (TRIR) and (2) fatality rate
for (a) direct employees and (b) contract employees
RT-CH-320a.1
Occupational Health andSafetyESG performance tablesDescription of e?orts to assess, monitor, and reduceexposure of employees and contract workers to long-term(chronic) health risks
RT-CH-320a.2
Occupational Health andSafetyProduct Design for Use-phaseE?ciency
Revenue from products designed for use-phase resource e?ciency
RT-CH-410a.1
Commitment to GreenProductAddressing Climate ChangeBuilding A Sustainable andLow-carbon Supply ChainSafety & EnvironmentalStewardship of Chemicals
(1) Percentage of products that contain Globally Harmonised
System of Classi?cation and Labelling of Chemicals (GHS)Category 1 and 2 Health and Environmental HazardousSubstances, (2) percentage of such products that haveundergone a hazard assessment
RT-CH-410b.1Chemical ManagementDiscussion of strategy to (1) manage chemicals of concernand (2) develop alternatives with reduced human and/orenvironmental impact
RT-CH-410b.2Chemical ManagementGenetically Modi?ed Organisms
Percentage of products by revenue that contain geneticallymodi?ed organisms (GMOs)
RT-CH-410c.1N/AManagement ofthe Legal &Regulatory Environment
Discussion of corporate positions related to governmentregulations and/or policy proposals that addressenvironmental and social factors a?ecting the industry
RT-CH-530a.1Environmental ManagementOperational Safety, EmergencyPreparedness & Response
Process Safety Incidents Count (PSIC), Process Safety TotalIncident Rate (PSTIR), and Process Safety Incident SeverityRate (PSISR)
RT-CH-540a.1
Occupational Health andSafetyNumber of transport incidentsRT-CH-540a.2None
Independent Assurance
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Independent Assurance Statement
Introduction
T?V Rheinland (Shanghai) Co., Ltd., member of T?V Rheinland Group, Germany (hereinafter “T?V Rheinland”,“We”) has been entrusted by the management of Shenzhen Capchem Technology Co., Ltd. (hereinafter“Capchem”, “the Company”) to conduct independent assurance of the Capchem ESG Report 2023 (hereinafter“the Report”). All contractual contents for this assurance engagement rest entirely within the responsibility ofCapchem. Our task was to give a fair and adequate judgment on the Report.The intended users of this assurance statement are stakeholders who have relevance to Capchem’s overallsustainability performance and impacts of its business activities during year 2023 (1 January 2023 ~ 31 December2023).T?V Rheinland is a global service provider of Corporate Social Responsibility (CSR) & Sustainability Services inover 65 countries, having qualified professionals in the field of Corporate Sustainability Assurance, Environment,Social and Stakeholder Engagement. We have maintained complete impartiality and independence during theassurance engagement, and we were not involved in the preparation of the Report contents.Assurance Standard
T?V Rheinland undertook the assurance work in accordance with the AA1000 Assurance Standard v3 (AA1000ASv3), Moderate level of assurance.Scope & Type of AssuranceOur assurance engagement was carried out in accordance with the AA1000AS v3, Type 1, Moderate level onCapchem’s ESG performance in the Report. The following assurance criteria were used in performing theassurance work:
? With reference to the GRI Sustainability Reporting Standards (GRI Standards 2021）? With reference to the Sustainability Accounting Standards Board Standards (SASB Standards)? Guidelines on Social Responsibility of Listed Companies on the Shenzhen Stock Exchange? The United Nations Sustainable Development Goals (UN SDGs)? Adherence to the AA1000 AccountAbility Principles of Inclusivity, Materiality, Responsiveness, and Impact
Assurance Methodology
Our assurance activities included:
? Reviewing the company's ESG-related management practices, processes, and performance to evaluate
the ESG management system, including the ESG strategy, corporate governance, compliancemanagement, risk management, stakeholder communication, material issue analysis, and keyperformance.? Interviews with company management and managers responsible for gathering and analyzing
information on ESG-related performance.? Reviewing and examining ESG management practices and performance information and data to test the
accuracy of such information and data based on a sample basis and applied analytical procedures.? Reporting assurance observations to management provides an opportunity for the company to take
corrective actions before the assurance process is completed.? Collecting documentary evidence and assessing management representations to support adherence to
the AccountAbility Principles.
138139
Sustainable Operations:
A Compliant and RobustGovernance Framework
Ecological Protection:
Green Environmental Practicesin Production and OperationsInnovation-driven:
Industry-leading Productsand Services
Safety First:
Diverse and Compre-hensive Safeguards
Collaborative E?ciency:
A Robust and ReliableSupply Chain
People-Oriented Philosophy:
The Development Environmentof Harmonious Coexistence
Engagement in Public Welfare:
Commitments to Diverse andInclusive CommunitiesCapchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
| 3 |
Capchem has implemented Environmental Impact Assessments (e.g., soil and water concerns), safety riskassessments, supply chain risk assessments, and compliance risk assessments to comply with nationalregulations. The company has established a Strategy and Sustainable Development Committee, as well as anEnergy (Carbon) management Committee, to create favorable conditions for the company's operations, riskmanagement, compliance management and ESG management decisions. The company has also incorporatedESG performance appraisal into its executive compensation system and promoted cross-functional assessmentand management of potential risks. We recommend that Capchem should fully understand, effectively measure,and evaluate ESG impact, and incorporate it into key management processes, and set medium- to long-termgoals to manage impact.
Daniel PanCorporate Sustainability Service Technical ManagerT?V Rheinland (Shanghai) Co., Ltd.Shanghai, China, 26 February 2024
| 2 |
LimitationsT?V Rheinland performed the assurance based on the scope of defined engagement agreement, and on amoderate level assurance under the AA1000AS for engagement. Information and performance data subject toassurance is limited to the contents of the Report.Our assurance work did not cover financial report and financial data, and other information not related tosustainability.ConclusionsBased on our methodology and activities performed within the scope of this assurance, we can reach a conclusionthat no instances or information came to our attention that would be to the contrary of the statement made asbelow:
? Capchem ESG Report 2023 and its contents adhere to the AA1000 AccountAbility Principles.? Capchem has implemented processes to collect and aggregate key performance data related to material
issues within reporting boundaries, and its management practices demonstrate that the companyidentifies, evaluates, and defines material issues.? The ESG-related information and performance disclosed in the report are evaluated and supported bydocumentary evidence.? T?V Rheinland shall not bear any liability or responsibility to a third party for perception and decision onCapchem based on this Assurance Statement.Adherence to the AA1000 AccountAbility PrinciplesInclusivityCapchem's identified key stakeholders include investors, regulators, customers, suppliers, and employees, etc.Supporting evidence shows that the company identified and understood relevant material ESG issues through astakeholder questionnaire in 2023. There are appropriate and timely communications with external stakeholderson governance and sustainability management at all levels of the company. We recommend that Capchem shouldset metrics to measure the effectiveness, outcomes, and impact of stakeholder engagement.Materiality
Through stakeholder questionnaires, industry peer comparisons, investment, and analysis and consideration ofthe policy and regulatory environment, Capchem is positioned to understand the material issues. In themateriality analysis and assessment process, Capchem considers the company's strategy, decision-making, riskand compliance management, operational management, and reporting mechanisms. A material issue matrix isformed from two dimensions: importance to stakeholders and importance to the company. The report discloses18 material issues, including high-material ones, such as intellectual property protection, environmentalcompliance, and business ethics.ResponsivenessCapchem can communicate with stakeholders and respond to material issues in a timely manner to standardizecorporate governance and the implementation of ESG policies and improve ESG management systems andprocesses. Multi-channel communication methods include regular communications with regulators, customermeetings, supplier audits and training, employee satisfaction surveys, and publication of company journals. Theresponse focused on the company's operating conditions, the results of the assessment of material issues, andcompliance reports. Capchem disclosed quantitative ESG performance indicators in the report, coveringintellectual property, emissions compliance, occupational health and safety, and greenhouse gas (GHG)emissions. Through these disclosures, the company communicates the fundamentals of compliance managementto all stakeholders.
Impact
Sustainable Operations:
A Compliant and RobustGovernance Framework
Innovation-driven:
Industry-leading Productsand Services
Capchem Enviromental, Social and Governance (ESG) ReportMulti-level Governance:
Complete and RobustESG Governance System
Readers Feedback FormThank you for your time to read the 2023 Capchem ESG Report. In order to better provide valuable information to you and otherstakeholders, and to enhance the capacity and performance of Capchem's ESG management, we welcome your comments and sug-gestions on the Report.
Thank you for supporting our ESG work. If you have any other comments and suggestions on this report,please feel free to contact us through the following channels.-Tel:0755-89923768-Address:Capchem Plaza, Changye Road, Pingshan District, Shenzhen City, Guangdong Province, China-Email:capchem@capchem.com
1. Which of the following categories of stakeholders do you belong to?
□Investors□Regulators□Customers□Employees□Suppliers □Industry associations□External experts □Media□Others
2. What is your overall satisfaction rating with the Capchem ESG Report?
□Very Satis?ed□Somewhat Satis?ed□Neither Satis?ed nor Dissatis?ed□Somewhat Dissatis?ed□Very Dissatis?ed
5. What is your satisfaction rating with the content arrangements and design of the Report?
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Environmental responsibility?
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Social responsibility:
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Corporate governance responsibility:
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4. What is your satisfaction rating with the clarity, accuracy and completeness of the ESG disclosures in the report?
Clarity:
□Very Satis?ed □Somewhat Satis?ed □Neither Satis?ed nor Dissatis?ed □Somewhat Dissatis?ed □Very Dissatis?ed
Accuracy:
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Completeness:
□Very Satis?ed □Somewhat Satis?ed □Neither Satis?ed nor Dissatis?ed □Somewhat Dissatis?ed □Very Dissatis?ed
6. Other comments and suggestions:
Capchem O?cialWeChat Account
Capchem O?cial
Video Account
Capchem VisionWeChat Signal
Stock code: 300037.SZCapchem LinkedInOverseas HomepageCapchem O?cialWebsite
3. What is your satisfaction rating with the performance of Capchem in environmental, social and corporate development responsibility: