Stock Abbreviation: Sokan

Stock Code: 688157

2025

Environmental Social and

Governance ReportCONTENTS

About this Report 01

About Sokan ESG Management

Message from the Chairman 03 01 Governance Foundation Upholding Integrity and

2025 ESG Highlight Performance 05 Company Profile 07 ESG Governance Structure 11 Compliance

Corporate Honors and ESG Risk and Opportunity Improving Corporate Governance 21

Qualifications 07 Management 12 Risk and Compliance Management 24

Corporate Strategy 08 Communication with Stakeholders 15 Protecting Investors' Rights and

Corporate Culture 09 Topic Materiality Assessment 17 Interests 25

Main Business 09 Compliance with Business Ethics 27

Main Products 10 Information Security Assurance 31

02 Environment as the Base 03 Value Co-Creation Appendix Committing to Green Empowering the Industrial 04 Caring for EmployeesContributing to a Better

Development Ecosystem Society

Key Data Performance Table 94

Addressing Climate Change* 35 Innovation-Driven Development* 53 Employee Rights and Benefits 73

Report Index Table 99

Environmental Compliance Product and Service Quality* 62 Employee Growth and

Reader Feedback 101

Management* 39 Responsible Supply Chain 69 Empowerment 80

Efficient Resource Utilization 44 Occupational Health and Safety* 84

Pollution Prevention and Chemical Safety 91

Control Management 48 Social Contribution Practice 932025 Environmental Social and Governance Report About this Report

About this Report Data Sources

All information and data disclosed in this report are sourced from official channels including the Company's internal documents

Report Description annual reports financial data original operational records and public government information. Unless otherwise specified financial

data is denominated in Renminbi (RMB). In case of any discrepancy with the financial report of the same period the financial report

This report is the second Environmental Social and Governance report released by Sokan New Materials Group Co. Ltd. It aims shall prevail. The Company undertakes that there are no false records misleading statements or material omissions in the contents

to systematically demonstrate to all stakeholders the Company's continuous deepening practices and outcomes in the fields of of this report and assumes full responsibility for the authenticity accuracy and completeness of the information.environment social and governance in the current year with a focus on elaborating the core principles upheld management Report Access

systems established specific practices adopted and substantive achievements made in addressing ESG-related topics during the

operation and management process. This report is released in electronic format in both Chinese and English versions. In case of any discrepancies between the two

versions the Chinese version shall prevail.Abbreviations Used in the Report The Chinese and English electronic versions of the report are available for viewing and download via the official website of Sokan

New Materials Group Co. Ltd. (https://www.sokan.com.cn/) and the Shanghai Stock Exchange website (http://www.sse.com.cn).Abbreviations Company Name Principles for Report Preparation

Sokan Sokan Group the

Sokan New Materials Group Co. Ltd.Company Materiality Quantification

Songrun New Materials Changsha Songrun New Materials Co. Ltd. The Company has systematically identified material topics of This report focuses on the disclosure of key quantitative

high relevance to its business activities that are of concern to indicators and to the fullest extent possible relevant historical

Ohashi Chemical Dongguan Ohashi Chemical Co. Ltd. all stakeholders and these topics serve as the core focus of data so as to intuitively present the changing trends of the

Beichi Technology Guangxi Beichi Automotive Technology Co. Ltd. this report. While disclosing material topics full consideration Company's ESG performance and provide stakeholders with

Sokan Electronic Inks Hunan Sokan Electronic Inks Technology Co. Ltd. is given to the characteristics of the industry in which the quantifiable references for decision-making.Company operates and main business of the Company. The Comparability

Sandi Digital Coating Hunan Sandi Digital Coating Systems Co. Ltd. complete process and evaluation results of the materiality The Company maintains consistency in the statistical scope

Hunan Sokan Advanced Surface Treatment and Functional Coating Research Institute Co. analysis are detailed in the "Topic Materiality Assessment"

Hunan Research Institute and disclosure methods for the same quantitative disclosure

Ltd. chapter of this report. items across different reporting periods. In the event of

Guangdong Research Institute Sokan New Materials Research Institute (Guangdong) Co. Ltd. Accuracy changes to data collection measurement and calculation

Shanghai Research Institute Sokan (Shanghai) New Materials Research Institute Co. Ltd. This report strives to ensure the accuracy of the information. methods relevant data will be retroactively adjusted and the

Location of the Company's headquarters Songrun New Materials and Hunan Sokan For quantitative information the data scope calculation details of such adjustments and the reasons thereof will be

Ningxiang Park Advanced Surface Treatment and Functional Coating Research Institute Co. Ltd. etc. basis and assumptions are clearly specified to ensure that the fully explained in the report notes. This enables stakeholders

serving as the Company's main production and R&D base range of calculation errors will not mislead information users. to conduct meaningful vertical analysis and evaluate the

Relevant quantitative information and accompanying notes development trends of the Company's ESG data performance.are detailed in the "Key Data Performance Table" chapter of Completeness

this report. The Board of Directors assumes responsibility for Unless otherwise specified the scope of this report is

Report Scope the authenticity accuracy and completeness of the contents consistent with that of Sokan New Materials Group Co. Ltd.'s

of this report and warrants the absence of any false records consolidated financial statements ensuring the completeness

misleading statements or material omissions.The time scope of this report covers January 1 2025 to December 31 2025. To enhance the comparability and completeness of of information disclosure and alignment with the scope of the Balance financial report.information certain contents may be appropriately retroactively referenced or extended. The organizational scope covers the The contents of this report strictly adhere to the principle Timeliness

Company and its subordinate subsidiaries. of objective and truthful disclosure with an impartial As an annual report this report covers the period from January

presentation of both positive and negative information related 1 2025 to December 31 2025 and is released simultaneously

to the Company. No undisclosed negative events that should with the Company's annual financial report providing

Compilation Basis have been disclosed were identified during the reporting stakeholders with timely and effective information for decision-

period. making.Clarity

Guidelines No. 14 of the Shanghai Stock Exchange for Self-Regulation of Listed Companies—Sustainability Report (Trial) Verifiability

This report is simultaneously released in Simplified Chinese

(hereinafter referred to as the "Guidelines") All cases and data disclosed in this report are sourced from and English. It includes visual information such as tables and

Guidelines No. 13 of the Shanghai Stock Exchange for Self-Regulation of Listed Companies on the STAR Market—Sustainability the original operational records or financial reports of model diagrams as supplementary explanations to the textual

Report Preparation the Company. All data sources and calculation processes content facilitating stakeholders' better understanding of the

Sustainability Reporting Standards by Global Reporting Initiative (GRI) (GRI Standards) are traceable which effectively supports the conduct and report. To further improve the efficiency of information access inspection of external assurance audit and other related work.United Nations Sustainable Development Goals (UN SDGs) a complete table of contents and a Benchmark Index Table for

ESG Standards are provided in this report.

01 022025 Environmental Social and Governance Report Message from the Chairman

Message from the Chairman

Respected investors partners and friends from all sectors of society: We put our people first and drive progress through innovation. The Company regards

employees as its most valuable asset and has established an occupational health and safety management system in

In 2025 facing the challenges of a complex and volatile macro environment and industrial transformation Sokan has line with the ISO 45001 standards. We fully safeguard the safety and health of employees through risk identification

consistently integrated the concept of sustainable development deeply into its strategy and daily operations. While regular safety training emergency drills and comprehensive health check-ups for all employees. We also pay attention

pursuing steady business development we have actively fulfilled our responsibilities to the environment society and all to employees' career development and provide competitive salary and welfare packages as well as career advancement

stakeholders. channels. In terms of product quality and innovation we adhere to an innovation-driven approach continuously provide

customers with high-reliability and green coating material solutions and take the lead in or participate in the formulation

of multiple industry standards boosting the overall upgrading of the industrial chain.In the new year we have further deepened our ESG management. Under the supervision of the Board of Directors

we rely on a three-tier governance structure featuring executive implementation by the management and cross-

departmental collaboration to ensure the effective achievement of sustainable development goals. We have continuously Looking ahead sustainable development is an endless journey. Sokan will stay true to its original aspiration and

optimized the closed-loop system covering risk identification assessment and control and fully integrated the concept integrate ESG philosophy more deeply into enterprise management. Through continuous technological innovation and

of responsibility into core links such as product safety production and operation and supply chain management. management improvement it is committed to providing customers with greener and safer product solutions creating

a more valuable development platform for employees delivering long-term and stable returns to shareholders and

working hand in hand with all stakeholders to contribute to the harmonious coexistence of society and the environment.We strengthen compliance and transparency to consolidate the foundation for

development. The Company has continuously improved its governance structure. The Board of Directors and

special committees have performed their duties diligently to ensure the scientificity and standardization of decision-

making. We attach great importance to internal risk control and business ethics. Guided by the principle of "deepening

refined management and enhancing executive efficiency" we continue to promote the standardized construction of the Ling Yunjian

internal control system strictly implement anti-fraud and integrity in employment systems and work with supply chain Chairman of the Board of Sokan

partners to build an honest and upright business ecosystem. We also maintain active and transparent communication

with investors through diverse channels to effectively safeguard the legitimate rights and interests of all shareholders.We adhere to the bottom line of compliance and advance green operations. The

Company strictly abides by national environmental protection laws and regulations and all production units carry

out their operations in accordance with the ISO 14001 Environmental Management System standards. Through a

series of measures including the introduction of solvent recovery devices optimization of equipment operation time

and implementation of refined energy management we have effectively reduced resource consumption and carbon

emissions. During the reporting period the Company achieved a 100% compliance rate in the disposal of hazardous

waste and no environmental pollution accidents occurred. We are fully aware that addressing climate change is a long-

term and arduous task and we will continue to explore the application of energy conservation emission reduction and

clean technologies in the future.

03 042025 Environmental Social and Governance Report 2025 ESG Highlight Performance

2025 ESG Highlight Performance

Social Performance

Employee satisfaction score Total employee training expenditure

Product and Service Performance 83.91 points RMB 986000

R&D investment amount accounting for

112.521 15.58% Employee training coverage rate Average employee training hoursRMB million of total operating revenue

100% 37.83 hours

Newly granted patents Cumulative national granted patents Cumulative PCT international

50 238 granted patents3 Cumulative investment in occupational Timely completion rate of occupational health and safety health check-ups

Customer satisfaction survey score Percentage of suppliers signing the RMB 718308 100%

85.93 Integrity and Honesty Agreement points 100%

No incidents of non-compliant employment practices such as child labor or forced labor

Governance Performance

For 2025 the Company proposes to distribute a cash dividend of along with a capital reserve transfer

RMB 0.40 (pre-tax) per 10 shares to all shareholders of 2 shares per 10 shares Environmental Performance

(This profit distribution proposal is subject to review and approval by the Company's 2025 Shareholders' Meeting.)

Total environmental protection investment amount Waste recycling volume

Shareholders'meetings held Board meetings held Data security and customer privacy protection

5 RMB 2.0746 million 395.07 tons3 6 training sessions conducted

Penalty amount for major administrative sanctions imposed by ecological environment

Percentage of employees trained on Percentage of directors trained on and other relevant authorities due to environmental incidents

anticommercial bribery and anti-corruption anticommercial bribery and anti-corruption

100% 100% RMB 0

05 062025 Environmental Social and Governance Report About Sokan

About Sokan Sokan Strategy

The Company has consistently adhered to its "single focus + multiple fields" development strategy known as the "three verticals

and three horizontals". On the horizontal product system it has built a multi-category integrated platform of advanced functional

Company Profile coating materials encompassing coatings inks and adhesives. In terms of the vertical business layout the Company actively

expands its presence across three key business sectors—high-end consumer electronics passenger cars and special equipment—

striving for leadership through technological excellence and aiming to become a global leader in the field of new functional

Founded in 2009 Sokan New Materials Group Co. Ltd. (Stock Abbreviation: Sokan Stock Code: 688157) is a world-leading

coating materials.enterprise in the advanced functional coating materials industry. With high-end consumer electronics passenger cars and

special equipment as its target markets the Company provides customers with systematic solutions for coatings inks adhesives

and other categories through the models of "interactive" independent R&D and "customized flexible manufacturing". Listed in

June 2020 the Company is the first A-share listed enterprise on the STAR Market of the Shanghai Stock Exchange with advanced Sokan's Medium-and Long-Term Development Strategy

functional coating materials as its main business. Exploration and

cultivation of future

business

Corporate Honors and Qualifications Development and

expansion of key Third Focus:

business level

Reservation of new

technologies and

National Maintenance and establishment of viable National

Industrial National consolidation of core Second business models

Specialized level

Product National Green Enterprise business Focus:

Fined Peculiar Target application industry：

Green Design Factory Technology

and Innovative

Demonstration Center Rapid growth

Giant Enterprise First through building core * 3 C industriesEnterprise

level capabilities * Automotive industry

* S pecial equipment

Focus: Target application industry： * A dvertising inks

Cost control efficiency * 3C industries * PCB (printed circuit board)

improvement contribution to * Automotive industry

revenue and profit * 3D printing coating equipment

National Enterprise

Postdoctoral Target application industry：

Technology Postdoctoral with National

Innovation &

Innovation Research Intellectual * 3C (computers communications

Entrepreneurship

Demonstration Workstation Property and consumer electronics) industries

Practice Base

Enterprise Advantages

Time

0708

Revenue2025 Environmental Social and Governance Report About Sokan

Corporate Culture Main Products

High-end Consumer Electronics Field:

The Company's core products in the high-end consumer electronics field cover coating

and ink series. Coatings include PVD coatings tactile coatings appearance coatings and

Corporate Mission Corporate Vision Core Values other functional coatings such as AF products low-reflectivity PU coatings low-resistance

coatings antibacterial coatings photosensitive coatings and thermosensitive coatings.Continuously surpassing and To become a global leader in the Customer centricity common The Company has also strategically positioned its water-based coating series including

creating exciting scenes field of new functional coating growth with employees water-based PU coatings water-based tactile coatings water-based UV coatings and water-

materials continuous innovation based high-temperature baking coatings. Inks include protective inks decorative inks and

UV inkjet inks while water-based screen printing inks and water-based spray inks are also

under development achieving lower VOC emissions and aligning with national industrial

development directions.Main Business

Passenger Car Field:

Sokan focuses on the high-end consumer electronics passenger car and special equipment fields. Through the models of

"interactive" independent R&D and "customized flexible manufacturing" the Company provides customers with systematic Based on several years of technical reserves and accumulated brand reputation the

Company adopts a differentiated market strategy to continuously drive two-way

solutions for advanced functional coating materials including coatings inks and adhesives. breakthroughs in technology and market. At present the Company has established supply

or cooperation relationships with a number of well-known domestic and foreign complete

The Company's products are classified into three categories by property and application: coatings inks and adhesives; cover vehicle and auto parts enterprises with products applied to multiple key components

thermosetting UV-curable and electron beam-curable coating materials by curing method; and include solvent-based water- of automotive interiors and exteriors. Products include coatings for interior/exterior trim

based high-solid and powder coating materials by solvent type. On the application side the Company focuses on the high-end parts with aftermarket repair coatings and body coatings under steady development. The

Company's automotive PVD coatings which replace traditional electroplating offer both

consumer electronics (mobile phones and accessories laptops and accessories wearable devices intelligent home appliances) multi-substrate adaptability and excellent performance while being more environmentally

and passenger car interior and exterior component fields. friendly. Ink products include protective inks decorative inks sintering inks and UV

insulating inks meeting requirements for in-process protection functional decoration

and insulation protection respectively fully suitable for diverse automotive application

scenarios.Upstream Raw Material Field Product System Downstream Application Field

Strategic Emerging Fields such as

Special Equipment

Coatings High-end ConsumerElectronics Field

Resins The Company focuses on the special equipment sectors such as rail transit aerospace Passenger car interior coating Mobile phones Laptops and

PVD coating series and marine equipment taking cutting-edge technologies such as surface treatment

series and accessories accessories functional coatings and adhesives as its core R&D directions and continuously carrying

Passenger car exterior coating Intelligent home

Tactile coating series Wearable devices out technological breakthrough and application research. Adhesives are an important part

series appliances of the Company's "three verticals and three horizontals" development strategy boasting

Pigments Exterior finish coating Passenger car refinish coatings a wide range of application scenarios and a diverse portfolio of mature products; at the

series Passenger Car Field same time the Company has built a high-performance and complete product system of

Other functional coatings Passenger car body coatings Passenger car Passenger car photoresists which can be customized and developed according to customers' process

interior parts exterior parts requirements. In the new energy battery sector the Company's UV inkjet printing technology

Solvents for cell insulation has achieved a breakthrough transformation in the end-of-line insulation

Passenger car bodies

Inks Adhesives protection process for cell manufacturing. Leveraging its accumulated expertise in UV digital

Protective Decorative printing technology the Company has successfully launched an integrated solution of Structural Hot melt Three-proof Strategic Emerging Fields

adhesives adhesives adhesives such as Special Equipment insulation frame printing equipment and materials for all-solid-state batteries promoting to inks inks

Additives Sintered Insulating Special Semiconductors achieve process innovation and significant efficiency improvement in the industry.Encapsulants Protective adhesives Photoresistsinks inks equipment etc.

09 102025 Environmental Social and Governance Report ESG Management

ESG Management

ESG Governance Structure ESG Risk and Opportunity Management

Sokan has always regarded ESG governance as a core underpinning for achieving high-quality sustainable development and Sokan regards the management of environment social and governance (ESG) related risks and opportunities as a critical

deeply integrated the concept of sustainable development into the its overall strategic planning and the entire production and foundation for supporting the Company's sustainable development. Under the supervision and guidance of the Board of Directors

operation process. We have built a three-tier ESG governance structure featuring clear division of powers and responsibilities the Company has established a closed-loop ESG risk and opportunity management mechanism covering the entire process.vertical and horizontal coordination and closed-loop management and control. With the Board of Directors as the decision- Combining its actual operation industry development trends and stakeholders' demands the Company systematically conducts

making core the senior management as the management hub and all departments branches and subsidiaries as the the full-cycle management of ESG risk and opportunity identification assessment prioritization response strategy formulation

implementation entities this structure fully covers the entire ESG chain of strategic decision-making system formulation overall on-the-ground implementation and monitoring and optimization. Relevant control measures and development plans are deeply

promotion on-the-ground implementation and supervision and management. It ensures that ESG management requirements integrated into the entire business operation process; the implementation and effectiveness of all work are guaranteed through

are effectively transmitted to all links of the Company's operations providing a solid governance guarantee for the systematic and a sound governance structure and a regular tracking and monitoring mechanism is established to continuously optimize the

standardized advancement of the Company's sustainable development initiatives. management system. The Company effectively controls relevant risks seizes sustainable development opportunities and actively

responds to the United Nations Sustainable Development Goals (UN SDGs). Ultimately it collaborates with all stakeholders to

create long-term sustainable value.ESG Governance Structure and Responsibilities of Sokan

(Highest Decision-Making Level)

Oversee the Company's sustainable development and outlook; review and approve

the Group's ESG management policies strategies objectives and annual work plan

including the assessment prioritization and management of key ESG issues risks and

opportunities.Board of

Directors (Management Hub)

Develop ESG management guidelines strategies and objectives;

define the responsibilities of each department branch and subsidiary;

coordinate the implementation of ESG policies while ensuring that

Senior

ent ESG management practices comply with relevant laws and regulatory

Managem requirements.(Implementation Entities)

tment

s

Depar Implement and execute the Group's ESG management strategies All nd

ranche

s a guidelines plans and work objectives based on actual work

B ries

Subsid

ia conditions; strictly abide by ESG-related policies and local laws and

regulations; fully advance the on-the-ground implementation of all

ESG-related initiatives.

11 122025 Environmental Social and Governance Report ESG Management

Impact Assessment of ESG-Related Risks and Opportunities on External Stakeholders

Risk/Opportunity Category Impact of Risk/Opportunity on External Stakeholders Impact Direction Time Horizon Corporate Value Chain External Stakeholders of Impact Link Causing Impact Affected Response Measures

Failure to timely adapt to new environmental and Track policy dynamics on a regular basis; upgrade

Production and Ecological and

"dual carbon (carbon peaking and carbon neutrality)" environmental governance facilities; promote

manufacturing waste environmental

Risk of tighter environmental regulations may result in compliance penalties and Short-term cleaner production and low-carbon technological

Negative disposal R&D and regulators customers

regulations and "dual carbon" policies production restrictions affecting customer delivery and long-term transformation; integrate "dual carbon" requirements

design supply chain investors community

investor returns and posing potential negative impacts into the entire value chain; conduct regular self-

management public suppliers

on the community ecology inspections and audits on environmental compliance

Extreme weather may cause disruptions to production Production and Conduct investigation and assessment of climate

and logistics affecting customer delivery and investor manufacturing logistics change risks; formulate contingency plans for

Climate change-related physical and Customers investors

returns; transition policies may push up operating costs Negative Medium term and transportation raw extreme weather; promote low-carbon technological

transition risks suppliers regulators

weaken product competitiveness and impact supply long term material procurement transformation and the application of renewable community public

chain stability product sales R&D and energy; optimize supply chain resilience; incorporate

design climate response into long-term strategies

Failure to meet the ESG access requirements of leading Product sales and Respond to customers' ESG needs on a regular basis;

Risk of elevated ESG access thresholds customers may result in qualification downgrades and customer service supply improve the management system by benchmarking

Negative

for core downstream customers order losses affecting investor returns and the stability Short term chain management Customers investors against the standards of leading customers; incorporate

of supply chain cooperation medium term production and suppliers ESG requirements into supplier management; disclose

manufacturing R&D and ESG performance regularly; ensure ESG compliance of

Occurrence of work safety accidents may damage design the supply chain

Improve the work safety and occupational health

employees' health rights and interests cause production Production and

Work safety and occupational health Employees work safety management system; conduct regular safety training

disruptions and affect customer delivery lead to Negative manufacturing

risks Short-term regulators customers and emergency drills; upgrade safety protection

regulatory penalties and harm investor interests brand warehousing and

long-term investors community facilities; carry out regular investigation and

reputation and community safety logistics raw material

public rectification of potential safety hazards; implement the

Establishing an ESG supply chain management system procurement full employee responsibility system for work safety

can drive the improvement of ESG performance of Raw material Establish a supplier ESG access assessment and

the upstream and downstream ensure the safety and

Opportunity for synergetic sustainable procurement supply empowerment mechanism; conduct ESG synergy

stability of the supply chain provide customers with Positive Suppliers customers

development of the industrial chain Medium term chain management training for the upstream and downstream; sign

full-chain compliant products and services boost long- investors industry long term product sales and sustainable development cooperation agreements;

term investor confidence and promote the sustainable associations regulatorscustomer service R&D jointly promote the green and compliant upgrading of

development of the industry and design the industrial chain

New coating products with low VOC degradable and Increase R&D investment in green and low-carbon

low-carbon emission properties meet customers' green R&D and design products; build a green technology R&D platform;

upgrading needs help customers achieve carbon production and Customers investors

Opportunity for green and low-carbon collaborate with the upstream and downstream to

neutrality goals create new growth drivers for investors Positive Medium term manufacturing product suppliers regulators

product and technological innovation promote the low-carbon transformation of the entire

drive the green transformation of the supply chain long term sales and customer community public industrial chain; participate in the formulation of

reduce environmental impacts and gain recognition service raw material industry associations industry green standards; build core competitiveness

from regulators and the industry procurement in green products

13 142025 Environmental Social and Governance Report ESG Management

Communication with Stakeholders

The Company has always paid close attention to the demands and expectations of all stakeholders and maintained regular

communication with internal and external stakeholders by establishing diversified communication channels. It proactively

solicits opinions and expectations of all parties on the Company's sustainable development and conducts targeted responses

and interactions. During the reporting period centering on key topics the Company took the initiative to communicate relevant

progress to stakeholders and solicit their feedback and on this basis continuously improved its management capabilities and

sustainable value creation capacity.Governments Partners Community

and Regulatory Shareholders Employees Customers and and the

Authorities and Investors Suppliers Public

E nvironmental compliance

management

E missions management Corporate governance Employee rights and benefits

U

Usage of energy

sage of energy Protecting investors' Employee training and R &D and innovation S upply chain

U sage of water resources rights and interests development

Usage of water resources

Quality management of management

A ddressing climate change

Business ethics Occupational health and Emissions managementproducts and services Quality management of

Q uality management of Risk control and safety

Addressing climate

D ata security and customer products and services

products and services compliance operations Chemical safety management

change

privacy protection R&D and innovation

C hemical safety

R&D and innovation Risk control and compliance Contributions to the Business ethics Business ethics

management Quality management of operations

society and rural

revitalizationCorporate governance products and services Business ethics

B usiness ethics

Shareholders' meeting Supply chain assessment

Professional title and auditsCompany website

F iling or approval evaluation

Industry forums and Supplier conferences

On-site research

R egular reporting exhibitions I ndustry-university-Conference calls Company official website

C ompliance information and intranet

A udit and factory inspections E nvironmental

research collaboration Performance briefings

disclosure Management meetings

Strategic cooperation projects information disclosure

Brokerage strategy meetings

S pecial inspections and employee meetings Interactive R&D Exchange visits

Community public

Roadshows and reverse

M eetings or exchange Employee care activities C ustomer communication and S trategic cooperation welfare projectsroadshows

visits Internal and external complaint channels projects

V olunteer activities

Periodic reports and interim

S tandard policy training C ustomer satisfaction survey Industry conference

Company official website

announcements

communication Whistleblowing and

W histleblowing and communications

Investor hotline

supervision channels supervision channels W histleblowing and SSE e-interaction supervision channels

1516

Stakeholders Concerned Topics Communication Channels2025 Environmental Social and Governance Report ESG Management

Topic Materiality Assessment Matrix of Sokan's Topics with Double Materiality in 2025

The identification of material topics is a fundamental work for the Company's ESG management helping the Company focus on 5

key areas and clarify its action direction. In strict compliance with the relevant requirements for materiality analysis of topics 10 7

stipulated in the Guidelines issued by the Shanghai Stock Exchange Sokan conducts the "Double Materiality Identification and 3

Analysis". Combining industry characteristics and its own business reality the Company comprehensively assesses the financial

impacts of various topics on the Company in the short medium and long term as well as the actual and potential impacts of the 818

Company's performance on various topics on the economy society and the environment. 11

126

199

Sokan's Analysis Process for Topics with Double Materiality

13

16

14

A nalyze the Company's internal activities and business 15 17

Background relationships including sustainability related impacts across the 4

Identification value chain both upstream and downstream. 1 2

and

Understanding I dentify and categorize the key stakeholders most affected

including both internal and external related parties.C onduct due diligence through interviews or surveys with the

Company's Management departments and stakeholders. Based

Topic on the Guidelines of SSE identify screen and define sustainability Not material Materiality to Sokan's financial performance Highly material

identification topics related to the Company through policy analysis industry

standards and trends and peer benchmarking finally forming a

list of 19 relevant topics.Environmental Social Governance

S et appropriate assessment methods and establish materiality

Topic

Materiality thresholds based on the Company's operational management 1 Usage of water resources 7 Occupational safety and 16 Corporate governance

Assessment capabilities. Combine the due diligence results to assess the 2 Usage of energy health* 17 Risk control and compliance

impact and financial materiality of each topic and rank the topics 8 Product and service quality

3 Circular economy operations

based on their importance. management* 18 Business ethics

4 Environmental compliance 9 R&D innovation*

10 Supply chain management 19 Protecting investors' rights management*

11 Data security and customer and interests

5 Emissions management privacy

6 Addressing climate change* 12 Employee rights and Combine the double materiality assessment results for all topics

Topic benefits

Review and and the materiality threshold standards to produce a list of 13 Employee training and

Confirmation "material" topics and form a double materiality analysis matrix to development

clearly present the assessment results. 14 Chemical safety

management

15 Contributions to the society

and rural revitalization

1718

Highly material Materiality to economic social and environmental impacts2025 Environmental Social and Governance Report Governance Foundation Upholding Integrity and Compliance

01

Governance Foundation

Upholding Integrity and

Compliance

Improving Corporate Governance 21

Risk and Compliance Management 24

Protecting Investors' Rights and Interests 25

Compliance with Business Ethics 27

Information Security Assurance 31

19 202025 Environmental Social and Governance Report Governance Foundation Upholding Integrity and Compliance

Improving Corporate Governance

Sokan strictly complies with applicable laws regulations and regulatory requirements including the Company Law of the Key Performance

People's Republic of China the Securities Law of the People's Republic of China and the Code of Governance for Listed

Companies. The Company has established a robust governance framework consisting of the Shareholders' Meeting the Board of

Directors and management ensuring clearly defined roles and efficient operations among all governance bodies. By abolishing During the reporting period the Company

the Board of Supervisors strengthening the functions of the Board of Directors and its specialized committees and enhancing the

independent director system Sokan has developed a more streamlined effective and balanced modern corporate governance Held 3 shareholders' meetings;

system. This structure better protects the rights and interests of all shareholders – particularly minority shareholders – and

provides a solid foundation for the Company's long-term stable development.Held 6 board meetings reviewed and approved 42 items with 100% attendance rate of directors;

The Company proactively adapts to the latest capital market regulatory requirements. In accordance with the Guidelines on the

Articles of Association of Listed Companies the Rules Governing the Listing of Stocks on the STAR Market of the Shanghai Stock

Exchange and other relevant regulations Sokan has completed a series of important institutional revisions and governance Held 3 audit committee meetings reviewed and approved 15 proposals;

structure optimizations. It has also carried out comprehensive and systematic revisions and improvements to its corporate

governance documents including the Articles of Association the Rules of Procedure for the Shareholders' Meeting the Rules

of Procedure for the Board of Directors and the Working Rules for Independent Directors . In addition the Company has newly Held 5 remuneration and appraisal committee meetings reviewed and approved 9 proposals;

established the Policy on Preventing Capital Occupation by Controlling Shareholders and Their Affiliates and the Compensation

Management Policy for Directors and Senior Management further strengthening its internal control and risk prevention

framework. H eld 2 nomination committee meetings reviewed and approved 4 proposals;

The Board of Directors has established four specialized committees: the Nomination Committee the Strategy Committee the

Audit Committee and the Remuneration and Appraisal Committee. Each committee strictly performs its duties in accordance with H eld 1 strategy committee meeting reviewed and approved 1 proposal.relevant laws regulations and internal policies to ensure the Company's stable operations and standardized practices thereby

promoting a scientific and efficient approach to corporate governance.Sokan's Organizational Structure

Shareholders' Meeting Nomination Committee

Strategy Committee

Board of Directors

Audit Committee

Management Remuneration and Appraisal

Committee

21 222025 Environmental Social and Governance Report Governance Foundation Upholding Integrity and Compliance

Diversity of the Board of Directors Risk and Compliance Management

Sokan places a strong emphasis on the diversity and balance of the composition of its Board of Directors. When selecting and

nominating directors the Company actively seeks qualified candidates from a wide range of backgrounds considering factors Guided by the principle of "deepening refined management and enhancing executive efficiency" Sokan continues to promote

such as gender age cultural and educational background industry experience skills and knowledge. Members of the Company's the standardized development of its internal control system. The Company strictly follows the Basic Norms of Enterprise Internal

Board of Directors bring professional expertise and industry experience across multiple disciplines including materials science Control the relevant evaluation guidelines and applicable laws and regulations in conducting self-assessments of the design and

chemical engineering business management and finance and accounting. This diversity enables the Board to evaluate corporate operational effectiveness of its internal controls. In addition the Company engaged an external third-party audit firm to conduct

strategy risks and opportunities from multiple perspectives thereby supporting more comprehensive and forward-looking an independent audit of the effectiveness of its internal controls during the reporting period and received an unqualified opinion

decision-making – particularly in response to technological changes market dynamics and sustainability issues. on its internal control audit report.Composition of the Company's Board of Directors

Key Performance

Name Gender Age Position Education Background Professional Background During the reporting period the Company established and effectively implemented internal control systems for

Ling Yunjian Male 55 Chairman Master's degree Industry background

all its business activities and operations achieved its internal control objectives and identified no material

Wang Weiguo Male 52 Non-independent director Master's degree Industry background

Miao Peikai Male 45 Employee representative director Doctor Industry background weaknesses in its financial reporting internal controls.Luo Jieyao Male 35 Non-independent director Bachelor's degree Financial background

Ma Jinying Female 58 Independent director Doctor Financial background To continuously enhance corporate governance and risk prevention capabilities the Company maintains a high level of awareness

Lu Xiaoyan Male 56 Independent director Master's degree Management background of regulatory developments and promptly adjusts and improves its internal compliance policies as needed. The Company has

Chen Zhuo Male 46 Independent director Doctor Industry background clearly defined the compliance responsibilities and authorities of each department by developing and strictly implementing the

Authorization Manual of Sokan Group . Through regular internal and external audits we strengthen the monitoring and review

of compliance policy implementation thereby effectively identifying and addressing potential non-compliant behaviors and

Independence of the Board of Directors reducing the Company's overall compliance risk.Sokan places a high priority on the independence of decision-making by the Board of Directors and the effectiveness of its The Company places great emphasis on fostering a compliance culture. By enhancing employee compliance training and

governance practices. Independent directors are selected and appointed in strict accordance with the Company's Articles of education we comprehensively improve our employees' legal awareness and commitment to voluntary compliance ensuring that

Association and regulatory requirements ensuring that they maintain an independent relationship from the Company its compliance requirements are embedded into all aspects of daily operations and cultivating a positive compliance environment.principal shareholders and its ultimate controlling shareholders. Independent directors fully leverage their professional expertise In addition by establishing and improving a compliance oversight mechanism we promptly address and correct any identified

and actively participate in corporate governance and major decision-making effectively safeguarding the Company's overall violations to uphold the seriousness of the compliance culture.interests as well as the legitimate rights and interests of minority shareholders. The Company has established a dedicated meeting

mechanism for independent directors providing a specialized platform and safeguards for the performance of their duties

communication and review of specific matters. Independent directors submit annual performance reports to the Company's Key Performance

annual shareholders' meeting detailing the execution of their duties.During the reporting period the Company

Working Rules for Independence Level of the Established an internal control and risk management evaluation framework covering procurement

Independent Directors Board of Directors management engineering management contract management asset management information systems

financial management information dissemination and communication sales operations and capital activities;

Through clearly defined independence criteria substantive As of the end of the reporting period the Board of Directors identified potential internal control risk points that may arise during these business activities and developed

special authorities and pre-approval rights an independent of the Company comprised 3 independent directors corresponding risk response measures. This lays the foundation for subsequent evaluations and improvements

dedicated meeting mechanism and robust performance representing 42.86% of the Board of Directors. Independent

safeguards together with stringent duty requirements directors accounted for 66.67% of the membership on each in internal control promotes risk prevention across the Sokan Group and supports the Group's sustainable and

these guidelines are designed to ensure that independent of the Board of Directors' Audit Committee Remuneration high-quality development.directors can effectively fulfill their critical balancing and and Appraisal Committee and Nomination Committee

oversight roles in the governance of the Board of Directors. with independent directors serving as chairpersons of all C onducted supplier risk management training for all supply chain personnel reaching 120 individuals.three committees.

23 242025 Environmental Social and Governance Report Governance Foundation Upholding Integrity and Compliance

Protecting Investors' Rights and Interests Case Investor Research and Exchange: Transparent Communication for Value Delivery

In active response to the call for high-quality capital market development and under the guidance of the Hunan Securities

The Company consistently prioritizes investor relations management striving to enhance investors' understanding and trust Regulatory Bureau and the Shanghai Stock Exchange Sokan in collaboration with the Securities Association of Hunan

through standardized transparent and efficient communication mechanisms thereby safeguarding their legitimate rights and Province jointly organized the "I Am a Shareholder" event in May 2025 inviting investors to visit the Company. The event

interests. The Company strictly complies with relevant laws regulations and regulatory requirements actively builds long-term attracted numerous investors through a hybrid online and offline format. Investors toured the Company's Industrial

and stable investor relations continuously improves corporate governance and intrinsic value and ultimately achieves mutual Ecosystem Innovation Center in person gaining in-depth insights into our core technologies and application strategies

growth and development for both the Company and its investors. in high-end consumer electronics passenger vehicles and specialty equipment. Through face-to-face discussions with

management they further deepened their understanding of our business strategy and industry innovation trends.Investor Communication Methods of Sokan

The event effectively established a communication bridge

Regular Communication between the Company and the capital market not only Performance briefings Special Activities

and Maintenance clearly conveying our R&D capabilities and industrial value to

investors but also providing an important channel for us to

I n c l u d i n g o n l i n e /o f f l i n e T h e C o m p a n y h a s h e l d Under the guidance of the listen to market feedback and optimize governance. Sokan

i n ve sto r co m m u n i cat i o n 3 p e r f o r m a n ce b r i e f i n g s Hunan Securities Regulatory

h o s t i n g o n - s i t e i n v e s t o r and actively part icipated Bureau and Shanghai Stock will continue to deepen investor relations management

research brokerage strategy in collective performance Ex c h a n g e t h e C o m p a n y with openness and transparency. Amid global competition

meetings roadshows reverse b r i e f i n g s f o r i n v e s t o r s has collaborated with the and industrial upgrading we will work hand in hand

r o a d s h o w s a n s w e r i n g i n H u n a n t o e n h a n c e Securit ies A ssociat ion of with investors repay market trust with solid operational

i n v e s t o r c a l l s r e p l y i n g c o m m u n i c a t i o n w i t h Hunan Province brokerages performance and jointly promote the long-term healthy

t h ro u g h i n v e sto r e m a i l s investors. and financial media to carry development of both the Company and the capital market. Investors' Visit to the Company

a n d r e s p o n d i n g t o S S E out the "I Am a Shareholder"

e-interaction inquiries. event to enhance interaction

and communication.Shareholder Returns and Dividends

While continuously promoting its own steady Key Performance

development the Company has always prioritized

delivering returns to its shareholders. Since its

listing in 2020 it has consistently implemented a The cumulative cash dividends distributed from 2020 to

prudent cash dividend policy. In 2025 the Company

implemented the 2024 profit distribution plan as 2024 amounted to approximately RMB 131 million.follows: A cash dividend of RMB 2.3211 (pre-tax) per The annual cash dividend as a percentage of net profit

10 shares was distributed to all shareholders a total attributable to shareholders of the listed company in

of RMB 25.9352 million (pre-tax) of cash dividends the consolidated financial statements for each of those

was distributed. A capital reserve transfer of 4 shares

years exceeded 30%.per 10 shares was made to all shareholders (no bonus

shares were distributed) resulting in a total share

capital increase of 44694594 shares.The Company plans to implement the following 2025 profit distribution plan: A cash dividend of RMB 0.40 (pre-tax) per 10 shares

is proposed to be distributed to all shareholders. Based on the Company's total share capital of 156431080 shares the total cash

dividend to be distributed would be RMB 6257243.20 (pre-tax). This amount represents 31.04% of the net profit attributable to

shareholders of the listed company in the 2025 consolidated financial statements and capitalized the capital reserve to issue 2

bonus shares for every 10 shares held by all shareholders with a total of 31286216 shares newly issued as a result. (Note: This

proposal is subject to review and approval by the 2025 Annual Shareholders' Meeting before implementation.)

25 262025 Environmental Social and Governance Report Governance Foundation Upholding Integrity and Compliance

Information Disclosure

The Company places high importance on the standardization and effectiveness of information disclosure. We strictly comply The Company conducted a specialized risk assessment covering all positions to identify risks related to commercial bribery and

with applicable laws and regulations including the Securities Law of the People's Republic of China and the Measures for corruption. In consideration of industry characteristics and the Company's actual operations we identified potential risk points

the Administration of Information Disclosure by Listed Companies as well as relevant regulatory requirements and internal associated with commercial bribery and corruption within each position's responsibilities. We then analyzed and evaluated the

management policies such as the Information Disclosure Management System and the Regulations on Standardized Information identified risks using a combination of qualitative and quantitative methods to determine risk levels.Disclosure and Internal Control Baselines to ensure that disclosed information is truthful accurate and complete. These measures

are designed to ensure investors are promptly informed of material matters and to safeguard the interests of the investors. Based on risk levels and assessment results the Company categorized positions into general-risk positions and key sensitive

positions. For key sensitive positions the Company further strengthened control measures by requiring relevant employees to

In 2025 the Company disclosed a total of 118 announcements and filed materials including 53 interim announcements and 4 sign the Cooperation and Commitment Letter for Internal Audit of Key Positions clarifying their cooperation obligations and

periodic reports. There were no incidents of regulatory penalties due to violations in information disclosure nor any instances of integrity commitments in internal audits and daily work ensuring risk prevention responsibilities are assigned to individuals.selective disclosure or non-compliance with disclosure regulations.Sokan's Risk Management Process of Commercial Bribery and Corruption

Compliance with Business Ethics

Sokan places high importance on employee integrity and strictly enforces internal management policies including the

Management Measures for Internal Audit of Sokan Group the Code of Professional Ethics Control Procedures and the Employee Risk Risk Analysis and Formulation of Risk Supervision

Issue Suggestion Whistleblowing and Complaint Handling Procedures. The Company has issued the "Four Strict Prohibitions" Identification Evaluation Control Measures and Improvement

and enforces them in accordance with the Employee Reward and Punishment System.Sokan's "Four Strict Prohibitions" Policy Through this comprehensive business ethics risk assessment the Company has established an important foundation for

subsequent targeted business ethics training enhanced audit oversight and the improvement of internal control systems.I Strictly prohibit accepting any form of shopping cards local specialty products tobacco alcohol tea gifts cash gifts payment cards red envelopes or similar items;

Violation Reporting and Whistleblower Protection

II Strictly prohibit accepting invitations from partners for meals travel gambling or participation in high-expenditure entertainment or fitness activities;

The Company strictly enforces internal procedural documents such as the Management Measures for Internal Audit of Sokan

Group and the Integrity and Honesty Agreement continuously improving the employee violation reporting mechanism. We

publish contact phone numbers and email addresses on multiple public channels including the Company's official website

III Strictly prohibit inviting external partners to weddings funerals or other celebratory or ceremonial official public social media account and supplier management system to ensure that all employees and external partners are events as a means of profiteering; fully informed of the reporting channels and procedures.In addition the Company places a high priority on the confidentiality of the whistleblowing process and has adopted strict

IV Strictly prohibit deliberately creating difficulties extortion bribery or other misconduct by taking confidentiality measures to protect whistleblowers from any form of retaliation. All whistleblowing information will be handled advantage of one's position. exclusively by the designated personnel or departments within the Audit and Supervision Department with whistleblowing

contents thoroughly investigated and findings promptly communicated to the whistleblower. At the same time the Company

encourages employees to actively report violations working together to uphold the Company's integrity and ethical culture.

27 282025 Environmental Social and Governance Report Governance Foundation Upholding Integrity and Compliance

Business Ethics Oversight of Commercial Partners By continuously strengthening business ethics oversight of our commercial partners the Company not only reduces our own

compliance and reputational risks but also encourages partners to collectively raise ethical standards laying a solid foundation

for sustainable supply chain cooperation.Sokan regards integrity and ethical conduct as the foundation of supply chain cooperation and is committed to building a fair

transparent and responsible business ecosystem. The Company systematically manages business ethics risks across the supply

chain through a combination of institutional controls education and training and ongoing oversight. Key Performance

Supplier Integrity Supervision Measures

During the reporting period

The proportion of management personnel covered by anti-bribery and anti-corruption training was 100%;

Institutional Constraints The proportion of employees covered by anti-bribery and anti-corruption training was 100%;

The Company requires all suppliers to sign the Integrity and Honesty Agreement prior to

cooperation which specifies in writing the mutual responsibilities and codes of conduct for both The number of personnel dismissed disciplined or investigated by competent authorities due to corruption-

parties in areas such as anti-bribery anti-corruption honest operation and conflict of interest

declaration. The agreement details prohibited acts (such as any form of bribery improper gifts related violations was 0;

concealment of related-party relationships etc.) the supplier's proactive declaration obligations

and clear breach liabilities (including disqualification as a supplier payment of liquidated damages

The number of contract terminations or non-renewals with business partners due to corruption-related violations

and compensation for losses) thereby establishing a clear legal and ethical red line for business

dealings. was 0.Awareness Reinforcement Anti-unfair Competition

To ensure that suppliers fully understand and internalize the Company's integrity requirements

the Company regularly conducts special integrity and honesty training sessions for suppliers.The training content is based on theIntegrity and Honesty Agreementand theIntegrity and The Company resolutely prohibits monopolistic and unfair competition practices. We strictly comply with laws and regulations

Honesty Requirements for Suppliers of Sokan with a focus on communicating the Company's such as the Anti-Monopoly Law of the People's Republic of China and the Anti-Unfair Competition Law of the People's Republic

anti-corruption policies specific behavioral prohibitions and reporting channels effectively of China and have revised the Anti-Bribery Anti-Corruption and Anti-Money Laundering Policy to strengthen anti-unfair

transmitting compliance requirements to business partners at the operational level. competition requirements. We explicitly prohibit all anti-competitive conduct or any violation of applicable competition or

antitrust laws. We also enhance employee training and awareness on anti-monopoly and anti-unfair competition matters foster a

culture of compliance improve employees' ability to conduct business in accordance with legal requirements and help maintain

a fair competitive order in the industry.Continuous Supervision

The Company has established a regular supervision mechanism with the Audit and Supervision

Department responsible for periodically reviewing suppliers' compliance with anti-corruption Key Performance

and business ethics regulations. If any violation such as corruption fraud or benefit transfer is

discovered during reviews or through reporting channels the Company will immediately initiate During the reporting period

an investigation in accordance with the terms of theIntegrity and Honesty Agreementand take

measures including but not limited to terminating cooperation and pursuing economic and legal the Company did not experience any litigation or material administrative penalties

liabilities depending on the severity of the violation thereby safeguarding the integrity of the

supply chain and the Company's legitimate rights and interests through rigorous corrective actions. arising from unfair competition practices.

29 302025 Environmental Social and Governance Report Governance Foundation Upholding Integrity and Compliance

Information Security Assurance Information Security Risk Assessment Process

Sokan adheres to the information security management system policy of "all-staff participation risk control; active prevention Risk Identification

continuous improvement." The Company places high importance on information security and customer privacy protection The Company identifies all assets and asset owners quantifies the confidentiality integrity availability and

regarding them as key safeguards for maintaining the Company's core assets and enhancing customer trust. Based on importance level of each asset and forms the List of Critical Assets.international standards such as ISO/IEC 27001:2022 the Company has developed the Information Security Management System

Manual and ensures the system's effectiveness and adaptability through continuous operation monitoring and improvement. In

addition the Company has established an information security and privacy protection management structure led by the General Risk Analysis and Evaluation

Manager to ensure that information security efforts align with the Company's business development needs.The risk level is calculated based on the value and vulnerability severity of critical assets as well as the

frequency of occurrence of each threat and the ease with which a vulnerability can be exploited by a threat.Sokan's Organizational Structure for Based on the risk level the priority of risk handling is determined.Information Security System

Risk Handling

The top management of Sokan continuously demonstrates leadership and commitment to information

Based on the results of the risk assessment the Company develops the Information Security Risk Handling

security by providing resources clarifying responsibilities and participating in reviews. A cross-

Plan which specifies the responsible department for risk handling the responsible person the handling

departmental information security team has been established to oversee daily management coordination

method and the start completion date.and supervision ensuring the effective implementation of information security policies and objectives.In addition the Company regularly conducts information security awareness education and training for all employees to ensure

ISO/IEC 27001 Information Security Management System Certification Certificate of the Company they fully understand the information security policy their individual responsibilities and the consequences of violations thereby

collectively maintaining a secure information environment.Key Performance

During the reporting period

the Company conducted a total of 5 data security and customer privacy protection training sessions and 1

information security emergency drill.T he number of confirmed data security incidents was 0.In accordance with the Information Security Risk Management Procedures the Company has established a risk assessment

mechanism that combines periodic and dynamic approaches. We conduct systematic identification and risk assessment of The Company continuously evaluates the performance and Key Performance

information assets annually formulate response plans based on risk levels and strictly manage information security risks through effectiveness of its information security management system through

strategies such as risk control avoidance and transfer ensuring that risks remain at an acceptable level. daily inspections internal audits management reviews and other

performance evaluation means. For any identified non-conformities During the reporting period

Based on risk assessment results and business needs the Company has developed a comprehensive set of control procedures or potential improvement opportunities we strictly implement

and management systems covering physical security access control network security system development supply chain corrective and preventive actions in accordance with the Continuous there were 0 incidents of information security

management incident response and other areas. Through documents such as the Document Control Procedure Access Control Improvement Control Procedure to drive ongoing optimization of breaches involving the Company or its clients.Procedure and Information Security Incident Management Procedure we ensure the standardized implementation of all control the system and address evolving internal and external threats as well

measures. as changes in the technological environment.

31 322025 Environmental Social and Governance Report Governance Foundation Upholding Integrity and Compliance

02

Environment as the

Base Committing to

Green Development

Addressing Climate Change* 35

Environmental Compliance Management* 39

Efficient Resource Utilization 44

Pollution Prevention and Control Management 48

33 342025 Environmental Social and Governance Report Governance Foundation Upholding Integrity and Compliance

Addressing Climate Change* List of Climate Change-related Risks for Sokan

Risk Category Risk Description Likelihood of Potential Financial Occurrence Impact Impact Period

Sokan regards addressing climate change as a critical issue for the Company's sustainable development. We have established a As the national carbon emissions trading market

climate change governance framework and dedicated policies deeply integrating climate management into operational decision- matures and potentially expands its industry

making. The Company not only identifies climate-related risks but also actively pursues development opportunities arising from coverage energy consumption and process Increased short term

the energy transition and low-carbon product markets. Through concrete measures such as advancing product carbon footprint Highemissions related to coating material production operating costs medium term

accounting developing bio-based eco-friendly coatings and implementing energy-saving initiatives in our operations we are Legal Risks may be brought within the scope of mandatory

reducing our carbon footprint and enhancing climate resilience. carbon emissions reporting and compliance.The growing demand for low-carbon coatings

Governance is squeezing the market for traditional solvent-

short term

based products. If an enterprise fails to launch Decreased operating

High medium term

To strengthen our climate change management mechanism the Company has developed the Greenhouse Gas Control environmentally friendly coating materials such revenueMarket Risks long term

Management System and the Energy Resource Management System which define the processes for monitoring and controlling as water-based bio-based or low-VOC options it

greenhouse gas emissions and energy consumption. The Company's EHS department is responsible for identifying and assessing may be replaced by competitors.climate change-related risks and opportunities developing climate response strategies focused on energy conservation energy

efficiency improvement and low-carbon products and ensuring their effective implementation. If the Company or its suppliers use high-carbon

Decreased operating short term

emission materials it could trigger a brand trust Medium

revenue medium term

Reputation Risks crisis.Strategy

In line with industry trends and the Company's business characteristics we regularly organize cross-departmental collaboration List of Climate Change-related Opportunities for Sokan

and incorporate external expert opinions to conduct climate change-related risk and opportunity assessments. The findings are Opportunity Opportunity Description Likelihood of Potential Financial Impact Period

then integrated into the Company's strategic decision-making framework. Category Occurrence Impact

With the growth in capacity of clean energy

List of Climate Change-related Risks for Sokan technologies such as photovoltaics and biomass

energy and the gradual maturation of low-cost Reduced operating

Risk Category Risk Description Likelihood of Potential Financial

High long term

Occurrence Impact Impact Period Energy Transition

technological routes adopting clean energy costs

Opportunities in the long term can reduce traditional energy

expenses.Decreased

Extreme weather incidents (such as floods and

operating

extreme heat) may cause damage to factory The carbon peaking and carbon neutrality goals

Medium revenue; short term

equipment and raw material storage facilities are driving a surge in demand for coatings in wind short term

Acute Physical Increased Increased operating

and disrupt supply chain logistics. power and new energy vehicles. Early layout High medium term

Risks operating costs Market revenueof a low-carbon product line can seize market long term

Opportunities opportunities.Decreased Real-time monitoring of climate risks in raw

T h e C o m p a n y m a y fa ce r i s k s t o n o r m a l Increased

operating material sourcing locations enhances supply

production and operations due to chronic climate operating

Low revenue; long term chain resilience; collaborating with research medium term

disasters such as rising temperatures and sea High revenue;

Chronic Physical Increased Adaptability institutions to develop climate-adaptive resin long termlevels. Reduced

Risks operating costs Opportunities materials can reduce the long-term physical risk operating costs

impact.

35 362025 Environmental Social and Governance Report Governance Foundation Upholding Integrity and Compliance

Impact Risk and Opportunity Management

Emergency Response Mechanism Greenhouse Gas Emission Management

Closely monitor meteorological warnings Product Carbon Footprint Analysis: Promote

Sokan has established and continuously operates a mechanism for identifying assessing and managing climate-related risks and and inspect the stability and safety of carbon emission accounting throughout the production facilities and emergency product lifecycle and control key raw materials

opportunities. This mechanism follows the PDCA (Plan-Do-Check-Act) cycle to achieve closed-loop management and continuous equipment in advance; most sensitive to carbon footprint such as resins

improvement. In the event of a disaster initiate the and solvents;

e m e r g e n c y r e s p o n s e m e c h a n i s m Internal Carbon Audit: Complete preliminary data

p r o m pt l y a c t i vate t h e p r e l i m i n a r y collection on greenhouse gas emissions to lay

disposal plan report to the relevant local the foundation for conducting a comprehensive

Sokan's Climate Change-related Risk and Opportunity Identification Management Process departments and proceed with handling internal carbon audit and establishing a regular

the situation. data collection accounting and disclosure

mechanism.Sokan's Key

Measures

Plan (P) Do (D) R&D of Environmentally to Address Energy Conservation and

Friendly Coatings Climate Consumption Reduction in

Focus on developing low-carbon Change Production and Operations

Using the Greenhouse Gas ContrPol Management Taking into account policy trendsD technological materials such as water-based Reduce energy consumption and System and the Energy Resource Management pathways and the business characteristics of high-solid and bio-based coatings. carbon emissions by implementing

The Company has seven bio-based intelligent upgrades and precise

System as the foundational framework the EHS the new functional coating material industry the coatings certified by UL for bio- control for high-energy-consuming

Department takes the lead in organizing cross- Company identifies and assesses climate-related based content. e q u i p m e n t s t a n d a r d i z i n g

employee electricity usage and

departmental collaboration and plans to conduct risks and opportunities that may arise in the short Industrial Collaboration taking other measures

comprehensive climate-related risk and opportunity medium and long term by means of collecting Actively collaborate with research institutions

identification and assessment exercises on a regular internal and external information studying policies and upstream and downstream partners to

basis. and regulations analyzing value chain emissions jointly advance low-carbon transformation.and engaging expert consultations.Indices and Goals

The Company continuously tracks greenhouse gas emission metrics and dynamically optimizes its management mechanisms

based on implementation progress.Check (C) Act (A)

Sokan's Greenhouse Gas Emissions in 2025

The Company regularly tracks monitors and Based on the results of the check phase successful

evaluates the implementation statCus of established practices are standardized andA embedded into

climate response strategies and action plans; relevant management systems and processes; Index Unit 2025

The Company also sets key performance indicators For unmet targets or newly emerging situations Total Greenhouse Gas Emissions (Scope 1 + Scope 2) tCO2e 9512.15

and verifies the effectiveness of measures through root cause analysis is conducted and corrective and

Scope 1 Greenhouse Gas Emissions tCO e 79.44

internal audits management reviews and routine preventive actions are taken. 2

monitoring data on carbon emissions and energy Scope 2 Greenhouse Gas Emissions tCO2e 9432.71

consumption.

37 382025 Environmental Social and Governance Report Governance Foundation Upholding Integrity and Compliance

Environmental Compliance Management* Strategy

Sokan adheres to the environmental policy of "energy conservation and emission reduction lawful operation; pollution The Company's EHS Department leads the identification and assessment of risks and opportunities related to environmental

prevention continuous improvement" and has established a comprehensive environmental management system. We identify compliance. Through internal and external factor analysis we conduct extensive scans of regulatory market social and

and manage relevant risks and opportunities and continuously strengthen our employees' compliance awareness and execution operational risks and opportunities.through comprehensive emergency drills organization-wide environmental training and the setting and achievement of

management goals such as "zero pollution incidents".List of Environmental Compliance Management Risks for Sokan

Governance Risk Category Risk Description Likelihood of Occurrence Potential Financial Impact Impact Period

The Company holds the national Green Factory certification and has established an EHS Committee chaired by senior Domestic and international environmental

management with an EHS Department reporting to it. We have formulated and implemented a series of internal policies regulations are becoming increasingly

including the Environmental Factors Identification and Evaluation Control Procedure Environmental Protection Operation Control stringent including the implementation of Increased costs for compliance

Procedure and Environmental Management Material Control Standards to ensure that environmental compliance management new environmental laws and workplace safety Medium long termupgrades and management

is carried out in a standardized manner. Legal Compliance laws heightened customer environmental

Risks requirements (e.g. RoHS) and intensified

Sokan's Environmental Management Structure government enforcement.EHS Committee EHS Department Improper control of pollutant emissions

such as exhaust gases wastewater and Increased operating costs due

* E stablish the Company's EHS management structure * E stablish and maintain the Company's environmental Medium long termnoise may lead to non-compliance with to fines.policies and objectives and approve management plans compliance management system and its procedures and Emission Risks standards and result in fines.and budget allocations; conduct routine inspections of the system's operation;

* H old quarterly special meetings to make decisions on major * P lan and organize pre-job on-the-job and emergency

matters; response team environmental compliance-related training; Power rationing during high-temperature Reduced production capacity

* Organize monthly company-wide EHS inspections and * Investigate and handle environmental incidents or seasons if not properly managed may Medium leading to decreased operating short term

supervise rectifications. emergencies occurring at the Company. impact the Company's production. revenue.Physical Risks

Environmental Management System Certification

List of Environmental Compliance Management Opportunities for Sokan

During the reporting period Sokan and Songrun New Materials completed the renewal of their ISO 14001

Opportunity Opportunity Description Likelihood of Environmental Management System certifications. Category Occurrence Potential Financial Impact Impact Period

ISO 14001 Environmental Management System Certification Certificate of the Company Personnel in the community and local residents

Increased employee satisfaction

expect that the Company's production

Low and social reputation leading to long term

Community processes will not cause environmental harm

higher operating revenue.and Employee to the outside world.Opportunities

As environmental regulations become

stricter and market demands evolve the

development of the Company's water-based

Medium Increased operating revenue long term

and low-VOC products is not only a response

Transition

to compliance risks but also an opportunity

Opportunities

to seize market leadership.

39 402025 Environmental Social and Governance Report Governance Foundation Upholding Integrity and Compliance

Impact Risk and Opportunity Management To effectively address environmental risks the Company has established an emergency management system with the General

Manager taking overall responsibility. It has developed the Emergency Response Plan for Environmental Incidents and the

Emergency Preparedness and Response Control Procedure and formed an emergency rescue team to carry out risk prevention

The Company has established a standardized process covering the identification assessment and management of risks and

and emergency management activities. Through regular environmental management meetings on-site inspections and

opportunities. First based on the SWOT framework the Company uses the Internal and External Factors Identification Analysis

specialized training the Company strengthens routine preventive controls. At the same time it organizes emergency drills to

Monitoring and Review Form to identify internal and external factors related to environmental compliance and makes a

enhance the team's practical response capabilities ensuring rapid and efficient response and handling when incidents occur.preliminary judgment of their nature (strengths weaknesses opportunities threats). Subsequently the identified internal and

external factors particularly threats (T) and weaknesses (W) are further input into the Risk and Opportunity Management Form

for quantitative assessment. Sokan's Environmental Compliance Management Measures

In addition the Company requires each business and functional department to comprehensively identify the environmental

aspects associated with their activities. Significant environmental aspects are determined through a unified evaluation method Emergency Management Regular Inspection

and ultimately consolidated into a corporate-level List of Significant Environmental Aspects . Core environmental aspects are

incorporated into the standardized management and control track centered on internal systems and various emergency response

The Company defines clear roles and responsibilities ranging The Company conducts a company-

plans thereby effectively reducing environmental risks. from the General Manager EHS Department and Quality wide environmental compliance

Sokan's Process for the Identification Assessment and Management of Environmental Compliance Risks Management Department to each executing department i n s p e c t i o n o n c e a m o n t h a n d

and manages them through a complete closed-loop process coordinates and supervises relevant

of "identifying emergency situations - developing plans - departments to promptly rectify

Risk and Opportunity Identification reviewing and approving - training and drilling - emergency identified issues and potential hazards.response - post-incident summary and plan updates";

I dentification of internal factors: including VOC emissions from major products compliance control T he Company develops specific emergency response plans

of production emissions etc.; for various identified risks and strictly requires that at least

Identification of external factors: including regulatory pressure supply chain and market drivers one comprehensive or specialized drill be organized each

social and community oversight etc. year and at least one on-site response plan drill be organized

every six months while integrating emergency training into

routine management.Risk Assessment

T he assessment uses the Risk Priority Number (RPN) method scoring from three dimensions and Case Comprehensive Desktop Emergency Drill Conducted to Validate the Effectiveness of Emergency Plans

calculating the RPN value (RPN = Severity × Occurrence × Detection):

S everity (SOO): assesses the seriousness of the consequences of the risk;

O ccurrence (COO): assesses the probability of the risk event occurring; In March 2025 the Company organized and conducted a

D etection (ATD): assesses the ability of existing control measures to detect the risk before it occurs. comprehensive desktop emergency drill covering twelve

types of accident scenarios including hazardous waste

leakage production wastewater leakage solvent poisoning

and flood control. A total of 49 participants from the

Company's emergency response team and heads of relevant

Risk Management and Response departments took part. The entire process strictly followed

the standardized procedure of "incident reporting - plan

For all identified and assessed risks a "risk reduction" strategy is adopted with corresponding activation - emergency response - emergency termination".specific measures developed including technological upgrades process compliance control The drill effectively validated the feasibility of the plans and

emergency safeguards etc. and a "responsible department" is designated to clarify the accountable strengthened the coordination and response capabilities

entity; among the various emergency response teams. Following

T he management of each risk is linked to the corresponding "process control document" (procedure the drill identified deficiencies were addressed thereby

document or management system) forming standardized support. Comprehensive Desktop Emergency Drillreinforcing the foundation for operational risk management.

41 422025 Environmental Social and Governance Report Governance Foundation Upholding Integrity and Compliance

Thematic Environmental Protection Training Conducted to Strengthen the Foundation for

Case Compliant Operations Efficient Resource Utilization

In March 2025 the Company organized mandatory compliance Sokan adheres to the principles of resource conservation and circular utilization. Through a series of internal systems and

training on Environmental Protection and Occupational Health measures the Company implements refined management and control over electricity steam and water resources and has set

for all employees based at the Ningxiang headquarters. The clear targets for reducing consumption and water usage. It promotes waste minimization and resource recovery achieving a win-

training systematically explained the core provisions of the win situation for both economic and environmental benefits.Environmental Protection Law the Law on the Prevention

and Control of Atmospheric Pollution and the Law on the Energy Management

Prevention and Control of Environmental Pollution by Solid

Wastes and provided cautionary education through real

penalty cases recently handled by local enforcement authorities The Company is a low-energy-consumption enterprise and its primary energy sources are purchased electricity and purchased

regarding unorganized VOC emissions and non-compliant steam. The Company has established a series of internal systems including the Energy and Resource Management System and the

hazardous waste management. The training and assessment Energy Management System for the Science and Innovation Building which define energy management responsibilities at various

effectively enhanced the environmental compliance awareness levels. An energy-saving team led by management has been formed to study energy-saving measures develop implementation

and practical capabilities of all employees laying a solid plans and supervise execution. Through monthly meetings and other mechanisms the Company ensures the continuous

foundation for preventing environmental risks and achieving progress and closed-loop management of energy-saving efforts. A comprehensive supporting reward and penalty mechanism has

standardized operations. Environmental Protection Training been established including the Employee Reward and Penalty System and regular inspections are conducted on the shutdown

status of electrical equipment and overall electricity usage across departments.The Company integrates energy-saving management into daily operations implementing energy conservation and consumption

Indices and Goals reduction through a combination of technical optimization and behavioral management. It has established energy utilization

indicators and targets to effectively track and measure the effectiveness of energy-saving efforts. During the reporting period

the Company launched a systematic energy-saving and emission-reduction special initiative at the Ningxiang Park achieving

The Company has established clear annual environmental compliance management targets assigned responsibilities to each significant results.department and strengthened dynamic monitoring of compliance through a normalized supervision and inspection mechanism

Sokan's 2025 Energy Management Targets

thereby preventing and reducing the occurrence of environmental pollution incidents.Sokan's 2025 Environmental Compliance Management Targets

Goals Achievement

Index Goals Achievement

Company's average monthly electricity

Environmental pollution accident 0 0 (Achieved) 808411 kWh/month (Achieved)

consumption ≤ 850000 kWh/month

Compliance rate of environmental monitoring results 100% 100% (Achieved)

Compliance disposal rate of hazardous waste 100% 100% (Achieved)

Number of penalties from EHS-related administrative authorities 0 0 (Achieved)

Number of EHS complaints from relevant parties 0 0 (Achieved)

EHS fund allocation adequacy rate 100% 100% (Achieved)

Completion rate of EHS training plan 100% 100% (Achieved)

43 442025 Environmental Social and Governance Report Governance Foundation Upholding Integrity and Compliance

Energy-Saving and Emission-Reduction Special Initiative Water Resource Management

Energy-Saving Measure Specific Content The Company's operational water use is primarily sourced from municipal water supply used for office and production processes.In terms of water use management the Company strictly complies with national laws and regulations such as the Water Law of the

Implement time-of-use pricing (peak/off-peak electricity rates) to regulate

Charging Pile Management People's Republic of China and the Law on the Prevention and Control of Water Pollution of the PRC and has developed internal

usage through economic means to reduce overall electricity consumption. rules including the Leakage and Spillage Control System and the Rainwater Management System to regulate water use practices.For idle floors while ensuring normal operation of surveillance systems

Control of Low-Power Equipment shut down all other low-power equipment to reduce standby energy At the same time the Company actively promotes water conservation practices including the adoption of water-efficient

consumption. equipment and process designs continuous water conservation publicity and education and ongoing efforts to enhance

employees' awareness of water conservation thereby minimizing water consumption across various business and operational

Establish temperature standards for turning on air conditioning (e.g. turn

Temperature- activities.on only when the office/workshop temperature exceeds 33° C) to reduce

Air Conditioning Triggered Control unnecessary consumption.Management

Strategy Time-Based Automatically shut down air conditioning in the Science and Innovation

Scheduled Building after work hours with a set restart interval limit; strictly limit the Main Water Conservation Measures in 2025

Shutdown daily operation periods for air conditioning in specific locations.Change the production mode of high-energy-consumption product from Water Conservation Measure Specific Content

Production Mode

"make-to-order" to "make-to-stock" to reduce the operation duration of

Production and Change constant temperature and humidity environments. Water Conservation Promotion Post water-saving slogans next to faucets in office buildings employee dormitories etc.Office Optimization

Consolidate office floors to achieve centralized office work reducing the

Centralized Office

area covered by air conditioning lighting etc. Conduct daily inspections of water outlets and regularly check water meter pressure.The EHS Department security team is responsible for inspections and Leakage Prevention

Enhanced Electricity Patrol Inspections announces implementation statuses in group chats forming a supervision Immediately investigate any abnormal water flow detected during monitoring to

mechanism. eliminate leakage risks at the source.To effectively track the effectiveness of water conservation efforts the Company has established annual water resource utilization

targets.Sokan's 2025 Energy Consumption

Index Unit 2025 Sokan's 2025 Water Resource Utilization Targets

Total energy consumption Ton(s) of standard coal 2231.69

Ton(s) of standard coal/

Comprehensive energy consumption intensity 3.09

RMB 1 million

Direct energy consumption Ton(s) of standard coal 41.17

Goals Achievement

Indirect energy consumption Ton(s) of standard coal 2190.52

Average monthly municipal water consumption

Including: electricity MWh 17232.00 (Ningxiang Park) ≤ 12000 tons/month 11063 tons/month (Achieved)

Including: steam Ton(s) of standard coal 72.71

45 462025 Environmental Social and Governance Report Governance Foundation Upholding Integrity and Compliance

Sokan's 2025 Water Resource Utilization Pollution Prevention and Control Management

Index Unit 2025 Sokan strictly complies with national and local environmental protection laws and regulations. Based on internal systems such

3 as the Waste Gas Management System Wastewater Management System and Solid Waste Management System the Company Total water consumption m 7543

integrates emissions and waste management into daily operations. The EHS Department is responsible for centralized supervision

Net freshwater consumption m3 6543 while each business department is responsible for implementation.Total water intake m3 170983

Key Performance

Including: municipal water supply m3 169983

During the reporting period the Company set and achieved the target of a 100% compliance rate for

Including: rainwater m3 1000 wastewater waste gas and noise monitoring results with all pollutants discharged in compliance with standards.Total water discharge m3 163440

No major environmental pollution incidents occurred and the Company did not receive any major

administrative penalties from ecological and environmental authorities for issues related to emissions.Circular Economy Pollutant Discharge

The Company has deeply integrated the concept of circular economy into its entire operational chain striving to establish a

development model featuring high resource efficiency and waste reduction. It has built a system for classified recycling and The main pollutants generated from the Company's operations are industrial waste gases primarily volatile organic compounds

resource utilization covering the whole production process and strengthened product life cycle management to enhance (VOCs) and domestic wastewater. The Company adopts a full-process control strategy covering "source process and endpoint".environmental attributes such as recyclability at the design stage.Sokan's 2025 Emission Management Measures

Case Constructing a Solvent Recovery Unit to Support Circular Economy

In 2025 the Company constructed and put into operation a solvent recovery unit which uses physical purification Waste Gas Control Measures Wastewater management

technology to recover and regenerate waste solvents generated during the production process. As of the end of the

reporting period the unit had recovered approximately 12 tons of solvents. This practice not only directly reduces raw Source and Process Control: Low-VOC raw materials such Domestic sewage from the Company

material procurement and hazardous waste disposal costs through resource recycling but also reduces carbon emissions as water-based resins and high-solid coatings are used. All is pre-treated before being discharged

and environmental risks throughout the product lifecycle at the source. It represents a concrete example of the Company's operations that generate organic exhaust gases shall be into the sewage treatment plant.commitment to developing a circular economy and promoting cleaner production. carried out with the ventilation and purification system A strict rainwater and wastewater

functioning normally. Sealed management of raw material diversion system is implemented

packaging shall be implemented. within the plant area.End-of-Pipe Treatment: Exhaust gases are treated by

efficient facilities including "adsorption concentration +

RCO incineration" before discharge. In 2025 the Company

strengthened daily inspections and treatment efficiency

assessments of the treatment facilities.

47 482025 Environmental Social and Governance Report Governance Foundation Upholding Integrity and Compliance

To ensure compliant emissions in accordance with laws and regulations the Company has established a regular environmental The Company's EHS Department organizes all departments annually to comprehensively identify solid wastes generated from

monitoring and information disclosure mechanism. Each month it commissions a qualified third-party professional institution to production experiments and other activities and prepares and updates the Solid Waste Inventory. Wastes are strictly classified

monitor the rainwater waste gas and noise emissions from its facility ensuring that all indicators comply with national and local into three categories for management: hazardous waste recyclable waste and non-recyclable waste. The Company conducts a

standards such as the Emission Standard of Air Pollutants for Paint Ink and Adhesive Industry. All monitoring reports are promptly statistical analysis of the disposal volume of various types of solid waste each month calculates the "waste landfill transfer rate"

uploaded to the "National Pollutant Discharge Permit Management Information Platform - Enterprise Portal" and the "National on a quarterly basis and reports to key customers annually.Pollution Source Monitoring Information Management and Sharing Platform" as required actively accepting public oversight.Sokan's Waste Management Measures

Sokan's 2025 Pollutant Emission Data Collection and Internal Transfer

◎ A ll departments shall set up classified containers on-site and post uniform labels;

◎ Hazardous waste must be packaged and affixed with a dedicated label containing detailed

Index Unit 2025

information;

Air pollutant emissions ◎ For the internal transfer of hazardous waste dedicated tools shall be used measures such as leak

prevention shall be taken and the waste shall be transported to the centralized storage site along

Total exhaust emission 10000 m3 65250 designated routes.Total volatile organic compounds (VOCs) emissions kg 3094.92 Centralized Storage of Hazardous Waste

◎ T he Company has a dedicated hazardous waste warehouse and its construction and management

Water pollutant emissions strictly comply with the requirements of the Standard for Pollution Control on Hazardous Waste

Storage. Comprehensive anti-leakage fire-fighting and other facilities are equipped. Hazardous

Total wastewater discharged m3 17828 waste is stored in separate zones and the storage period does not exceed one year;

◎ All storage sites are marked with environmental protection graphic signs as specified by national

standards.Waste Management

Transfer and Disposal

The Company has defined the organizational structure and responsibilities for waste management and has established and ◎ G eneral solid waste is sent to the Park's waste treatment plant for recovery and disposal.Solid Waste Management System ◎ All hazardous waste is entrusted to licensed units for disposal with electronic manifests processed implemented the to carry out standardized management across the entire process of waste

according to law before transfer;

classification collection storage transfer and disposal. In 2025 the Company revised the Solid Waste Management System

◎ New disposal units must be audited before introduction and existing cooperative units shall

adding requirements such as due diligence on waste treatment contractors signing of treatment contracts and targets for waste undergo at least one on-site supervisory audit annually;

landfill transfer rates. ◎ A ll outsourced disposal activities must be contractually documented and records shall be retained.Sokan's Waste Management Structure and Responsibilities

Sokan's 2025 Waste Treatment Volume

Central Procurement Production and

EHS Department President's Office Department Operational Departments

Index Unit 2025

As the department Be responsible for the Be responsible for Be responsible for the

for supervision and disposal management of signing contracts with daily classification and Total waste generated Ton(s) 718.31

management be responsible kitchen waste and non- various waste disposal management of waste

for organizing waste recyclable waste. suppliers based on the within their respective Including: hazardous waste Ton(s) 694.11

identification entrusting supplier list provided by areas of jurisdiction.qualified units for the the EHS Department. Including: non-hazardous waste Ton(s) 24.2

disposal of hazardous waste

and recyclable waste and Total recycled/reused waste Ton(s) 395.07

coordinating related data

analysis and supplier audits. Waste recycling rate % 55

49 502025 Environmental Social and Governance Report Value Co-Creation Empowering the Industrial Ecosystem

03

Value Co-Creation

Empowering the

Industrial Ecosystem

Innovation-Driven Development* 53

Product and Service Quality* 62

Responsible Supply Chain 69

51 522025 Environmental Social and Governance Report Value Co-Creation Empowering the Industrial Ecosystem

Innovation-Driven Development* Division of Responsibilities Among R&D Team Members

Sokan adheres to the development path of "Sokan of Technology" continuously increasing R&D investment strengthening Product Development Engineer (PD) Product Application Engineer (PA)

platform construction and the cultivation of high-level teams and constantly stimulating the organization's innovation

momentum. At the same time guided by an innovation model that prioritizes "interactive" independent research and Be responsible for providing technical

B e responsible for new product development

development supplemented by collaborative R&D the Company deeply cultivates the field of new functional coating support for customer market projects

materials such as paints inks and adhesives solidly advancing the deep integration of technological innovation and industrial

development thereby laying a solid foundation for the Company's sustainable and high-quality development.Governance Strategy

By comprehensively examining technology development trends and market dynamics and taking into account the Company's

Centered on customer needs the Company has established a research development and innovation management organizational development strategy as well as its R&D and innovation capabilities the Company continuously identifies potential risks and

structure with clear authority and responsibilities collaborative and efficient operations defined boundaries of responsibilities development opportunities under the theme of innovation-driven initiatives forming a dynamically updated risk and opportunity list.at each level and coordination mechanisms. It strictly implements internal systems such as the Product Design and Development

Control Procedure Design and 5M1E Change Control Procedure R&D Process Management System and R&D Investment Risk List for Innovation-Driven Initiatives

Accounting Management System thereby laying a solid governance foundation for the standardized conduct of R&D and Likelihood

innovation work. Risk Category Risk Description of Potential Financial Impact Impact Period

Occurrence

R&D and Innovation Management Organizational Structure If the Company fails to master innovative

technologies in a timely manner or

launch differentiated products that This may result in unrecoverable

Technical Management Committee meet customer needs i ts market R&D investments delayed short term

New Technology competitiveness may weaken; Low p r o d u c t i t e r a t i o n a n d medium term

and New Product R&D activities themselves involve consequently affect revenue long term

Be responsible for overseeing R&D management focusing on the Group's strategic needs for new technologies Development uncertainty and the development of new growth and profitability.and products reviewing the annual new product development plans submitted by each R&D institute guiding Risk technologies or products may not meet

the initiation and closing reviews of new product R&D projects assisting in resolving technical challenges and expectations.organizing regular communication mechanisms such as technical liaison meetings.The loss of key technical personnel

This may cause R&D project

may affect the progress of ongoing

delays or interruptions increase

Hunan Research Institute/Shanghai Research Institute/Guangdong Research Institute R&D projects and the confidentiality of short term

Low talent replacement costs and

Key Technical existing intellectual property posing a medium term

affect the expected benefits from

As an incubation platform for the Company's major strategic and innovative projects be responsible for Personnel threat to the continuity of technological technological innovation.planning forward-looking layout with global vision and focusing on surface treatment and functional coatings Turnover Risk innovation.fields for the breakthrough and industrial application of key technologies.Facing competition from internationally

r e n o w n e d c h e m i c a l g r o u p s a n d

increasingly intense competition in the This may lead to pressure on

Coatings/Inks/Adhesives Application R&D Centers domestic market if the Company lacks product selling prices shrinking

medium term

sufficient technological innovation Medium market share and consequently

Intensifying long term

Based on end-customer needs be responsible for proposing medium- to long-term (3-5 years) and annual or fails to keep pace with industry affect revenue and overall Market

technology and product planning in the respective field managing the entire process of new product technology upgrades and iterations it profitability.Competition Risk

development projects and handling patent searches preparation of application materials and subsequent may face the risk of declining market

management for newly developed products. share.

53 542025 Environmental Social and Governance Report Value Co-Creation Empowering the Industrial Ecosystem

Opportunity List for Innovation-Driven Initiatives Impact Risk and Opportunity Management

Opportunity Likelihood of Potential Financial

Opportunity Description Impact Period

Category Occurrence Impact The Company has established an influence risk and opportunity management mechanism covering the entire process of

This may lead to innovation activities ensuring precise direction control effective resource allocation and continuous strategy optimization in a

Leveraging differentiated innovative processes and sustained growth in dynamic environment.leading technological advantages the Company core business increase

continues to deepen cooperation with renowned the proportion of high-

domestic and international key customers in the value-added products

high-end consumer electronics and passenger expand market Risk and Opportunity Management Process for Innovation-Driven Initiatives

vehicle sectors promoting the implementation of share and enhance

medium term

High-end Market new processes and continuously expanding product High economies of scale;

long term Continuously monitor technological advancements market demands and

and Emerging categories; It may open up new Identification competitive landscape and dynamically identify potential risks and development

market Expansion The Company actively expands into strategic business growth opportunities related to innovation activities.Opportunity emerging markets such as power batteries solid- curves establish

state batteries and aerospace scientifically grasps technological

new quality productive forces and drives significant leadership and

progress in key strategic R&D projects. generate new revenue

sources. Analyze and evaluate identified risks and opportunities and assess their impact Assessment

level likelihood of occurrence and duration.As one of the few domestic companies capable of

directly competing with international giants in niche

segments and achieving domestic substitution the

Company occupies a pivotal position in the field of This may expand

new functional coating materials by virtue of its deep market share enhance short term Develop and implement differentiated response strategies and action plans for key Management

technological expertise and industry influence. As High brand premium and medium term risks and opportunities.Domestic

the demand for self-controllable industrial chains generate incremental long term

Substitution

increases and the pace of domestic substitution revenue.Opportunity

accelerates the Company is expected to capture

import substitution demand in more key niche

segments. Continuously track and monitor the effectiveness of management measures and Monitoring

changes in internal and external environments.This may drive revenue

growth through

increased sales of

As environmental regulations tighten and

environmentally Optimize management strategies based on monitoring results and evaluation

downstream customers' preference for green

friendly products Improvement feedback and drive continuous iteration and improvement of closed-loop

products increases market demand for

while leveraging management.environmentally friendly coating materials continues medium term

High technological

Green Demand to rise; The Company has made forward-looking long term

premium to improve

Growth arrangements in relevant fields and continuously

product profit margins

Opportunity iterates its related product systems enabling it to

expand into high-end

effectively capture market demand.customer groups To systematically address the uncertainties in the technological innovation process and fully unleash the long-term value driven

and further increase by R&D the Company continuously advances the construction of its R&D system deepens R&D process management strengthens

market share. training and exchange mechanisms and establishes and improves R&D innovation incentive mechanisms thereby enhancing the

Company's R&D and innovation level in all aspects.

55 562025 Environmental Social and Governance Report Value Co-Creation Empowering the Industrial Ecosystem

R&D System Construction

Case Annual Technology Conference Held to Stimulate Innovation Vitality

High-intensity R&D Investment High-level Talent Team Three Regional R&D Platforms

In 2025 the Company successfully held its second annual technology conference under the theme "Technological

Innovation · Applied for the Future." The conference showcased the Company's technological breakthroughs and creative

Since its listing the Company has The R&D team comprises 286 Research institutes have been achievements in the field of new functional coating materials. Through keynote reports achievement exhibitions and

continuously maintained R&D people accounting for 33.14% of the established in Shanghai Guangdong honorary commendations it effectively stimulated the innovation enthusiasm of R&D personnel promoted cross-

investment at over 10% of its total workforce and brings together and Hunan forming three core

operating revenue. outstanding talents including R&D technology platforms in "East departmental technical collaboration and injected innovation momentum into the Company's continuous deep

domestic and international doctoral China—South China—Central cultivation of core technology areas and enhancement of competitiveness.and postdoctoral researchers China".selectees of the National Special

Talent Support Program and high-

level talents from Changsha.Digital-driven R&D Efficiency Multi-level Product Planning

Improvement System Full-chain R&D Facility Support

T h e C o m p a n y c o n t i n u o u s l y The Company has established a R&D The Company has formula development

promotes the development of product planning system covering laboratories color centers CNAS-

digital systems to comprehensively strategic emerging fields such as certified laboratories and solution

enhance R&D efficiency. high-end consumer electronics design departments with a complete

passenger vehicles and special set of R&D testing equipment and digital

equipment. systems across the functional coatings

industry providing full-process support

from project initiation to industrial The Second Annual Technology Conference of Sokan

application.R&D Innovation Incentive Mechanism

To promote the Company's technological innovation and improve the success rate and efficiency of new product development

Case Strengthened Training Conducted to Promote Standardized Development of R&D Processes and upgrade projects the Company has established and continuously improved the R&D Job Family Incentive Scheme . This

scheme defines incentive standards for different R&D positions research topics and product types and fully stimulates the

In 2025 the Company issued a special training and enhanced motivation and creativity of R&D personnel through substantial bonuses.implementation notice for the newly revised Project

Management Procedure for End Customers/ODM/T1 and Green Design

Pure Mold Manufacturers and the APQP Control Procedure .In January 2025 the Company organized centralized online

and offline training covering all employees of the Coating Driven by both tightening environmental policies and downstream industrial upgrading the Company integrates green design

R&D Application Center Ink Application R&D Center and concepts throughout the entire product R&D process.Central Research Institute. In February an offline closed-

book examination was conducted. Employees who did not In terms of coating systems the Company focuses on the development of water-based coatings solvent-free technology and PVD

participate in the training or failed to meet the required coating solutions achieving near-zero VOC emissions and avoiding the generation of heavy metals and wastewater at the source.standards faced performance penalties. Through the enhanced It actively introduces bio-based materials leveraging their degradable characteristics to meet the needs of the circular economy.training and examination the full-process management of R&D Meanwhile the Company continuously promotes process innovation developing environmentally friendly excimer screen printing

projects was standardized ensuring that product development The Company Conducting Specialized R&D technology and advancing the application of UV/PU dual-cure topcoats and hydrolysis-resistant PU tactile coatings in automotive

work is carried out in a programmed and standardized manner. Innovation Training interiors and other fields. By replacing traditional technologies with more energy-efficient and high-performance processes the

Company effectively meets the market's dual demands for environmental friendliness and lightweighting.

57 582025 Environmental Social and Governance Report Value Co-Creation Empowering the Industrial Ecosystem

R&D Innovation Progress and Achievements Industry Development

During the reporting period relying on its mature R&D system and comprehensive R&D process management the Company The Company actively participates in industry development and is deeply involved in the formulation of multiple industry

achieved multiple product and process innovations in strategic emerging fields such as high-end consumer electronics passenger standards promoting standardized industry development through technological innovation. At the same time the Company

vehicles and special equipment resulting in a series of technological outcomes and continuously driving product performance actively integrates into academic societies and other exchange platforms exploring cutting-edge trends with industry peers and

upgrades and application expansion. continuously contributing its professional expertise to the construction of a healthy industrial ecosystem.Key performance indicators for products such as PVD dual coating low-reflection matte black paint high-

weatherability flocking paint and interior excimer coatings have achieved significant improvements fully

meeting the stringent standards of leading automotive manufacturers.

01 As the lead drafter it formulated the group standard Technical A full series of primer basecoat and clearcoat products suitable for mainstream bumper substrates have Requirements for Light-curing Coatings for Power Battery Cell been developed with water-based bumper basecoats successfully launched. Insulation (UV) which has been published.

02 Under the leadership of the Technical Committee for Standardization of Paints and Pigments the Company co-authored the pre-research report for the industry standard UV Curable Coatings for

Power Batteries and Energy Storage Batteries. As the lead drafter

Passenger Car

Field it prepared the final draft for approval of the same standard.The

standard has entered the industry pre-research stage.

03 Led the drafting of the enterprise standard Technical Requirements for Coating of Low-Altitude Aircraft Skins (Q/SJY 002-2025) for Sokan New Materials Group Co. Ltd.

04 Formulated and released four enterprise standards including Strategic Fingerprint-Resistant Coatings and Fluorosilicone Coatings for High-end Emerging

Consumer Elastomers. Fields such Some Industry

Electronics as Special

Field Standards Equipment Development

Activities in Which

the Company

Successfully developed water-based PU+UV dual- H igh-performance UV insulating inks and insulating Participates

cure system coatings which have been applied in adhesive series for solid-state battery electrodes

wearable products; have been continuously iterated and upgraded

The excimer technology product system has been establishing high technical barriers and achieving

continuously refined and upgraded; customer deliveries. Case Company Experts Appointed to National-Level Societies Enhancing Industry Technological Influence

O vercame the technical bottleneck of silicone In the aerospace field following the receipt of

coatings on HNBR substrates and achieved mass RFI confirmation some coating projects have

completed product development and tr ial In November 2025 at the 10th General Assembly (Election Session) of the Coatings Finishing and Surface Protection production providing a reliable coating material

solution for demanding application scenarios. production as required by customers.Technology Professional Committee of the Chinese Society for Corrosion and Protection two core R&D personnel were

respectively elected Chairperson and Committee Member of the committee. This election signifies that the Company's

I n the low-altitude economy sector coating

solutions for low-altitude aircraft have completed technical expertise in corrosion protection and coatings technology has been highly recognized by the industry further

application validation with end customers and have enhancing its participation and voice in industry standard setting and technological development.been recognized by multiple eVTOL manufacturers.

59 602025 Environmental Social and Governance Report Value Co-Creation Empowering the Industrial Ecosystem

Key Honors Product and Service Quality*

Sokan always adheres to its core value of "customer centricity". In quality management it upholds the quality policy of "Source

Shanghai Research Institute Selected for the 2025 Control Process Monitoring and Continuous Improvement" continuously driving process optimization and quality enhancement

Shanghai Research Institute Recognized as a High- Qingpu District (Third Batch) Innovative Small

Tech Enterprise and is committed to providing customers with safe and reliable products and professional and efficient services. and Medium-Sized Enterprise List Shanghai

Governance

The Company strictly complies with management system standards such as ISO9001 IATF 16949 EN/AS9100 and QC080000. It

has built a quality control system covering the entire product lifecycle comprehensively standardizing key activities including

production process control non-conforming product handling and customer complaint response ensuring stable and reliable

product quality and effective closed-loop management of customer feedback. Concurrently the Company continuously optimizes

its quality management organizational structure clarifying responsibilities at each level forming a full-chain closed-loop

management mechanism from strategic decision-making to implementation.Full-Lifecycle Quality Control System

Design and

APQP Control Procedure

Development

Indices and Goals

Supplier Development and Management Control ProcedureNew Raw Material

The Company's indices and goals for the Innovation-Driven topic are as follows: Raw Material Introduction Control RegulationsRaw Material Inspection StandardMonitoring and

Introduction Measurement Control Procedure

Key Performance

Storage and Storage Management ProcedureMaterial and Product Protection Management

Transportation Regulations

During the reporting period

the Company's R&D investment amounted to RMB 112.521 million accounting for Production Production Process Control ProcedureProduction Process Management Regulations

15.58% of its operating revenue. R&D personnel accounted for 33.14% of the

Finished Product Monitoring and Measurement Control ProcedureProduct Inspection StandardNon-

total workforce. Delivery Inspection conforming Product Control Procedure

The Company was granted 50 national patents including 29 invention patents and 21 utility

Construction Terminal/ODM/T1 and Mold Factory Project Management Procedure

model patents. As of the end of the reporting period the Company held 3 PCT international patents

149 85 1 Customer Complaint domestic invention patents utility model patents and software copyright. Customer Complaint Return and Quality Claim Handling ProcedureManagement

61 622025 Environmental Social and Governance Report Value Co-Creation Empowering the Industrial Ecosystem

Product and Service Quality Management Organizational Structure Strategy

By continuously monitoring and evaluating internal and external factors related to product and service quality the Company

Quality Management Committee Quality Management Department systematically identifies potential risks and development opportunities and conducts in-depth analysis of their potential impacts

Strictly implement national and ministerial Lead the maintenance and continuous improvement of various providing effective support for scientifically formulating response plans.quality laws regulations and standards to ensure system certifications such as ISO IATF and AS promote process

compliance management; standardization and organize internal audits; Risk Register for Product and Service Quality

Oversee decisions on quality policies objectives Develop the Company's quality objectives and management

Likelihood of

and development planning and promote system plans inspect and supervise the formulation and implementation Risk Category Risk Description Potential Financial Impact Impact Period

Occurrence

reviews and continuous improvement; of objectives and management plans for each department and

E nhance management efficiency by standardizing regularly report the progress of quality management work to the

processes promoting advanced quality Quality Management Committee; If products exhibit quality defects such as It may lead to reduced

management tools and building information Establish and improve the testing mechanisms for raw materials substandard performance or application market share and revenue; short term

platforms; processes and finished products and conduct identification of issues during production it may lead to Low It may result in the Company medium term

P lan review and approve major quality hazardous substances and data traceability analysis; Product Quality customer complaints claims or even bearing corresponding long term

improvements and other major quality activities Handle customer complaints and non-conforming products Defect Risk loss of customer qualification. compensation costs.of the Company and coordinate the Quality through closed-loop management and systematically promote

Management Department for implementation. the continuous improvement of the Group's quality management

level.If products contain hazardous substances It may lead to product

exceeding customer requirements or recalls inventory write-offs

regulatory limits they may be rejected fine payments and loss of short term

Low

or removed from sale by customers or market access due to non- medium term

Product

the Company may face penalties from compliance resulting in

Compliance Risk

This is to certify that the management system of: IATF Certificate Number: 0535093

Certificate Number: regulatory authorities. decreased revenue.SOKAN NEW MATERIALS 2014-0065 Certificate Issue Date:

2 August 2024

GROUP CO. LTD. Certificate Expiry Date: 1 August 2027

Main Site: No.777 North Third Ring Road Ningxiang Economic and

Technological Development Zone Changsha Hunan Province

P. R. China

IATF USI Number: YF9Z6T

has been registered by Intertek as conforming to the requirements of:

IATF 16949:2016

The management system is applicable to:

Design and Manufacture of Coating Adhesives and Ink.Permissible exclusions include: None

Calin M oldove an

Presiden t Busine ss Assurance

Intertek – 4700 Bro admoor Suite 200 Kentwood MI 49512 USA

Opportunity Register for Product and Service Quality

In the issuance of this certificate Intertek assumes no liability to any party other than to the Client and then only in accordance with the agreed upon Certification Agreement. This

certificate’s validity is subject to the organization maintaining their system in accordance with Intertek’s requirements for systems certification. Validity may be confirmed via email at

certificate.validation@intertek.com or by scanning the code to the right with a smartphone. The certificate remains the property of Intertek to whom it must be returned upon

request. Opportunity Likelihood of

CT-IATF-16949-2016-IATF-EN-A4-12.dec.23-with appendix Page 1 of 2

Opportunity Description Potential Financial Impact Impact Period

Category Occurrence

ISO 9001 Quality IATF 16949 Automotive EN/AS 9100 Aerospace QC 080000 Hazardous Substance

Management System Industry Quality Management Management System Process Management System In the high-end consumer electronics

Certification Certificate of System Certification Certification Certificate of Certification Certificate of the It may ensure stable revenue and passenger vehicle sectors customers

the Company Certificate of the Company the Company Company growth through consistent

generally do not easily switch suppliers after

and stable orders and

Product Quality and Customer Service Performance qualification due to their high dependence short term provide priority cooperation on product quality stability. Leveraging High medium term

Management Mechanism Customer opportunities in customers' its excellent product quality and stable long term

Stickiness new project development

The Company continuously optimizes its product quality and customer service performance management mechanism. Core delivery capabilities the Company is deeply Opportunity further increasing market

indicators such as mass production success rate first-pass yield and number of customer complaints are incorporated into the integrated into the supply chains of globally share and profitability.KPI assessment systems of R&D production and quality management departments. This deeply links key performance indicators renowned end-brand customers.to employee compensation incentives guiding all roles to continuously focus on product quality and customer feedback thereby

ensuring the enhancement of product service levels and customer satisfaction.

63 642025 Environmental Social and Governance Report Value Co-Creation Empowering the Industrial Ecosystem

Impact Risk and Opportunity Management Quality Testing

The Company fully integrates the impacts risks and opportunities related to product and service quality into its routine The Company's testing center laboratory has obtained multiple authoritative certifications demonstrating comprehensive testing

management. By establishing systematic mechanisms for identification response and improvement it continuously enhances capabilities and technical expertise. Based on this the Company continuously improves its quality testing system defining testing

the foresight and effectiveness of quality management. On this basis it promotes collaboration across all functions continuously procedures at each stage and standardizing operating procedures. Through full-process monitoring and measurement of raw

strengthens quality assurance capabilities and supports the ongoing optimization of product and service quality. and auxiliary materials production processes and finished products it ensures stable and controlled product quality to meet

customer requirements and legal regulations.Risk and Opportunity Management Process for Product and Service Quality

Identification and

Analysis

Regularly identify internal and external factors affecting product and service quality analyze

potential risks and opportunities assess their impact and develop response plans.Response

Based on identification and analysis results formulate and implement targeted response

measures clarify responsible parties and resource guarantees to ensure effective implementation

of strategies.CNAS Laboratory BYD Passenger Vehicle Supplier NIO Laboratory Accreditation

Monitoring and Accreditation Certificate of Laboratory Accreditation Certificate – Certificate of the Company

Improvement the Company Three-Star of the Company

Continuously track the execution effectiveness and quality performance of measures evaluate

response outcomes through data monitoring and feedback analysis and promote closed-loop Hazardous Substance Control

management and continuous optimization.The Company implements an HSF (Hazardous Substance Free) policy throughout the product lifecycle ensuring that hazardous

substances are "not received not used not produced and not transferred" through source control process monitoring and

The Company focuses on full lifecycle product management continuously optimizing product quality testing mechanisms strictly continuous improvement.implementing closed-loop handling of non-conforming products and continuously improving product quality through multi-

dimensional collaborative efforts. During the incoming inspection stage quality inspectors conduct testing of raw and auxiliary materials based on hazardous

substance risk levels and testing frequency requirements. Materials are only accepted into inventory after it is confirmed that the

Key Measures to Enhance Product Quality test results comply with environmental standards. For production processes and finished products the Company implements

comprehensive monitoring and measurement. Hazardous substance levels are defined before production operations and testing

of hazardous substances is conducted before finished product delivery to ensure product safety and compliance.Full Lifecycle Product Optimizing Product Quality Closed-Loop Handling of

Management Testing Mechanism Non-Conforming Products

Case Improving Pigment Paste Process to Reduce Costs and Increase Efficiency

Implement comprehensive Continuously improve quality Strengthen the quality issue

quality management building a testing capabilities covering key handling mechanism to ensure In 2025 the Production Technology Department initiated a process improvement project in collaboration with multiple

quality control system covering stages such as raw materials new efficient closed-loop response departments to address issues with a specific pigment paste such as excessively high grinding temperatures and low filtration

full employee participation and product R&D manufacturing and resolution of anomalies. efficiency. After systematically analyzing the root causes alternative pigment pastes were screened and validated. Laboratory

the entire lifecycle. finished products shipping and and small-scale production trials confirmed that the alternatives were superior to the original in terms of color difference

application. performance and stability effectively resolving the original process deficiencies. Consequently production work orders operating

instructions and PFMEA documents were comprehensively updated. This improvement significantly enhanced production

efficiency and product stability providing strong support for subsequent product quality control and cost optimization.

65 662025 Environmental Social and Governance Report Value Co-Creation Empowering the Industrial Ecosystem

Quality Training

Initiate the Material Review Board (MRB) process to develop solutions such

During the reporting period the Company invited internal and external trainers to organize tiered and targeted quality

MRB Review and as return rework concession acceptance or scrap. Products with harmful management system training. This aimed to enhance company-wide quality awareness ensure employees accurately understand

Disposition substance or exceeding VOC limits shall not be released.and skillfully apply quality standards and integrate quality management requirements into daily operating procedures providing

a solid foundation for the continuous improvement of product and service quality.When quality risks are identified in delivered products promptly notify the

Quality Management Course Objective customer initiate a recall and trace the root cause of the issue.System Training Product Recall

APQP Control Procedure Enable cross-functional teams to master APQP. U se methods such as 5W1H to analyze the root cause and develop and

implement corrective actions

FMEA Master key points of DFMEA and PFMEA. Non-conformities found at customer sites or after product shipment shall

Root Cause Analysis be handled by the Quality Management Department in accordance with the

Control Plan Training Master the logic and methods of control plans. and Corrective Customer Complaint Return and Quality Claim Handling Procedure traced

Actions as required by theIdentification and Traceability Control Procedure and

DOE Training Master the logic and methods of DOE. resolved according to the relevant procedures.Track the effectiveness of measures and incorporate effective improvements

Change Management Master key points of change management.into operational documents or technical specifications to achieve closed-

Measure Verification

Training for QC080000 Hazardous Ensure that relevant hazardous substance managers understand and Standardization loop management.Substance Process Management the hazardous substance management system and product-related

System Internal Auditors personnel comprehend customer hazardous substance standards. Customer Service

Training for Hazardous Substance Ensure that product-related personnel comprehend customer

Management Requirements hazardous substance standards. The Company consistently upholds its core cultural value of "customer centricity" and is committed to building an efficient and

professional customer service system. A Customer Success Department has been established with full-time personnel responsible

for routine customer maintenance and complaint handling ensuring timely responses to customer needs. Simultaneously the

Non-Conforming Product Control Company has implemented a field engineer mechanism to provide on-site technical support for customers. It has formulated and

implemented the Customer Complaint Return and Quality Claim Handling Procedure ensuring efficient closed-loop resolution

Based on the Non-Conforming Product Control Procedure and the Corrective and Preventive Action Control Procedure the of customer issues through a rapid response mechanism and continuously improving customer satisfaction.Company has established mechanisms for identifying evaluating handling and improving non-conforming products. This

ensures that non-conforming products are not used unintentionally implements recall procedures for risks associated with

delivered products and prevents recurrence through root cause analysis and corrective actions. Indices and Goals

Non-Conforming Product Control Mechanism The Company's indices and goals for the Product Quality Service topic are as follows:

Upon discovery of non-conforming raw materials semi-finished products Key Performance

or finished goods immediately label them notify the relevant departments

Identification and and transfer them to the designated non-conforming product area for During the reporting period the Company had no product recalls. The customer satisfaction survey result was

Isolation segregated storage. 85.93 points.

67 682025 Environmental Social and Governance Report Value Co-Creation Empowering the Industrial Ecosystem

Responsible Supply Chain Supply Chain Sustainability Management

Sokan has formulated the Supplier Development and Management Control Procedure clearly defining the procurement

responsibilities of the Central Procurement Department Application R&D Center Quality Management Department and other The Company places great importance on suppliers' performance in occupational health environmental protection and integrity

functions. It integrates the product lifecycle management concept into supply chain development standardizing a full-process and is committed to building a sustainable supply chain.management mechanism covering all supplier categories including production materials and construction services. Through

strict access control signing long-term agreements and developing backup resources the Company ensures that suppliers Regarding occupational health and environmental protection the Company sends the Notice on Environmental Protection /

continuously meet quality and delivery requirements effectively reduces supply interruption risks strengthens the supply chain Occupational Health and Safety to Relevant Parties to suppliers advocating for work safety and green operations. It requires

foundation and ensures stable and efficient production operations. suppliers to sign the Environmental Quality Agreement to ensure that hazardous substance content in supplied products complies

Raw Material Quality Control Measures with the Company's Hazardous Substance Control Standards. Regarding integrity the Company signs the Integrity and Honesty

Agreement with suppliers explicitly prohibiting commercial bribery and unfair competition and stipulating breach of contract

liabilities to jointly build an honest and compliant cooperation environment.Conflict Minerals Management

Raw Material Introduction Storage and Transportation

The Company recognizes that raw materials such as pearlescent pigments involve the use of conflict minerals. To systematically

Periodic evaluations and dynamic management are For temperature-sensitive paint raw materials mitigate conflict minerals risks the Company strictly complies with relevant international organization and industry regulations

implemented through rigorous supplier admission the Company uses constant-temperature explicitly prohibiting the procurement and use of conflict minerals originating from the Democratic Republic of the Congo and

processes (including physical verification and vehicles during transportation implements full- its surrounding countries and regions. The Company has formulated and strictly implements the Management Measures for

second-party audits) comprehensive incoming process temperature monitoring and stores the Control of Conflict Minerals requiring suppliers to trace the origin of metals such as gold tantalum tin and tungsten and

quality inspections and statistical analysis of them in constant-temperature warehouses to submit a Commitment to Not Use Conflict Minerals and a Conflict Minerals Survey Form ensuring their sources align with

supplier material quality. upon arrival effectively preventing material internationally recognized frameworks such as the Responsible Minerals Initiative (RMI) and the OECD's Due Diligence Guidance

deterioration through full-chain temperature for Responsible Supply Chains of Minerals from Conflict Affected and High-Risk Areas.management and ensuring stable raw material

performance. If an investigation reveals that a supplier uses conflict minerals from the aforementioned regions the Company will immediately

suspend relevant procurement require the supplier to provide a written explanation and select compliant mineral sources.The supplier must provide valid evidence demonstrating that the new sources meet conflict-free mineral requirements while

Preventing Supply Chain Interruptions simultaneously formulating and implementing corresponding corrective and preventive measures to ensure the supply chain

By implementing tiered and classified supplier management the Company has built multiple lines of defense to prevent supply continuously meets international compliance standards.chain interruption risks effectively reducing reliance on single sources enhancing supply chain resilience and risk resistance and

providing strong support for stable and efficient production operations.Key Performance

Suppliers meeting the criteria of achieving annual procurement targets for key raw materials having domestic production bases D uring the reporting period

and R&D laboratories and maintaining an "A" performance rating for three consecutive years are classified as the Company's

strategic suppliers. The Company establishes long-term stable mutually trusting and win-win deep partnerships with them. the supplier assessment coverage rate was 100% and the supplier assessment pass rate was 100%.Through joint R&D information sharing and risk sharing it ensures the continuous and stable supply of key raw materials

solidifying the supply chain foundation at the source.The percentage of suppliers signing the Code of Conduct was100% the percentage of suppliers signing

For non-strategic suppliers the Company ensures they continuously meet requirements for quality cost delivery etc. through

strict qualified supplier access and performance evaluations forming a stable and reliable routine supply assurance system. For

contracts including environmental and labor requirements clauses was and no suppliers with actual or

special circumstances such as technological monopolies patent restrictions or emergencies the Company maintains temporary 100%

supplier procurement channels as an emergency supplement explicitly prohibiting the use of temporary supplier materials for potential significant negative environmental impacts were identified.aviation products to balance risk and need.

69 702025 Environmental Social and Governance Report Caring for Employees Contributing to a Better Society

04

Caring for Employees

Contributing to a Better

Society

Employee Rights and Benefits 73

Employee Growth and Empowerment 80

Occupational Health and Safety* 84

Chemical Safety 91

Social Contribution Practice 93

71 722025 Environmental Social and Governance Report Caring for Employees Contributing to a Better Society

Employee Rights and Benefits Anti-Discrimination and Diversity

The Company is committed to building a diverse equitable and inclusive workplace. It strictly complies with laws and regulations

Compliant Employment in its business locations explicitly prohibiting discrimination based on any legally protected status including age disability

ethnicity gender marital status pregnancy nationality race religion sexual orientation gender identity or trade union

membership throughout the entire process of recruitment hiring and promotion. Concurrently through the Protected Employee

The Company strictly complies with the Labor Law of the People's Republic of China the Labor Contract Law of the People's Management System the Company provides targeted protection for groups such as minor workers female employees and foreign

Republic of China and the laws and regulations of its business locations. It implements standardized management in all aspects employees ensuring the legal rights and professional dignity of all employees through institutionalized inclusive management.of recruitment employment termination working hours and compensation strictly adhering to the principles of fair distribution

according to work and equal pay for equal work and comprehensively protecting employees' legal rights and interests. To further

enhance the scientific and collaborative efficiency of human resource management the Company has formulated a series of Employee Composition as of the End of the Reporting Period

internal policies including the Human Resource Management Procedures Recruitment Management System and Protected

Employee Management System.

45

The Company fully implements compliant employment requirements strictly prohibiting the recruitment of child labor prison 183 171

labor and minor workers (for hazardous chemical enterprises). It standardizes the processes for labor dispatch and outsourcing employees employees

conducts legal compliance assessments of cooperative recruitment suppliers and prohibits non-compliant agency recruitment employees 680

of frontline production employees. During the reporting period the Company further refined its recruitment principles By Gender By Age

implementing strict age verification mechanisms and comprehensive background checks (covering core sensitive roles such as employees

mid-to-senior management R&D and marketing) to eliminate child labor and involuntary labor at the source. The Company 647

adopts a direct employment model signing clear written labor contracts with all employees and pays social insurance and employees

housing provident funds in full for employees in accordance with the law effectively protecting every employee's legal rights and Male 30 to 50

interests and building harmonious and stable labor relations.Female Under 30

Over 50

Key Performance

During the reporting period

By Employment Type：

t he labor contract signing rate was 100% and the social security coverage rate for employees was 100%

Labor contract system: 863 employees

100%.

N o incidents of child labor or forced labor occurred. No incidents of employee discrimination or harassment occurred.Rights Protection

The Company insists on building a solid foundation for employee rights protection through institutionalization. It strictly complies

with national laws and regulations establishing a standardized management system covering attendance leave overtime

rewards and penalties. The Company explicitly prohibits forced labor and strictly controls the weekly working hours within 60

hours. Concurrently through the Employee Reward and Punishment System it defines behavioral norms and reward/penalty

standards supported by a fair and just appeal mechanism safeguarding employees' rights to information and appeal during the

reward and punishment process continuously fostering a simple happy and mutually respectful workplace atmosphere.

73 742025 Environmental Social and Governance Report Caring for Employees Contributing to a Better Society

Employee Communication Employee Benefits of Sokan

Sokan places high importance on employee communication and democratic

management. During the reporting period the Company signed labor

contracts with all its employees in accordance with the law achieving a Base Salary

100% contract signing rate and safeguarding employees' legal rights and Overtime Pay

interests at the institutional level. The Company continuously improves Performance Bonuses

its collective consultation mechanism. Throughout the year it held five 1. Monthly: Sales commissions profit-sharing bonuses mileage bonuses cafeteria

employee representative meetings engaging in full consultations with performance bonuses;

employee representatives on core topics such as compensation and benefits 2. Every two months: Special technical bonuses for R&D roles;

occupational safety and the protection of female employees' rights and 3. Quarterly: Floating calculation based on performance scores for functional roles;

formally signed the Collective Wage Agreement Collective Contract and 4. Annually: Special bonuses for cost savings recruitment rewards dangerous

Collective Contract for the Protection of Female Employees' Rights. Through goods transport safety etc. Compensation Incentives

institutionalized and regular communication mechanisms the Company Fixed Allowances

effectively safeguards employees' rights to information participation and 1. General: Confidentiality allowance seniority allowance education allowance

expression continuously building harmonious and stable labor relations and Site of Employee Representative Meeting skill allowance;

promoting mutual progress and long-term win-win outcomes between the 2. Special: Internal trainer subsidy docent subsidy high-temperature allowance

Company and its employees. overseas/difficult post allowance.Employee Complaints and Whistleblower Protection

The Company is committed to building an open and transparent communication environment. Through the Employee Issue

Suggestion Whistleblowing and Complaint Handling Procedures it provides employees with channels to file complaints or

suggestions on over 20 matters including personal rights and workplace fairness. Employees can provide feedback anonymously

or by name through various methods including the A8 system dedicated email addresses hotlines physical suggestion boxes Five Social Insurances & One Housing Fund

and annual communication meetings.Statutory Benefits

During the reporting period the Company formally established a team for receiving suggestions complaints or reports with

the head of the Enterprise Management Center as the team leader. The Human Resources Department was designated as the

responsible department with the Trade Union collaborating on complaints involving employees' legal rights. A rapid response

mechanism was established for significant core issues such as sexual harassment and ethical violations with the head of Statutory Holidays

Human Resources Department directly accepting such cases ensuring sensitive matters are handled seriously and prudently. Paid Annual Leave

The Company strictly requires that the handling person complete investigation and feedback within 10 working days and Marriage/Bereavement Leave

provides strict confidentiality protection for whistleblowers. The Company explicitly prohibits any form of retaliation imposing

Parental Leave

severe penalties on violators. Simultaneously if employees are unsatisfied with the handling results they may appeal to senior

1. Prenatal check-ups;

management or apply for labor arbitration forming a multi-level closed-loop rights protection system.

2. Maternity leave;

Compensation Benefits and Care 3. Paternity leave;

4. Breastfeeding leave.

Sokan adheres to its core value of "growing together with employees" building a compensation and benefits system that is both Family Care Leave

market-competitive and internally equitable. The Company strictly follows the principles of fair distribution according to work Paid Leave 1. Parental leave;

and equal pay for equal work eliminating discrimination based on any identity factors such as race age gender or religious belief 2. Only-child care leave.in compensation and benefits decisions. Using job evaluation tools the Company has established a scientific job level structure Medical/Injury Leave

and compensation grades ensuring compensation levels are deeply linked to job value employee performance and Group

1. Work-related injury leave;

development. In addition to the statutory social insurance and housing provident fund employees enjoy comprehensive benefits

2. Sick leave.

including meal subsidies housing allowances high-temperature allowances holiday benefits and paid leave. By optimizing

allowance standards for overseas personnel meal subsidies and vehicle allowances the Company recognizes the contributions Compensatory Time Off

of employees in different regions and roles with more human-centric compensation design.

75 762025 Environmental Social and Governance Report Caring for Employees Contributing to a Better Society

D aily Work/Life Subsidies Employee Care

H oliday and Birthday Care

1. Birthday gifts; The Company has provided recreational facilities including indoor badminton courts a cinema and a gym. It has established

2. Holiday benefits. seven themed sports associations (badminton basketball running etc.) and regularly hosts events such as the "Old is Fun"

C ongratulations and Condolence Payments retro party the "Wisdom Creates the Future Craftsmanship Leads to Excellence" Sokan Science and Technology Workers and

1. Congratulations for employee marriage childbirth children's university

Craftsmanship Day the "Decode Happiness · Energize Family" Sokan Group's 4th Family Day the "Night Forward" hiking activity

admission;

2. Condolence payments for hospitalization or death of immediate family as well as badminton billiards and fishing competitions enriching employees' cultural life outside of work. Additionally a mutual

members. aid fund has been established to provide financial support to employees facing difficulties due to illness disability etc. and to

H ealth Protection their families effectively alleviating their hardships and continuously creating a warm and supportive workplace environment.One free annual health check-up for all active employees.Lifestyle Care T eam Building

Team activity funds.S pecial Overseas Benefits

1. Assignment allowances;

2. Hardship allowances;

3. Eligible employees may receive reimbursement for travel and accommodation

for family visits."Decode Happiness · Energize Family" "Old is Fun" Retro Party

Sokan Group's 4th Family Day

Y ear-End Incentives

T alent Referral Rewards

I ntellectual Property Rewards

1. Special reward for invention patents;

2. Special reward for utility model / design patents;

Special Incentives

3. Special reward for software copyrights;

4. Special reward for patent / trademark management.

""Wisdom Creates the Future Craftsmanship Leads

to Excellence" Sokan Science and Technology Badminton Competition

Key Performance Workers and Craftsmanship Day

During the reporting period

t he Company's investment in employee work-related injury insurance was RMB 704700 and the

investment in work safety liability insurance was RMB 13608.The work-related injury insurance coverage rate for employees was 100%.Group Photo After the Billiards Competition

77 782025 Environmental Social and Governance Report Caring for Employees Contributing to a Better Society

Key Performance Employee Growth and Empowerment

During the reporting period Employee Training

the charity mutual aid fund assisted 13employees and their families who were ill distributing a total of During the reporting period Sokan revised and improved the Training Management System to continuously enhance the job

52700 competence of all employees providing talent support and capability assurance for the Company's high-quality development.RMB in assistance.

Employee Training Management Structure

Top-level Management: Human Resources Department

Sokan has established and implemented the Protected Employee Management System to create a comprehensive protection

system for female employees' rights. The Company strictly enforces labor protection regulations for female employees including As the competent department for training the Human Resources Department is responsible

restrictions on labor during menstruation pregnancy and breastfeeding. For employees who are pregnant and unable to for planning the Company's overall training system organizing and implementing company-

perform their original work the Company reduces their workload or adjusts their position accordingly. Female employees who wide training guiding and supervising departmental training coordinating and approving

are pregnant for over seven months or breastfeeding (with a child under 1 year old) are prohibited from working overtime or annual training plans managing external training agencies and building the internal trainer

night shifts and are provided with dedicated breaks and one hour of paid breastfeeding time per day. The Company also strictly system.adheres to maternity leave and prenatal check-up leave policies fully protecting female employees' physical and mental health Departmental Responsibility: Department Heads

and legal rights. Department heads are the primary responsible parties for improving employee competence

within their departments. They are responsible for developing the department's annual

training plan implementing it and conducting monthly reviews. Each department

Employee Communication designates a part-time HRBP or training organizer to implement the training including tasks

like notifying employees about training liaising with trainers managing attendance and

The Company conducts annual employee satisfaction and engagement surveys through questionnaires discussions and other tracking the training effectiveness.methods to gather comprehensive feedback on various aspects of the Company work and workgroups. Based on survey results Specialized System Collaboration: Quality Department EHS Department Human

management measures are continuously optimized. During the reporting period 35 departments participated in the survey. The Resources Department and Other Departments

results show that employee satisfaction has remained stable with engagement and departmental scores consistently improving. Each department is responsible for the planning and implementation of specialized training

for quality EHS and LHR systems ensuring that these training programs comply with

management system standards such as ISO 9001 IATF 16949 AS 9100D QC 080000 as well

Year 2023 2024 2025

as customer-specific requirements such as hazardous material control.Employee Satisfaction Survey 81.67 points 81.85 points 83.91 points Trainer System Support

The Company has established a five-tier internal trainer system including reserve trainers

junior trainers intermediate trainers senior trainers and honorary trainers. Standards for

trainer selection grading compensation and courseware development have been defined.Additionally a mechanism for selecting and managing external training agencies has been

established creating a combined internal and external trainer support system.Performance Evaluation Management

A rigid assessment mechanism has been established to measure the execution rate of

annual training plans and the employee participation rate. Departments failing to meet

targets will have the relevant managers' performance scores deducted.

79 802025 Environmental Social and Governance Report Caring for Employees Contributing to a Better Society

The Company has developed a systematic training framework consisting of "Four Core Courses" which covers employees Employee Development

throughout their entire career lifecycle including all positions and job stages.Employee Training System

The Company adheres to a healthy personnel management philosophy which states that "the excellent are promoted the

mediocre are demoted and those who violate rules are punished; promotion or demotion is possible in the Management and

employees can join or leave as needed". This is the foundation of the Company's human resources management system which is

centered on rewarding hard work. By strictly enforcing the Performance Management System Employee Promotion and Demotion

Admittance-Type: Special Job/Process Certification Adaptation-Type: Onboarding Training for New and Management System and Employee Reward and Punishment System the Company has established a corresponding dynamic

Training Transferred Employees adjustment mechanism. The Company continues to optimize its job classification and salary incentive structure ensuring that

For mandatory national certification positions and For new hires a standardized onboarding training system resources are directed towards high-performing high-potential individuals thereby providing a solid talent foundation for

internal specialized processes the Company conducts is implemented covering corporate culture quality sustainable development.certification training covering areas like hazardous awareness LHR system standards three-level EHS safety

cargo transportation forklift operation electrical work education basic quality management system knowledge

welding high-altitude operations fire safety operations and product knowledge. Specialized EHS training courses The Company has created a dual-track career development pathway for employees focusing both on management and

and radiation safety as well as internal processes are provided for employees handling hazardous chemicals. professional/technical roles. It has established professional/technical title assessment standards covering all job levels providing

such as grinding and color matching. External training For employees transferring to new roles customized training employees with diverse growth opportunities through vertical promotions or lateral cross-track development. Adhering to the

recertification and assessments are strictly organized in is provided on job responsibilities EHS requirements principle of internal priority for job vacancies professional/technical employees are given an annual opportunity for promotion

accordance with national regulations to ensure that all equipment/instrument operation and specialized skills to ensuring ample space for internal talent development.personnel in these positions are 100% certified. ensure a smooth transition to the new position. Sokan's Employee Promotion Job Families

Consolidation-Type: Mandatory Skills Training for On- Development-Type: Employee Advancement and Marketing Technical Applications Administration

the-Job Employees Development Training

Regular skills enhancement training is provided for all To support career progression the Company offers diverse

job categories. This includes modules on EHS and quality training opportunities including degree enhancement

management systems labor rights marketing R&D management development technical specialization

Finance Equipment Production

quality assurance production PMC finance corporate and external professional training. Various learning

management etc. The training focuses on essential areas formats are provided such as mentoring book clubs

such as customer RSS and EQS standards for hazardous project experience sharing and skills competitions. For

substance control updates to system documents job key positions like R&D color matching and sales an

skill upgrades and the implementation of new customer incentive mechanism is in place to encourage mentorship Quality Control Warehousing TS

requirements ensuring continuous compliance and facilitating both career skill improvement and personal

alignment with business development needs. development.Key Performance BM PM

As of the end of the reporting period The Company has established a scientific and standardized promotion management mechanism adhering to the principles of

balancing morality ability and performance as well as combining gradual and skip-level promotions. A professional review

the Company's total employee training duration amounted to32644 hours with an average of 37.83 committee consisting of the Company's vice presidents Human Resources Department and department heads has been formed

to oversee the entire promotion process. The promotion system includes personal application departmental preliminary review

hours per employee; review by Human Resources Department committee evaluation and public announcement of results. Employees' performance

100% 986000 professional abilities potential and personal qualities are comprehensively assessed. Those who pass the review will have their The training coverage rate was with a total training expenditure of RMB . compensation and benefits adjusted accordingly ensuring a deep connection between employee capability improvement value

creation career development and reward incentives.

81 822025 Environmental Social and Governance Report Caring for Employees Contributing to a Better Society

Equity Incentives Occupational Health and Safety*

Sokan actively practices its core value of "growing together with employees" aiming to build a long-term incentive and restraint

mechanism based on shared interests. The Company implements an equity incentive plan with a three-year cycle designed to Sokan adheres to the occupational health and safety policy of "people-oriented safety first; prevention-focused comprehensive

deeply bind the interests of key employees with the long-term development of the Company. management ensuring occupational health and labor safety". The Company has established a comprehensive management

system to identify and control major risks in production operations strictly enforcing special work permits and safety training

In 2025 the Company successively launched two employee stock ownership plans further improving its diversified incentive systems. Additionally through emergency drills health monitoring and insurance the Company ensures a safe and healthy

system. The first employee stock ownership plan based on the Company's repurchased shares was implemented for core working environment for all employees fostering harmonious development between the enterprise and its people.technical and key employees with performance and individual appraisal metrics tied to the plan. The underlying shares are

scheduled to vest over a three-year period. The second employee stock ownership plan funded through a combination of

employee self-financing and the Company's incentive fund covers the Company's directors senior management core technical Governance

personnel and key employees. The plan is self-managed by the Company with corresponding lock-up and duration periods. Both

plans adhere to the principles of legal compliance voluntary participation and assumption of risk. They effectively enable the

sharing of benefits and risks between the Company and its employees stimulate talent vitality and promote the coordinated and The Company strictly complies with relevant laws and regulations and has established 17 procedural documents such as the

sustainable development of both the Company and its employees. Occupational Health Operation Control Procedures and the Work Safety Operation Control Procedures 8 management systems

including the Protected Employee Management System and the Work Injury Handling Measures and 51 operational documents

such as the Work Safety Management System and the Contractor Safety Management System. These documents form a

Index Unit 2025 occupational health and safety management system covering equipment safety hazardous operations chemical management

occupational health protection and emergency management continuously advancing the work safety system. In 2025 the

Number of employees holding shares Person(s) 13 Company revised 15 of these documents and issued 3 new operational documents including the Precursor Chemical Safety

Management System.Proportion of employees holding shares to total employees % 1.51

Number of shares held by employees Ten thousand shares 448.03 In addition the Company has established an emergency management system fully overseen by the General Manager and follows

standardized emergency management procedures as outlined in the Emergency Preparedness and Response Control Procedures.Proportion of employee shares to total share capital % 2.86 Emergency leadership teams are formed based on the type of emergency event.Sokan's Occupational Health and Safety Management Structure

Note: The above shareholding statistics are based on the shareholder register provided by China Securities Institution Member Responsibilities

Depository and Clearing Corporation Limited covering the top 200 registered shareholders as of the end of the

reporting period. The highest leadership and coordination body for EHS

management being responsible for implementing

Chaired by the Chairman with members

regulations and customer requirements promoting safety

including vice presidents department

culture making decisions on major matters through

heads dedicated EHS managers and

quarterly meetings and monthly company-wide EHS

employee representatives.EHS Committee inspections and supervising corrective actions to achieve

closed-loop management.Be responsible for the daily management and supervision

Safety engineers HE engineers and of work safety environmental protection occupational

other professionals health fire safety and security ensuring the effective

implementation of all EHS systems and measures.EHS Department

83 842025 Environmental Social and Governance Report Caring for Employees Contributing to a Better Society

Occupational Health and Safety Management System Certification Sokan's Occupational Health and Safety Management Risks

Likelihood of

The Company continuously advances the construction and improvement of its occupational health Risk Category Risk Description Potential Financial Impact Impact PeriodOccurrence

and safety management system. In 2025 Sokan and its subsidiary Songrun New Materials successfully

completed the ISO 45001 Occupational Health and Safety Management System certification renewal.New regulations such as the revised This will result in administrative

Work Safety Law impose stricter penalties increased rectification

ISO 45001 Occupational Health and Safety Management System Certification Certificate of the Company medium term

occupational health and safety High costs potential impact on business

long term

Legal Compliance requirements on businesses with licenses higher operating costs

Risk more stringent enforcement. reduced revenue.This is to certify that the management system of: Unified Social Credit Identifier: This is to certify that the management system of: Unified Social Credit Identifier: 91430100685004249U 91430100MA4M18BU7K

SOKAN NEW MATERIALS Certificate Number: 05132208015 Changsha Songrun New Certificate Number: 05132208015-1

Initial Certification Date:

GROUP CO. LTD Initial Certification Date: 18 September 2022

Date of Certification Decision: Materials CO. LTD 18 September 2022

N o.777 North Third Ring Road Ningxiang Economic and Technological Date of Certification Decision: 05 September 2025 N o.777 North Third Ring Road Ningxiang Economic and Technological 05 September 2025

D evelopment Zone Changsha Hunan Province P. R. China Issuing Date: D evelopment Zone Changsha Hunan Province P. R. China Issuing Date:

Company employees expect a hazard-

05 September 2025

has been registered by Intertek as conforming to the requirements of: 05 September 2025

Valid Until: has been registered by Intertek as conforming to the requirements of:

ISO 45001:2018 Valid Until: 17 September 2028 ISO 45001:2018 17 September 2028

The management system is applicable to: The management system is applicable to: free work environment that meets This may lead to talent loss

Design and Manufacture of Coating Adhesives and Ink Sales of Coating

(The other sites and scopes covered by the certificate can be found in the sub- (This sub-certificate is linked to the Main Certificate 05132208015 and

certificate(s).) cannot be shown nor reproduced without it. )

occupational health and safety increased recruitment costs medium term

Rathin Grover Rathin Grover Medium

President Business Assurance President Business Assurance

Intertek Certification Limited 10A Victory requirements. Failure to meet these re d u ce d p ro d u ct i v i t y a n d long term

Park Victory Road Derby DE24 8ZF United Intertek Certification Limited 10A Victory

Kingdom Park Victory Road Derby DE24 8ZF United

Kingdom Employee

expectations will impact satisfaction decreased revenue.Intertek Certification Limited is a UKAS accredited body under schedule of accreditation no. 0014.In the issuance of this certificate Intertek assumes no liability to any party other than to the Client and then only in accordance with the agreed upon Certification Intertek Certification Limited is a UKAS accredited body under schedule of accreditation no. 0014. Employment Risk

Agreement. This certificate’s validity is subject to the organisation maintaining their system in accordance with Intertek’s requirements for systems certification. Validity may In the issuance of this certificate Intertek assumes no liability to any party other than to the Client and then only in accordance with the agreed upon Certification

be confirmed via email at certificate.validation@intertek.com or by scanning the code to the right with a smartphone. The certificate remains the property of Intertek to Agreement. This certificate’s validity is subject to the organisation maintaining their system in accordance with Intertek’s requirements for systems certification. Validity may

whom it must be returned upon request. be confirmed via email at certificate.validation@intertek.com or by scanning the code to the right with a smartphone. The certificate remains the property of Intertek to

The annual validity of the certificate can also be checked through the website http://www.cnca.gov.cn of CNCA in China. whom it must be returned upon request.The annual validity of the certificate can also be checked through the website http://www.cnca.gov.cn of CNCA in China. retention and employer branding.Strategy Sokan's Occupational Health and Safety Management Opportunities

Opportunity Likelihood of Potential Financial

Opportunity Description Impact Period

Category Occurrence Impact

The Company has identified and assessed occupational health and safety risks and opportunities in daily operations and

production processes. It has conducted a comprehensive analysis of various hazards and their potential impacts and prepared

documents such as the Risk and Opportunity Management Form the Hazard Identification and Risk Classification and Control

List and the List of Major Risks. short term

Passing stringent customer EHS audits may open Increased

Medium medium term

up opportunities in the high-end market. operating revenue

? Sokan's Occupational Health and Safety Management Risks Market long term

Opportunity

Likelihood of

Risk Category Risk Description Potential Financial Impact Impact Period

Occurrence

Avoidance of

production

This may result in compensation

Inadequate identification of safety External pressure from governments and stoppages and

for injury or death production short term

risks or failure to effectively implement medium term residents drives the Company to establish a fines improved

Medium interruptions rectification costs Medium medium term

management requirements leads to long term forward-looking systematic occupational health corporate

Safety Accident regulatory fines increased operating Reputation long term

employee injury incidents. and safety risk management system. reputation

Risk costs. Opportunity

increased

revenue.

85 862025 Environmental Social and Governance Report Caring for Employees Contributing to a Better Society

Sokan's List of Major Risks for Work Safety Impact Risk and Opportunity Management

Potential Incident and Control

Risk Category Risk Control Measures The Company uses the Internal and External Factors Identification Analysis Monitoring and Review Form along with the SWOT

Consequences Level analysis framework to identify and analyze occupational health and safety risks and opportunities. Based on this analysis the

Company has developed the Risk and Opportunity Management Form. In addition the Company follows the "dual prevention

mechanism" requirements establishing a standardized risk control process for work safety.Personnel management and emergency preparedness: Work Safety Risk Management and Control Process

Develop job safety procedures and conduct training

provide full personal protective equipment and prepare

specialized emergency response plans.Company Engineering controls and explosion-proof measures:

level

Fire object strikes other Install combustible gas alarms and static electricity Comprehensive Graded Control Multi-layer Closed-loop

injuries mechanical injuries dissipation devices (e.g. static bonding grounding

(Level 1) Identification and Inspection Improvement

Filling Operation clamps) use explosion-proof tools and implement daily

The Company

Grading

inspections. develops and The Company The Company tracks

The Company implements performs routine the rectification of

conducts safety corresponding control inspections of work identified hazards

E quipment safety and interlocks: Install pressure monitoring

risk identification measures for risks teams monthly ensures closed-

gas source regulation and emergency stop buttons on filling

across all operations at different levels company-wide loop management

equipment.such as production and clearly assigns inspections led by the and periodically

warehousing and responsibilities for persons in charge as reviews and updates

R&D etc. scientifically each level. well as special and risk management

assesses and seasonal inspections information to

Systems and plans: Establish specialized safety management determines the risk to identify and rectify achieve continuous

systems and develop and approve construction technical levels and establishes potential hazards on improvement.plans and safety measures for specific operations. a graded control list. an ongoing basis.P ersonnel and qualifications: Provide safety training In terms of capability building and emergency preparedness the Company strictly implements a "three-level safety education"

for all employees and ensure that supervisors special program for new employees requiring no less than 72 hours of training and an annual re-training plan of at least 20 hours for on-

operations personnel and special equipment operators the-job employees. The Company also develops an annual Safety Training Plan ensuring that all personnel involved in special

Fire object strikes burns are all trained and certified before assuming their operations or handling special equipment are certified. Moreover the Company regularly conducts emergency drills based on the

Company

Confined Space electric shock poisoning positions. registered Emergency Response Plan for Work Safety Accidents to enhance practical response capabilities.level

Work Hot Work and asphyxiation explosions

Above Level I falls from heights lifting Process control: Before operations special work permits

(Level 1)

Level IV High- injuries vehicle-related (such as hot work or confined space entry permits) must

Altitude Work injuries be applied for and issued in accordance with the system.Level I Hoisting

Work Areas and facilities: Implement comprehensive safety

management for work areas and specialties and ensure

that all relevant safety protection facilities and emergency

equipment are fully equipped as required.Health and Safety Knowledge Lecture Emergency Response Plan and Emergency Rescue Training

87 882025 Environmental Social and Governance Report Caring for Employees Contributing to a Better Society

Case Conducting Regular Training to Strengthen Emergency Rescue Capabilities Indices and Goals

In December 2025 the Company organized specialized training on "Emergency Rescue Team Responsibilities and Basic The Company has established a safety target management system setting clear annual safety management targets and indicators

Skills Enhancement". This training covered all members of the emergency rescue team (49 people in total) focusing at the beginning of each year. These targets are effectively implemented through regular risk control and hazard identification

on emergency management regulations and basic knowledge the Company's emergency response system and the processes.responsibilities of each emergency team. The training emphasized standardized handling procedures and safety

precautions for over ten types of emergency scenarios including fires leaks and confined space accidents. The training Key Performance

effectively enhanced the team's risk awareness and collaborative capabilities helping the Company build a "prevention-

first ready-to-respond" emergency management system. In 2025

the Company's occupational health and work safety training1 totaled 9249hours with an average

of 28.72 hours of training per employee. The Company conducted 7 safety drills including fire

and toxic gas leakage exercises.There were no work-related fatalities or occupational disease cases.

2025 Occupational Health and Safety Management Targets of Sokan

Index Goals Unit Achievement

Minor injury incidents2 ≤ 1 Case(s) 1 (Achieved)

Emergency Rescue Team Training Work injury accidents 0 Case(s) 0 (Achieved)

Work Safety

Chemical leakage accidents 0 Case(s) 0 (Achieved)

Indicators

Annual inspection pass rate for special

To improve the risk protection mechanism the Company legally pays for work injury insurance for all employees and has 100 % 100% (Achieved)equipment

subscribed to work safety liability insurance fortifying the safety protection network for employees. For employees working in Certification rate for special operations

positions exposed to hazardous chemicals volatile organic compounds and other occupational health risks the Company strictly 100 % 100% (Achieved)personnel

enforces pre-employment annual (during employment) and post-employment occupational health check-ups achieving 100%

Diagnosed occupational disease cases 0 Case(s) 0 (Achieved)

coverage for employee health monitoring. These measures help prevent and reduce occupational health risks. Occupational

Timely completion rate of occupational

Health 100 % 100% (Achieved)

health check-ups

Indicators Pass rate of occupational disease

100 % 100% (Achieved)

hazard factor detection

On-time Completion Rate of EHS Hazard Rectifications 100 % 100% (Achieved)

1The statistical scope of training hours for occupational health and work safetycovers only the Group's Ningxiang headquarters.

2One recordable minor injury incident occurred during the reporting period which was confirmed through investigation to be

non-work-related. Details: A cafeteria worker accidentally slipped and was injured within the work area. This incident has been

duly incorporated into the minor injury management process. Its nature is not related to the Company's production operations.

89 902025 Environmental Social and Governance Report Caring for Employees Contributing to a Better Society

Chemical Safety Sokan's Chemical Safety Management Structure

The Company primarily uses flammable liquid hazardous chemicals as raw materials with the largest volume of solvents stored As the centralized management department it is responsible EHS

in dedicated tank areas. Following an assessment it was determined that these do not constitute major hazards. As a hazardous for system formulation maintenance overall supervision and Department

chemical manufacturing enterprise the Company and its subsidiaries have obtained the necessary work safety licenses and organizing safe disposal of waste chemicals.hazardous chemical usage registration certificates. All products are accompanied by chemical safety technical data sheets and

safety labels ensuring traceability of safety information throughout the product lifecycle. Be responsible for managing chemical procurement processes Central Procurement

ensuring suppliers provide compliant chemical safety data sheets Department

To prevent and control safety and environmental risks associated with hazardous chemicals during production storage usage (MSDS) and related documents.and disposal the Company has established the Hazardous Chemical Management System which covers the entire lifecycle of

chemicals. The system defines the core responsibilities of each functional department and establishes specific control measures

for every stage of the chemical process. Be responsible for managing the storage safekeeping and Warehouse and Logistic

transportation of chemicals. s Team

Sokan's Chemical Safety Management Requirements Be responsible for providing technical guidance and implementing R&D

on-site usage temporary storage and waste management of and User Department

chemicals within their respective departments. s

Admission Assessment and Information Management

A ll new chemicals must undergo a risk assessment organized by the EHS Department before

introduction; Additionally the Company organizes at least one chemical safety training session and one chemical leak emergency drill each year

to strengthen its accident emergency response capabilities. These drills also assess the feasibility effectiveness and compliance

The Company establishes and maintains a comprehensive chemical list and compatibility matrix of the Company's hazardous chemical leak emergency response plans.requires all chemicals to be accompanied by easily accessible Chinese MSDS and mandates that

properly formatted safety labels be affixed to containers to manage risks at the source.?

Case Conducting Hazardous Chemical Leak Emergency Drill to Enhance Employee Handling Capabilities

Storage and Operational Safety

H azardous chemicals are stored in dedicated warehouses strictly zoned and categorized according

In May 2025 the Company organized a hazardous

to the compatibility matrix with secondary containment meeting capacity standards;

chemical leak emergency drill. The drill simulated

The warehouses are equipped with explosion-proof fire-proof leak-proof and emergency a leak scenario in the storage and logistics process

response facilities and regular temperature/humidity monitoring and safety inspections are covering the full emergency response process with

performed; coordinated responses from the emergency team.On-site usage should not exceed 24-hour consumption in principle and operators must receive It adhered to the principles of "controlling impact

specialized training and wear prescribed personal protective equipment. preventing spread and safe disposal". The evaluation

indicated that the emergency response plan was

feasible and effective though some areas of initial

Transportation and Waste Disposal

response procedures were identified for optimization.T he transportation of chemicals is outsourced to qualified carriers; These improvements have been incorporated

A ll waste hazardous chemicals are treated as hazardous waste and entrusted to qualified units for into subsequent training. The drill involved 110 Hazardous Chemical Leak Drill

compliant disposal in accordance with the Solid Waste Management System achieving closed- key staff members further clarifying emergency

loop harmless treatment. responsibilities and collaborative procedures while

enhancing initial response and rescue capabilities.

91 922025 Environmental Social and Governance Report Appendix

Case Conducting Specialized Training to Cultivate Employee Awareness of Standard Operating Procedures Appendix

In May 2025 the Company organized a specialized

training session on "Hazardous Chemical Safety". Key Data Performance Table

This training delivered through in-person lectures

covered basic knowledge of hazardous chemicals

their classification and characteristics storage and

usage standards accident case studies and the entire Environmental Performance

emergency rescue process. The training focused

on materials the company uses such as flammable Disclosure Item Unit 2023 2024 2025

liquid and precursor chemicals. Over 500 employees

participated in the training with an online exam Environmental Compliance Management

afterward to reinforce their knowledge. This training

clarified safety responsibilities and operational Total environmental protection investment RMB 10000 275.81 190.10 207.46

standards for employees involved in chemical Penalty amount for major administrative

management improving their regulatory awareness Specialized Training on Hazardous Chemical Safety sanctions imposed by ecological environment

RMB 10000 0.00 0.00 0.00

and risk prevention capabilities. and other relevant authorities due to

environmental incidents

Addressing Climate Change

Total greenhouse gas emissions (Scope 1 + Scope

Social Contribution Practice 3 tCO2e 7111.44 8713.34 9512.152)

-Scope 1 greenhouse gas emissions tCO2e 0.00 0.00 79.44

The Company consistently upholds the concept of sustainable development actively fulfills its responsibilities as a corporate -Scope 2 greenhouse gas emissions tCO2e 7111.44 8713.34 9432.71

citizen integrates social value creation into its daily operations and management practices and continuously focuses on

supporting public welfare initiatives. Focusing on key areas such as charitable donations community co-development and Greenhouse gas emission intensity per unit of tCO2e/RMB 1 12.06 11.59 13.17

science education and culture the Company steadily explores effective paths for social contribution based on its actual revenue million of revenue

capabilities and resources. It encourages employees to participate in voluntary services helping to enhance community well-

being and public cultural services. In the field of rural revitalization the Company actively responds to national strategic calls Resource Utilization

closely monitors rural development needs and explores diverse empowerment methods such as industrial assistance and Ton(s) of standard

technical support to promote coordinated urban-rural development. The Company continuously optimizes its social contribution Total energy consumption 1630.44 1997.90 2231.69coal

mechanisms demonstrating the responsibility and commitment of a listed company through concrete actions. Ton(s) of standard Direct energy consumption4 / / 41.17

coal

-Gasoline Liter(s) / / 26489

-Diesel Liter(s) / / 8799

Ton(s) of standard

Indirect energy consumption 1630.44 1997.90 2190.52

coal

Purchased electricity MWh 13241.10 16219.49 17232.00

Ton(s) of standard

Purchased steam / / 72.71

coal

93 942025 Environmental Social and Governance Report Appendix

Disclosure Item Unit 2023 2024 2025

Social Performance

Comprehensive energy consumption intensity Ton(s) of standard

2.762.683.09

per unit of revenue coal/RMB 1 million Disclosure Item Unit 2023 2024 2025

Total water intake m3 135368.00 136450.71 170983.00 R&D and Innovation

-Municipal water supply m3 134368.00 135450.71 169983.00 Number of R&D personnel Person(s) 241 268 286

-Rainwater collection and storage m3 1000.00 1000.00 1000.00 Proportion of R&D personnel % 31.75 32.56 33.14

Total drainage volume (via sewer system) m3 128599.00 129628.10 163440.00 R&D investment RMB 10000 9028.59 10544.50 11252.10

Total water consumption5 m3 6769.00 6822.61 7543.00 Proportion of R&D investment in main business % 15.31 14.14 15.58

revenue

m3/RMB 1 million

Water consumption intensity per unit of revenue 11.48 9.15 10.45 Number of patent applications during the

of revenue Item(s) 65 59 45reporting period

Pollutant Emission and Waste Disposa6 Including: Number of invention patent Item(s) 45 45 38

applications

Total exhaust emission 10000 m3 64125.00 65250.00 65250.00 Number of patents granted during the reporting Item(s) 24 52 50

period

-Total volatile organic compounds emissions kg 4688.64 3311.40 3094.92 Including: Number of invention patents granted Item(s) 18 19 29

Total wastewater discharged7 m3 14890.00 16951.00 17828.00 Number of valid patents during the reporting Item(s) 143 195 238

period

Total hazardous waste8 Ton(s) 348.08 481.82 694.11 Number of invention patents applied to main Item(s) 142 194 232

business

Total non-hazardous waste Ton(s) 18.60 19.20 24.20 Product and Service Quality

Recycled waste volume Ton(s) - 0.39 395.07 Amount involved in major safety and quality

liability accidents related to products and RMB 10000 0 0 0

3Scope 2 greenhouse gas (GHG) emissions consist of indirect GHG emissions from purchased electricity and purchased steam. The emission factor for services during the reporting period

purchased electricity is the national average carbon dioxide emission factor for electricity of 0.5366 tCO2 /MWh as published in the Announcement Data security and customer privacy protection

on Publishing 2022 Electricity Carbon Dioxide Emission Factors issued by the Ministry of Ecology and Environment and the National Statistics Bureau

in December 2024. The emission factor for purchased steam is sourced from the Guidelines on Accounting Methods and Reporting of Greenhouse Gas Amount involved in data security incidents RMB 10000 0 0 0

Emissions of Enterprises in Other Sectors of Industry (Trial) (2015) issued by the National Development and Reform Commission (NDRC) of China.Amount involved in customer privacy leakage

4In the Company's operations direct energy use primarily relates to transportation activities. During 2023-2024 the main types of energy used by the RMB 10000 0 0 0

incidents

Company were diesel and gasoline but the volumes were minimal and have not yet been included in the statistical scope.Employee Employment and Rights

5[Calculation Method] Total water consumption = Total water withdrawal – Total water discharge.

6 Total employees Person(s) 759 823 863The statistical scope for pollutant emissions and waste disposal data covers the Ningxiang Park.

7No industrial wastewater is discharged externally from the production processes at the Ningxiang Park. The total wastewater discharge figure Male employees Person(s) 598 655 680

comprises only domestic wastewater. By gender

Female employees Person(s) 161 168 183

8The hazardous waste generated by the Company mainly includes waste activated carbon waste packaging drums waste paint buckets and coating

waste.

9The Company's 2024 waste recycling volume only includes carbon black extracted from waste tires resulting in a significant difference from the

current year's data.

95 962025 Environmental Social and Governance Report Appendix

Disclosure Item Unit 2023 2024 2025

Corporate Governance

Employees aged above 50 Person(s) 30 42 45

Disclosure Item Unit 2023 2024 2025

By age Employees aged 30-50 Person(s) 584 611 647

Business Ethics

Employees aged below 30 Person(s) 145 170 171

Proportion of employees receiving anti-

Employee turnover rate10 % 14.03 13.50 13.40 commercial bribery and anti-corruption % 100 100 100

training16

Employee Training and Development Proportion of directors receiving anti-

commercial bribery and anti-corruption % 100 100 100

Employee training coverage rate11 % 100 100 100 training

17

Proportion of management personnel receiving

Average employee training duration12 Hour(s) 15.29 35.70 37.83 anti-commercial bribery and anti-corruption % 100 100 100

training18

Employee training expenditure RMB 10000 133.21 71.00 98.60 Amount involved in litigation or major

administrative penalties due to the Company's

RMB 10000 0 0 0

Number of employee training sessions Time(s) 305 340 307 unfair competition practices during the reporting

period

Employee Occupational Health and Safety

16[Calculation Method] Percentage of employees covered by anti-commercial bribery and anti-corruption training = Number of employees covered

Proportion of employees covered by work injury by anti-commercial bribery and anti-corruption training / Total number of employees × 100%.

13 % 100 100 100insurance 17[Calculation Method] Percentage of directors covered by anti-commercial bribery and anti-corruption training = Number of directors covered by

Proportion of employees covered by work safety

% 38.21 35.24 56.08 anti-commercial bribery and anti-corruption training / Total number of board members × 100%.liability insurance1415

18[Calculation Method] Percentage of management employees covered by anti-commercial bribery and anti-corruption training = Number of

Investment in employee work injury insurance RMB 10000 37.74 42.92 70.47 management employees covered by anti-commercial bribery and anti-corruption training / Total number of management employees × 100%.Investment in employee work safety liability

RMB 15120 13608 13608

insurance

Contributions to the Society and Rural Revitalization

Amount of investment in rural revitalization RMB 10000 1.83 4.72 -

Amount of charitable donations RMB 10000 0 1.30 -

10[Calculation Method] Employee turnover rate = Number of employee departures during the reporting period / Total number of employees at the

end of the reporting period × 100%.

11[Calculation Method] Employee training coverage rate = Number of employees participating in training during the reporting period / Total number

of employees at the end of the reporting period × 100%.

12[Calculation Method] Average employee training hours = Total employee training hours during the reporting period / Total number of employees at

the end of the reporting period.

13[Calculation Method] Employee work-related injury insurance coverage rate = Number of employees covered by work-related injury insurance /

Total number of employees × 100%.

14[Calculation Method] Employee work safety liability insurance coverage rate = Number of employees covered by work safety liability insurance /

Total number of employees × 100%.

15Work safety liability insurance covers all employees of the Company's subsidiaries involved in the production and operation of hazardous

chemicals.

97 982025 Environmental Social and Governance Report Appendix

Report Index Table Guidelines No. 14 of

Shanghai Stock Exchange

Global Reporting Initiative (GRI) Sustainability Reporting

Report Framework for Self-regulation of Listed

Guidelines No. 14 of Standards (GRI Standards)Companies - Sustainability

Shanghai Stock Exchange 19

Global Reporting Initiative (GRI) Sustainability Reporting Report (Trial)

Report Framework for Self-regulation of Listed

Standards (GRI Standards) Pollution Prevention and Pollutant Discharge and Waste GRI 305: Emissions 2016

Companies - Sustainability Control Management Treatment GRI 306: Waste 2020 (306-1 306-2)

Report (Trial)19

Chapter V Value Co-Creation Empowering the Industrial Ecosystem

About this Report GRI 2: General Disclosures (2-1 2-2 2-3 2-5)

Innovation-Driven Innovation-driven

Chapter I About Sokan GRI 2: General Disclosures (2-1 2-6) Development Development

GRI 2: General Disclosures (2-6)

Safety and Quality of Products

Chapter II ESG Management Product and Service Quality GRI 416: Customer Health and Safety 2016 (416-1 416-2)and Services

GRI 417: Marketing and Labeling 2016 (417-1 417-2)

GRI 2: General Disclosures (2-6 2-8)

ESG Governance Structure GRI 2: General Disclosures (2-12 2-13 2-14 2-17 2-18 2-22) Responsible Supply Chain Supply Chain Security GRI 308: Supplier Environmental Assessment 2016 (308-2)

ESG Risk and Opportunity GRI 414: Supplier Social Assessment 2016 (414-2)

Due Diligence

Management Chapter VI Caring for Employees Contributing to a Better Society

Communication with

Stakeholder Engagement GRI 2: General Disclosures (2-12 2-13 2-16 2-25 2-26 2-29)

Stakeholders GRI 2: General Disclosures (2-7)

GRI 401: Employment 2016 (401-1 401-2)

Topic Materiality Assessment GRI 3: Material Topics 2021 (3-1 3-2 3-3) GRI 405: Diversity and Equal Opportunity 2016 (405-1)

Employee Rights and Benefits Employees GRI 406: Non-discrimination 2016 (406-1)

Chapter III Governance Foundation Upholding Integrity and Compliance GRI 408: Child Labor 2016

GRI 409: Forced or Compulsory Labor 2016 (409-1)

Improving Corporate GRI 2: General Disclosures (2-8 2-9 2-10 2-11 2-15 2-19 GRI 202: Market Presence 2016

Governance 2-20) Employee Growth and GRI 2: General Disclosures (2-19)

Anti-commercial Bribery Anti- Employees

Compliance with Business GRI 205: Anti-corruption 2016 (205-1 205-2 205-3) Empowerment GRI 404: Training and Education 2016 (404-2)

corruption and Anti-unfair

Ethics GRI 206: Anti-competitive Behavior 2016 (206-1) Occupational Health and GRI 403: Occupational Health and Safety 2018 (403-1 403-2

Competition EmployeesSafety 403-3 403-4 403-5 403-6 403-7 403-8)

Risk and Compliance

Due Diligence Rural Revitalization and Social

Management Social Contribution Practice GRI 203: Indirect Economic Impacts 2016 (203-1 203-2)Contribution

Protecting Investors' Rights

and Interests Appendix

Data Security and Customer

Information Security Assurance GRI 418: Customer Privacy 2016 (418-1) Addressing climate change

Privacy Protection pollutant discharge waste

Chapter IV Environment as the Base Committing to Green Development treatment environmental

compliance management GRI 201: Economic Performance 2016 (201-1)

Addressing Climate Change Addressing Climate Change GRI 201: Economic Performance 2016 (201-2) energy utilization water GRI 205: Anti-corruption 2016 (205-1)

resource utilization circular GRI 302: Energy 2016 (302-1 302-2 302-3)

Environmental Compliance invironmental Compliance economy innovation- GRI 303: Water and Effluents 2018 (303-3 303-5)

Management Management driven development safety GRI 305: Emissions 2016 (305-1 305-2 305-4 305-7)Key Data Performance Table

Eneray Utilization Water and quality of products GRI 306: Waste 2020 (306-3 306-4)

GRI 302: Energy 2016 (302-4 302-5)

Efficient Resource Utilization Resource Utilization and and services data security GRI 308: Supplier Environmental Assessment 2016 (308-1)

GRI 303: Water and Effluents 2016 (303-1 303-2)

Circular Economy and customer privacy GRI 401: Employment 2016 (401-1)

protection employees GRI 404: Training and Education 2016 (404-1)

19 * Ethics of Science and Technology: The Company's main business is the R&D production and sales of new functional coating rural revitalization social GRI 414: Supplier Social Assessment 2016 (414-1)

materials. It is not directly involved in scientific research technology development or other activities in science and technology contribution anti-commercial

ethics-sensitive fields such as life sciences or artificial intelligence. Therefore this report does not disclose the Company's basic

compliance status with respect to ethics of science and technology during the reporting period. bribery anti-corruption and

anti-unfair competition.* Equal Treatment to Small and Medium-Sized Enterprises (SMEs): The Company treats SMEs on an equal basis and has no

overdue payments to SMEs or similar circumstances. Report Index Table

* Biodiversity Protection: The Company's business activities have not had any material adverse impact on biodiversity or

endangered species. In accordance with the requirements of the SSE Guidelines the topic of "Ecosystem and Biodiversity Reader Feedback Form

Protection" is not material to the Company and has therefore not been included as a material topic for disclosure in this report.

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