Sokan New Materials Group Co. Ltd.2024 Environmental Social and

Governance (ESG) ReportCONTENTS 2024 Environmental Social and Governance (ESG) Report

Report Preparation Instructions 01

Chairman’s Message 05

Benchmark Index Table 79

Consolidation of the Foundation

Resource Symbiosis Based on Innovation-driven Quality and of Corporate Governance by

01 About Sokan Low-Carbon Development 05 Safety Management 07 Compliance and Integrity 1.1 Company overview 07 03 3.1 Climate change tackling 18 5.1 Quality management of 33 7.1 Corporate Governance 65

products and services

1.2 Main business and products 09 3.2 Energy usage 22 7.2 Protection of the Rights and 66

5.2 R&D and innovation 38 Interests of Investors

1.3 Highlight performance for 2024 11 3.3 Usage of water resources 25

5.3 Data security and customer 44 7.3 Risk control and compliant 68

privacy protection operations

5.4 Supply chain management 47 7.4 Business ethics 71

Protection of Green Mountains

and Clear Water through Green People-Oriented Demonstration

02 Topic Materiality Assessment 04 and Complaint Operations 06 of Corporate Responsibility ESG Data Tables and Notes2.1 Dual materiality analysis process 12 4.1 Environmental compliance 26 086.1 Rights interests and benefits 49 Environmental performance 74

management of employees

2.2 Communication with 13 Social performance 75

stakeholders and due diligence 4.2 Emissions management 29 6.2 Employee training and 54

Corporate governance performance 78

development

2.3 Conclusion of topic 15 4.3 Circular economy 32

materiality analysis 6.3 Occupational health and safety 58

2.4 ESG Management 17 6.4 Chemical safety management 62

6.5 Contributions to the society 64

and Rural revitalizationSokan New Materials Group Co. Ltd. 2024 Environmental Social and Governance (ESG) Report

Report Preparation Instructions

This report is the first Environmental Social and Governance (ESG) report of Sokan New Materials Group Co. Ltd. It Reporting Period

aims to disclose to stakeholders the Company’s philosophy on ESG topics the management approaches established

The reporting period of this report is from January 1 2024 to December 31 2024. Unless otherwise specified all data

the work implemented and the results achieved in its operations.in this report corresponds to this period.Report Scope

Basis for Report Preparation

The Report scope covers Sokan New Materials Group Co. Ltd. and its affiliated companies (hereinafter referred

This report has been prepared based on the Guidelines No. 14 of the Shanghai Stock Exchange for Self-Regulation

to as “Sokan” or “the Company”). Unless otherwise stated the Report scope is consistent with the scope of the

of Listed Companies—Sustainability Report (Trial) (April 2024) (hereinafter referred to as the Guidelines) the Rules

consolidated financial statements of Sokan (stock code: 688157.SH) for the same period.Governing the Listing of Stocks on the STAR Market of the Shanghai Stock Exchange (April 2024) and the Guidelines

No. 2 of the Shanghai Stock Exchange for Self-Regulation of Listed Companies on the STAR Market—Voluntary

Information Disclosure (January 2022).Explanation of Abbreviations Used in the Report

Data Explanation

Abbreviation Full Name

The data and cases in this report are sourced from the Company’s official records of actual operations.Sokan the Company Sokan New Materials Group Co. Ltd.All financial data in this report is denominated in RMB. In case of any discrepancies between the financial data and

Songrun New Materials Changsha Songrun New Materials Co. Ltd. the Company’s annual financial report the latter shall prevail.Gull Hash Chemistry Dongguan Gull Hash Chemistry Co. Ltd. How to Obtain the Report

This report is published in electronic format in both Chinese and English versions. In case of any discrepancies

Beichi Technology Guangxi Beichi Automotive Technology Co. Ltd.between the two versions the Chinese version shall prevail.Huatu Chemical Huatu Chemical (Jilin) Co. Ltd.The Chinese electronic version of this report can be viewed or downloaded on the website of the Shanghai Stock

Sandi Digital Coating Hunan Sandi Digital Coating Systems Co. Ltd. Exchange (hereinafter referred to as “SSE”) (www.sse.com.cn) or on the official website of Sokan New Materials

Group Co. Ltd. (www.sokan.com.cn). The English electronic version can be viewed or downloaded on the official

Sokan Vietnam Sokan New Materials (Vietnam) Co. Ltd. website of Sokan New Materials Group Co. Ltd. ( www.sokan.com.cn).Sokan USA Sokan New Materials Americas LLC and Songjing Property Holdings LLC Contact Us

Ningxiang Park is the location of the Company’s headquarters Songrun New Contact address: No. 777 Sanhuan North Road Ningxiang City Changsha City Hunan Province

Materials and Hunan Sokan Advanced Surface Treatment and Functional

Ningxiang Park

Coating Research Institute Co. Ltd. and is also the Company’s main Contact phone: 0731-87877770

production and R&D base.Contact email: zqb@sokan.com.cn

01 02Sokan New Materials Group Co. Ltd. 2024 Environmental Social and Governance (ESG) Report

Principles for Report Preparation

Materiality Quantification and Consistency

The Company has identified the material topics related to its operations that are of concern to each stakeholder which This report discloses key quantitative performance indicators and where possible historical data. This report

are the focus of this report. While reporting on these material topics this report also considers the characteristics of maintains consistency in the statistical and disclosure methods of the same indicator across different reporting

the industry and business operations of the Company. The process and results of the materiality analysis are detailed periods. Any changes in the statistical or disclosure methods will be fully explained in this report’s notes to enable

in the “Topic Materiality Assessment” section of this report. stakeholders to conduct meaningful analysis and assess the development trends of the Company’s ESG performance.Accuracy Completeness

This report strives to ensure the accuracy of the information. For quantitative information the data scope calculation The scope of disclosure in this report is consistent with the scope of the Company’s consolidated financial

basis and assumptions have been stated to avoid misleading the report’s users due to any calculation errors. Detailed statements.quantitative information and notes can be found in the ESG Data Table and Notes section of this report. The Board of

Directors guarantees the content of the report affirming that there are no false records misleading statements or Timeliness

This report is an annual report covering the period from January 1 2024 to December 31 2024. It is published

material omissions.simultaneously with the Company’s 2024 annual report providing timely information for stakeholders’ decision-

Balance making.The content of this report reflects objective facts providing unbiased disclosure of both positive and negative

information related to the Company. During the reporting period the Company did not identify any significant negative Verifiability

The cases and data in this report are sourced from the Company’s actual operational original records or financial

incidents that should have been disclosed but were not.reports. The sources and calculation processes of the disclosed quantitative data are traceable and can support

Clarity external verification and audit work.This report is published in Simplified Chinese and English. In case of any inconsistencies between the Chinese and English

versions the Chinese version shall prevail. The report includes tables model diagrams and other information as supplementary

to the text aimed at helping stakeholders better understand the content of this report. To facilitate stakeholders’ access to

information the report provides a table of contents and a Benchmark Index Table for ESG standards.

03 04Sokan New Materials Group Co. Ltd. 2024 Environmental Social and Governance (ESG) Report

Chairman’s Message

Advocating “prosperity and growth striving for great achievements” the Company as a modern enterprise driven Join hands with partners to build a responsible ecosystem

by innovation has always integrated the concept of sustainable development into its overarching strategy. We We consistently uphold our core value of “customer centricity” and have established a rigorous quality

firmly believe—and actively uphold—that only by working together with our customers employees and society management system and continuously increasing investment in R&D to drive technological upgrades and

to build an industrial ecosystem continually innovating and striving for further technological breakthroughs product iteration thereby delivering safe and reliable products and services to our customers. At the same time

in the field of new functional coating materials can we realize a collaborative mutually beneficial and shared we have strengthened our data security protection mechanisms to effectively safeguard customer privacy. In

development model. In 2024 we advanced the integration of ESG practices into our operations by establishing a supply chain management the Company adheres to the principle of shared responsibility. While ensuring supply

sound ESG management system embracing the philosophy of green development and deepening stakeholder chain security we work with our partners to jointly enhance standards in environmental protection workplace

collaboration in an effort to achieve symbiotic success in both economic returns and social value. safety and professional integrity striving together to build a sustainable industrial value chain.Strengthen the foundations of governance and safeguard the baseline for development Care for employee development and give back to society

We have always regarded the enhancement of governance efficiency as a core safeguard for sustainable We uphold the people-oriented philosophy providing employees with a fair employment environment a

development. We have established a sound and standardized governance structure in which the roles and competitive compensation and benefits system and well-structured career development pathways to fully

responsibilities of the Shareholders’ Meeting Board of Directors Board of Supervisors and Senior Management protect their lawful rights and interests. Through a robust health and safety management system and diverse

are clearly defined operating in a coordinated efficient transparent and regulated manner. Meanwhile we training programmes we are committed to enhancing employees’ professional capabilities and overall

attach great importance to the timeliness and transparency of information disclosure maintaining positive competencies supporting their growth alongside the Company’s development. In the field of social welfare the

interaction with investors through diversified communication channels and continuously improving the Company actively fulfills its corporate citizenship responsibilities by continuously promoting rural revitalization

standard of corporate governance. We have continued to strengthen our risk prevention and control capabilities initiatives and delivering positive social impact through concrete actions.by building an internal control system that covers the entire business process strictly enforcing codes of

professional integrity and regularly conducting compliance training and supervision to effectively protect the Look ahead and struggle forward with determination

rights and interests of investors.Looking ahead Sokan will advance ESG practices to higher standards and embed the concept of sustainable

development deeply into the Company’s DNA. We firmly believe that only by transforming a sense ofProtect the ecological environment and practise the philosophy of “carbon peaking and carbonresponsibility into conscious action can we navigate the evolving era with stability and forge lasting progressneutrality” creating enduring value for society the environment and all stakeholders.Tackling climate change and protecting the ecological environment are inescapable responsibilities endowed

by the era to enterprises. We embed the philosophy of green development throughout the entire production

and operational process reducing greenhouse gas emissions through the development of environmentally

friendly materials and the implementation of energy-saving and carbon-reduction measures. We strictly comply

with national environmental protection laws and regulations strengthen the control of pollutant discharge and

promote the reduction and resourceful treatment of waste. Looking ahead the Company will continue to deepen Ling Yunjian

its green transformation and steadily advance towards carbon neutrality contributing our corporate strength to

global climate governance. Chairman of the Board of Sokan

05 06Sokan New Materials Group Co. Ltd. 2024 Environmental Social and Governance (ESG) Report

About Sokan 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 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

1.1 Company overview passenger cars and special equipment—striving for leadership through technological excellence and aiming to become

Sokan (688157.SH) established in 2009 is an internationally leading enterprise in the new functional coating material a global leader in the field of new functional coating materials.industry. With the markets of high-end consumer electronics passenger cars and special equipment as its targets

the Company adopts an “interactive” independent R&D model and a “customized flexible manufacturing” approach Sokan’s Medium- and Long-Term Development Strategy

to provide customers with multi-category systematic solutions for coatings inks adhesives and other materials. The Exploration and cultivation Return of future business

Company was listed in June 2020 and is the first A-share listed enterprise on the STAR Market of the Shanghai Stock

Exchange with advanced new functional coating materials as its core business. Focus

Development and expansion Third Reservation of new technologies

of key business level and establishment of viable busi-

Company Profile of Sokan ness models

Focus Target application industry

Chinese name 松井新材料集团股份有限公司 Maintainance and consolidation Second Rapid growth through building 3C industries

of core business level core capabilities Automotive industry

English name SOKAN NEW MATERIALS GROUP CO.LTD. Special equipment

Target application industry

Advertising inks

Stock listing location and market STAR Market of the Shanghai Stock Exchange Focus 3C industries PCB (printed circuit board)

Cost control efficiency improvement Automotive industry

Listing date June 9 2020 First level contribution to revenue and profit 3D printing coating equipment

Stock abbreviation 松井股份 Target application industry

3C (computers communications

Stock code 688157.SH and consumer electronics) industries Time

No. 777 Sanhuan North Road Economic and Technological Development Zone

Company headquarters location “Prosperity and growth striving for great achievements” Sokan’s corporate philosophy is closely aligned with its name.Ningxiang City Hunan Province

The Company firmly believes that only by setting high aspirations building a symbiotic and prosperous ecosystem and

continuously innovating to create exceptional platforms and develop cutting-edge technologies can it achieve greater

success. Over more than a decade of development the Company has accumulated numerous outstanding cultural

Key Qualifications and Certifications of Sokan elements which have been refined into the distinctive “‘Sharp Culture”. This culture serves as the guiding principle for the

Company’s daily business operations and management. It not only reflects the enterprising and unstoppable character traits

of the Company’s employees but also forms the fundamental guarantee for the Company’s sustainable development.National Enterprise with

Enterprise National Intellectual Sokan’s Corporate CultureNational Green

Technology Property Factory

Center Advantages

Vision Mission Corporate culture

To become a global Continuously Sharp Culture:

leader in the field of surpassing and Achieve customers with

National National National new functional coating creating exciting sharp quality

Specialized Fined Technology Industrial Product Postdoctoral

Peculiar and Innovation Green Design Innovation & materials scenes Empower employees

Innovative Giant Demonstration Demonstration Entrepreneurship with a Sharp platform

Enterprise Enterprise Enterprise Practice Base Achieve the future with

Sharp innovation

07 08Sokan New Materials Group Co. Ltd. 2024 Environmental Social and Governance (ESG) Report

1.2 Main business and products Passenger car coating solutions

In the field of high-end consumer electronics the Company focuses on its target market and has established

partnerships with numerous globally renowned downstream terminal customers. Currently the core terminal customers

that have been served by the Company or incorporated into the Company’s customer system include major North

American consumer electronics customers such as Microsoft Google HP Amazon Meta Logitech domestic H

customers Honor Xiaomi VIVO OPPO and many other internationally well-known terminal brands. The Company’s self-

developed products including tactile coatings PVD coatings water-based coatings appearance coatings and other

functional coatings and ink products are industry-leading or at an advanced level. Among them the water-based series

coatings water-based screen printing inks and water-based spray inks offer lower VOC emissions making them more

environmentally friendly and in line with national development strategies and industry trends.In the field of passenger cars the Company leverages its technological advantages and brand influence accumulated

in the field of high-end consumer electronics to achieve dual breakthroughs in both technology and market through a

differentiated competitive strategy. The core customers that have been served by the Company or incorporated into the

Company’s customer system include: BYD North American T companies NIO Li Auto Geely GAC SAIC-GM-Wuling

XPeng Motors FAW Hongqi Valeo Yanfeng Minth Group XIN QUAN AutoMative and other well-known domestic and

Special equipment coating solutions

international automobile manufacturers and automotive parts suppliers. The Company’s self-developed PVD coatings

for automotive parts and anti-fog coatings for automotive headlamps are industry-leading. Among them the automotive

PVD coatings based on vacuum ion sputtering plating technology are pollution-free and can replace water electroplating

(chromium) products with high environmental impact making them more environmentally friendly and widely

recognized in the downstream market.In the field of coatings for special equipment such as rail transportation aerospace and marine equipment the

Company is focusing on cutting-edge technologies related to surface treatment functional coatings adhesives and

other relevant areas as its R&D direction. The Company is actively carrying out technical research and application

studies. In the aerospace field the Company continues to advance its collaboration with downstream customers with

its airworthiness certification currently in a critical stage.Consumer electronics coating solutions

The Company continues to build a global multi-dimensional service network establishing R&D production sales and

technical service facilities in regions where key terminal brands and major manufacturers are located. In the domestic

market the Company has established technical and marketing service centers in cities such as Beijing and Shanghai

enabling it to provide timely services for terminal brand customers and major manufacturers. Overseas the Company

has set up operations in the United States and Vietnam creating a dual-hub structure that serves the North American

and Southeast Asian markets. This global positioning ensures the Company’s ability to respond swiftly to the demands

of downstream market customers such as terminals and manufacturers.

09 10Sokan New Materials Group Co. Ltd. 2024 Environmental Social and Governance (ESG) Report

1.3 Key Performance for 2024 Topic Materiality Assessment

2.1 Dual materiality analysis process

1901Thousands RMB 300kilograms

The identification of material topics is a crucial component of the Company’s ESG management helping the Company

Total environmental protection investment Amount of carbon black extracted from waste

tires used focus on key areas and clarify the ESG strategic planning and priorities. In 2024 Sokan strictly followed the relevant

requirements for “Topic Materiality Analysis” outlined in the Guidelines of SSE while also referring to the Guidelines

No. 4 of the Shanghai Stock Exchange for Self-Regulation of Listed Companies—Sustainability Report Preparation to

conduct a “Dual Materiality Identification and Analysis” for sustainability topics.

32.56 52 88.61 /81.40 The Company taking into account the characteristics of the industry it is in and its own business operations identifies % items points points the short-term medium-term and long-term financial impacts of the topics on the Company as well as the actual

Proportion of R&D personnel Number of newly granted Satisfaction score of manufacturing/

patents terminal customers and potential economic social and environmental impacts of the Company’s performance in each topic. The specific

analysis process is illustrated in the diagram below.

14.14% 191items 100%

Proportion of R&D Investment Total Number of Authorized Proportion of suppliers signing the Integrity

to Total Revenue Patents and Honesty Agreement Dual Materiality Analysis Process for Topics of Sokan in 2024

Background

Topic identification Topic materiality Topic review and 81.85 7.87 710 identification and points % Thousands RMB assessment confirmationunderstanding

Employee satisfaction score Proportion of shares held by employees Total employee training

in total share capital expenditure

100% 100% 35.7hours Analyze the Company’s Conduct due diligence Set appropriate assessment Combine the dual

Employee training Timely completion rate of occupational Average employee training internal activities and through interviews or methods and establish materiality assessment

coverage rate health check-ups duration business relationships surveys with the Company’s materiality thresholds results for all topics

including sustainability- Management departments based on the Company’s and the materiality

related impacts across the and stakeholders. Based operational management threshold standards

value chain both upstream on the Guidelines of SSE capabilities. Combine the to produce a list of

and downstream. identify screen and define due diligence results to “material” topics and

sustainability topics related assess the impact and form a dual materiality

Identify and categorize

100 100 to the Company through financial materiality of each analysis matrix to % % the key stakeholders most policy analysis industry topic and rank the topics clearly present the

affected including both

Proportion of employees receiving training on anti- Proportion of directors receiving training on anti- standards and trends and based on their importance. assessment results.internal and external related

commercial bribery and anti-corruption commercial bribery and anti-corruption peer benchmarking finally parties.forming a list of 19 relevant

24494.7 topics.Thousands RMB 16013.3 Thousands RMB

Cash dividends distributed for 2023 Amount spent on share repurchase

1112

Environmental Social Employee Corporate gover-

performance performance performance nance performanceSokan New Materials Group Co. Ltd. 2024 Environmental Social and Governance (ESG) Report

2.2 Communication with stakeholders and due diligence Key Stakeholders Key Topics of Concern Communication and Response

Rights interests Chemical safety Professional title Employee care activi-

Effective Communication with stakeholders is an important foundation for the Company’s ESG management. Sokan and benefits of management evaluation ties

employees Company website and Internal and external

based on the characteristics of the industry it is in and its own business operations identifies and classifies six key Risk control and Employee training compliant operations intranet training

stakeholders: Shareholders and investors government and regulatory agencies customers suppliers and partners Employees and development Business ethics Management meetings Whistleblowing and

and employee meetings supervision channels

employees and community and the public. Occupational health and safety

The Company values the demands and expectations of its stakeholders and maintains regular communication with Energy usage Climate change tackling

Environmental Volunteer activities

key stakeholders. Through regular communication surveys and other channels the Company gathers opinions and Usage of water Contributions to the information disclosure

resources society and rural Company website

expectations regarding its sustainable development and engages in targeted discussions and responses. During the revitalization Community public Community and Emissions welfare projects

reporting period the Company proactively communicated progress on key topics with stakeholders and received the public management

feedback to enhance management practices and sustainable value.For the 19 identified topics the Company conducted due diligence to identify and assess the impact of each topic on the

Sokan’s Methods for Communication with Stakeholders and Key Topics of Concern economy environment and society in the short term (0-2 years) medium term (3-5 years) and long term (6-10 years)

as well as ensuing risks and opportunities for the Company’s daily operations and business decisions. In this report the

Key Stakeholders Key Topics of Concern Communication and Response

Company responds in detail on how to control these impacts mitigate risks and seize opportunities.Financial reports or Analyst

announcements communication Sokan’s Topic List for 2024 and Impacts Definition

Protection of the Risk control and Shareholders’ meetings meetings

rights and interests compliant operations Performance briefings On-site research No. Category Topic Impact Period Affected Stakeholders

of investors R&D and innovation communicationsRoadshows and

Corporate

Shareholders and Quality management of reverse roadshows

Shanghai Stock Customers

governance Exchange e-interaction Short- Medium- and Long-

investors products and services Broker strategy 1 Climate change tackling Government and regulatory agencies

Business ethics termmeetings Investor hotline Community and the public

Investor Relations

WeChat public account Environmental Compliance

2 Short- and Medium-term

Management

Environmental Climate change tackling

compliance man- Quality management of Environment Short- Medium- and Long-

agement products and services Information disclosure Meetings or exchange 3 Energy usagevisits term Government and regulatory agenciesEmissions manage- Chemical safety man- Filing or approval Community and the public

ment agement Regular reporting Standard policy com- 4 Usage of water resources Short- and Medium-term

Government and Energy usage munication

regulatory agencies Corporate governance 5 Emissions management Short- and Medium-term

Usage of water Special inspectionsBusiness ethics

resources 6 Circular economy Medium- and Long-term

Industry forums and Customer communi- 7 Supply chain management

R&D and innovation exhibitions cation and complaint Government and regulatory agencies

Quality management of products and services Audit and factory

channels Quality management of products Short- Medium- and Long-8 Customers

inspections Customer satisfaction and services term

Data security and customer privacy protection Suppliers and partners

Customers Strategic cooperation surveysBusiness ethics 9 R&D and innovation

Interactive R&D Whistleblowing and

supervision channels Rights interests and benefits of

10

Supply chain assess- Strategic cooperation Social employees

Supply chain management ment and audits projects Employee training and Employees

11

Quality management of products and services Supplier conferences Industry conference development

R&D and innovation Industry-university-re-

communications Medium- and Long-term

Suppliers and search collaboration Whistleblowing and 12 Occupational health and safety

partners Business ethics projects supervision channels

Exchange visits Contributions to the society and Employees13

rural revitalization Community and the public

13 14Sokan New Materials Group Co. Ltd. 2024 Environmental Social and Governance (ESG) Report

No. Category Topic Impact Period Affected Stakeholders Matrix of Sokan’s Materiality of Topics in 2024

Data security and customer Short- Medium- and

1410

privacy protection Long-term Employees Very important

Social Suppliers and partners 9

Chemical safety manage- Short- Medium- and Customers Emissions management15 Supply chain management

ment Long-term 8 Circular economy business ethics

Occupational health and safety

Short- Medium- and Government and regulatory agencies Business ethics

16 Corporate governance 7 Data security and customer privacy Quality management of products and servicesLong-term Shareholders and investors Climate change tacklingprotection

Contributions to Rights interests and benefits of employees

Protection of the rights and 6 the society and Protection of the rights and interests of investors17 Medium term Shareholders and investors rural revitalization

interests of investors Employee training and development R&D and Innovation

Gover- 5 Chemical safety

Corporate governance

nance Risk control and compliant

Government and regulatory agen- management

18 Medium- and Long-term

operations cies 4

Shareholders and investors Energy usage Usage of water resources

Employees Environmental compliance managementShort- Medium- and 3

19 Business ethics

Long-term Customers

Suppliers and partners Risk control and compliant operations2

2.3 Conclusion of topic materiality analysis Not important Very important0

012345678910

Based on the identified topic list Sokan invited key stakeholders and external experts to assess the materiality of the Impact on the Company’s Finances

topics from the dual perspectives of impact materiality and financial materiality. The final results were presented in a

matrix format showing the degree of materiality of each topic. Topics with both financial Topics with financial Topics with impact Topics with neither

materiality and impact materiality but no impact materiality but no financial financial materiality nor

materiality materiality materiality impact materiality

In 2024 Sokan identified 19 topics of materiality. Among these 5 topics have dual materiality 3 topics have only

financial materiality 10 topics have only impact materiality and 1 topic has neither financial materiality nor impact

materiality. Sokan’s List of Topics with Dual Materiality in 2024

Topics with both financial Topics with financial Topics with impact Topics with neither

materiality and impact materiality but no impact materiality but no financial financial materiality nor

materiality materiality materiality impact materiality

Emissions management Energy usage Supply chain management Usage of water resources

Occupational health and Environmental compliance Circular economy

safety management

Business ethics

Quality management of Risk control and compliant

products and services operations Data security and customer

privacy protection

R&D and Innovation

Contributions to the society

Climate change tackling and rural revitalization

Protection of the rights and

interests of investors

Rights interests and benefits

of employees

Employee training and

development

Corporate governance

Chemical safety management

1516

Impact on the economy environment and societySokan New Materials Group Co. Ltd. 2024 Environmental Social and Governance (ESG) Report

2.4 ESG management Resource Symbiosis Based on Low-

Sokan places great emphasis on ESG management and operations. In accordance with external requirements such Carbon Developmentas the Guidelines the Company has established a top-down ESG management structure of “Decision-Making -Management - Execution” integrating ESG principles into various business operations. The Board of Directors as the 3.1 Climate change tackling

highest decision-making body for ESG management is fully responsible for overseeing the Company’s ESG matters.The Senior Management is responsible for coordinating and managing all ESG matters while each department and The Company’s current greenhouse gas emissions primarily come from direct emissions (fuel and diesel used by ownedsubsidiary is tasked with implementing and executing ESG initiatives under the coordination of the Senior Management. vehicles) and indirect emissions (purchased electricity and steam). Following the “Governance - Strategies - ImpactsThe collaboration across all levels ensures the efficient operation of ESG matters within the Company. Risks and Opportunities Management - Indicators and Targets” climate information disclosure framework specified in

SSE’s Guidelines the Company has established and continuously improved its climate change management system

strengthening its capacity to address climate change.ESG Management Structure and Responsibilities at Each Level of Sokan in 2024 Governance

To strengthen climate change management the Company has developed the Greenhouse Gas Control Management

Decision-making level: Oversee the Company’s sustainable System and the Energy Resource Management System to regulate the control and monitoring of greenhouse gas and

development and outlook; review and approve the Group’s ESG energy emissions. Additionally the Company’s EHS (Environmental Health and Safety) Department is responsible for

Board of management policies strategies objectives and annual work

plan including the assessment prioritization and management identifying and assessing climate change-related risks and opportunities formulating climate change-tackling strategies

Directors of key ESG issues risks and opportunities. focusing on energy conservation emission reduction and low-carbon products and implementing relevant measures.Strategy

Management level: Develop ESG management To systematically tackle the challenges of climate change the Company combines industry trends and business

guidelines strategies and objectives; define the

responsibilities of each department branch and characteristics conducts regular climate risk and opportunity identification and assessment through cross-departmental

subsidiary; coordinate the implementation of ESG collaboration and expert consultation and incorporates the results into its strategic decision-making system.Senior Management policies while ensuring compliance with relevant

laws and regulatory requirements.Analysis of Sokan’s Response to Climate Risks and Opportunities

Execution level: Implement and ex-

Risk Risk Description Impact Scope Financial Impact

ecute the Group’s ESG management

strategy guidelines plans and work Extreme weather incidents (such as floods and extreme

objectives based on actual work con- heat) may cause damage to factory equipment and raw Acute physical risks Short term Decreased

ditions; comply with ESG-related pol- Phys- material storage facilities and disrupt supply chain lo-

Departments branches and subsidiaries operating revenueicies and local laws and regulations; ical gistics.promote the execution of various risks Increased operating The Company may face risks to normal production and

Chronic physical

ESG-related tasks. costsoperations due to chronic climate disasters such as ris- Long term

risks

ing temperatures and sea levels.Investment is required to upgrade environmental Increased

Policy and legal protection equipment to meet VOCs emission limits; Short- and procurement costs

risks failure to meet VOCs emission standards may result Medium-term Increased non-

in regulatory penalties. operating expenses

Tran-

sition The growing demand for low-carbon coatings is squeez-

risks ing the market for traditional solvent-based products. If Short- Medium- Decreased Market risks

the Company fails to introduce bio-based inks or low- and Long-term operating revenue

VOCs coatings it may be replaced by competitors.If the Company or its suppliers use high-carbon emis- Short- and Decreased

Reputation risks

sion materials it could trigger a brand trust crisis. Medium-term operating revenue

17 18Sokan New Materials Group Co. Ltd. 2024 Environmental Social and Governance (ESG) Report

Opportunity Opportunity Description Impact Scope Financial Impact Impacts risks and opportunities management

With the growth in capacity of clean energy technolo- To fully tackle climate change risks and effectively seize opportunities the Company has established a climate change

gies such as photovoltaics and biomass energy and the

Reduced operating

Energy source opportunities gradual maturation of low-cost technological routes Long term tackling system that balances mitigation and adaptation. The system strengthens management at the production and

costs

adopting clean energy in the long term can reduce tradi- operational levels continuously improving the Company’s climate change management capabilities.tional energy expenses.The carbon peaking and carbon neutrality goals are

driving a surge in demand for coatings in wind power Short- Medium- Increased operating

Market opportunities Sokan’s Main Measures for Climate Change Tackling

and new energy vehicles. Early layout of a low-carbon and Long-term revenue

product line can seize market opportunities.Closely monitor meteorological forecasts and early warning information to stay informed

Real-time monitoring of climate risks in raw material Increased operating about the dynamics and impact range of extreme weather incidents such as typhoons and

sourcing locations enhances supply chain resilience;

Medium-and revenue floods. Preemptively inspect production facilities and emergency supplies to ensure the

Adaptability opportunities collaborating with research institutions to develop cli-

Long-term Reduced operating stability and safety of production facilities minimizing the impact of extreme weather on mate-adaptive resin materials can reduce the long-term

costs production facilities.physical risk impact.Emergency response In the event of a disaster initiate the emergency response mechanism promptly activate

mechanism the preliminary disposal plan report to the relevant local departments and proceed with

handling the situation.Sokan’s Climate Change Tackling Strategy

Actively build a green materials platform and green product evaluation standards. Based

on product carbon footprint analysis using lifecycle assessment evaluate the carbon

footprint of products throughout their lifecycle from raw materials resin synthesis solvents

monomers pigments and transportation to final product packaging and storage. Special

Product carbon foot- focus will be given to controlling the carbon footprint of critical elements such as raw Emergency

response mech- print analysis materials resins and solvents which are most sensitive to carbon footprint.anism

Develop water-based material products. The low VOCs

properties of water-based materials can reduce greenhouse

gas emissions.Develop bio-based material products which can reduce

carbon emissions generated during the production process

Industry collabo- Product carbon foot- of chemical raw materials used in traditional solvent-based

ration print analysis R&D of environmental- coatings. The Company has seven bio-based coatings

ly friendly coatings certified by UL for bio-based content.UL Certificate for Bio-based

Content Validation

Reduce energy consumption and carbon emissions by implementing intelligent control of

Energy conservation and high-energy consumption equipment and regulating employees’ daily electricity usage.consumption reduction in

production and operations

Energy consumption R&D of environ- Collaborate with research institutions universities and others to develop low-carbon

reduction in production mentally friendly products and strengthen the industry’s collective ability to tackle climate change.and operations coatings Industry collaboration

19 20Sokan New Materials Group Co. Ltd. 2024 Environmental Social and Governance (ESG) Report

Sokan Collaborates with South China Agricultural University to Develop Bio-based Light-curing Coatings 3.2 Energy usage

The Company has collaborated with South China Agricultural University on the research and industrialization of the The Company is a low-energy consumption enterprise with the main types of energy used being purchased electricity

project “Key Technologies for the Green Conversion of Vegetable Oils and High-value Applications”. The Company and purchased steam. The Company complies with laws and regulations such as the Energy Conservation Law of

has adopted an efficient chemical conversion method using bio-based tung oil acid soy oil acid and other modified

grafts to develop bio-based light-curing coatings providing solutions for sustainable green and low-carbon economic the People’s Republic of China establishes awareness of energy conservation and promotes energy-saving and

development in the Guangdong Hunan and Jiangxi regions. This project was awarded the Second Prize of Guangdong consumption-reduction measures in an effort to jointly build a green enterprise.Provincial Science and Technology Progress Award in 2023.Governance

The Company places great emphasis on energy management and has established management systems such as

the Energy Resource Management System and the Energy Consumption Management System for the Science and

Technology Innovation Building to standardize the management of energy use. The Company has improved its energy

management system clarified the responsibilities of each department and achieved systematic management of energy-

saving and consumption-reduction efforts.Sokan’s Energy Usage Management System

Equipment Engineering Department Use departments in each area

Designate a responsible person to conduct daily Designate a responsible person to conduct 6S

inspections and keep inspection records. inspections and check electricity usage in each area

and be responsible for the energy consumption of

the assigned floor.Certificate of Science and Technology Progress Award of Guangdong Province Strategy

The Company constantly focuses on the far-reaching impact of energy management on society and is fully aware that

energy conservation in enterprises contributes to the achievement of the national carbon peaking and carbon neutrality

goals. At the same time the Company reviews energy consumption summarizes energy-saving and emission-reduction

experience identifies risks and opportunities related to energy usage and develops corresponding response strategies.Indicators and targets

Analysis of Risks and Opportunities Related to Sokan’s Energy Usage

To ensure the effective implementation of climate change management measures the Company regularly tracks

Risk Risk Description Impact Scope Financial Impact

greenhouse gas emission indicators and continuously optimizes the management mechanisms based on progress. In

2024 based on the current development status the Company has set a goal for greenhouse gas emissions in Scope 1 The government’s regulatory efforts on energy use Increased non-

are continually strengthened and related regulations

and Scope 2 to increase by no more than 30% compared to 2023. Medium- and operating expensesPolicy and legal risks are becoming more stringent. If the Company fails to

Long-term

adapt to these changes in a timely manner it may face Decreased operating

fines or other forms of penalties. revenue

Sokan’s Climate Change Tackling Indicators

Opportunity Opportunity Description Impact Scope Financial Impact

Indicator Unit Progress in 2024 By adopting clean energy technologies the Company

Energy source can reduce traditional energy consumption costs mit- Medium- and Reduced operating

Greenhouse gas emissions 8713.34 opportunities igate the risks of traditional energy price fluctuations Long-term coststCO e(Scope 1 and Scope 2) 2 (Achieved the goal) and also benefit from clean energy subsidies.

21 22Sokan New Materials Group Co. Ltd. 2024 Environmental Social and Governance (ESG) Report

Sokan’s Energy Usage Response Strategy Logistics transportation optimization

Plan logistics transportation routes systematically to reduce unnecessary gasoline and diesel consumption caused by

inefficient route planning.Production efficiency improvement

Production efficiency

Intelligent control

improvement Use advanced intelligent manufacturing technologies to improve production efficiency while ensuring product quality and

reduce energy consumption per unit during the production process.In addition the Company has established a comprehensive reward and punishment system to encourage employees to

practice energy-saving and consumption-reduction behaviors. The Employee Reward and Punishment System has been

implemented which includes regular checks on the status of equipment shutdowns and electricity usage as well as

Logistics transporta- Equipment usage stan- reporting and punishment of deliberate wasteful behaviors.tion optimization dardization

Indicators and targets

The Company’s overall target is to reduce unnecessary energy consumption. The Company has established energy

usage indicators to monitor the progress and results of its energy-saving and consumption-reduction actions.Impacts risks and opportunities management Indicators Related to Sokan’s Energy Usage

The Company uses an intelligent system to monitor and automatically control the energy consumption of high-energy

Indicator Unit 2024

equipment strictly setting start-stop conditions for equipment and regulating employee energy usage behaviors.Besides the Company optimizes logistics transportation route planning and improves product yield through advanced

Total energy consumption Tons of standard coal

manufacturing technologies to achieve indirect energy savings ensuring that energy-saving and consumption-reduction 1997.90

measures cover all business and operational processes.Sokan’s Main Measures for Energy Usage in 2024

Intelligent control

Install building automation modules for air conditioning systems and set timers to turn off the system.Launch an AI-based comprehensive IoT management platform for Ningxiang Park to monitor energy consumption in real time.Equipment usage standardization

Set air conditioning temperatures to no lower than 26°C in summer and no higher than 20°C in winter.Use sensor-based escalators that run when people are present and automatically stop when no one is around.Reduce the brightness of underground parking lights during non-working hours.

23 24Sokan New Materials Group Co. Ltd. 2024 Environmental Social and Governance (ESG) Report

3.3 Usage of water resources Protection of Green Mountains and Clear Wa-

The water resources used by the Company mainly come from municipal water supply systems for office and production ter through Green and Complaint Operations

purposes. The Company strictly complies with laws and regulations such as the Water Law of the People’s Republic

of China the Water Pollution Prevention and Control Law of the People’s Republic of China and the Regulation on

the Administration of the License for Water Drawing and the Levy of Water Resource Fees. It has established internal

systems such as the Runoff Leakage and Drip Control System and the Rainwater Management System to regulate 4.1 Environmental compliance management

water resource usage.The Company places great importance on environmental compliance management and has established a database of

The Company uses water-saving equipment and designs promotes water-saving initiatives and continually strengthens environmental regulations. It monitors changes in laws and regulations such as the Air Pollution Prevention and Control

employees’ awareness of water conservation to reduce the consumption of water resources in business and operational Law the Water Pollution Prevention and Control Law and the Solid Waste Pollution Prevention and Control Law in real

activities. time with a particular focus on updates regarding VOCs limits and hazardous waste lists. In 2024 the Company did not

experience any significant administrative penalties from environmental or related departments nor was it held criminally

Sokan’s Main Measures for Usage of Water Resources in 2024 accountable due to environmental incidents.Water-saving equipment usage Water-saving advocacy Governance

Renovate the drip irrigation system in greenbelt Post water conservation slogans next to faucets in The Company has developed internal systems and procedures such as the Environmental Factors Identification and

areas to improve irrigation efficiency and reduce office buildings employee dormitories and other Evaluation Control Procedure the Environmental Protection Operation Control Procedure and the Environmental

water waste from drip irrigation. areas. Management Material Control Standards. It has established a management structure clarified the responsibilities

of each relevant department and ensured the orderly implementation of the Company’s environmental compliance

The Company sets water resource usage goals to encourage employees to implement water-saving measures and management efforts.enhance the Company’s water resource usage capabilities. Sokan’s Environmental Compliance Management Structure

Sokan’s Targets for Usage of Water Resources in 2024 EHS Management Committee

Establish the Company’s environmental management organizational structure set environmental management policies

Indicator Unit Annual Target Achievement Status

goals and medium- to long-term plans approve environmental management proposals submitted by the EHS management

departments and ensure funding investment.Average monthly municipal water usage

Tons ≤12000

(Ningxiang Park) 9427 (Achieved the goal) Hold quarterly meetings on environmental compliance work and organize monthly environmental compliance inspections

across the Company.EHS Department

Establish and improve the Company’s environmental compliance management system and be responsible for the daily

inspections of the system’s operations.Plan and organize environmental compliance training for EHS personnel before they take the job and during the job process

and for emergency response teams.Investigate and handle environmental-related accidents or emergencies within the Company.The Company continues to advance the establishment and certification of its environmental management system

actively promoting internal system improvements through external evaluations and audit certifications. During

the reporting period Sokan and Songrun New Materials were certified under the ISO 14001:2015 Environmental

Management System with the certification valid until September 2025.

25 26Sokan New Materials Group Co. Ltd. 2024 Environmental Social and Governance (ESG) Report

Sokan’s Environmental Compliance Management Response Strategy

Environmental protec- Environmental risk

tion training identification

Emergency

Regular inspections

response

ISO 14001:2015 Environmental Management System ISO 14001:2015 Environmental Management System

Certification Certificate for Sokan Certification Certificate for Songrun New Materials

Impacts risks and opportunities management

The Company identifies environmental risks such as the generation of hazardous waste the emission of organic

exhaust gases and potential chemical spills and confirms environmental hazards related hazardous substances and

Strategy the expected environmental harm they may cause. To address environmental risks the Company has developed the

Emergency Plan for Sudden Environmental Incidents established an emergency leadership team and regularly conducts

The Company led by the EHS Department conducts the identification of environmental compliance-related. Based environmental management-related meetings inspections and training. These efforts aim to reduce the probability of

on the identification results the Company develops response strategies to reduce the likelihood of environmental risk environmental risk incidents and ensure effective emergency handling of such incidents.incidents.Analysis of Risks and Opportunities Related to Sokan’s Environmental Compliance Management Sokan’s Identification of and Response to Major Environmental Risks

Risk Risk Description Impact Scope Financial Impact Major Environmental Environmental Risk Environmental Harm Emergency Measures

Risks Substances

If the Company fails to comply with relevant environ-

Short- and Increased non-

Policy and legal risks mental laws and regulations it may face fines and The hazardous waste storage warehouse

Medium-term operating expenses

legal liabilities. has a cement-hardened floor with corrosion Generation of hazardous

Hazardous waste and seepage prevention treatment and is

waste

Opportunity Opportunity Description Impact Scope Financial Impact Pollution of air water equipped with diversion ditches and buffer

bodies soil etc. pools.Effective environmental management can enhance

Medium- and Increased operating

Reputation opportunity brand image earning the trust and support of custom- Emission of organic

Long-term revenue Organic waste gases Regular inspections and maintenance

ers. waste gases

27 28Sokan New Materials Group Co. Ltd. 2024 Environmental Social and Governance (ESG) Report

Sokan’s Main Measures for Environmental Compliance Management in 2024 Governance

Emergency response Regular inspections Environmental protection training The Company has developed internal systems such as the Waste Gas Management System Wastewater Management

Establish an emergency lead- Hold four specialized meetings on Organize one environmental pro- System and Solid Waste Management System to achieve full-chain compliance management of emissions from source

ership team and develop the environmental compliance work tection training for all employees control to end treatment. The Company’s emissions management structure is aligned with its environmental compliance

Emergency Plan for Sudden analyze the Company’s environ- with the training content including management structure ensuring the effective implementation of emissions management measures.Environmental Incidents based on mental compliance management environmental laws and regula-

actual risks which has been filed situation and study significant tions industry standards opera-

with the competent environmen- policy measures for the Compa- tion and maintenance of pollution Strategy

tal departments. ny’s environmental compliance control equipment during produc-

management. tion hazardous waste classifica- The Company deeply recognizes its environmental protection responsibilities. Non-compliant pollutant discharge could Conduct three emergency drills to

continuously improve all employ- Organize a company-wide envi- tion and handling methods and harm the health of local residents. Therefore the Company actively identifies risks related to emissions and develops

ees’ emergency response capabil- ronmental compliance inspection emergency handling of environ- response strategies.ities for crisis incidents. once a month. For any identified mental incidents.issues and risks coordinate and

supervise the relevant depart-

ments to promptly implement

corrective actions.Analysis of Risks Related to Sokan’s Emissions Management

Indicators and targets Risk Risk Description Impact Scope Financial Impact

Violating pollutant discharge or waste disposal regula- Short- and Increased non-

The Company has established environmental compliance management targets while strengthening the supervision and Policy and legal risks

tions may lead to regulatory penalties. Medium-term operating expenses

control of responsible departments over environmental compliance and making every effort to prevent environmental

If the Company is publicly exposed for violating emis- Short- Medium- Decreased operating

pollution incidents. Reputation risks sion regulations it may lead to a decline in reputation. and Long-term revenue

Sokan’s Indicators and Targets for Environmental Compliance Management

Indicator Unit Annual Target Achievement Status

Number of environmental pollution

Times 0

incidents 0(Achieved the goal) Sokan’s Emissions Management Response Strategy

Pass rate of environmental compliance

%100

testing 100(Achieved the goal)

Use of low-pollution Waste gas emission

4.2 Emissions management raw materials treatment

The air pollutants generated by the Company mainly include volatile organic compounds (VOCs) toluene xylene

particulate matter etc. The types of wastewater are primarily domestic sewage with water pollutants mainly including Regular Wastewater

discharge

chemical oxygen demand (COD) ammonia nitrogen suspended solids (SS) etc. The waste primarily includes solvent- monitoring

treatment

contaminated waste domestic garbage and paint-cleaning solvents.The Company places great emphasis on the management of pollutants and waste strictly complying with laws and Hazardous General

regulations such as the Solid Waste Pollution Prevention and Control Law of the People’s Republic of China the Air waste solid waste

treatment disposal

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

Law of the People’s Republic of China ensuring the legal and compliant discharge of pollutants and treatment of waste.During the reporting period the Company’s pollutant discharge and waste disposal did not result in any significant

administrative penalties or criminal liabilities.

29 30Sokan New Materials Group Co. Ltd. 2024 Environmental Social and Governance (ESG) Report

Impacts risks and opportunities management Indicators and targets

The Company manages emissions throughout the entire product lifecycle. In the product development phase it uses The Company has established goals and indicators for emissions and monitors the progress and results of emissions

low-pollution raw materials to reduce pollutant generation at the source. In the production phase it employs closed management to verify the effectiveness of pollution prevention measures and continuously ensure the compliant

production processes to minimize pollutant leakage. In the emissions disposal phase advanced treatment processes discharge of all pollutants and waste.are used to reduce the concentration of emissions ensuring the compliance of pollutant discharge with standards and

the proper treatment of waste.Relevant Indicators and Targets for Sokan’s Emissions Management

Sokan’s Measures for Emissions Management in 2024 Indicator Unit Annual Target Achievement Status

Use of low-pollution raw materials Hazardous waste compliance disposal

%100

rate 100(Achieved the goal)

Use water-based resins high-solid-content coatings and other low-VOC raw materials to reduce the use of benzene-series

compounds thereby reducing pollutant generation at the source.Waste gas emission treatment

Replace workshop exhaust hoods with enclosed exhaust hoods to improve exhaust gas collection efficiency reduce harmful 4.3 Circular economy

gas concentrations in the workshop and decrease pollutant discharge.Install negative pressure gas collection systems in the mixing spraying and filling stages to ensure VOCs collection efficiency. Sokan deeply integrates the concept of circular economy into the entire production and operational process and is

Use the “Adsorption Concentration + RCO Incineration” high-efficiency treatment technology to ensure that emission committed to building a sustainable development model focused on efficient resource usage and waste reduction.concentrations are below national limits.The Company has established a classification recycling mechanism covering all production stages strengthening its

capacity for the resourceful usage of waste. It also enhances product lifecycle management improving recyclability and

Wastewater discharge treatment environmental compatibility from the design end.Have kitchen wastewater initially treated by an oil separator and domestic wastewater treated by a septic tank before being

discharged into the Wastewater Treatment Plant in Ningxiang Economic and Technological Development Zone.Sokan’s Main Recycling Measures in 2024

General solid waste disposal Extract carbon black from waste tires and reuse it in ink manufacturing; in 2024 300 kilograms of carbon black

extracted from waste tires were used.Deliver waste to the Waste Treatment Plant in Ningxiang Park for recycling and disposal. Introduce solvent distillation equipment which can distill and purify solvents from cleaning agents for recycling and

reuse.Hazardous waste treatment

The Company has set quantitative targets around the circular economy establishing the proportion of carbon black

Set up a leak-proof hazardous waste temporary storage area clearly label the types of hazardous waste and establish a

hazardous waste management ledger. extracted from waste tires as the core indicator for recycling. A regular monitoring and evaluation mechanism has been

Entrust a qualified unit to dispose of and treat hazardous waste. established to continuously improve resource usage efficiency and waste reduction contributing to the construction of

a green production system.Regular monitoring

Sokan’s Recycling-related Targets and Indicators

Every month entrust a third-party qualified professional organization to monitor the Company’s rainwater waste gas and

noise emissions and to provide a testing report. Ensure that emission standards comply with the Emission Standards for Indicator Unit Annual Target Achievement Status

Atmospheric Pollutants in the Coating Ink and Adhesive Industries (GB37824-2019). Upload the testing results to the national

pollutant discharge permit management information platform - enterprise end and the national pollution source monitoring Proportion of carbon black extracted

information management and sharing platform in a timely manner. % 20from waste tires used 25(Achieved the goal)

31 32Sokan New Materials Group Co. Ltd. 2024 Environmental Social and Governance (ESG) Report

Innovation-driven Quality and Safety The Company conducts international quality management system certification to identify gaps in its quality management system and continuously improves its quality management system to achieve comprehensive

Management management of its product quality. Sokan has passed the ISO 9001 Quality Management System Certification IATF 16949 Automotive Quality Management System Certification EN/AS9100 Aerospace Quality Management System

Certification and QC080000 Hazardous Substance Management System Certification with all relevant certificates

actively maintained.

5.1 Quality management of products and services

The Company consistently upholds its core value of “customer centricity” and continuously improves customer

satisfaction through high-quality products and services. The Company strictly adheres to national standards such as

GB/T 1723-1993 Determination of Viscosity of Coatings and GB/T 1740-2007 Determination of Resistance to Heat and

Humidity of Paint Film and requirements from ISO 9001 Quality Management System IATF 16949 Automotive Quality

Management System EN/AS9100 Aerospace Quality Management System and QC080000 Hazardous Substance

Management System. This ensures that quality control in the entire production and manufacturing process complies

with the standards and management system requirements. During the reporting period the Company did not experience

any major safety or quality incidents related to products or services.Governance

The Company has developed internal systems such as the Continuous Improvement Control Procedures Non-

conforming Product Control Procedures Customer Complaint Quality-based Return Quality Claim Handling Procedures

and the Customer Satisfaction Measurement Control Procedures. These systems comprehensively ensure product and

customer service quality from the perspectives of product quality control non-conforming product recall complaint

handling and satisfaction management. The Company has established a top-down quality management structure Sokan’s ISO 9001:2015 Quality Management System Sokan’s IATF 16949:2016 Automotive Quality Management

System Certification

for products and services clarifying the responsibilities and boundaries at each level forming a full-loop system from Certification

strategic decision-making to execution.Sokan’s Quality Management Structure for Products and Services

Quality Management Committee Quality Management Department

Strictly implement national and departmental quality Lead ISO/IATF/AS system certification maintenance pro-

laws regulations and standards to ensure compli- mote process standardization and manage internal audits.ance management.Be responsible for formulating quality targets and man-

Decide on the Company’s quality policies goals and agement plans inspecting and supervising the formulation

development plans and improve system reviews. and implementation of targets indicators and manage-

ment plans in each unit and reporting progress to the

Standardize process construction promote ad-

Quality Management Committee.vanced quality management tools and establish an

information platform. Establish raw material/process and finished product test-

ing mechanisms and conduct hazardous substance iden-

Plan review and approve the Company’s major

tification and data traceability analysis.quality improvements and other significant quality

activities and coordinate the Quality Management Implement closed-loop management of customer com-

Department for implementation. plaints and non-conforming products and promote con-

tinuous improvement of the Group’s quality management Sokan’s EN/AS9100 Aerospace Quality Management Sokan’s QC080000 Hazardous Substance Management

level. System Certification System Certification

33 34Sokan New Materials Group Co. Ltd. 2024 Environmental Social and Governance (ESG) Report

Strategy Sokan’s Main Measures for Product Quality Management in 2024

The Company deeply understands that product and service quality helps ensure customer production stability enhance Quality monitoring

customer satisfaction and contribute to the production efficiency of the supply chain. Therefore the Company identifies Verify and confirm the raw and auxiliary materials according to the Material Receipt Management Regulations and perform

related risks and opportunities to provide a basis for formulating the response strategy for quality management of testing according to the quality inspection plan to ensure the quality of raw and auxiliary materials. Handle non-conforming

products according to the Non-Conforming Product Control Procedures.products and services.Implement the production process in strict accordance with the Production Process Control Procedures. Supervise and

randomly inspect operators’ standardization in process execution record making and operation by process engineers in the

Analysis of Risks and Opportunities Related to Sokan’s Quality Management of Products and Services Production Technology Department.Conduct performance testing for finished products according to the APQP Control Procedures and specific requirements of the

Risk Risk Description Impact Scope Financial Impact testing outline.Decreased operating

If product quality issues or safety hazards arise the Com-

Short- and revenue

Responsibility risks pany may need to conduct large-scale product recalls and Quality audits

Medium-term

face compensation. Increased operating

costs Apply a process-based approach to audit the entire quality management system with key processes audited annually and key

projects audited selectively.If product quality issues occur frequently it may reduce Short- Medium- Decreased operating

Reputation risks Conduct product audits by randomly sampling products from the warehouse according to the implementation plan.customer trust in the Company leading to customer loss. and Long-term revenue

Take testing outlines or finished product inspection plans as well as packaging specifications and applicable technical

Opportunity Opportunity Description Impact Scope Financial Impact specifications and standards as the basis for product audits to determine product defect levels.Establish a market reputation for high-quality products and Short- Medium- Increased operating

Market opportunity

services to attract more customers. and Long-term revenue Continuous improvement

Perform data statistics and analysis on the completion of the previous year’s operational plan and targets identify issues and

Sokan’s Response Strategy for Quality Management of Products and Services risks and select key projects for continuous improvement in the current year.Determine the direction for continuous improvement following the guidelines of minimizing product scrap rework and repairs

Product quality control Customer service optimization and well responding to customer complaints.Quality monitoring Proper handling of customer complaints Supplier quality control

Sign a Supplementary Quality Agreement with suppliers requiring them to establish and obtain quality system certification

Quality audits with comprehensive product quality and safety control processes in place.Rapid response

Continuous improvement

Sokan’s Product Recall Process

Product recall Satisfaction surveys and improvements

Return application Review and approval Return processing Return acceptance and submission verification

Follow-up on disposal

results and closure Returned products disposal Disposal plan formulationImpacts risks and opportunities management

Product quality management

Customer service optimization

The Company ensures product quality through measures such as quality monitoring and measurement quality audits

and continuous improvement. If customers receive non-conforming products the Company will handle the situation The Company leverages its rapid response advantage to actively collaborate with customers on R&D and production.according to the product recall process to ensure the stability of customer production. This in turn enhances customer Through satisfaction surveys it understands customer demands and ensures continuous improvement optimizing

trust and loyalty driving market expansion and reputation building. customer service effectiveness and enhancing customer loyalty.

35 36Sokan New Materials Group Co. Ltd. 2024 Environmental Social and Governance (ESG) Report

Sokan’s Main Customer Service Measures in 2024 Targets and Indicators Related to Sokan’s Quality Management of Products and Services

Rapid response Satisfaction surveys and improvements Indicator Unit Annual Target Achievement Status

Provide on-site technical services to customers fa- Regularly conduct customer satisfaction surveys Manufacturing customers’ satisfaction Point ≥80 88.61( Achieved the goal)

cilitating direct communication of technical solutions with survey results composed of performance data

to improve R&D and production efficiency. on relevant internal processes such as on-time de- Terminal customers’ satisfaction Point ≥80 ( Achieved the goal)

livery rates and quality complaint rates and address 81.40

Lease nearby warehouses for fast inventory turnover

customer dissatisfaction and make targeted im-

ensuring timely replenishment of raw materials for Completion rate of corrective actions as

provements in service. % ≥90 ( Achieved the goal)

customers. planned 92

Establish prototyping centers in East China and

South China to provide localized sampling and quick-

ly respond to customer needs.

5.2 R&D and innovation

The Company values customer feedback and has established a customer complaint handling process and formed a The Company is primarily involved in the R&D and innovation of new functional coating products for coating inks and

rapid response team to address urgent customer issues ensuring that customer demands are effectively responded to. adhesives. It complies with laws and regulations such as the Law of the People’s Republic of China on Scientific and

Technological Progress and the Regulation on Computers Software Protection as well as national standards such

as GB 30981 GB 24409 and GB 38507 and customer-required standards like the Restriction on the Use of Certain

Hazardous Substances in Electrical and Electronic Equipment (“RoHS”) and the Registration Evaluation Authorisation

Sokan’s Customer Complaint Handling Process and Restriction of Chemicals (“REACH”). While ensuring the legality and compliance of the product development

process the Company actively innovates to become a global leader in the field of new functional coating materials.Customer feedback

On-site immediate Complaint process Formulation of corrective

acceptance & on-site Complaint classification

handling and verification submission & preventive actions

issue confirmation Governance

The Company has established internal systems such as the APQP Control Procedures Product Design and Development

Control Procedures Design and 5M1E Change Control Procedures R&D Process Management System and R&D

Follow-up verification

Complaint issue closure Customer complaint Implementation of Measures / report / standardized output follow-up corrective Actions review Investment Accounting Management System. Vertically a top-down R&D and innovation management structure has

been built while horizontally product-oriented application R&D centers for coatings inks and adhesives have been

established fully implementing the R&D and innovation strategy.Sokan’s R&D and Innovation Management Structure

Indicators and targets Technical Management Committee

To achieve the strategic target of “becoming a quality benchmark in the coating materials industry” Sokan oriented Implement the Group’s strategy for new technologies and new products and promote R&D management.at customer value comprehensively manages quality risk prevention capabilities by monitoring core indicators such Review the annual new product development plans submitted by the Group’s R&D institutions.as customer satisfaction and the completion rate of corrective actions as planned the Company comprehensively Be responsible for initiating and reviewing new product R&D projects within the Group and guiding the resolution of technical

challenges during the new product development process.manages quality risk prevention capabilities. This provides internal momentum for building brand trust based on the

Organize and hold the Group’s technical joint meetings and other meetings of the technical committee.dual-driving forces of “technology + quality”.

37 38Sokan New Materials Group Co. Ltd. 2024 Environmental Social and Governance (ESG) Report

Central Research Institute chain the Company closely monitors customer demands and market trends. With forward-thinking strategic planning

the Company reasonably plans makes early deployments and advances in an orderly manner. At the same time the

Collect and analyze relevant development technology information from both domestic and international sources.Company uses new technologies and innovative approaches to proactively iterate on products thereby stimulating R&D

Develop the Company’s medium- and long-term (3-5 years) and annual technology and product plans.and innovation with distinctive “Sokan characteristics”.Be responsible for new product formulations processes packaging design and preparation of product material lists and other

technical materials.Sokan’s R&D and Innovation Response Strategy

Coatings/inks/adhesives application R&D centers

Be responsible for the medium- and long-term (3-5 years) and annual technology and product plans for the areas under their

jurisdiction.Be responsible for managing the entire process of new product development projects. Innovation culture

R&D team development

Be responsible for patent searches preparation of application materials and subsequent management for R&D of new development

products.Strategy

The Company develops new products through R&D and innovation to meet customer demands and fulfill investors’

expectations for the Company’s growth potential bringing positive impacts to stakeholders. At the same time the R&D reserves R&D facility investment

Company identifies R&D risks and innovation opportunities and by implementing R&D and innovation strategies it enhancement optimization

creates differentiated competitive advantages and sustained innovation momentum.Analysis of Risks and Opportunities Related to Sokan’s R&D and Innovation

Risk Risk Description Impact Scope Financial Impact

The downstream application fields are rapidly changing. If the

Company is unable to provide product solution capabilities inno-

vate in a timely manner master relevant technologies and launch Sokan’s Honours Related to R&D and Innovation

differentiated innovative products to continuously meet customer

Decreased operating

demands the Company’s market competitiveness and sustained

profitability will be weakened. Short- Medium-

revenue

Market risk

and Long-term Increased operating National Enterprise

The Company’s core technical personnel are all key participants in National Technology Innovation

costs Technology Center

existing patents non-patent technologies research projects etc. If Demonstration Enterprise

these personnel leave the Company resulting in a loss of technical National Development and Ministry of Industry and

staff it will adversely affect the progress of ongoing projects and Reform Commission of the Information Technology

the confidentiality of existing intellectual property. People’s Republic of China of the People’s Republic of

Opportunity Opportunity Description Impact Scope Financial Impact China

The market scale of downstream fields such as new energy vehi-

Market cles and high-end consumer electronics is growing increasingly Short- Medium- Increased operating National Postdoctoral Specialized Fined Peculiar and

opportunity and these industries are rapidly updating and iterating continu- and Long-term revenue Research Station Innovative Giant Enterprise

ously placing new demands on coatings and ink products. National Postdoctoral Industry and Information

Management Committee Technology Department ofThe Company adheres to the R&D concept of “demand-oriented forward-looking planning highlighting characteristics Hunan Provinceand proactive iteration” and considers it as the guiding principle throughout the entire process of technology research

and product development. By establishing a regular communication mechanism integrating R&D marketing and supply

39 40Sokan New Materials Group Co. Ltd. 2024 Environmental Social and Governance (ESG) Report

Impacts risks and opportunities management

To achieve the strategic goal of “becoming a global leader in the field of new functional coating materials” the Company

has built an innovative culture implemented a comprehensive R&D team-building mechanism and deepened the reserve

of forward-looking technological R&D. The Company has made breakthrough progress in several key areas providing

innovative coating solutions for industries such as high-end consumer electronics and new energy vehicles.Sokan’s Main Measures for R&D and Innovation in 2024

Innovation culture development

In February the Group’s first technical annual meeting was held where technical personnel from different business areas

of the Company conducted 32 technical presentations and displayed over 20 research achievement posters. Thirty-one

technical talents with outstanding contributions and excellent performance at the annual meeting were honoured.In May the 2024 Science and Technology Workers’ Day & First Craftsmanship Day event was held. Holiday gifts were provided

to science and technology workers from the Central Research Institute various application R&D centers Gull Hash Chemistry

Park Ningxiang Park and other locations enhancing the cohesion of the scientific and technological workforce. Launch Ceremony of Sokan’s Global R&D Center

The Company participated in the China International New Materials New Processes and Colour (CMF) Exhibition and the

China Coatings Exhibition where a set of CMF trends was launched and roadshow promotions were conducted for the design

and engineering departments of customers.The Research Institute conducted more than 20 internal training sessions each lasting 1-2 hours with over 50 participants

per session. Throughout the year more than 20 employees participated in external training including 20 technical professional

training sessions and one project management training session.R&D team development

A dual-incentive mechanism was established for basic R&D and mass production outcomes through methods such as

phased completion rewards for innovative R&D projects and patent awards to encourage patent application. First Technical Annual Meeting Science and Technology Workers’ Day & First Craftsman

Day Event

The talent development mechanism was continuously improved aiming to build a strong career development platform for

employees. Through the internal title evaluation system 12 outstanding R&D personnel stood out and successfully received

promotions.R&D facility optimization

A Global R&D Center was built and officially launched in Ningxiang Park. The center includes research laboratories with multi-

technology integration and multi-product platforms equipped with internationally advanced instruments and equipment.It covers the entire R&D chain including formulation development colour design pilot testing inspection and analysis and

process validation effectively enhancing the efficiency of the Company’s R&D projects.R&D reserves enhancement

The Company has a rich pipeline of ongoing projects covering fields such as high-end consumer electronics passenger

vehicles and special equipment. The Company is conducting forward-looking R&D for various new functional coating

products including water-based coatings special resins inks and adhesives.

41 42Sokan New Materials Group Co. Ltd. 2024 Environmental Social and Governance (ESG) Report

Sokan’s Main R&D and Innovation Achievements in 2024 proportion of R&D investment to operating income and the proportion of R&D personnel. The Company’s application

R&D centers also set specific targets. For example the Ink Application R&D Center has established success rate

Inks indicators for new product R&D projects and upgraded R&D projects effectively ensuring the efficiency of technological

Systematic Solution for Power Battery Insulation Coating Material: In terms of performance while ensuring high insulation breakthroughs and the ability to transform innovative results thereby laying the foundation for building market

performance the solution also provides excellent aging resistance in complex operating environments. This effectively competitiveness through innovation.prevents risks such as battery shell rust leakage or breakdown short circuits thereby further enhancing the battery’s safety

and reliability. In terms of implementation process compared to traditional coating processes digital coating technology can Indicators Related to Sokan’s R&D and Innovation

significantly improve the production efficiency of power battery insulation coatings with better environmental performance.In terms of cost control by optimizing the coating process material consumption and energy waste can be reduced creating Indicator Unit Progress in 2024

significant economic benefits for the enterprise.Sintered Ink: A special ink that achieves curing and adhesion through sintering. Based on addressing industry pain points new R&D investment as a proportion of %

production processes are adopted to reduce production steps (such as pre-sintering lines) shorten overall production time operating revenue 14.14

lower unit energy consumption and improve production efficiency and yield. This product has a wide sintering temperature

range and an appropriate expansion coefficient making it suitable for use in automotive glass home appliances aerospace Proportion of R&D Personnel % 32.56

and other fields. It enhances aesthetics while providing protective performance.AF Products: Traditional AF products have extremely stringent requirements for wear resistance weather resistance and

construction performance. The Company’s new AF products not only surpass international benchmark performance standards

but also significantly optimize construction processes.Integrated Circuit Chip-related Inks: This kind of chips mainly includes PCB solder mask inks (solder mask photoresist) and

PCB character inks (marking inks) which adopt the digital inkjet printing technology. Compared to traditional screen printing 5.3 Data security and customer privacy protection

the digital inkjet printing technology has obvious advantages in simplifying processes improving efficiency saving materials

and production costs and environmental protection. At the same time the digital inkjet printing technology offers excellent The data security and privacy protection processes within the Company primarily include the technical operational and

viscosity stability jet stability superior hardness solder resistance and other performance advantages.management secrets as well as production and financial data of the Company itself its customers suppliers and other

partners.Coatings The Company strictly adheres to laws and regulations such as the Cybersecurity Law of the People’s Republic of China

the Tort Law of the People’s Republic of China and the Personal Information Protection Law of the People’s Republic

Excimer Coating Materials: An innovative solution that integrates raw materials with excimer curing technology achieving

excellent CMF performance and pioneering in the industry. of China along with related requirements. The Company has established internal procedures such as the Information

Classification Management Procedures Information Security Risk Management Procedures and PII Privacy Handling

Imprinted Coating Materials: These coating materials can achieve a triple breakthrough in new materials new processes and

new colours which not only provide unique textured three-dimensional beauty but also offer differentiated features such as a Control Procedures to comprehensively manage information security and privacy protection for the Company and

silky touch. its partners. At the same time the Company has established a top-down information security and privacy protection

Automotive Exterior Transparent PVD Technology: Wave-Transparent PVD Technology for Automotive Exterior: ensuring management structure to ensure that information security efforts align with the Company’s business development needs.efficient radar signal penetration and delay-free transmission. It supports real-time perception and precise operation of

vehicle intelligent driving systems. Additionally it offers highly realistic metallic aesthetics greatly enhancing the luxury quality

and visual appeal of automobiles. It is also a truly green process effectively solving the environmental pollution and energy Sokan’s Data Security and Customer Privacy Protection Management Structure

consumption issues associated with traditional processes.Light-Transparent PVD Technology for Automotive Exterior: This technology performs excellently and stably in terms of light Information Security Management Group IT Group

transmittance high-pressure water impact resistance weather resistance water resistance corrosion resistance and stone

impact resistance. It has also pioneered the application of “family-style facial makeup” design in automotive aesthetic trends.Be responsible for organizing the classification man- Be responsible for identifying the privacy require-

agement of various types of information. ments of employees suppliers and customers and

providing technical support for obtaining using

Be responsible for reviewing the acquisition of per-

managing and exiting privacy contracts or agree-

Indicators and targets sonally identifiable information (PII) overseeing the ments while monitoring and reviewing privacy com-

use of PII privacy information and approving the

pliance and requirements during the PII processing.To achieve the strategic vision of technological innovation the Company sets its overall target as enhancing core removal of PII privacy information.competitiveness and maintaining technological leadership. It establishes and tracks quantitative indicators such as the

43 44Sokan New Materials Group Co. Ltd. 2024 Environmental Social and Governance (ESG) Report

The Company has established an information security management system that covers four key dimensions: Sokan’s Main Measures for Data Security and Customer Privacy Protection

Organizational personnel physical and technological security through the implementation of information security Information security risk assessment

management system standard certification. This system strengthens risk control capabilities in areas such as data

leakage prevention and secure coding enhancing business continuity and customer trust. The Ningxiang Park of the A risk assessment team has been established to conduct risk assessments on all important assets. The assessment considers

factors such as threats vulnerabilities probability of the occurrence of threat incidents potential impact on assets if such

Company has obtained ISO/IEC 27001 Information Security Management System Certification valid until December incidents occur and measures already taken. The findings are documented in the Information Security Risk Assessment Report.

2026.

Access authority control

To ensure the secure transmission of PII access authority must be strictly limited to authorised personnel. The requirements

for PII transmission control can be included in contracts with customers. If no such contractual requirements exist customer

advice should be sought before transmission.Information backup

Daily and weekly backups are performed according to the information backup strategy.Emergency response

In the event of an emergency the procedures outlined in the Information Network System Emergency Response Plan are

followed.Information system protection

All customer devices are equipped with desktop management software (IPguard) which controls USB drive access enables

the software center and restricts the installation of unauthorized software.PII protection

PII is not used for marketing and/or advertising purposes without the explicit consent of the data subject. Any requests for PII

disclosure that are not legally binding are rejected. Before disclosing any PII customer consent must be obtained.Temporary files containing PII that have not been used within the designated time frame are deleted and periodic verification

is conducted.Information security training

ISO/IEC 27001: 2022 Information Security Management System Standard for Sokan

In 2024 two information security training sessions were organized for all employees covering issues such as the interpretation

of information security regulations and the publicity of cybersecurity and privacy protection knowledge.The Company has built a multi-dimensional protection system for data security and customer privacy protection. The Company has established an overall information security target with the short term target being “no majorThrough core measures such as information security risk assessments access authority control and employee privacy information security incidents” the ultimate target being “achieving zero damage to information assets” and the ongoingtraining the Company safeguards the security of its information systems and ensures the confidentiality completeness target throughout the Company’s business activities being “ensuring the continuous and reliable operation of businessand availability of customer information providing compliance assurance for building strong customer relationships. systems”. At the same time the Company has set measurable targets to monitor the management of data security and

customer privacy protection.

45 46Sokan New Materials Group Co. Ltd. 2024 Environmental Social and Governance (ESG) Report

Targets and Indicators Related to Sokan’s Data Security and Customer Privacy Protection in 2024 Supply chain sustainability management

Indicator Unit Annual Target Achievement Status The Company attaches great importance to managing suppliers in areas such as occupational health environmental

protection and integrity in professional conduct striving to build a sustainable supply chain.Number of company information security leakage incidents Times 0 0(Achieved the goal)

Sokan’s Main Measures for Supply Chain Sustainability Management

Number of customer information security leakage incidents Times 0 0(Achieved the goal) Occupational health and environmental protection

Number of days of data loss in core business systems Day 0 0(Achieved the goal) Send the Notification to Stateholders in Environmental Protection/Occupational Health and Safety to suppliers urging them to

achieve safety production by ensuring environmental protection and occupational health.Require suppliers to sign the Environmental Quality Agreement ensuring that the harmful substance content in the products

they provide complies with the Company’s Hazardous Substance Control Standards.Integrity in professional conduct

5.4 Supply chain management Require suppliers to sign the Integrity and Honesty Agreement resisting commercial bribery and unfair competition and

stipulating liability for breach of contract.The Company’s suppliers mainly include suppliers of raw and auxiliary materials such as resins additives pigment In 2024 100% of suppliers signed the Integrity and Honesty Agreement.pastes and solvents suppliers of packaging and consumables suppliers of engineering equipment installation services

as well as suppliers of production monitoring and R&D equipment. The Company has established a Supply Chain

Center which is responsible for coordinating supplier development and procurement management. Conflict minerals management

Supply chain security The Company’s raw materials such as pearlescent pigments involve the use of conflict minerals. The Company strictly

adheres to relevant international and industry regulations and does not accept or use “conflict minerals” sourced from

To standardize supplier management the Company has developed the Supplier Development and Management Control the Democratic Republic of the Congo (DRC) and its surrounding countries and regions. The Company has established

Procedures which strictly regulates the qualification review of suppliers. Additionally the Company signs long-term the Management Measures for the Control of Conflict Minerals requiring suppliers to investigate the source of the

framework contracts with key raw material suppliers and actively develops backup suppliers to prevent situations where materials they supply and provide a Commitment to Not Use Conflict Minerals and a Conflict Minerals Survey Form.production utilization rates decrease or production is interrupted due to supply shortages. This ensures that materials containing gold (Au) tantalum (Ta) tin (Sn) and tungsten (W) comply with the Responsible

Minerals Initiative (RMI) the OECD’s Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-

Affected and High-Risk Areas or equivalent and recognized due diligence frameworks.Sokan’s Main Measures for Supply Chain Security Management

If the investigation reveals that the materials contain conflict minerals from the DRC or its surrounding regions suppliers

Qualification review Framework agreements Backup suppliers concerned will be required to provide a written explanation and immediately cease procuring and using conflict minerals

from the DRC or its surrounding regions. They must select new mineral sources and provide valid evidence that the newStrictly regulate the qualifica- Adopt a “long-term framework Actively expand backup suppli-tion review and financial status contract + orders” procurement ers and procure raw materials sources meet the conflict-free requirements for the DRC. Additionally they should develop corresponding corrective and

assessment of suppliers to model with key resin suppliers from backup suppliers when preventive measures to ensure compliance with the DRC’s conflict-free metal requirements.ensure that suppliers’ produc- and metallic pigment suppli- existing suppliers are unable

tion processes are compliant ers to ensure the bulk supply to supply thereby preventing

and that they have the ability to of critical raw materials with production interruptions.provide continuous supply. suppliers failing to supply as The Company has issued the Conflict Minerals Survey Form to 143 suppliers achieving a 100% coverage rate.agreed being required to pay None of the existing suppliers are involved in the use of mineral resources from conflict regions.compensation.

47 48Sokan New Materials Group Co. Ltd. 2024 Environmental Social and Governance (ESG) Report

People-Oriented Demonstration of Sokan’s Main Measures for Employee Recruitment and Employment in 2024

Corporate Responsibility Prevention of labour risks Strategic talent assurance

Comprehensively summarize and review the employ- Successfully opened two overseas recruitment chan-

ee lifecycle management process (including recruit- nels laying the foundation for the future introduction of

ment hiring contract signing probation attendance overseas talent.

6.1 Rights interests and benefits of employees and leave compensation and benefits manage- Optimize internal policies and streamline and improve ment of female employees during their pregnancy

external policies to attract overseas and high-level talent.maternity and lactation periods and resignation

Employee recruitment and employment management) to identify potential labour risk points. Expand headhunting resources by ten agencies building

Gradually enhance the risk awareness of various de- a talent pool of over 100 headhunted professionals.Sokan strictly adheres to domestic laws and regulations such as the Labour Law of the People’s Republic of China and partments through property publicity and guidance. Based on an analysis of the Company’s operational

the Labour Contract Law of the People’s Republic of China. The Company’s overseas operations also strictly comply background develop the Three-Year Strategic Planning

with the laws regulations and policy requirements of the respective locations. The Company regulates the management for Human Resources of Sokan to clarify specific targets

of recruitment and dismissal working hours holidays and other aspects following the principles of fair distribution key tasks and measures for talent selection and em-

ployment.according to work and equal pay for equal work while legally protecting employees’ legitimate rights and interests.The Company has developed internal management systems such as the Human Resource Management Procedures

Recruitment Management System and Protected Employee Management System. Additionally the Company uses the In 2024 all employees of the Company were full-time employees under labour contracts including foreign employees

Mercer Job Evaluation Tool to assess the value of internal positions. This clarifies the human resource management employed both at home and abroad. There were no incidents of penalties from relevant authorities due to violations of

processes for the Company’s various functional centers research institutes and subsidiaries standardizing human labour laws or regulations concerning employee recruitment and dismissal compensation working hours and holidays

resource management and enhancing compliance coordination and work efficiency. or any violations related to forced labour or child labour.Protection of the rights and interests of employees

Sokan’s Main Policies for Employee Recruitment and Employment

The Company has established management systems such as the Wages and Benefits Management System and

Anti-discrimination the Attendance and Leave Management System. These systems along with the Human Resources Management

The Company does not discriminate against any employee on the grounds of race age gender sexual orientation ethnicity Procedures document clearly define various provisions to safeguard the diverse rights and interests of employees.disability religion political affiliation trade union membership military service nationality marital status pregnancy health Additionally employee representative meetings are held regularly to effectively protect employees’ legal rights and

condition or any other status protected by national law. interests and statutory benefits from being infringed upon while reflecting the core values of the Company’s corporate

culture which focuses on the mutual growth of the Company and its employees.Prevention of child labour and protection of adolescent employees

Sokan’s Policy for Guaranteeing the Rights and Interests of Employees

Employment of individuals under the age of 16 is prohibited: The Company implements reliable age verification measures

such as using ID verification devices to confirm authenticity or checking through the Internet or local government resources. Remuneration

Remediation plan: If an employee aged below 16 is inadvertently hired the Company will provide transportation costs to help

the employee return home or educational fees to support his/her study. If the employee faces significant financial difficulties Adhere to the principle of equal pay for equal work regularly survey external remuneration information conduct comparative

daily necessities and living expenses will be provided until the employee reaches the age of 16. analysis of internal and external remuneration and design remuneration structures that align with job positions capabilities

and performance ensuring internal fairness and external competitiveness of the remuneration system.Protection of adolescent employees: The Company strictly limits the employment of employees under the age of 18 complies

with applicable laws that restrict or regulate the work of minors aged below 18 and ensures that all operations and locations For positions with performance assessments bonuses are calculated and distributed based on corresponding incentive

are inspected by safety professionals to identify and prevent any conditions that may pose a danger to adolescent workers. policies and performance assessment results.Working hours

During the reporting period the Company undertook a series of measures to optimize its recruitment and employment Employees cannot work more than six consecutive days and the weekly working hours must not exceed 40 hours with actual

practices laying a talent foundation for the Company’s long-term operations. working hours (including overtime) limited to no more than 60 hours per week.Forced overtime or unauthorized overtime is prohibited. All overtime must be voluntary and approval from the department

head and verification by the Human Resources Department is required.

49 50Sokan New Materials Group Co. Ltd. 2024 Environmental Social and Governance (ESG) Report

Holidays

Be responsible for collecting summarizing and providing feedback on employee issues and

Employees are entitled to statutory holidays annual leave marriage leave bereavement leave work injury leave sick leave suggestions as well as accepting investigating determining coordinating and responding to

maternity leave for female employees breastfeeding leave for female employees paternity leave for male employees Human Resources employee complaints or whistleblowing.compensatory leave and other paid leave. Department All personnel of the Human Resources Department are responsible for accepting employee

complaints or whistleblowing and collecting employee issues and suggestions. They are also

responsible for recording communicating handling and responding to related tasks.Protection of female employees

Female employees are not assigned to work at heights in low temperatures or in cold water or work with a third-level

physical labour intensity as defined by the country during their menstrual period.Responsible Cooperate with the Human Resources Department or the trade union in investigations providing

Female employees are not assigned to work with third-level physical labour intensity or to work prohibited during pregnancy departments handling suggestions and assisting with communication and coordination with employees.as defined by the country.Female employees are not assigned to work with third-level physical labour intensity or to work prohibited during the lactation

period if the infant is under one year old.As of the end of the reporting period the Company had not experienced any serious violations of the rights and interests

Anti-harassment and anti-abuse of employees nor had it been subjected to administrative or judicial penalties for infringing upon the rights and interests

of employees and all employee complaints had been properly resolved.No form of harassment is allowed in the workplace. Employees will not be penalized or retaliated against for reporting

harassment or abuse incidents. All employees supervisors and managers must participate in anti-harassment training.Employee care

The Company provides a variety of benefits to all employees including inclusive benefits special benefits and

During the reporting period the Company legally entered into labour contracts with all employees achieving a

allowances. In addition to enrich employees’ extracurricular life the employee activity associations regularly organize

100% labour contract signing rate. Four employee representative meetings were held during which collective wage

cultural and recreational activities fostering a united friendly progressive and harmonious corporate atmosphere. This

negotiations were conducted and relevant documents such as the Collective Wage Agreement Collective Contract and

has effectively enhanced employees’ sense of happiness and belonging.Collective Contract for the Protection of Female Employees’ Rights were signed.In 2024 the Company revised the Employee Issue Suggestion Whistleblowing and Complaint Handling Procedures. Sokan’s Employee Care Measures

Through various initiatives the mechanism for handling employee issues suggestions whistleblowing and complaints

was standardized and improved with feedback channels processing procedures and liaison points clarified. These Inclusive benefits

measures were implemented to promote the efficient resolution of issues while ensuring that all employees are aware The Company makes timely and full contributions to various statutory social insurances and benefits including basic pension

of the reporting mechanism and that the privacy and rights of whistleblowers are protected. This has ensured effective insurance basic medical insurance unemployment insurance work injury insurance maternity insurance and housing

communication between the employees and the Company’s leadership. provident fund achieving a 100% coverage rate.The Company provides group accident insurance for all employees and offers medical mutual aid for employees in Changsha.Sokan’s Whistleblowing and Complaint Handling Process in 2024 The Company provides benefits such as year-end bonuses meal and accommodation subsidies health check-ups birthday

gifts holiday gifts and cash and daily necessities.Whistleblowing/ Follow-up and Determination of

Request for disposal Appeal tracking

complaint reception feedback handling responsibility

Special benefits

Sokan’s Employee Issue Suggestion Complaint or Whistleblowing Management System Additional benefits are provided in specific circumstances including high-temperature allowances hardship allowances

expatriate allowances internal training remuneration subsidies and company guide allowances.Company President Handle employee complaints or whistleblowing related to the Human Resources Department.Allowance benefits

Collaborate in accepting whistleblowing or complaints that involve employees’ legal rights and

Company Trade Union The Company offers allowances for confidentiality seniority education and skills.interests.

51 52Sokan New Materials Group Co. Ltd. 2024 Environmental Social and Governance (ESG) Report

Cultural and recreational activities

The Company’s mutual aid fund has provided assistance to 11employees and their family members who were ill with

The Company has built indoor facilities such as badminton courts cinemas and gyms and established seven activity a total of RMB26354 in medical subsidies disbursed.associations including badminton basketball billiards table tennis fishing fitness and running clubs with regular activities held.The Trade Union Committee regularly hosts activities such as “Singing the Strongest Voice of Sokan” “Shaping the Future withTechnology through Unlimited Innovation” on the Science and Technology Workers’ Day and “Love in Sokan Unity in Action” on

the Family Day.Each year the Company conducts employee satisfaction and engagement surveys through questionnaires or discussion

sessions. These surveys assess satisfaction across multiple dimensions including the Company as a whole the work

Female employee care itself and the workgroups. Based on the survey results the Company makes real-time improvements and adjustments.During the reporting period the Company had a total of 31 departments of which 29 participated in the survey. The

On International Women’s Day female employees receive holiday allowances and are given time off.average employee satisfaction remains at a high level and the engagement scores for both the departments and

employees have increased year on year.Care for employees with difficulty

The Company has set up a mutual aid fund to provide financial support to employees and their families facing difficulties due

to illness disability or other hardships. Sokan’s Employee Satisfaction Survey

82

81.85

Sokan’s Employee Care Activities in 2024 81.9

81.881.75

81.67

81.7

81.6

81.5

202220232024

“Sing the Strongest Voice of Sokan” Basketball Tournament

Work Commencement Karaoke Activity Satisfaction score

6.2 Employee training and development

Employee training

The Company places great emphasis on employees’ career development and has established internal regulations

including the Training Management System. This has led to the development of a comprehensive talent development

“First Quarter Employee Birthday Party”

“Love in Sokan Unity in Action” - The 3rd Annual Family Day system which includes learning maps for core positions research projects and training programs for mid-to senior-level

Production Department of Changsha Factory

management such as the Executive Master of Business Administration (EMBA) and Executive Development Programs

(EDP) as well as special management enhancement training camps. The Company also boasts a complete team of

53 54Sokan New Materials Group Co. Ltd. 2024 Environmental Social and Governance (ESG) Report

internal trainers. This talent development system continually cultivates a diverse range of international management and Employee development

technical talents in alignment with the Company’s strategic targets providing significant human capital support for theThe Company follows the principle of a virtuous cycle which states that “the excellent are promoted the mediocreachievement of these targets.are demoted and those who violate rules are punished; promotion or demotion is possible in the Management andSokan’s Employee Training System employees can join or leave as needed.” The Company has established systems such as the Performance Management

System Employee Promotion and Demotion Management System and Employee Reward and Punishment System

Curriculum system planning Training categories Training effectiveness evaluation

continuously guiding and encouraging employees to improve their performance levels. The Company has also

Based on the Job Description ISO Training for work license for spe- The evaluation of organizers and established a position salary and incentive system centered around ability performance and value contribution.

9001 standards ISO 14001 stan- cial work types/processes instructors is conducted through

dards IATF 16949 standards EHS questionnaires or interviews The Company creates multiple career development paths for employees establishing ten major job families. Employees Onboarding training for new

management system standards employees and employees trans- while the evaluation of trainees can choose a career development path based on their interests and personality traits.QC 080000 management system ferred to new positions includes written exams on-site

standards and AS 91000D quality practical assessments etc.Mandatory skills training for cur-

management system require-

rent employees Evaluation criteria: For those with Sokan’s Employee Promotion Job Families

ments the Human Resources qualification certificates such

Department organizes relevant Employee enhancement and de- certificates serve as proof; for

personnel to conduct research velopment training those without certificates a com-

and discussions and establishes bination of qualitative and quanti-

the Company’s training curricu- tative assessments is used. Technical

lum system. Marketing applications Administration Finance Equipment Production

The Human Resources Department is the designated responsible department for training responsible for the planning

of the training system the organization and implementation of company-level training and the guidance assistance

and inspection of department-level training implementation. The department head is the primary responsible person for

Quality control Warehousing TS BM PM

improving the competence of employees within the department responsible for the development and implementation

of the department’s training plan. The quality EHS and other relevant departments are responsible for the planning of

special training in areas such as quality and EHS.Sokan’s Employee Training Management Structure

Center heads subsidiaries’ general manager Human Resources Department The Company implements a position-based salary system where employees’ salaries consist of basic wages overtime

pay performance bonuses allowances subsidies and other components. The performance bonus is awarded based on

Review and approval of training programs. Planning of the training system and organization and

implementation of company-level training. the employee’s daily performance evaluations with higher bonuses given to employees who demonstrate outstanding

Guidance assistance and inspection of department-level performance in their daily work. Additionally the Company has set up incentive awards to reward employees who make

training. significant contributions in different areas fully motivating employees’ initiative and engagement.Department heads Quality Department EHS Department etc.Formulation and implementation of departmental train- Planning of special training programs.ing plans. Sokan’s Incentive Awards Setup in 2024

Aspects Awards

During the reporting period the Company conducted 211 “mandatory skills training” sessions and 98 “enhancement Star Performer Sales Breakthrough AwardQuarterly excellenceand development training” sessions through onsite training online training and a combination of both. The total training Patent Award Outstanding Review Projectawards

expenditure for the year amounted to RMB710000 with a total training duration of 20833 hours. The average training Lotus Award Outstanding Project

duration per employee was 37.5 hours and the training coverage rate was 100%.

55 56Sokan New Materials Group Co. Ltd. 2024 Environmental Social and Governance (ESG) Report

Aspects Awards Sokan’s Employee Shareholding Situation in 2024 (As of the End of 2024)

Indicator Unit 2024

Outstanding Part-Time Committee Member Outstanding Job Operator

Gold Medal Corporate Culture Executive Quality Model Number of employees holding shares Person

Advanced Worker EHS Model 31

Annual excellence

Bo Le Award Technical Invention Award

awards Proportion of employees holding shares %

Innovation Award Outstanding Contribution to New Technology in the total number of employees 3.77

Annual Task Completion Award Award

Customer Development Breakthrough Award Sales Increment Contribution Award Employee shareholding quantity Ten Thousand Shares 879.68

Outstanding Project Advanced Cost Reduction Team Employee shareholding quantity as a

%

Center/subsidiary- level Star Project High-Quality Support Team proportion of total share capital 7.87

team awards Outstanding R&D Team Outstanding Sales Team Note: The above shareholder information is based on the shareholder register provided by China Securities Depository and Clearing Corporation Limited

Outstanding Amoeba Sales Target Achievement Award covering the top 200 registered shareholders as of the end of the reporting period.Technological Innovation Award Outstanding Technical Innovation Award

Group-level individual Sales Champion Award Sales Elite Award 6.3 Occupational health and safety

awards Outstanding Management Award Distinguished Management Award

Stock Option Award Rising Star Award As a manufacturing enterprise the Company has always regarded occupational health and safety management as a

key element in cultivating core competitiveness placing the highest priority on safe production. The Company actively

President Quality Award 6S Demonstration Unit

implements control and protective measures to manage risks across the entire production and operational process

Group-level team awards Corporate Culture Practice Model Unit Amoeba Management Demonstration Unit

High-Performance Team ensuring the physical and mental well-being of its employees.Governance

In 2024 the Company promoted employee development and drove continuous progress and innovation through such The Company strictly adheres to relevant laws and regulations such as the Work Safety Law of the People’s Republic

methods as mechanism improvement and equity incentives. of China the Law of the People’s Republic of China on the Prevention and Control of Occupational Diseases and the

Fire Protection Law of the People’s Republic of China. The Company has established and improved 16 procedural

documents including the Occupational Health Operation Control Procedures and the Safety Production Operation

Control Procedures as well as eight management systems such as the Work Injury Handling Measures and Pressure

Sokan’s Main Measures for Employee Development in 2024

Vessel Safety Management Regulations. Additionally 48 operational documents including the Safety Inspection

Management System and Occupational Disease Hazard Monitoring and Evaluation Management System have been

Mechanism improvement Equity incentives formulated. This forms a comprehensive occupational health and safety production management structure and the

Company continues to advance the construction of its safety production system.By revising systems such as the Group Excellence Approved by the Shareholders’ Meeting the 2024 Re- Sokan’s Safety Production Management Structure

Evaluation Plan Performance Management System stricted Stock Incentive Plan has been implemented

Employee Promotion and Demotion Management initially granting incentives to 68 individuals covering Institutions Members Responsibilities

System Employee Reward and Punishment System the Company’s directors Senior Management key

and developing the Backup Talent Cultivation Plan technical personnel and core employees. The Committee mainly organizes the implementation of national and local gov-The Chairman ser ves as

the Company has completed the review and update ernment laws and regulations related to EHS as well as customer-specific EHS the Director with vice pres-

of incentive policies for key positions essentially es- EHS requirements. Moreover the Committee promotes the development of safety idents department heads

Management culture and holds quarterly EHS-focused meetings to guide and coordinate the

tablishing an incentive framework and model. full-time EHS managers and Committee Company’s EHS management work. Additionally it organizes a company-wide

employee representatives as

The Company achieved 100% coverage of perfor- EHS inspection every month coordinating and supervising relevant depart-members

mance evaluations for key entities ensuring full im- ments to ensure timely rectification of identified issues and hazards.plementation. EHS Safety engineers and EHS The EHS Department is responsible for managing safety environmental protec-

The promotion channel for the research institute has Department engineers tion occupational health fire safety security and other related areas.been opened up.The Company continues to advance the establishment and certification of its occupational health and safety

management system. The key manufacturing facilities of Sokan and Songrun New Materials in the Ningxiang Park have

successfully passed the ISO 14001 Environmental Management System and ISO 45001 Occupational Health and Safety

57 Management System certifications (valid until September 2025). 58Sokan New Materials Group Co. Ltd. 2024 Environmental Social and Governance (ESG) Report

Sokan’s Response Strategies for Occupational Health and Safety

Occupational Risk identification

health and safety and hazard gover-

investment nance

Safety training Development and

and awareness implementation of

building safety standards

ISO 45001 Certification Certificate for Sokan ISO 45001 Certification Certificate for Songrun New Materials

Impacts risks and opportunities management

In 2024 the Company signed annual responsibility agreements with all employees from the Chairman to frontline

staff in accordance with systems and documents such as the Environmental Protection Occupational Health and

Strategy Safety Management Responsibility System. Through daily rewards and punishments regular performance evaluations

In 2024 the Company proactively identified and assessed potential occupational health risks and opportunities in its and annual excellence awards the Company continuously enhances employees’ safety awareness strengthens the

daily operations and manufacturing processes. A comprehensive analysis was conducted on various risk sources and ideological defense line and improves the safety management system with high standards and strict requirements

the potential impacts they may bring. aiming to build an intrinsically safe enterprise.Analysis of Risks and Opportunities Related to Sokan’s Occupational Health and Safety Sokan’s Main Measures for Occupational Health and Safety Management in 2024

Risk Risk Description Impact Scope Financial Impact Invest RMB3526400 as a special fund for safety production.Improper storage or insufficient electrostatic protection Occupational Pay work injury insurance as per regulations covering all employees and pay safety production

may lead to accidents causing direct economic losses. Decreased revenue health and safety liability insurance in a timely manner.Short- and

Market risk If employees develop occupational diseases due to

Medium-term Increased operating

investment Provide frontline operators with standard protective equipment according to regulations and

prolonged exposure to harmful volatile organic com- costs supervise the correct usage of such equipment during daily work.pounds the Company may face compensation risks.Violations of laws and regulations on occupational

Short- Medium-

Policy risk health or hazardous chemical safety management may Decreased revenue Revise and upgrade the Dual Prevention Mechanism Summary Report covering risk control during

and Long-term

result in fines and administrative penalties. production storage and other operations in the Ningxiang Park and develop targeted control and

protective measures.Media exposure of occupational diseases or safety pro-

Short- and Increased operating Fully revise the Emergency Plan Production Safety Accidents forming one comprehensive

Reputational risk duction accidents may trigger a public trust crisis and

Medium-term costs Risk identification emergency plan seven specific emergency plans and four on-site handling plans. Conduct a total of

increase employee turnover. and hazard 28 comprehensive inspections special inspections and holiday inspections.management

Opportunity Opportunity Description Impact Scope Financial Impact Develop corrective plans for 235 identified hazards and conduct re-inspection of the corrective

results with all the 235 hazards being already corrected.Passing stringent customer EHS (Environmental

Short- Medium-

Market opportunity Health and Safety) audits may bring opportunities in Increased revenue Organize nine drills including fire drills personnel evacuation elevator accidents chemical accidents

and Long-term

high-end markets. and confined space accidents as per the Annual Emergency Drill Plan.

59 60Sokan New Materials Group Co. Ltd. 2024 Environmental Social and Governance (ESG) Report

For occupational health risks caused by improper storage or leakage of hazardous chemicals 6.4 Chemical safety management

and long-term exposure to volatile organic compounds organize occupational health check-ups

Development and for employees in hazardous posts before they start work annually during employment and upon The resins solvents and other raw materials used by the Company are mostly flammable liquids and hazardous

implementation of leaving the post. chemicals. The nine types of solvents with the highest usage are stored in a tank area (10 vertical storage tanks each with

safety standards

Organize annual health check-ups for other employees with a 100% coverage rate. a capacity of 50 cubic meters) which does not constitute a major hazard. Sokan and Gull Hash Chemistry are hazardous

Ensure 100% certification rate for special operation personnel and special equipment operators. chemical production enterprises and in accordance with national and local regulations they have obtained safety

production licenses and hazardous chemicals usage registration certificates. All produced products have chemical safety

data sheets and safety labels.Organize no less than 72 hours of three-level safety education and training for new employees

and no less than 20 hours of safety production knowledge training special operations monitoring The Company fully implements the entity responsibility for the safety production of hazardous chemicals as a hazardous

training and emergency rescue training covering a total of 13 sessions. chemical production enterprise. It has established the Hazardous Chemicals Management System and in 2024 revised

Safety training

and awareness Entrust professional medical staff to train employees in first aid knowledge and skills such as the and improved it in line with the latest company organizational structure and duty and authority requirements. The system

building Heimlich maneuver and CPR with 317 employees trained. manages the entire process of chemical procurement transportation storage use and disposal. The Company organizes

Install promotional display boards banners notice boards posters and warning signs at prominent

at least one chemical safety training and one chemical leakage emergency drill each year to enhance the Company’s

locations within the park and work areas.emergency rescue capabilities while also testing the feasibility effectiveness and compliance of the emergency response

plan for hazardous chemical leakage accidents.Indicators and targets Sokan’s Hazardous Chemicals Management Requirements

Introduction requirements

The Company actively implements safety policies and sets annual safety management targets and indicators at the

When introducing new chemicals all departments must select substances that comply with the Environmental Management

beginning of each year. During the Reporting Period no major production safety accidents work-related injuries or Material Control Standards prioritizing chemicals with low risk and low hazard. All chemicals used by the Company must be

occupational disease incidents occurred nor was the Company punished by relevant authorities or judicial bodies due to accompanied by a chemical safety data sheet in Chinese with content and format in line with national standards. All original

issues related to occupational health and safety of employees. and repackaged containers must be labeled with chemical identifiers; hazardous chemicals must also bear safety labels that

meet applicable national standards.Indicators and Targets Related to Sokan’s Occupational Health and Safety in 2024

Procurement

Type Indicator Unit Target Achievement Status

Procurement quantity should align with production needs to ensure safety. Suppliers must use certified vehicles for

0 transporting hazardous goods and ensure that the drivers and escorts hold valid licenses. Preventive measures against Minor injury accidents Case ≤3 (Achieved the goal) leakage fire and explosion must be taken during transportation.

Work injury accidents Case 0 0(Achieved the goal) Transportation and handling

Fire accidents Case 0 0(Achieved the goal) Transportation must be entrusted to carriers with the appropriate hazardous goods transport qualifications. Incoming

Safety vehicles must pass five mandatory checks. Handling personnel must follow labeling instructions during loading/unloading

production Chemical leakage accidents Case 0 0(Achieved the goal) and wear suitable protective equipment based on the nature of the hazardous chemicals ensuring gentle handling.Pass rate of annual inspection of special

% 100 100(Achieved the goal) Storageequipment

Storage warehouses must be equipped with ventilation fire protection combustible gas detection explosion-proofing anti-

Certification rate of special operation

% 100 100(Achieved the goal) static and lightning protection facilities along with protective equipment and emergency devices. Compatible containers personnel

must be regularly inspected for integrity and must be stored separately by warehouse zone and classification.Diagnosed occupational disease cases Case 0 0(Achieved the goal)

Production and use

Occupational Timely completion rate of occupational % 100

health health check-ups 100(Achieved the goal) Prominent safety warning signs must be displayed at relevant workplaces and on safety facilities and equipment. During

production and use safety measures must be taken based on the type and properties of the hazardous chemicals including

Pass rate of occupational disease hazard

% 100 100(Achieved the goal) monitoring ventilation temperature regulation fire prevention explosion-proofing anti-static corrosion resistance leakage factor detection prevention or isolation operations.

61 62Sokan New Materials Group Co. Ltd. 2024 Environmental Social and Governance (ESG) Report

Scrap 6.5 Contributions to the society and rural revitalization

Waste hazardous chemicals must be treated as hazardous waste and disposed of in accordance with the Solid Waste Man-

agement System. Scrapped chemicals used in operations must be transferred by the relevant department to the hazardous Sokan has always actively given back to society and is committed to exploring long-term mechanisms for contributions

waste warehouse. to the society. While ensuring the Company’s long-term healthy development and sustained brand value growth it also

promotes harmonious social development. In 2024 the Company invested a total of RMB60200 in dedicated funds for

Emergency response contributions to the society creating a dual empowerment model of “social value – business value”.In the event of an accident involving hazardous chemicals during storage transport use or disposal emergency response

must be carried out in accordance with the Emergency Preparedness and Response Control Procedures and related

emergency plans. If the impact of an accident is beyond the control of the Company it must be reported to emergency

management departments as well as environmental protection public security and competent health departments. During the reporting period the Company donated RMB10000 to support activity expenses for Xinshan Primary

School in Yutang Subdistrict.The Company fully recognizes the potential hazards that hazardous chemicals may pose to the surrounding

environment communities and employees at its production sites. It remains committed to reducing the use ofSokan actively responds to the national rural revitalization strategy and continuously upholds the philosophy of “sharedhazardous chemicals through measures such as process optimization and substituting existing raw materials with non-responsibility shared value” in promoting rural revitalization. Under the broader context of urban-rural integration and

hazardous alternatives. These efforts aim to minimize environmental and social impacts without compromising product

common prosperity the Company advances rural development. In 2024 it supported poverty alleviation and agricultural

quality or performance.assistance initiatives through concrete actions enhancing employees’ sense of mission increasing farmers’ income

and shaping the Company’s image as a “responsible and compassionate” enterprise.Sokan’s Main Measures to Reduce the Use of Hazardous ChemicalsProhibition of cobalt catalysts Replacement of fluorinated UV inkjet technology During the reporting period the Company participated in Ningxiang City’s “Poverty Alleviation and Agriculturalsilicone rubber coatingsAssistance” program through a “city-enterprise cooperation” approach purchasing agricultural products worth

In response to environmental To meet customer require- To meet the lithium battery RMB47200 in total which were all distributed to employees.concerns and requirements ments for reducing perfluo- industry’s requirements for

from downstream customer roalkyl and poly-fluoroalkyl insulating coating applications

companies the Company has substances (PFAS) in products the Company has developed

signed agreements explicitly the Company has actively de- UV inkjet printing technology

prohibiting the use of cobalt veloped fluorine-free silicone which does not use solvents

catalysts in production. rubber coatings which have and significantly reduces the

now entered mass production demand for hazardous chem-

replacing fluorinated silicone icals in the production of lith-

rubber coatings. ium battery products such as

power batteries.During the reporting period the Company did not experience any major accidents involving chemical fires or explosions

leakage or poisoning chemical reactions or equipment and operational failures. No penalties were imposed by relevant

authorities or judicial bodies due to chemical safety issues.

63 64Sokan New Materials Group Co. Ltd. 2024 Environmental Social and Governance (ESG) Report

Consolidation of the Foundation of Corporate The Board of Supervisors exercises supervisory authority to safeguard the rights and interests of shareholders and investors protect the Company’s interests and uphold the lawful rights and

Governance by Compliance and Integrity interests of employees.Board of Supervisors As of the end of 2024 the Board of Supervisors comprised three members including one employee

representative.In 2024 nine meetings of the Board of Supervisors were held during which 26 proposals were

7.1 Corporate governance reviewed.

The Company’s Management fulfils its responsibilities in accordance with laws regulations and

The Company strictly complies with the Company Law of the People’s Republic of China (the “Company Law”) the Management internal policies and strictly implements all resolutions passed by the Shareholders’ Meeting and the

Securities Law of the People’s Republic of China (the “Securities Law”) the Rules Governing the Listing of Stocks on Board of Directors thereby promoting the Company’s stable and sustainable operations.the STAR Market of the Shanghai Stock Exchange (the “Listing Rules”) and other applicable laws regulations and

In 2024 the Company further enhanced efficient and standardized operations through organizational restructuring and

relevant provisions. The Company continuously improves its corporate governance structure and builds and optimizes a

system improvements.governance structure comprising the Shareholders’ Meeting the Board of Directors the Board of Supervisors and Senior

Sokan’s Corporate Governance Measures in 2024

Management to ensure the Company’s sustained regulated and healthy development.Organizational restructuring System improvements Enhancement of the duty performance ability of independent directors

Sokan’s Governance Structure

Based on the Company’s actual In line with the latest legal and Organize onsite visits for inde-

Shareholders’ Meeting circumstances adjust the number regulatory requirements and the pendent directors to conduct field

of Board members from nine to Company’s operational practices research and engage in in-depth

Nomination Committee

Board of Supervisors seven to enhance decision-mak- revise and improve a series of exchanges with the management

ing efficiency. systems including the Articles of team thereby supporting the

Strategy Committee

Successfully completed the elec- Association Rules of Procedure Board’s strategic decision-making

Board Secretary Board of Directors tion and appointment of the Board for the Shareholders’ Meeting capabilities.Audit Committee

of Directors Board of Supervisors Rules of Procedure for the Board

and Senior Management. of Directors and Working Rules

Remuneration and Appraisal Committee for Independent Directors.Management

The Company continuously improves the remuneration system for directors supervisors and Senior Management.The remuneration of Senior Management is determined by the Remuneration and Appraisal Committee of the Board

The Shareholders’ Meeting is the Company’s highest authority legally responsible for deciding on

Shareholders’ of Directors and submitted to the Board of Directors for approval. The remuneration of directors and supervisors is the Company’s business policies and investment plans.Meeting reviewed and approved by the Board of Directors and the Board of Supervisors and subsequently submitted to the

In 2024 six shareholders’ meetings were held during which 23 proposals were reviewed.Shareholders’ Meeting for approval. The annual work reports of the Board of Directors and the Board of Supervisors

must be submitted to the Shareholders’ Meeting for review and independent directors are required to present their

The Board of Directors is the highest governance body of the Company and is responsible for the

Shareholders’ Meeting. The Board of Directors has four special committees namely the Audit annual performance reports at shareholders’ meetings.Committee the Nomination Committee the Remuneration and Appraisal Committee and the The Company has formulated the Connected Transactions Management System and other related system documents

Strategy Committee. Each special committee performs its own duties to ensure the standardization

scientificity and effectiveness of the Board’s decisions. to regulate connected transactions minimize unnecessary transactions and ensure that decision-making regarding

The Board of Directors is responsible for the Shareholders’ Meeting. Directors serve a term of three connected transactions is fair and just for all shareholders.years and may be re-elected. Independent directors may serve for no more than six consecutive

years.Board of Directors 7.2 Protection of the rights and interests of investors

The Board of Directors has a diverse background with members possessing professional expertise

and industry knowledge in areas such as auditing financial management human resources

management and the new materials industry along with experience in large-scale corporate Information disclosure

management. The Company strictly complies with the Company Law Securities Law Listing Rules Measures for the Administration of

As of the end of 2024 the Company’s Board of Directors comprised seven members including three Information Disclosure by Listed Companies and other applicable laws regulations and normative documents. It has

independent directors. established systems such as the Information Disclosure Management System and the Regulations on Standardized

In 2024 the Board of Directors convened 13 meetings and reviewed 61 proposals. The special Information Disclosure and Internal Control Baselines to ensure that disclosed information is truthful accurate and

committees held 15 meetings with a 100% attendance rate from directors.complete. These measures are designed to ensure investors are promptly informed of material matters and to safeguard

65 the interests of minority investors. 66Sokan New Materials Group Co. Ltd. 2024 Environmental Social and Governance (ESG) Report

The Company actively improves its channels for communication with investors by disclosing information via the official

website of the SSE and other statutory media designated by the China Securities Regulatory Commission. It adopts a The cumulative dividend amount of the company from 2020 to 2023 reached RMB 105 million with the annual

combination of mandatory and voluntary disclosures to maintain sound communication with the capital market and cash dividend accounting for more than 30% of the consolidated net profit attributable to shareholders of listed

investors and to continuously enhance the transparency of its information disclosure. companies each year.In 2024 the Company disclosed a total of 171 announcements including 87 ad hoc announcements and four periodic

reports. No incidents of regulatory penalties due to information disclosure violations occurred nor were there any The Company also actively explores share repurchase as a means of stabilizing its share price. In 2024 the Company

instances of selective or non-compliant disclosures. conducted its first share repurchase with a total repurchase amount of RMB16013300 (excluding stamp duty

transaction commissions and other transaction-related fees) repurchasing 426900 shares accounting for 0.38% of the

Investor communication

Company’s total share capital. This effectively safeguarded investor rights and interests stabilized investor confidence

The Company strictly adheres to the Securities Law the Work Guidelines for the Investor Relations Management of in the Company and enhanced investor recognition of the Company’s value.Listed Companies and other relevant laws regulations and normative documents. It has established internal systems

such as the Investor Relations Management System and implements various investor relations measures based on the

principles of fairness impartiality and transparency to safeguard the legitimate rights and interests of all investors.The Company has established an investor relations management system in which the Chairman assumes primary

responsibility the Board Secretary acts as the person in charge and the Securities Affairs Department serves as the

main executing body. Through multiple channels the Company responds to investors’ concerns on major issues

provides comprehensive interpretations of key highlights and long-term strategies and delivers feedback from the 7.3 Risk control and compliant operations

capital markets to directors supervisors and Senior Management thereby enhancing effective communication with the

capital market. Governance

The Company has developed a two-way communication mechanism and platform for investors using official channels Sokan adheres to the principle of lawful and honest operation and places great emphasis on risk control. In accordance

such as the corporate email the WeChat public account “Sokan Investor Relations” investor hotline Shanghai Stock with the Company Law the Guidelines for Evaluation of Enterprise Internal Controls the Guidelines for Auditing of

Exchange e-interaction and performance briefings to regularly and occasionally respond to investor queries. After the Enterprise Internal Controls and the Code of Corporate Governance for Listed Companies and other relevant laws

release of periodic reports the Company routinely holds performance briefings and actively participates in investor regulations standards and specifications the Company has formulated system documents such as the Management

engagement meetings organized by the CSRC Hunan Office for listed companies within the jurisdiction of Hunan Measures for Internal Audit of Sokan Group and the Authorization Manual of Sokan Group. A risk control and compliant

Province thereby strengthening communication with a broad base of investors. In 2024 the Company held three operation system has been established with the Audit Committee of the Board of Directors as the guiding and decision-

performance briefings responded to 54 investor queries on the Shanghai Stock Exchange e-interaction platform with a making body and the Audit and Supervision Department as the main department responsible for daily management.

100% response rate and received more than 120 investor visits and queries. The responsibilities of each department regarding risk control and compliant operation are clearly defined thereby

supporting the Company’s stable operation and development.Return for investors

Sokan actively responded to the SSE’s Initiative on the Special Campaign to Enhance Quality and Efficiency and Strategy

Emphasize Returns for SSE-Listed Companies. In line with the “investor-oriented” development philosophy the Company

The Company has established and continues to improve management processes related to risk control and compliant

formulated and implemented the 2024 Action Plan for Enhancing Quality and Efficiency and Emphasizing Returns with

operations. It proactively identifies the impacts risks and opportunities in these areas and implements targeted

the aim of delivering tangible benefits to investors.response measures based on the results in order to mitigate the impact of risk events on business operations and

The Company attaches great importance to providing reasonable returns to shareholders and actively implements ensure compliant and standardized corporate governance.a prudent cash dividend policy. It has developed the Three-Year Shareholder Dividend Return Plan (2023–2025) to

clarify and stabilize profit distribution expectations thereby enhancing investors’ sense of gain. In 2024 the Company

distributed a cash dividend of RMB2.20 (tax included) per ten shares to each shareholder amounting to a total of

RMB24494700 (tax included) accounting for 30.20% of the consolidated net profit attributable to shareholders of listed

companies for 2023.

67 68Sokan New Materials Group Co. Ltd. 2024 Environmental Social and Governance (ESG) Report

Analysis of Risks and Opportunities Related to Sokan’s Risk Control and Compliant Operations Sokan’s Measurement Measures for Risk Control and Compliant Operations in 2024

Risk Risk Description Impact Scope Financial Impact

System improvements Risk and compliance review Risk and compliance training

Inadequate monitoring and control of risks may lead to the

occurrence of potential risk incidents adversely affecting

R e v i s e t h e M a n a g e m e n t Establish an internal control Conduct one internal compli-

Liability risk the Company’s financial condition. Improper compliance

Measures for Internal Audit of and risk management eval- ance training session covering

management may result in legal violations and financial

Increased operating Sokan Group to further clarify uation framework covering all Sokan employees effec-

risks such as litigation or regulatory penalties.Short- Medium- expenses the responsibilities of each contract management asset tively enhancing compliance

Failure to adequately monitor risks and policies may result and Long-term Increased non- position in l ight of system management information awareness and legal knowl-

Policy risk in an inability to keep pace with policy changes potentially operating expenses operations. systems and financial man- edge.leading to regulatory penalties. agement. Identify 71 internal Incorporate compliance man-

control risk points and propose

Poor risk or compliance management may result in dam- agement content into onboard-

Reputational risk corresponding risk mitigation

age to the Company’s brand image. ing training for new employees measures.to reduce the risk of non-com-

Opportunity Opportunity Description Impact Scope Financial Impact pliant behaviour due to lack of

awareness.Effective risk and compliance management can signifi-

Medium- and Reduced operating

Market opportunity cantly reduce the Company’s operating costs and enhance

Long-term costs

its profitability.Indicators and targets

Sokan’s Response Strategies for Risk Control and Compliant Operations

To achieve stable and standardized development the Company has established a series of targets related to risk control

and compliant operations. These targets are designed to guide relevant departments and personnel in their work and to

enhance the Company’s awareness and capability in risk mitigation and standardized management.System im- Risk and compli-

Indicators and Targets Related to Sokan’s Risk Control and Compliant Operations in 2024

provements ance review

Indicator Unit Annual Target Achievement Status

Number of major compliance incidents Times 0 0(Achieved the goal)

Number of company-wide compliance

Times 1

Risk and compliance training sessions 1(Achieved the goal)

training Complete framework establish-

Establishment of internal control and risk ment for contract management

management evaluation frameworks for —— asset management information Completed

each business segment by 2026 systems and financial manage-

ment

Impacts risks and opportunities management

Based on the identification of impacts risks and opportunities the Company actively implements measures such as

system improvements risk and compliance reviews and risk and compliance training. These efforts aim to proactively

identify and address potential risk factors in the course of operations promote standardized operations and support the

Company’s long-term and stable development.

69 70Sokan New Materials Group Co. Ltd. 2024 Environmental Social and Governance (ESG) Report

7.4 Business ethics whistleblowing channels including telephone and email to receive complaints or whistleblowing. These whistleblowing

channels are published on public platforms to ensure that employees external partners and other stakeholders are fully

informed of the whistleblowing channels and procedures. After an incident whistleblowed is verified the Company will

Anti-corruption and anti-commercial bribery

order the concerned violator to return the improper benefits obtained and bear corresponding responsibilities.Sokan upholds the principle of “adhering to the rule of law safeguarding fairness and justice ensuring the healthyand sustainable development of the enterprise and protecting the interests of shareholders employees and the The Company places a high priority on the confidentiality of the whistleblowing process and has adopted strictgeneral public”. The Company strictly complies with the Criminal Law of the People’s Republic of China the Company confidentiality measures to protect whistleblowers from any form of retaliation. All whistleblowing information will be

Law and other relevant laws and regulations. It has established system documents such as the Employee Reward handled exclusively by the designated personnel or departments within the Audit and Supervision Department with

and Punishment System and the Code of Professional Ethics Control Procedures thereby constructing a top-down whistleblowing contents thoroughly investigated and findings promptly communicated to the whistleblower.supervision and management system for anti-corruption and anti-commercial bribery.Whistleblowing Channels

Sokan’s Anti-Corruption and Anti-Commercial Bribery Management Structure

Audit Committee of the Board of Directors Email Phone

The Audit Committee of the Board of Directors is responsible to lead the Company’s anti-corruption and anti-commercial sj@sokan.com.cn 186-7562-9856/0731-87187777-8011

bribery efforts formulate relevant policies and targets approve related management systems and supervise the

implementation of related work.Sokan’s Management Measures for Anti-Corruption and Anti-Commercial Bribery in 2024

Audit and Supervision Department

The Audit and Supervision Department is responsible for the execution of anti-corruption and anti-commercial bribery Anti-corruption and Review key positions and critical processes and implement correction and mitigation measures for

anti-commercial

initiatives and for handling clues involving disciplinary or legal violations related to corruption and bribery in accordance with bribery review identified risk points.relevant regulations.The Audit and Supervision Department serves as the daily management units for the Company’s anti-corruption and anti- Send “Integrity Reminder Letters” to employees via email and the Company’s official WeChat

commercial bribery efforts. Based on the internal control and risk management evaluation framework the Department platform outlining potential forms and consequences of corruption and bribery and providing

whistleblowing channels to help employees prevent such behaviour.has identified key corruption and bribery risk points critical positions and key processes. It conducts regular supervisory

Integrity culture Develop integrity culture based on relevant festivals incidents or activities such as the International

inspections and periodic audits of key departments and roles formulates preventive measures and improves systems development Anti-Corruption Day further enhancing employees’ awareness of anti-corruption and anti-

and mechanisms accordingly. commercial bribery.In terms of anti-bribery management for suppliers the Company has issued the Integrity and Honesty Agreement Integrate anti-corruption and anti-commercial bribery content into compliance training sessions

conducted for all employees with full participation from directors and Senior Management.of Sokan Group and the Integrity and Honesty Requirements for Suppliers of Sokan. The Company regularly reviews

suppliers’ adherence to anti-bribery commitments. Upon discovery of any violation involving corruption bribery or

related misconduct in any form the Company will take immediate and strict disciplinary action. Through measures By the end of 2024 all suppliers had signed the Integrity and Honesty Agreement of Sokan Group.such as signing integrity agreements with suppliers conducting anti-bribery due diligence and providing anti-corruption Supplier anti-bribery

measures The Company conducted anti-corruption reviews of suppliers and no incidents of corruption or

training the Company fosters a “fair impartial clean and honest” cooperative relationship thereby building a long-term bribery involving suppliers were reported.and stable supply ecosystem.Regarding whistleblowing management the Company encourages employees and business partners to whistleblow

any violations of integrity and self-discipline regulations or acts of fraud corruption or bribery. The Company has During the reporting period the Company was not subject to any administrative or judicial penalties related to corruption

established the Employee Issue Suggestion Whistleblowing and Complaint Handling Procedures and provides multiple bribery fraud or similar misconduct.

71 72Sokan New Materials Group Co. Ltd. 2024 Environmental Social and Governance (ESG) Report

Anti-unfair competition

Sokan strictly complies with the Anti-Unfair Competition Law of the People’s Republic of China the Anti-Monopoly Law ESG Data Tables and Notes

of the People’s Republic of China the Interim Provisions on Anti-Unfair Competition on the Internet and other relevant

laws and regulations. The Company firmly prohibits unfair practices such as false advertising infringement of trade

secrets and fraudulent sales and upholds fair and legitimate market competition. Environmental performance

Performance Table for Greenhouse Gas Emissions and Resource Usage

Sokan’s Anti-Unfair Competition Measures in 2024 Disclosure Item Unit 2022 2023 2024

Climate change tackling1

Prohibition of false advertising Prohibition of trade secret infringement

Total greenhouse gas emissions1 Tons of CO2e 5710.50 7111.44 8713.34

-Scope 1 Greenhouse gas emissions Tons of CO e 0.00 0.00 0.00

Ensure that all announcements product or activity Sign confidentiality agreements with employees 2

information and other contents published through interns and suppliers to prevent the leakage of trade -Scope 2 Greenhouse gas emissions Tons of CO2e 5710.50 7111.44 8713.34

the Company’s official website WeChat public secrets.account and other channels are approved by Tons of CO e Greenhouse gas emission intensity per 2

the heads of relevant departments before being / million 11.44 12.06 11.59unit of revenue

published and any content not complying with the RMB

requirements of relevant laws and regulations is Energy usage

modified and resubmitted for approval or directly

not published. Tons of

Comprehensive energy consumption standard 1308.84 1630.44 1997.90

coal

During the reporting period the Company was not subject to any administrative or judicial penalties for unfair Tons of

-Direct energy consumption2 standard 0.00 0.00 0.00

competition practices such as monopolistic behaviour false advertising or infringement of trade secrets. coal

Tons of

-Indirect energy consumption standard 1308.84 1630.44 1997.90

coal

Purchased electricity MWh 10642.00 13241.10 16219.49

Purchased steam3 GJ 0 57.00 90.54

Tons of

Comprehensive energy consumption standard

2.622.762.68

intensity per unit of revenue coal/ million

RMB

Usage of water resources

Total water intake volume m3 124652.00 135368.00 136450.71

-Municipal water supply m3 123652.00 134368.00 135450.71

-Collected and stored rainwater4 m3 1000.00 1000.00 1000.00

Total drainage volume (via sewer system) m3 118419.00 128599.00 129628.10

Total water consumption5 m3 6233.00 6769.00 6822.61

Water consumption intensity per unit of m3/ million

12.4911.489.15

revenue RMB

73 74Sokan New Materials Group Co. Ltd. 2024 Environmental Social and Governance (ESG) Report

Disclosure Item Unit 2022 2023 2024 Social performance

Circular economy

Performance Table for R&D and Innovation

Recycled waste volume6 kg — — 300

Disclosure Item Unit 2022 2023 2024

Note 1: Total greenhouse gas emissions represent the sum of Scope 1 and Scope 2 emissions. As the Ningxiang Park does not use natural gas petrol or

diesel Scope 1 emissions are zero. Scope 2 emissions refer to indirect emissions from purchased electricity and steam. The emission factor for purchased

electricity is based on the national average electricity carbon dioxide emission factor of 0.5366 tCO2 /MWh as published in December 2024 by the Ministry

Number of R&D personnel Person 199 241 268

of Ecology and Environment and the National Bureau of Statistics in the Notice on the Publication of the 2022 Electricity Carbon Dioxide Emission Factors. 1

The emission factor for purchased steam is sourced from the Guidelines for Accounting and Reporting Greenhouse Gas Emissions from Enterprises of Proportion of R&D personnel % 29.70 31.75 32.56

Other Industries (Trial) (2015) issued by the National Development and Reform Commission.Note 2: In the Company's operation direct energy mainly involves the transportation link. The main types are diesel and gasoline but the consumption R&D investment amount RMB10000 7452.16 9028.59 10544.50

is relatively small and has not been included in the statistics for the time being. In the future the Company will further improve the statistical criteria for

energy consumption. R&D investment as a proportion of main

2%14.9315.3114.14

Note 3: In 2023–2024 the Company introduced purchased steam to support the R&D and production needs of new technologies. business revenue

Note 4: Rainwater collection and storage volumes are Company estimates. Number of patent applications during the

Note 5: Calculation method: Total water consumption = Total water intake volume – Total drainage volume. Item 35 65 59reporting period

Note 6: The recycled waste during production primarily refers to carbon black refined from used tyres.-Number of invention patent applica-

Item 32 45 45

tions among them

Performance Table for Environmental Compliance and Emissions Management Number of patents granted during the Item 29 24 52

reporting period

Disclosure Item Unit 2022 2023 2024 -Number of invention patents granted Item 25 18 19

among them

Environmental compliance management

Number of valid patents during the re-

Total environmental protection invest- Item 119 143 195

1 RMB10000 236.38 275.81 190.10 porting periodment

Number of invention patents applied to

Penalty amount for major administrative Item 118 142 194main business

sanctions related to environmental inci- RMB10000 0.00 0.00 0.00

dents Note 1: Calculation method: Proportion of R&D Personnel = Number of R&D personnel / Total number of employees × 100%.Note 2: Calculation method: R&D investment as a proportion of main business revenue = R&D investment amount / Operating revenue × 100%.Emissions management2

Total waste air emissions 10000 m3 65025.00 64125.00 65250.00

Performance Table for Quality Management of Products and Services

-Total volatile organic compounds

kg 3677.29 4688.64 3311.40

(VOCs) emissions Disclosure Item Unit 2022 2023 2024

Total wastewater discharge3 m3 13383.00 14890.00 16951.00 Amount involved in major safety and quality

liability accidents related to products and RMB10000 0 0 0

Total hazardous waste4 Tons 304.69 348.08 481.82 services during the reporting period

Total non-hazardous waste Tons 18.80 18.60 19.20

Note 1: In 2022–2023 the Company introduced environmental protection equipment. As the equipment entered stable operation in 2024 the total

environmental protection investment decreased accordingly. Performance Table for Data Security and Customer Privacy Protection

Note 2: The data on emission management is based on the operations of Ningxiang Park.Note 3: During the production process in Ningxiang Park no industrial wastewater is discharged externally and the total amount of wastewater discharged Disclosure Item Unit 2022 2023 2024

only includes domestic wastewater.Note 4: The hazardous waste generated by the Company primarily includes spent activated carbon packaging drums paint buckets and paint waste. Amount involved in data security inci-

RMB10000 0 0 0

dents

Amount involved in customer privacy

RMB10000 0 0 0

leakage incidents

75 76Sokan New Materials Group Co. Ltd. 2024 Environmental Social and Governance (ESG) Report

Performance Table for Employee Employment and Rights and Interests of Employees Disclosure Item Unit 2022 2023 2024

Disclosure Item Unit 2022 2023 2024 Amount of investment in work Injury In- RMB10000 26.90 37.74 42.92

surance

Total number of employees Person 670 759 823

Amount of investment in work safety lia-

Male employees Person 507 598 655 RMB10000 15120 15120 13608bility insurance

By gender

Female employees Person 163 161 168

Note 1: Calculation method: Proportion of employees covered by work injury insurance = Number of employees covered by work injury insurance / Total

Employees aged number of employees × 100%.Person 172 145 170

below 30 Note 2: Calculation method: Proportion of employees covered by work safety liability insurance = Number of employees covered by work safety liability insurance / Total number of employees × 100%.Employees aged Note 3: Work safety liability insurance covers all employees of the Company's subordinate units involved in the production and operation of hazardous

By age Person 467 584 611 chemicals.

30–50

Employees aged

Person 31 30 42

above 50 Performance Table for Contributions to the Society and Rural Revitalization

Employee turnover rate1 % 12.30 14.03 13.50 Disclosure Item Unit 2022 2023 2024

Note 1: Calculation method: Employee Turnover Rate = Number of Departed employees during the reporting period / Total number of employees at the end Amount of investment in rural revitaliza-

of the reporting period × 100%. RMB10000 3.68 1.83 4.72tion

Amount of charitable donations RMB10000 0 0 1.30

Performance Table for Employee Training and Development

Disclosure Item Unit 2022 2023 2024 Corporate governance performance

Employee training coverage rate1 % 100 100 100

Performance Table for Business Ethics

Average employee training duration2、3 Hour 32.60 15.29 35.70

Total training expenditure4 RMB10000 41.74 133.21 71.00 Disclosure Item Unit 2022 2023 2024

Number of training sessions Times 347 305 340 Proportion of employees receiving an-

ti-commercial bribery and anti-corruption % 100 100 100

Note 1: Calculation method: Employee training coverage rate = Number of employees participating in training during the reporting period / Total number of training1

employees at the end of the reporting period × 100%.Note 2: Calculation method: Average employee training duration = Total employee training duration during the reporting period / Total number of employees at Proportion of directors receiving an-

the end of the reporting period. ti-commercial bribery and anti-corruption % 100 100 100

Note 3: In 2023 there were no significant changes to training practices. The decrease in data was due to organizational restructuring resulting in some training2

training records not being captured. Current data is based on recorded entries only thus appearing lower than in 2022 and 2024.Note 4: In 2023 the Company organized targeted training projects for key personnel resulting in a notable increase in training expenditure compared to 2022. Proportion of management personnel

receiving anti-commercial bribery and % 100 100 100

anti-corruption training3

Amount involved in litigation or major ad-

Performance Table for Occupational Health and Safety of Employees ministrative penalties due to the compa- RMB10000 0 0 0

ny’s unfair competition practices during

Disclosure Item Unit 2022 2023 2024 the reporting period

Proportion of employees covered by work Note 1: Calculation method: Proportion of employees receiving anti-commercial bribery and anti-corruption training = Number of employees receiving anti-

%100100100

injury insurance1 commercial bribery and anti-corruption training / Total number of employees × 100%.Note 2: Calculation method: Proportion of directors receiving anti-commercial bribery and anti-corruption training = Number of directors receiving anti-

Proportion of employees covered by work commercial bribery and anti-corruption training / Total number of Board members × 100%.

2、3 % 43.28 38.21 35.24safety liability insurance Note 3: Calculation method: Proportion of management personnel receiving anti-commercial bribery and anti-corruption training = Number of management

personnel receiving anti-commercial bribery and anti-corruption training / Total number of management personnel × 100%.

77 78Sokan New Materials Group Co. Ltd. 2024 Environmental Social and Governance (ESG) Report

Benchmark Index Table

Index Table of Guidelines No. 14 of the Shanghai Stock Exchange for Self-Regulation of Listed

Companies—Sustainability Report (Trial)

Topic Corresponding Section in This Report Topic Corresponding Section in This Report

Topics required to be disclosed under the Guidelines Safety and quality of products and ser-

Quality management of products and services

vices

Climate change tackling Climate change tackling

Data security and customer privacy pro-

Pollutant discharge Emissions management Data security and customer privacy protectiontection

Waste disposal Emissions management Rights interests and benefits of employees

Not applicable. The Company’s operational sites are not located in key protected Employees Employee training and development

Ecosystem and biodiversity protection areas and its production and business activities do not have significant negative Occupational health and safety

impacts on ecosystems or biodiversity. Therefore this topic is not applicable. Due diligence Communication with stakeholders and due diligence

Environmental compliance management Environmental compliance management Communications with stakeholders Communication with stakeholders and due diligence

Energy usage Energy usage Anti-commercial bribery and anti-corrup-

Business ethics

Usage of water resources Usage of water resources tion

Circular economy Circular economy Anti-unfair competition Business ethics

Rural revitalization Contributions to the society and Rural revitalization Voluntarily disclosed topics under Article 5 of the Guidelines

Contributions to the society Contributions to the society and Rural revitalization Chemical safety management Chemical safety management

Innovation-driven R&D and Innovation Corporate governance Corporate governance

Not applicable. The Company is engaged in the manufacture of chemical raw Protection of the rights and interests of Protection of the rights and interests of investors

Ethics of science and technology materials and products and does not operate in fields considered sensitive in terms investors

of science and technology ethics. Therefore this topic is not applicable. Risk control and compliant operations Risk control and compliant operations

Supply chain security Supply chain management

Not applicable. As of the end of the reporting period the Company’s accounts pay-

Equal treatment to small and medi -

able (including notes payable) did not exceed RMB30 billion and did not account for

um-sized enterprises

more than 40% of total assets. Therefore this topic is not applicable.

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