XINAO

Environmental, Social and

Governance (ESG) Report

2024

CONTENTS

Navigating Low-carbonand Recycling

Tackle Climate ChangePollutant DischargeWaste DisposalConservation of Ecosystems and BiodiversityEnvironmental Compliance ManagementEnergy UtilizationWater Resources UtilizationCircular Economy

Company Profile05Direction of the Report02Letter from the Chairman04

ESG Data Sheets and Notes60

Guide Index67

Assessment of Materiality of TopicsDouble Materiality AnalysisDue Diligence, Stakeholder CommunicationConclusion of the Materiality Analysis of the Topics

Arrangement for CorporateESG Governance

Governance Structure for SustainabilityStrategies & Actions related to SustainabilityManagement of Impact, Risk and OpportunityMechanisms of Supervision and Appraisal

Join Hands for Integrationand Mutual BenefitEmployeesSafety and Quality of Products and ServicesData Security & Customer PrivacyInnovation-DrivenSupply Chain SecurityRural Revitalization and Social Contribution

Empowering GovernanceExcellenceAnti-Commercial Bribery and Anti-CorruptionAnti-Unfair Competition

CompanyProfile

Assessment ofMateriality of Topics

Arrangement forCorporate ESG Governance

Navigating Low-carbon and Recycling

Join Hands for Integrationand Mutual Benefit

EmpoweringGovernance Excellence

ESG Data Sheetsand Notes

GuideIndexLetter fromthe ChairmanDirection ofthe Report

Environmental, Social andGovernance (ESG) Report 2024

This is the third of Zhejiang Xinao Textiles Inc. whichdiscloses to stakeholders the concepts, management approaches, efforts and achievements on ESG topicsin its operations.This report covers Zhejiang Xinao Textiles Inc. and its subsidiaries (hereinafter referred to as the "Company",which is consistent with the scope of the consolidated financial statements in the annual report of XINAO(stock code: 603889), unless otherwise stated.

Direction of the Report

Scope of the Report

This is an annual report covering the period from 1 January 2024 to 31 December 2024. Some infor-mation that goes beyond this scope is indicated where involved.Time Frame

This report is prepared in accordance with the

andthe

published by the Shanghai Stock Exchange, whiletaking the United Nations Sustainable Development Goals (SDGs) as a guiding reference for thereport.

Basis of the Report

Notes on Data

Note on ESG data: The ESG data and information in the report are from the official records of the

actual operations of the Company and its subsidiaries.

Note on financial data: The financial data in this report is in RMB. In case of any inconsistency

between the financial data and the financial report, the annual financial report shall prevail.

Access to the Report

This Report is available as an E-document in both simplified Chinese and English versions. In theevent of any ambiguity in the understanding of the two texts, the simplified Chinese version shallprevail. Both versions of the Report can be downloaded from the Company's WeChat Official Ac-count (XINAO TEX) and the website of Shanghai Stock Exchange (http://www.sse.com.cn/).

ContactXINAO ESG Management Committee Phone: +86 573 88455801 E-mail: esg@xinaotex.comAddress: Guanzhuang Bridge, Chongfu Town, Tongxiang City, Zhejiang Province, China

ZHEJIANG XINAO TEXTILES INC.ZHEJIANG NEW CHUWA WOOL CO., LTD.ZHEJIANG HOUYUAN TEXTILE INC.NINGXIA XINAO CASHMERE CO., LTD.XINAO TEXTILES (YINCHUAN) CO., LTD.JIAXING FEIXUN SPECIAL FIBER TECHNOLOGY CO., LTD.ZHEJIANG HONGDE CASHMERE PRODUCTS CO., LTD.ZHEJIANG TAIYUAN TEXTILES CO., LTD.SHANGHAI JINGHENG TEXTILE TECHNOLOGY CO., LTD.NINGXIA MODERN TEXTILE INDUSTRY RESEARCH INSTITUTE CO., LTD.TODD&DUNCAN LIMITEDTAIYUAN INTERNATIONAL(AUSTRALIA)PTY LIMITEDXINAO (HONGKONG) LIMITEDXINAO TEXTILES（EUROPE）S.R.L.XINAO TEXTILES (VIETNAM) COMPANY LIMITEDXINAO TEXTILES UK LIMITEDTODD & DUNCAN KINROSS LIMITED

XINAO TEXNEW CHUWAHOUYUAN TEXXINAO CASHMEREXINAO YINCHUANJX FEIXUNHONGDE CASHMERETAIYUAN TEXJH TECHTEXTILE INSTITUTET&D UKTAIYUAN INTLXINAO HKXINAO EUXINAO VNXINAO UKT&D KINROSS

Full NameShort Name

Environmental, Social and Governance (ESG) Report

Guidelines No. 1 of Shanghai Stock Exchange for Self-Regulation of Listed Companies – Standardized Operation (Revised in December 2023)

Guidelines No. 14 of Shanghai Stock Exchange forSelf-Regulation of Listed Companies – Sustainability Report (Trial) (April 2024) (the “Guidelines”)

CompanyProfile

Assessment ofMateriality of Topics

Arrangement forCorporate ESG Governance

Navigating Low-carbon and Recycling

Join Hands for Integrationand Mutual Benefit

EmpoweringGovernance Excellence

ESG Data Sheetsand Notes

GuideIndexLetter fromthe ChairmanDirection ofthe ReportEnvironmental, Social andGovernance (ESG) Report 2024

Direction of the Report

Principles Governing the ReportPrinciples for Defining the contentof the Report

Principles for the Quality of the Report

Taking into account the characteristics of theindustry in which the Company operates and thebusiness it conducts, topics of materiality relatedto management that are of concern to variousstakeholders have been identified in this reportand are the focus of reporting in this report.The process of analyzing the materiality topicsand the results are detailed in the chapter of “As-sessment of Materiality of Topics” of this report.

This is an annual report. The Company endeavors to publishthe report as soon as possible after the end of the reportingyear in order to provide stakeholders with timely informationfor decision-making.Context of Sustainability

The scope of disclosures in this report is consis-tent with the scope of the Company's consolidat-ed financial statements.

Completeness

Timeliness

To the extent possible, the accuracy of the information contained inthis report is ensured. For the quantitative information, the caliber ofthe data, the basis of calculation and the assumptions have beenexplained to ensure that the margin of error of the calculation willnot mislead the users of the information. The quantitative informa-tion and notes are detailed in the chapter of “ESG Data Sheets andNotes” of this report.The Board of Directors of the Company guarantees that the con-tents of the Report are free from false records, misleading state-ments or material omissions.

Accuracy

The contents of this Report reflect objective and truthful facts,and disclose both positive and negative information related tothe Company in an impartial manner.

Balance

The statistics and disclosure method of the same quantitative dis-closure items in this report are as consistent as possible across dif-ferent reporting periods; if there is a change in the method of datacollection, measurement or calculation, the relevant data will be ret-rospectively adjusted, and the circumstances and reasons for theadjustment will be explained in the notes to the report, so as toenable stakeholders to conduct a meaningful analysis and assessthe development trend of the Company's ESG data level.

Comparability

The cases and data in this Report come from the original recordsor financial reports of the actual operation of the Company, andthe sources of the disclosed data and the calculation process aretraceable and supportive of external verification.

Verifiability

This report contains tables, model diagrams, and a glossary ofterms as a supplement to the text so that stakeholders can betterunderstand the text. To facilitate faster access to information forstakeholders, this report provides a table of contents and a guideindex of ESG standards.

Clarity

This Report discloses key quantitative disclosures and, tothe extent possible, historical data.

Quantification

CompanyProfile

Assessment ofMateriality of Topics

Arrangement forCorporate ESG Governance

Navigating Low-carbon and Recycling

Join Hands for Integrationand Mutual Benefit

EmpoweringGovernance Excellence

ESG Data Sheetsand Notes

GuideIndexLetter fromthe Chairman

Direction ofthe ReportEnvironmental, Social andGovernance (ESG) Report 2024

To be a warm fashionenterprise with long-termperseverance that laststhrough the ages

Letter from the Chairman

This is the third ESG report released by XINAO. I cherish thisopportunity to share with you the ESG actions of XINAO overthe past year. Through self-examination and mutual learning,we are moving towards a more responsible and sustainabledirection, and a company with a warm heart.Over the past year, we have carried out a series of carbonreduction initiatives centered on the goal of “carbon peakbefore 2030 and carbon neutrality by 2050”. For example,we have added new photovoltaic power generation equip-ment in the plant, retrofitted equipment and facilities such asthe air compression station, air-conditioning system, andsteam system, and carried out energy-saving technologiessuch as waste heat recovery, achieving a reduction of 30% inGHG emissions per unit of revenue compared to the baseyear of 2020. We participated in the drafting of standardsrelated to the carbon footprint of woolen products, broadenedthe carbon footprint evaluation of representative products,and guided green consumption; we promoted various waterconservation and emission reduction measures, especially theupgrading of dyeing vats of wool tops has realized a 15%water saving in the washing process; we utilized recycled ma-terials such as discarded plastic bottles and waste fishing netsto weave environmentally friendly yarns that certified by GRS...Only by respecting nature and guarding lush moun-tains and lucid waters can products of XINAO carrythe warmth of sustainability.Over the past year, we have practiced the people-orientedconcept of mutual respect, equality and intergration, contin-ued to improve the salary and welfare system and employeesedurity system, and created a positive, favorable and safeworking environment, so that employees could work and live

happily; for the first time, the concept of “customized” talentdevelopment was put forward to provide employees with pro-fessional training and diversified promotion channels toachieve common growth of employees and the enterprise; wehave maintained a R&D investment for a total of more than100 million yuan, and worked with customers, suppliers, anduniversities to develop green products, promote qualityupgrades, and build a new ecology for the industry; we haveinsisted on the wealth to the good, and continued to investthe proceeds of the Common Prosperity Fund in social charityprograms such as education, beautiful village, ecological civili-zation, etc., benefiting more than 23,240 people throughoutthe year... Only by keeping goodwill and guarding theharmony of the community can the future of XINAOperpetuate the warmth of hustle and bustle.Over the past year, we have planned to optimize the StrategyCommittee into the Strategy and Sustainability (ESG) Commit-tee, taking the lead in the construction of the Company'sstrategy and ESG governance system in order to furtherenhance the effectiveness of governance; we have continuedto maintain good communication with the capital market andinvestors, improved the transparency of governance, empha-sized on the quality of disclosure, and was awarded the GradeA evaluation for information disclosure of listed companies inShanghai Stock Market; we have carried out trainings andpublicity on Anti-commercial Bribery, Anti-Corruption andAnti-Unfair Competition to create a corporate culture of advo-cating clean and good governance ... Only through integri-ty and compliance, and guarding fairness and justice,can the development of XINAO accumulate thewarmth of long-term trust.

At a time when the global economic landscape is undergoing deep adjustments and social values continue to evolve, the mac-ro-context of corporate operations has undergone profound changes. ESG is no longer a peripheral topic in corporate develop-ment, but has gradually converged to become a key force affecting the long-term competitiveness of enterprises and their sus-tainable development prospects, and is the path to a century-old enterprise; ESG is definitely not a short-term trend tocater to, but rather a long-term perseverance that lasts. Therefore, over the past year, we have improved our ESG man-agement system and medium- and long-term development plan, refined our three-tier ESG governance structure, and furtherclarified the positioning of ESG as one of the cornerstone strategies of XINAO, which will remain unchanged.I firmly believe that a company with a warm heart will be able to remain forward-looking and innovative, maintain a balancebetween business value and social responsibility, and keep its original intention between shortcuts and foresight. In the future, wewill continue to weave the greenness of the environment, the warmth of society and the light of governance into the warp andweft of our corporate life. We also look forward to working hand in hand with our global partners and make every effort to runtowards a better future!

Chairman of XINAOApril, 2025

CompanyProfile

Assessment ofMateriality of Topics

Arrangement forCorporate ESG Governance

Navigating Low-carbon and Recycling

Join Hands for Integrationand Mutual Benefit

EmpoweringGovernance Excellence

ESG Data Sheetsand Notes

GuideIndexLetter fromthe Chairman

Direction ofthe ReportEnvironmental, Social andGovernance (ESG) Report 2024

Company Profile

Shanghai Stock ExchangeListed onXINAOStock abbreviation

Production base

Employees worldwide

Trade base

603889.SHStock code

Zhejiang Xinao Textiles Inc.English Name

China (Jiaxing, Ningxia), UK, Vietnam

4,265

5000+

Clients worldwide

Revene

4.84billion yuan

20+

Countries and regions of global marketing network

China (Jiaxing, Shanghai and Hong Kong),Australia, Italy, UK.

StockFacts

Specialized in the R&D, production and sales of wool and cashmere yarns, a leading enterprise in thesegment of wool spinning industry, and awarded as a model enterprise of single champion of worstedwool yarns in the manufacturing industry by the Ministry of Industry and Information Technology (MIIT).The Company owns a complete wool spinning industry chain from raw wool selection to scouring, stopmaking, chemical treatment, dyeing and spinning, with the world's leading production capacity. It pro-vides commission top making, various knitting yarns (circular knitting, flat knitting) and weaving yarns,which are applied to multiple fields such as clothing, accessory, household, and industry, etc.

MainBusiness

National High-tech Enterprise, National Green Factory, Green Design Model Enterprise of MIIT, GreenSupply Chain Management Enterprise of MIIT, National Development Base of Woolen Yarns Product,China Wool Textile Industry R&D Center of Worsted Woolen Yarns Technology, Provincial EnterpriseTechnology Center, Provincial Enterprise Institute, and the first Knitwear Development Center (KDC)jointly founded with International Wool Secretariat (IWS).Focusing on sustainable development, the Company has been committed to the development of func-tional products and green products, with a number of products shortlisted for fashion trend and greensustainability innovative products by China Knitting Industry Association (CKIA) in recent years.

Qualification

RecognitionPrinciplePlaces ofOperation

Scale ofCompany

To be a globalleader in thewool textile

industry

Vision

Enjoy betterlife with wool

Learning, Innovation,

Integrity, Sharing

MissionValues

ZHEJIANG XINAO

Spinning

NINGXIA XINAO

Dyeing and FinishingHEADQUARTERSTongxiang, Zhejiang

XINAO VIETNAM

Dyeing and Finishing

T&D UK

Dyeing and Finishing

ZHEJIANG NEW CHUWATop and Modification treatment

ZHEJIANG HOUYUANDyeing and Finishing

With its products marketed globally and widely recognized, the Company has been listed as the desig-nated yarn supplier of many internationally renowned fashion brands and luxury brands.

CompanyProfile

Assessment ofMateriality of Topics

Arrangement forCorporate ESG Governance

Navigating Low-carbon and Recycling

Join Hands for Integrationand Mutual Benefit

EmpoweringGovernance Excellence

ESG Data Sheetsand Notes

GuideIndexLetter fromthe ChairmanDirection ofthe ReportEnvironmental, Social andGovernance (ESG) Report 2024

Performance of ESG Honors & Ratings

China Securities Journal

Securities Market Weekly

ESG Golden Dawn Award 2024 forBest Employee Caring and Dynamic Business

ESG Golden Dawn Award 2024 for

Best Green Supply Collaborator

Top 100 Best ESG Performance of Listed Companies

in China 2024 (65

th)Top 100 Best ESG Performance of Listed Companies

in Zhejiang Province 2024 (4

th)

Growing Business of ESG Strategic Philanthropic Impact of

Listed Companies in Zhejiang Province 2024

Top 100 of the 2

ndChina Reform CupESG Golden Bull Award

jointlyprepared by Zhejiang Associationfor the Promotion of CorporateSocial Responsibility and ChinaChengxin Green Finance Technol-ogy (Beijing) Co., Ltd.Zhejiang Association for the Pro-motion of Corporate Social Re-sponsibility, Zhejiang Public Offer-ing and M&A Association

ESG Rating from QuantData

ESG Rating from CCXGF

ESG Rating from CRHC

ESG Rating from Sino-Securities Index

ESG Performance Assessment from ChineseTextile and Apparel Enterprises (2023-2024)

ESG Rating from Wind

ESG Rating from SnyTao Green Finance

AUpdated: December 2024

AUpdated: May 2024

A-Updated: 2024Q4

AAUpdated: 2024Q4

AAUpdated: July 2024

AA-Updated: 2024Q4

AAUpdated: 2024Q4

ESG RaterPerformance of ESG RatingsPerformance of ESG HonorsPublisher of ESG Honors

China National Textile and Apparel Council “ClimateInnovation 2030 Initiative” and “Life Cycle AssessmentWorking Group” (CNTAC-LCA Working Group)

Member of China Wool Textile IndustryGreen Low Carbon Alliance

“Enterprise of National

Green Supply ChainManagement”

XINAO TEX honored with

Listed Companies 2024,ESG Index Assessment Report for

CompanyProfile

Assessment ofMateriality of Topics

Arrangement forCorporate ESG Governance

Navigating Low-carbon and Recycling

Join Hands for Integrationand Mutual Benefit

EmpoweringGovernance Excellence

ESG Data Sheetsand Notes

GuideIndexLetter fromthe ChairmanDirection ofthe Report

Environmental, Social andGovernance (ESG) Report 2024

Double Materiality Analysis

Based on the actual situation, by taking into account national and regulatory policies, standards and peer benchmark-ing, and investigating the needs and expectations of the affected stakeholders, the Company forms a list of materialitytopics, and carries out the double materiality analysis and ranking of them in accordance with the requirements of the

of the Shanghai Stock Exchange on the analysis of the materiality of topics.

Process for Analyzing Topics of Materiality

?Learn company activities and business relationships, interpret national and industry laws, regulationsand regulatory policies, analyze rating standards, peer practices, and find out key affected stakehold-ers and ways of communicating with them.BackgroundAnalysis

?With reference to the topics set out in the the Company summarizes a list of materialtopics by combining the characteristics of the Company's major business segments, standardbenchmarking, policy analysis and peer benchmarking, as well as learning the topics of concern tothe major affected stakeholders through research and interviews.

Create a Listof Topics

Guidelines,

?Determine the order of materiality of the topics, form a matrix of materiality topics, and after reviewand confirmation by the Strategy and Sustainability (ESG) Committee of the Company's Board ofDirectors, make focused disclosure on the topics of higher materiality in the FY2024 ESG Report.Report onthe Topics

?Impact Materiality Assessment: Questionnaire surveys are conducted with stakeholders such as gov-

ernment departments, industry associations, peer companies, shareholders and investors, customers,media, suppliers, research institutes, employees, NGOs, etc., and internal and external experts areinvited to jointly identify and analyze the impacts, risks, and opportunities of the topics.?Financial Materiality Assessment: The internal finance department assesses the financial materiality ofthe topics, with multiple departments review and confirm.MaterialityAssessment

Assessment of Materiality of Topics

“Guidelines”

CompanyProfile

Assessment ofMateriality of Topics

Arrangement forCorporate ESG Governance

Navigating Low-carbon and Recycling

Join Hands for Integrationand Mutual Benefit

EmpoweringGovernance Excellence

ESG Data Sheetsand Notes

GuideIndexLetter fromthe ChairmanDirection ofthe ReportEnvironmental, Social andGovernance (ESG) Report 2024

Due Diligence, Stakeholder CommunicationIn order to strengthen the management ofimpacts, risks and opportunities in daily oper-ations, the Company conducts ESG-relateddue diligence on a regular basis, strengthensthe management of material topics, andestablishes procedures for responding to andmanaging negative impacts or risks relatedto ESG to promote the stable operation ofthe Company.The Company establishes an ESG informa-tion communication mechanism for stake-holders, pays attention to the demands andexpectations of stakeholders, and maintainsopen communication channels with stake-holders such as shareholders (investors),creditors, employees, customers, suppliers,partners, community organizations and rele-vant government departments. The Compa-ny's ESG working group coordinates withrelevant departments to listen to feedbackand suggestions from primary stakeholdersthrough regular and irregular interviews,talks, questionnaires and other due diligencemethods, so as to continuously improvemanagement and optimize practices.

Shareholders (investors) & Creditors

?Innovation-driven?Anti-commercial bribery and anti-corruption?Anti-unfair competition

Key StakeholdersTopics of Concern

?Shareholders meeting & investor exchange?Complaint reporting & monitoring mechanism?Regular and irregular information disclosure?Implement the new vision for development

?Improve quality control?Increase investment in R&D and innovation?Customer satisfaction survey?Measures for customer privacy?Supplier management?Transparent & fair purchase?Strategic cooperation?Industry exchanges and visits?Boost rural revitalization?Launch social welfare projects?Participate in community volunteer activities

Communication & Response

Chapter 5Chapter 6

Chapter 5Chapter 6

Employees

Customers

Suppliers & Partners

Community Organizations

?Rural revitalization & social contribution

Government Sectors

?Employment & employee rights?Occupational health & safety?Employee training & development

?Supply chain security?Anti-commercial bribery & anti-corruption?Anti-unfair competition

?Safety & quality of products and services

?Innovation-driven

?Data security & customer privacy

?Ecosystem and biodiversity conservation

?Anti-unfair competition

?Channels for communication of internal information?Improve compensation & benefit system?Enrich activities for employees?Production safety management?Protect occupational health?Expand channels for employee development?Employee performance appraisal & promotion

?Tackle climate change ?Pollutant discharge?Waste disposal ?Energy utilization?Water resources utilization ?Circular economy?Environmental compliance management

?Identify risks of climate change?Improve environmental management systems?Implement the measures of emission management?Implement energy saving and consumption reduction?Disclose environmental information in accordance with the law

Chapter 5

Chapter 5

Chapter 4

Chapter 5

Chapters Disclosed

CompanyProfile

Assessment ofMateriality of Topics

Arrangement forCorporate ESG Governance

Navigating Low-carbon and Recycling

Join Hands for Integrationand Mutual Benefit

EmpoweringGovernance Excellence

ESG Data Sheetsand Notes

GuideIndexLetter fromthe ChairmanDirection ofthe Report

Environmental, Social andGovernance (ESG) Report 2024

Conclusion of the Materiality Analysis of the TopicsIn 2024, the Company carried out identification and screening of the topics, identified and con-firmed 16 topics of materiality including the ones that characterize the Company's major busi-ness segments through due diligence and stakeholder communications, analyzed their impact,risks and opportunities with reference to the opinions of internal and external experts, assessedtheir financial materiality and impact materiality, and finally formed the ranking matrix of thematerial topics.

Matrix of Topics of Materiality in 2024

Financial Materiality

?Ecosystem and biodiversity conservation?Environmental compliance management?Circular economy?Data security & customer privacy?Supply chain security?Rural revitalization & social contribution

?Tackle climate change?Pollutant discharge?Energy utilization?Water resources utilization?Employees?Safety & quality of products and services?Innovation-driven

?Waste disposal?Anti-commercial bribery & anti-corruption?Anti-unfair competition

Both financial andimpact materialityFinancial materiality,

but not impactmaterialityImpact materiality,

but not financialmaterialityNeither financial nor

impact materiality

Low

High

High

Impact Materiality

Changes in Topics of Materiality in 2024 and Reasons ThereforTopics of Materiality in 2023Topics of Materiality in 2024Reasons for Changes

Optimize the expression oftopics by referring to thename of topics in the

——————

Incorporate into the Gover-nance Structure for Corpo-rate Sustainability by refer-ring to the

Tackle climate change

Pollutant dischargeWaste disposalEcosystem and biodiversity conservationEnvironmental compliance management

Energy utilizationWater resources utilizationCircular economyRural revitalization & social contribution

Innovation-driven

Low-carbon products & climate

change adaptation

Animal welfare & biodiversityEnvironmental management system

Industry & people’s values

Pollutant reduction

Recycling of resources

Responsible supply chainsProduct quality & safetyCustomer rights & interests

Information security & privacyEmployee rights & benefitsEmployee training & development

Occupational health & safety

Supply chain security

Data security & customer privacySafety & quality of products and services

Employees

Organization structure & functions

Investor protectionInternal controls & risk management

Compliance & business ethics

Anti-commercial bribery & anti-corruption

Anti-unfair competition

Scientific and technological innovation& intellectual property protection

Guidelines.

Guidelines.

CompanyProfile

Assessment ofMateriality of Topics

Arrangement forCorporate ESG Governance

Navigating Low-

carbon and Recycling

Join Hands for Integrationand Mutual Benefit

EmpoweringGovernance Excellence

ESG Data Sheetsand Notes

GuideIndexLetter fromthe ChairmanDirection ofthe ReportEnvironmental, Social andGovernance (ESG) Report 2024

Board ofSupervisors

· As the highest decision-making body of the Company, the board of

shareholders decides on the Company's business policies and investmentplans; elects and replaces directors and supervisors who are not employ-ee representatives, and decides on the remuneration of directors and su-pervisors; reviews and approves the reports of the board of directors andthe board of supervisors; safeguards the legitimate rights and interests ofall shareholders and ensures that all shareholders enjoy equal status. 3 meetings were held in 2024.· The board of directors is the decision-making center of the Com-

pany and is accountable to the board of shareholders. It consists of

9 members (2 women), including 3 independent external directors.The board members come from diverse backgrounds, with profes-sional backgrounds in industries such as law and finance and man-agement experience in large corporations.

10 meetings were held in 2024.· The board of supervisors exercises its supervisory powers to protect therights and interests of shareholders and investors, the interests of theCompany and the legitimate rights and interests of employees frominfringement; the board of supervisors consists of3 supervisors, including1 employee supervisor. 9 meetings were held in 2024.

· The management of the Company performs its duties in accordance with

laws and regulations and internal rules of the Company, strictly imple-

ments the resolutions of the board of shareholders and the board of

directors, and promotes the sustainable and stable operation of the Com-

pany; the Company has a total of6 senior executives (3 women).

Members & Meetings of the Three Boards and One LayerIn strict compliance with the laws and regulations and relevant provisions such as the

the Company develops a set of rules such as “Articles ofAssociation of Zhejiang Xinao Textiles Inc.”, “Rules of Procedure for Shareholders Meetings”, “Rules of Pro-cedure for the Board of Directors”, “Rules of Procedure for the Board of Supervisors”, and “Rules of Workfor the General Manager”, forming a relatively comprehensive system of corporate governance.Combined with the actual situation, the Company forms a corporate governance mechanism with transpar-ent powers and responsibilities and effective checks and balances among the board of shareholders, boardof directors, board of supervisors and the management. The board of directors consists of four professionalcommittees, respectively strategy and sustainability (ESG) committee, audit and risk management commit-tee, nomination committee and remuneration and appraisal committee.

For more information on corporate governance, please refer to the

Structure for Governance of Corporate SustainabilityCorporate Governance Structure

Corporate Governance Structure

Board of supervisors

Strategy and sustainability (ESG)

committee

Board of shareholders

Board of directors

Management team

Audit and risk management

committee

Audit sectorNomination committeeRemuneration and appraisal

committee

Board ofShareholders

Board of

Directors

Note: The renaming of the Strategy Committee of the Board to the Strategy and Sustainability (ESG) Committee of the

Board has been reviewed and approved by the eighteenth Session of the 6

th

Board meeting and submitted to theGeneral Meeting of Shareholders. For details, please refer to the relevant announcement of the Company.

Layer ofManagement

Arrangement for Corporate ESG Governance

Company Law of theGovernance for Listed Companies, and the Guidelines No. 1 of the Shanghai Stock Exchange for Self-Regula-People's Republic of China, the Securities Law of the People's Republic of China, the Code of Corporatetion of Listed Companies – Standardized Operation,

Annual Report 2024 of Zhejiang Xinao Textiles Inc.

CompanyProfile

Assessment ofMateriality of Topics

Arrangement forCorporate ESG Governance

Navigating Low-carbon and Recycling

Join Hands for Integrationand Mutual Benefit

EmpoweringGovernance Excellence

ESG Data Sheetsand Notes

GuideIndexLetter fromthe ChairmanDirection ofthe ReportEnvironmental, Social andGovernance (ESG) Report 2024

Composition & Terms of Reference of the ESG Governance StructureThe Company actively identifies and manages the impacts of its business and operationalactivities, and continuously improves its ESG governance structure to ensure the efficientpromotion of ESG work. The Board of Directors of the Company is the leading and deci-sion-making body for ESG work, and the Board’s Strategy and Sustainability (ESG) Com-mittee is the research and management body for ESG work. The Company has set up anESG Management Committee at the management layer, with the general manager of theCompany serving as the chairman of the ESG Management Committee to plan and imple-ment ESG practices. The functions and subsidiaries of the Company form the ESG workinggroup to carry out specific ESG tasks.

ESG Governance Structure

ESG Governance Structure

Strategyand Sustainability(ESG) Committeeof the Board

ESG ManagementCommittee

ESG Working Group（Relevant functions andsubsidiaries of the Company）

Decision-making：

Lead & make decision on ESG mattersResearch & manage ESG matters

Management：

Plan & implement ESG practices

Performance：

Perform ESG specific tasks

TierTerms of ReferenceComposition

Decision-

making

Management

Performance

?Review and approve the Company's ESG report.?Review and approve the disclosure of major information concerning the Compa-ny's ESG governance.?Review ESG-related risks that have a significant impact on the Company and

respond to significant ESG negative events.?Review and approve the Company's ESG objectives, strategic plans, programs

and implementation plans.?Review and approve the Company's ESG governance structure and management

system.?Identify and monitor ESG related risks and opportunities that have a significant

impact on the Company's business, and direct management to take appropriate

responses to ESG risks and opportunities.?Review and submit the Company’s ESG report to the Board.?Implement ESG related policies, laws and regulations of the state and regulatory

authorities, study and formulate the Company's ESG strategies and objectives,

work plans and related management systems.?Organize and lead the construction of ESG management system and mechanism.?Conduct stakeholder surveys to assess the materiality of ESG topics.?Identify and control the impacts, risks and opportunities associated with the

day-to-day management of ESG.?Evaluate the ESG performance of each unit, and organize the formulation of im-

provement measures.?Organize the review of ESG work plan and report, and report to the Strategy and

Sustainability (ESG) Committee of the Board.?Organize and lead the daily management of ESG of the Company.?Study and draft the program of ESG governance structure system of the Company.?Collect, collate and prepare the Company's annual ESG report and public disclo-

sure of other ESG information.?Implement the Company's ESG development strategy and objectives, coordinate

and promote ESG matters in the daily operation of the Company, as well as the

implementation of ESG related matters.?Pay close attention to ESG related risks and issues in daily management, provide

feedback and suggestions.?Assign ESG responsibilities to all aspects of production and management.?Communicate with all stakeholders of the Company and actively respond to their

demands.?Other ESG related matters.

Consists of members ofthe Company’s Board ofDirectors

Consists of membersof the Board's Strate-gy and Sustainability(ESG) Committee

Members include seniorexecutives of the Com-pany and its subsidiarieswith ESG-related knowl-edge

Set up an ESG workinggroup consisting ofcore members from var-ious functional depart-ments and subsidiaries,as well as employeeswith full knowledge ofESG and the Company'sbusiness.

CompanyProfile

Assessment ofMateriality of Topics

Arrangement forCorporate ESG Governance

Navigating Low-carbon and Recycling

Join Hands for Integration

and Mutual Benefit

EmpoweringGovernance Excellence

ESG Data Sheetsand Notes

GuideIndexLetter fromthe ChairmanDirection ofthe Report

Environmental, Social andGovernance (ESG) Report 2024

Taking into account relevant laws and regulations, therequirements of the and its own needs, theCompany has set sustainability-related goals with ref-erence to China's comprehensive rural revitalization,the Carbon Peak and Carbon Neutral Strategy, as wellas the United Nations Sustainable Development Goals(SDGs) and the With the manage-ment of ESG materiality topics as the core, the Com-pany has comprehensively carried out ESG practicesin terms of ESG governance, ESG risk management,and ESG information disclosure, etc., and has madegood progress in sustainable development, supportingthe United Nations SDGs with concrete actions.

Strategies & Actions related to Sustainability

SDGsCorporate ESG Stratgies & Actions

?Help the disadvantaged?Continuously boost rurual revitalization?Certified by ISO45001 Occupational Health and Safety Management System?Assist suppliers in securing production?Financially aid students in need

?Ensure gender equality in recruitment and employment?Adopt water-saving sanitary equipment?Cultivate water-saving habits among employees through water-saving publicity and education?Generate photovoltaic power?Buy green power

?Protect employee remuneration and benefits?Examine the performance of the labor in the supply chains?Strengthen technological innovation?Advance the construction of smart factories?Promote equal opportunities?Oppose any form of discrimination?Assist groups in need?Provide community volunteer services?Purchase preferentially the certified raw materials?Work with suppliers to improve environmental performance?Calculate carbon emissions?Carry out extensive actions to conserve energy and reduce emissions?Promote green-oriented transition of the industry?Protect animal welfare?Certified by Responsible Wool Standard (RWS) and The Good Cashmere Standard (GCS)?Transparency of information?Prohibit all forms of corruption?Communicate with stakeholders?Release the annual ESG report

SDGsCorporate ESG Stratgies & Actions

E

SGParis Agreement.

Guidelines

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Management of Impact, Risk and Opportunity

ESG Risk & Opportunity Management Process

?Establish a cross-departmental ESG risk identification team, including mem-bers from departments of environmental protection, production, humanresources, and supply chain, etc.?Sort out comprehensively the risks that the enterprise may face in terms ofenvironment, society and corporate governance through brainstorming andindustry benchmarking.

?Assess the identified risks through both qualitative and quantitative methods.?Compile the “Risk and Opportunity Assessment and Analysis Form” for theidentified major risks.

?Formulate targeted risk response strategies based on the results of riskassessment.?Clarify the division of responsibility for major risks and confirm that manage-ment strategies for major risk and response plans are in place.

?Set up a risk monitoring index system, collect and analyze relevant data on a

regular basis, and evaluate the effectiveness of risk response measures.?Track the effectiveness of major risk controls on a regular basis, and issuereports on major risk management.

RiskIdentification

RiskAssessment

RiskResponse

RiskTracking

ESG Risk & Opportunity Management Structure

The Company actively cultivates risk culture, establishes correct risk concepts, and strives to inte-grate risk awareness into core corporate values, employee performance appraisal and daily behaviorsand habits. The Company has established a systematic risk management mechanism. Based on the“Procedures for Risk and Opportunity Control”, the Company clarified the responsibility mechanismand operation mechanism of management, and carried out specific work such as risk identification,risk assessment, risk response, risk tracking around the whole process of the management mecha-nism, so as to enhance the risk control and management in an all-round way.Board of DirectorsStrategy and Sustainability (ESG)

Committee

General Manager

Heads ofSubsidiariesVice General

Managers

ESG Management

Committee

ESG Working Group

EnterpriseManagement SectionHeadquarters

Functions

Subsidiaries

Responsible for identifying and con-trolling the risks and opportunitiesrelated to daily ESG management.

Responsible for planning the manage-ment of the Company's ESG risks andopportunities, formulating risk andopportunity management process,and coordinating risk and opportunitymanagement activities of various de-partments and subsidiaries.

Decistion-making

Management

Performance

The Strategy and Sustainability (ESG)Committee of the Board and the Auditand Risk Management Committee of theBoard make decisions on major mattersand risk management of the Company.The Strategy and Sustainability (ESG)Committee of the Board reviews and ap-proves the strategy and management ofESG risks and opportunities, and theAudit and Risk Management Committeeof the Board examines the managementof the Company's ESG risks and opportu-nities, and puts forward supervisory rec-ommendations on major risk matters.

Audit and Risk Management

Committee

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GuideIndexLetter fromthe ChairmanDirection ofthe Report

Environmental, Social andGovernance (ESG) Report 2024

The Company has established an ESG monitoring mechanism, whereby the Board of Directors, itsStrategy and Sustainability (ESG) Committee, and Audit and Risk Management Committee monitorthe Company's ESG-related impacts, risks, and opportunities by approving strategies, accessing risks,setting objectives, monitoring implementation, reviewing performance, and ensuring transparentcommunication. The Company's Audit Department, independent of other departments, evaluates theeffectiveness of risk and opportunity management efforts, provides oversight opinions and recom-mendations, and reports regularly on oversight.

Supervision and Appraisal Mechanisms

ESG Oversight Mechanism

The Company has incorporated ESG-related objectives into its appraisal system and clarified the scope ofpersonnel covered by the appraisal. In order to motivate the management to optimize the allocation ofresources and achieve the established ESG objectives, the Company has linked the management appraisal tothe performance on relevant ESG topics.

The Company's ESG Manage-ment Committee reports annu-ally to the Board of Directorsand the Strategy and Sustain-ability (ESG) Committee as wellas the Audit and Risk Manage-ment Committee on progresstowards ESG-related objectives.

The Company's ESG Manage-ment Committee convenesdedicated meetings to prioritizeESG-related impacts, risks andopportunities, and to resolveand review performance indica-tors and objectives in the Com-pany's ESG strategy.

The Company has made reduc-tion of greenhouse gas emis-sion an appraisal indicator forthe relevant person in charge.

ESG Oversight ProcessEstablish ESG related governance structure.Step 1

Review the list of material topics of the Company.Step 2

Discuss the impact of identified ESG-related risks and

opportunities on the Company's overall growth strategy.

Step 3

Step 4

Ensure that appropriate disclosure has been made of

ESG-related impacts, risks and opportunities, measures taken

and progress towards achievement of objectives; review the

Company's ESG Report and disclose to stakeholders.

Update, refine and improve as necessary.

Step 5

Step 6

Step 7

Info. ReportMechanism

Oversightproceduresand measures

Appraisal

Incorporate significant risk factors into procedures of

business strategy and risk management.

Establish an internal mechanism to oversee the manage-

ment of ESG matters.

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The SDGs to which this chapter is dedicated:

Navigating Low-carbon and RecyclingPriority actions on environmental dimensions

?Tackle climate change?Pollutant emission?Waste disposal?Ecosystem and biodiversity conservation?Environmental compliance management?Energy utilization?Resources utilization?Circular economy

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The main sources of greenhouse gas (GHG) emissions involving the Company's operations are sta-tionary source combustion of natural gas and liquefied petroleum gas (LPG), mobile source combus-tion of on-road vehicles such as gasoline trucks, diesel trucks and off-road vehicles such as dieselforklift trucks, unorganized emissions of refrigerants and fire extinguishers, direct GHG emissionsfrom the process emssions of carbon-containing chemicals, as well as indirect GHG emissions fromoutsourced electricity, outsourced steam, etc. for production and office, covering seven major green-house gases: carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs),perfluorocarbons (PFCs), sulfur hexafluoride (SF6) and nitrogen trifluoride (NF3).The Company actively follows the trend of global climate change, responds to the State Council's cli-mate-related policies such as “Action Plan for Carbon Dioxide Peaking Before 2030”, “Respondingto Climate Change: China's Policies and Actions” and constructs a climate change managementsystem and integrate climate change mitigation and adaptation into daily management.

OverviewGovernance

Governance Structure of Tackling Climate Change

Board of DirectorsStrategy and Sustainability(ESG) Committee

General Manager

Heads ofSubsidiariesVice GeneralManagers

ESG Management

Committee

ESG Working Group

Enterprise Management Section,General Section of Safety and Environment

HeadquartersFunctions

Subsidiaries

Responsible for researchingand formulating climatechange-related strategies,objectives, and managementwork, as well as identifying andcontrolling climate-related risksand opportunities.

Responsible for organizing,arranging, managing andimplementing the climate-relat-ed matters, and reporting onthe performance regularly.

Decistion-making

Management

Performance

Responsible for reviewing andapproving the strategy andmanagement of climatechange-related matters.

Tackle Climate Change

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GuideIndexLetter fromthe ChairmanDirection ofthe ReportEnvironmental, Social andGovernance (ESG) Report 2024

The Company regularly identifies short-, medium- and long-term risks and opportunities arising from cli-mate change on its operations and finances, and incorporates the management of climate-related risksand opportunities into the Company's strategic planning and the formulates relevant mitigation and adap-tation strategies based on the assessment results of climate-related risks and opportunities.The Company has been improving its climate resilience and better adapting and responding to the im-pacts of climate change by developing carbon-neutral action plans. In the future, the Company will takethe value chain into consideration and actively promote carbon neutrality in the supply chain to boost thedevelopment of the industry, and provide carbon-neutral solutions to the society through technologicalinnovation, so that its business strategy can better match the social needs of zero-carbon development.

Taking 2020 as the base year, the Company has verified its GHG emis-sions, formed a green, low-carbon and sustainable development plan,and put forward a commitment at the operational level:

In order to better respond to climate change, the Company has identified climate change-related risks andopportunities related to its operations with reference to the IFRS S2 framework and national and localpolicy requirements, and assessed the impact of each risk and opportunity on its finances. Based on thedevelopment of its business, the Company will assess the impact of physical risks (extreme weather suchas high temperature and heavy rainfall) and transformational risks (such as technological innovation)brought by climate change in its operations, and actively seek opportunities brought by its products andservices, and efficiency of resource utilization.

Strategy

Matrix of Climate Risks and Opportunities

Climate-related risksClimate-related opportunities

Probability of occurrence of risks and opportunitiesLow High

High

To achieve carbon peaking before 2030

To achieve carbon neutrality by 2050

Degree of impact of risks and opportunities

Market risksPolicy and legal risksReputational risksChronic physical risksAcute physical risksTechnology risks

Resource efficiencyProducts and servicesAdaptabilityEnergy sourcesMarket opportunities

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Climate-related Risks and Opportunities & Management Strategies

Types of risk oropportunity

Technology risks

Risks

Description

Durationof Impact

Potential Financial

Impact

Management

Strategies

The Company may face the upgrading ofmanufacturing equipment and processtechnology and the elimination of oldequipment due to the tightening of policyand regulatory requirements.

Short-to-medium

term

Increase inoperating costsDecrease inoperating income

Increase inoperating costsDecrease inoperating income

Increase inoperating costsDecrease inoperating income

Depreciation offixed assetsIncrease inoperating costsDecrease inoperating income

Increase inoperating costs

Acute physical risks

Policy and legal risks

Market risks

Reputational risks

Chronic physical risks

Extreme weather such as typhoons andfloods pose a threat that could result indamage to the Company's productionplants and equipment, loss of personneland disruption of business activities.

Extreme temperature environments canaffect the proper operation of tempera-ture-sensitive production equipment, andrising sea level can affect the Company'snormal operations in coastal areas.

With the continuous introduction of carbonemission reduction policies at home andabroad, as well as the gradual tightening ofregulatory requirements, the Companyneeds to meet the relevant requirements inthe production, operation, sales and ser-vices, and to strengthen its own operationalcarbon accounting, product carbon foot-print measurement and other related work.Low-carbon related policies affect thesupply and demand in the market. If theCompany fails to provide appropriate prod-ucts or services to its customers, it will leadto a decrease in its competitiveness in themarket and increase in the cost of raw ma-terials or decrease in the demand for ener-gy-intensive products, which will result incompromised products and may lead tothe loss of customers.Stakeholders are increasingly concernedabout the Company's performance inaddressing climate change, including strat-egies and objectives, management mea-sures, etc. Failure to carry out climatechange response action may affect theCompany's reputation.

Short term

Short-to-medium-to-long term

Medium-to-

long term

Increase invest-ment in newenergy-savingtechnologiesand equip-ment.Formulate con-tingency plansfor extremeweather andconduct regu-lar emergencydrills.Strengthen thecapacity forR&D and inno-vation of tech-nologies andgreen prod-ucts.

Types of risk oropportunity

Description

Durationof Impact

Potential FinancialImpact

ManagementStrategies

Medium-to-

long term

Medium-to-

long term

Decline in operat-ing income

Resource efficiency

Opportunities

The adoption of green packaging,green raw materials and greendesign, the optimization of pro-duction technology and process-es, and the improvement of pro-duction efficiency will help toincrease the efficiency ofresource utilization.

Decrease inoperating costs

Decrease inoperating costs

Decrease inoperating costsIncrease inoperating income

Increase inoperating income

Increase inoperating income

Modify highenergy-con-suming equip-ment toreduce carbonemissionsfrom products.Developlow-carbonproducts.Purchase andutilize greenelectricity.

Products and services

Market opportunities

Energy sources

Adaptability

As customer demand for green,low-carbon and intelligent prod-ucts increases, the developmentof related products and the provi-sion of related services can driverapid business growth.

Deepen collaboration betweenuniversities, enterprises andindustries, participate in cleanenergy-related projects, activelyseek solutions for green andlow-carbon products, promotegreen manufacturing, andimprove adaptability to climatechange.

With increasing demand forgreen and low-carbon productsand services driven by the “du-al-carbon” goals, strengtheningproduct development andexpanding into new markets willenhance market competitiveness.Increasing the use of clean orrenewable energy can reducecarbon emissions and addressthe risk of energy price hikes inthe future.

Short-to-medium-to-long term

Medium-to-

long term

Note: The time frame is defined as short term (1 year or less), medium term (1 year to 5 years) and long term (more than 5 years).

Short-to-medium-to-

long term

Medium-to-

long term

Medium-to-

long term

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Indicator, Objective and Annual Progress in Response to Climate Change

(with 2020 as base year)Cumulative reduction of total GHG

Emissions by 2030

132,000 tCO?e

Cumulative reduction ofGHG emissions of

16,939.54 tCO?e

Indicator and Objective

Indicator ObjectiveProgress in 2024The Company actively responds to the challenges of climate change and gradually integrates the man-agement of climate risks and opportunities into the overall operational risk management of the Compa-ny, establishes a climate risk and opportunity management process of “identification, assessment andsupervision”, and regularly identifies climate-related risks and opportunities, assesses the scope andcycle of impact of such risks and opportunities on the Company, and formulate corresponding manage-ment strategies and action measures to properly manage climate risks and opportunities.

Management of Impact, Risk and Opportunity

Processes for Managing Climate Risks and Opportunities

Identify

The ESG Management Committee conducts an assessment of short-,medium- and long-term climate risks and opportunities at least once ayear and reports the results to the Strategy and Sustainability (ESG) Com-mittee of the Board for review.

Statistics on the physical and transformational climate risks and opportuni-ties for each asset in the short, medium and long term based on the actualclimate risk profile, rank them according to their degree of impact on thetotal assets, report to the ESG Management Committee for review.

The Strategy and Sustainability (ESG) Committee of the Board formulatesstrategies, policies and mechanisms to address climate change based onthe results of the climate risk assessment, and delegates to managementand performance team the Company’s strategies and objectives for ESGand addressing climate-related topics, and the ESG Management Commit-tee supervises the performance team in practicing the tasks of ESG andaddressing climate risks.

Assess

Supervise

Product Carbon Footprint. Taking the lead in the industry to carry out carbon footprint projects andactively promote the Life Cycle Assessment (LCA) project for representative products, XINAO TEX haspublished the carbon footprint assessment data from pasture to yarn for CASHFEEL worsted wool yarn,and XINAO CASHMERE has published the carbon footprint assessment data from pasture to yarn for 6types of cashmere yarn in 2 categories, namely CASHQUEEN and PRESTIGE.Group Standard. As one of the main drafting units, XINAO TEX formulated the group standard “Prod-uct Carbon Footprint Product Category Rules Wool Yarn” (T/CNTAC 203-2024 T/CWTA 1-2024).Low-carbon product. Develop blended products such as zero-carbon Tencel, low-carbon diacetatefiber, etc.

Carbon footprintassessment onworsted wool yarn

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Pollutant Discharge

Governance Structure of Pollutant Discharge

The wastewater pollutants generated from the Company's production and operationare mainly chemical oxygen demand (COD

Cr) five-day biochemical oxygen demand(BOD

), ammonia nitrogen (NH3-N), total phosphorus (TP), total nitrogen (TN), totalzinc (TZn), dissolved chromium (DCr), suspended substances (SS), adsorbable organichalogen (AOX), etc. The Company applied for the national pollutant discharge permitin accordance with the requirements of the state and local governments, implement-ed strictly the sewage declaration and registration, established an online monitoringand early warning mechanism for water treatment, formulated a self-monitoringscheme for pollutant discharge permit and set up a wastewater treatment system tomake sure all discharges through outfalls are in accordance with standards.The air pollutants generated from the Company's production and operation are mainlytotal suspended particulates, malodors (ammonia and hydrogen sulfide), acetic acid,sulfuric acid mist, sulfur dioxide, nitrogen oxides, volatile organic compound, and can-teen fumes. The Company effectively supervises exhaust emissions and ensures thatall emission indicators comply with local and industry emission standards throughstrict treatment and monitoring measures.The Company strictly abides by laws, regulations and management rules such as

Water Pollution Prevention and Control Law of the People’s Republic of China, Atmo-spheric Pollution Prevention and Control Law of the People's Republic of China, andNoise Pollution Prevention and Control Law of the People's Republic of China, and en-deavors to minimize negative impacts on the environment. In 2024, the subsidiaries,NEW CHUWA and HOUYUAN TEX were the key units for environmental supervisionby the local ecological and environmental management authorities. The Company dis-closed the discharge and eco-environmental administrative license information of thesubsidiaries that were included in the key units for environmental supervision in ac-cordance with the relevant regulations of the China Securities Regulatory Commission(CSRC), the Stock Exchange and the Ministry of Ecology and Environment (MEE). Fordetailed information on pollutant discharge from key units of environmental supervi-sion, please refer to theDuring the reporting period, there was no incident in which the Company was sub-jected to significant administrative penalties or held criminally liable for the dischargeof pollutants.

OverviewGovernance

Board of Directors

Strategy and Sustainability

(ESG) Committee

General Manager

Heads ofSubsidiariesVice General

Managers

ESG Management Committee

ESG Working Group

General Section of Safety and Environment

Headquarters

Functions

Subsidiaries

Responsible for researching and formulatingpollutant discharge-related governance plansand annual work plans, as well as identifyingand controlling risks and opportunities relatedto pollutant discharges.

Responsible for organizing, arranging, andmanaging the work related to pollutant dis-charges and the day-to-day operation andmaintenance of the pollution control equip-ment, ensuring that the equipment operatesproperly, and reporting on the performanceon a regular basis. The production subsidiar-ies operate their equipment in strict accor-dance with environmental protection stan-dards to ensure that pollutants are dis-charged according to standards.

Decistion-making

Management

Performance

Responsible for reviewing and approving thestrategy and management of pollutant dis-charge-related matters.

Noise Pollution Prevention and Control Law of the People's Republic of China,

Annual Report 2024 of Zhejiang Xinao Textiles Inc.

spheric Pollution Prevention and Control Law of the People's Republic of China, and

Water Pollution Prevention and Control Law of the People’s Republic of China, Atmo-

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Note: The time frame is defined as short term (1 year or less), medium term (1 year to 5 years) and long term (more than 5 years).

Risks and Opportunities related to Pollutant Discharge & Management Measures

Regulation and policy risk:

Relevant laws and regulations are constantly improvingand tightening, if not recognized in time, it may lead toviolation of discharges and face the risk of administra-tive penalties, suspension and rectification of production.

Reputational risk:

Environmental incidents arising from pollutant dischargeissues negatively affect the reputation of the Company.

Market opportunity:

With the improvement of consumers' awareness of en-vironmental protection, the demand for green and envi-ronmentally friendly printed and dyed textile productscontinues to increase. Strengthening the control of pol-lutant discharge and improving the level of environmen-tal protection to meet market demand can expand themarket share of green products.

Medium-to-long term

Short-to-medium term

Medium-to-long term

Risks

Opport-unities

Risks and Opportunities Duration of Impact

Increase inoperating costs

Increase inoperating income

Financial ImpacManagement Measures

StrategyIn terms of pollutant discharge management, the Company faces compliance risks brought about by changes in laws and regulations and strengthened su-pervision, while its market share is affected by increased governance costs, production restrictions and reputation damage. In terms of seizing opportunities,the Company increases investment in research and development, cooperates with universities and scientific research institutions to carry out technologicalinnovation, introduces advanced environmental protection technology and equipment in a timely manner, develops green products and undertake branding,thus promoting the enterprise to move forward steadily on the road of environmental protection and development. In response to the above risks and oppor-tunities, the Company regularly maintains and upgrades its pollutant treatment facilities, introduces advanced treatment processes, and optimizes productionprocesses to reduce the amount of pollutants produced. At the same time, the Company has established a pollutant discharge monitoring system to monitorthe concentration and volume of discharges and ensure that the discharge standards are met.

Regularly track additions, chang-es and revisions to laws and reg-ulations.Regularly conduct pollutant mon-itoring and check the operationof environmental protection facili-ties to ensure compliance withlaws and regulations.Actively publicize the Company'spractices and achievements inenvironmental protection throughchannels such as the Company'sofficial website, social media, etc.Increase investment in R&D ofenvironmental technology, devel-op green and environmentallyfriendly products, and enhancethe added value of products.

Increase inoperating costs

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Wastewater Discharge Standards, Main Control Indicators and Treatments

CompaniesTypesExecutive StandardsMain Control IndicatorsTreatments

XINAO TEX

Domesticsewage

Integrated wastewater discharge standard

(GB 8978 – 1996)

COD，BOD5，NH3-N，TP，SS，etc.

HOUYUAN TEX

The indirect discharge limits in the

CODCr，BOD

，SS，NH

-N，TP，TN，AOX，etc.

NEW CHUWA

Industrialwastewater,domesticsewage

Discharge standards of water pollutants forwoolen textile industry (GB 28937 – 2012)

CODCr

，BOD

，TP，TN，SS，NH3-N，etc.

XINAOCASHMERE

COD

Cr

，NH

-N，TP，TN，etc.

JX FEIXUN

Maximum allowable dischargeconcentrations of Class 3 in

COD，NH

-N，etc.

Collected by septic tank and connected to the domestic sewage pipenetwork of NEW CHUWA, and discharged into the municipal sewagenetwork after pretreatment.

T&D UK

XINAO VN

BOD

，NH

-N，TP，TZn，DCr，SS，etc.

BOD

，COD，SS，NH4+（以N计），TN，TP，etc.

The high-temperature sewage discharged from the dyeing vat in the plantenters the sewage regulating pond after heat exchange through the heatrecovery device and cooled by the cooling tower, and pools with thelow-temperature sewage discharged from the dyeing vat, the workshop floorrinsing water, the backwash wastewater from the water purification stationand the domestic sewage, etc., and then treated by the plant’s own pretreat-ment station, after that, it is processed into the reclaimed water reuse facilityfor reuse, and finally the remaining water is piped to the centralized waste-water treatment system of the Park for in-depth treatment and dischargedafter reaching standard.

The high-temperature sewage discharged from the dyeing vat in theplant enters the sewage regulating pond after heat exchange throughthe heat recovery device and cooled by the cooling tower, and poolswith the low-temperature sewage discharged from the dyeing vat,the workshop floor rinsing water, the backwash wastewater from thewater purification station and the domestic sewage, etc., and thentreated by the plant’s own pretreatment station, after that, it is pro-cessed into the reclaimed water reuse facility for reuse, and finallythe remaining water is piped into the network of the sewage treat-ment plant for centralized in-depth treatment and then dischargedafter reaching standard.

Management of Impact,Risk and Opportunity

By analyzing the productionprocesses, equipment opera-tion conditions and industryregulations, the Companyidentifies the possible risks ofwaste water, waste gas andnoise emissions, such as thefailure of waste water treat-ment facilities, excessiveexhaust gas emissions, etc.,and at the same time classifiesthe risks into different levelsbased on the probability of riskoccurrence and the degree ofimpact on the environmentand the enterprise. Based onthe assessment results, theCompany formulates responsestrategies, taking emergencymeasures for high risks, reduc-ing risks by optimizing opera-tional processes and strength-ening equipment maintenancefor medium risks, and con-ducting continuous monitoringfor low risks. In addition, theCompany regularly evaluatesthe effectiveness of its man-agement, adjusts its manage-ment strategy based on theevaluation results, and continu-ously improves its pollutantdischarge management pro-cess in order to achieve a bal-ance between sustainable cor-porate development and envi-ronmental protection.

Industrialwastewater,domesticsewage

Industrialwastewater,domesticsewageDomesticsewageIndustrialwastewater,domesticsewage

Industrialwastewater,domesticsewage

Discharge standards of water pollutantsfor dyeing and finishing of textile industry

(GB 4287 – 2012)

Table 2 Indirect discharge limits inDischarge standards of water pollutantsfor dyeing and finishing of textile industry

(GB 4287 – 2012)Integrated wastewater discharge standard

(GB 8978 – 1996)Water Environment and Water Services

(Scotland) Act 2023Water Environment (Controlled Activities)(Scotland) Regulations 2005

National Technical Regulation on IndustrialWastewater (QCVN40:2011/BINMT)

Discharged into the municipal sewage pipe network after being treat-ed by grease trap and septic tank in the plant.Collected by sewage treatment station and pre-treated by physico-chemical and two-stage A/O process;After reaching the standard, discharged into the network of thesewage treatment plant for centralized in-depth treatment and thendischarged after reaching the standard.

Piped into the Park's wastewater treatment plant through the pipenetwork and discharged after reaching standard.

Collected by septic tank and connected to the domestic sewage pipenetwork of NEW CHUWA, and discharged through the network afterpretreatment.

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CompaniesExecutive StandardsMain Control IndicatorsTreatmentsCompanies

ExecutiveStandards

MainSources

Treatments

XINAO TEX

Total suspended particulates

Canteen fumesAmmonia, hydrogen sulfideand odor concentrations

Discharged at high altitude after treatments ofoxidation + alkali absorption (+ photocatalyticoxidation)NEW CHUWA

HOUYUAN TEX

XINAO CASHMERE

non-methane hydrocarbons,total suspended particulates

Discharged outwards through high positionedwindows,increase the number of ventilationwindows to ensure fresh air in the workshop

Canteen fumesSulfur dioxide, nitrogen oxides

Total suspended particulates,non-methane hydrocarbon,hydrogen chloride

Canteen fumes

Discharged in the workshop after treatment bydust removal equipmentDischarged at high altitude after treatment ofalkali liquor two-stage spray absorptionDischarged to the standard after treatment byfume purifier

XINAO VN

Methanol, diethylamine, benzene,2-pentanone, neon, nitrogen oxides,sulphur dioxide, carbon monoxide

Ammonia, hydrogen sulfideand odor concentration

Discharged to the standard after treatment byhigh-density blue light plasma-driven catalyticequipment

Waste Gas Emission Standards, Main Control Indicators and Treatments

Integrated emission standard of air

pollutants (GB 16297 – 1996)Emission standard of cooking

fume (GB 18483 – 2001)Emission standards for odorpollutants (GB 14554 – 93)Integrated emission standard ofair pollutants (GB 16297 – 1996)Emission standard of cooking

fume (GB 18483 – 2001)

Emission standards forodor pollutants (GB 14554 – 93)

Table 2 of

Integrated emission standard ofair pollutants (GB 16297 – 1996)Emission standard of cooking

fume (GB 18483 – 2001)

National Technical Regulation onIndustrial Emission of Inorganic Substances

and Dusts (QCVN19:2009/BTNMT)

Emission standard of airpollutants for boiler (GB 13271 – 2014)

Table 3 of

National Technical Regulationon Industrial Emission of OrganicSubstances (QCVN20: 2009/BTNMT)

Discharged to the standard after filtrationthrough the dust removal systemDischarged to the standard after treatment byfume purifier

Discharged to the standard after filtrationthrough the dust removal system or the exhausthood

Discharged to the standard though exhaustfunnel

Discharged to the standard after treatment byfume purifier

Emission standard forIndustrial enterprisesnoise at boundary (GB 12348 – 2008)

National TechnicalRegulation on Vibration (QCVN 27: 2010/BTNMT)Integrated emission standard of airpollutants (GB 16297 – 1996)

Discharged to the standard after filtrationthrough the dust removal systemTotal suspended particulates

Noise Emission Standards and Treatments

XINAO TEX,XINAOCASHMERE

Spinningequipment,waterpumps, fans,etc.

Spinningequipment,waterpumps, fans,etc.

Chooselow-speed,low-noiseequipment,and consid-er addingacousticenclosuresand vibra-tion-proof-ing fornoisymotors.

XINAO VN

Insulate thesound byinsulationfacilities andthe buildingitself, andregularlycheck thevibrationdampingeffect of thefacilities.

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Major Initiatives for Pollutant Discharges for the Year

XINAO TEX carried out inspection to the sewage pipe network to solve the problems of breakage,blockage and misconnection of the pipes, so as to avoid sewage leakage.

HOUYUAN TEX adopted new dyeing technology, integrated and optimized the process flow, andimproved the utilization rate of water resources to reduce wastewater discharge.

Indicator, Objective and AnnualProgress on Pollutant Discharges

Completion rate ofpollution detectionCompliance rate forpollutant discharges

100%

100%

100%

100%

Indicator and Objective

IndicatorObjectiveProgress in 2024

Compliance discharge

of pollutantReduction ofpollutant discharge

Reduction in theconcentration ofpollutant discharge

HOUYUAN TEX treated aniline by adding sodium hypochlorite to the wastewater before discharg-ing, making the chroma, ammonia nitrogen and total nitrogen decrease to different degrees.

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Waste Disposal

The wastes generated in the course of the Company's operation include leftovers such as wasteyarn and waste fiber, reclaimed yarn and reclaimed fiber, etc., non-hazardous wastes such aswaste packaging drums/boxes, sludge, beverage bottles, food wrappers, napkins, toilet trash,kitchen waste, etc., as well as hazardous wastes such as inner film bags of dyes, waste chemicalpackaging, waste oil drums, waste resin, used oil, etc.The Company strictly abides by the laws, administrative regulations and normative documentssuch as the

theand theDuring the reporting period, there was no incident of illegal disposal of waste and no litigationcase arising from the above matters.

Overview

Governance

Board of DirectorsStrategy and Sustainability (ESG)

Committee

General Manager

Heads ofSubsidiariesVice General

Managers

ESG Management

Committee

ESG Working Group

General Section ofSafety and EnvironmentHeadquarters

Functions

Subsidiaries

Responsible for researching and formu-lating waste disposal-related gover-nance plans and annual work plans, aswell as identifying and controlling wastedisposal-related risks and opportunities.

The Company's General Affairs Section,as the core management departmentfor waste disposal, is responsible for for-mulating waste disposal policies, moni-toring their implementation and com-municating and coordinating with exter-nal regulators, as well as identifying andsorting waste generated in daily opera-tions to ensure that waste is properlycollected and initially disposed of.

Decistion-making

Management

Performance

Responsible for reviewing and approv-ing the strategy and management ofwaste disposal-related matters.

The Company has formulated management systems such as “Measures for the Management of Three Wastes andNoises” to strictly supervise the generation, classification, collection, storage and treatment of waste.

Governance Structure of Waste Disposal

Standard for Pollution Control on Hazardous Waste Storage (GB18597-2023).

Law of the People's Republic of China on the Prevention and Control of Environmen-tal Pollution by Solid Wastes, Regulations on the Safety Management of Hazardous Chemicals,

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Risks and Opportunities related to Waste Disposal & Management Measures

Risks and Opportunities

Risks

Opportunities

Regulation and policy risk:

Relevant laws and regulations are constantly improvingand tightening, if not recognized in time, it may lead toviolation of discharges and face the risk of administrativepenalties, suspension and rectification of production.

Liability risk:

Improper disposal of waste will lead to environmentalproblems such as soil pollution and water pollution, affect-ing the surrounding ecological environment and the healthof residents, and will face risks such as legal proceedings.

Market opportunities:

Consumers are increasingly concerned about environmen-tally friendly products. By implementing effective wastedisposal strategies and participating in projects of wasteminimization, reuse and recovery of resources, more envi-ronmentally conscious consumers can be attracted andmarket share can be expanded.

Regularly follow up onadditions, changes andrevisions to laws andregulations.Increase research onrecycling and reuse ofwaste.Organize regular train-ings for employees onwaste disposal and en-vironmental protectionto improve their under-standing of the impor-tance of waste disposaland their operationalskills.

Management MeasuresDuration of ImpactFinancial Impact

Short-to-medium-to-long

term

Increase inoperating costs

Short-to-medium term

Increase inoperating costs

Medium-to-long term

Increase inoperating income

Note: The time frame is defined as short term (1 year or less), medium term (1 year to 5 years) and long term (more than 5 years).

Strategy

In terms of waste disposal, the Company faces the risks of tightening policies and regulations and increasing waste disposal costs. In response to theabove risks, the Company has strengthened its waste disposal compliance by enhancing technology R&D and cooperation, optimizing the waste treat-ment process, and raising the awareness of its employees.

Recycled nylon blends

Products developed from recycled plastic bottles

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In 2024, XINAO TEX upgraded its hazardous waste warehouse in terms of hardware facilities and safety protection.

Measures for Waste DisposalTypesContents

Hazardous waste

Non-hazardouswaste

Inner film bags of dyes, waste chemical packaging,

waste oil drums, etc.

Waste resin

Used oil

Entrust qualified units for standardized disposalEntrust qualified units for standardized disposal

Entrust qualified units for standardized disposal

Industrial waste

Domestic waste

Sell to waste recycling units for comprehensive utilization,

recycling and development of new products

Reclaim by suppliers regularlyHand over to qualified units for incinerationEntrust the sanitation department for disposalEntrust qualified units for harmless disposal

and reuse of resources

Disposal Measures

Leftovers such as waste yarn and waste fiber,reclaimed yarn and reclaimed fiberWaste packaging drum, box, etc.

SludgeBeverage bottles, food wrappers, napkins,

toilet trash, etc.Kitchen waste

Management of Impact, Risk and Opportunity

The Company's General Section of Safety and Environment takes the lead and joins hands with production departments to collect informa-tion on all aspects of waste generation, collection, storage, transportation and treatment, and analyzes the collected information to identifypossible impacts, risks and opportunities. On this basis, the Company evaluates the possibility of risk occurrence, the degree of impact, thescope of influence, etc., and classifies risks into different levels and formulates strategies, specifying the responsible departments and time-lines. At the same time, the Company regularly assesses the effectiveness of risk management and control and continuously improves themanagement process.

Indicator, Objective and Annual

Progress on Waste Disposal

Accuracy rate of waste

sorting and storage

Rate of waste collection

and disposal

100%

100%

Indicator and Objective

IndicatorObjectiveProgress in 2024

Harmless disposal rate of

hazardous waste

100%

100%

100%

100%

Compliance sorting for waste

固废仓库Hazardous waste warehouseSolid waste warehouse

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Practical Initiatives for Animal Welfare

Conservation of Ecosystems and BiodiversityThe Company pays constant attention to the impact of its activities on biodiversi-ty, and carries out risk identification and hidden danger investigation of ecosys-tem and biodiversity conservation in strict compliance with relevant laws and reg-ulations and guiding policies such as the

the

released by the General Office of the State Council,and the released by the State Council.The Company recognizes that the discharge of waste water, waste gas andwastes from the production process can pollute the surrounding water, soil andair, destroy the balance of ecosystems and affect biodiversity. The Company takesthe conservation of ecosystems and biodiversity into consideration and strictly im-plements the requirements of relevant national laws on operating sites, and pro-hibits any direct discharge of production wastewater and domestic sewage inorder to maintain and protect local biodiversity.During the reporting period, all of the Company's production and operation baseswere located in mature industrial parks, all of which were industrial land. TheCompany does not have any operation sites located inside nature reserves or bio-diversity-rich areas outside nature reserves, and no significant impact on biodiver-sity has been found in any of its business activities, products and services.In terms of animal welfare, the Company focuses on the responsible sourcing ofits main raw materials, such as wool and cashmere, avoids the use of hazardouschemicals in its production processes, and actively participates in animal protec-tion activities with the aim of reducing any form of animal cruelty and providingconsumers with safe and reliable products.

Choose animal-friendly raw materials:

Priority is given to the purchasing of animal fibers ob-tained from humane farming. In 2024, the Company fur-ther increased its purchases of Responsible Wool Stan-dard (RWS) certified wool (tops), the Good CashmereStandard (GCS) or Sustainable Fibre Alliance (SFA) certi-fied cashmere.Establish a supplier assessment system:

Suppliers supplying raw materials of animal origin are au-dited to assess whether their animal farming and han-dling processes comply with animal welfare guidelinesand to ensure that the source of raw materials meetsanimal welfare requirements.

During rawmaterialpurchase

Avoid the use of harmful chemical substances:

In the printing and dyeing process, strictly controlthe use of chemical substances and avoid the useof dyes and additives that are harmful to animals.Optimize the production process:

Improve the printing and dyeing process, reduceenergy consumption and pollutant emissions in theproduction process to reduce the impact on theliving environment of the surrounding animals.

Duringproduction

Opinions on Further Strengthening Bio-Regulation on Groundwater ManagementControl of Soil Contaminationdiversity Protection, Law of the People's Republic of China on Prevention and

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Wastewater

Waste gas

Wastes

Risk of excessive discharge ofwastewaterRisk of wastewater leakageRisk of excessive emission ofwaste gasRisk of waste gas leakageRisk of pollution caused by stock-piling of non-hazardous wasteRisk of illegal disposal of hazard-ous waste

Check the core equipment and conveying pipelines regularly, and replace the aging parts in time toensure the normal operation of the equipment.Optimize the treatment process regularly according to the actual water quality.Overhaul and maintain equipment regularly, and replace critical components that are aging and indisrepair timely.Set the operating parameters strictly in accordance with the equipment operating procedures, andcalibrate them periodically. Regularly examine the ventilation system and exhaust gas collectionpipes in the production workshop to ensure their tightness and proper operation.Classify and store the non-hazardous wastes such as waste packaging materials and left-over wastes, and avoid stacking them at random.Carry out whole-process tracking management for the generation, storage, transportationand disposal of hazardous waste, ensure that qualified units are entrusted to handle them,and sign standardized disposal contracts.Establish strict codes of practice for chemical substances and strengthen the training of operators toavoid operational errors.Use high-quality storage containers and regularly check the tightness and integrity of containers.

Environmental Compliance Management

The Company strictly abides by the environmental laws and regulations to the places where it operates, carries out environmental management in an orderly manner, and at thesame time pays environmental taxes and fees in full in accordance with the During the reporting period, theCompany did not have any environmental emergencies and was not subject to any major administrative penalties or criminal liabilities.Following the environmental management policy of “energy saving and high efficiency, pollution prevention and sustainable development”, the Company has formulated manage-ment documents covering various environmental impact factors, such as "Procedures for Identification and Evaluation of Environmental Factors" and "Procedures for Control of En-vironmental Operations", etc. which have been implemented through production and operation to ensure effective control of environment-related risks.Based on ISO14001:2015 environmental management system, the Company carries out environmental factor identification, compliance review, internal audit and managementreview. At the same time, the Company requires subsidiaries at all levels to fully allocate full-time and part-time personnel for environmental management, and normalizes theworking mechanism of potential risks identification and notification in order to strengthen systemic support in a sustainable manner. By the end of 2024, XINAO TEX, NEWCHUWA, HOUYUAN TEX and XINAO CASHMERE have all passed ISO 14001 environmental management system certification.The Company integrates the concept of environmental compliance into the entire process of raw material procurement, production and pollutant management. By setting environ-mental management targets, the Company regularly uploads Pollutant Release and Transfer Register (PRTR), DETOX and carbon data through the Institute of Public and Environ-mental Affairs (IPE), and accepts social supervision proactively. The Company passed the third round of Cleaner Production Audit in 2020 (valid until 2025).

In order to cope with environmental emergencies, the Company, in accordance with the relevant requirements of the Notice onthe Issuance of Interim Measures for the Administration of Contingency Plans for Environmental Emergencies and the NationalEnvironmental Emergency Response Plan released by the Ministry of Ecology and Environment, prepares the "EnvironmentalEmergency Response Plan" according to the production process, pollution chain and environmental risks, and reports to thecompetent authorities of environmental protection of the area for record in accordance with the regulations. In 2024, the Com-

pany managed the risk of enterprise accident in accordance with the requirements of the environmental impact assessment(EIA) and its comment, and regularly conducted 4 times of environmental emergency response drills to train the staff's emer-gency response ability, improve their skills in preventing and disposing of environmental emergencies, so as to reduce the possi-ble harm to the environment caused by environmental emergencies.

TypesRisksManagement Measures

Risks of Environmental Incidents and Management Measures

Chemicals

Risk of chemical substance leakageRisk of chemical substance misuse

Environmental Protection Tax Law of the People's Republic of China.

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Energy management is one of the core aspects of green manufacturing and low carbon, aswell as the main channel for the Company to realize low carbon development. In terms ofenergy use, the types of energy consumed during the Company's production and operationinclude electricity, steam, gasoline, diesel, natural gas and liquefied petroleum gas.

Adhering to the energy management concept of "energy conservation, consumption reduc-tion, efficient utilization and sustainable development", the Company strictly abides by thelaws and regulations as well as management provisions such as

and constantly strengthens the management ofenergy utilization.

Energy Utilization

Overview

Major Types of Energy and Their Usage Scenarios

Governance Structure of Energy Utilization

Direct Energy

Indirect Energy

Gasoline: running of own automobilesDiesel: running of own trucks and forkliftsNatural Gas: boilers, canteenLiquefied petroleum gas: canteen

Municipal grid and photovoltaic powergeneration: for the production facilitiesSteam: for processes of dyeing, washing, drying, etc.

Governance

Board of Directors

Strategy and Sustainability (ESG)

Committee

General Manager

Heads ofSubsidiariesVice General

Managers

ESG Management

Committee

ESG Working Group

Equipment Section, Production Section

Headquarters

Functions

Subsidiaries

Responsible for researching and for-mulating energy utilization-relatedstrategies, objectives and gover-nance plans, approving relevantmajor decisions and projects, andidentifying and controlling ener-gy-related risks and opportunities.

Responsible for organizing, arrang-ing, and managing the work relatedto energy utilization and reportingon the performance on a regularbasis.

Decistion-making

Management

Performance

Responsible for reviewing and ap-proving the strategy and manage-ment of energy utilization-relatedmatters.

Energy Conservation Law ofPower conservation Management Program,

the People's Republic of China, Measures for Industrial Energy Conservation and Supervision,

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In terms of energy utilization, the Company may face the risks of technological upgrading, unstable energy supply and price fluctuation, etc. Meanwhile, dueto the development of clean energy and the innovation of energy-saving technology, the Company is provided with new development opportunities. In viewof the above risks and opportunities, the Company keeps abreast of the latest technological developments in the industry through cooperation with universi-ties and scientific research institutions, continues to carry out technological innovation in energy utilization, and constantly improves the energy efficiency andeco-friendly performance of its products, so as to maintain the Company's dominent position in the market competition.

Strategy

Note: The time frame is defined as short term (1 year or less), medium term (1 year to 5 years) and long term (more than 5 years).

Risks and Opportunities related to Energy Utilization and Management Measures

Risks and Opportunities

Durationof Impact

Management MeasuresFinancialImpact

Risks

Opportunities

Medium-to-long term

Short-to-medium-to-

long term

Increase inoperating costs

Increase inoperating income

Science and technology risk:

Energy utilization technology is constantly updated, ifthe Company cannot keep pace with technologicaldevelopment in time and adopt new energy-savingtechnologies and equipment, it may lead to low effi-ciency of energy utilization and disadvantage inmarket competition.

Energy source opportunity:

The development of clean energy sources such assolar, wind, and hydropower provides new energy op-tions. Adopting clean energy sources reduces depen-dence on traditional fossil energy sources, minimizespollutant emissions, and enhances the Company's en-vironmental image.

Increase investment in new en-ergy-saving technologies andequipment, carry out indus-try-university-research coopera-tion with universities andresearch institutions to acceler-ate the pace of technologicalinnovation.Assess the Company's sites andenergy demand, and plan theconstruction layout of facilitiesfor clean energies such as solarenergy.Develop marketing strategiesfor green energy products,publicize the Company's advan-tages and achievements inenergy utilization to improvethe corporate brand image.Medium-to-long term

Decrease inoperating costsIncrease inoperating income

Market opportunity:

Effective energy management can reduce energyconsumption and production costs, which can im-prove the market competitiveness of products. At thesame time, focusing on the environmental friendlinessof energy utilization can satisfy consumer demand forgreen products and open up new market space.Sustainable and creative fashion design

Rooftop photovoltaic

Green sustainability finalists

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Through comprehensive collection of internal and external information related to energy utilization, the Company identifies potential impacts, risks and op-portunities related to energy utilization, assesses the possibility of occurance, degree and scope of impact of the risks and opportunities, formulates andimplements risk response and opportunity utilization strategies, and evaluates the effectiveness of the implementation, so as to ensure continuous optimi-zation of the Company's management of energy use.

Management of Impact, Risk and Opportunity

Energy Conservation Measures and Achievements for the YearMeasures

ConservationAchievementsMeasures

Optimizeenergy

Retrofitequipment

New energy conserva-tion measures inFY2024 is estimated tosave a total of2,176MWhof conventionalelectricity,1,305 tons

of steam, and 314,614

cubic meters of natu-

ral gas per year.

XINAO TEX retrofitted energy-intensive motors in the workshop.XINAO TEX retrofitted the fan impeller in the fourth spinning workshop, replacing the aluminum alloyimpeller with the most advanced carbon fiber impeller.XINAO TEX added 1 set of high-efficiency air compressor according to the optimal load capacity in Building 5#; andeliminated low energy efficiency air compressors at 1# air compression station.XINAO TEX retrofitted air conditioning in the sixth spinning workshop.

HOUYUAN TEX replaced the membrane pump for the automatic feeding system in the hank dyeing workshop.NEW CHUWA implemented energy-saving retrofits for air supply and return system of air conditioning, dustcollection, recovery system of combed wool noil, roof insulation and phase-out of other old equipment in thefirst top-making workshop.

NEW CHUWA launched distributed photovoltaic power generation project on unused rooftops.XINAO CASHMERE added solar energy hot water system in the dyeing workshop.

Indicator, Objective and Annual

Progress of Energy Utilization

(with 2020 as the baseyear)Cumulative consumptionof renewable energy by2030

235,000MWh51，415.09MWh

Indicator and Objective

IndicatorObjectiveProgress in 2024

Opening ceremony of air compression station of primary energy efficiency

HOUYUAN TEX changed the dyeing process in the top-dyeing workshop to reduce the process time andwashing time, lowering power consumption.

Improve

process

HOUYUAN TEX modified the cooling water circulation piping in the top-dyeing workshop to reduce the steamneeded for heating by using cooling water with temperature for dyeing.

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Benchmark enterprise on water conservation

The Company’s water consumption is mainly for production and domestic use, with municipalwater supply for domestic use and multiple sources of water for production purpose accordingto the location of the project, including municipal water supply, surface water, ground water,rainwater, purchased steam, production reuse water, etc.The Company deeply recognizes that textile enterprise with printing and dyeing are highly de-pendent on water resources, and their production processes such as pretreatment, dyeing andpost-treatment are closely related to water use. The Company strictly follows the laws and regu-lations such as

etc., attaches importance to and continuously improves the man-agement of water resources, strengthens the concept of water resources management and pro-motes the efficient management of water resources.During the reporting period, the Company did not commit any water withdrawal violations.

OverviewGovernance

风险类别

Water Resources Utilization

Governance Structure of Water Resources Utilization

Board of Directors

Strategy and Sustainability (ESG)

Committee

General Manager

Heads ofSubsidiariesVice GeneralManagers

ESG Management

Committee

ESG Working Group

General Section of Safety and Environment

Headquarters

Functions

Subsidiaries

Responsible for formulating thestrategic objectives and overall poli-cies of water resources manage-ment, approving major waterresources management decisionsand projects, as well as identifyingand controlling the risks and oppor-tunities related to water resources.

Responsible for organizing, arrang-ing, managing, and implementingthe work related to the utilization ofwater resources and reporting onthe performance on a regular basis.

Decistion-making

Management

Performance

Responsible for reviewing and ap-proving the strategy and manage-ment of matters related to waterresources utilization.the Water Law of the People's Republic of China, the Environmental Protectionand Control of Water Pollution,Law of the People's Republic of China, the Law of the People's Republic of China on Prevention

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Water availability

Impacts on waterecosystems

Risks related to Water Utilization and Management MeasuresRisk TypeManagement MeasuresRisk Description

Manufacturing operations mayresult in water restrictions fornearby communities or neigh-boring businesses, affecting thelifes of local residents.

Groundwaterrecession

In terms of water resources utilization, the Company is exposed to risks of water availability, impacts onwater ecosystems, groundwater recession, and community water conflicts. In response to these risks, theCompany insists on executing its responsibilities for water resource management and protection at a highstandard, and adopts strategies such as water conservation at source and recycling in order to better realizethe efficient use of water resources.

Strategy

Annual Key Water Conservation Projects and Their Achievements

With key production sites in 2 countries and 2 provinces / autonomous regions in China, theCompany takes locally adapted water management measures to ensure water security for itself and neigh-boring communities. The Company analyzes the current development and utilization status of waterresources in the watersheds or regions where its production sites are located, assesses the impacts ofwater withdrawals on water bodies and surrounding stakeholders, and then takes appropriate measuresand continuously evaluates their reasonableness and effectiveness.

Management of Impact, Risk and Opportunity

Water Conservation

Projects

Water Converstaion Achievements

HOUYUAN TEX improved the washing process and renovated the wooltop dyeing vat in its top-dyeing workshop, saving 15% direct water with-drawal per ton of product in the washing process and 1,305 tons of pur-chased steam water annually.

Retrofitting of watersupply network

XINAO CASHMERE started to construct the project of 1,500-tonreclaimed-water recycling system to recycle 980 tons/day light-coloredwastewater, with 80% of the wastewater expected to be recycled.

Technological upgrading

of dyeing equipmentReclaimed waterreuse system

XINAO TEX retrofitted the water supply network to reduce drippingand leakage.

Indicator, Objective and AnnualProgress of Water Resources Utilization

Water reuse rate by 2030

(with 2020 as base year)Cumulative total water savings by 2030

Not less than 45%

39.61%

3,250,000 ton521,355 ton

Indicator and Objective

Indicator and ObjectiveObjectiveProgress in 2024

Communitywater conflicts

Production and operationsrequire groundwater withdraw-als, and large-scale withdrawalsmay lead to a decline in ground-water levels.

Production operations are sur-rounded by water ecosystems,such as rivers, that require waterfrom the surface, and if notproperly managed, large or inap-propriate water withdrawals maylead to disruption of the waterecosystem balance.

If local water resources are rela-tively scarce, there is a risk thatwater for production and opera-tion may be in short supply.

Carry out water resource survey and assessmentto ensure an accurate understanding of thewater resources at the project site and makereasonable water use plans.Promote the adoption of recycled water utiliza-tion technologies to minimize reliance on localnatural water sources.Develop ecological protection plans to ensurethat production and operations do not causepermanent damage to surrounding water eco-systems.Assess groundwater reserves to ensure that pro-duction and operations do not cause significantgroundwater decline.Promote the use of water-saving technologies toreduce the consumption of groundwater fromproduction and operations at source.Establish regular communication mechanismswith neighboring communities to understandtheir water needs and concerns.Participate in decision-making on water resourc-es management in the Park to ensure that theinterests of all parties are fully considered andcoordinated.

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The Company's resource categories involved in recycling include materials such as reclaimed yarn and fiber, reclaimed water and condensate producedduring the production process, as well as packaging materials such as cartons, plastic tubes and woven bags. The Company adopts water recycling, packag-ing reduction and waste recycling, while focusing on the greening of raw materials and accessories, aiming to contribute to the circular economy.The Company strictly complies with the identifies the generation of wastes from a lifecycle perspective, and extends environmental impact assessment to the entire value chain. The Company manages the collection, separation, storage, trans-portation and disposal of waste in accordance with the priorities of prevention and reduction, reuse and recycling, energy recovery, and landfill waste, basedon the possible uses of the waste and an understanding of its environmental impacts and risks.

Circular Economy

Circular Economy Initiative

Promote bobbin dyeing pro-cess by adopting pallet pack-aging for transportation fromspinning to bobbin dyeing,minimizing the use of plasticfilm bags and cardboardboxes compared with hankdyeing process, and mean-while reducing 4kg of bun-dling rope per ton of product.Adopt plastic tube packagingfrom spinning to bobbindyeing and reuse internally,thereby reducing the use ofpaper tubes. The use of papertubes decreased by 23 tonsin 2024.XINAO CASHMERE upgradedits packaging carton from11kg to 22kg per carton

load, thereby reducing theamount of carton used perunit of product.

Reduction

Reuse reclaimed water andcooling water in the pro-duction process and recov-er condensate.NEW CHUWA reclaimed thewoven bags.XINAO CASHMERE recycledthe pre-spun yarn cartons.

Reuse

Participate in the Ocean Re-cycling Nylon social initia-tives.Develop recycled productseries with partners, such asREMAKE, which is a blend of40% recycled nylon and 60%superfine Merino wool. In2024, the amount of recycledpolyester tops used wasabout 28.06% of the fullyear amount of polyestertops used, and the amountof recycled nylon tops usedwas about 19.17% of the fullyear amount of nylon topsused.XINAO CASHMERE developsrecycling concepts tailored tothe availability of reclaimedfiber and wool.

Recycling

The main raw materials include rawwool, wool top, dehaired cashmerefiber and cashmere top, all of whichare 100% biodegradable andrenewable natural active fibers.Cooperate with suppliers in sus-tainable projects. In 2024, theusage percentage of varioustypes of traceable raw materialssuch as RWS, NATIVA, GRS,GOTS, GCS, etc., reached

21.77% of the total raw materials

for XINAO TEX, 18.29% forXINAO CASHMERE, and 39.59%for T&D UK.Develop blended products suchas zero-carbon Tencel andbio-based chemical fiber.Adopt chlorine-free treatment ofwool using bio-enzyme and 3E,etc.Continuously launch plant color-ing series.

Greening

Circular Economy Promotion Law of the People's Republic of China,

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Priority actions on social dimensions

The SDGs to which this chapter is dedicated

Join Hands for Integration and Mutual Bene?t

?Employee?Safety and Quality of Products and Services?Data Security & Customer Privacy?Innovation-driven?Supply Chain Security?Rural Revitalization and Social Contribution

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The Company strictly adides by the laws and regulations as well as relevant provisions such as the

the the

thethethe

theand theDuring the reporting period, there were no labor disputes or significant staff changes, nor were there anyincidents of child labor or forced labor; there were no deaths due to work-related injuries, and no penaltiesimposed by the competent authorities for violation of laws and regulations relating to occupational healthand safety.

Overview

Structure of Employee ManagementGovernance

Employees

Board of DirectorsStrategy and Sustainability (ESG)

Committee

General Manager

Heads ofSubsidiariesVice GeneralManagers

ESG Management

Committee

ESG Working Group

Human Resources Section, GeneralSection of Safety and EnvironmentHeadquarters

Functions

Subsidiaries

Responsible for researchingand formulating employ-ee-related strategies, objec-tives, and managementwork, as well as identifyingand controlling risks and op-portunities related to em-ployees.

Responsible for overseeingand managing the Compa-ny's employment and em-ployee rights, occupationalhealth and safety, and em-ployee training and develop-ment.

Decistion-making

Management

Performance

Responsible for reviewingand approving strategiesand decisions on employ-ee-related matters.

2021-2024年，24人次被评为新澳工匠，33人次入选创新英才和技术标兵

LaborLaw of the People's Republic of China, Labor Contract Law of the People's Republic of China, Regula-

of the People's Republic of China, Regulations on Work-Related Injury Insurances, etc.of the People's Republic of China on Prevention and Control of Occupational Diseases, Work Safety Lawance Law of the People's Republic of China, Trade Union Law of the People's Republic of China, Lawtions on the Implementation of the Labor Contract Law of the People's Republic of China, Social Insur-

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Overview of Employment Management System

In terms of occupational health and safety, the Company has set up a leading group for production safety, with thegeneral manager as the leader and the highest responsible person; the leading group is responsible for the overallmanagement of the Company's production safety, the formulation of contingency plans, technical measures and oc-cupational health and safety programs, as well as the inspection and supervision of the production safety; a full-timesafety administrator is set up under the leading group, who is responsible for the implementation of the Company'sspecific safety management. The Company has established the Occupational Health and Safety related manage-ment system, such as “Management System for Production Safety Objectives”, “Management System for Appraisalof Production Safety Responsibility”, “Management System for Safety Education and Training”, “ManagementSystem for Labor Protective Articles and Health Products”, “Emergency Management System”, and “MangementSystem for Safety Performance Evaluation”.

Legal Compliance Strategy. The Company is committed to eliminating any employment or supportof child labor or forced labor. At the same time, the Company prohibits employees from paying de-posits or storing ID cards when employed, and eliminates prison labor, indentured labor, bondedlabor, slave labor, or any punitive, forced, or involuntary labor.Equality and Inclusion Strategy. The Company adheres to the cultural values of equality and diver-sity, and creates an equal and inclusive workplace environment for its employees. The Companysticks to the principles of "fairness, equity and openness" in the recruitment, employment and work-place, and is committed to providing equal opportunities in hiring, compensation, training, promotionand dismissal, without discrimination or disparity in treatment of employees on the basis of race,gender, social class, nationality, religion, disability or political affiliation, etc. The Company sets up afemale staff committee, which focuses on the needs of female employees with an emphasis on nego-tiation and deliberation, and solves the practical problems of women workers through the building the"Tongxin" council room and carrying out "mutual help among sisters" activity. Meanwhile, the Compa-ny opposes workplace harassment, adopts the principle of "zero tolerance" for any form of workplaceharassment, actively creates an equal and safe working environment for employees, and establishes amechanism to preventing and controlling sexual harassment in the workplace to protect the physicaland mental health, as well as the safety of life and property of employees.Labor Union Protection Strategy. The Company establishes labor union in accordance with the law,pays continuous attention to the needs of employees, and protects the legitimate rights and interestsof employees through means of staff congresses. In order to further regulate the rights and obliga-tions of the Company and its employees, establish harmonious and stable labor relations and safe-guard the labor rights and interests of the employees, the Company's labor union, as the representa-tive of the employees, entered into a Collective Contract with the Company, agreeing that both par-ties shall, according to the actual condition of the Company, and on the basis of mutual respect andfriendly cooperation, conduct equal consultation on matters of vital interests of the employees, suchas labor contracts, negotiation on wage adjustment, insurance and benefits, labor safety and hygiene,and special protection for female workers, etc. After the signing of the Collective Contract, it will beused as the basis for the Company to formulate labor rules and regulations, and employees areinformed of rules and regulations and major decisions involving their immediate interests throughforms of public announcements.Health and Safety Strategy. The Company takes "safety first, prevention foremost, comprehensivecontrol" as its safety management policy, production safety responsibility as the core, risk evaluationand control as the means to vigorously build a safety culture.Talent Development Strategy. The Company actively creates a development platform that empha-sizes "people", supports the personalized development and all-round ability enhancement of employ-ees, and empowers the development of talents in the entire industrial ecosystem. The Company ad-heres to the principle of making the best use of one’s talents and situating the talents in the bestsuited position, and builds a vigorous team with a singleness of purpose and unity of effort whileextensively integrating talents. Meanwhile, the Company implements the principle of open, fair andjust promotion, and establishes a scientific promotion management process through continuous opti-mization to ensure that outstanding talents can be identified in the Company and achieve their per-sonal career growth.

Strategy

Recuritment andSeparation

Working Hours

and Holidays

In terms of employment and employee rights, the Company has established management systems focusing on thedimensions of recruitment and termination, working hours and holidays. On the basis of the Company's standardizedsystem, some subsidiaries have formulated specific management systems according to their own operating condi-tions to carry out employment management in a targeted manner.

?Recruitment: Implement the " Measures for the Management of Recruitmentand Employment of Production Line Employees" and the "Measures for theManagement of Recruitment and Employment of Non-Production Line Em-ployees", adhere to legal compliance, and uphold the principles of equality,fairness, and non-discrimination in the recruitment process.?Separation: Implement the "Measures for the Management of Employee

Separation", handle separation procedures according to the type of separa-tion, and comprehensively protect the legitimate rights and interests of em-ployees in the process of separation.

?Retirement: Implement the "Measures for the Management of RetirementRetention", which stipulates matters such as retirement, rehiring policies afterretirement and management requirements, etc.

?Working hours: Implement the "Attendance Management Measures" andcarry out the standard working system.

?Holidays: Implement the "Attendance Management Measures", and enjoy na-tional statutory leave, as well as personal leave, sick leave, work-related injuryleave, marriage leave, maternity leave, benefit leave (birthday), funeral leaveand other leave in accordance with the law.

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Diversified Recruitment. The Company formulates recruitment plans for different positions, and providesequal employment opportunities and competitive salaries by means of online recruitment, live communi-cation and offline interviews, etc. At the same time, the Company continues to increase the introductionof overseas talents. In 2024, the Company focused on the recruitment of talents for overseas projects inVietnam, attracting local community residents for employment through brand promotion, aiming toachieve efficient operation of overseas projects with a high localization rate of the management team.

Workplace Inclusiveness. The Company provides equal development opportunities and correspondingwelfare guarantee for women, middle and senior age groups, ethnic minorities and flexibly employedpeople under the premise of meeting business operations.Democratic Communication. The Company has set up diversified democratic communication and com-plaint platforms for employees, such as the care hotline, WeChat official account, employee representativeforum, employee opinion survey, mailbox, bulletin board, and talk room (dispute mediation committee).

Mangement of Impact, Risk and Opportunity

?Provide daily benefits such as shuttle bus for some routes, rentalsubsidies, five social insurances and one housing fund, commercialinsurance, annual physical examination, paid annual leave, gift pack-ages, condolences, team building activities, tours, etc.Daily Benefits

?Cash benefit allowances: distance allowance, meal allowance,

birthday benefit, holiday benefit, referral fee benefit, retirement ben-efit, family planning allowance.?Job subsidies: professional title subsidy, full-attendance bonus, shiftallowance, holiday allowance for company reasons.?Special rewards for excellence: advanced and civilized staffawards, operation competition awards, excellent team awards, vari-ous sales awards, QC group performance appraisal awards.Cash Allowance

Employee Benefit System

In 2024Number offemale employees2,562

Number of employeesover the age of 50

Number of domesticminority employees

Employment and Employee Rights

Campus recruitment in VietnamCampus presentationEmployee tourismEmployee forum

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Employee Care Platform

?Internal activities: the second

women’s talent and skill show &women’s garden party themed“Light in the heart, youth forever”;rice dumpling competition on theDragon Boat Festival themed “Enjoygood times with rice dumplings”;trailwalk in the Anji BaizhanglingMountain.

?External activities: Tongxiang Bas-ketball Match, Honor of Kingse-sports competition among listedenterprises in Tongxiang City,Tongxiang Staff Fun Games.

Trailwalk to the Anji Baizhangling Mountain

Employee bastketball match

Recreational and sports activities

Living and workingin peace and contentment

Mutual aid

The Company actively builds an "employee care platform" to enhanceemployee satisfaction, sense of belonging and happiness through ap-proaches of recreational and sports activities, living and working inpeace and contentment, as well as mutual aid.

?Free accommodation: free dormitoryfor non-local employees, couple roomfor non-local working couple, enjoyfree utilities within the specified limits.?Family service center: equipped withdance room, gym, leisure bar, talkroom, reading room, etc.?Schooling and care for children:

assist non-local staff to solve theirchildren's schooling problems; In 2024,the Company organized the secondsummer camp for little migratory bird,and cooperated with five-color careproject in Chongfu Town, covering 64children of employees.

?Creating mother and baby place:

providing nursing and breastfeedingplaces for breastfeeding workers witha sense of comfort and security.

?Medical aid fund: on top of thesocial security reimbursement, theout-of-pocket expenses can bereimbursed by the Company for afurther 70%, and the subsidies foremployees totaled 405,600 yuanin 2024.

?Participation in the EmployeeMedical Mutual Aid Program ofTongxiang Federation of TradeUnions: the funds required formedical mutual aid are paid in fullby the Company's trade union fund,and the expenditure of premiumsfor employees totaled 141,900yuan in 2024.?Assistance for needy employees:

In 2024, 300,000 yuan of assis-tance was granted to employees inneed.

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Thematic training for work safety month

Upon identification, the risks involved in the Company’s production safety include safety risks inthe construction phase of construction projects, safety risks in workplaces during the commis-sioning and operation phases, and risks in chemical management. The Company has identifiedthe types of occupational disease hazards involved in its business, which mainly include noise,fur dust, formic acid, acetic acid, sulfur dioxide, hydrogen peroxide, sodium hydroxide, sodiumcarbonate and other dusts.The Company continues to promote the standardization of production safety and requires thatthe safety facilities of construction projects must be designed, constructed, put into productionand used in tandem with the main project to ensure safety from the source. Meanwhile, theCompany continuously improves its safety monitoring measures, covering monitoring of majorsources of danger, fire alarm and fire control, etc., in order to prevent and minimize productionsafety accidents, and safeguard the lives and properties of the Company and its employees. In2024, XINAO TEX, NEW CHUWA and HOUYUAN TEX passed the reassessment of work safetystandardization and received the Certificate of Work Safety Standardization of Enterprise (Textile)Class 2.

Occupational Health & Safety

The Company builds a comprehensive occupational health and safety managementsystem based on the dimensions of system guarantee, risk management and dailyprotection, and undertakes the corresponding accreditation process. As at the endof 2024, XINAO TEX, NEW CHUWA, HOUYUAN TEX and XINAO CASHMERE havepassed the ISO45001 occupational health and safety system certification.The Company promotes its subsidiaries to carry out regular testing of occupationaldisease hazard factors and investigation of occupational health-related hidden dan-gers, monitor and rectify occupational disease risks, and strengthen the manage-ment of employees' occupational health. The Company provides employees withoccupational health checkups and establishes occupational health files for employ-ees involved in occupational disease hazards. At the same time, the Company, ac-cording to the identified hazards, provides employees with Personal ProtectiveEquipment (PPE) to protect the health and safety in the course of their work. Ac-cording to the “Implementation Measures of Liability Insurance of Safe Production”,HOUYUAN TEX and NEW CHUWA purchase liability insurance of work safety forhazardous chemical operations and management personnel, sewage treatment per-sonnel and special personnel. In 2024, the Company carried out thematic activitiessuch as safety training, safety inspection, and emergency drill during the worksafety month under the theme of “Everyone Pays Attention to Safety, EveryoneSkilled in Emergency Response - Smooth Life Passageway”.

In 2024Investment in produc-tion safety (CNY)

6.60 M

Participations insafety education andtrainings

14,674

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IndicatorCoverage rate of work-related injury insurancefor employeesCoverage rate of employee training

Objective

100%

96.04%

100%100%

Progress in 2024

Employee Training & Development

Employee Development System

Indicator, Objective and Annual Progress of Employee Management

Indicator and Objective

Training participations

55,319

Training investment(CNY)

2.18 M

Training hours in total

76,414.70

In 2024

Generalskills

Leadership

skills

Professional

skills

Mentorship ceremony

The Company deepens the work of talent cultivation and echelon construction, focuses on generalskills, professional skills and leadership skills, comprehensively organizes training courses and deeplyintegrates training resources.

?Newcomer training: training newcomers from social and on-campusrecruitments?Basic knowledge: company open class, online class, labor emulation,

knowledge contest of little wool master, QCC group activity?Engineer training: continuing education training for engineers?Technician training: recognition of skill levels, independent appraisal ofjunior and intermediate professional and technical qualifications, techni-cal seminar, cultivating mode of “Dual Teacher” + “Project-based”

?Induction training: training camps for sales recruits, mentor-apprentice

one-on-one job coaching, customer development and sales practice

?Leadership training for top management: comprehensive quality en-

hancement courses for corporate executives?Leadership training for middle management: skill master studio?Leadership training for grassroots management: training camps for

emerging shift leaders

Training and Education. Based on the existing internal trainer team, the Companyset up a "training college". At the same time, the Company continued to challengeand innovate in talent cultivation by organizing the third training camp for sales new-comers, the second competitive reporting on the "dual-teacher" training for textile col-lege students and the launch of the third “dual-teacher” training, as well as thesecond new-generation management cadre enhancement course. It also pioneeredthe "2+1" progressive training model to comprehensively establish a compound talentsystem through cognitive learning, rotational learning and mentor training, providingstrong talent support for the Company's strategy of sustainable and broadband devel-opment.Career Development. The Company is oriented to the ability and value creation ofemployees and provides employees with four major career promotion channels: skill,technology, function and management. At the same time, the Company carries outthe competitive recruitment of management cadres, and the independent evaluationof technical and skilled talents, guiding the career development of employees andrealizing the matching of people and posts. In 2024, the Company carried out theindependent recognition of textile fibre comber/spinners/dyers for a cumulative totalof 133 participations, and held management cadre competitions with a cumulativetotal of 30 participations, of which 5 people have been appointed to various manage-ment positions through competitive recruitment. In 2024, 14 employees obtainedjunior or intermediate professional titles by the Company’s prilimiary appraisal, and 15employees obtained junior or intermediate professional and technical qualificationsthrough the Company’s independent appraisal.Incentive Mechanism. The Company carries out general salary adjustment andsalary adjustment upon performance appraisals every year, and sets up a variety ofinternal awards for employees, such as selection and commendation of outstandingemployees and outstanding managers to motivate employees from both material andspiritual dimensions and promote their long-term retention and development. In addi-tion, the Company further improves its medium- and long-term incentive mechanism,and creates a benefit-sharing mechanism between employees and owners throughcontinuous equity incentives, so as to attract and retain outstanding management tal-ents and business backbones.

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Safety and Quality of Products and Services

The Company strictly abides by the laws and regulations such as the

the

and establishes a life-cycle qualitymanagement system covering product R&D, procurement, production, market ser-vices, and achieved a lean upgrade of product quality through end-to-end life-cyclemanagement and continuous improvement.During the reporting period, the Company did not have any major liability accidentsthat were penalized by the competent authorities for violating the laws and regula-tions related to the safety and quality of products and services, nor did it have anycases related to product recalls.

OverviewGovernance

决策层

Governance Structure of Safety and Quality of Products and Services

The 6th

QCC presentation contest

Competitively dominant enterpriseamong China's textile and garment brands

Product Qualitythe Protection of Consumer Rights and Interests,Law of the People's Republic of China, Law of the People's Republic of China on

Board of DirectorsStrategy and Sustainability (ESG)

Committee

General Manager

Heads ofSubsidiariesVice General

Managers

ESG Management

Committee

ESG Working Group

QC Section, Marketing Section,International Trade Section, Dom-estic Sales Section, Center Laboratory

Headquarters

Functions

Subsidiaries

Responsible for researching and formulating strategies,objectives and management work related to safety andquality of products and services, as well as identifyingand controlling risks and opportunities related to safetyand quality of products and services.

Responsible for organizing, arranging and managing thework related to safety and quality of products and ser-vices, and reporting the performance on a regular basis.The QC Section is responsible for controlling the quality ofthe Company's products, the Marketing Section, Interna-tional Trade Section, and Domestic Sales Section areresponsible for product sales and after-sales services, cus-tomer communication and satisfaction management, andthe Center Laboratory carries out relevant performancetestings from raw materials to finished products, includingincoming testing of raw materials (woolen tops, syntheticfibers, filaments, etc.), spinning testing, and back-end test-ing.

Decistion-making

Management

Performance

Responsible for reviewing and approving the strategyand management of matters related to safety and qual-ity of products and services.

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In the process of managing the safety and quality of products and services, the Company may face the risks ofproduct safety and quality not meeting the standards and brand reputation decline. In response to the aboverisks, the Company has implemented a quality leadership strategy to continuously improve the quality of itsproducts and services by strengthening the management of its raw material suppliers and optimizing its pro-duction processes, in order to ensure that its products and services meet market demand.

Strategy

ProductDevelo-pmentProductR&DMaterialProcur-mentManu-facturing

MarketService

Total Quality Management

Risks and Opportunities related to Safety and Quality

of Products and Services & Management Measures

Management of Impact, Risk and Opportunity

Quality Management Process

Note: The time frame is defined as short term (1 year or less), medium term (1 year to 5 years) and long term (more than 5 years).

Durationof Impact

FinancialImpact

Management MeasuresRisks and Opportunities

Being capable of comprehensive product inspection, the Company conducts preventive testing for qualityproblems that may arise in each process to ensure the quality of the product. For emerging or potentialquality issues, preventive testing is prioritized with schemes such as error and fool proofing, and equip-ment automation. The Company continuously improves the reliability of testing equipment throughinspector's visual check, calibration of testing equipment, benchmark testing with third parties, and en-hances the competence of testing personnel's quality skills though newcomer training and internal train-ing, including QC training, quality analysis and improved tools training, etc.The Company standardizes the procedures of nonconformity management through two dimensions,namely business process and field process, forming a closed-loop of identification, marking, segregation,evaluation, disposal and improvement, and clarifying the responsible departments for each process, so asto strictly control the quality. Besides, the Company formulates systems such as "Procedures for the Con-trol of Marking, Traceability and Recall" and carries out product recall drills on a regular basis in strict ac-cordance with the relevant laws and regulations of its own country or exporting countries.

?Regularly track additions,changes and revisions tolaws and regulations.?Implement the strategyof quality leadership, takethe safety and quality ofproducts and services asthe core competitivenessof the enterprise andintegrate them into thelong-term developmentstrategy.?Shape the high-endbrand image of the en-terprise through continu-ous improvement ofproduct quality and ser-vice level, win the trustof customers and expandmarket share throughhigh quality in both do-mestic and internationalmarkets.

Short-to-medium term

Increase inoperating costs

Oppor-tunities

Risks

?Liability risk: Failure of products andservices to meet expected safety andquality standards may lead to reworkor even legal action, resulting in directfinancial loss and customer loss.?Reputation risk: In case of quality andsafety accidents, it may lead to thedamage of the company's brandimage and reputation, lowering markettrust and affecting subsequentbusiness expansion.?Policy and regulatory risk: Regula-

tions related to chemicals manage-ment are becoming increasinglystringent, and if not familiar with or donot comply with the requirements ofthe regulations, the Company may beexposed to legal risks, such as beingordered to suspend production andrectify the situation if restricted chemi-cals are used in violation of the regula-tions.

?Product/service opportunities:

Developing and using safe andhigh-quality materials can increase theadded value of products and expandbusiness areas.

Decrease inoperatingincomeShort-to-medium term

Increase inoperating costsDecrease inoperatingincome

Medium-to-long term

Decrease inoperatingincome

Medium-to-long term

Decrease inoperating costsIncrease inoperatingincome

?Ensure that products meet product safety standards during the development phase.?Set product safety targets at the development phase to improve product safety-related require-

ments.

?Set access to professional after-sales customer service and quality complaint to provide cus-

tomers with professional and timely technical service support.?Quality-related departments analyze quality problems and follow up until they are solved.

?Control comprehensively of the elements in the manufacturing process, such as operators, ma-

chinery and equipment, materials, methods, and environment, etc.?Conduct routing and sampling inspection, incoming and outgoing inspection to the qualified

materials, continuously improve the quality problems in the production process.

?Carry out supplier introduction and quality management by categorizing and rating.?Inspect incoming materials for different suppliers.

?Conduct tests according to various standards during the R&D process to ensure that the prod-

uct meets the certification standards.?Review at each stage of R&D to ensure the success and efficiency of product design and devel-

opment.

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Customer Service Management

Management MeasuresSpecific Progress

Process for Handling Customer Complaints

Adhering to the service concept of "customer demand-centered", the Company continuously strengthens customer service before, during and aftersales, and formulates system documents such as "Management Measures for Measurement of Customer Satisfaction" to constantly improve man-agement efficiency and standardization.

Collect

Collect customerfeedback, receiveand prejudgecomplaints.

Investi-gate

Investigate byrelevant depart-ments, formulatesolutions, andrectify preven-tive measures.

RespondRespond to customerof the handling state,track the implementa-tion of corrective andpreventive measures,and close complaints.

Measures and Progress on Customer Management

The Company establishes a timely and effective mechanism for han-dling customer complaints, formulates management documentationssuch as the "Procedures for the Control of Handling Customer Com-plaint", specifies that a specially-assigned person is in charge of cus-tomer complaints, and standardizes the efficiency of responding tocustomer claims and demands. The Company also establishes a cus-tomer complaint management system in the OA system to enhancethe efficiency of recording and handling of customer issues. TheCompany receives customer complaints in a timely manner throughchannels such as customer feedback phone (0573-88455805) andthe Company's official website, and categorizes all complaints andensures that "every complaint will be closed".

Salesandafter-salesservices

Manage-ment ofcustomercommu-nicationandsatis-faction

?Well-developed servicenetwork: Build an independentpopular color system andrespond to customer needs intime.

?Professional service team:

Deploy sufficient salespersonsand technicians, provideone-on-one exclusive service toquality customers.?Diversified communicationapproaches and channels:

Display the Company'scutting-edge innovative achieve-ments by participating in exhibi-tions and exchange meetings,build new media platforms,create internationalized websiteto disseminate various news andactivities of the Company.?Regular visits: Pay regular visitsto customers, collect theircomments on the Company.?Customer satisfaction survey:

Send "Customer SatisfactionQuestionnaire" to customersboth at home and abroad everyyear.

?Every year, Italian color experts are invited to predict the domestic and international trends of woolen knitwearin the next 1-2 years, and the theme colors of the seasons spring/summer and autumn/winter are released inMarch and August every year. Through the leading of fashion trends and digital analysis of customerdemands, precise stocking service is launched to provide rapid response to customer demands.?Develop differentiated products according to the special needs of the market and customers.?Collaborate with customers to carry out traceability activities and help brand customers to enhance their brand

image with premium origin and fine quality.?By the end of 2024, the Company has set up offices and marketing teams in the US, UK, France, Germany,Japan, South Korea, and Northern Europe, etc., covering most provinces in China and more than 20 countriesand regions overseas, with local marketings personnel reporting directly to the head office to localize customercommunications.?Professional technical service team, together with sales, provide customers with pre-sale, in-sale and after-saleon-site technical advice and support in a timely and rapid manner.?In 2024, the Company participated in exhibitions such as SPINEXPO SHANGHAI for international fashion yarnsand knitwear (spring/summer and autumn/winter), FILO International Yarn Show, PERFORMANCE DAYS func-tional fabric fair, ISPO MUNICH, etc., and brand events of「LIVE | the X attitude」series in Florence, Italy.?The Company promoted all types yarns to the corporate customers and end consumers through four majornew media platforms, namely Official Account, Tik Tok, Xiaohongshu (the red note), and WeChat Video Chan-nel. By the end of 2024, the number of Official Account followers has exceeded 21,500, and the number ofTik Tok followers has exceeded 7,000.?In 2024, XINAO TEX and XINAO CASHMERE updated their websites based on the new brand vision to

strengthen brand recognition, enhance user experience by optimizing navigation and interaction design, and

adapting to multi-device display.?The Company took the initiative to pay interactive visits to key customers and collected their relevant or specif-

ic requirements on service, quality, products, and fed back the corresponding requirements to the responsible

departments for resolution and action.?Investigated the user experience and product experience in the entire process of pre-sales, in-sales, and

post-sales. In 2024, XINAO TEX, NEW CHUWA and HOUYUAN TEX conducted customer satisfaction surveys

and all achieved a satisfaction score of 90 or higher.

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Responsible Use of Chemicals

Indicator, Objective and Annula Progress of theSafety and Quality of Products and Services

Life Cycle Management of ChemicalsIn terms of chemical management, the Company has established a chemical management commit-tee, with the director of the committee responsible for providing guidance on the overall approach tochemical management, the heads of functional departments and subsidiaries monitoring the progresstowards chemical management objectives, and the specialist of chemical management responsiblefor the overall implementation of the chemical management manual.The Company strictly complies with laws and regulations on the registration, use, disclosure andmanagement of chemicals as well as customer requirements, and expects to minimize the use ofchemicals in order to reduce the impact of chemicals on human health and the environment. Basedon its own chemical management policy and management organization, the Company carries out thelife cycle management of chemicals covering procurement, access, evaluation and use to ensure thesafety use of chemical in an all-round way.

100%100%

When purchasing chemicals, require suppliers to provide documentations such as qualifica-tions and certifications, material safety data sheet (MSDS) and chemical safety labels, andidentify the content of hazardous substances in the products or components they provide.Chemical Procurement

When admitting chemicals, formulate internal control standards and management process-es for chemical substances that are in line with its own operations and in accordance withinternational, national and industrial standards such as RoHS and REACH, and implementand regularly update chemical control lists and catalogues.

Chemical Access

When evaluating new chemical, analyze and manage the risks that they may pose to opera-tional safety, human health, and the environment, and confirm the acceptance and effective-ness of the risk control measures.Chemical Evaluation

When using the chemicals, register the detailed information of chemicals involved in allproducts, services and activities to identify the hazardous characteristics of chemicals, andclearly stipulate that the receipt of chemicals must be registered and documented byspecialized personnel.

Chemical Use

Handling rate of complaints from customers

IndicatorObjectiveProgress in 2024

Indicator and Objective

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Data Security & Customer PrivacyThe Company attaches great importance to data security and customer privacy, and strictly complies with therequirements of laws, regulations and documents such as thethe the

theand theetc., and the relevant systems and policies cover all the business lines and data management work. Datamanagement work. During the reporting period, the Company did not experience any data security incidents orleakage of customers' privacy, nor did it experience any litigation cases arising from the abovementioned matters.The Company has established a three-tier management system of information security, namely, "Information Secu-rity Leading Group, Information Security Prevention and Control Group and Information Security Emergency Re-sponse Group". The Information Security Leading Group is chaired by the general manager of the Company, whois the first person responsible for the Company's information security and the overall supervision and management,overall planning, decision-making and disposal of the Company's information security; the Information Security Pre-vention and Control Group is led by the information center, with the participation of various business functions tocarry out the construction of information security and day-to-day governance work on a regular basis; and theInformation Security Emergency Response Team, led by the company's management representative, with the par-ticipation of the vice presidents in charge of each function and the leaders of core business departments, isresponsible for dealing with all kinds of information security incidents and accidents, and carrying out emergencydrills from time to time to cope with potential risks and enhance its data disaster tolerance and security capabilitiesagainst risks.The Company stores all customer information and data in the information system, which can only be effectively ac-cessed and extracted through specific authorization to prevent malicious disclosure. The Company strictly controlsthe date such as production capacity, raw materials and processes generated during the production process anddoes not support arbitrary export. Meanwhile, the Company sets access rights for sales personnel at all levelsthrough the ERP system to protect customers' information such products and colors, and prohibits sales personnelfrom using customized products and colors for other customers' orders.

Measures to Protect Information Security

教育赞助

为纺织类大学生提供毕业设计纱线，共计赞助羊毛羊绒纱线合计金额约

XX万元

Perform routine loginof log analysis oncritical informationsystems to identifypotential cyberattacks and maliciousaccess.

Set dynamic verifica-tion code for systemssuch as collaborativeplatforms that areuniversal, mobile, andhighly applicable todifferent places toincrease the cost anddifficulty of maliciousaccesses and attacks.

Install firewalls andnetwork antivirussoftware on front-endhardware for cybersecurity.

Participate in thecyber attack anddefense drill coordi-nated by the cybersecurity supervisionbrigade of the publicsecurity bureau, andmake response, rectifi-cation and securityimprovement accord-ing to the report of thecyber security attackand defense drill.

Login log analysis

Dynamicveri?cation code

Terminal security

control

Cyber attack and

defense drill

Data Security Law of the People's Republic of China,

tems,Users, Regulations of the Peoples Republic of China for Safety Protection of Computer Information Sys-Republic of China, Regulations for the Protection of Personal Information of Telecommunications and Internet

Sybersecurity Law of the People's Republic of China, Personal Information Protection Law of the People's

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The Company strictly follows relevant laws, regulations and policy documents such as the Law of thePeople's Republic of China on Scientific and Technological Progress and the Outline of the National Strat-egy for Innovation-Driven Development to ensure compliance and high standards of execution in technol-ogy R&D and product innovation.

Innovation-driven

Governance Structure of Invovation-driven

Overview

Innovation-driven related Risks, Opportunities and Management Measures

Note: The time frame is defined as short term (1 year or less), medium term (1 year to 5 years) and long term (more than 5 years).

In the process of innovation and R&D, the Company may face the risks of failure in technology development,failure to effectively protect the innovation achievements, prolongation of the R&D cycle, and launch of moreadvantageous products by competitors. In response to the above risks, the Company has set up a professionaltechnical team to carry out technical feasibility demonstration, formulate detailed project plan and budget moni-toring mechanism to ensure the stability of innovative R&D.

Durationof Impact

Management MeasuresRisks and Opportunities

Strategy

Board of Directors

Strategy and Sustainability (ESG)

Committee

General Manager

Heads ofSubsidiariesVice General

Managers

ESG Management

Committee

ESG Working Group

Technology Section,Product Development SectionHeadquarters

Functions

Subsidiaries

Responsible for researchingand formulating innova-tion-driven strategies, objec-tives and management work,as well as identifying andcontrolling risks and oppor-tunities related to innova-tion-driven matters.

Responsible for organizing,arranging, and managing thework related to innova-tion-driven matters, as wellas reporting on the perfor-mance regularly.

Decistion-making

Management

Performance

Responsible for reviewingand approving the strategyand management of innova-tion-driven matters.

Governance

?Continuously pay atten-tion to the technologicaldynamics of the industry,layout basic research andfrontier technology explo-ration in advance, andestablish technologyreserves.?Establish long-term andstable industry-universi-ty-research cooperation toaccelerate the applicationof innovative achieve-ments.?Strengthen marketresearch, deeply under-stand consumer needsand market trend chang-es, explore potentialmarket demand andapplication scenarios, andprovide direction guid-ance for innovative R&D.

Short-to-medium term

Oppor-tunities

Risks

?Market risk: If competitors launchmore technologically advantageous orcost-effective products, the Company'sexisting products may face the risk ofbeing replaced.

Decrease inoperatingincome

FinancialImpact

?Technology risk: If technical data,design solutions or innovations in theR&D process are not effectivelyprotected, they may face the risk ofbeing stolen, copied or misused byexternal competitors or wrongdoers.

?Market opportunity: Consumers'attention to environmentally friendly,sustainable and functional products isincreasing, environmentally friendlyand functional products can open upthe green and high-end consumermarket and expand the Company'smarket competitiveness.

Short-to-medium term

Increase inoperatingcosts

Medium-to-long term

Increase inoperatingincome

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Following the principle of "combining innovation and standardization, economic practicality and aesthetics,design & production and sales", the Company forms a unique R&D system by virtue of its in-depth under-standing of the industry, and through innovations in terms of product R&D, quality testing, technology andproduction process, skill training for talents, and reform of system.

Relying on the experienced R&D team and extensive and in-depthexternal cooperation, the Company has established innovative R&Dcenters in Jiaxing (Zhejiang Province), Yinchuan (Ningxia Province),Italy and Scotland, forming a R&D system which is standardized,efficient, and sustainable. By the end of 2024, the Company hasbuilt the National Development Base of Woolen Yarns Product, En-terprise Technology Center of Zhejiang Province, Enterprise Re-search Institute of Zhejiang Province, Ningxia Research Center ofCashmere Engineering Technology, and XINAO TEX, HOUYUAN TEXand XINAO CASHMERE have been recognized as national high-techenterprises.The Company maintains a high level of R&D investment, continuesto promote the construction of scientific research platform, and en-hances the R&D capability. In 2024, the Company invested a total of

110.70 million yuan in R&D, accounting for 2.29% of the operating

income. As of the end of 2024, the Company has 483 R&D person-nel, accounting for 11.32% of the total number of employees, ofwhich 4 have senior titles and 67 have intermediate titles; 5 havemaster's degrees and 76 have bachelor's degrees, and the overallR&D team size and strength is in the leading position in the industry.

Management of Impact, Risk and Opportunity

Indicator and Objective

Indicator

The proportion of R&D investment tooperating incomeThe proportion of R&D personnel

ObjectiveProgress in 2024

InnovationDimensions

Focus onlow-carbonfashionDevelop greenproducts

MainContents

Annual ProgressLayout of R&D innovation Projects and Annual Progress

Innovation-driven related Indicator, Objective and Annual Progress

Not less than 2.5%2.29%Not less than 10%11.32%

In 2024Number of inventionpatents applied

Number of inventionpatents authorized

Number of effectivepatents

Number of inventionpatents applied tothe main business

Product

Technology

Focus on high-end marketDevelopdifferentiatedproductsFocus on Broad-band strategyDevelopmulti-scenarioproductsBreakthroughand upgradekey technolo-giesParticipate inthe develop-ment ofindustrytechnicalstandards

?XINAO TEX developed chlorine-free shrinkproof wool and zero-carbon lyocellblended yarn, which was selected in the “2024 Compilation of Green andLow-Carbon Technologies in Textile Industry”.?XINAO CASHMERE cooperated with fiber companies to develop blended prod-

ucts of degradable materials and protein fibers, breaking through the applica-tion limitation of protein fibers.?XINAO CASHMERE utilized recycled cashmere, wool, recycled nylon andzero-carbon tencel and developed 4 products of recycled series, which werehighly valued by the market.?XINAO CASHMERE developed 6 products of fancy yarn series, with obvioussense of texture, high-class and elegant colors, which were unanimously recog-nized by textile and garment brands.?XINAO TEX developed high count wool yarn in 130s, high twist extremely finewool yarn, elastic core-spun cashmere yarn.?Designed and produced 6 sample swatches of worsted woven home textile fabricsuch as cut pile and boiled wool.?Cooperated with a leading automobile interior decoration enterprise to developyarn for automobile interior decoration products, which has shown initial success.?Designed and developed high-count wool fancy yarn, which has been introducedto the market.?XINAO TEX made great breakthroughs in key technologies such as compact

spinning hairiness and low-pilling yarns.?XINAO TEX engaged in the application and enhancement of key technologies

such as shrinkage of wool fiber in hot water, application of wool yarn on mo-

torcycle cushion, and embedded spinning.?XINAO TEX participated in the standard

which has been promulgated and implemented.?XINAO CASHMERE has presided over the formulation of the group standard

"Technical Specification for Low Phosphorus Decolorization of Colored Cash-

mere", which has been published and implemented.?XINAO CASHMERE participated in the formulation of the national standard

which has been

submitted to the competent authorities of the State for review.

Tex-tiles – Quality labelling specification for dehaired cashmere,

Worsted fabric GB/T26382-2024,

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Supply Chain Security

Risks and Opportunities related to Supply Chain Security

According to the degree of influence of purchased materials on finished products, the Company classifies purchased ma-terials into four categories: Ⅰ (raw materials), Ⅱ (outsourced processing), Ⅲ (accessories) and Ⅳ (others).The Company has built a sound supply chain governance structure, with the Purchasing and Outsourcing Section respon-sible for overall planning, supplier evaluation and management. The Company has formulated "Supplier Management Pro-cedures" and "Procedures for the Control of Purchasing and Outsourcing Process" to clarify the requirements related tothe categorization, inclusion, evaluation and daily management of suppliers, and apply different control levels to differentcategories of suppliers.Supply chain disruption risks can have a significant impact on the Company's business, such as delays in product avail-ability and product quality issues. Identified risks to the Company's supply chain management include liability risks andreputational risks due to lax supplier access and poor supplier ESG performance.

Types of Riskor Opportunity

Liability Risk

Reputational Risk

Product & Service

Opportunity

DescriptionFinancial Impact

Grand opening of XINAO Vietnam, building a diversified supply chain system

?The direct introduction of new suppliers without adequate qualification,sample testing or on-site evaluation leads to fluctuations in the qualityof supply, increased delivery uncertainty, and possible risks of supplychain disruption and financial compensation to customers.

?Poor performance on ESG aspects of suppliers, such as excessive pol-lutant emissions, improper waste disposal, labor rights issues, or busi-ness ethics violations, may expose the Company to risks of supply chaindisruptions, reputational damage, etc.

?Through sample testing, comparative analysis and on-site evaluation,suppliers are promoted to improve product quality and technical capa-bilities, which is conducive to the Company's new product developmentand technological innovation.

Increase inoperating costs

Increase inoperating costs

Increase inoperating income

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Management ProcessDescription

Suppliers are required to have a certain production scale, as well as competitiveness in terms of capacity, quality, price,transportation, service and brand. Provide relevant certificates such as their product quality certificates, quality andenvironmental system certificates, as well as environmental protection commitment letters. Fill out the “Supplier Informa-tion Registration Form”.

Verify the qualification of suppliers, review the implementation and operation of their quality management (raw materials,process, outgoing quality control, etc.) and environmental system.Fill in the "Supplier On-site Survey Form" and "Supplier Social Responsibility Assessment Form", and those not reaching 80scores won’t be included in the qualified suppliers until their rectifications are completed.Sign documents such as the “Supplier Commitment on Social Responsibility” and the “Supplier Commitment on Anti-Brib-ery/Anti-Corruption” with new suppliers to prevent social responsibility risks for suppliers.

Request for new supplier inclusion when existing qualified suppliers cannot meet requirements of cost, delivery or quality.Application

Review

Qualification surveyof potential suppliersApproval of samplefrom suppliersOn-site assessment

Assessmentmanagement

Inclusion of newlyqualified suppliers

Disqualification ofsuppliers from eligibility

The potential suppliers will be included as new suppliers after their submitted samples being approved.

Make statistical analysis monthly for Class I and Class II suppliers on their quality indicators, cost indicators for delivery, and

environmental information. The assessment cycle is half a year for Class I suppliers, and one year for Class II suppliers.

Include supply quality, contract fulfillment, service provision and support capability, price competitiveness, self-improve-

ment ability, quality system, environmental protection, safety, etc., in supplier evaluation, evaluate suppliers regularly and fill

in “Supplier Assessment Form” to reduce supply chain risks.

If a Class I supplier is rated C in the assessment cycle, relevant departments shall organize on-site review, propose rectification

items, and track the rectification results.

If a Class I supplier is rated A in the assessment cycle, it will be rewarded with an increase in the procurement ratio and a

reduction in the payment cycle.

quality accidents or whose supplies have been continuously unqualified shall be disqualified.

onsecutive year shall be disqualified. When it is required to supply again, it will be re-evaluated as a new supplier.

The Company develops sustainable supply chain manage-ment in synergy with its core businesses of R&D, produc-tion and sales, and achieves environmental protection andsocial responsibility goals through optimizing the supplychain to reduce costs, improve product quality, and assistoutsourced processing units, so as to enhance thelong-term competitiveness of the enterprise. At the sametime, the Company actively builds a fair, open, transparentand responsible supply chain, incorporates sustainable de-velopment requirements into the terms of new supplieraccess audit, implements environmental and social respon-sibility risk management for suppliers, and ensures thatproducts and services meet the requirements of sustainabil-ity from the source.In addition, the Company gives priority to suppliers withexcellent performance in environmental protection, energysaving and emission reduction, and promotes the greeningof raw materials and packaging materials. The Companyprioritizes the procurement of energy-saving and environ-mentally friendly products. In the purchase of projects, ITequipment, office furniture and office computers, the Com-pany requires suppliers to provide products or services thatare in compliance with national and industry standards andgreen purchase standards, and prioritizes suppliers that pro-vide energy-saving and environmentally friendly products tofurther strengthen its focus on environmental protectionand resource utilization.

Supplier Management Process

Supplier Audit

Inclusionof newsuppliers

Dailymanage-ment ofqualifiedsuppliers

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In terms of volunteer activities, the Company has formed a volunteer team centered on CPC members. By the end of 2024, theCompany and its subsidiary XINAO CASHMERE had a total of 6 Party branches, 175 Party members, 3 probationary party membersand 6 active applicants. The Company adheres to the work of party building as the overall leader, focuses on party building withgroup construction, and continuously enhances the cohesion, combat power and influence of the party organization. The Companyencourages its employees to participate in social welfare undertakings in the form of volunteers, and collaborates with party organiza-tions at all levels of the Company to provide support for employee volunteer activities in terms of funds, resources, and platforms, etc.

In addition, the Company focuses on educational sponsorship, directional donation and increase in rural incomes, andactively carries out public welfare activities and responds to social needs in a timely manner.The Company strictly abides by the laws, regulations, and policy documents such as the

thetheand theetc. In 2024, the Company formulated the “Management System for External Dona-tion” to further regulate the behavior of external donation.The Company insists on common prosperity and wealth to the good, and actively exploresthe in-depth integration of public charity and business operation, forming a new pattern of"bringing employees to do charity and integrating business into charity". Sine 2023, the Com-pany has pledged 60 million yuan to Tongxiang Charity Association for its fund titled"XINAO Charity Common Prosperity Fund of Tongxiang Charity Association". Each year, 3million yuan of annual value-added proceeds from the Chrity Common Prosperity Fund areused for social charity programs such as student assistance and poverty relief, beautiful vil-lage, and ecological civilization, etc.

Rural Revitalization and Social Contribution

Overview of the targeted use ofCommon Prosperity Fund in 2024

Overview of Rural Revitalization and Social Contribution in 2024

StudentAssistanceand Proverty

Relief

Beautiful Village

EcologicalCivilization

?1 million yuan was used for construction of beautiful village and charitable assistance in Chongfu Town.?100,000 yuan for the construction of ecological civilization practice and education base at Alxa Planting Center in Inner Mongolia.

?300,000 yuan was used for various kinds of aid by Tongxiang Charity Association.?600,000 yuan was used as charitable assistance for families in difficulty in Chong-

fu town.?200,000 yuan was used as relief fund for workers.?500,000 yuan was used as XINAO education fund for assisting students and

teachings in Chongfu Town, 100,000 yuan for assisting students and teachings of

Tongxiang Senior High School, and 150,000 yuan for assisting students and

teachings as well as school anniversary of Tongxiang No. 2 Middle School.

?50,000 yuan was used for “Five-color” care project in Chongfu Town.

talization,vitalization, Measures for Implementation of the Accountability System for Rural Revi-ple's Republic of China, Law of the People's Republic of China on Promotion of Rural Re-of the People's Republic of China on Donation for Public Welfare, Charity Law of the Peo-

Law

EducationalSponsorship

Directional

Donation

Increase

in ruralincomes

?Shanghai Donghua University Education Development Foundation sponsored students and

teaching 300,000 yuan.?Donated 50,000 yuan to Tongxiang General Artificial Intelligence Research Institute.?Donated 300,000 yuan to Hanqu Economic Cooperative of Chongxing Town, Lingwu City.?XINAO EU donated 800 euros for cancer research.?T&D UK made a charitable donation of 2,500 pounds .? Donated daily necessities such as rice, flour, and cooking oil worth 35,000 yuan to underprivi-leged residents in Lingwu's Dongtan Village and Jingling New Village .? Donated various stationery worth 10,400 yuan to Lingwu Fifth Kindergarten .?Purchased beef and agricultural products worth 97,400 yuan from Lingwu Chongxing TownHanqu Economic Cooperative.

The Company actively responds to the call of the government and relevantdepartments of the operation location, and carries out regular and specificvolunteer activities with a focuse on the construction of urban civilization, en-vironmental protection, and public health. In 2024, the Company organizedvolunteers to offer condolences and care to needy families in their villagesfrom time to time and carry out civilized persuasion, environmental hygieneinspection and rectification, etc.

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Priority actions on governance dimensions

The SDGs to which this chapter is dedicated

Empowering Governance Excellence

?Anti-commercial Bribery and Anti-corruption?Anti-unfair Competition

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Anti-commercial Bribery and Anti-corruption

The Company is committed to upholding professionalism, honesty and integrity in all business dealingsand commercial relationships, conducting its business in strict compliance with the United Nations Con-vention Against Corruption as well as all applicable laws and regulations such as the

the the

the the

etc., always aiming to create a fair, transparent andhonest working and business environment, emphasizing and continuously creating a corporate culture ofintegrity and honesty, and strictly resisting any corrupt behavior that adversely affect the integrity andreputation of the Company.During the reporting period, there were no commercial bribery or corruption related incidents and litiga-tion cases.

Overview

GovernanceGovernance Structure of Anti-commercial Bribery and Anti-corruption

Board of DirectorsStrategy and Sustainability (ESG)

Committee

General Manager

Heads ofSubsidiariesVice General

Managers

ESG Management

Committee

ESG Working Group

Office of the BoardHeadquarters

Functions

Subsidiaries

Responsible for researchingand formulating strategies,objectives and managementwork related to anti-com-mercial bribery and anti-cor-ruption, as well as identifyingand controlling risks and op-portunities related to an-ti-commerical bribery andanti-corruption.Responsible for supervisingand controlling anti-com-mercial bribery and anti-cor-ruption activities to ensurethe effective implementationof the Company's anti-com-mercial bribery and anti-cor-ruption efforts.

Decistion-making

Management

Performance

Responsible for reviewingand approving the strategiesand decisions on mattersrelated to anti-commericalbribery and anti-corruption.

In terms of system construction, the Company has formulated “Administrative Procedures for Anti-Com-mercial Bribery”, which clearly defines commercial bribery and corruption, such as offering or acceptingimproper benefits, kickbacks, and bribe gifts, as well as the corresponding penalties, ranging from warn-ings and fines to termination of labor contracts, and even pursuing legal responsibility. At the same time,the Company established the template of “Anti-commercial Bribery Agreement” and required all newsuppliers to sign it to constrain their behavior in business dealings, and required directors, supervisorsand procurement practitioners to sign the “Clean Practice Agreement”.

nal Procedure Law of the People's Republic of China,of the People's Republic of China, Civil Procedure Law of the People's Republic of China, Crimi-

the People's Republic of China, Criminal Law of the People's Republic of China, Supervision Law

Company Law of

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In international operations, laws from different regions may impose different compliance requirements on the Company's business,and suspected ethical or legal violations may also pose significant risks to the Company's business and result in fines or reputationaldamage. In day-to-day operations, there are risks of violations of laws and regulations such as commercial bribery, misappropriationof company assets, procurement fraud, false travel reimbursement, etc. These behaviors can increase operation and managementcosts, erode the company's clean culture, and cause disorder and confusion in operation and management activities.

Strategy

Note: The time frame is defined as short term (1 year or less), medium term (1 year to 5 years) and long term (more than 5 years).

?Reputation risk: In the sales process, sales

personnel may provide customers with improp-er benefits such as kickbacks and bribes inorder to fulfill their performance, which under-mines fair competition in the market and dam-ages the reputation of the enterprise.

Durationof Impact

Financial

Impact

Management MeasuresRisks and Opportunities

Risk and Opportunities related to Anti-commercialBribery and Anti-corruption & Management Measures

?Establish transparent busi-ness processes for pur-chase, sales, etc., andensure that all transactionsare conducted based onthe principles of fairness,impartiality and openness.?Enhance compliancereview of partners in theprocess of signing con-tracts and conducting busi-ness.?Incorporate anti-commer-cial bribery and anti-cor-ruption into the values andculture of the Company,and strengthen employees'awareness of reputationprotection through internaltraining and publicity.Oppor-tunities

Risks

?Liability risk: In the purchase process, suppli-ers may bribe purchasing personnel to obtainorders or seek more favorable conditions forcooperation, influencing purchase decisionsand leading to inflated procurement costs andlower quality of raw materials; in the biddingand implementation of projects such as equip-ment renewal and plant construction, there isthe risk that contractors may bribe to obtain theproject or cut corners, and the Company mayface compensation liabilities to shareholders,customers and other stakeholders due to inter-nal mismanagement.

?Market opportunity: Actively participating in

anti-commercial bribery and anti-corruptioninitiatives can help enterprises build a morecomplete internal management system, elimi-nate improper transactions through strictcontrol of all aspects such as purchase, sales,and production, thereby enhancing operationalefficiency and market competitiveness.

Short-to-medium-to-long term

Medium-to-long term

Medium-to-long term

Increase inoperating costs

Increase inoperating costs

Increase inoperating income

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The Company actively identifies and evaluates anti-commercial bribery and anti-corruption related impacts,risks and opportunities in the course of its operations, as well as the possibility of occurrence, degree ofimpact and scope of impact, etc. For the identified risks, the Company adopts the method of periodicallysummarizing and updating the risk list to ensure the accuracy and completeness of risk identification. TheCompany regulates its business partners with the same high standards, and actively builds a corporate atmo-sphere that advocates clean and good governance to create together a responsible value chain and businessecosystem.

Incorruptible Culture

Complaint & ReportInformer Protection

IndicatorObjectiveProgress in 2024

Management of Impact, Risk and OpportunityIndicator and Objective

100%100%Coverage rate of anti-commercial bribery andanti-curruption training for directors

100%100%

Coverage rate of anti-commercial bribery andanti-curruption training for management staff

100%

92.26%

Coverage rate of anti-commercial bribery andanti-curruption training for grass-roots staff

Management Measures against Commercial Bribery and Corruption

Indicator, Objective and Annual Progress ofAnti-Commercial Bribery and Anti-Corruption

◎Report hotline: 0573-88226086◎Report e-mail: sjhg@xinaotex.comNumber of trainings on anti-commercialbribery and anti-corruption

Number of suppliers that have signed"Anti-Commercial Bribery Agreement"

In 2024

?Incorruptible training: Regularly organize employees to participate in online or offline an-

ti-commercial bribery and anti-corruption training, including for directors, supervisors, middleand senior managers, grass-roots employees, etc., to ensure that they continue to update theirknowledge and strengthen compliance awareness; Anti-commercial bribery and anti-corruptioncourses are included in the induction training of new employees to enable them to understandthe company's compliance requirements through case studies and interpretation of regulations.?Incorruptible cooperation: The Company signs an Anti-Commercial Bribery Agreement withits major suppliers, and suppliers who violate the incorruptible terms will be blacklisted.

?The Company has established a soundreporting system and acceptance process,giving feedback on complaints and reports,encouraging and accepting supervision fromall sectors of society.

?The Company strictly protects the personalinformation of informers, prohibits any formof unlawful discrimination or retaliation, orhostile acts against those involved in theinvestigation, and deals severely with thoseinvolved in illegal disclosure of informationabout informers and retaliation againstinformers.

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Anti-unfair Competition

The Company complies with the laws and regulations such as the

the the

the thethe etc., and takes thedocuments such as the “Rules for the Implementation of the Patent Law of the People's Republic ofChina”, the “Guidelines for Patent Examination”, the “Regulations on the Implementation of theTrademark Law of the People's Republic of China”, and the “Guidelines for Trademark Examination andTrial” as guidelines for its anti-unfair competition management efforts.During the reporting period, the Company did not incur any litigation or significant administrative penal-ties resulting from unfair competition behavior.

Overview

Governance

决策层

Governance Structure of Anti-unfair Competition

Board of DirectorsStrategy and Sustainability (ESG)

Committee

General Manager

Heads ofSubsidiariesVice General

Managers

ESG Management

Committee

ESG Working Group

Technology Section, Product DevelopmentSection, Marketing Section, International

Trade Section, Domestic Sales Section

Headquarters

Functions

Subsidiaries

Responsible for researchingand formulating strategies,objectives and managementwork related to anti-unfaircompetition, as well as iden-tifying and controlling risksand opportunities related toanti-unfair competition.Responsible for organizing,arranging and managing thework related to anti-unfaircompetition such as intellec-tual property protection andresponsible marketing, aswell as implementing therelevant work and reportingon the implementation on aregular basis.

Decistion-making

Management

Performance

Responsible for reviewingand approving the strategyand management of mattersrelated to anti-unfair compe-tition.

In terms of system construction, the Company formulated management systems such as “AdministrativeProcedures against Unfair Competition”, clarified the review process, standards and responsiblesubjects of publicity contents, and stipulated that the publicity information must be true, accurate andlawful, and must not contain false or exaggerated contents.

Criminal Law of the People's Republic

People's Republic of China, Anti-Monopoly Law of the People's Republic of China,

ple's Republic of China, Trademark Law of the People's Republic of China, Copyright Law of theof China, Anti-Unfair Competition Law of the People's Republic of China, Patent Law of the Peo-

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Note: The time frame is defined as short term (1 year or less), medium term (1 year to 5 years) and long term (more than 5 years).

Upholding the business philosophy of fairness and impartiality, the Company has adopted a multi-dimensional management strategyin anti-unfair competition such as protection of intellectual property rights and responsible marketing, etc. In terms of intellectualproperty protection, the Company attaches great importance to it, and registers patents, trademarks and copyrights of its innova-tions in a timely manner, strengthens daily monitoring to prevent itself from infringing and being infringed upon, and continues topioneer and innovate on the track of legal compliance. In terms of responsible marketing, the Company puts an end to improperbehaviors such as false propaganda and business defamation, and promotes the development of the enterprise with positive mar-keting, so as to create a fair and orderly market competition environment and achieve sustainable development of the enterprise.

Strategy

Durationof Impact

Financial

Impact

Management MeasuresRisks and OpportunitiesRisks and Opportunities related to Anti-Unfair Competition & Management Measures

?Assign specialized personnelresponsible for the applica-tion, maintenance and man-agement of patents, trade-marks and copyrights.?Continuously invest funds for

technology R&D and productinnovation, develop newtechnologies, processes andproducts with independentintellectual property rights, soas to improve the core com-petitiveness of the enterprise.?Strictly scrutinize the contentof product publicity to ensurethat the publicity informationis true, accurate, not exag-gerated, not false, and avoidmisleading consumers.

Short-to-medium-to-long term

Increase inoperating costs

Short-to-medium term

Decrease inoperating income

Medium-to-long term

Increase inoperating incomeOppor-tunities

Risks

?Liability risk: In the course of daily operation,

there are risks of trademark infringement,patent infringement, copyright infringementand trade secret disclosure, etc. In the face ofinfringement lawsuits, the Company may haveto bear compensation liabilities and stop theinfringing behavior, which will bring economiclosses to the enterprise.?Reputation risk: In order to attract consumers,enterprises exaggerate the characteristics oftheir products such as performance, quality,environmental protection, etc., which may leadto a crisis of trust among consumers anddamage their reputation.

?Market opportunity: Enterprises can effective-ly protect their trademarks, patents, copyrightsand business secrets, and realize the transfor-mation of the commercial value of intellectualproperty rights through patent licensing, brandcooperation, etc., thus expanding the marketand obtaining more cooperation opportunities.

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GuideIndexLetter fromthe ChairmanDirection ofthe ReportEnvironmental, Social andGovernance (ESG) Report 2024

The Company regularly identifies the impacts, risks and opportunities related to anti-unfair competition in the course of its operations, as-sesses the possibility of occurrence, degree of impact and scope of impact of the identified risks, formulates strategies and contingencyplans for different risks, and evaluates the effectiveness of its anti-unfair competition management work to ensure the effectiveness of riskresponse measures. At the same time, the Company establishes good cooperative relationships with peers and upstream and downstreamenterprises to actively seize market opportunities in light of market demand and its own advantages.

Intellectual

PropertyProtection

ResponsibleMarketing

IndicatorObjective

Progress in 2024

TypesSpecific Measures

Management of Impact, Risk and Opportunity

Indicator and Objective

Mangement Measures of Anti-unfair Competition

Indicator, Objective and Annual Progress of Anti-unfair Competition

Number of incidents resulting in litigation or significant administrativepenalties due to the company's unfair competition behavior

?Training: Organize trainings on intellectual property rights for relevant departments to enhance employee’s awareness ofintellectual property rights. Respect the intellectual property rights of others and prohibit employees from improperly obtaining,improperly disclosing, improperly using and improperly disposing of the intellectual property rights of others.?Layout: Patenting core technologies in new product development to form a layout of patent protection. At the same time,identify the blind area for the protection of core technology through analysis of existing and industry patents, and guide effec-tively the directions of R&D and operation.?Novelty check: Relevant department conducts novelty checks to determine whether intellectual property rights infringementwill occur before carrying out activities involving intellectual property rights, such as scientific and technological innovation,new product sales, and external exhibitions. Make full use of intellectual property literature to formulate the right researchdirection and technological routes before the R&D and technological transformation of new technologies, new processes, andnew products to raise the threshold of R&D, and avoid repetitive developments or IP infringement disputes.

?Compliance: Carry out responsible marketing work in strict compliance with national laws and regulations as well as indus-try-related regulations, and deliver true, accurate, effective and easy-to-understand information to clients and consumersabout product characteristics, service efficiency, potential risks, safety instructions, operation and maintenance methods, etc.through channels of official company website, exhibitions, product launches, new media, etc.?Scrutiny: Scrutinize all released new product detail sheets and brochures to ensure that there are no contents or descriptionsthat infringe or violate the requirements of the advertising law.

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GuideIndexLetter fromthe ChairmanDirection ofthe Report

Environmental, Social andGovernance (ESG) Report 2024

Total wastewater discharges Industrial wastewater discharges Domestic wastewater dischargesWastewater discharge per unit of product 7Wastewater discharge per unit of revenue 8Total waste gas emissionsWaste gas emission per unit of product 9Waste gas emission per unit of revenue

m?m?m?m?/tm?/million yuan

m?m?/tm?/million yuan

1,189,203.511,107,048.5182,155.00

45.74

301.07

///

1,273,986.831,189,010.8384,976.00

47.05

287.04

///

1,434,805.871,315,409.87119,396.00

46.43

296.40

28,521,610.54

922.96

5,891.94

Indicators Unit202220232024

Data Sheet on Pollutant Discharges

Indicators

Total waste generation Total hazardous waste generation Total non-hazardous waste generationTotal non-hazardous industrial waste generationTotal non-hazardous domestic waste generationTotal hazardous waste generation per unitof product

Total hazardous waste generation per unitof revenue

Total non-hazardous waste generation perunit of product

Total non-hazardous waste generation perunit of revenue

tttttkg/tkg/million yuan

t/tt/million yuan

9,192.32

25.95

9,166.378,689.07

348.24

1.00

6.57

0.35

2.32

11,143.20

15.62

11,127.5810,610.51

364.08

0.58

3.52

0.41

2.51

13,433.76

15.31

13,418.4512,841.14

390.24

0.50

3.16

0.43

2.77

Unit202220232024

Data Sheet on Waste Disposal

In accordance with the principle of "comparability", the Company discloses the data performance reflect-ing the effectiveness of the Company's ESG management and, to the possible extent, retrospectively ad-justs the corresponding data for historical years. In 2024, the Company further improved the data collec-tion process, adjusted the statistical scope of some data to optimize the disclosure of data, and retroac-tively adjusted some of the disclosed data from previous years.The scope of data statistics for the reporting period is consistent with the scope of the Company's con-solidated financial statements, unless otherwise stated.

披露项Annual environmental expenditure10,000 CNY

10,000 CNY

1,717.68

1,279.78

Penalties for major administrative punishment orcriminal liability imposed by relevant ecological andenvironmental authorities for environmentalincidents during the reporting period

Unit202220232024

Data Sheet on Environmental Compliance Management

Indicators

1,512.56

tCO?etCO?etCO?etCO?e/ttCO?e/million yuantCO?etCO?etCO?etCO?etCO?etCO?etCO?etCO?e

103,095.246,234.3097,058.11

3.97

26.10

////////

110,601.045,505.43105,346.94

4.08

24.92

////////

124,294.696,875.94117,622.85

4.02

25.68

16,939.543,552.6813,386.86

154.39

4,492.69

681.97

2,402.569,207.93

Indicators

Data Sheet on Tackling Climate Change

Unit

By scope

Total greenhouse gas emissions Scope I total greenhouse gas emissions 1 Scope II total greenhouse gas emissions 2Greenhouse gas emissions per unit of product 3Greenhouse gas emissions per unit of revenue 4Greenhouse gas emissions directly reduced byemission reduction measures 5 Scope I Scope II Re-engineer the production process Retrofit equipmentImprove technique Replace fuel Others 6

202220232024

By emissionreductionmeasure

Data Sheet on Environmental Dimensions

ESG Data Sheets and Notes

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Indicators

Data Sheet on Water Resources Utilization

UnitWater withdrawal Municipal water supplySurface water Ground water Rain water Purchased steam waterWater withdrawal per unit of product

Water withdrawal per unit of revenue

Reuse water consumption Cooling reuse water consumption Reclaimed reuse water consumption Steam condensate consumption Other reuse water consumputionTotal water consumption

Water reuse rate

ttttttt/tt/million yuan

tttttt%

1,569,113.76827,555.00454,790.0078,344.3058,578.00127,788.46

60.36

397.26

933,583.262,658.00774,376.00111,207.2067,400.062,502,697.02

37.30

1,693,988.95907,959.00501,587.0083,953.0060,904.00139,585.95

62.56

381.67

1,287,519.2410,450.001,076,746.00117,224.9083,098.342,981,508.19

43.18

1,823,490.161,050,674.00481,019.0061,520.0078,591.00151,686.16

59.01

376.69

1,196,000.2937,529.67910,192.00142,565.80105,712.823,019,490.45

39.61

202220232024

Indicators

Waste cyclic utilizationShare of recycled waste

Total resource consumptionRenewable resource consumptionThe proportion of renewable resourceconsumption to the total resource consumption

t%tt%

/////

/////

187.07

1.38

51,520.65

33,413.17

64.85

Unit202220232024

Data Sheet on Circular Economy

tcem?

llm?tceMWhtceMWh

ttceMWhMWhtcetcetcetce/ttce/million yuanMWh

%MWhm?

%MWh

%MWh

%

Directenergyconsumption

Indicators

Data Sheet on Energy Utilization

Unit

Indirectenergyconsumption

Cleanenergyutilization

Non-renewable energy consumption Natural gas Gasoline Diesel Liquefied petroleum gasRenewable energy consumption Solar water heatingNon-renewable energy consumption Consumption of purchased conventMWhwer Total consumption of purchased steamRenewable energy consumption

Consumption of purchased green-certified power

Consumption of purchased photovoltaic powerTotal energy consumption Consumption of direct energy Consumpution of indirect energyTotal energy consumption per unit of product

Total energy consumption per unit of revenue

Renewable energy consumption

Share of renewable energy consumption

Clean energy consumption Natural gasShare of natural gas

Solar energyShare of solar energy

OthersShare of others

Energyconsumption

202220232024

Renewable

energyutilization

2,921.691,966,132.40

102,897.91106,083.88

90.74

24,554.29

101,434.76

127,788.46

1,082.62

0.00

8,809.00

28,558.60

2,921.69

25,636.91

1.10

7.23

8，809.00

3.79

30,086.101,966,132.40

70.72

8,809.00

29.28

0.00

0.00

2,604.631,735,950.19

121,067.37103,763.96

51.26

26,662.02109,504.60139,585.951,489.31

800.00

11,318.04

30,755.962,604.6328,151.33

1.14

6.93

12，118.04

4.84

30,104.161,735,950.19

60.79

11,318.04

36.62

800.00

2.59

3,194.522,192,146.00111,943.04102,556.37

43.32

504.22

4,102.72

29,611.10124,187.05151,686.16

2,340.70

7,799.60

11,245.9835,650.54

3,698.74

31,951.80

1.15

7.36

23，148.30

7.98

46,871.292,192,146.00

50.61

15,348.70

32.75

7,799.60

16.64

Note 1：[Calculation method] Scope I greenhouse gas emissions are generated from the consumption of natural

gas, gasoline, diesel and liquefied natural gas of the Company, unorganized emissions from fire extinguish-ers, and process emissions from carbon-containing chemicals, which are calculated with reference to the

The calculation method for unorganized emissions of refrigerants refers toNote 2：[Calculation method] Scope II greenhouse gas emissions are generated from the Company's purchased

conventional power and steam, which are calculated by a market-based approach. The emission factor forpurchased conventional power of T&D UK adopts the emission coefficient of 0.22535 tCO?/MWh forFY2022 published in by the UK govern-ment. The emission factor for the remaining purchased conventional power adopts the emission coefficientof 0.5856 tCO?/MWh published jointly by the Ministry of Ecology and Environment and the National Bureauof Statistics in the

The emission factor for purchased heat adopts 0.11 tCO?/GJ with reference to theNote 3：[Calculation method] Greenhouse gas emissions per unit of product = Total greenhouse gas emissions /

Output.[Note of scope] Output refers to is the total output of each productive enterprise within the scope of theconsolidated statements presented in the form of final sales of products after internal consolidation andoffset, the same below.Note 4：[Calculation method] Greenhouse gas emissions per unit of revenue = Total greenhouse gas emissions /

Revenue.Note 5：[Calculation method] The greenhouse gas emission reductions directly resulting from the emission

reduction measures refer to the total amount of greenhouse gas emission reductions resulting from the

emission reduction measures (incomplete statistics) taken by each company up to the end of the reporting

period, with 2020 as the base year.Note 6：[Note of scope] Other emission reduction measures are greenhouse gas emissions reduced by the use of

photovoltaic power and green-certified power.Note 7：[Calculation method] Wastewater discharge per unit of product = Total wastewater discharges / Output.Note 8：[Calculation method] Wastewater discharge per unit of revenue = Total wastewater discharges / Revenue.Note 9：[Calculation method] Waste gas emission per unit of product = Total waste gas emissions / Output.Note 10：[Calculation method] Waste gas emission per unit of revenue = Total waste gas emissions / Revenue.Note 11：[Calculation method] Total hazardous waste generation per unit of product = Total hazardous waste gener-

ation / Output.Note 12：[Calculation method] Total hazardous waste generation per unit of revenue = Total hazardous waste gen-

eration / Revenue.

Note 13：[Calculation method] Total non-hazardous waste generation per unit of product = Total non-hazardous

waste generation / Output.Note 14：[Calculation method] Total non-hazardous waste generation per unit of revenue = Total non-hazardous

waste generation / Revenue.Note 15：[Calculation method] The types of direct energy consumption include natural gas, raw coal, gasoline, diesel,

liquefied petroleum gas, and solar water heating, and the types of indirect energy consumption include pur-

chased conventional power, purchased steam, purchased green-certified power, and purchased photovoltaic

power. The basis for converting various types of energy into standard coal coefficient is theNote 16：[Note of change] In 2024, the Company increased its consumption of green-certified power, hence the

increase of the renewable indirect energy consumption.Note 17：[Calculation method] Total energy consumption per unit of product = Total energy consumption / Output.Note 18：[Calculation method] Total energy consumption per unit of revenue = Total energy consumption / Revenue.Note 19：[Note of change] In 2024, the Company increased its consumption of solar water heating and

green-certified power, hence the increase of the renewable energy consumption.Note 20：[Calculation method] Share of renewable energy consumption = Renewable energy consumption / Total

energy consumption x 100%.Note 21：[Calculation method] Share of natural gas = Natural gas consumpution / Clean energy consumption x 100%.Note 22：[Calculation method] Share of solar energy = Solar energy consumption / Clean energy consumption x

100%.Note 23：[Calculation method] Share of others = Other clean energy (green-certified power) consumption / Clean

energy consumpution x 100%.Note 24：[Calculation method] Water withdrawal per unit of product = Water withdrawal / Output.Note 25：[Calculation method] Water withdrawal per unit of revenue = Water withdrawal / Revenue.Note 26：[Calculation method] Total water consumption = Water withdrawal + Reuse water consumption.Note 27：[Calculation method] Water reuse rate = Reuse water consumption / Total water consumption x 100%.Note 28：[Calculation method] Share of recycled waste = Waste cyclic utilization / Total waste generation x 100%.Note 29：[Calculation method] The proportion of renewable resource consumption to the total resource consumption

= Renewable resource consumption / Total resource consumption x 100%.

2024). Accounting meth-

Announcement on the Release of the CO? Emission Factor of Power in 2022 (December

2024 Government Gas Conversion Factors for company reporting

Supplementary Matertial.

other sectors. IPCC Chapter 7

Accounting methods and reporting guidelines of greenhouse gas emissions for industrial enterprises in

ods and reporting guidelines of greenhouse gas emissions for industrial enterprises in other sectors.

General rules

for calculation of the comprehensive energy consumption (GB/T 2589-2020).

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Data Sheet on Social Dimensions

Data Sheet on Employment and Employee Rights

PeoplePeoplePeoplePeoplePeoplePeoplePeoplePeoplePeoplePeoplePeople

%%%人人%10,000 CNY10,000 CNY

3,806

1,4952,3113,381

2,406

13.07

3,379

25.88

8.98

103.78

3,9791,5772,4023,502

2,478

15.77

3,4741,001

25.21

9.59

111.54

4,2651,7032,5623,785

2,494

15.76

3,6751,004

23.54

9.80

113.50

By gender

By form ofemployment

By age

Total number of employees (end of period)

Indicators Unit202220232024

MaleFemaleFull-time labour contractingPart-timeLabor dispatchingOther forms of employement 130 and underBetween 30 to 5050 and aboveNumber of employee turnoverEmployee turnover rate 2Labor contract signing rate 3Social insurance coverage rate

4、5

Number of employees included in collective negotiationagreemePeople (end of period) 6Number of employees subject to periodic performance orcareerPeopleevelopment appraisal (end of period)Proportion of employees subject to periodic performanceor career development appraisal in all employees 7Remuneration per capita 8Income generation per capita 9

Data Sheet on Occupational Health & Safety

People

%%10,000 CNY

%10,000 CNY%accident(s)accident(s)

1,986

////

1,958

////

2,121

149.91

3.25

Indicators Unit202220232024

Number of employees in occupationaldisease risk positionsMorbidity rate of occupational diseasesPosition tansfer rate due to occupationalcontraindications

Amount invested in work-related injuryinsurance for employeesCoverage rate of work-related injury insurancefor employees

Amount invested in workplace safety liabilityinsurance for employeesCoverage rate of workplace safety liabilityinsurance

Number of general work-related accidentsamong employeesNumber of other safety accidents

PeoplePerson-time(s)

%10,000 CNY

3,797/

99.76

92.76

3,966/

99.67

37.28

4,09655,319

96.04

218.38

IndicatorsUnit202220232024Total number of employees trained (end of period)Total number of participations of employee trainingsCoverage rate of employee training

Amount of expenditure on employee training

Data Sheet on Employee Training & Development

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Data Sheet on Data Security & Customer Privacy

Indicators Unit202220232024Specific amount involved in data security incidentsSpecific amount involved in customer privacy breaches

10,000 CNY10,000 CNY

Data Sheeet on Innovation-Driven

Amount of investment in R&DProportion of R&D investment to revenue

Number of R&D personnel (end of period)Proportion of R&D personnel

Number of patents applied during the reporting period Of which number of invention patents appliedNumber of patents authorized during the reporting period Of which number of invention patents authorizedAccumulated number of valid patentsNumber of invention patents applied to the main business

10,000 CNY%People%Patent(s)Patent(s)Patent(s)Patent(s)Patent(s)Patent(s)

10,736.44

2.72

9.54

11,120.66

2.51

10.18

11,069.89

2.29

11.32

Indicators Unit202220232024

10,000 CNY

%10,000 CNY10,000 CNY

////

////

Data Sheet on Equal Treatment of SMEs

Unit202220232024

Data Sheet on Supply Chain Security

Supplier(s)Supplier(s)Supplier(s)Supplier(s)

%Supplier(s)

%Supplier(s)

%Supplier(s)Supplier(s)

%Supplier(s)

//////

//////

20.80

16.32

15.96

90.43

Indicators Unit202220232024

Total number of suppliers

Number of suppliers certified by quality managementsystemProportion of suppliers certified by quality managementsystem

Number of suppliers certified by environmentalmanagement systemProportion of suppliers certified by environmentalmanagement system

Number of suppliers certified by occupational healthand safety management systemProportion of suppliers certified by occupational healthand safety management system

Number of suppliers assessed on environmen, labor,ethics, etcNumber of qualified suppliers assessed on environment,labor, ethics, etcProportion of qualified suppliers assessed on environment,labor and ethics, etc.

Number of suppliers with anti-commerical briberyagreements

Total number of suppliers in Chinese MainlandTotal number of suppliers in Hong Kong, Macau, Taiwan, and overseas

Balance of accounts payable (including notes payable)at the end of the reporting periodRatio of balance of accounts payable (including notes payable)to total assets at the end of the reporting period

Amount overdue at the end of the reporting periodAmount overdue to SMEs at the end of the reporting period

Data Sheet on Safety and Quality of Products and Services

Total number of complaints received about products and servicesHandling rate of complaints on products and services

Proportion of products recalled due to safety and health concerns to all products sold

Amount involved in major liability accident damages related to safety and quality ofproducts and services that occurred during the reporting period

Case(s)%%10,000 CNY

Indicators Unit202220232024

45,378.22

7.98

29.12

29.12

Indicators

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披露项

10,000 CNY10,000 CNY

People10,000 CNY10,000 CNYPerson-time(s)

Hour(s)

20.00

5.26

/

20.00

7.70

145.00

202.84

1.60

/

326.84

10.60

100.00

249.74

3.50

18,601

367.62

4.54

40.00

Indicators Unit202220232024

Cash expenditures for projects of poverty alleviationand rural revitalization

Value of expenditure on goods for projects ofpoverty alleviation and rural revitalizationNumber of people benefiting from projects ofpoverty alleviation and rural revitalizationCash expenditure for projects of external donationsand public benefits

Value of expenditure on goods for projects ofexternal donations and public benefitsNumber of participations of employees in volunteeractivitiesTotal hours of volunteer service of employees

Data Sheet on Rural Revitalization and Social Contribution

Note 1：[Note of scope] Other forms of employement include retired retainers, temporary workers, etc.Note 2：[Calculation method] Employee turnover rate = Total number of employee turnover (deducting retirees of the

right age) / (Total number of employee turnover + Total number of employees) x 100%.Note 3：[Calculation method] Labor contract signing rate = Number of employees who have signed labor contracts /

Number of employees who should have signed labor contracts × 100%.Note 4：[Note of scope] The Company buys accident insurance for employees in other forms of employment than

full-time labor contracts.Note 5：[Calculation method] Social insurance coverage rate = Number of employees covered by social insurance

(end of period) / Number of full-time labor contract employees (end of period) ×100%.Note 6：[Note of scope] 100% coverage of collective negotiation agreement in companies and subsidiaries that are

unionized.Note 7：[Calculation method] Proportion of employees subjects to periodic performance or career development ap-

praisal in all employees = Number of employees subjects to periodic performance or career development ap-

praisal (end of period) / Total number of employees (end of period) x 100%.Note 8：[Note of scope] The statistical caliber is for employees of production enterprises.Note 9：[Calculation method] Income generation per capita = Revenue / Total number of employees (end of period).Note 10：[Calculation method] Position tansfer rate due to occupational contraindications = Number of employees

transferred due to occupational contraindications / Total number of employees with occupational contraindi-

cations x 100%.

Note 11：[Calculation method] Coverage rate of work-related injury insurance = Number of employees insured

against work-related injuries / Total number of employees who should be insured against work-related inju-ries x 100%.Note 12：[Calculation method] Coverage rate of workplace safety liability insurance = Number of employees covered

by workplace safety liability insurance / Total number of employees required to be covered by workplacesafety liability insurance by the local Emergency Management Agency x 100%.Note 13：[Calculation method] Coverage rate of employee training = Total number of employees trained (end of

period) / Total number of employees (end of period) x 100%.Note 14：[Calculation method] Handling rate of complaints on products and services = Total number of complaints

on products and services handled / Total number of complaints on products and services x 100%.Note 15：[Calculation method] Proportion of products recalled due to safety and health concerns to all products

sold = Number of products recalled due to safety and health concerns / Total number of products sold x

100% .Note 16：[Calculation method] Proportion of R&D investment to revenue = Amount of investment in R&D / Revenue

x 100%.Note 17：[Calculation method] Proportion of R&D personnel = Number of R&D personnel (end of period) / Total

number of employees (end of period) x 100%.Note 18：[Calculation method] Proportion of suppliers certified by quality management system = Number of

suppliers certified by quality management system / Total number of suppliers x 100%.Note 19：[Calculation method] Proportion of suppliers certified by environmental management system = Number of

suppliers certified by environmental management system / Total number of suppliers x 100%.Note 20：[Calculation method] Proportion of suppliers certified by occupational health and safety management

system = Number of suppliers certified by occupational health and safety management system / Total

number of suppliers x 100%.Note 21：[Calculation method] Proportion of qualified suppliers assessed on environment, labor and ethics, etc. =

Number of qualified suppliers assessed on environment, labor and ethics, etc. / Number of suppliers

assessed on environment, labor and ethics, etc.Note 22：[Calculation method] Ratio of balance of accounts payable (including notes payable) to total assets at the

end of the reporting period = Balance of accounts payable (including notes payable) at the end of the

reporting period / Total assets x 100%.Note 23：[Note of change] Since 2023, the Company has been donating 3 million yuan annually from the proceeds

of the self-titled Charity Common Prosperity Fund, hence the cash expenditure for projects of poverty alle-

viation and rural revitalization and projects of external donations and public benefits in 2023 and 2024 has

increased compared with that in 2022.

CompanyProfile

Assessment ofMateriality of Topics

Arrangement forCorporate ESG Governance

Navigating Low-carbon and Recycling

Join Hands for Integrationand Mutual Benefit

EmpoweringGovernance Excellence

ESG Data Sheetsand Notes

GuideIndexLetter fromthe ChairmanDirection ofthe Report

Environmental, Social andGovernance (ESG) Report 2024

PeoplePeople%People%PeopleTime(s)Time(s)Time(s)

22.22

33.33

22.22

33.33

22.22

33.33

Indicators

Data Sheet on Corporate Governance

Unit202220232024

Number of board of directorsNumber of female directors on the boardPercentage of female directors on the boardNumber of independent directors on the boardPercentage of independent directors on the boardNumber of employee supervisors on the supervisory boardNumber of general meetings of shareholders heldNumber of board meetings heldNumber of supervisory board meetings held

10,000 CNY//0

Indicators

Data Sheet on Anti-unfair Competition

Amount involved in litigation or significant administrative penalties due to thecompany's unfair competition behavior during the reporting period

Unit202220232024

People%People

%People

%Case(s)

///////

///////

3,873

92.26

Indicators

Total number of directors covered by anti-commercial bribery andanti-corruption trainingPercentage of directors covered by anti-commercial bribery andanti-corruption trainingTotal number of management staff covered by anti-commercial briberyand anti-corruption trainingPercentage of management staff covered by anti-commercial briberyand anti-corruption trainingTotal number of grass-roots employees covered by anti-commercial briberyand anti-corruption training 1Percentage of grass-roots employees covered by anti-commercial briberyand anti-corruption trainingNumber of corruption cases proposed and concluded against the issuer orits employees during the reporting period

Unit202220232024

Data Sheet on Anti-commercial Bribery and Anti-corruption

Data Sheet on Governance Dimensions

Note 1：[Note of scope] The Management is the head or higher level of executives of each section of the Company

and its subsidiaries, and the employees other than the management are classified as grassroots employees.

CompanyProfile

Assessment ofMateriality of Topics

Arrangement forCorporate ESG Governance

Navigating Low-carbon and Recycling

Join Hands for Integrationand Mutual Benefit

EmpoweringGovernance Excellence

ESG Data Sheetsand Notes

GuideIndexLetter fromthe ChairmanDirection ofthe ReportEnvironmental, Social andGovernance (ESG) Report 2024

Guide Index against theGuidelines No. 14 of Shanghai Stock Exchange for Self-Regulation of Listed Companies – Sustainability Report (Trial)Guide Index

Tackle climate change

Pollutant discharge

Waste disposalConservation of ecosystems and biodiversity

Environmental compliance management

Energy utilizationWater resources utilizationCircular economyRural revitalizationSocial contributionInnovation-driven

Environmental

Social

Sustainability-relatedgovernance

Ethics of science and technology

Equal treatment of SMEsSafety and quality of products and servicesData Security & Customer Privacy

EmployeesDue deilgenceStakeholder communicationAnti-commercial bribery and anti-corruption

Anti-unfair competition

Supply chain security

Article 21 to 28Article 30Article 31Article 32Article 33Article 35Article 36Article 37Article 39Article 40Article 42

Article 47Article 48Article 50Article 52Article 53Article 55Article 56

Article 43Article 45Article 46

4.1 Tackle Climate Change

4.2 Pollutant Discharge

4.3 Waste Disposal

4.4 Conservation of Ecosystems and Biodiversity

4.5 Environmental Compliance Management

4.6 Energy Utilization

4.7 Water Resources Utilization

4.8 Circular Economy

5.6 Rural Revitalization and Social Contribution

5.6 Rural Revitalization and Social Contribution

5.4 Innovation-Driven

5.5 Supply Chain Security

5.2 Safety and Quality of Products and Services

5.3 Data Security & Customer Privacy

5.1 Employees

2.2 Due Diligence, Stakeholder Communication

2.2 Due Diligence, Stakeholder Communication

6.1 Anti-Commercial Bribery and Anti-Corruption

6.2 Anti-Unfair Competition

Corresponding ChapterNo.DimensionTopicCorresponding Article

The Company is not an entity engaged in such activities as scientific research andtechnology development in an ethically sensitive domain such as life science and artifi-cial intelligence.The balance of the Company's accounts payable (including notes payable) did not exceed 30billion yuan, accounting for no more than 50% of the total assets, and there was no situation inwhich overdue payments to SMEs were required to be disclosed to the public through theNational Enterprise Credit Information Publicity System.

CompanyProfile

Assessment ofMateriality of Topics

Arrangement forCorporate ESG Governance

Navigating Low-carbon and Recycling

Join Hands for Integrationand Mutual Benefit

EmpoweringGovernance Excellence

ESG Data Sheetsand Notes

GuideIndexLetter fromthe ChairmanDirection ofthe ReportEnvironmental, Social andGovernance (ESG) Report 2024