In climate governance, the Board of Directors serves as the Group’s top climate change governance body, which oversees the Group's climate change strategies and approaches. The Corporate Sustainability Committee has established the Sustainable Environment and Products Team that is operating across plants and units. It is responsible for planning and formulating carbon reduction, greenhouse gas emission, and climate change impact management and mitigation tasks.

We identify relevant climate change risks and opportunities through each operating plant and department, develop countermeasures, and report the identification results to the Corporate Sustainability Committee on a regular basis. The Corporate Sustainability Committee formulates control measures and action plans for various climate change-related risks and opportunities, adjusts and identifies climate change factors in a timely manner, and assigns each committee working group to implement control and action plans in accordance with the environmental policies.

The Corporate Sustainability Committee regularly reports the core climate risks and opportunities faced by CSRC, countermeasures, and the implementation results to the Board of Directors per year, so that the board can keep abreast of the climate-related risks and opportunities, decide on the relevant management policies, and supervise the implementation.

Faced with global climate change, CSRC is continuously enhancing the Group’s resilience to climate-related risks and remains committed to mitigating greenhouse gas (GHG) emissions. CSRC conducts annual GHG inventories and formulates management policies based on the inventory results. These policies lead to the establishment of reduction targets and corresponding measures, including replacing traditional energy sources with low-emission alternatives and gradually introducing carbon capture technologies. Based on the GHG emissions and management conditions of each operating site, the Group has set a long-term carbon reduction target of a 21% reduction by 2030 compared to the base year of 2018.

To continually achieve our GHG emission reduction targets, the Group has developed specific strategies addressing both Scope 1 and Scope 2 emissions. For Scope 1 emissions, efforts are focused on enhancing energy efficiency, upgrading process equipment, and setting goals for equipment renewal. Additionally, the Group seeks to reduce crude oil consumption by improving overall production efficiency. In the Greater China region, the Linyuan Advanced Plant and Chongqing Plant transitioned to natural gas as a cleaner alternative to heavy fuel oil in 2023. In order to effectively improve the combustion efficiency of the heating furnace, the Maanshan Plant has upgraded the U6 air preheater and increased the heat exchange area to raise the air inlet temperature, thereby reducing fuel consumption. In the United States, tail gases are utilized to generate steam and electricity for on-site use, supporting energy self-sufficiency and contributing to the energy needs of surrounding communities. In India, the facilities are continuously optimizing process parameters and upgrading the tail gas dryer systems to reduce future dependence on high-carbon fuels.

In terms of Scope 2 emissions reduction, the Linyuan Advanced Plant in Greater China has repurchased solar panels previously operated by Chailease, and is gradually planning to increase the use of renewable energy in the future. At the CCIPL Plant, wind turbine motors have been replaced with high-efficiency models, effectively reducing energy consumption while achieving both economic and emission reduction benefits. In the United States, the facility has re-evaluated and optimized the selection of rotating equipment to enhance operational efficiency. Additionally, the site has partnered with local utility providers to purchase renewable electricity. This strategic shift toward renewable energy serves as a cornerstone of the Group’s GHG mitigation strategy. Moving forward, the Group will actively explore opportunities to integrate more renewable energy sources into its operations.

To effectively achieve greenhouse gas emissions reduction targets, the Group has established a Carbon Management Task Force comprising members from the Technology Department, the EHS Department, and representatives from each operating site. In the Greater China region, a cross-site digital carbon emission monitoring system has been implemented, allowing real-time tracking of carbon emissions. Each month, CSRC calculates the financial impact based on local carbon pricing, providing this information to each site for review and improvement. Globally, CSRC holds regular meetings to review and track GHG emissions, with progress reports submitted to the Board of Directors. In addition, each plant is encouraged to share its emission reduction initiatives and performance results, fostering mutual learning among sites. The Greater China region has also incorporated monthly and quarterly GHG emission intensity figures into each plant’s key performance indicators (KPIs), which are linked to performance bonuses. This approach aims to motivate all employees to actively contribute to energy conservation and emission reduction efforts.

CSRC strictly controls the use of water resources and continues to improve the efficiency of water circulation to prevent damage to the surrounding environment caused by excessive water intake. Linyuan Advanced in Greater China and the operating plants in the United States have implemented a water balance project and continue to adjust the water resource consumption on a rolling basis. They work with neighboring factories to sell steam to neighboring factories, and the external partners transport the condensate generated in their processes back to the plants for reuse. Other internal water-saving actions include the following: diverting cooling water discharged from the cooling water to the desulfurization absorption tower as a supplementary water source, to expand the scale of water cycle; and regularly examining and repairing leaks in the plant's pipelines to reduce the risk of water waste. In 2024, we continued to take water-saving measures and reviewed the room for improvement in practical operations to achieve the best water resource use efficiency.

In 2024, CSRC's total water intake was 4,783 thousand m3, which came from third-parties’ water, groundwater, well water, and condensate, and the water was used for processes, packaging, and office administration in the Group as a whole. Water intake was 2,321 thousand m3 in Greater China, 1,295 thousand m3 in India, and 1,167 thousand m3 in the United States. The reason for the increase in water withdrawal in the India region in 2024 is the higher production volume at the CCET plant in 2024 compared to 2023.

CSRC complies with various waste disposal laws and regulations to ensure that all waste generated is properly disposed of. In order to live up to the spirit of responsible production and circular economy, each plant has kept abreast of the source, type, and quantity of various waste resources, and ensured that their disposal methods and flows are in compliance with all environmental laws and regulations, to further achieve the goals of cleaner production, resource recycling and industrial waste reduction to achieve the goals of pollution reduction, waste reduction, and environmental protection. In 2024, the Group achieved a waste recycling rate of 78.9%, of which 84.5% in Greater China, 89.5% in India, and 73.1% in the United States. Each plant within the group will continue to strive for waste reduction improvements to achieve short-term goals.

In 2024, CSRC Group's total waste generation was 13,308 metric tons, a decrease from 13,727 metric tons in 2023, primarily due to enhanced waste management at the Ponca plant in the U.S., which reduced non-hazardous waste output.