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.

In the face of global climate change, CSRC is constantly strengthening the Group's climate adaptation and resilience and mitigating greenhouse gas emissions. CSRC conducts a greenhouse gas inventory every year and formulates a greenhouse gas management policy based on the inventory results and then sets reduction targets and draws up measures, while replacing traditional energy with low-emission one to reduce carbon emissions from the process and planning to gradually adopt carbon capture technology. In this regard, we have set the group-wide long-term carbon reduction target for 2030 based on the greenhouse gas emissions and management status of each operating plant, to reduce emissions by 21% compared to the baseline year of 2018. In 2023, the achievement rate was 100%.

In order to effectively achieve the goal of greenhouse gas reduction, the Group has established an Emissions Management Team consisting of personnel from the Technical Department, the Safety and Environment Center, and various operating plants. A cross-plant online e-carbon emission monitoring system has been established for plants in Greater China, which can be checked at any time. Regarding carbon emissions, plants in all regions around the world hold regular meetings to review and track carbon emissions and invite each plant to share its carbon reduction solutions and performance with other plants so that they can learn from each other. The monthly and quarterly greenhouse gas emission intensity of the plants in Greater China has been listed as a KPI of the plants. The KPI is linked to the performance bonus to motivate all employees to work together for energy conservation and emission reduction.

To realize the concept of environmental sustainability, CSRC has invested in various environmental protection projects in recent years, including desulfurization and denitrification systems and low-nitrogen burners and has successively built natural gas pipelines in Greater China to replace heavy crude oil as fuel, to reduce carbon emissions. To further promote low-carbon transition, the Group has budgeted greenhouse gas management and regularly reports to the Board of Directors.

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 2023, 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 terms of water resources management, CSRC continues to examine the process water consumption in the plants and implements water conservation and recycling projects to make the most effective use of water resources. In 2023, the wastewater recycling rates of the group is 89%, and plants in Greater China were 56% for Linyuan Advanced, 90% for Maanshan, and 22% for Anshan; the said rates of the plants in India were 100% for CCET and 100% for CCIPL; the said rates of the plants in the United States were 100% for CCC Sunray and 100% for CCC Ponca.

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 2023, the Group achieved a waste recycling rate of 80.4%, of which 87.9% in Greater China, 72.0% in India, and 51.4% in the United States. All are expected to achieve short-term targets ahead of schedule.

In 2023, the Group's total waste generated was 6,767.5 tons (Note), a significant decrease of 13% from 7,742.8 tons in 2022. In Greater China, Anshan uses incineration method to dispose of general solid waste, which has led to significant reduction of waste.