Environmental, Socialand Governance Report
2023
Hengtong Optic-Electric Co., Ltd.
Table of Contents
Corporate GovernanceESG GovernanceStakeholder CommunicationRisk ManagementAdherence to Business Ethics
R&D and InnovationSustainable Supply ChainQuality ControlResponsible SalesCustomer Communicationand Service
Compliance and Stability:
The Foundation for SteadyGrowth
Leading with Innovation:
Creating Leading Quality
About This ReportMessage from the ExecutiveAbout HengtongAppendix
Environmental Protection andManagementClimate Change and CarbonNeutrilityEnergy E?ciency and TransformationWater-saving Transformation andOptimizationEmission Management and Recycling
Global Action for SustainableDevelopmentEmpowering DevelopingCountries: Innovation andResponsibilitySupporting DevelopedCountries: Promoting GreenTransformation and SocialResponsibilityDeepening SustainableDevelopment: Ecological andSocial Responsibility Practicesin the Chinese Market
Talent Attraction and RetentionEmployee Compensation andIncentivesSupporting Growth and DevelopmentPromoting Communication and CareOccupational Health and Safety
Low-Carbon Development:
Illuminating a Green Future
Global Cooperation:
Demonstrating Hengtong'sResponsibility
Caring For Employees:
Promoting InclusiveDevelopment
0305
Hengtong Optic-Electric Co., Ltd.2023 Environmental, Social and Governance Report
0203
About This Report
Data Source and ReliabilityAssurance
The data and cases in this report are mainly sourced from the ourstatistical reports and related documents, and have been reviewedby relevant departments. Our Board of Directors guaranteesthat there are no false records or misleading statements in thisreport, and takes responsibility for the authenticity, accuracy, andcompleteness of its content.
Language and Format
Con?rmation and Approval
This report is available in both Chinese and English, with theelectronic version available for viewing. In case of any discrepanciesbetween the Chinese and English versions, the Chinese version shallprevail. Please visit the Hengtong Optic-Electric's website at http://www.htgd.com.cn/ for more information.We highly value the opinions of our stakeholders and welcomereaders to contact us through the following channels. Yourfeedback will help us further improve this report and enhance ouroverall sustainable development performance.Email: htgd@htgd.com.cnTel: 0512-63430985Address: No. 2288, Zhongshan North Road, Wujiang District,
Suzhou City, Jiangsu Province, ChinaThis report was con?rmed by the management and approved bythe Board of Directors on August 27, 2024.
Overview
Reporting Period
Preparation Basis
Scope and Boundaries
This report is the second Environmental, Social, and GovernanceReport (hereinafter referred to as "this report") published byJiangsu Hengtong Optic-Electric Co., Ltd. (hereinafter referredto as "Hengtong Optic-Electric," "the company," "we"). JiangsuHengtong Optic-Electric Co., Ltd. is a listed subsidiary of HengtongGroup Co., Ltd. (hereinafter referred to as "Hengtong Group","the Group"). This report truthfully discloses our practices inful?lling our responsibilities towards key stakeholders, includingshareholders, customers, partners, employees, the environment,and communities, as well as its performance in environmental,social, and corporate governance (hereinafter referred to as"ESG").
This report covers the ?scal year from January 1, 2023, to December31, 2023 (hereinafter referred to as "the reporting period"). Somecontent appropriately extends to previous or subsequent years.
The preparation of this report primarily follows the standards ofthe Global Reporting Initiative (GRI) and also responds to issuesraised in the Morgan Stanley Capital International (MSCI) ESGRatings.The content of this report has been determined through a set ofprocedures, including identifying and prioritizing key stakeholdersand important ESG-related issues, defining the boundaries ofthe ESG report, collecting relevant materials and data, compilingthe report based on the collected information, and reviewing thecontent within the report.
The policies and data provided in this report cover the headquartersand subsidiaries of Hengtong Optic-Electric, and the scope ofthe report is consistent with the annual report. Unless otherwisespeci?ed, the currency mentioned in the report is in RMB.
About This Report
Hengtong Optic-Electric Co., Ltd.2023 Environmental, Social and Governance Report
0405
Optimizing GovernanceStructureto Strengthen the Foundationfor Sustainable Development
Hengtong Optic-Electric has focused on five key areas: low-carbon transformation,sustainable development ecosystems, technological research and innovation, cultural andvision-building, and risk management. To support this, we established an ESG Committeeand released our ?rst ESG report. By continuously improving our corporate governanceand environmental management systems, we have further advanced our greendevelopment strategy, strengthening the foundation for Hengtong's sustainable growth.As the world enters the era of Industry 4.0, characterized by the deep integration ofdigitalization, networking, intelligence, and industrial transformation, Hengtong Optic-Electric is seizing the opportunity presented by the new wave of industrialization. We haveaccelerated our e?orts in digital transformation, leveraging digital management to drivehigh-quality development. In this context, we built the world's ?rst "Lighthouse Factory"in the global optical communication industry, a symbol of excellence in intelligentmanufacturing and digitalization. This has significantly reduced production costs andimproved product quality.
Commitment to Green andLow-Carbon Developmentto Strengthen OurCompetitiveness
Ful?lling CorporateResponsibilitiesand Creating Greater Social Value
In response to global climate challenges, Hengtong Optic-Electric has actively alignedwith China's national goals of "carbon peaking" and "carbon neutrality," focusing onenergy transition and striving to become a global provider of information and energyinterconnection solutions.We are committed to green and low-carbon development, actively exploring opportunitiesin clean technology. Through our self-developed dual-cross industrial internet platform,we have created a green energy management system and a big data centralized controlcenter, enabling digital and intelligent carbon emission management throughout theproduction process. We are advancing green technology upgrades and green facilityconstruction to help factories achieve "near-zero carbon" goals. To date, we haveestablished five national-level green factories, three national-level green supply chainenterprises, seven national-level green products, and three industrial product greendesign demonstration enterprises. Our subsidiary, Hengtong Submarine Power Cable Co.,Ltd., has been awarded the "Five-Star Certi?cation for Carbon Peak and Carbon NeutralityManagement." Hengtong Optic-Electric is strategically positioned in low-carbon and greenindustries, with a comprehensive presence in ?elds such as marine energy, o?shore windpower equipment, and ultra-high-voltage power transmission. We provide systematicservices for integrated clean energy projects, building a complete, green, and efficientindustrial ecosystem.Hengtong Optic-Electric views its employees as the company's most valuable asset andconsiders talent development as its top priority. We are committed to providing goodemployment opportunities for people with disabilities, protecting the rights of femaleemployees, and creating a transparent, fair, and just working environment. We continueto improve our talent development and promotion systems, encouraging all Hengtongemployees to work together with the company towards high-quality growth.At the same time, we uphold the belief that "corporate social responsibility is the foremostresponsibility." We actively participate in social welfare initiatives, enhancing Hengtong'ssocial in?uence and contributing to the sustainable development of both the industry andsociety.Looking ahead, Hengtong Optic-Electric remains steadfast in its commitment tosustainable development, transforming ESG principles into an intrinsic driver of corporategrowth and competitive advantage, while creating more value for our stakeholders.Finally, on behalf of the Board of Directors, I would like to express my heartfelt thanks toevery Hengtong employee for their hard work. I would also like to thank our customers,investors, partners, regulatory bodies, and all sectors of society for their trust, support,and guidance. Let us continue to move forward together and create a better future.
In 2023, we faced unprecedented challenges and transformations, marking a centuryof great change while also nurturing new momentum and opportunities. This year alsocoincides with the 20th anniversary of Hengtong Optic-Electric's listing. Over the past20 years, Hengtong Optic-Electric has continuously placed sustainable developmentat the core of its long-term strategy, consistently deepening its commitment to thisphilosophy in line with the evolving times, and leading the company's high-qualitydevelopment. Looking back, Hengtong Optic-Electric has weathered the complexitiesof the market and grown from an initial revenue of RMB 560 million in 2003 to RMB
47.62 billion in 2023, achieving steady growth across cycles.
ChairmanHengtong Optic-ElectricCui Wei
Message from the Executive
Message from the Executive
0607
About Hengtong
Products and TechnologiesIn the ?eld of communication networks, we successfully launchedthe 800G QSFP-DD 2×FR4 optical transceiver and achieved small-scale applications of 400G optical transceiver products in bothdomestic and international markets. Our "Next-Generation SilicaOptical Fiber Preform Key Technologies and Industrialization"project won the second prize in the Science and TechnologyProgress Awards from the Chinese Optical Engineering Society.The "Multi-Core Low-Mode Fiber High-Capacity OpticalInterconnect Core Components and System R&D" project wasapproved as a key research and development plan for 2022 byJiangsu Province.In marine communications, our ultra-long-distance, high-capacitydeep-sea submarine optical cable system key technologies andindustrialization project won the first prize in the Science andTechnology Innovation Awards at the Second World PhotonicsConference (AOPC 2021) and the Seventh Chinese OpticalEngineering Society Awards. We introduced the world's first32-?ber pair submarine communication repeater prototype and32-fiber pair repeater submarine cable, advancing the industryinto the Petabit-level ultra-large capacity system transmissionera. Additionally, we released the world's first 18kV powersupply scheme for submarine repeater cables, leading the SDMtechnology revolution in the marine communication industry.In marine observation, led by CNOOC Research Institute, wedeveloped China's first "Fiber Optic Communication-BasedUnderwater Data Transmission System (SRM)," which completedDNV GL verification and Ministry of Industry and InformationTechnology acceptance, and has been delivered for use. Our "FiberOptic Communication-Based Marine Oil and Gas UnderwaterEquipment R&D and Engineering Application" won the First Prize inShanghai Marine Science and Technology, marking the beginning ofthe domestication process for marine oil and gas SRM underwaterrouting equipment.In the energy interconnection field, our self-developed fourth-generation ultra-flexible mineral-insulated fire-resistant cablesmeet international advanced levels; the 500kV cross-linkedpolyethylene-insulated submarine cables achieve internationalleading standards, and the key technologies and engineeringapplications of the 500kV cross-linked polyethylene-insulatedsubmarine cables won the First Prize in the Science andTechnology Progress Awards from the China Electric PowerResearch Institute.
Hengtong was awarded the "Optical Fiber Intelligent ManufacturingDemonstration Factory" by the Ministry of Industry and InformationTechnology, being the first in the industry to receive this award.We have also received the China Patent Excellence Award fromthe National Intellectual Property Administration and titles suchas "National Service-Oriented Manufacturing DemonstrationEnterprise" and "Industrial Product Green Design DemonstrationEnterprise" from the Ministry of Industry and InformationTechnology, as well as "Jiangsu Province 5G Fully ConnectedFactory" from the Jiangsu Provincial Department of Industry andInformation Technology.Hengtong ranks among the top three globally in the "Top 10 MostCompetitive Cable Companies 2023," "Top 10 Most CompetitiveSubmarine Cable Companies 2023," and "Top 10 Most CompetitiveOptical Fiber and Cable Companies 2023" lists. We also toppedthe "Top 10 Most Competitive Cable Companies in China 2023" listfor nine consecutive years. During the reporting period, we wereranked among the top three in the "Top 10 Most ComprehensiveCompetitive Optical Fiber and Cable Companies in China 2023" andwon the Best Customer Service Gold Award in the Chinese OpticalCommunication Market in 2023. Additionally, we were recognized asan Excellent Supplier in China Mobile's 2022 Level One Procurementand an Excellent Supplier for China Telecom in 2022. We also rankedseventh in the "Top 100 Chinese Communication EquipmentTechnology Service Suppliers" in the seventeenth communicationindustry rankings.
Industry HonorsCompany Overview
Hengtong Optic-Electric provides industry-leading productsand solutions in optical communications, smart grids, o?shorewind power, marine communications, and smart cities.With comprehensive capabilities in design, research anddevelopment, manufacturing, sales, and service, Hengtongis committed to becoming a global leader in information andenergy interconnection solutions through its global industrialand marketing network.
Hengtong integrates traditional Chinese culture, local culture,contemporary characteristics, industry features, and uniquecompany attributes into its corporate culture. This creates the"Hengtong Culture System" characterized by "The greatestvirtue has the characteristics like water-it nurtures the worldwithout taking or contending. Water is always aware of rationaleof change, properly altering and keeping pace with times,"which serves as the eternal source of Hengtong's vitality.
Corporate Culture
Hengtong has a nationwide industrial presence with threehigh-tech industrial parks in Suzhou (Hengtong Optic Comm.Tech-Park, Hengtong International Marine Industrial Park, andHengtong Optic-Electric Wire And Cable Industrial Park). Ourproducts and services support major communication andenergy internet system integration projects globally.In the context of economic globalization, Hengtong continuouslyimproves its global marketing network and industrial layout incommunication networks and energy interconnection. In recentyears, Hengtong has expanded its industries to Europe, SouthAmerica, South Asia, Africa, Southeast Asia, covering all fivecontinents. Hengtong's overseas industrial layout is continuallyimproving, with a total of 12 overseas industrial bases,enhancing its global operations, market competitiveness, andbrand value.
Business layout
About Hengtong
Hengtong Optic-Electric Co., Ltd.2023 Environmental, Social and Governance Report
0809
ESG Major Events and Honors
On January 7, 2023
On November 7, 2023On November 24, 2023In December 2023
on March 18, 2023On June 11, 2023
In September 2023
On June 5, 2023
In July 2023
Hengtong Groupannounced itsESG dual-carbongoals
Hengtong Submarine Power Cableparticipated in the China InternationalImport Expo (CIIE) and announcedits membership in the Science BasedTargets initiative (SBTi)
At the EY (Ernst &Young) Second ListedCompanies SustainableDevelopment O?cerSummit, Hengtong wonthe "Outstanding CaseAward."
Hengtong Alpha Optic-Electric, a subsidiaryof Hengtong Optic-Electric, was includedin the World EconomicForum's (WEF) GlobalLighthouse Network asone of the 11th batch of"Lighthouse Factories."
In December 2023
Hengtong's Spanishsubsidiary, Cablescom,received the EcoVadis GoldAward for sustainability
Hengtong Optic-Electric established the "Environment, Social,and Governance (ESG) Committee" and released the "Board ofDirectors ESG Committee Rules of Procedure."
Hengtongparticipated in theinaugural ShanghaiInternationalCarbon Expo andshared insights in aroundtable forum
August 17, 2023
Hengtong was nominated for the "Green Dot China· Green Pearl Award" in the "Green Dot China ·Sustainable Practice Case Selection"Hengtong Optic-Electric wasapproved asa "Near-ZeroCarbon" factory inSuzhou
Hengtong Optic-Electric globallyreleased its 2022ESG report
Hengtong Submarine Power Cable, asubsidiary of Hengtong Optic-Electric,received a 5-star rating for its enterprise-level carbon peaking and carbonneutrality management
On October 26, 2023Hengtong Groupwas recognized as ademonstration unitfor the EATNS carbonmanagement systemstandards
0809
Global LighthouseNetwork:
Adopting AI atSpeed and Scale
WHITE PAPERDECEMBER 2023
Hengtong Optic-Electric Co., Ltd.2023 Environmental, Social and Governance ReportAbout Hengtong
Hengtong Optic-Electric Co., Ltd.2023 Environmental, Social and Governance Report
1011
ESG Sustainable Value Management Performance
Projects20222023Year-on-year Change
Self-built Photovoltaic Capacity0.4 MW10.5 MW+10.1 MW
Purchased Green Electricity250,435 MWh227,100 MWh -23,335 MWhTotal Greenhouse Gas Emissions
339,189.14tons of CO
equivalent
385,822.96tons of CO
equivalent
+13.75%Greenhouse Gas Emission Intensity
730.00 tons of CO
equivalent/100 million RMB
810.18 tons of CO
equivalent/100 million RMB
+10.98%R&D Investment1.967 billion RMB2.101 billion RMB+ 6.79%Total International and Domestic
Standards
364426+62Total Authorized Invention patents1,0101,198+188
Total PCT International Patents197135-62Operating Revenue46.464 billion RMB47.622 billion RMB+2.49%
Operating Pro?t1.674 billion RMB2.311 billion RMB+38.00%
Number of ESG-RelatedIndices IncludedESG Score Industry Ranking:
8 / 127 (Communications
Equipment Ⅲ)
Number of ESG-RelatedFund Products Included
3.58
%
ESG-RelatedIndex Weight (%)
Rating agencies20222023Year-on-year Change
Re?nitiv3376+43China CreditBBA-+4 levelsWindBBA+2 levelsHuazhengBBBBB+1 levelBusiness GreeningBA-+2 Levels
*Data as of December 31, 2023
ESG Sustainable Value Management Achievements
Project20222023Year-on-year Change
Green Manufacturing
National Green Factories45 +1National green products77 /National Green Supply Chain Enterprises33 /Jiangsu Green Factories67 +1Industrial Product Green Design Demonstration Enterprises23+1Lighthouse Factories01+1Near-zero carbon factories01+1ISO 150001 Energy Management Systems4 6 +2ISO 14064 Organizational Carbon Emission Systems4 7+3ISO 14067 Product Carbon Footprints1228 +16Membership in Science-Based Targets Initiative (SBTi)02+2R&D Innovation
National Enterprise Technology Centers11/National Postdoctoral Research Workstations11/National CNAS Accredited & Provincial Key Laboratories78+1Provincial Postdoctoral Innovation and Practice Base34+1Provincial Engineering Technology Research Centers/Enterprise Technology Centers/Industrial Design Centers
4041+1Academician Workstations33/High-quality developmentHigh-Tech Enterprises2525/National-Level Specialized and New "Little Giant" Enterprises38+5Provincial-Level Specialized and New "Little Giant" Enterprises77
+4 (An additional 4 were added, while theoriginal 4 were upgraded to the national level.)National Manufacturing Champion Enterprises23 +1
Re?nitiv ESG Rating
About Hengtong
Foundation for Steady Growth
Leading with Innovation:
Creating Leading Quality
Caring For Employees: PromotingInclusive Development
Global Cooperation: DemonstratingHengtong's Responsibility
1213
Low-Carbon Development:
Illuminating a Green Future
Corporate GovernanceESG GovernanceStakeholders EngagementRisk ManagementAdhere to Business Ethics
Compliance andStability:
The Foundation forSteady Growth
1415
Hengtong Optic-Electric Co., Ltd.2023 Environmental, Social and Governance ReportCompliance and Stability: The
Foundation for Steady Growth
Leading with Innovation:
Creating Leading Quality
Caring For Employees: PromotingInclusive DevelopmentLow-Carbon Development:
Illuminating a Green Future
Global Cooperation: DemonstratingHengtong's Responsibility
Hengtong enhanced its operational efficiency and effectivenessthrough the construction of an internal control system, promotingthe realization of its development strategy and safeguarding theinterests of the company and all shareholders. The eighth boardof directors held its 21st meeting to review and approve the 2023Internal Control Evaluation Report, available on the ShanghaiStock Exchange website (http://www.sse.com.cn).
Hengtong strictly follows theInformation Disclosure Management Systemand theInsider Information Register ManagementSystem. It strengthens the management of insiders through the implementation of insider information registration andexternal information reporting, standardizes the information disclosure review process, clari?es the con?dentiality obligationsof relevant personnel, and reinforces information disclosure awareness, e?ectively preventing disclosure violations
Through regular reports, interim announcements, emails, phone calls, and platforms like Shanghai Stock Exchange'se-interaction, Hengtong actively listens to reasonable suggestions and opinions from shareholders and investors, ensuring fairtreatment for all, and safeguarding their legitimate rights and interests
BDO China Shu Lun Pan CPAs audited the effectiveness of thecompany's internal control over its 2023 financial statementsand issued a standard unquali?ed audit report. For details of the"2023 Internal Control Audit Report" issued by Shu Lun Pan CPAs,please refer to the website of the Shanghai Stock Exchange (http://www.sse.com.cn).
Committee Meetings HeldDuring the Reporting Period
times
Audit Committee
times
Strategy andDevelopmentCommittee
times
NominationCommittee
times
Remuneration andAppraisal Committee
time
Environmental, Socialand Governance (ESG)Committee
Hengtong strictly adheres to laws and regulations such as theCompany Law,Securities Law,Corporate Governance Guidelines for ListedCompanies, and theStock Listing Rules of the Shanghai Stock Exchange. Additionally, it complies with the latest governance requirementsfrom the China Securities Regulatory Commission (CSRC) and the Shanghai Stock Exchange. Based on Hengtong's actual situation, itcontinuously improves the corporate governance structure, enhances the internal control system, and ensures regulatory compliance inoperations. Hengtong's governance complies with theCompany Lawand the relevant regulations of the CSRC. Speci?c governance aspectsinclude:
The roles and responsibilities between Hengtong's shareholders' meeting, board of directors, board of supervisors, and management areclearly de?ned, with each party performing its duties, exercising checks and balances, and coordinating e?ectively. Hengtong complieswith regulatory requirements in key areas of governance, including relationships between shareholders and the shareholders' meeting,between controlling shareholders and the listed company, between directors and the board of directors, between supervisors and theboard of supervisors, as well as in performance evaluation, incentive mechanisms, stakeholder engagement, information disclosure, andtransparency. Independence is maintained in areas such as operations, personnel, assets, institutions, ?nances, etc.
Corporate Governance
Hengtong convenes and holds shareholders' meetings in strict accordance with the requirements and procedures of the
Company Law,Articles of Association,Rules of Procedure for Shareholders' Meetings, and other relevant laws and regulations.Lawyers are appointed to witness the meetings in person and provide legal opinions to fully protect shareholders' rights
In compliance with theCompany Law,Articles of Association, and relevant regulations of the China Securities RegulatoryCommission (CSRC) and the Shanghai Stock Exchange, Hengtong appoints members to the eighth and ninth boards of directors.The board is composed of 12 directors, including 4 independent directors, meeting the legal and regulatory requirements for sizeand composition. The eighth board of directors has established a Strategy and Development Committee, an Audit Committee, aNomination Committee, a Remuneration and Appraisal Committee, and an Environment, Social, and Governance (ESG) Committee,all of which operate in accordance with theArticles of Associationand the Working Rules of the committee. Directors perform theirduties as required, attend board and shareholders' meetings, review board proposals, and o?er opinions and suggestions on majordecisions. Hengtong discloses information promptly based on board decisions
Hengtong elects the members of the eighth and ninth boards of supervisors in strict accordance with theCompany Law,Articles of Association, and relevant regulations of the CSRC and the Shanghai Stock Exchange. The board of supervisorsconsists of 3 members, including 1 employee representative, with its composition meeting legal and regulatory requirements.The supervisors fulfill their duties by overseeing major operational, financial matters, related-party transactions, and thelegality and compliance of directors and senior management in performing their duties, thus safeguarding the legitimateinterests of Hengtong and its shareholders and ensuring proper corporate governance
Based on the requirements and regulations of the CSRC and the Shanghai Stock Exchange, and considering its own situation,Hengtong improves its internal control system, signi?cantly enhancing its risk prevention capabilities and corporate governancestandards
1617
Hengtong Optic-Electric Co., Ltd.2023 Environmental, Social and Governance ReportCompliance and Stability: The
Foundation for Steady Growth
Leading with Innovation:
Creating Leading Quality
Caring For Employees: PromotingInclusive DevelopmentLow-Carbon Development:
Illuminating a Green Future
Global Cooperation: DemonstratingHengtong's Responsibility
Hengtong has established an ESG Committee as a specialized body under the board of directors, responsible for researching and makingrecommendations on the company's environmental, social, and governance matters. The board of directors, as the highest authority onESG matters, oversees the implementation and supervision of the overall ESG strategy, including environmental management, climatechange, hazardous substance and waste discharge, health and safety, and labor management.
Committeecomposition
Responsibilitiesand Authorities
ESG Governance
The ESG Committee consists of three to ?ve directors, including at least one independent directorCommittee members are nominated by the chairman, more than half of the independent directors, orone-third of all directors, and elected by the boardA chairperson (convener) is appointed to lead the committeeThe ESG Committee's term aligns with the board of directors, and members may be re-elected. If amember ceases to serve as a director due to resignation or other reasons, their committee position willautomatically be vacated. The board will appoint new members according to the company's Articles ofAssociation and the committee's rules
Formulate Hengtong's ESG strategies, principles, and policies, ensuring continuous implementation ofboard-approved ESG policiesRegularly review the achievement of the Hengtong's ESG goalsMonitor ESG-related risks and propose response strategiesEnsure ESG policies are aligned with national regulations and requirementsReview Hengtong's annual ESG report and other ESG-related disclosures, submitting recommendationsto the board for approvalMonitor Hengtong's ESG strategy and progressAddress other matters authorized by the Board of DirectorsThe ESG Committee reports to the board, and its proposals are submitted for the board's review anddecision-making
Stakeholder participation and concerns are essential to Hengtong's ESG management. The company is committed to fostering positiveinteraction with stakeholders, continuously improving regular communication mechanisms, and using diverse channels to understand theirexpectations and demands, thereby creating value for all stakeholders.
Distribution of Hengtong's stakeholders
Stakeholders Engagement
Hengtong consistently upholds the principles of integrity and transparency bydisclosing its operational status and major issues truthfully. Hengtong places greatimportance on protecting the rights of shareholders and investors. By continuouslyenhancing the competitiveness of its products and services, maintaining itsindustry position, and focusing on sustainable green development, Hengtongreduces its environmental impact and creates long-term economic value forinvestors. In 2023, Hengtong held 78 strategy meetings, both online and offline,including roadshows and earnings briefings, receiving approximately 700 visitsfrom brokers and institutional investors
Hengtong is committed to becoming a trusted provider of global information andenergy interconnection solutions, always prioritizing quality. From customizedneeds to design, research, development, and production, the company offersclients integrated advanced solutions. It drives the entire industry chain's qualityand development, empowering high-end manufacturing supply chain partnersand promoting industry growth
Hengtong is dedicated to creating a shared future with its employees, o?ering agood working environment and employment opportunities. Hengtong encouragesemployee participation in corporate development while enabling them tomaximize their potential and achieve personal growth
As Hengtong grows, it also contributes to the economic development of surroundingcommunities. Globally, the company actively engages in public welfare activities,enhancing social care, promoting rural revitalization, education support, andcharitable projects to advance harmonious community development from multipleangles
Investors and
regulators
Employees
Community
Partners
1819
Hengtong Optic-Electric Co., Ltd.2023 Environmental, Social and Governance ReportCompliance and Stability: The
Foundation for Steady Growth
Leading with Innovation:
Creating Leading Quality
Caring For Employees: PromotingInclusive DevelopmentLow-Carbon Development:
Illuminating a Green Future
Global Cooperation: DemonstratingHengtong's Responsibility
In order to clarify the focus of ESG management, Hengtong comprehensively considered various substantive issues, evaluated and screenedout 16 important issues, and ranked the importance of each issue to the company and external stakeholders to form an annual signi?cantissue matrix. The following issues are disclosed in this report to respond to the concerns of stakeholders.
Hengtong's Substantive Issue Identi?cation and Assessment Process
Hengtong 2023 Materiality Matrix
Issue Identi?cation
Questionnaire
Survey
Issue Evaluation
Audit con?rmation
Identify and establish a corporate social responsibility topic database through macro policy andindustry policy analysis, research on authoritative domestic and international social responsibilitystandards, benchmarking against outstanding industry ESG reports and sustainable developmentreports, and sorting out corporate strategic prioritiesConducted questionnaire surveys for investors, regulators, partners, employees, and communities,and collected multiple valid questionnairesAnalyze the survey results and establish a substantive topic matrix from the two dimensions of"importance to external stakeholders" and "importance to Hengtong"from ESG- related research groups and industry experts will select substantive issues that requiredisclosure, which are then reviewed and ?nalized by the company
Circular Economy
Water Resource ManagementWaste Management
Energy Management
Exhausted Gas Management and EmissionEmployee CareerDevelopment and TrainingSupply Chain Management
Employee Care and WelfareGreenhouse Gas Emission
Business Ethisc
Corporate Governance
Data Safety and ProtectionEmployee Health and Safety
Quality and Safety
Diversity, Equality and InclusivenessImportance to external stakeholders
Community Contribution and ImpactImportance to HengtongEnvironmental issuesSocial issuesGovernance issues
StakeholderDistribution
Stakeholder
Categories
Main ConcernsCommunication Channels
Investors andregulators
Investmentinstitutions/Shareholders
· Product quality· corporate governance· business ethics
· diversity· employee health andsafety
· Shareholders' meetings· investor events· performance releasesGovernment/Regulatory agencies
· Emission management· GHG management· employee safety
· product quality· ethics· governance
· On-site visits· periodic meetings
Partners
Suppliers
· Product quality· safety· ethics
· data security· governance
· Supplier development andaudit· supplier communicationconference· regular supplier visits andevaluations· questionnaire survey
Industry Associations
· Energy management· waste management· water management· employee care andwelfare· employee health and
safety
· product quality andsafety· data security andprivacy protection· supply chainmanagement· business ethics· corporate governance
· Industry exchanges and
conferences· Industry exhibitions andresearch cooperation
Clients/Consumers
· Product quality andsafety· employee health and
safety· employee careerdevelopment andtraining· employee care and
welfare
· business ethics· diversity· equality and inclusion· supply chainmanagement· corporate governance
· Customer satisfaction survey· customer relationshipmanagement platform· customer hotline· company media publicity
Employees
Employees
· Employee health and
safety· product quality and
safety· employee care and
welfare· data security and
privacy protection
· corporate governance· business ethics· employee careerdevelopment andtraining· diversity· equality and inclusion
· Internal meeting· internal publications· employee interviews andemployee activities· questionnaire survey· collecting employeeopinions (internal mailboxplatform, telephone, etc.)
Community
Media
· Energy management· emission management
and emissions· employee health and
safety
· product quality andsafety· data security andprivacy protection· supply chainmanagement
· Media meeting· news releases &announcements· company media publicityIn response to the concerns raised by stakeholders, Hengtong has re?ned its comprehensive issue identi?cation and evaluation processes.
During the reporting period, Hengtong identified key stakeholder categories, including employees, suppliers, customers, consumers,media, investors, industry associations, government agencies, and regulatory bodies. The main topics of concern and correspondingcommunication channels are as follows:
2021
Hengtong Optic-Electric Co., Ltd.2023 Environmental, Social and Governance ReportCompliance and Stability: The
Foundation for Steady Growth
Leading with Innovation:
Creating Leading Quality
Caring For Employees: PromotingInclusive DevelopmentLow-Carbon Development:
Illuminating a Green Future
Global Cooperation: DemonstratingHengtong's Responsibility
Risk TypeRisk DescriptionCountermeasuresStrategic RisksStrategic risks refer to the risks that
a company may encounter whendeveloping and executing its long-term strategic plans, including marketcompetition, technological changes,policy changes, and changes inindustry trends. Rapid technologicaladvances in the industry to which thecompany belongs and adjustmentsin global energy policies may have animpact on the company's long-termstrategy
Market Monitoring: Regularly monitor market trends, policy changesand competition dynamics to ensure that the company's strategy isconsistent with the external environmentTechnology Investment: Increase investment in emerging technologiesto maintain technological leadership in the industry, especially in 5Gcommunications, smart grids and renewable energyDiversi?ed Development: Diversify the risks brought about by marketand policy changes through business diversification and regionalexpansionRegularly Review and Adjust Strategies: Establish a rolling planningmanagement mechanism to continuously evaluate and adjust thestrategy process to cope with rapid changes in the external environment
Legal andComplianceRisks
Legal and compliance risks involvewhether the company complieswith applicable laws and regulationsduring its operations, includingintellectual property-related laws,environmental regulations, laborlaws, data privacy regulations, etc.The industry to which the companybelongs is strictly regulated, and anyviolations may result in fines, lawsuitsor damage to brand reputation
Compliance Management System: Establish a sound compliancemanagement system to ensure that all business activities comply withrelevant laws and regulationsRegular training: Provide regular legal and compliance training toemployees to enhance their legal and compliance awarenessInternal Audit and Monitoring: Set up an independent internal auditdepartment to conduct regular risk assessment and monitoring topromptly identify and correct potential compliance issuesLegal Consultation: Maintain close cooperation with legal advisors toobtain the latest legal developments and compliance advice in a timelymanner
OperationalRisks
Operational risks include businessinterruptions, service degradation orsafety incidents caused by naturaldisasters, equipment failures, humanerrors, etc. Business continuity andsecurity are critical in the industryto which the company belongs, andany operational interruptions mayhave a serious impact on customersand the company's reputation
Business Continuity Plan: Develop and implement a business continuityplan to ensure that normal operations can be quickly resumed in the eventof an unexpected eventEquipment Maintenance and Updates: Regularly maintain and updateequipment to prevent business interruptions caused by equipment failuresEmergency Response Team: Establish an emergency response team toensure rapid response and take appropriate measures when operationalproblems ariseRisk transfer: Transfer part of the operational risks to a third party throughpurchasing insurance and other meansFinancial RisksFinancial risk involves the risks
that a company may face in fundmanagement, investment decisions,foreign exchange fluctuations andfinancing activities. The industry towhich the company belongs usuallyrequires a large amount of capitalinvestment and has a long businesscycle, so ?nancial risk managementis crucial
Cash Flow Management: Strengthen cash ?ow management to ensuresu?cient liquidity to cope with daily operations and emergenciesDiversi?ed Financing Channels: Expand diversi?ed ?nancing channelsand reduce the risks brought by a single source of ?nancingFinancial Audit: Conduct regular ?nancial audits and risk assessmentsto ensure the accuracy and transparency of ?nancial statementsForeign Exchange Hedging Strategy: Adopt foreign exchange hedgingstrategy in international business to reduce the financial uncertaintycaused by foreign exchange ?uctuations
The overall goal of the Company's risk management is to develop risk management policies that minimize risk without unduly a?ecting theCompany's competitiveness and resilience. In 2023, we have developed risk management policies to identify and analyze the risks facedby the Company. These risk management policies clearly de?ne speci?c risks and cover many aspects such as market risk, credit risk andliquidity risk management. The Company regularly evaluates changes in the market environment and the Company's business activitiesto decide whether to update risk management policies and systems. On the other hand, the Company diversi?es ?nancial instrument risksthrough appropriate diversi?ed investments and business portfolios, and reduces risks concentrated in a single industry, speci?c region orspeci?c counterparty by formulating corresponding risk management policies.
Risk Management Framework of Hengtong Optic-Electric
Hengtong has established a comprehensive risk management framework with reference to the enterprise risk management framework.Hengtong's Board of Directors and its subordinate Audit Committee provide overall leadership and deployment for risk managementmatters within the company.
Risk Management
Board of Directors
Audit Committee
Risk Management CommitteeInternal Audit Department
Making plan for and establishing the risk managementframework, making risk management-related policiesand guidelines, overseeing the implementation andexecution
Implementing board policies, receiving reports fromthe internal audit department, and managing overallrisks
Carrying out risk identification, assessment, andmitigation in accordance with relevant policies approvedby the board of directors
Conducting regular reviews of risk management controlsand procedures, and reporting to the audit committee ona regular basis
2223
Hengtong Optic-Electric Co., Ltd.2023 Environmental, Social and Governance ReportCompliance and Stability: The
Foundation for Steady Growth
Leading with Innovation:
Creating Leading Quality
Caring For Employees: PromotingInclusive DevelopmentLow-Carbon Development:
Illuminating a Green Future
Global Cooperation: DemonstratingHengtong's Responsibility
Hengtong strictly adheres to relevant laws and regulations, including the United Nations Convention against Corruption, the Conventionon Combating Bribery of Foreign Public Officials in International Business Transactions, the Criminal Law of the People's Republic ofChina, the Anti-Unfair Competition Law of the People's Republic of China, and the Interim Provisions on Prohibiting Commercial Bribery.It centers its e?orts around three core principles: "Fairness, Transparency, and Competition." Hengtong continuously improves its internalanti-corruption and anti-bribery management processes and has established a robust management system and regulatory framework. Thecompany maintains a zero-tolerance policy towards any form of bribery and corruption, enforcing strict anti-bribery policies that explicitlyprohibit employees from o?ering or accepting any form of bribes, directly or indirectly, through third parties to gain business bene?ts. Allindividuals or entities representing Hengtong in business, including all employees, agents, contractors, subcontractors, and suppliers, arerequired to conduct their daily work in compliance with the law and uphold a zero-tolerance principle against any form of embezzlement,bribery, corruption, extortion, misappropriation of public funds, breach of duty, or harm to company interests. During the reporting period,no signi?cant legal violations a?ecting company operations occurred.
Anti-corruption and Anti-bribery
Anti-corruptionand anti-briberycomplianceConstruction route
Integrated moderngovernance systemSteady developmentis guaranteed
Systematic compliancecontrol mechanism,Overall considerationand emphasis oncoordination
The road tointernational andclean development,One Belt One Road asa DemonstrationHengtong's Anti-Corruption and Anti-Bribery Compliance Construction Route
Education and TrainingHengtong regularly conducts anti-bribery andanti-corruption training for employees, ensuringall staff understand relevant policies and canidentify and prevent potential corruption
Hengtong conducts ongoing monitoring ofpotential corruption risks through internal auditsand external reviews, with a focus on high-riskbusiness areas
Monitoring and Review
As a global industry leader, Hengtong always applies the highest business ethics standards throughout its daily operations. In all its globalbusiness operations, the company adheres to the principles of integrity, transparency and fairness, ensuring that all decisions and actionscomply with internationally recognized ethical standards and legal requirements.
Hengtong has established a detailed code of conduct to provide employees with clear behavioral guidelines covering several key areas:
Adhere to Business Ethics
Code of Business Ethics
Proper Use of Company Assets
Employees must use the company's tangible and intangible assets, such as production equipment, informationsystems, and intellectual property, responsibly. These assets must not be used for personal purposes or illegalactivities
Avoidance of Con?icts of Interest
Hengtong values con?ict of interest management, requiring employees to remain objective in decision-making processes that may involve personal interests. Employees must regularly disclose personalrelationships and ?nancial interests related to the company's interests to avoid situations that may a?ectfair decision-making
Prohibition of Deception and MisrepresentationHengtong requires employees to accurately re?ect the company's actual operations when submitting businessrecords and ?nancial data. Any acts of false statements, information concealment, or record falsi?cation will bestrictly addressed
Prohibition of Improper PaymentsHengtong takes a strong stance against bribery and corruption, explicitly prohibiting the provision oracceptance of any form of improper bene?ts, including cash, gifts, travel, or entertainment, to or from anythird party
Information ProtectionHengtong places a high priority on the con?dentiality of employee and client information. Employees arerequired not to disclose internal company information in public places or without authorization and mustensure that all sensitive information is e?ectively protected through strict con?dentiality agreements andinformation protection measures
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Hengtong Optic-Electric Co., Ltd.2023 Environmental, Social and Governance ReportCompliance and Stability: The
Foundation for Steady Growth
Leading with Innovation:
Creating Leading Quality
Caring For Employees: PromotingInclusive DevelopmentLow-Carbon Development:
Illuminating a Green Future
Global Cooperation: DemonstratingHengtong's Responsibility
Hengtong strictly adheres to the Anti-Unfair Competition Law of the People's Republic of China and the Anti-Money Laundering Law,along with other relevant laws and regulations. Hengtong has developed internal policies to respect competitors and strictly comply withapplicable anti-unfair competition and antitrust laws in the places where it operates. It also remains vigilant against money laundering andthe handling of illicit funds through its operations, actively promoting a fair trading environment. During the reporting period, Hengtong didnot experience any public litigation related to unfair competition.
Hengtong encourages employees, external stakeholders, and thegeneral public to report violations of business ethics. According tothe "Disciplinary Inspection Management Measures of HengtongGroup," anyone has the right to supervise and report any misconductor unethical behavior by Hengtong' management personnel oremployees. Upon receiving a report, the Audit Committee willinitiate an investigation within the framework permitted by lawsand regulations, and provide feedback. If confirmed, necessarydisciplinary actions will be taken, or the case may be referred tojudicial authorities.
Anti-Unfair Competition and Anti-Money Laundering
Whistleblower Protection
Email: htjubao@htgd.com.cn
Hengtong Business Ethics Reporting Channel
Hengtong prohibits all discrimination and retaliation against whistleblowers, and promises to strictly keep the whistleblower's informationcon?dential and protect the safety and rights of the whistleblower. For whistleblower cases that are veri?ed to be true, the company willreward the whistleblower accordingly, and strictly investigate and punish violations of discipline and regulations, dereliction of duty andunethical behavior, and take timely remedial and improvement measures to ensure that the company operates in compliance with lawsand regulations.Relevant personnel who have access to the reportinginformation shall not disclose any reporting situation (thereporter, the content of the report, the relevant personneland information involved, etc.) to the outside; nor shallthey tip off the relevant departments or individualsinvolved
Those who leak the whistleblower's information in violationof regulations or retaliate against the whistleblower will bepunished according to the severity of the circumstances, upto and including dismissal and termination of their laborcontracts; those who violate the law will be transferred tojudicial authorities for handling in accordance with the lawHengtong's whistleblower protection measures
did not
Hengtonghave any corruption or bribery cases
and the anti-corruption training conductedthe middle-level managers and grassroots employees
covered allDuring the reporting period
Case
Hengtong has established a complete business ethics management and supervision mechanism. Hengtong's Board of Directors andthe Audit Committee are the leading and responsible agencies for business ethics work. The Internal Audit Department under the AuditCommittee is responsible for conducting regular audits of all Hengtong's subsidiaries each year, including business ethics standards,corruption and bribery, etc., to supervise the implementation of Hengtong's business ethics behavior standards when carrying out businessmanagement activities.
Compliance Management and Supervision Mechanism
Special Event on Contract Management System and Integrity Risk Prevention
In June 2023, the Wujiang Economic and TechnologicalDevelopment Zone Discipline Inspection Commission organizedthe "Integrity and Compliance System Construction for Enterprises- Special Event on Contract Management System and IntegrityRisk Prevention." Under the guidance of relevant governmentdepartments, the company took the lead in establishing theWujiang District Integrity and Compliance Enterprise Union,aiming to create a learning, sharing, and growth-oriented socialorganization. This union serves as a bridge, promoting mutuallearning, collaboration, and communication among 86 memberenterprises, fostering a shared consensus on integrity andcompliance.Additionally, Hengtong holds its suppliers to the same ethical standards and has signed a "Supplier Integrity Agreement" with them, clearlyoutlining anti-corruption and anti-bribery requirements. Suppliers who violate these requirements may face suspension of cooperation orbe placed on a blacklist.
System Development and UpdatingRegularly review and update Hengtong's compliance policies to ensure they comply with the latest laws,regulations and industry standards
Investigation Process
After receiving the report, the Internal Audit Department will initiate the investigation procedure withinthree days and report the results to the Audit Committee after the investigation. Hengtong will take strictdisciplinary measures against any person who violates business ethics and refer the case to the judicialauthorities if necessary
Management of Reporting ChannelsHengtong provides employees and third parties with global reporting channels, ensuring their highcon?dentiality and security, and designates speci?c personnel to handle reports and protect the privacyand safety of reporters
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Hengtong Optic-Electric Co., Ltd.2023 Environmental, Social and Governance ReportCompliance and Stability: The
Foundation for Steady Growth
Leading with Innovation:
Creating Leading Quality
Caring For Employees: PromotingInclusive DevelopmentLow-Carbon Development:
Illuminating a Green Future
Global Cooperation: DemonstratingHengtong's Responsibility
To e?ectively implement its vision for ethical management and anti-corruption, the company has established the following managementframework:
Governance Rules
Internal Control Systems
Transparency and Accountability Mechanism
Continuous Improvement and Employee Participation
Hengtong develops comprehensive governance rules that specify the ethical and anti-corruption standards all parties inthe value chain must follow. These rules cover all stages from contract signing to execution, prohibiting any form of bribery,kickbacks, or improper bene?ts
Hengtong designs and implements an internal control system that includes
Code of Conduct: Hengtong establishes detailed codes of conduct regarding business ethics and anti-corruption
Contract Provisions: Hengtong incorporates ethical and anti-corruption clauses into value chain contracts, requiringcompliance from partners
Monitoring and Enforcement: Hengtong sets up a dedicated monitoring team to oversee ethical and compliance mattersin the value chain, taking corrective action when issues are identi?ed
The company is committed to ?nancial transparency and accountability management, ensuring that all ?nancial records andbusiness reports accurately re?ect the company's situation, prohibiting any form of false records, o?-the-books funds, or assetmanipulation. Key employees are required to regularly disclose potential con?icts of interest to ensure fair decision-making
Accountability Mechanism: Hengtong establishes a robust accountability system to thoroughly investigate any violationsof business ethics, implementing disciplinary measures based on the ?ndings, including termination or legal action
Hengtong encourages employees to actively participate in the improvement process of business ethics management.Through employee feedback and regular evaluation, the company continuously optimizes policies and practices to ensurethat they meet the needs of the company's global development
Improvement suggestion channel: Hengtong has established dedicated channels for employees to submit improvementsuggestions, either anonymously or by name, which will be evaluated and implemented by the internal audit department
Global consistency: Hengtong ensures that its business ethics policies are consistently implemented across all businessunits and subsidiaries worldwide, making appropriate adjustments in accordance with the legal requirements of di?erentcountries and regions
Hengtong Optic-Electrics is committed to promoting high standards of business ethics and anti-corruption practices throughout its globalvalue chain, ensuring that all partners and stakeholders adhere to principles of integrity, transparency, and fair competition. Throughstringent governance rules and internal control systems, the company not only ensures legal compliance but also aims to protect itsreputation, foster socioeconomic development in the communities it operates in, and create long-term sustainable value.
Management of Integrity and Transparency in the Value Chain
Comprehensive Risk Assessment
Training and Education
Supply Chain Audits
Whistleblower Mechanism
Regularly assesses risks in the value chain to identifypotential ethical and corruption risks, with a focus onhigh-risk areas and partners
Provides training on business ethics and anti-corruptionfor employees, suppliers, and partners, ensuring theyunderstand and comply with the company's policiesand regulatory requirements
Conducts regular ethical and compliance audits atcritical points in the value chain to ensure all partnersadhere to the company's ethical standards
Establishes transparent and secure reporting channelsto encourage employees and value partners to reportany unethical or potentially corrupt behavior, ensuringthe privacy and safety of whistleblowers
To achieve business ethics and anti-corruption objectives within the value chain, the company implements the following managementmeasures:
Caring For Employees: PromotingInclusive DevelopmentLow-Carbon Development:
Illuminating a Green Future
Leading with Innovation:
Creating Leading Quality
Global Cooperation: DemonstratingHengtong's Responsibility
Hengtong Optic-Electric Co., Ltd.2023 Environmental, Social and Governance ReportCompliance and Stability: The
Foundation for Steady Growth
R&D and InnovationSustainable Supply ChainQuality ControlResponsible SalesCustomer Communication and Service
Leading withInnovation:
Creating LeadingQuality
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Hengtong Optic-Electric Co., Ltd.2023 Environmental, Social and Governance ReportCompliance and Stability: The
Foundation for Steady Growth
Caring For Employees: PromotingInclusive DevelopmentLow-Carbon Development:
Illuminating a Green FutureLeading with Innovation:
Creating Leading Quality
Global Cooperation: DemonstratingHengtong's Responsibility
Hengtong has achieved signi?cant technological breakthroughs in multiple ?elds:
Hengtong has been awarded the title of "Smart ManufacturingDemonstration Factory for Optical Fiber" and maintains a leadingposition in 5G optical fiber communication, quantum securecommunication, optical transceivers, and submarine ultra-highvoltage power transmission. The release of the 800G QSFP-DD2×FR4 optical transceiver and successful application of the 400Goptical transceiver in domestic and international markets furthersolidifies its leadership. The R&D project on "Next-GenerationSilica Optical Fiber Preform Key Technology and Industrialization"received the Second Prize for Technological Progress from theChina Optical Engineering Society, reinforcing the company'smarket position in optical communication
Hengtong successfully developed the world's ?rst prototype of a32-?ber pair underwater communication repeater and a 32-?berpair submarine cable, advancing the industry into the Petabit-level ultra-large capacity system transmission era. Hengtong alsolaunched the world's ?rst 18kV power supply solution for repeatersubmarine cable systems, significantly enhancing the technicallevel of marine communication. Additionally, it made signi?cantprogress in marine observation, completing the developmentof an underwater data transmission system based on opticalfiber communication and passing relevant certifications,thereby initiating the localization process for marine oil and gasequipment
Hengtong's fourth-generation ultra-?exible mineral insulated?re-resistant cable technology has reached an internationallyadvanced level, while its 500kV cross-linked polyethyleneinsulated submarine cable has achieved internationalleadership. Hengtong has also successfully developed ahigh-voltage torsion-resistant flexible cable for 132kV windturbines and is the ?rst to sell a 66kV environmentally friendlyarray submarine cable project, further enhancing its marketcompetitiveness and technological advantage in the energyinterconnection sector
Major R&D Achievements and Industry-Leading Technologies
5G+Internet Intelligent Manufacturing Workshop
Industrial Internet Development Demonstration Workshop
National Intelligent Manufacturing Demonstration Factory
Communication Network Field
Marine Communication and Observation Field
Energy Interconnection Field
Hengtong continues to advance its IPD system to enhance R&Dmanagement levels. Building on the IPD 2.0 management systemmanual, Hengtong has supplemented it with market planningprocesses and an Innovation Management Maturity (IMM) module.It has further re?ned detailed processes for demand management,project initiation, product development, and decision-making andreview mechanisms, culminating in the IPD 3.0 R&D managementsystem manual. Guided by the principles of "Deepening, Expanding,Increasing Efficiency, and Sustainability," Hengtong continuallyoptimizes its R&D management system, promotes a shift in innovativethinking, enhances the adaptability of demand management, projectinitiation, and product development processes, and strengthenscross-departmental collaboration and core talent development tocomprehensively improve R&D e?ciency and culture.The IPD management methodology emphasizes starting frommarket demand and cross-departmental collaboration to ensurethe full lifecycle management of product development. Throughthis approach, Hengtong can strictly control quality and risk atevery stage of the product lifecycle, from concept and designto development, verification, and delivery, thus enhancingR&D efficiency and product competitiveness. Within the IPD 3.0framework, Hengtong has introduced market planning processesand the IMM module to more accurately forecast market trends
and improve innovation capabilities. Additionally, it has refinedteam role management to ensure clear responsibilities and smoothcooperation among departments during project advancement.Through this system, Hengtong not only responds more quicklyto market changes but also effectively reduces environmentalimpacts and resource consumption during product development.The IPD methodology is closely integrated with the company's qualitymanagement system, aligning R&D activities with sustainability goals.At every project stage, Hengtong incorporates energy-saving, emissionreduction, environmentally friendly design, and green manufacturingprinciples to ensure that new product development meets marketdemands while being highly environmentally friendly and sustainable.In terms of supply chain management, Hengtong leverages the IPDsystem to collaborate with industry partners for joint innovation andcoordinated R&D, ensuring supply chain e?ciency and sustainabledevelopment. This comprehensive integration of quality and R&Dmanagement not only maintains the company's technological andproduct leadership but also enhances its ability to navigate thecomplexities and challenges of the global market. The introductionof the IPD 3.0 system marks a new milestone for Hengtong in R&Dmanagement, laying a solid foundation for the company's futuresustainable development.
In 2023, the Hengtong Research Institute released over 20 R&D management regulations,covering project initiation, acceptance, performance, process management, outcomeassessment, incentives, intellectual property, standards, and patents. This year, eight keyregulations were newly added or improved, including the "Pre-research ManagementRegulations," "Guidelines for Hengtong Technology Management System Construction,""Management Measures for Hengtong Industry-Academia-Research Collaboration," andthe "IPD 3.0 R&D Management System Manual." These regulations provide strong supportfor the company's efforts in intellectual property, technology management, and R&Dincentives, ensuring that R&D work is conducted in a standardized and e?cient manner.
Construction and Upgrading of R&D Management System
R&D Management Regulations and Annual Updates
R&D and Innovation
The Hengtong Research Institutereleased over
R&D management regulations
In 2023
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Hengtong Optic-Electric Co., Ltd.2023 Environmental, Social and Governance ReportCompliance and Stability: The
Foundation for Steady Growth
Caring For Employees: PromotingInclusive DevelopmentLow-Carbon Development:
Illuminating a Green FutureLeading with Innovation:
Creating Leading Quality
Global Cooperation: DemonstratingHengtong's Responsibility
Hengtong continues to deepen the construction of a sustainable supply chain, incorporating sustainability-related topics into supplierevaluation standards throughout the supplier lifecycle, making them crucial for supplier admission, daily management, evaluation, andelimination.
Hengtong is committed to building a stable, green, and sustainable supply chain by integrating sustainability into all processes of supplieraccess, evaluation, and management. The company assesses potential sustainability risks within the supply chain and encouragesimprovements to ensure compliance and stability.
Sustainable Supply Chain
Supplier Management
Based on a series of management regulations including the "Hengtong Supplier AccessStandards," "Hengtong Supplier Management Regulations," "Hengtong Material SupplierPerformance Evaluation Standards," "Hengtong Procurement Bidding ManagementRegulations," "Hengtong Procurement Contract Management Regulations," "HengtongProcurement Execution Management Regulations," and "Hengtong Logistics ManagementRegulations," Hengtong evaluates the qualifications and performance of suppliers.During the reporting period, the coverage rate of suppliers certified by the ISO 14001environmental management system reached 100%.
Admission Standards: Clearly de?ned criteria must be met for each category before applying for entry, including but notlimited to corporate credit, production and delivery capability, product quality, environmental protection, occupationalhealth and safety, commitments not to use con?ict minerals, business ethics, and social responsibilityReview Process: After admission, a sample batch will be produced for on-site audits of all suppliers. Upon passing theaudit, a procurement framework agreement will be signed, detailing requirements for integrity guarantees, product quality,intellectual property, and supplier evaluations, thereby designating them as quali?ed suppliersPerformance Assessment: Quali?ed suppliers will undergo monthly or quarterly performance evaluations based on thecategory of supplied materials. Non-compliance will trigger a series of corrective actions and measures, followed by regularre-evaluations
Hierarchical Management: Different assessment frequencies and management mechanisms are applied based on theimportance of suppliers. Suppliers are categorized into four levels of importance based on factors such as irreplaceability,procurement scale, and sustainability risks. Category A and B material suppliers are assessed monthly, while Category C and Dsuppliers are evaluated quarterly. All quali?ed suppliers undergo a system audit at least once every three years during the biddingperiod
Classification Management: Di?erent assessment frequencies and management mechanisms are applied based on the typeand nature of materials
Regular materials undergo annual, semi-annual, quarterly, and monthly tenders for ?exible and routine management
Key materials or dominant suppliers will undergo targeted annual negotiations and sign strategic agreements to enhancecooperation and supply stability
Admission and Review
Classi?cation and Hierarchical Management
Continuous Evaluation: Suppliers are continuously assessed. If a supplier's product scores below 70 points in performance
assessments three times within a valid six-month period, that material will be frozen
Elimination and Blacklisting: Suppliers may be frozen, eliminated, or blacklisted based on the severity of the situation in casessuch as: ①Providing false information; ②Collusion or bid-rigging; ③Breaching contract during the contract period; ④Significantquality incidents causing severe impacts; ⑤No business activity for over two years resulting in freezing; ⑥Violating threeagreements; ⑦Breaching national laws and regulations; ⑧Being frozen, eliminated, or blacklisted by other companies withinHengtong Group; ⑨Situations listed in the "Hengtong External Units or Individuals Blacklist Management Measures."Continuous Optimization: Suppliers in the top two grades will continue to collaborate, while C grade suppliers will bemonitored for improvement, assistance, and re-evaluation. D grade suppliers will be classi?ed as unquali?ed and terminatecooperation
Evaluation and Elimination
Environmental Standards
Should obtain ISO 14000 environmental management system
certi?cation and other relevant certi?catesShould establish environmental emergency response plans andmajor environmental factor monitoring systemsShould create e?ective management mechanisms for
environmental protection and waste managementSocial Standards
Should obtain ISO 45001 occupational health and safety
management system certi?cation and other relevant certi?cateShould establish mechanisms for identifying occupational
health hazards and conducting safety trainingShould sign the "Social Responsibility Ethical Standards
Agreement" to safeguard employee labor rights and welfareSuppliers are required to responsibly use mineral resources at
every stage from extraction to processing, transportation, and
sales, explicitly stating that minerals and raw materials from
con?ict areas are not acceptedGovernance StandardsShould have a good commercial reputation, with no signi?cant
violations or accident recordsShould sign the "Integrity Co-construction Agreement" and
adhere to ethical business conduct
Hengtong's Sustainable Development Standards for Suppliers
%
The coverage rate of supplierscerti?ed by the ISO 14001environmental managementsystem reachedDuring the reporting period
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Hengtong Optic-Electric Co., Ltd.2023 Environmental, Social and Governance ReportCompliance and Stability: The
Foundation for Steady Growth
Caring For Employees: PromotingInclusive DevelopmentLow-Carbon Development:
Illuminating a Green Future
Leading with Innovation:
Creating Leading Quality
Global Cooperation: DemonstratingHengtong's Responsibility
During the reporting period, Hengtong proactively identified and analyzed potential supply chain risks based on operational realities,supplier conditions, and business situations, identifying three key risk categories:
Con?ict Minerals ManagementDuring the reporting period, Hengtong intensi?ed e?orts to reduce risks associated with con?ict minerals, further identifying and assessingvarious sources of tin, tantalum, tungsten, and gold materials that may directly or indirectly finance armed groups in the DemocraticRepublic of the Congo. The following management measures were adopted and promoted:
Hengtong Supply Chain Risks and Responses
Hengtong enhanced its supply chaindue diligence processes to ensurecompliance with con?ict mineralsregulations and industry standards.By applying the CMRT (Con?ictMinerals Reporting Template) model,the company aims to consolidatesupply chain information, understandthe origin of minerals, and verify thesources and regulatory chains of theminerals used in its products
Strengthening Due DiligenceProcesses
Actively seeking alternative sources forminerals and promoting supply chaindiversi?cation to reduce reliance oncon?ict-a?ected areas
Investment in AlternativeMaterials
To ensure customers and stakeholdersare informed and support sustainabledevelopment goals, Hengtongimplemented con?ict-free product labelsfor relevant items
Establishing Con?ict-FreeProduct Labels
Collaborate with domestic material and equipentmanufacturers to develop alternative materials andcomponents
The complex and changing international situationmay lead to instability with certain suppliersand a lack of technological independence,a?ecting the procurement of some materialsand equipment
Accelerate the localization of materials and working
with existing suppliers to develop such materials canbreak exclusivity or irreplaceabilityInvolve senior management in supplier relationship
management, maintain communication to enhancemutual trust, and establish a community of sharedinterests
Some key suppliers have low substitutability,making it challenging to enforce improvementplans whensustainability risks arise
Supply Chain Risk ManagementHengtong has established a supply chain risk management mechanism consisting of three main modules: risk identification andassessment, risk response and prevention, and enhancement of risk management capabilities. This aims to create a routine control andresolution system for supply chain risks, continuously improving the ability to respond to these risks.
Through regular on-site audits andoccasional supplier visits, Hengtonggathers information on suppliers'actual conditions. This is done inaccordance with relevant suppliermanagement policies and sustainablesupply chain evaluation standards,allowing for timely identification orprediction of potential risksBy conducting timely research andanalysis on international situationsand market conditions, in conjunctionwith supplier evaluation results andoperational status, potential relatedrisks are identi?ed
Hengtong addresses supply chain risksthrough three dimensions: suppliersource diversification, technologicalindependence, and strategic supplierrelationships. Hengtong activelydevelops alternative suppliers andnurtures potential ones, promotes PCN(Porous Coordination Network) changes,and encourages material localization.By breaking through technologicalconstraints and establishing deepstrategic partnerships with key suppliers,Hengtong aims to reduce supplierirreplaceability and ensure stable andsustainable supply
Training for Procurement Personnel:
During the reporting period, trainingsessions on procurement regulations,safety, and environmental protectionwere conducted for procurementstaff to enhance their awareness andability to address compliance andsustainability risksSupplier Training: Ongoing training andoutreach to suppliers are conducted.During the reporting period, specificperformance evaluations on sustainabilitywere implemented, with targeted trainingand support provided based on theevaluation results to improve suppliers'sustainability performance
Risk Response andPrevention
Enhancement of RiskManagement CapabilitiesRisk Identi?cationand Assessment
Signing the "Social Responsibility EthicalStandards Agreement"
Environmental Performance Screening forProcurement MaterialsHengtong signs the "Social Responsibility Ethical StandardsAgreement" with all suppliers, explicitly requiringcommitments to not employing child labor, not using forcedlabor, and not discriminating against employees, andcommitments to respecting employee rights, and ensuringhealth and safety, including guaranteeing employeecompensation and benefits. Hengtong also reviews andconfirms these commitments during supplier audits andsite visits
Hengtong follows the EU RoHS standard version 3.0 and thelatest REACH regulations for environmental performancerequirements of raw materials. During the reporting period,100% of the materials used in products complied with RoHS
3.0 certi?cation
In the procurement phase, suppliers must provide third-party test reports that meet environmental requirements,which serve as the primary method for screening rawmaterials. Later, environmental standards testing is alsoconducted on ?nished optical cables, with quali?ed third-party reports verifying compliance with environmentalrequirements
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Hengtong Optic-Electric Co., Ltd.2023 Environmental, Social and Governance ReportCompliance and Stability: The
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Caring For Employees: PromotingInclusive DevelopmentLow-Carbon Development:
Illuminating a Green FutureLeading with Innovation:
Creating Leading Quality
Global Cooperation: DemonstratingHengtong's Responsibility
Hengtong has implemented a "Four-Way, Two-Sided" quality management model, establishing a comprehensive, systematic, and highlydigitalized quality management system. This has successfully enhanced the reliability of products and services and signi?cantly optimizedthe e?ciency of the value chain. This model integrates four key areas: "full-stack independent research and breakthrough core technology,fully digital empowerment of quality management, all-around consolidation of quality infrastructure, and constructing a quality ecosystemacross the entire value chain," showcasing Hengtong's technological leadership and market competitiveness in the global marinecommunications ?eld.Firstly, Hengtong has independentlydeveloped core technologies, successfullybreaking through technical barriers in marinecommunications. Hengtong continuouslypromotes technological innovation,developing highly reliable communicationproducts and systems that meet thedemands of complex marine environments.This technological autonomy ensuresHengtong's competitiveness in the globalmarket and the independence of its industrialchain, further consolidating its strategicposition in international markets.
Quality Control
In terms of fully digital quality management, Hengtong has built a 5G + IPv6 fully digital smart factory relying on an industrial internetplatform, achieving digital twins of the production process and full lifecycle quality traceability. Through a "one item, one code"management mechanism, the company has achieved full traceability from raw material supply to product delivery, signi?cantly improvingmanagement efficiency while reducing resource waste and environmental pollution, supporting global energy-saving and emission-reduction goals.
Digital Twin Smart Factory
Special Optical Fiber and Cable Laboratory
Raw Material Sustainability
2023 Data
In procuring raw materials, Hengtong prioritizes environmentalperformance and sustainability by using eco-friendly certifiedmaterials and components that meet recognized sustainabilitystandards (e.g., ISO 14001, Forest Stewardship Council (FSC)certi?cation, Cradle to Grave, etc.). Currently, 100% of the materialsused are ISO 14001 certi?ed.During the supplier selection stage, a detailed environmentalassessment is conducted to ensure compliance with sustainabilityrequirements. This includes audits, site inspections, and third-
party evaluations to verify suppliers' environmental claimsand collect detailed information about their environmentalpolicies, practices, and products, including their environmentalmanagement systems, raw material sources, energy consumption,and waste management during production. For key materials, lifecycle analyses (LCA) are conducted to assess the environmentalimpact throughout the entire life cycle, from raw materialextraction to production, usage, and disposal.
1,651
Total Suppliers
1,651Total Suppliers Certi?ed by ISO 14001
New Suppliers Audited On-Site
%
Percentage of New Suppliers SelectedUsing Environmental Standards
%Percentage of New Suppliers SelectedUsing Social Standards
1,566
Asian Suppliers
Suppliers from Other Regions
Suppliers by Region
Foundation for Steady Growth
Caring For Employees: PromotingInclusive DevelopmentLow-Carbon Development:
Illuminating a Green FutureLeading with Innovation:
Creating Leading Quality
Global Cooperation: DemonstratingHengtong's Responsibility
In addition, Hengtong has established a customer-centered and market-oriented quality managementculture. Through a multi-channel market servicesystem and talent development mechanisms,Hengtong continuously enhances employees'quality awareness and technical capabilities,ensuring high-quality output of products andservices.
Inaugural Conference of the Marine Information Technology and Equipment
Innovation Industry Alliance
Hengtong International Marine Industry Development Strategy SeminarIn the integration of quality management and corporate social responsibility, Hengtong adheres to the core concept that "quality is vitalto an enterprise." Through standardized, systematic, and digital management measures, it strictly controls product quality while reducingresource waste and environmental impact during production. Hengtong is committed to promoting energy-saving and emission reductionthrough quality management, actively responding to global carbon neutrality goals. As a leader in the industrial chain, Hengtong hasinitiated and established the Marine Information Technology and Equipment Innovation Center, collaborating with over 50 universities,research institutions, and leading enterprises in the industry to create a quality ecosystem covering the entire industrial chain, ensuringhigh-quality development of the supply chain and reducing environmental and social risks.
To solidify quality infrastructure, Hengtong actively participates in the formulation and revision of international and domestic standards,holding significant positions in various industry organizations. By establishing world-class R&D centers, testing centers, measurementcenters, and laboratories, the company ensures quality throughout product R&D, production, and service. This systematic construction ofquality management infrastructure, combined with Hengtong's numerous patent reserves and international certi?cations, provides robustquality assurance for the global market.
Product Testing Scenarios
4041
Hengtong Optic-Electric Co., Ltd.2023 Environmental, Social and Governance ReportCompliance and Stability: The
Foundation for Steady Growth
Caring For Employees: PromotingInclusive DevelopmentLow-Carbon Development:
Illuminating a Green FutureLeading with Innovation:
Creating Leading Quality
Global Cooperation: DemonstratingHengtong's Responsibility
Hengtong provides systematic training for all sales personnel, covering relevant laws, compliance policies, andindustry best practices. The training includes various learning formats to help sales personnel understand andapply compliance requirements. In addition to on-boarding training, the company regularly offers ongoingeducation to current sales staff to ensure they stay updated on the latest market trends and compliancerequirements
Hengtong has implemented a comprehensive management and supervision mechanism to ensure that salespersonnel strictly adhere to compliance requirements in their daily work. The compliance behavior of thesales team is supervised by their supervisors, and Hengtong has established anonymous reporting channels toencourage employees to report any potential violations. Regular internal audits further ensure the enforcementof comInstitutepliance policies
Compliance performance is included in the evaluation of sales personnel's performance, directly a?ecting theirassessment results. This mechanism not only strengthens the compliance awareness of the sales team but alsohelps the company maintain a good reputation in the market
Hengtong places high importance on compliance management within its sales team, ensuring adherence to the highest professionalstandards during market promotions.
Training and Continuing Education
Management and Supervision Mechanism
Performance Assessment and Incentives
Sales Personnel Management and Training
Hengtong is well aware that responsible marketing is not only key to gaining customer trust and enhancing customer satisfaction but also anecessary means to shape a positive business environment and enhance brand value. The company places great importance on regulatingmarketing behaviors and strengthening sales personnel training, clearly committing to adhering to legal standards in all promotionaland sales activities, maintaining a highly responsible attitude toward customers, and avoiding any misleading information. Additionally,the company respects competitors and provides fair evaluations, refraining from any inappropriate or non-objective denigration, therebyfostering a harmonious market environment.
Hengtong consistently adheres to the principles of transparency and authenticity in marketing, ensuring that all productpromotion and service information comply with laws, regulations, and industry standards. The company has establishedstrict review processes, requiring all promotional materials to undergo joint reviews by legal, marketing, technical, and otherdepartments before publication, ensuring accuracy and authenticity. Special attention is paid to precise descriptions oftechnical parameters, product functions, and application scenarios to avoid any form of misleading advertisingFor international markets, Hengtong strictly complies with local laws and regulations, ensuring that global customers receivetruthful, accurate, and consistent information about the company's products and services
Regulatory Requirements for Product Promotion and Service InformationCompliance Marketing Management Measures
Number of Violations During the Reporting Period03
During the reporting period, Hengtong did not experience any incidents of violations related to product promotion and service
information regulations. By continuously strengthening internal controls and supervision, the company ensures the accuracy
and compliance of all promotional information, re?ecting its e?ectiveness in compliance management
Hengtong has set up a compliance supervision mechanism responsible for addressing any violations of product promotion
and service information standards. Upon discovery or receipt of relevant complaints, the company will promptly initiate an
investigation process, assess the severity of the incident, and take necessary corrective actions. Responsible parties will face
appropriate consequences according to internal regulations. The company regularly reviews and updates compliance policies
to ensure they adapt to the ever-changing legal and market environments
Handling Mechanism for Violations of Product Promotion and Service Information Regulations02
Responsible Sales
4243
Hengtong Optic-Electric Co., Ltd.2023 Environmental, Social and Governance ReportCompliance and Stability: The
Foundation for Steady Growth
Caring For Employees: PromotingInclusive DevelopmentLow-Carbon Development:
Illuminating a Green FutureLeading with Innovation:
Creating Leading Quality
Global Cooperation: DemonstratingHengtong's Responsibility
Hengtong has established a strict information security and confidentiality system, creating a dedicated Information Security andConfidentiality Committee under the oversight of the Environmental, Social, and Governance (ESG) Committee at the board level tosupervise and manage con?dentiality-related work. During the reporting period, Hengtong did not experience any incidents of informationleakage or cybersecurity issues.
Hengtong adheres to the "Hengtong Group Information Securityand Con?dentiality Management Regulations" and has formulated"Hengtong Technical Data Con?dentiality Control Regulations" andother internal systems aimed at all employees. These regulationscover all operational aspects and supply chain informationsecurity and privacy management, incorporating informationmanagement into business ordering, contracts, and other processesthrough specialized account management. Different levels ofaccess permissions are established for di?erent account roles. Keypersonnel in sensitive positions must sign con?dentiality agreementsto ensure data security. If any violations of the agreements are found,Hengtong may verify through internal and external resources andprovide relevant evidence to pursue the liability of the individualsinvolved. During the reporting period, Hengtong did not have anycases involving infringement of customer privacy or loss of customerdata.On this basis, to safeguard overall information security at Hengtong, wemaintain a high level of transparency and thorough communicationwith customers regarding information security and privacy protectionmechanisms, ensuring they are aware of the nature and purpose of theinformation we collect, the retention period of the information, andtheir right to decide how their information is collected, stored, and used.Customers are explicitly informed that they have the right to opt-in or
opt-out when their information is collected and may request access tothe data held by Hengtong, request the transfer of their data to otherservice providers, and request corrections or deletions of their data.At the same time, in order to ensure the overall information securityof Hengtong, we have established an information security incidentresponse procedure. All information security architectures havepassed ISO 27001 certification and conduct response tests everysix months. On this basis, Hengtong has established an informationsecurity risk reporting channel for all employees, providedinformation security training for employees, and used informationsecurity accident responsibility as an important reference foremployee performance evaluation, established a corporate cultureand corporate mechanism that attaches importance to and protectsinformation security, and e?ectively ensures that customer privacy isnot leaked.
Main Responsibilities of Hengtong Optic-Electric's Con?dentiality Committee
Information Protection
Implement nationaland industry policies,laws and regulationson con?dentiality
Review the company'scon?dentialitywork deploymentand annual workarrangements
Provide companycon?dentiality systemresources, supportand promote theimplementation ofcompany con?dentialitywork
Review and supervisemajor matters relatedto the company'scon?dentiality work
Supervise theoperation ofcon?dentiality work ineach center / divisionand module
Hengtong upholds the service philosophy of "All Staff Service,Touching Customers, Sincerity Forever" and has established internalnorms such as the "Customer After-Sales Service ManagementSystem," "Emergency Response Management System," "CustomerComplaint Management Measures," and "Special Process forCustomer Complaints and Returns." These regulations define thecommunication and handling processes for customer complaints.With after-sales and engineering services as the two pillars, the
company has improved its rapid response and emergency handlingmechanisms for customer complaints and market emergencies,requiring that signi?cant complaints be addressed within 12 hoursto quickly and effectively enhance service quality and minimizenegative impacts on both the company and customers. Duringthe reporting period, the company did not receive any complaintsrelated to products and services.
On this foundation, Hengtong conducts annual customer satisfaction surveys to accurately capture customer pain points and assist clientsin timely resolution of concerns. In 2023, customer satisfaction survey results indicated a satisfaction score of 96.31 points.
Service System
Hengtong is dedicated to providing every customer with professional and responsible high-quality service. By establishing a comprehensivecustomer service system, the company carefully listens to customer feedback, promptly addresses customer needs, and e?ectively protectscustomer privacy to create the best possible customer service experience.
To ensure customers can easily consult product information and provide feedback, all Hengtong service centers haveregional and customer managers, o?ering 24-hour free services
Hengtong provide in-depth services like customer follow-ups and training. Each quarter, Hengtong survey customer serviceand consumption needs, designing targeted training programs led by technical experts with both theoretical and practicalexperience. Hengtong also o?er free on-site installation guidance and training for customer technicians
Hengtong's Engineering Service Department consists of professional engineers to ensure immediate repairs for engineeringfaults, providing robust technical support to clients
During the product warranty period, any quality issues will be addressed by on-site technical personnel who provide freerepairs and cover any resulting economic losses
After the warranty period, technical personnel will be dispatched to resolve issues promptly, typically within 30 minutes,depending on the situation
After-Sales Service - Comprehensive Service Network
Engineering Services - Professional
Customer Communication and Service
4445
Hengtong Optic-Electric Co., Ltd.2023 Environmental, Social and Governance ReportCompliance and Stability: The
Foundation for Steady Growth
Caring For Employees: PromotingInclusive DevelopmentLow-Carbon Development:
Illuminating a Green FutureLeading with Innovation:
Creating Leading Quality
Global Cooperation: DemonstratingHengtong's Responsibility
Environmental Protection and ManagementClimate Change and Carbon NeutrilityEnergy Efficiency Improvement and TransformationWater-saving Transformation and OptimizationEmission Management and Recycling
Facing the challenges of global climate change and the transition to a green andlow-carbon economy, Hengtong adheres to the development philosophy of "greendevelopment, circular development, and low-carbon development." Hengtongpractices a low-carbon development strategy, actively building a high-end greenmanufacturing system. By introducing advanced technologies, optimizingproduction processes, and improving resource utilization, Hengtong achieveslow-carbon and environmentally friendly products and production processes,actively responding to the United Nations Millennium Development Goals and theParis Agreement, promoting a win-win situation for both the economy and theenvironment, and gaining high recognition from international and domestic ratingagencies. Hengtong closely tracks international green and low-carbon policydynamics and strengthens cooperation and communication with outstandingdomestic and foreign enterprises, continuously pursuing green innovation andclean technology research and development, enhancing its green manufacturingcapabilities, and striving to promote the transformation and upgrading of themanufacturing industry. Hengtong contribute positively to achieving global greenand low-carbon development in response to climate change.
Low-CarbonDevelopment:
Illuminating a Green Future
Foundation for Steady Growth
Leading with Innovation:
Creating Leading Quality
Caring For Employees: PromotingInclusive Development
Global Cooperation: DemonstratingHengtong's Responsibility
4647
Low-Carbon Development:
Illuminating a Green Future
To ensure the orderly advancement of environmental risk management processes, the company has established a grassroots organizationalsystem for environmental emergency risk management that includes a control team, rescue team, ?re prevention team, evacuation team,alert team, and monitoring team. Each team performs its duties to provide timely, comprehensive responses to environmental risks.
In terms of environmental pollution risk investigation, Hengtong has formulated an enterprise emergency response plan for environmentalpollution emergencies. By conducting daily environmental hazard investigations and closed-loop tracking of environmental risk pointsdiscovered during the investigations, Hengtong also regularly conducts emergency drills for environmental pollution emergencies, anddynamically optimizes and improves problems discovered during the drills.
Environmental Risk Management
Hengtong Optic-Electric's Environmental Emergency Risk Management Grassroots Organization System
Control Group
Evacuation GroupVigilance GroupMonitoring Group
Rescue TeamFire Fighting Group
Cablescom, a subsidiary of Hengtong Optic-Electric, carriesout tree planting campaign
Aberdare, a subsidiary of Hengtong Optic-Electric, issues aposter calling for action
"Hengtong Environmental Protection Month" Action
Alcobre, a subsidiary of Hengtong Optic-Electric, installsrooftop photovoltaic panels
Environmental Protection and Management
Hengtong integrates green development and environmental protection into the company's long-term strategy, consistently implementingsustainable development concepts. Based on compliance with domestic laws and regulations such as the Environmental Protection Law ofthe People's Republic of China, the Environmental Impact Assessment Law, and the Environmental Protection Tax Law, Hengtong thoroughlyimplement relevant overseas environmental regulations such as international environmental law, the Environmental Responsibility Directive,and the Industrial Emissions Directive, striving to minimize the negative environmental impacts throughout the entire life cycle of products fromdesign, production, usage, and disposal. During the reporting period, Hengtong did not experience any incidents of violating environmental lawsand regulations. The company has been awarded the National Industrial Product Green Design Demonstration Enterprise certi?cation and hasaccumulated seven green product certi?cations.
Currently, Hengtong has established a complete environmental management framework, with the board of directors serving as the highestgoverning body responsible for the ?nal environmental management outcomes. The ESG Committee oversees environmental managementmatters, formulates and reviews progress toward environmental management goals, and assesses the environmental performance ofsubordinate companies, reporting to the board of directors. The ESG working group is responsible for coordinating the speci?c executionof environmental management across departments, implementing environmental pollution risk assessments, and managing emergencyresponses to incidents. During the reporting period, the company actively participated in the construction of project environmentalcompliance, further improving the compliance management processes.
Environmental Management System
In terms of green o?ce practices, Hengtong actively advocates paperless operations and green commuting for employees, continuously promotingthe construction of information systems, prioritizing the purchase of new energy vehicles for business use, and providing charging services foremployees. Additionally, Hengtong has engaged professional administrative service resources and adopted a strategy of integrating social resources forenvironmentally friendly printing services, thereby further reducing the consumption of printer toners and ink cartridges.Furthermore, Hengtong has obtained ISO 14001 environmental management system certification, covering 100% of its core business operations,including environmental management activities related to the design and production processes of relevant products. Each year, Hengtong conductsregular external audits based on ISO 14001 standards to assess compliance with environmental laws, the implementation of environmentalmanagement policies, and the e?ectiveness of risk control measures, and Hengtong performs re-certi?cation audits every three years to ensure thatenvironmental management audits encompass all of Hengtong's operational areas.On this basis, Hengtong follows a green incentive mechanism and accountability system, focusing on resource consumption, environmental impact,and ecological bene?ts within the evaluation framework of ecological civilization construction. Hengtong diligently promotes green factory construction,prioritize project environmental compliance management, and strengthen environmental control across the supply chain.
Conduct feasibility studies onprojects, prepare environmentalimpact reports and environmentalimpact forms for constructionprojects or ?ll in environmentalimpact registration forms inaccordance with relevant regulations,and obtain environmental impactassessment approval for projects
Adhere to environmental impactassessment priority, strictly abide bythe pollution prevention and controlmeasures in the environmentalimpact assessment documents,and implement the "threesimultaneous" management systemfor environmental protectionof construction projects
Before formal production begins,we will independently completethe completion acceptance ofenvironmental protection facilitiesand other related procedures
Hengtong Optic-Electric's Environmental Compliance Construction Management Process
Before project constructionProject under constructionAfter project construction
Foundation for Steady Growth
Leading with Innovation:
Creating Leading Quality
Caring For Employees: PromotingInclusive Development
Global Cooperation: DemonstratingHengtong's Responsibility
4849
Low-Carbon Development:
Illuminating a Green Future
In 2015, nearly 200 countries and regions globally adopted the Paris Agreement, with its primary vision of global cooperation to collectivelyaddress climate change and mitigate its adverse e?ects on ecosystems and society. As of October 2023, 151 countries have set carbonneutrality targets, covering 92% of global GDP, 89% of the population, and 88% of emissions.In the current trend of countries advancing their "carbon peak and carbon neutrality" goals in response to climate change, Hengtong, as a leadingprovider of information and energy interconnection solutions, recognizes the imperative to effectively and orderly respond to the risks andopportunities brought by climate change.
Climate Change and Carbon Neutrality
CaseLaunch of SBTi Project by Jiangsu Hengtong Power Cable Co., Ltd.To promote carbon neutrality activities and meet the increasingdemand for "green cables" from domestic and internationalcustomers, Hengtong has been actively urging suppliers toadopt green energy for the production of green products. OnOctober 31, 2023, Jiangsu Hengtong Electric Power Cable Co.,Ltd. submitted a commitment letter to the SBTi organization,which has been reviewed and publicly disclosed on their o?cialwebsite prior to this report.
Net Zero Targets:
By 2045, achieve a 90% reduction in absolute greenhousegas emissions from Scope 1 and Scope 2 compared to the2022 baselineWithin the same time frame, achieve a 90% reductionin absolute greenhouse gas emissions from Scope 3,covering purchased goods and services, upstream anddownstream transportation and distribution, use of soldproducts, and end-of-life treatment of sold products
Short-term targets:
By 2033, reduce absolute greenhouse gas emissionsfrom Scope 1 and Scope 2 by 54.6% based on the 2022baselineWithin the same time frame, reduce greenhouse gasemissions per million RMB added value by 61.1% in areassuch as purchased goods and services, upstream anddownstream transportation and distribution, use of soldproducts, and end-of-life treatment of sold products
Jiangsu Hengtong Power Cable Co., Ltd. Applies to Join the SBTiScience Based Targets Organization and make a commitment
Hengtong is committed to protecting the ecological environmentand biodiversity, avoiding damage to forests, ensuring that woodand packaging materials used in production come from sustainablymanaged forests, and reducing the negative impacts of its businessactivities on biodiversity. This includes adopting more sustainableresource management and operational strategies and consideringecological protection needs during project planning and expansion.We collaborate with suppliers to ensure they adhere to the sameenvironmental standards, thereby ensuring the sustainabledevelopment of the entire supply chain.To fulfill this commitment, Hengtong conducts biodiversity riskassessments in certain regions, particularly where production basesare located, focusing on understanding the potential impacts ofcompany activities on biodiversity, especially concerning productionfacilities and raw material supply chains. During the assessmentprocess, Hengtong works with local environmental organizationsand utilize scienti?c data and Geographic Information Systems (GIS)tools to analyze the ecosystems and species potentially a?ected bythe operations.
Ecological Assessment and Protection
Before commencing the underwater cable project in the RedSea of Saudi Arabia, Hengtong controlled environmentalcompliance based on an approved ConstructionEnvironment and Social Management Plan (CESMP),assessing and monitoring biodiversity and ecologicalconditions in the project area. To mitigate impacts on marineanimals listed in the Red List of the International Unionfor Conservation of Nature and protect approximately 210species of hard corals and 120 species of soft corals within theprotected area from project and business activities, Hengtongformed a professional environmental protection team towork in coordination with the owner's team, successfullyrelocating 2,743 living corals. Additionally, articulated pipeswere installed in other areas to protect cables while ensuringthe normal growth of underwater corals.
CaseHengtong's underwater
biodiversity protection
2,743 living coralsSuccessfully relocating
Foundation for Steady Growth
Leading with Innovation:
Creating Leading Quality
Caring For Employees: PromotingInclusive Development
Global Cooperation: DemonstratingHengtong's Responsibility
5051
Low-Carbon Development:
Illuminating a Green Future
GovernanceIn terms of climate change governance, Hengtong Optic-Electric has established a three-level climate change governance structureconsisting of the Board of Directors, the Environment, Social and Governance (ESG) Committee and the ESG Working Group:
Hengtong's climate change governance structure
ESG Working Group
ESG Working Group:
Responsible for formulating climate change responsemeasures and coordinating the speci?c implementation ofvarious departments
Environmental, Socialand Governance ( ESG )Committee
Environmental, Social and Governance (ESG)Committee:
Responsible for researching climate change-related strategies,setting targets and evaluation mechanisms, and makingrecommendations to the Board
Board ofDirectors
Board of Directors:
Overall responsible for formulating and reviewing policiesrelated to climate change, leading and supervising climatechange matters
Hengtong has established an ESGSustainable Development Committee,focusing on green manufacturing, greenproducts, green supply chains, greenenergy, and intelligent managementplatforms. This deepens the greenstrategy, creates a green premium inexisting businesses, accelerates low-carbon transformation, and drives high-quality development in new businesses
Hengtong conducts in-depth research onregulations related to the EU Green Deal,including carbon border adjustmentmechanisms, sustainability reportingdirectives, and the EU Critical RawMaterials Act, alongside China's "1+N"policy system. This analysis forecastspolicy trends and impacts to guidesubsidiaries in proactive responses
Hengtong studies domestic andinternational ESG standards such asGRI, MSCI, and those from the ShanghaiStock Exchange, aligning with carbonborder adjustment mechanisms and EUsustainability reporting directives. Thisenhances reporting and rating responses,building an ESG management systemin line with international standards toincrease corporate value
Hengtong's ESG Sustainable Development Value Management
Top-level design andstrategic leadership
Policy analysis andprecise action plans
Aligning with internationalstandards and enforcingstrict requirements
ProactivePlanning:
TrendInsights:
BenchmarkingStandards:
Hengtong is committed to e?ectively managing the risks posed by climate change. We reference the Task Force on Climate-related FinancialDisclosures (TCFD) framework to identify climate change risks and their potential impacts while proactively responding. Additionally,we seize the opportunities for green development arising from climate change by heavily investing in clean technology research anddevelopment and continuously promoting energy transition and green upgrading in our industry.
CaseLaunch of SBTi Project by Jiangsu Hengtong Submarine Cable Co., Ltd.
In June 2023, Hengtong Submarine Power Cable Co., Ltd.formally applied to join the SBTi science-based carbontarget organization. To achieve the SBTi 1.5℃ target, thecompany has actively formulated green carbon reductiongoals, reasonably planned emission reduction pathways,and firmly implemented reduction measures. During thereporting period, it also received ISO 14064 greenhousegas verification statements and ISO 14067 product carbonfootprint veri?cation certi?cates.
Hengtong Submarine Power Cable Co., Ltd. applies to join the SBTiScience Based Targets Organization and makes a commitment
54.6
%
By 2033, reduce absolute greenhouse gasemissions from Scope 1 and Scope 2 by
%
By 2045, achieve a
61.1
%By 2033, achieve a reduction of
in greenhouse gas emissions per million pro?t
%Within the same time frame, achieve a
Short-term targets:
By 2033, reduce absolute greenhouse gas emissions fromScope 1 and Scope 2 by 54.6% based on the 2022 baselineBy 2033, achieve a reduction of 61.1% in greenhouse gasemissions per million pro?t based on the 2022 baseline
Net Zero Targets:
By 2045, achieve a 90% reduction in absolute greenhousegas emissions from Scope 1 and Scope 2 compared to the2022 baselineWithin the same time frame, achieve a 90% reduction inabsolute greenhouse gas emissions from Scope 3
reduction in absolute greenhouse gas emissionsfrom Scope 3
reduction in absolute greenhouse gas emissions fromScope 1 and Scope 2 compared to the 2022 baseline
Foundation for Steady Growth
Leading with Innovation:
Creating Leading Quality
Caring For Employees: PromotingInclusive Development
Global Cooperation: DemonstratingHengtong's Responsibility
5253
Low-Carbon Development:
Illuminating a Green Future
Hengtong aims to become a world-leading optical communicationand renewable energy enterprise. By leveraging technology todrive high-quality development and innovation to promote low-carbon transformation, the company is dedicated to achievinga future that is green, low-carbon, and sustainable. Hengtongdeepens its green strategy, creating a green premium in existingbusinesses while accelerating low-carbon transformation anddriving high-quality development in new businesses. In speci?c
?elds, Hengtong focuses on green manufacturing, green products,green supply chains, marine energy, green operations, greenelectricity, natural carbon sinks/CCUS, clean energy, and strategicemerging industries. Additionally, Hengtong has established anESG sustainable development system, a carbon managementsystem, an intelligent management platform, and a specializedteam to ensure the effective implementation and continuousdevelopment of these strategies.
Green, Low-Carbon and Sustainable Development Strategy
Building a world-leading optical communication andnew energy enterprise with high-quality developmentled by technology and low-carbon transformation
driven by innovation
Deepen green strategy and forge greenpremium of traditional businesses
Accelerate low-carbon transformationand drive the high-quality development
of new businesses
GreenManufacturingGreen Operation
CleanEnergyGreenProducts
MarineEnergyGreen Power
StrategicEmergingIndustriesGreenSupply ChainNatural CarbonSink/CCUS
ESG Sustainability SystemCarbon Management System
Digital and IntelligentManagement Platform
Professional Team
StrategyThe company is committed to transforming the ESG strategy from aconcept into practical actions, and promoting substantial improvementof sustainable development capabilities by implementing specificmeasures in the three aspects of environment, society and governance.In terms of environmental protection, Hengtong has implementedits environmental protection commitments through practical actionssuch as reducing carbon emissions, improving energy efficiency, andpromoting the application of renewable energy. In terms of socialresponsibility, Hengtong focuses on employee welfare, safety and
health, and community development, ensuring that social responsibilityis not just a slogan, but is actually integrated into daily operations. At thegovernance level, Hengtong has implemented governance conceptsinto concrete actions by strengthening compliance managementand internal governance, improving management transparency andrisk control capabilities. All of this not only demonstrates Hengtong'scommitment to sustainable development, but also strengthens theits competitiveness in the market and investors' confidence, turning"virtual" visions into "real" results.
Hengtong ESG Sustainable Development Capacity Construction -Turning "Virtual" into "Real"
Reduce carbon emissions, and enhance watermanagement, waste management, energye?ciency, environmental protection, etc. Thecompany sets targets for emission reduction,uses renewable energy, optimize manufacturingprocess, mitigate environment pollution
Environmental
Boost employee care, safetyand health, human rights,community responsibility,supplier management, welfareof the employees, safetymanagement, the lawful rightsof the suppliers, communitydevelopment, etc.
Social
Ensure the independence,transparency, compliance ofthe company's operation, theperformance of duty of theboard, compliance policies,internal managementmechanisms, independenceand e?ectiveness of theboard, risk management, ,etc.
Governance
Improve the trustand loyalty ofthe investors andcustomers, andincrease the marketcompetitiveness
Corporate imageand reputation:
Brand assets
Identify and managerisks that haveadverse impactson operation and?nancial status, andreduce unnecessaryloss
Satisfy the demandof the investors,and increase theattractiveness forinvestors
Risk management:
Risk control andtacklingInvestor's demand:
Responsibleinvestment
Ensure managementcompliance, andreduce the legal risksand adverse results
Legal compliance:
Regulationrequirements
Stimulate inter-departmentalcollaboration, andincrease the internalmanagemente?ciency
Internalmanagement:
Managementimprovement
Hengtong ESGSustainableDevelopment
Foundation for Steady Growth
Leading with Innovation:
Creating Leading Quality
Caring For Employees: PromotingInclusive Development
Global Cooperation: DemonstratingHengtong's Responsibility
5455
Low-Carbon Development:
Illuminating a Green Future
Following the analysis scenarios published by institutions like the International Energy Agency (IEA) and the Intergovernmental Panel onClimate Change (IPCC), Hengtong identi?es climate change physical risks based on "Representative Concentration Pathways (RCP)" forgreenhouse gas emissions. It also assesses transition risks by referring to the "Net Zero Emissions by 2050 (NZE)" scenario and the "StatedPolicies Scenario (STEPS)", prioritizing risks according to their likelihood and impact.
RCP4.5 Scenario:
A scenario in which the global averagetemperature rises less than 2℃ abovepre-industrial levels by 2100, known asthe "2℃ or less warming" scenario
RCP8.5 Scenario:
A scenario in which the global averagetemperature rises more than 4℃ abovepre-industrial levels by 2100, known asthe "4℃ or more warming" scenario
Stated Policies Scenario (STEPS):
A scenario based on the current policies ofvarious industries and countries, includingthe implementation of announced policyplans worldwide
Net Zero Emissions by 2050Scenario (NZE):
A scenario where the global energy industryachieves net-zero carbon dioxide emissionsby 2050 without relying on reductionsoutside the energy sector
Hengtong pursues green sustainable development as a strategicdirection, aiming to achieve a win-win situation for economic andenvironmental benefits through measures such as optimizingindustrial structure, strengthening energy management,developing low-carbon technologies, and promoting greenfinance. Hengtong actively builds a low-carbon managementsystem to improve resource utilization efficiency, reducegreenhouse gas emissions, and increase investments in renewableand clean energy to decrease reliance on fossil fuels. Furthermore,
Hengtong promotes technological innovation to developadvanced energy-saving and emission-reduction technologiesand processes, improving industrial energy e?ciency. Hengtongalso strengthens collaboration with various sectors to advancegreen development, actively participating in the formulationof domestic and international green standards, leading theindustry toward sustainable development. Through these e?orts,Hengtong not only achieves its own green development but alsocontributes to social and economic progress.
Green, Low-Carbon and Sustainable Development Actions
Action Goals
GreenIndustries
Low-CarbonTechnologiesGreen andLow-CarbonInvestment
EnergyOptimizationStrengtheningGovernance
GreenArchitecture
Low-CarbonTransport
GreenDevelopment
Optimize and upgradeindustrial structure
Prioritize developmentof green and low-carbonindustries
Improve managementsystem
Improve carbon-management calculationand monitoring
Enhance professionalteam building
Overall low-carbondesign for new buildings
Continuously optimizeenergy mix for buildings
Continuously strengthenenergy saving andcarbon reduction
Low-carbon logistics
Introduce low-carbontravelling
Use low-carbontransportation tools
Strengthen planningand guidance
Optimize industrial arealayout
Introduce greenproduction and life style
Strengthen fundamentalresearch on energysaving, emissionreduction and energye?ciency improving
Make plan for cuttingedge industrialapplications
Develop advancedsuitable technologies andtechniques
Develop green?nance
Improve low-carboninvestment policies
Reinforce control of energyconsumption intensity andtotal volume
Improve energy utilizatione?ciency
Control fossil energyconsumption
Develop non-fossil energies
Deepen energy mechanismreform
Foundation for Steady Growth
Leading with Innovation:
Creating Leading Quality
Caring For Employees: PromotingInclusive Development
Global Cooperation: DemonstratingHengtong's Responsibility
5657
Low-Carbon Development:
Illuminating a Green Future
On the other hand, Hengtong actively identi?es opportunities related to climate change, enhancing its capacity to respond to these challenges byimproving energy e?ciency and promoting energy transition. At the same time, Hengtong continues to increase investments in low-carbon andclean technologies to meet customer demand for green products, ultimately driving the green transformation of its operations and the energystructure of society as a whole.
Opportunity TypeOpportunity DescriptionImpact on HengtongResourceE?ciency
Energy e?ciency
In the context of carbon peak and carbonneutrality, the production and storagetechnologies for clean energy are maturingrapidly. Increasing investments in distributedphotovoltaic and other renewable energyassets can signi?cantly enhance energye?ciency
Hengtong has created a distributed photovoltaicrevenue model of "self-generation for self-useand access to the grid for surplus power" bybuilding distributed photovoltaic and other newenergy assets, meeting its own energy needswhile generating additional revenueEnergySource
Low-emissionenergy sources
In recent years, China's newly installedrenewable energy power generation capacityaccounts for about 50% of the world's total,with an annual increase of about 140GW. Thegrid emission factor has been declining yearby year
In order to achieve the dual carbon goals, thedomestic energy structure transformationcontinues to advance, providing a favorableenvironment for Hengtong Optic-Electric toachieve its own energy transformation andenergy conservation and emission reduction
Products andServices
Customer demandfor green products
In order to achieve climate andenvironmental goals such as reducinggreenhouse gas emissions by 55% andsaving 32.5% of energy by 2030 compared to1990, the European Commission proposeda package of legislative proposals called "Fitfor 55". The proposal covers multiple areassuch as renewable energy, energy e?ciency,construction, land use and carbon emissionstrading system, involving 13 speci?clegislative proposals
The EU's "Fit for 55" legislative packageincludes construction goals for alternative fuelinfrastructure, renewable energy, hydrogenand decarbonized gas markets, providing newmarket opportunities for Hengtong Optic-Electric in o?shore wind power and new energyfacilities. Hengtong Optic-Electric will activelyinvest in the research and development ofclean technologies, improve related productioncapacity and supply capabilities, and providecustomers with better quality green products
Risk TypeRisk ParametersRisk DescriptionStrategic Response Measures
Transformationrisks
Market
Rising raw materialcosts
The prices of resources such asenergy, water, and equipmentwill increase with the impact ofclimate change, which will in turna?ect the procurement costs of rawmaterials and increase supply chaintransportation costs
Actively explore energy-saving andconsumption-reducing measures inthe production process and achievethe recycling of resources as much aspossibleReach consensus with partners on low-carbon supply chain transportation toreduce procurement costs
Reputation
Investorsincreasinglyconcerned aboutnegative feedback
Stakeholders are increasinglyconcerned about climate changeissues. If Hengtong fails to meetinvestor expectations, it may facedivestment and a reduction in therating of ESG-related indexes in thecapital market
Strengthen disclosure requirementsrelated to sustainable developmentand climate change to ensurecomplianceClosely follow up on feedback fromcustomers and other stakeholders onclimate change
Risk TypeRisk ParametersRisk DescriptionStrategic Response Measures
Physical risks
Acute
Extreme weatherevents such astyphoons, ?oods,extreme heat andcold climate
Frequent extreme weather eventswill cause inconvenience toemployees' commuting, supplychain transportation obstructionsand equipment operation failures,a?ecting the continuity of productionand operations, and thus causing areduction in revenueTyphoons and extreme cold weathermay damage laid cables and othercommunication equipment
Implement a management dutymechanism, strengthen weatherforecast monitoring, issue weatherwarnings in advance, and open thecompany's reception dormitory for freeuse by company employees in a timelymanner during extreme weatherDevelop emergency plans for extremeweather (strong typhoons, heavy rainsand ?oods, freezing rain and snow,etc.) and prepare emergency facilitiesin advanceBefore the ?ood season and typhoonseason arrives, prepare typhoon and?ood prevention materials and relatedpreparations in advance accordingto the company's emergency plan,and conduct sand table rehearsals inadvance
Chronic
Impacts of changesin temperature,rainfall and sealevel rise
Slow changes in temperature andrainfall may lead to the relocation ofsome potentially a?ected operatingsites, increasing operating costsThe slow rise in sea levels may causesubmarine optical cables to fail due topressure changes
Transformationrisks
RegulatoryPolicies
Stricter emissionsdisclosuremanagementand compliancerequirements
As national carbon emission reductionpolicies and international carbonemission requirements becomeincreasingly stringent, Hengtong facesincreasing disclosure requirements fromregulatory and investment institutionsfor corporate emission reductiontargets, measures, and results, whichmay bring potential risks such as projectprogress being hindered, high ?nes andcompliance costs
Keep abreast of and comply withthe laws and regulations issuedby relevant domestic and foreignregulatory agencies, and regularlyidentify applicable carbon emission-related policiesStrengthen internal carbonaccounting management andenhance the carbon emissionaccounting system in the productionprocess
Technology
Low-carbontechnologytransition
In response to climate change, low-carbon materials will graduallyreplace existing products. Low-energyconsumption equipment and moreadvanced energy-saving technologiesand processes will receive widerattention from investors and receivepolicy support, which may lead torisks such as reduced liquidity ofexisting assets and increased costs oflow-carbon materials and technologytransformation
Explore low-carbon materials andtechnology transformation paths,and introduce e?cient and energy-saving technical means or productionequipment
Market
Shift in customerpreferences
Risks such as accelerated deploymentof low-carbon transformationprogress, resulting in increasedbudgets, threats from competitorsproviding low-emission products,resulting in reduced market share,and decreased demand for goods andservices
Closely track and investigate changes incustomer demand for energy-saving andgreen products and services, and adjustindustrial layout in a timely mannerIncrease the budget for providingtransformational products and servicesto meet customer needs and activelyanalyze price ?uctuation trends
Based on the identi?cation and analysis of climate change risks, it is evident that physical risks are more likely and impactful under high-emission scenarios, while transition risks are more probable and impactful under low-emission scenarios. In response to identi?ed risks,Hengtong has developed speci?c measures:
Foundation for Steady Growth
Leading with Innovation:
Creating Leading Quality
Caring For Employees: PromotingInclusive Development
Global Cooperation: DemonstratingHengtong's Responsibility
5859
Low-Carbon Development:
Illuminating a Green Future
To ensure the orderly implementation of Hengtong's climate change strategy and support the national dual carbon goals, Hengtonghas actively set carbon reduction targets for each phase. Based on the company's actual situation, it has developed correspondingaction plans to manage carbon emissions and established the following key performance indicators (KPIs) to measure the progress ofits green and low-carbon manufacturing system:
Goals and Targets
Implementation Measures
As an industry leader, Hengtong actively responds to the national call for green development by integrating low-carbon principlesthroughout its operations. To achieve carbon reduction goals, the company follows a scienti?c tracking and planning pathway, focusingon three key areas: low-carbon design, low-carbon supply chain, and system support. By leveraging an industrial internet platform,Hengtong monitors and automatically collects carbon emission data during production, e?ectively identifying direct and indirect sourcesof greenhouse gas emissions and clearly de?ning emission boundaries. A digital platform is used to manage carbon-related indicators,further enhancing the e?ciency and accuracy of carbon management. Based on these plans and preparations, Hengtong promotes theconstruction of a green and low-carbon manufacturing system through the following measures, setting a new benchmark for the industry'ssustainable development:
Total energy consumption, energy consumption per RMB 10,000 of output, totalelectricity consumption, used to assess energy consumption levels and driveenergy e?ciency improvements
Promote the research and application of green and low-carbon technologies,such as energy-e?cient technologies, clean energy technologies, and recyclingtechnologies, to enhance green manufacturing capabilities
Amount of green electricity used, percentage of green electricity usage, totalinstalled solar photovoltaic capacity, used to evaluate the use of green energy andpromote the replacement of traditional energy sources
综合能源消费量、万元产值能耗、总用电量等指标，用于评估能源消耗水平，并推动能源效率提升；
综合能源消费量、万元产值能耗、总用电量等指标，用于评估能源消耗水平，并推动能源效率提升；
综合能源消费量、万元产值能耗、总用电量等指标，用于评估能源消耗水平，并推动能源效率提升；
EnergyConsumption
GreenTechnology
GreenEnergy
GreenProducts
CarbonEmissions
GreenSupply Chain
E?ciencyImprovement
Total carbon emissions, carbon emissions per RMB 10,000 of output, used toassess carbon emission levels and promote reduction e?orts
Establish a green supply chain management system, encouraging suppliers toadopt green and low-carbon production methods, aiming for a fully green supplychain
Reduction rate of energy consumption per unit of output, reduction rate ofcarbon emissions per unit of output, used to assess the e?ectiveness of energyconservation and emission reduction, and drive continuous improvement
Develop green, low-carbon products to meet market demand and lead the greenconsumption trend
Risk Management
Hengtong is committed to embedding the climate change risk management process into the company's overall risk management process,and identifying, assessing and responding to major climate change risks through a three-level risk prevention and control mechanism.
Hengtong's Risk Prevention and Control Mechanism for Climate Change
Board ofDirectors
Risk Management
Committee
The Board of Directors regularly evaluates the e?ectiveness of risk managementmeasures and improves climate change risk management, internal control andgovernance processesUnder the leadership of the Audit Committee, the Internal Audit Departmentconducts regular audits of the climate change risk management and control of alldepartments and links of the company, assists and supervises the implementationof the risk management system by various departments, promptly identi?es riskloopholes, and reports them to the Audit Committee
Physical risks: The Risk Management Committee coordinates relevant functionaldepartments to identify, prevent and respond to physical risks of climate changesuch as extreme weatherTransition risks: The Risk Management Committee coordinates relevant functionaldepartments to analyze and judge climate change-related laws, policies, disclosureguidelines, and market trends to respond to related risks in advance
Audit Committee
Foundation for Steady Growth
Leading with Innovation:
Creating Leading Quality
Caring For Employees: PromotingInclusive Development
Global Cooperation: DemonstratingHengtong's Responsibility
6061
Low-Carbon Development:
Illuminating a Green Future
Hengtong has adopted new digital management practices forcarbon emissions and carbon footprint tracking, leveraging theindustry's carbon management platform. In 2023, HengtongHigh Voltage, a subsidiary of Hengtong, was awarded the"Five-Star Certi?cate for Enterprise Carbon Peak and CarbonNeutrality Management Evaluation."
Hengtong consistently improves production efficiency, reduces energy consumption, and optimizes resource allocation, driving thecompany's transformation into a high-end green and low-carbon manufacturing system. The company has deeply implemented the"Intelligent Transformation, Digitalization, and Networking" initiative, applying advanced analytics, machine vision technology, and arti?cialintelligence throughout the production process. Its subsidiary, Jiangsu Hengtong Fiber Technology Co., Ltd. (Hengtong Fiber), has achieveda 66% improvement in e?ciency, a 21% reduction in unit manufacturing costs, and a 33% reduction in unit energy consumption over thepast three years through digital transformation.
Technology R&D
Digital and Intelligent Upgrades
●Smart Manufacturing: Hengtong
is actively advancing smartmanufacturing production linesby introducing automationequipment and robotictechnologies to automate andoptimize the production process,enhancing production e?ciencyand product quality●Production Management Platform:
Hengtong has built a productionmanagement platform to monitorthe production process in real-time, optimize production plans,and improve operational e?ciency
●Data Analytics Platform:
Hengtong has established a dataanalytics platform to deeplyanalyze production data, identifybottlenecks and problems inthe production process, andimplement improvements andoptimizations
●Industrial Internet Platform:
Hengtong uses an industrialinternet platform for equipmentnetworking, data collection,and data analysis, providingstrong support for productionmanagement, equipmentmaintenance, and energymanagement●Remote Equipment Monitoring:
Using the industrial internetplatform, the company monitorsequipment remotely, tracksoperational status in real-time,and quickly detects and resolvesequipment issues to enhanceutilization rates●Energy Management Platform:
Hengtong has built an energymanagement platform that allowsfor real-time monitoring, analysis,and optimization of energyconsumption data, e?ectivelyreducing energy usage
●Intelligent Decision-Making:
Hengtong uses arti?cialintelligence technology toanalyze production data indepth, providing intelligentdecision support for productionmanagement, equipmentmaintenance, and energymanagement●Smart Detection: Hengtong hasimplemented AI-based detectiontechnology to automaticallyinspect product quality, improvinginspection e?ciency and accuracy●Smart Logistics: Hengtongapplies arti?cial intelligence tooptimize logistics routes, reducinglogistics costs and improvingtransportation e?ciency
Arti?cial Intelligence ApplicationsIndustrial Internet ApplicationsDigital Factory Construction
Clean Energy TechnologyEnergy-Saving TechnologyLow-Carbon Product Design
The company actively developsand applies clean energytechnologies to reduce energyconsumption and achieve anenergy transition
Hengtong continues todevelop and apply energy-saving technologies to enhancethe e?ciency of productionequipment and reduce energyconsumption
The company conducts low-carbon design projects, utilizinglow-carbon materials andoptimizing product designs toreduce the carbon footprintthroughout the product lifecycle
Foundation for Steady Growth
Leading with Innovation:
Creating Leading Quality
Caring For Employees: PromotingInclusive Development
Global Cooperation: DemonstratingHengtong's Responsibility
6263
Low-Carbon Development:
Illuminating a Green Future
Greenhouse Gas Emissions
Unit2022 Data2023 Data
Total Greenhouse Gas Emissions(scope 1 + scope 2 )
Tons of carbon dioxide equivalent (tCO
e)339,189.14385,822.96Scope 1 Greenhouse Gas EmissionsTons of carbon dioxide equivalent (tCO
e)80,297.4078,606.87Scope 2 Greenhouse Gas Emissions
Tons of carbon dioxide equivalent (tCO
e)258,891.74307,216.08Greenhouse Gas Emission Intensity
Tons of carbon dioxide equivalent (tCO
e)/RMB100 million in revenue
730.00810.18
The company's main greenhouse gas emissions come from direct emission sources ( scope 1 ) and indirect energy emission sources ( scope 2 ).The company conducts carbon inventory based on ISO14064-1:2018 "Planning and Guidelines for Quanti?cation and Reporting of Greenhouse GasEmissions and Removals at the Organizational Level". The greenhouse gas categories mainly include carbon dioxide, methane and nitrous oxide,and the national power grid average emission factor for 2022 in the "Notice on Doing a Good Job in the Management of Greenhouse Gas EmissionReports of Power Generation Enterprises from 2023 to 2025" issued by the Ministry of Ecology and Environment and the emission factors in the "IPCC2006 National Greenhouse Gas Inventory Guidelines 2019 Revised Edition" issued by the Intergovernmental Panel on Climate Change of the UnitedNations are used for calculation.
The electricity emission factor for 2023 is 0.5942tCO
/MWh, and the electricity emission factor for 2022 is 0.5703tCO
/MWh.
Hengtong has innovated the core preparation technology for green optical preforms, altering the traditional synthesis processand eliminating pollution risks during production. This project has been recognized by the Ministry of Industry and InformationTechnology as a green manufacturing system integration project. The developed manufacturing technology for organic silicongreen optical preforms ?lls a domestic gap, achieving rapid industrialization and fully replacing traditional high-pollution, high-energy consumption techniques.
Hengtong has developed a "Net Zero Carbon Factory" plan, committed to achieving green and low-carbon development acrossall business processes through key technological breakthroughs, equipment upgrades, and digital transformation. The firstpilot projects have successfully been implemented, establishing an energy management center that integrates carbon emissionmanagement and implements multiple energy-saving technical renovations. These efforts have resulted in annual electricitysavings and reductions in carbon dioxide emissions. Additionally, Hengtong has achieved carbon neutrality through the purchaseof green certi?cates and carbon credits. This initiative not only signi?cantly enhances Hengtong's green sustainable developmentmanagement system but also accumulates valuable experience for horizontal promotion in other factories, making it an importantpractice in leading the industry's green transformation.
The Hengtong Lighthouse Factory project was selected incollaboration with the World Economic Forum and McKinsey,making it the only enterprise in the global optical communicationssector to receive this recognition, as well as being the ?rst privateenterprise in Jiangsu Province to achieve this honor. Hengtongaims for "high e?ciency and unmanned operations" by deepeningfactory intelligence, lean manufacturing, and managementinformatization. Based on the industrial internet platform,Hengtong has deployed 27 typical digital use cases and isadvancing the application of artificial intelligence and largemodel technologies. By incorporating machine learning andvisual + AI technologies, Hengtong has achieved a 66% increasein factory output, a 21% reduction in unit manufacturing costs,and a 52% decrease in product defect rates. The HengtongLighthouse Factory has launched a three-year action plan aimedat creating an intelligent manufacturing model characterized bypersonalized customization, networked collaboration, flexibleproduction, and visual supervision, leading the enterprise toachieve sustainable high-quality development in the digitaleconomy era.
CaseCase
Case
Research and Industrialization of Green, Low-Carbon, Pollution-Free Fiber Optic PreformsHengtong's "Net Zero Carbon Factory" Initiative: A Pioneer in Leading Green Transformation
Hengtong Lighthouse Factory: Leading Intelligent Manufacturing and SustainableDevelopment
New Lighthouse sites in Wave 11
New Lighthouses in 2023
| FIGURE 1 | ||
| 232441325 | ||
Previous LighthouseNew Factory LighthouseNew End-to-End (E2E) LighthouseNew Sustainability Lighthouse
ACG CapsulesPithampur, IndiaPharmaceuticals
Agilent TechnologiesWaldbronn, GermanyMedical equipment
AMOREPACIFICOsan, South KoreaCosmetics
AramcoYanbu, Saudi ArabiaOil and gas
CATLLiyang, ChinaElectronics
CITIC Paci?c SpecialSteel Jiangyin, China
Steel products
CR Building MaterialsTech Tianyang, ChinaCement
GAC AION New EnergyGuangzhou, ChinaAutomotive
HaierHefei, ChinaHome appliances
Hengtong AlphaSuzhou, ChinaOptoelectronics
IngrasysTaoyuan, Taiwan, ChinaElectronics
K-waterHwaseong, South Korea
WaterLONGiJiaxing, China
Renewable energyMondelēzBeijing, China
Food productsReNewRatlam, India
Renewable energyVitrA KaroBozüyük, Turkey
Building materials
DHL Supply ChainMemphis, United States
Logistics
HaierQingdao, ChinaHome appliances
J&J JanssenXi'an, China
Medical devicesKenvueShanghai, ChinaSelf-care products
UnileverSonepat, IndiaFood products
KenvueBangkok, Thailand
Self-care productsSchneider ElectricHyderabad, IndiaElectrical components
SiemensChengdu, ChinaIndustrial automation
Source: Global Lighthouse NetworkGlobal Lighthouse Network: Adopting AI at Speed and Scale6
For this research and industrialization project of green, low-carbon,pollution-free ?ber optic preforms, Hengtong was awarded the AnnualExcellent Case Award at the second "Sustainable Development O?cerSummit Forum and Annual Awards Selection" organized by Ernst &Young.Hengtong is committed to the research and innovation of green,low-carbon products, continuously promoting breakthroughs andapplications in green technology, contributing to the sustainabledevelopment of the industry, and providing practical solutions for thenational "carbon peak and carbon neutrality" strategy.
Foundation for Steady Growth
Leading with Innovation:
Creating Leading Quality
Caring For Employees: PromotingInclusive Development
Global Cooperation: DemonstratingHengtong's Responsibility
6465
Low-Carbon Development:
Illuminating a Green Future
Accelerate the utilization of roof resources in ownedindustrial parks, factories, office buildings, etc.,plan and build a distributed photovoltaic project(Phase I) of 37MW, connect 10.5MW to the gridwithin the year, and provide 12,600MWh of greenelectricity throughout the year.
We will continue to expand the share of greenelectricity transactions and increase the use ofrenewable energy. Through direct purchases fromthe power grid and green electricity and greencerti?cate transactions, we will purchase 236,000MWh of green electricity from within and outsidethe country this year.
Self-Built Distributed Photovoltaic
Green Power & Green Certi?cate Purchase
Clean Technology and Energy TransitionBased on the green strategic direction, Hengtong actively explores clean technology opportunities, continuously promotes greentechnology transformation and green base construction, comprehensively arranges green energy development projects such as marineenergy and o?shore wind power equipment, and provides operation services for comprehensive clean energy projects such as distributedwind power, distributed photovoltaics, and energy storage, creating a modern industrial system with a complete chain, green and e?cient.
In 2023, Brazil Hengtong actively communicated andnegotiated with the free market transmission anddistribution company and signed a one-year powerpurchase contract. It will use 100% clean energy throughout2023, totaling 1.46 million kWh, reducing carbon emissionsby approximately 151.84 tons.
The 110 kV polypropylene insulated cable provided byHengtong is the ?rst 110 kV polypropylene insulated cable inChina. It has made breakthroughs in key technologies suchas three-layer co-extrusion of polypropylene insulation, high-temperature system testing, molded joints, AC and DC testing,and the product process eliminates the degassing step, whichsimplifies the procedure while shortening the productioncycle by more than 50%, and reducing carbon emissionsby about 17%. It has unique advantages in electricalproperties, heat resistance, chemical stability and cost, andis an emerging low-carbon product in the industry, fillingthe current shortage of green, low-carbon, environmentallyfriendly and recyclable power cables in the industry.
Case
Case
Hengtong's Subsidiary in Brazil
The "110kV Meimei II Line Renovation Project" by China Southern Power Grid'sShenzhen Power Supply Bureau.
Re?ned energy management is the only way to achieve energy conservation and emission reduction and low-carbon operation. Hengtongattaches great importance to energy e?ciency in production operations, and fully implements energy management-related standards andspeci?cations from top to bottom to establish a complete and e?ective energy management system.
Hengtong promotes process technology innovation, equipment upgrades and digital management practices by strengthening target settingand process monitoring to implement and check the energy management status of the operation process. During the reporting period,Hengtong has obtained ISO 50001 energy management system certi?cation, covering all the main businesses.
To date, Hengtong has been selected for the national green manufacturing system integration project, won the ?rst batch of China EnergyE?ciency Star Five-Star Enterprise, and the "Global Human Settlement Environment Green Technology (Product) Example" award. Fivesubsidiary companies have been awarded national green factories, three companies have been awarded green supply chain managementcompanies, three companies have been awarded national industrial product green design demonstration companies, and seven types ofproducts have been awarded national green design products.
Energy Management System
As electricity is the main type of energy used in factories at present (accounting for 99.7% of the comprehensive energyconsumption of factories in 2023), Hengtong has established an energy management platform. By installing sensors on smartmeters to automatically collect power consumption data and connecting to the management platform, real-time online monitoringand dynamic optimization management of factory power consumption can be achieved. Based on the power consumption datacollected by the energy management platform, the factory can shut down unnecessary equipment in time, reduce equipmentstandby time, and actively help the factory achieve the "near zero carbon" goal.
CaseDigital Energy Management Platform
Clean Energy Use Targets
31.21
%
The usage ratio will reach
227,142.77MWhGreen power procurement
Energy Consumption Target
0.13
%Energy intensity to drop by
Energy E?ciency Improvement and Transformation
in 2023
in 2024
Foundation for Steady Growth
Leading with Innovation:
Creating Leading Quality
Caring For Employees: PromotingInclusive Development
Global Cooperation: DemonstratingHengtong's Responsibility
6667
Low-Carbon Development:
Illuminating a Green Future
Mexico Cross-Sea Power Project
Indonesia Floating Photovoltaic Power Generation Project
Zhanjiang Xuwen O?shore Wind Farm CapacityExpansion Project in GuangdongDuring the reporting period, Hengtong successfully promoted theMexican cross-sea power project, which was listed by Mexico as akey infrastructure project to protect the people's livelihood. As alandmark project for the ?rst entry of China's electric submarinecable system into the Mexican market, the project demonstratedthe company's leading capabilities in clean technology andenergy, and provided Mexico with stable and reliable powersupport, promoting global sustainable energy development.
During the reporting period, Hengtong actively participated in theIndonesian floating photovoltaic power generation project. Afterthe project is completed, the annual power generation is expectedto reach 300,000 megawatt hours, saving 117,000 tons of standardcoal in Indonesia and providing sufficient electricity for 50,000households. This project not only significantly reduced the useof fossil fuels, but also significantly reduced carbon emissions,promoting the green transformation of the regional energy structure.
During the reporting period, Hengtong provided key support forthe capacity expansion project of Xuwen offshore wind farm inZhanjiang, Guangdong. After the project is fully connected to thegrid and put into operation, the annual grid-connected electricity isexpected to reach 899 million kWh, equivalent to the basic electricityconsumption of 370,000 households in one year. Hengtong Optic-Electric' support helps the project save 272,000 tons of standardcoal and reduce 723,300 tons of carbon dioxide emissions eachyear, signi?cantly promoting the development of green energy andmaking important contributions to mitigating climate change.
Zheneng Taizhou No. 1 O?shore Wind Power ProjectDuring the reporting period, Hengtong actively supported theZheneng Taizhou No. 1 Offshore Wind Power Project. Oncecompleted, the project is expected to generate an annualpower output equivalent to one-sixth of Linhai City's electricityconsumption, signi?cantly boosting the local supply of green energy.
As the ?rst o?shore wind power project invested,developed and constructed by Huaneng Groupin eastern Guangdong, it faced the technicalbottleneck of large transmission capacity andlong lines. Hengtong Optic-Electric conductedin-depth research and improvement onproduct structure, materials and manufacturingprocess, broke through the laying method, andsuccessfully developed a 3,000mm? 220kV smoothaluminum transmission system. While improvingthe transmission capacity, it has made its owncontribution to o?shore wind power transmission,new energy industry and low-carbon economicdevelopment.
This project is the ?rst phase project with the widest oil ?eld coverage, the largest engineering volume and the largest electricity loadamong my country's o?shore shore power application projects. The main production facilities include o?shore platforms and onshorecontrol centers, with a designed transmission capacity of 520 megawatts.After completion, the project will provide electricity for 39 o?shore production platforms including the Kenli Oil?eld Group. It is expectedto reduce direct carbon emissions by 3.8 million tons and nitrogen oxides by 10,000 tons annually, reduce natural gas consumption by
1.18 billion cubic meters in peak years, and reduce crude oil consumption by 1.91 billion cubic meters. It can greatly improve energy
utilization e?ciency and reduce o?shore greenhouse gas and pollutant gas emissions, which is of great signi?cance to promoting thegreen development of o?shore oil and gas ?elds and helping China achieve its "carbon peak and carbon neutrality" goals.
Case
Case
Huaneng Shantou Haojiang O?shore Wind Power Transmission Line Pipeline Project220kV Smooth Aluminum Project
Bozhong-Kenli Oil?eld Group Shore Power Application Project
Indonesia Jakarta-Bandung High-Speed RailwayGreen Power Transmission ProjectDuring the reporting period, Hengtong provided advanced green,high-speed and safe service solutions for the Jakarta-BandungHigh-Speed Railway Green Power Transmission Project inIndonesia. The project connects the Indonesian capital of Jakartaand the famous tourist city of Bandung, becoming an importantnew transportation option between the two places. By providingefficient and environmentally friendly power transmissionsolutions, the company supports the green operation of thehigh-speed rail project and improves the sustainability of theoverall transportation system, helping to achieve sustainabletransportation and energy development goals.
Foundation for Steady Growth
Leading with Innovation:
Creating Leading Quality
Caring For Employees: PromotingInclusive Development
Global Cooperation: DemonstratingHengtong's Responsibility
6869
Low-Carbon Development:
Illuminating a Green Future
Hengtong strictly abides by the Water Law of the People's Republic of China, the Measures for the Administration of Water Withdrawal Permits andother relevant laws and regulations as well as the requirements of relevant internal water use management systems. It regularly conducts waterbalance tests and water price monitoring to comprehensively identify water shortage risk points in the short, medium and long term along theentire value chain, so as to implement pre-emptive water risk management measures, improve water use e?ciency and avoid water use risks.During the reporting period, we actively promoted water-saving projects through technological transformation, equipment renewal and processoptimization. Inside the factory, we established a centralized water circulation system for the workshop and adopted a centralized coolingmode of cooling towers to e?ectively increase the recycling rate of water resources. At the same time, we widely equipped water-saving facilitiesand established a rainwater collection and utilization system to use the collected rainwater for on-site equipment, vehicles and road washing,maximizing the utilization rate of rainwater to achieve e?cient use of water resources.
2.508
million tonsCirculating water used this year
%Water use intensity to drop by
Water conservation this year
Water-saving Transformation and Optimization
During World Water Day, Hengtong organized a series of water conservation campaigns to raise awareness among employees about thecorrect use of water. Through lectures, distribution of water conservation guides and interactive workshops, the company emphasizedthe importance of water conservation and taught employees e?ective water management techniques. This event not only enhancedemployees' awareness of water conservation practices, but also promoted a sustainable culture within the company and furtherpromoted the implementation of environmental responsibility. Through these initiatives, Hengtong Optic-Electric actively advocateswater conservation awareness and helps achieve sustainable resource utilization and environmental protection goals.
Case
Hengtong's "World Water Day" water-saving publicity campaign enhances employees'water awareness
The comprehensive energy consumption is calculated based on the consumption of gasoline, diesel, natural gas, hydrogen, electricity and steamand the discount coe?cient in the national standard "General Rules for Calculation of Comprehensive Energy Consumption" (GB/T 2589-2020).
130,269.75133,396.91
Total energyconsumption(Ton of standardcoal)
280.37
280.12
Energy consumptionintensity(Ton of standard coal /100 million RMB)
2022 Data2023 Data
2022 Data2023 Data2022 Data2023 DataIndirect Energy
Direct Energy
Total energy
| 2022 | 2022 |
Purchasedelectricity
(kWh)
701,999,126.00
727,744,962.00
250,435,000.00227,142,770.00
Purchasedgreen electricity(kWh)
15,358.558,883.66
Outsourcing
steam(ton)
| 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2023 | 2023 |
Gasoline(liter)
157,017.59
321,840.10
5,742,733.626,067,596.95
Diesel fuel
(liter)
2,667.762,624. 67
Natural gas(10,000 cubicmeters)
29.46
27.35
Hydrogen(10,000 cubicmeters)
75.19
15.3
Propane(ton)
2,367.00
3,070.00
Biomass pellets(ton)
| 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 |
Energy Consumption
Cablescom, a subsidiary of Hengtong, promotes water-saving activities
by 2024
Foundation for Steady Growth
Leading with Innovation:
Creating Leading Quality
Caring For Employees: PromotingInclusive Development
Global Cooperation: DemonstratingHengtong's Responsibility
7071
Low-Carbon Development:
Illuminating a Green Future
Hengtong strictly abides by the relevant laws and regulations of the operating areas such as the Environmental Protection Law of thePeople's Republic of China, the Air Pollution Prevention and Control Law of the People's Republic of China, the Water Pollution Preventionand Control Law of the People's Republic of China, and the Solid Waste Pollution Prevention and Control Law of the People's Republic ofChina. On the basis of continuously improving product production technology and management processes, building a harmless treatmentand resource utilization system for emissions, reducing the emission of waste gas, wastewater and waste generated in the production andoperation process from the source, and strictly controlling all emissions in the company's operation process. In 2023, Hengtong's waste gasand noise emission compliance rate will reach 100%, and the quali?ed waste disposal rate will reach 100%.Emission reduction targets for this year
Exhaust Gas ManagementHengtong's waste gas emissions are mainly sulfur oxides generated during the production process of extrusion, lead extrusion, asphaltcoating and other processes, as well as during the production and operation of the administrative office area. In addition to strictlycomplying with domestic and international emission management policies and standards such as the "Law of the People's Republic ofChina on the Prevention and Control of Air Pollution", we have formulated more stringent waste gas emission standardization requirementsand treatment measures.
Hengtong's waste gas emission treatment measures
70.4
tons
The target for reducing hazardous wasteemissions for the whole year of 2023 was
263.6
tonsand the actual reduction was
exceeding
the emission reductiontarget
Handle exhaust gas throughactivated carbon adsorption(extrusion, asphalt process),water spray + bag dustremoval (lead extrusionprocess) and other methods
Monitor exhaustemissions in realtime and entrust aquali?ed third-partytesting agency tomonitor indicatorsregularly
In accordancewith relevantrequirements,strengthen themanagement ofvolatile organiccompoundsgenerated during theproduction process
Introducee?cienttreatmentmeasures andinstall wastegas collectionand disposaldevices
Strictlycontrolthe wastegas facilitytreatmentprocess
Emission Management and Recycling
Wastewater Management
Wastewatertreatment system
Wastewater treatmentfacilities
Domestic sewagetreatment
The main sources of Hengtong's wastewater are domestic sewage and industrial wastewater, and the types of pollutants include COD, SS, totalphosphorus, ammonia nitrogen, etc. Hengtong further improves the wastewater management process and related measures on the premiseof strictly abiding by the "Water Pollution Prevention and Control Law of the People's Republic of China" and international sewage dischargestandards and other relevant domestic and foreign laws and regulations.
Hengtong's wastewater management measures
Configure sewage treatment system,centrally treat and discharge thewastewater after reaching the standard,and conduct self-monitoring and third-party sampling of water pollutants
Set up sump pits, sedimentation tanks, drainageditches, septic tanks, grease traps and othertreatment facilities at the production site, andrecycle the treated wastewater after sedimentationtreatment and degradation separation measures.
All discharged into the municipalpipe network for treatment
During the reporting period, Hengtong's Mexican subsidiarydeveloped and implemented an intelligent constant pressurecirculating water supply system to achieve efficient recycling ofproduction water. The system waterproofs the pipeline trenchand designs a 1% slope to connect the end of the trench directlyto the pool, ensuring that even if the pipeline leaks, the seepagewater can naturally ?ow back to the pool through the trench. High-temperature production water flows smoothly back to the poolthrough PVC pipes, and the silt and impurities ?owing through theproduction line are effectively precipitated in the sedimentationtank, and the upper clear water ?ows back to the clear water tankthrough the over?ow port. This system not only greatly reduces thewaste of water resources, but also improves the e?ciency of waterresource management in the production process, further promotingthe company's e?orts in environmental protection and sustainabledevelopment.
During the reporting period, Hengtong introduced lightweight environmentally friendly diluent in the mold cleaning process,replacing traditional organic solvents. This measure not only e?ectively reduced the generation of mold cleaning waste liquid,but also achieved the reuse of environmentally friendly diluent through secondary precipitation technology, thereby signi?cantlyreducing the amount of wastewater treatment. This innovative measure significantly reduced the environmental impact ofthe production process, improved the efficiency of waste management, and also strengthened the company's sustainabledevelopment practices. By optimizing the cleaning process, Hengtong Optic-Electric promoted resource recycling andenvironmental protection while ensuring production e?ciency, demonstrating positive results in environmental responsibility.
Case
Case
The intelligent water supply system of Hengtong's Mexican subsidiary improves therecycling of production water and promotes resource conservation
Hengtong introduces environmentally friendly diluent to optimize mold cleaning andimprove water-saving e?ciency
In Egypt, Hengtong faces the challenge of water scarcity and relies mainlyon desalination of the Red Sea as a water source. To meet this challenge,the company implemented a recycling water storage measure andsignificantly improved the efficiency of water resource utilization by addingwater storage tanks on the production line. This measure saves about4,800 tons of water each year and significantly improves the recyclingrate of water resources. This innovative practice of Hengtong Egypt notonly effectively supports production needs in a resource-constrainedenvironment, but also demonstrates the company's active efforts inpromoting water conservation and sustainable development.
Case
Hengtong's Egyptian subsidiary signi?cantly improves water resource utilizationthrough circulating water storage measures
Water useUnit2022 Data2023 Data
Total water consumption10,000 tons285.18250.80Water use intensityTons/RMB 100 million6,137.615,401.10
Foundation for Steady Growth
Leading with Innovation:
Creating Leading Quality
Caring For Employees: PromotingInclusive Development
Global Cooperation: DemonstratingHengtong's Responsibility
7273
Low-Carbon Development:
Illuminating a Green Future
Hazardous WasteHengtong's hazardous waste sources are mainly waste emulsions, activated carbon and other toxic and hazardous substancesgenerated in the factory and administrative office areas. In strict accordance with the "Pollution Control Standards for HazardousWaste Storage" (GB18597-2001) and the requirements of the hazardous waste management plan and other systems, the hazardouswastes generated in the course of the operation will be collected and stored in the hazardous waste storage room, and thentransferred and disposed of through the "Jiangsu Province Hazardous Waste Life Cycle System", and then regularly entrusted toqualified third-party units for uniform disposal. Third-party units are regularly entrusted to qualified third-party units for unifieddisposal
In the large Red Sea submarine cable project in Tabuk Province, Saudi Arabia, Hengtong strictly follows the ConstructionEnvironmental and Social Management Plan (CESMP), the environmental requirements of the National Center for WasteManagement (NCW) and the Waste Management Plan (WMP), and carefully monitors and manages waste and emissions in theproject area. Waste at the project site is collected, transported and disposed of by waste transporters certi?ed by the NationalCenter for Environmental Compliance (NCEC). The company also provides employees with specialized waste treatment andstorage training, especially in the treatment of hazardous waste, to ensure that they are regularly inspected and supervised inaccordance with the established management plan. The environmental team is responsible for recording waste treatment andincorporating relevant data into the monthly environmental performance report. Through these measures, Hengtong not onlyensures the environmental compliance of the project, but also promotes continuous improvement in environmental protectionand resource management.
Case
Hengtong implements strict hazardous waste management in Saudi Arabia's Tabukproject to promote environmental compliance
At the same time, we continue to track hazardous waste emission targets. During the reporting period, the total amount of hazardous wastegenerated decreased by 45% compared to 2022, with signi?cant emission reduction e?ects.EmissionsUnit2022 Data2023 Data
Exhaust EmissionsSulfur oxideston0.05303
0.048
Wastewater DischargeDomestic sewage dischargeton36,180.7231,099.93
Hazardous WasteWaste emulsionton251.09
287.28
Activated carbonton1.40
8.106
Total amount of hazardous waste generatedton586.60
322.98
Non-hazardous WasteGeneral solid waste generation (recyclable)ton117,586.80115,016.46Total amount of packaging materials recycledton70,894.8677,984.35Total amount of other waste recycledton46,691.9437,032.11Total amount of general solid waste (non-recyclable)ton49,939.2243,946.52Total amount of general solid waste generatedton167,526.02158,962.98
Waste Management
Non-hazardous Waste
Hengtong strictly abides by relevant domestic and foreign laws and regulations such as the "Law of the People's Republic of China onthe Prevention and Control of Solid Waste Pollution ", the "Law of the People's Republic of China on the Prevention and Control of SoilPollution", and the "Environmental Impact Assessment Law of the People's Republic of China", and has formulated the "Waste ControlProcedure" to clarify the process specifications for the targeted collection, storage, transportation and treatment of all harmless andhazardous wastes generated.
Hengtong Optic-Electric's' harmless waste mainly includes packaging materials (optical fiber shells, cardboard boxes, etc.), raw andauxiliary materials (steel and aluminum strips, steel wires, etc.), and other waste generated during the factory production process, as well aso?ce and employee living waste generated during o?ce operations.
Direct recycling of packagingwaste
Reuse of raw and auxiliary materialwaste after secondary processing
Employees' domestic waste is packed in bagsand piled up in a centralized location, and isregularly transported out for disposal by thelocal sanitation departmentHengtong's harmless waste treatment measures
During the reporting period, the average value of our wastewater testing complies with GB8978-1996 and has been incorporated into thepipe network requirements. In addition, Hengtong did not have any non-compliance incidents exceeding the emission limit in 2023.
During the reporting period, Hengtong's Braziliansubsidiary actively responded to the headquarters' ESGglobal activities and committed to the environmentallyfriendly treatment of fiber optic cable waste. Thecompany worked closely with waste treatmentsuppliers to explore and implement innovative wastetreatment solutions. Through shredding, discardedoptical fiber cables are converted into reusablematerials for the construction industry, effectivelyreplacing traditional landfill treatment. This movenot only reduces the environmental impact of waste,but also provides sustainable material solutions forthe construction industry. This action by HengtongBrazil reflects the company's active commitment topromoting resource recycling and environmentalprotection.
Case
Hengtong's Brazilian subsidiary promotes the recycling economy of optical cable wasteand innovates recycling solutions
7475
Hengtong Optic-Electric Co., Ltd.2023 Environmental, Social and Governance ReportCompliance and Stability: The
Foundation for Steady Growth
Low-Carbon Development:
Illuminating a Green FutureLeading with Innovation:
Creating Leading Quality
Caring For Employees: PromotingInclusive Development
Global Cooperation: DemonstratingHengtong's Responsibility
Hengtong regards talent strategy as the company's first strategy,always adheres to the people-oriented concept, is committed tocreating an open, fair and just working environment, furtherimproves the employee recruitment management system, adheresto the principle of combining talent introduction and talent training,and promotes the common development of the company and itsemployees.
Talent Attraction and RetentionEmployee Compensation and IncentivesSupporting Growth and DevelopmentPromote Communication and CareOccupational Health and Safety
Caring forEmployees:
Promoting InclusiveDevelopment
7677
Hengtong Optic-Electric Co., Ltd.2023 Environmental, Social and Governance ReportCompliance and Stability: The
Foundation for Steady Growth
Low-Carbon Development:
Illuminating a Green FutureLeading with Innovation:
Creating Leading Quality
Caring For Employees: PromotingInclusive Development
Global Cooperation: DemonstratingHengtong's Responsibility
Unions and Collective Agreements
Talent Retention
Employee retention measures at Hengtong Egypt
Hengtong pays close attention to the equality of labor-capital relations, actively implements the equal consultation and collectiveagreement system, and formulates internal management methods such as the "Power Management and Control Procedures for Freedom ofAssociation and Collective Bargaining" in accordance with the requirements of the International Labor Organization. It holds all employeerepresentative meetings on time to e?ectively protect employees' working environment, working hours, overtime pay, vacation and otherrights and interests, and fully respects employees' rights to free association and collective bargaining. During the reporting period, ouremployee collective agreement signing rate was 100%, and the union coverage rate also reached 100%.
While introducing outstanding talents, we also attach great importance to the long-term stability of talents, and regard talent retention asa key performance indicator for managers. By continuously optimizing employee salary and welfare mechanisms, constantly improvingemployee development and training systems, and strengthening employee communication and exchanges, we will further consolidate thecompany's talent retention capabilities. During the reporting period, the overall employee turnover rate of Hengtong was 16%.
The Spanish Diversity Charter (abbreviated as the "Diversity Charter") was jointly initiated by theEuropean Commission and the Spanish Ministry of Equality. Companies that voluntarily sign the"Diversity Charter" must commit to complying with relevant laws and regulations on equality andanti-discrimination and promoting diversity and inclusion in the workplace.During the reporting period, Hengtong's Cablescom reaffirmed its commitment to the DiversityCharter and therefore adheres to its European principles, which are related to promoting arespectful society, a sustainable economy and a rigorous legal environment, and cover areas such aspromoting inclusion, promoting reconciliation or raising awareness of equality.
CaseCablescom, the Spanish subsidiary of Hengtong, signed the European Diversity Charter (Spain)
Incorporate employee turnoverrate into management'sperformance appraisal indicators
Regularly conduct salarycompetitiveness assessments toensure that salaries and bene?tsare competitive in the market
Provide employees with a goodincentive mechanism and awardbonuses or rewards to key talentswith outstanding performance
Implement ?exible working hours,employees can choose to workremotely, work ?exible hours, etc.according to their needs
Provide employees with careerdevelopment support such ascareer development planning,mentor guidance and regularfeedbackConduct interviews with formeremployees to understand themain reasons for their resignationand collect measures for furtherimprovement
Prohibition of Child Labor and Forced Labor
Diversity and Inclusion
Hengtong attaches great importance to the protection of workers' human rights and strictly prohibits all incidents of using child labor andforced labor. We have formulated the "Prohibition of Forced Labor Management and Control Procedures". During the employee recruitmentprocess, we strictly review the age and background of employees, refuse to hire underage employees, and fundamentally eliminatepotential violations. If relevant employment violations occur, the company will conduct an in-depth investigation and deal with themseriously as soon as possible. During the reporting period, the company did not have any incidents of employing child labor or forced labor.
Hengtong is committed to providing equal employment opportunitiesfor all employees and candidates. It promises that in the processof recruitment, promotion, compensation and benefits, it will notdiscriminate or treat employees differently due to differences ingender, age, region, ethnicity, family status, marital status, religion,disability, sexual orientation, social origin, etc., and insists on creatinga diverse and inclusive work environment. For anti-discriminationand anti-harassment incidents in the workplace, the company hasalso formulated a complete reporting process. If the incident isveri?ed and con?rmed, we will take warnings, penalties or dismissalmeasures against the employees involved in the relevant incidentsaccording to the nature of the incident. At the same time, weregularly organize training and publicity on diversity-related topics todeepen employees' awareness of diversity so as to achieve mutual
understanding and respect, and jointly build an open, inclusive andgood working environment.In addition, we continue to provide good employment opportunitiesfor vulnerable groups such as the disabled, and ensure thateveryone is treated equally based on the principle of equal payfor equal work. During the reporting period, we recruited disabledemployees through various channels such as recommendationsfrom the Wujiang District Disabled Persons' Federation and the QiduTown Civil A?airs Department, website postings, and participation inspecial job fairs for the disabled. We also provided convenient jobsbased on their actual physical conditions and provided completebarrier-free facilities for disabled employees in the o?ce.
Creating a comfortable working environment for disabled employees
Talent Attraction and RetentionHengtong strictly abides by the requirements of laws and regulations such as the Labor Law of the People's Republic of China, the LaborContract Law of the People's Republic of China, and the Law of the People's Republic of China on the Protection of Minors, and hasformulated rules and regulations such as the Hengtong Recruitment Management Measures to continuously standardize and improve theemployee recruitment management process, and adopt campus recruitment, social recruitment, internal recommendations and otherforms to widely absorb talents from all over the world.
7879
Hengtong Optic-Electric Co., Ltd.2023 Environmental, Social and Governance ReportCompliance and Stability: The
Foundation for Steady Growth
Low-Carbon Development:
Illuminating a Green FutureLeading with Innovation:
Creating Leading Quality
Caring For Employees: PromotingInclusive Development
Global Cooperation: DemonstratingHengtong's Responsibility
Employee CompensationWe are committed to improving the external competitiveness ofemployee remuneration, following the basic principle of "equal payfor equal work, distribution according to work", guided by employeeperformance and business capabilities, and establishing a fair, scienti?cand reasonable remuneration management mechanism based on thenature of employees' positions. At the same time, we also incorporaterelevant performance indicators such as environmental managementperformance, health and safety into the remuneration assessmentsystem of management, closely combining the company's sustainabledevelopment with the interests of management personnel.
At the same time, Hengtong refers to the statutory minimum wageand living wage standards of each operating location
to ensure that allemployees (including part-time employees) receive at least the livingwage standard. In addition, we regularly monitor and evaluate employeepay differences, including whether equal pay for equal work, whetherthere is no di?erence in pay between male and female employees, etc.,to ensure that male and female employees with the same position, workperformance and experience can receive equal pay.
Hengtong's Rank-Based Salary Model
Living wage: A minimum wage for a minimum number of working hours that ensures the basic needs of employees and their families are met.; Aliving wage includes base pay but excludes bonuses and overtime pay.
Employee Compensation and IncentivesHengtong regards talents as the core competitiveness of the company. We continue to improve the compensation and welfare mechanism,through good pay and welfare protection, fully mobilize the sta?'s work enthusiasm and motivation, to achieve the development of thecompany and the sta? to create a win-win situation.
Management andtechnical positions
Marketing PositionsOperation PositionsLogistics and
Administrative Positions
Implement rankmanagement, assessemployee ranks basedon job quali?cations,and determine jobcoe?cients based onranks
Determine salarystandards based onemployee capabilitiesand performance
The monthly salaryis based on the jobgrade, and the businesssettlement salary isadded to improve thesecurity of the salary
Determine the totalannual revenue basedon the completion ofperformance evaluationindicators such as salesvolume and marketdevelopment, andprovide key rewards tosales personnel whosigni?cantly exceedtheir targets to ensurethat performanceand revenue growsimultaneously
Assess employees' skilllevels and job levelsbased on their skills
Implement piece-rateand time-based salarymodels, and determineemployee salary levelsbased on local marketconditions
The salary standards aredetermined accordingto the local marketaverage, and throughthe implementation ofjob grade managementand quali?cationassessment, it isensured that the salarylevel matches the abilityand performanceIndexUnit2023Employee turnover rateTotal churn rate%16Employee turnover by gender
Male%12.60Female%3.40Employee turnover by age
Less than 30 years old%6.5030-40 years old%6.35Over 40 years old%3.15
2023
16,230 PersonsTotal number of employees
3,486 PersonsNew employees
Number of employees by genderNumber of employees by educational background
Number of employees by region
Number of employees by level
Number of employees by age
4,094
11,012
3,439
15,379
10,280
4,460
12,791
1,6684,282
12,136
Male employees
50 years old and above30 years old and below30 - 50 years old
Senior ManagementMid-level sta?Ordinary employees
Overseas employeesEmployees fromMainland China, HongKong, Macau and Taiwan
PhD and aboveMasterUndergraduateCollege degree and belowFemale employees
Foundation for Steady Growth
Low-Carbon Development:
Illuminating a Green FutureLeading with Innovation:
Creating Leading Quality
Caring For Employees: PromotingInclusive Development
Global Cooperation: DemonstratingHengtong's Responsibility
The company continues to improve its employee performance management and assessment system. Every quarter, it conducts acomprehensive evaluation of employees' work and performance based on dimensions such as learning ability, leadership, execution,knowledge and experience, and issues annual evaluation results at the end of the year to ensure the fairness, objectivity and rationality ofperformance evaluation.
Employee Motivation
Hengtong's Performance Evaluation TypeFor performance appraisal results, we help employees review their past performance and provide feedback and suggestions throughtimely communication and interviews with employees. If employees disagree with the performance evaluation results, they can appealand provide feedback according to the appeal process to ensure that the performance evaluation is fair and objective. During the reportingperiod, our regular performance and career development appraisals covered all employees.
On the other hand, Hengtong has formulated and actively implemented an employee stock ownership plan, covering a total of 246directors, senior managers, core technical personnel and technical business backbones of the company. In order to further stimulate thepotential of core backbone employees, we have set performance evaluation requirements and long-term service requirements at thecompany and individual levels for the stock ownership plan by formulating binding performance evaluation targets and multi-batch phasedunlocking mechanisms.
Hengtong's Employee Performance Complaint Process
Formulate an annual comprehensiveevaluation plan for employees, clarify thecoverage, form, indicators and content, andgoals of the evaluation, and evaluate andmotivate employees based on the completionof the goals
Management by objectives
Further increase the performanceallocation of department teams,combine team performancewith individual performance forcomprehensive evaluation, and givepriority to outstanding talents withspecial contributions
Team performance evaluation
Establish leadershipfeedback andemployeecon?rmationmechanisms,and maintaincommunication andfeedback betweenemployees andleaders throughregular reviews ofindividual and teamperformance goals bythe company
Agile Dialogue
Determine the performance level of employees by comprehensively considering factorssuch as their performance, work performance, contribution, rewards and punishments frommultiple dimensionsMultidimensional performance evaluation (360 -degree feedback method)
If employees have objections toperformance appraisal resultsor other aspects, they cancommunicate directly with theirsupervisors to resolve the issue
Supervisor communication
If the disagreement cannot beresolved after communicatingwith the supervisor, theemployee has the right to appealto the indirect superior or to theHuman Resources Department
Complaints to indirectsupervisor / HR department
The Human ResourcesDepartment is responsible forcoordinating and investigatingemployee complaints andpromptly informing thecomplainant of the ?nal results
Investigation and coordination
Hengtong Employee Salary Growth Mechanism
2023
Establish a management strategy for high-quality controlof remuneration through "assessment mechanismadjustment, company independent allocation, and groupsupervision and guidance"
Hengtong has formulated a salarygrowth mechanism based on outputvalue to achieve both e?ciency andsalary improvements
GrowthMechanism
CompensationStrategy
IncentiveOrientation
Guided by work performance (work results), we willimprove the competitiveness of the salary levels ofemployees with outstanding performance in themarket and enhance their incentives
Ratio of average pay betweenmale and female seniormanagement employees
Ratio of standard starting salary for female employeesto local minimum wage
Ratio of standard starting salary for male employeesto local minimum wage
1:1
1.751.75
Ratio of average salary betweenmale and female managementemployees
1:1
Ratio of average salarybetween male and femalegeneral employees
1:1
8283
Hengtong Optic-Electric Co., Ltd.2023 Environmental, Social and Governance ReportCompliance and Stability: The
Foundation for Steady Growth
Low-Carbon Development:
Illuminating a Green FutureLeading with Innovation:
Creating Leading Quality
Caring For Employees: PromotingInclusive Development
Global Cooperation: DemonstratingHengtong's Responsibility
In addition, Hengtong actively encourage employees to pursue further academic studies and training and certification, and provideemployees with additional external training and related expense reimbursement support to help employees improve their academicquali?cations and obtain relevant professional certi?cates.
Hengtong has established a mature and complete employee promotion mechanism, and set up a dual-channel career development pathin the management direction and professional and technical direction, so that every employee has the opportunity to exert their personalpotential. At the same time, we have also formulated a complete internal cross-position mechanism. According to the "Hengtong's RotationManagement Measures", it is clear that employees in di?erent positions and at di?erent levels can obtain internal rotation opportunities inthe company, helping employees to obtain comprehensive learning and practice to become compound talents.
During the reporting period, the situation of Hengtong's employee training is as follows:
Employee Promotion
Support for External Training and Academic Upgrading of Hengtong Sta?
Cooperate with ShanghaiJiaotong University to organizethe company's generalmanagers to participate in thesenior business administrationpresident and executive trainingclass
With Zhejiang University toorganize a reserve team ofsenior executives to participatein the advanced training courseof business administration
Cooperate with WuxiPolytechnic and othercolleges and universities tocarry out college educationimprovement projects forfront-line employees
The company encouragesrelevant skilled personnelto participate in externaltraining and certi?cation(welder certi?cate, electriciancerti?cate, PMP, projectmanager, etc.). After obtainingthe certi?cate, the employeecan reimburse the trainingexpenses in the company'sreimbursement system withthe signed and approvedexternal training applicationform and payment records
Cablescom, a subsidiaryof Hengtong Optic-ELectric provides trainingscholarships to all full-timeemployees and their children
Providing tuitionreimbursement or vacationsupport to employees whoobtain quali?cations relevantto their ?eld of work
University CooperationEducational advancementExternal Training
Training and academicadvancement rewards
2023
37.18
HoursAverage training hours per female employee247,846 PersonsTotal person times of training participants
557,825.10 Hours
Total training time
33.41
Hours
Average training hours per male employee
34.37
HoursAverage training hours per employeeSta? TrainingHengtong attaches great importance to the professional quality and professional ability improvement of employees, and has formulatedrelevant management systems such as the "Hengtong's Training Management Measures", continuously improving the employee trainingmanagement system, and providing a wealth of online and offline training courses for all employees. During the reporting period, wesuccessfully completed the annual employee training goal of more than 36 hours per person.
Hengtong's Employee Training Channels
Hengtong's Talent Training Mechanism
Supporting Growth and DevelopmentWe value the growth and development of every employee, provide employees with comprehensive and diversi?ed career developmentpaths, establish a smooth and sound employee promotion channel, and continuously improve employees' professional skills andknowledge levels through multi-dimensional and targeted training resources, promoting talent growth in multiple dimensions.
An online learning platform covering more than 16,000 employees at home and abroad, and launch more than 100 new courses;frequently hold o?ine classes, with company executives serving as resident lecturers
Through Hengtong Management College and Hengtong Craftsman College, we have achieved the goal of developing bothmanagement and professional talents, established a team of more than 800 certi?ed lecturers, built a training system of morethan 1,500 courses, integrated internal and external learning resources, and created high-quality training programs such as"executive lectures, high-level training, high-standard study tours, and advanced seminars."
A "triangle" training model of mentors, supervisors, and HR coaches, and set up reserve talent training projects for starting,escorting, leading, and sailing. We have guided the construction of reserve echelons for key management positions andprofessional and technical positions in each company, and helped employees develop their abilities throughout their careers.Every year, more than 50 employees move from professional and technical positions to management positions
Diverse learning methods
Precise training program
Talent echelon construction in colleges and universities
Sta? training
Internal o?ine trainingExternal online training
Special seminars, skills andknowledge sharing sessions, caseanalysis, system promotion, etc.
8485
Hengtong Optic-Electric Co., Ltd.2023 Environmental, Social and Governance ReportCompliance and Stability: The
Foundation for Steady Growth
Low-Carbon Development:
Illuminating a Green FutureLeading with Innovation:
Creating Leading Quality
Caring For Employees: PromotingInclusive Development
Global Cooperation: DemonstratingHengtong's Responsibility
Dragon Boat Festival ActivitiesMother's Day Themed Activities
College Student Orientation and OutreachReading Month ActivitiesSta? Table Tennis Competition
We advocate a working atmosphere of "happy work, happy life", and focus on creating and building ten cultural clubs, including the DanceClub, Singing Club, Workshop, Micro-Photography, Painting and Calligraphy Club, Poetry Club, Storytelling Club, Magic Hands, Warme-Home, and Cultivation Club. We actively carry out various cultural activities, festival activities and team-building activities to enrich thelives of employees, expand the communication platform, and enhance team cohesion.
Statutory Bene?ts
Five social insurances and one housing fund, nursing leave, annual leave and other statutoryholidays
Additional Bene?ts
In addition to basic salary, we provide a variety of variable remuneration such as bonuses andperformance rewards
Holiday and birthday gifts, high temperature allowance, apartment accommodation, mealallowance, reimbursement of round-trip transportation expenses during the Spring Festival
Free health check-up, sports facilities and equipment
Flexible working hours
Paternity leave (covers all employees)
Employee Care
We ensure the welfare of our employees and provide them with pension, medical, unemployment, work injury, maternity insurance andhousing provident fund in accordance with the law. In addition, we provide a variety of additional bene?ts and care to all employees on thebasis of meeting the statutory requirements of the country and the region.
Hengtong's Employee Communication Mechanism
Promoting Communication and CareHengtong always listens to employees sincerely, builds diversified employee communication and feedback channels, and fully meetsemployee needs through practical actions by providing rich employee care bene?ts.Employee CommunicationHengtong has established a sound and e?ective employee communication and consultation mechanism to further optimize employeecommunication channels and rational suggestion channels. In addition to the regular company email and hotline, it also actively carriesout activities such as micro-innovation, rational suggestions, and golden idea proposals for all employees, and thoroughly implementscommunication methods such as "leadership interviews", "democratic seminars", and "through trains" to provide employees with timelyfeedback and responses.
Hold employee representative meetings every year to actively listen to and review work reports, commend outstandingemployees, and track, rectify, and publicize employee proposals
Publicize and explain the latest systems related to employees' vital interests and matters of general concern toemployees, promptly rectify reasonable suggestions made by employees and publicize the recti?cation results
Workers' Congress
Establish a direct-line mechanism for rationalization suggestions for all employees
Suggestions involving the company's internal processes will be initially reviewed by the administrative department andforwarded to relevant departments for acceptance and follow-up implementation according to the type of suggestion
Suggestions involving the company's external processes will be initially reviewed by the Organization PerformanceDepartment and forwarded to relevant departments for acceptance and implementation according to the type ofsuggestion
Through train mechanism
Leaders of each department conduct interviews with employees, maintain regular communication with departmentemployees, and promptly understand employees' work and life situations as well as their di?culties and needs, andprovide them with humanistic care.
The Human Resources Department holds a symposium for campus recruited college students every quarter tounderstand their work and living conditions, collect reasonable suggestions and questions from employees, andpromptly feedback to the relevant departments for recti?cation
Interview Mechanism
Foundation for Steady Growth
Low-Carbon Development:
Illuminating a Green FutureLeading with Innovation:
Creating Leading Quality
Caring For Employees: PromotingInclusive Development
Global Cooperation: DemonstratingHengtong's Responsibility
Hengtong regularly conduct occupational health and safety riskassessments for employees during operations, including specialsafety inspections, hidden danger investigation and recti?cation,emergency plan review and revision, etc. We conduct preventiveanalysis of potential safety hazards in advance, timely discoverand eliminate safety hazards, formulate emergency rescueplans, establish emergency rescue teams, and conduct regularemergency drills. We ensure that all staff are equipped withcomplete safety protection equipment, and set up safety warningsigns around places with potential safety hazards to minimizesafety risks in production workplaces and e?ectively improve thecompany's overall risk prevention and control capabilities.
Hengtong's production safety measures
Hengtong's Production Safety Management Mechanism
Occupational Health and SafetyHengtong always puts the health and safety of its employees first, strictly abides by the "Work Safety Law of the People's Republic ofChina", "Occupational Disease Prevention Law of the People's Republic of China" and the laws, regulations and regulatory requirementson occupational health in the place of operation, and has formulated a sound and complete occupational health and safety managementsystem, committed to creating a healthy, safe and comfortable working environment. During the reporting period, a total of 6 subsidiariespassed the ISO 45001 occupational health and safety certi?cation.
Safety Management
Hengtong has established a complete safety production management mechanism, with the board of directors as the highest responsiblebody for the company's safety management-related matters. It determines the safety production responsibilities and authorities of eachrelevant personnel, establishes a corresponding responsibility system, and implements safety management measures in all aspects fromprocess management, target management, information management, and supplier and contractor management.
Equipped with earplugs, masks, protectiveglasses, high temperature protective clothingand other safety devicesPost warning signs and install protective nets onhigh-temperature production equipmentAll high-speed running devices are equipped withinfrared alarm systems. In case of emergency, theproduction line will stop running immediately
During the reporting period, Hengtong's Cablescom organized employees and their families to participate in amusement park activities,and prepared a variety of surprises and gifts for employees' children on the day of the event, creating a friendly and happy atmosphere,providing employees with more time to spend with their families, and helping employees balance work and life.
Together with the Women and Equality Section of the Zaragoza City Council, Hengtong's Cablescom, in partnership with the IDiA cluster,participated in the #MujeresenDigital cycle, where, through round tables and conferences, women's experiences in the digital world,innovation proposals and the keys to female entrepreneurship in this sector were presented.
Case
Case
Cablescom, a subsidiary of Hengtong, held a Family Day event
Cablescom, a subsidiary of Hengtong, held the #Women in digital event
Cablescom Family Day Event
Carry out safety management on suppliers and contractors to ensure that the products and services they provide meetthe company's safety production requirements
Establish a production safety information management system, collect and analyze relevant data and informationon enterprise production safety, and provide support for production safety decision-makingEstablish clear safety production goals and supervise and evaluate the implementation of the goals
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Low-Carbon Development:
Illuminating a Green FutureLeading with Innovation:
Creating Leading Quality
Caring For Employees: PromotingInclusive Development
Global Cooperation: DemonstratingHengtong's Responsibility
Hengtong's 2023 Safety Training and Emergency Drills
IndexUnit2022 2023Work-related fatalitiesPeople00Number of safety emergency drillsSecond-rate392407Number of safety training sessionsSecond-rate182211Total safety training hoursHour364422
Safety Training
In order to further deepen employees' safety awareness and emergency incident handling capabilities, we formulate an annual safetytraining plan at the beginning of each year, carry out safety-related activities and safety knowledge training and education such as "SafeProduction Month" and "Safety Consultation Day" for all employees, enhance employees' safety awareness and safe operation skills, andcreate a good atmosphere of "everyone pays attention to safety."
safety drills and trainings for all employeesthrough a combination of online ando?ine methods
During the Reporting Period
Formulate an annualtraining plan and signa safety responsibilityletter
Conduct safetytraining on theuse of hazardouschemicals
Carry out productionsafety training andsafety accident warningtraining before andafter the National DayCarry out safetyproduction monthactivities, safetyconsultation days, and?re evacuation drills
Early 2023
April
June
October
November
Carry out ?re escape drillsand physical examinationsfor all employees
Conduct occupational healthand safety risk inventory
Hire a third-party agency toconduct safety monitoring of noise,temperature, lighting, etc.
We also require suppliers to provide a safe and healthy working environment for all employees at the same standards as Hengtong, andto take e?ective measures to prevent potential health and safety accidents and occupational injuries, or diseases that occur or are causedduring work.
Conduct an occupational safetyassessment reportHengtong's Occupational Health and Safety Risk Assessment Frequency
Hengtong's Supplier Health and Safety Standards
Quarterly or half-yearlyEvery yearEvery three years
Suppliers should provide regular and formal safety training to employees, and corrective and preventivemeasures should be compiled and properly kept
Suppliers should have a dedicated organization, led by a company-level leader and with at least one workerrepresentative, to evaluate and control factors that may cause harm, such as "three wastes" and chemicals,special equipment, and production equipment, and develop appropriate procedural documents and preventionplans to reduce risks and improve the working environment
Suppliers should provide appropriate personal protective equipment to employees free of charge, haveemergency plans in place, and provide emergency first aid and assist workers in obtaining follow-up medicaltreatment if work injuries occur
Suppliers should provide all employees with free clean toilet facilities, drinking water, and suitable dining andresting spaces. Regardless of the nature of the dormitory, suppliers should ensure that any dormitory facilitiesprovided to employees are clean, safe, and meet the basic needs of employees
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Foundation for Steady Growth
Low-Carbon Development:
Illuminating a Green FutureLeading with Innovation:
Creating Leading Quality
Caring For Employees: PromotingInclusive Development
Global Cooperation: DemonstratingHengtong's Responsibility
As a global leading provider of optical communication and powertechnology solutions, Hengtong has always taken serving globalsustainable development as its mission. Hengtong is committed topromoting wider access to power and communication networksaround the world through advanced technology and high-qualityproducts. Hengtong's goal is not only to help more people aroundthe world enjoy the convenience brought by modern technology,but also to promote the exchange and development of the conceptand practice of global sustainable development. Hengtong activelyresponds to national policies, and supports sustainable develop-ment efforts in China and overseas markets.
Global Action to Promote Sustainable DevelopmentEmpowering Developing Countries: Innovation and ResponsibilityGo Hand in HandSupporting Developed Countries: Promoting Green Transformationand Social ResponsibilityDeepening Sustainable Development: Hengtong's Ecological andSocial Responsibility Practices in the Chinese Market
Global Cooperation:
DemonstratesHengtong's Responsibility
Foundation for Steady Growth
Low-Carbon Development:
Illuminating a Green FutureLeading with Innovation:
Creating Leading Quality
Caring For Employees: PromotingInclusive Development
Global Cooperation: DemonstratingHengtong's Responsibility
Hengtong actively practices the concept of global sustainable development and is committed to addressing the challenges of globalclimate change and energy transformation through cross-border cooperation and technology output. Hengtong works closely withgovernments, enterprises and international organizations to promote the realization of sustainable development goals. On multipleinternational platforms, Hengtong has demonstrated its innovative practices in low-carbon transformation, green energy and supplychain optimization, re?ecting its responsibility and contribution as a Chinese company in the global sustainable development process.In addition, the company has also actively invested in public welfare undertakings, donating 8.3583 million yuan to external partiesduring the year to support the sustainable development of society and the environment with practical actions.Case
Actively participate in COP28 to promote global energy transformation and o?shorewind power grid connectionDuring the 28th Conference of the Parties to theUnited Nations Framework Convention on ClimateChange (COP28), Hengtong delivered a speechentitled "Improving the Global Supply ChainSystem and Promoting Offshore Wind Power GridConnection" at the "China Corner" side event. Thespeech explored the opportunities and challengesof energy transformation and called for globalcooperation to optimize the supply chain systemand promote efficient offshore wind power gridconnection. Hengtong also participated in themain venue and multilateral meetings in more thana dozen countries, and had in-depth exchangeswith global policymakers and industry experts topromote climate action and energy transformation,demonstrating its positive contribution andleadership in global sustainable development.
Global Action to Promote Sustainable Development
Case
Showcasing Low-carbon Transformation Achievements at the Shanghai InternationalCarbon Expo and Promoting Sustainable Development
During the first Shanghai International CarbonNeutrality Expo, Hengtong actively participated ina number of roundtable forums and had in-depthexchanges with leading industry organizations. Thecompany shared its valuable experience in settinginternal sustainable development goals throughscience-based targets (SBTi) and discussed theimportance of improving the quality of climateinformation disclosure. Hengtong demonstrated itsinnovative achievements in low-carbon transformationand further consolidated its leadership in sustainabledevelopment. These participations and demonstrationsdemonstrate the company's firm commitment toaddressing climate change and promoting greentransformation, and promote environmental protectioncooperation and progress within the industry.
Case
SBTi Initiative at the CIIE and Demonstration of Hengtong's Commitment to CarbonNeutrality
During the 6th China International Import Expo, Hengtong Submarine Power Cable Co., Ltd., a subsidiary of Hengtong, obtainedthe ISO 14064 Greenhouse Gas Veri?cation Statement Certi?cate and ISO 14067 Product Carbon Footprint Veri?cation Statementissued by international certification bodies, and officially announced its joining the SBTi Science-Based Target Initiative,demonstrating its ?rm commitment to carbon neutrality and low-carbon sustainable development.
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Low-Carbon Development:
Illuminating a Green FutureLeading with Innovation:
Creating Leading Quality
Caring For Employees: PromotingInclusive Development
Global Cooperation: DemonstratingHengtong's Responsibility
Case
MBG, a subsidiary of Hengtong, practices social responsibility and contributes tocommunity welfare
Donate funds and items to local orphanages to ful?ll social responsibilities through practical actions
Partner with the local Red Cross to organize blooddrives to support public health programs and fostercare for others
Donate dairy cows to the community government during localtraditional festivals to support community charity activities
Hengtong is committed to promoting the construction and upgrading of power and communication infrastructure in developing countries,narrowing the digital divide and improving the quality of life and sustainable development level of local communities through innovativetechnologies and active social responsibility practices. Hengtong actively promotes the popularization of clean energy and smart grids inAfrica, Asia, Latin America and other regions, and provides e?cient and reliable power and communication solutions. In addition, Hengtonghas demonstrated its corporate social responsibility and ?rm commitment to global sustainable development through a series of publicwelfare activities and community construction projects, contributing to the common progress of local social economy.
While promoting the popularization of electricity and communications, Hengtong actively integrates community social responsibility intoits corporate vision and goals. The company not only focuses on the construction of technology and infrastructure, but also supports thedevelopment of the community in various ways. It also actively participates in environmental protection and sustainable development projects,and is committed to improving the ecological environment of the community. Through these e?orts, the company aims to achieve the dual goalsof technology empowerment and community co-development, and contribute to the grand vision of global sustainable development.
The company participated in the ASEAN WIND ENERGY 2023 and won the 2023 PowerCable Technology Award from the organizer. The award recognizes the company'soutstanding contributions to power cable technology innovation and wind energy. Thecompany focuses on the research and development of e?cient and reliable power cablesolutions and is committed to promoting the construction and upgrading of clean energyinfrastructure. By continuously improving product performance and technical level, thecompany not only provides strong support for the widespread application of renewableenergy, but also demonstrates a firm commitment to social sustainable development.In the future, the company will continue to deepen technological innovation, activelyparticipate in the global clean energy industry, and jointly respond to the challenges ofclimate change.
CasePromoting the development of clean energy and winning the Power Cable Technology Award
At the 23rd Africa Energy Exhibition in South Africa, the company won the "MOST CREATIVE SWAG" award for its high-voltagecables, OPGW, submarine cables, photovoltaic cables, wind power cables, smart grids and energy storage projects and otherproducts and comprehensive system solutions. This award not only highlights the company's outstanding performance in the ?eldof green technology and innovation, but also re?ects the company's positive contribution to promoting the popularization of cleanenergy and the development of smart grids. Through technological innovation, the company continues to ful?ll its environmentalprotection and social responsibilities and contribute to the sustainable development of Africa and the world.
CaseInnovation drives sustainable development and wins the "Most Creative" award
Empowering Developing Countries: Innovationand Responsibility Go Hand in Hand
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Hengtong Optic-Electric Co., Ltd.2023 Environmental, Social and Governance ReportCompliance and Stability: The
Foundation for Steady Growth
Low-Carbon Development:
Illuminating a Green FutureLeading with Innovation:
Creating Leading Quality
Caring For Employees: PromotingInclusive Development
Global Cooperation: DemonstratingHengtong's Responsibility
Case
Hengtong wins Morocco's "Mutual Assistance" Award, highlighting corporate socialresponsibilityAt 23:11 local time on September 8, 2023 (6:11 Beijing time onSeptember 9), a magnitude 7.0 earthquake occurred in Morocco.Local buildings were severely damaged, and electricity andcommunications were interrupted due to the disaster. Thecompany donated and provided necessary support through theMoroccan Electricity Association FENELEC
At the opening ceremony of the ELEC EXPO held in Casablanca,FENELEC, the Moroccan Electricity Association, awardedHengtong the "Helping Each Other" trophy, commendingHengtong for its immediate donation to the Moroccanearthquake and its timely support to the disaster-stricken areas.
Letter of Appreciation from the Moroccan Electricity Association
Case
Aberdare, a subsidiary of Hengtong, is committed to community care and childassistance, ful?lling its social responsibilityIn 1998, Aberdare and the South African Association for theDisabled jointly established a joint venture, Abercare, torecruit physically disabled people from all walks of life in thelocal community to provide paid work and to hold socialevents on important holidays such as Christmas.
The Sinethemba Project is a public welfare project that providesa safe haven for abandoned, abused and neglected children.Aberdare provides monthly sponsorship to help with dailyexpenses and needs. Every year, Aberdare also hosts a Christmasparty for the children in the children's home.
Case
Voksel, a subsidiary of Hengtong, actively integrates into the community and builds aharmonious society
CaseJoin hands with Suez Canal University to help graduates ?nd employmentThe Egyptian company of Hengtongsigned a cooperation agreement with SuezCanal University to jointly improve theemployability and career development oflocal graduates. By providing internshipopportunities, professional training andcareer guidance, the company actively laysa solid foundation for the careers of youngtalents. This cooperation not only helpsgraduates integrate into the workplacesmoothly, but also re?ects the company'sfirm commitment to promoting thedevelopment of education and fulfillingcorporate social responsibility.
Voksel has always been committed topromoting sustainable developmentin the local community. In April 2023,on the occasion of the company's 52ndanniversary, Voksel presented a gift to theresidents of the nearby community tostrengthen its ties with the community. Atthe same time, Voksel employees activelyparticipated in volunteer services to supportcommunity development. The companyalso provided assistance in many aspects,including supporting local religious sitesand improving sanitary conditions,demonstrating the company's firmcommitment and social responsibility inpromoting community well-being.
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Hengtong Optic-Electric Co., Ltd.2023 Environmental, Social and Governance ReportCompliance and Stability: The
Foundation for Steady Growth
Low-Carbon Development:
Illuminating a Green FutureLeading with Innovation:
Creating Leading Quality
Caring For Employees: PromotingInclusive Development
Global Cooperation: DemonstratingHengtong's Responsibility
Hengtong actively practices the concept of sustainable development in the Chinese market, responds to the call for rural revitalization, andhelps ecological protection and rural revitalization through actions such as a?orestation, river patrols and garbage sorting. Hengtong alsopays attention to vulnerable groups in society and actively participates in public welfare undertakings, demonstrating its ?rm commitmentto social responsibility.
Hengtong not only leads the industry in technology and products, but also demonstrates a high degree of corporate social responsibility.Through these e?orts, Hengtong has further deepened its connections with the rest of the world and injected the wisdom and strength of Chinesecompanies into the concept of global sustainable development.
Deepening Sustainable Development: Hengtong'sEcological and Social Responsibility Practices in theChinese Market
Hengtong focuses on providing leading optical communications and power technologies in developed countries such as the EuropeanUnion, helping these countries achieve green energy transformation and smart city construction. Through close cooperation with localgovernments and enterprises, Hengtong promotes technological innovation and supports Europe's leading position in digitalization andenvironmental protection. At the same time, Hengtong also actively participates in community services and social responsibility activities,strengthens its contribution to society, and further promotes the realization of sustainable development goals in various places.
Case
Case
Cablescom, a subsidiary of Hengtong, joins hands with the Red Cross to promotevolunteer services
Hengtong's sustainable development contribution in Portugal's o?shore wind power project
Cablescom actively supports employeesto participate in the Volunteer Day event,working hand in hand with the Zaragoza RedCross. The event aims to improve communitywelfare and strengthen the fulfillment ofsocial responsibility by organizing employeesto participate in various public welfareprojects. The company's employees activelyparticipated in community service during theVolunteer Day event, providing assistance tolocal residents and enhancing the society'sattention and support for public welfare. Thisinitiative of Cablescom not only reflects itscommitment to social contribution, but alsoencourages employees to actively participatein volunteer services and demonstratesthe company's positive role in promotingcommunity development.
In Portugal, Hengtong participated in theconstruction of an offshore floating windpower output system project, ?lling the gapin the construction of offshore wind poweroutput systems by Chinese companies inEurope, and realizing and meeting the cleanenergy supply needs of more than 60,000households across the ocean. Through thisproject, Hengtong not only promoted thedevelopment of green energy in Portugal,but also demonstrated the capabilities andcommitment of Chinese companies in theglobal energy transition. The successfulimplementation of this project not onlymet the local demand for clean energy, butalso laid a solid foundation for cooperationin similar projects in the future, reflectingHengtong's positive contribution to globalsustainable development.
Supporting Developed Countries: Promoting GreenTransformation and Social Responsibility
CasePractice the concept of sustainable development and promote youth volunteer service
Hengtong took the Arbor Day as anopportunity to organize more than 50young volunteers to plant trees and put intopractice the development concept of "Greenwater and green mountains are gold andsilver mountains". In addition, the companycontinues to carry out youth volunteerservice actions to help rural revitalization,and has organized more than 50 river patrols,garbage classi?cation publicity and civilizedcity construction activities, demonstrating our?rm commitment to social responsibility andmaking positive contributions to promotingecological protection and sustainablecommunity development.
Case
Caring for the disadvantaged groups in society and demonstrating corporateresponsibility
Hengtong Alpha Optic-Electric, a subsidiary of Hengtong Optic-Electric, has always sparedno e?ort in ful?lling its social responsibilities and actively participated in social welfareundertakings. With its outstanding performance in supporting social welfare undertakings,the company won the "Suzhou Social Welfare General Hospital Love Contribution Award".This award is not only an affirmation ofour long-term care for vulnerable groupsin society and support for social welfareundertakings, but also an encouragementfor us to continue to practice the concept of"people-oriented, giving back to society".In the future, Hengtong will continue toleverage its corporate advantages, promotemore charity activities, and strive to build amore inclusive and caring society.
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Hengtong Optic-Electric Co., Ltd.2023 Environmental, Social and Governance ReportAppendix
DisclosuresDisclosure issuesCorresponding chapter3-2List of substantive issues
Compliance management is the foundation for steadydevelopment - communication with stakeholders3-3Management of substantive issues
Compliance management is the foundation for steadydevelopment - communication with stakeholdersGRI 201: Economic Performance 2016
201-2
Financial impacts and other risks and opportunities of climatechange
Low-carbon development illuminates a green future:
climate change and dual carbon
GRI 202: Market Performance 2016
202-1
Ratio of standard starting salary to local minimum wage bygender
Caring for employees and promoting inclusivedevelopment - employee compensation and incentivesGRI 203: Indirect Economic Impacts 2016203-1Infrastructure investment and supporting services
Global co-creation demonstrates Hengtong'sresponsibilityGRI 204: Procurement Practices 2016
204-1Proportion of spending from local suppliers
Leading with innovation and creating leading quality -sustainable supply chainGRI 205: Anti-corruption 2016205-1Operations that have undergone corruption risk assessments
Compliance management is the foundation for steadydevelopment - adhering to business ethics205-2
Communication and training on anti-corruption policies andprocedures
Compliance management is the foundation for steadydevelopment - adhering to business ethics
GRI 206: Unfair Competition Practices 2016206-1
Legal actions against anti-competitive behavior, antitrust andantitrust practices
Compliance management is the foundation for steadydevelopment - adhering to business ethicsGRI 302: Energy 2016302-1Energy consumption within the organization
Low-carbon development illuminates a green future -energy e?ciency and transformation302-3Energy intensity
Low-carbon development illuminates a green future -energy e?ciency and transformation302-4Reduce energy consumption
Low-carbon development illuminates a green future -energy e?ciency and transformation302-5Reduce the energy requirements of products and services
Low-carbon development illuminates a green future -energy e?ciency and transformation
GRI 303: Water and Wastewater 2018303-2Managing impacts associated with drainage
Low-carbon development illuminates a green future -water-saving transformation and optimization303-3Water Collection
Low-carbon development illuminates a green future -water-saving transformation and optimization303-4drain
Low-carbon development illuminates a green future -water-saving transformation and optimization303-5Water consumption
Low-carbon development illuminates a green future -water-saving transformation and optimizationGRI 305: Emissions 2016305-1Energy direct (scope 1) GHG emissions
Low-carbon development illuminates a green future:
climate change and dual carbon305-2Energy indirect (scope 2) GHG emissions
Low-carbon development illuminates a green future:
climate change and dual carbon
Appendix
DisclosuresDisclosure issuesCorresponding chapter
GRI 2: General Disclosures 2021Organizations and their reporting practices2-1Organization detailsAbout this report2-2Entities included in the organization's sustainability reportAbout this report2-3Reporting period, reporting frequency and contact personAbout this reportActivities and Workers2-6Activities, value chains and other business relationshipsAbout Hengtong2-7Sta?
Caring for employees and promoting inclusivedevelopment - talent attraction and retentionGovernance2-9Governance Structure and Composition
Compliance management is the foundation for steadydevelopment - corporate governance2-10Nomination and selection of the highest governance body
Compliance management is the foundation for steadydevelopment - corporate governance2-12
The highest governance body's oversight role in managingin?uence
Compliance management is the foundation for steadydevelopment - corporate governance2-13Delegating responsibility for managing impacts
Compliance management is the foundation for steadydevelopment - corporate governance2-14The highest governance body's role in sustainability reporting
Compliance management, the foundation for steadydevelopment - ESG governance2-16Communication of key concerns
Compliance management is the foundation for steadydevelopment - corporate governance2-17Highest governance body's shared knowledge
Compliance management, the foundation for steadydevelopment - ESG governance2-19Remuneration Policy
Caring for employees and promoting inclusivedevelopment - employee compensation and incentives
Strategy, policy and practice2-22Strategic statement on sustainable development
Compliance management, the foundation for steadydevelopment - ESG governance2-23Policy commitment
Compliance management is the foundation forsteady development - ESG governance, stakeholdercommunication, and adherence to business ethics2-24Integration policy commitment
Compliance management is the foundation forsteady development - ESG governance, stakeholdercommunication, and adherence to business ethics2-26Mechanisms for seeking advice and raising concerns
Compliance management is the foundation for steadydevelopment - adhering to business ethicsStakeholder Engagement2-29Methods for stakeholder engagement
Compliance management is the foundation for steadydevelopment - communication with stakeholders2-30Collective Bargaining Agreement
Caring for employees and promoting inclusivedevelopment - talent attraction and retentionGRI 3: Material Topics 20213-1Process for Identifying Substantive Issues
Compliance management is the foundation for steadydevelopment - communication with stakeholders
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DisclosuresDisclosure issuesCorresponding chapter
GRI 406: Anti-discrimination 2016406-1Incidents of discrimination and corrective actions taken
Compliance management is the foundation for steadydevelopment - adhering to business ethics
GRI 407: Freedom of Association and Collective Bargaining 2016407-1
Operations and suppliers where freedom of association andcollective bargaining rights may be at risk
Caring for employees and promoting inclusivedevelopment - talent attraction and retentionGRI 408: Child Labor 2016408-1Operations and suppliers with signi?cant risk of child labor
Caring for employees and promoting inclusivedevelopment - talent attraction and retentionGRI 409: Forced or Compulsory Labor 2016409-1
Operations and suppliers at signi?cant risk for incidents offorced or compulsory labor
Caring for employees and promoting inclusivedevelopment - talent attraction and retention
GRI 413: Local Communities 2016
413-1
Operations with local community engagement, impactassessments and development plans
Global co-creation demonstrates Hengtong'sresponsibility
GRI 414: Supplier Social Assessment 2016414-1New suppliers screened using social ratings
Leading with innovation and creating leading quality -sustainable supply chainGRI 416: Customer Health and Safety 2016416-1
Health and Safety Impact Assessments for Product and ServiceCategories
Leading with innovation, creating leading quality -sustainable supply chain, quality control416-2
Non-compliance incidents related to health and safety impactsof products and services
Leading with innovation, creating leading quality -sustainable supply chain, quality control
GRI 417: Marketing and Identity 2016417-1Requirements for product and service information and labeling
Leading with innovation, creating leading quality -responsible sales417-2
Violations involving product and service information andlabeling
Leading with innovation and creating leading quality -responsible sales417-3Violations involving marketing communications
Leading with innovation, creating leading quality -responsible salesGRI 418: Customer Privacy 2016418-1
Substantial complaints regarding customer privacy and databreaches
Leading with innovation, creating leading quality -customer communication and service
DisclosuresDisclosure issuesCorresponding chapter
305-4Greenhouse gas emission intensity
Low-carbon development illuminates a green future:
climate change and dual carbon305-5Greenhouse gas emissions reduction
Low-carbon development illuminates a green future:
climate change and dual carbon305-7
Nitrogen oxides (NOX), sulfur oxides (SOX) and other signi?cantgas emissions
Low-carbon development illuminates a green future:
climate change and dual carbonGRI 306: Waste 2020306-2Management of signi?cant waste-related impacts
Low-carbon development illuminates a green future -
Emission management and recycling306-3Waste generated
Low-carbon development illuminates a green future -
Emission management and recycling306-4Waste diverted from disposal
Low-carbon development illuminates a green future -
Emission management and recycling
GRI 308: Supplier Environmental Assessment 2016
308-1
New suppliers screened using environmental assessmentdimensions
Leading with innovation and creating leading quality -
sustainable supply chainGRI 401: Employment 2016401-1New employee hiring rate and employee turnover rate
Caring for employees and promoting inclusive
development - talent attraction and retention401-2
Bene?ts provided to full-time employees (not includingtemporary or part-time employees)
Caring for employees and promoting inclusive
development - promoting communication and care403-3Parental leave
Caring for employees and promoting inclusive
development - promoting communication and careGRI 403: Occupational Health and Safety 2018403-1 Occupational Health and Safety Management System
Caring for employees and promoting inclusive
development?Occupational health and safety403-2
Hazard identi?cation, risk assessment and incidentinvestigation
Caring for employees and promoting inclusive
development?Occupational health and safety403-3 Occupational Health Services
Caring for employees and promoting inclusive
development?Occupational health and safety403-5 Worker occupational health and safety training
Caring for employees and promoting inclusive
development?Occupational health and safety403-6 Promoting worker health
Caring for employees and promoting inclusive
development?Occupational health and safety403-7
Prevent and mitigate occupational health and safety impactsdirectly related to business relationships
Caring for employees and promoting inclusive
development?Occupational health and safety403-9Work Injury
Caring for employees and promoting inclusive
development?Occupational health and safetyGRI 404: Training and Education 2016404-1Average hours of training per employee per year
Caring for employees and promoting inclusive
development - helping growth and development404-2Employee skills upgrading and transition assistance programs
Caring for employees and promoting inclusive
development - helping growth and development404-3
Percentage of employees receiving regular performance andcareer development reviews
Caring for employees and promoting inclusive
development - helping growth and developmentGRI 405: Diversity and Equal Opportunity 2016405-1Diversity of governance bodies and sta?
Caring for employees and promoting inclusive
development - talent attraction and retention405-2
Ratio of basic wages and remuneration between men andwomen
Caring for employees and promoting inclusive
development - employee compensation and incentives