01 About Sanhua Intelligent Feature: Innovating for the Future Foundation of Trust: Quality

About the Report 01 Controls 05

04 Leading the Technological Frontier 25 07 Safety and Security 55

Statement of the Chairman 03 Company Overview 07 R&D Innovation 27 Product and Service Safety and Quality 57

Business Layout 08 Intellectual Property Protection 34 Cyber and Information Security 65

Corporate Culture 10 Sustainable Procurement 70

02 Sanhua Intelligent Controls 05 Feature:Low-Carbon Transition 08 Social Value: Respect

2024 Highlights Overview 11 and Climate Change Response 35 Development and Contribution 75

Responding to Climate Change 37 Labour Rights and Talent Retention 77

Human Capital Development 81

Occupational Health and Safety 83

Corporate Citizens and Public Welfare 89

06 Corporate Governance: Transparency 09 Environmental Protection: Clean

ESG Data and Notes 104 03 ESG Management 13 Responsibility and Value 43 Circular and Natural 91

Indexes 113 ESG Governance Mechanism 15 Corporate Governance 45 Environmental Policies and Management 93

Double Materiality Assessment 17 Risk and Compliance Management 49 Resource Management 97

Contribution to the United Nations 23 Business Ethics 51 Emissions and Waste 100

Sustainable Development Goals (SDGs)

Contents2024 Environmental Social and Governance Report About the Report

About the Report Reporting principles

This report is the second Environmental Social and Governance (ESG) Report published by Zhejiang Sanhua Intelligent Materiality

Controls Co. Ltd. disclosing the Company’s philosophy held the regulations established the measures implemented and The Company identifies the material topics related to its operations that are of concern to stakeholders and focuses on

the results achieved on ESG topics in its operations to all stakeholders. them in this report. While disclosing material topics the Company also considers the characteristics of the industry and

business operations. The process and results of materiality assessment are detailed in the “Double Materiality Assessment”

Reporting Scope section of this report.The reporting scope covers Zhejiang Sanhua Intelligent Controls Co. Ltd. (hereinafter referred to as “Sanhua Intelligent AccuracyControls” or “the Company”) and its subsidiaries . Unless otherwise stated the reporting scope is consistent with the scope This report ensures the accuracy of information to the best of the Company’s ability. For quantitative information the data

of the consolidated financial statements of Sanhua Intelligent Controls (stock code: 002050) for the same period. scope calculation basis and assumptions are clearly explained to ensure that the calculation error range does not mislead

information users. The quantitative information and notes are provided in the “ESG Data and Notes” section of this report.Reporting Period

Balance

The reporting period for this report is from 1 January 2024 to 31 December 2024. The data in this report unless otherwise

The content of this report reflects objective and truthful facts with both positive and negative information about the

specified pertains to this period.Company disclosed impartially. No negative events that should have been disclosed were omitted during the reporting

Reporting Approach period.This report has been compiled in accordance with the Self-Regulatory Guidelines No. 17 for Companies Listed on Shenzhen Clarity

Stock Exchange—Sustainability Report (For Trial Implementation) (April 2024) the Self-regulatory Guidelines No. 1 for This report is published in both Simplified Chinese and English. It includes tables models and other supporting information

Companies Listed on Shenzhen Stock Exchange — Standardised Operations of Companies Listed on the Main Board to aid in the understanding of the textual content. To help stakeholders access the information more quickly this report

(December 2023) the Self-regulatory Guidelines No. 3 for Companies Listed on Shenzhen Stock Exchange — Sustainability includes content indexes.

Report Compilation (January 2025) with reference to Global Sustainability Standards Board (GSSB) GRI Sustainability

Quantification

Reporting Standards (2021) and the United Nations Sustainable Development Goals (SDGs).This report discloses key quantitative information and where possible provides historical data.Data Collection Comparability

The financial data in this report is sourced from the 2024 financial report while other data is sourced from internal For the same quantitative indicators the statistical methods and disclosure approach remain consistent across different

documents and real records of actual operations. reporting periods. If there are changes in data collection measurement or calculation methods the relevant data will be

retrospectively adjusted and the adjustments and reasons will be explained in the notes. This ensures that stakeholders

The financial data in this report is presented in RMB. In case of discrepancies between the financial data in this report and

can conduct meaningful analysis and evaluate the trends in the Company’s ESG data.the Company’s annual financial report the figures in the annual financial report shall prevail.Completeness

Reporting Access The scope of disclosure in this report aligns with the scope of the Company’s consolidated financial statements.This report is available in both Simplified Chinese and English. In case of any discrepancies between the two versions the

Timeliness

Simplified Chinese version shall prevail. The electronic version of the report can be obtained from the Company’s official

This report is an annual report covering the period from 1 January 2024 to 31 December 2024.website the Shenzhen Stock Exchange (http://www.szse.cn) and the CNINFO website (http://www.cninfo.com.cn).Contact Us Verifiability

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

If you have any suggestions regarding this report you can contact us through the following methods: sources and calculation processes disclosed in the report are traceable and can support external verification checks.Address: No. 219 Woxi Avenue Chengtan Street Xinchang Shaoxing Zhejiang China.Email: shc@zjshc.com

01 022024 Environmental Social and Governance Report Statement of the Chairman

Statement of the Chairman

As a global leader in the manufacturing of automotive thermal management system components and refrigeration In Environmental Management we have fully implemented carbon reduction initiatives continually optimizing

and air-conditioning control components we consistently stand at the forefront of industry. We drive industry energy usage efficiency and reducing greenhouse gas (“GHG”) emissions. We are also advancing the development

upgrade through technological innovation and expand our growth boundaries with a global strategic layout. In 2024 of low-carbon products leveraging innovative technologies to contribute to global climate action.we are resolutely advancing accelerating the upgrade of low-carbon technologies deeply engaging in the global

In Employee Management we persist in advancing talent development strategies optimizing our global talent

energy transition and continuously expanding our influence within the global industry value chain. distribution and ensuring diversity and inclusion. We are committed to promoting vocational education and

Industry Upgrade: Shaping the Future through Technology developing the next generation of green technology talent.Technological advancements are reshaping the global industrial landscape with the electric vehicle and refrigeration In Intelligent Manufacturing we continue to optimize energy efficiency in factories driving the upgrade of

industries undergoing profound transformation. We continue to break new ground in our core business areas offering intelligent and digital production processes. In multiple global production bases we are accelerating the adoption of

more efficient and intelligent thermal management solutions to our global clients. automation equipment and data analysis platforms optimizing production workflows and improving efficiency.In we emphasize global collaboration ensuring the stability and sustainability of our

In the Automotive Components sector we have maintained our leadership edge with products such as electronic Supply Chain Management

supply chain. By optimizing procurement strategies we continuously enhance manufacturing efficiency and product

expansion valves electronic water pumps and electric oil pumps covering three critical scenarios: cabinet thermal

quality leveraging our global layout to strengthen supply chain resilience.management battery thermal management and electrical/control system thermal management. These products have

made us a key partner to leading global automotive companies. Through precise temperature control management In Corporate Governance we adhere to principles of transparency compliance and responsibility. We are

we help optimize energy efficiency in new energy vehicles (“NEVs”) enhance driving range and contribute to a more constantly refining our ESG governance structure strengthening data security and ensuring compliance and risk

efficient safer and sustainable future. management to ensure the stable development of the Company.In the Refrigeration and Air-conditioning Product Components sector we drive industry advancement Thanks to our exceptional ESG management practices we have received multiple global ESG recognitions in 2024.through technological innovation actively promoting the use of new eco-friendly refrigerants and heat pump Our ratings with EcoVadis and CDP for climate change have significantly improved reflecting our global leadership

technologies to reduce energy consumption in cooling equipment. Our products including electronic expansion in sustainability.valves four-way reversing valves and micro-channel heat exchangers are widely used in air conditioners

refrigerators washing machines industrial refrigeration cold-chain transport heat pump heating and data centres Our growth journey is a history of transformation driven by technological innovation and a continuous exploration

empowering energy-efficient buildings heating ventilation and air-conditioning (“HVAC”) systems and household of sustainability. We understand that the global industry is undergoing profound changes and we are committed

appliances thermal management systems. to being a practitioner leader and promoter of this transformation. Looking to the future we will continue to

drive technological innovation leverage our global strategic layout and uphold sustainability as our core value

ESG Strategy Upgrade: from Social Responsibility to Long-Term Value Creation collaborating with global partners to create a smarter more efficient and sustainable future.Sustainability for enterprises is not only about economic growth but also about enhancing environmental

responsibility social responsibility and governance capabilities. We recognize that exceptional ESG management Chairman Zhang Yabo

is the foundation for long-term corporate success. In 2024 we have fully upgraded our ESG management system

integrating sustainability principles into business decision-making processes.

03 042024 Environmental Social and Governance Report About Sanhua Intelligent Controls

01

About Sanhua

Intelligent Controls

05 062024 Environmental Social and Governance Report About Sanhua Intelligent Controls

Company Overview Business Layout

Zhejiang Sanhua Intelligent Controls Co. Ltd. was established in 1994. The Company primarily engages in the research Sanhua Intelligent Controls is the world’s largest manufacturer of refrigeration and air-conditioning control components

and development (“R&D”) manufacturing and sales of refrigeration and air-conditioning product components as and a global leader in automotive thermal management system components. In line with the mission to develop an

well as automotive components. With a core focus on the R&D and application of heat pump technology and thermal intelligent low-carbon economy and create a sustainable quality living environment the Company has been dedicated to

management systems the Company is dedicated to developing efficient heat exchange and temperature control the R&D promotion and adoption of thermal management technology providing customers across the globe with energy-

solutions for environmental thermal management. efficient solutions through the Company’s industry-leading products of the finest quality. Embracing globalization the

Over the years the Company has expanded from offering a single valve product to providing a broader range of Company has established a business that spans two major sectors: refrigeration and air-conditioning product components

refrigeration and air-conditioning product components and automotive components. In 2005 the Company was listed on and automotive components.Shenzhen Stock Exchange and was further included in major indices such as the CSI 300 Index SZSE 100 Index MSCI In 2024 the Company achieved significant success in multiple business sectors as follows:

FTSE Russell etc.World’s Largest

refrigeration and air-condition-

Company Profile ing control component manu-

facturer RMB27.947 bn 4252

Global Leading

automotive thermal manage- 2024 Revenue Valid Patents

Company Chinese Name 浙江三花智能控制股份有限公司 ment system component manu-

facturer

Company English Name ZHEJIANG SANHUA INTELLIGENT CONTROLS CO.LTD.Headquarter Address Xinchang County Shaoxing City Zhejiang Province

World’s Largest

market share 100% Global Presence

Listed Date 2005

for 8 major coverage of the World’s top 10 refrigeration and air-conditioning across5 Continents

products categories manufacturers & automobile man-

Stock Code 002050.SZ ufacturers

07 082024 Environmental Social and Governance Report About Sanhua Intelligent Controls

Under the refrigeration and air-conditioning product component business the Company mainly engages in the development and Corporate Culture

application of control components subsystems and technology solutions which empower energy-efficient buildings heating

ventilation and air-conditioning systems and household appliances thermal management systems. The Company is a key suppli-

er of automatic control components and system technology solutions serving the global market for residential and commercial The Company adheres to the development strategy of “focusing on excellence and innovating for success” committed

air-conditioning commercial and industrial refrigeration and small household appliances among others. to reinforcing the leadership in existing product offerings while actively cultivating new drivers for sustained growth. The

Under the automotive components business the Company is committed to offering essential and comprehensive thermal man- Company has established itself as a trailblazer in creating a global network.agement and control solutions for NEVs and providing high-performance products that enhance energy efficiency and reduce The “Sanhua” brand symbolises the “Flower of Management” “Flower of Technology” and “Flower of Talent” representing

emissions for traditional fuel vehicles. The Company spearheads the R&D of values pumps heat exchanges and integrated the Company’s high regard for advanced management practices cutting-edge technology and the acquisition

modules especially under cabinet thermal management battery thermal management and electrical/control system thermal development and retention of talent. By summarising practical experience and refining cultural connotations the Company

management designed to achieve effective thermal management in automotive operations. has developed a corporate culture system centred around the concept of the “Evergreen Tree” which fully guides the

As a pioneer that leads the development of thermal management technologies the Company has accumulated abundant expe- Company’s development process.riences and expertise in developing and manufacturing a considerable number of electric motors. By leveraging the Company’s

Sanhua Evergreen Tree

motor manufacturing expertise scalability and cost-control capabilities the Company has successfully ventured into the produc-

tion of bionic robot electromechanical actuators. The Company strives to provide lighter smaller and more precise electrome-

chanical actuators through independent R&D.The Company has built 8 production bases globally which serve as production centres comprising factory clusters warehouses

and logistics hubs designed to support key nearby markets. Factories across the globe are deployed with R&D resources. The

Company’s R&D system consists of one R&D Center and six R&D bases with three located in China two in the United States

and one in Germany.As of December 31 2024 our products had reached the America Europe Asia Oceania and Africa covering over 80 countries and regions worldwide.The Company has production bases / manufacturing plants / R&D bases in these regions.

09 102024 Environmental Social and Governance Report Sanhua Intelligent Controls 2024 Highlights Overview

02 Sanhua Intelligent Controls 2024 Highlights Overview

Domestic and International ESG Ratings Awards and Recognitions

Global Top 100 China’s Top 500

Automotive Parts Suppliers Most Valued Listed Manufacturing Companies

EcoVadis Sustainability Rating CDP Climate Change Questionnaire Awarded by Automotive News Awarded by Economic Management Research

Score improved from 46 to 57 and awarded the Upgraded from C to B Institute of Machinery Industry China Association

Committed Medal of Plant Engineering China Heavy Machinery

Industry Association

Manufacturing Industry Single Champion 2024 Zhejiang Top 100 High-tech Enterprises

Product — Four-way Reversing Value with the Strongest Innovation Capability

Awarded by the Ministry of Industry and Awarded by Zhejiang High-tech Enterprise

Information Technology China Association

CNINDEX ESG Rating CSINDEX ESG Rating

Upgraded from A to AAA Improved from A to AA

United Nations Global Compact Member National Enterprise Technology Centre

Recognized by UN Global Compact Certification

Issued by the National Development and Reform

Commission China

MSCI ESG Rating Wind ESG Rating National Postdoctoral Research WorkStation Zhejiang Provincial Science & Technology

Maintained at B Maintained at BB Approved by the Ministry of Human Resources Leader Enterprise

and Social Security China Certified by the Department of Science and

Technology of Zhejiang Province

11 122024 Environmental Social and Governance Report ESG Management

03

ESG Management

13 142024 Environmental Social and Governance Report ESG Management

ESG Governance Mechanism

The Company attaches great importance to ESG management based on its operational situation and industry In 2024 the Strategy Management and ESG Committee (hereinafter referred to as “the Committee”) actively improved the

characteristics it refers to domestic and international ESG standards policies industry trends and key focus areas of ESG strategy and development plan. It formulated the Company’s strategies and goals for key topics such as corporate

global ESG ratings. With a clear ESG governance structure the Company continuously improves its ESG management governance sustainable procurement responding to climate change business ethics human capital development etc.performance. The Committee also issued and published Sanhua Intelligent Controls’ Labour and Human Rights Statement Environmental

Management Statement and Business Ethics Statement making ESG management commitments and goals to

demonstrate the Company’s responsibility and determination in ESG governance.The Board of Directors

In 2024 the ESG Working Group coordinated and organised multiple ESG training sessions and interviews. It held 6

Sanhua Intelligent Controls

ESG working meetings collaborating with each functional department and business unit to formulate ESG goals and

ESG Governance Structure The Strategy Management and ESG Committee strategies for improvement along with a detailed work plan. The ESG Working Group actively participated in domestic and

international ESG rating responses and information disclosure collecting the Company’s practices and progress of goals

The ESG Working Group from functional departments and business units and regularly reporting work progress to the Strategy Management and

ESG Committee.Furthermore the Company emphasises the formulation of ESG promotion and capacity. It invited external experts to

Responsibilities and Duties of ESG Governance conduct specialised seminars such as “LCA and Ecodesign” “Science-based Targets for Corporate Climate Risk Responsesand Opportunity Analysis” and “Anti-bribery and Anti-corruption Training” to enhance comprehensive awareness of ESG

The highest governance body for the Company’s ESG management and is responsible for: across all organizational levels from executives to frontline employees.Developing supervising and reviewing the Company’s ESG strategy including strategic direction goal

The Board of

setting and key policies.Directors

Evaluating and monitoring ESG-related risks and opportunities assessing their impacts on the

Company’s long-term development.The specialised working body under the Board of Directors responsible for:

Specialising in ESG-related matters and providing decision-making and research recommendations to the

The Strategy Board.Management and

ESG Committee Irregularly reviewing the implementation of ESG strategies and goals regularly reporting progress to the

Board.Guiding the ESG Working Group and various business units to effectively implement ESG efforts.Composed of the Company’s senior managers with the Company’s Human Resources Director and

Procurement Director as the leaders and delegates from each functional department and each business

unit as members and is responsible for:

Planning the overall strategy and key actions for ESG-related topics assisting departments in breaking

The ESG Working down goals and clarifying responsibilities.Group Holding ESG working meetings to ensure the effective implementation of related measures and reporting

work progress to the Strategy Management and ESG Committee.Leading the planning of ESG information disclosure and preparing the annual ESG report in accordance

with regulations.

15 162024 Environmental Social and Governance Report ESG Management

Double Materiality Assessment

Double Materiality Assessment Process Stakeholder Communication and Due Diligence

In 2024 the Company conducted an assessment of ESG topics from a double-materiality perspective in accordance with Based on the Company’s business and operational characteristics and in line with industry practices the Company has

the Self-Regulatory Guidelines No. 17 for Companies Listed on Shenzhen Stock Exchange—Sustainability Report (For Trial identified its primary stakeholders as investors the Management customers employees government and regulation

Implementation) (hereinafter referred to as the “Guidelines”) for determining the materiality of topics. The assessment also authorities suppliers industry associations and the media. A communication mechanism has been established with

referenced international sustainability information disclosure standards such as the GRI Sustainability Reporting Standards each stakeholder group and regular interactions are maintained through channels such as the Company’s website

(2021 edition) (hereinafter referred to as the “GRI Standards”). The analysis and assessment focused on both impact media meetings reports events interviews surveys visits etc. This ensures timely and continuous communication with

materiality and financial materiality to identify the topics that are of high materiality to the Company. stakeholders.Double Materiality Assessment Process in 2024 Key Stakeholder-Concerned Topics and Communication Methods

Step 1 Stakeholder Topics of Concern Communication Methods and Frequency

Understand the Understand Sanhua Intelligent Controls’ strategic planning business model external market Responding to Climate Change Company website WeChat official account news updates (real-

Company’s Activities and environment and industry trends. Opportunities in Clean Tech time)

Business Relationships Identify and understand the key stakeholders of the Company. Innovation and Intellectual Property Shenzhen Stock Exchange Interaction Platform (real-time)

Rights Investor research activities (irregularly)

Investors Risk and Compliance Management Shareholders' Meetings and earnings briefings (annually)

Step 2 Investors' meetings and roadshow events (annually)

Communicate with stakeholders and identify screen and determine ESG topics relevant to the

Stakeholder Company in conjunction with disclosure standards and industry practices. Product Lifecycle Management Product carbon footprint verification report (irregularly)

Communication Topic Conduct due diligence for senior management employees suppliers customers etc. analyse Responding to Climate Change Pre-sale in-sale and after-sale customer service (real-time)

Identification and Due the significant impact of the topics on the economy environment and society as well as Opportunities in Clean Tech Customer factory audits CSR audits (annually)

Diligence the significant impact on the Company's business model operations development strategy

financial position etc. and identify the impact risks and opportunities of the topics on the Innovation and Intellectual Property

Customer satisfaction surveys (annually)

Company. Rights

Product and Service Safety and

Customers

Quality

Step 3 Cyber and Information Security

Chemicals and Hazardous Sub-A total of 160 quantitative survey questionnaires were distributed and collected. Reasonable

stances

Topic Materiality and applicable evaluation methods (impact materiality: impact scale scope and irremediability;

financial materiality: likelihood of occurrence and extent of financial impact) and materiality Sustainable ProcurementAssessment

thresholds were set.Based on the due diligence results evaluate the materiality and priority of the topics.Corporate Governance Meetings of Board of Directors Committees and Board of

Business Ethics Supervisors (irregularly)Step 4

Risk and Compliance Management Daily work reporting meetings (irregularly)

After review and approval of assessment results by the Company’s Strategy Management Environmental Policies and Man-

Topic Approval and The Management

and ESG Committee form a matrix of topics of materiality disclose the topics of high agement

Disclosure

materiality for 2024 in the ESG report. Responding to Climate Change

17 182024 Environmental Social and Governance Report ESG Management

Stakeholder Topics of Concern Communication Channels and Frequency Based on the ESG governance structure the ESG Working Group coordinates all departments to carry out due diligence to

all stakeholders through daily communication research interviews etc. to identify analyse and evaluate the ESG topics

based on their potential impacts over the short term (0-1 year) medium term (2-5 years) and long term (6+ years) on the Occupational Health and Safety Employee Representative Congress (annually)

Labour Rights and Talent Reten- Employee training and sports/cultural activities (irregularly) economy environment and society as well as significant impacts on the Company’s business model business operations

tion “Department Head’s Mailbox” “Employee Complaint Forms” development strategy and financial position. The assessment also identifies the risks and opportunities that these topics

Employees Human Capital Development and Sanhua Employee Service Platform (real-time) pose to the Company allowing the Company to implement targeted management practices.Business Ethics Employee performance feedback mechanism (annually)

Environmental Policies and Government-enterprise communication meetings (irregularly) 2024 Materiality Topics and Their Impact Risks and Opportunities

Management Government pollution discharge permit management waste

No. Topics Impact Scope Stakeholders Affected Main Risks/OpportunitiesEmissions and Waste management systems (annually)

Chemicals and Hazardous Regular government department filings (irregularly) If environmental compliance management is inadequate such

Substances Environmental Short-term as exceeding pollutant discharge limits or improper waste

1 policies and medium-term disposal the Company may face substantial fines or risks of Government and Water resources management production suspension and rectification and may even face

Regulation Authorities Corporate Governance management long-term legal lawsuits and public resistance leading to financial losses

and reputational damage.Business Ethics Government and

Risk and Compliance regulation authorities Purchasing green electricity and self-generated photovoltaic

Management Energy Medium-term 2 The Management power will bring cost pressure to the Company in the short

management long-term term but optimising energy usage structure can create cost-Community and the public saving opportunities for the Company.The installation and maintenance of water recovery and

Product Lifecycle Management Supplier information security self-assessment actions Water Medium-term recycling systems require significant initial investment and

Circular Economy (irregularly) 3 resources may affect financial performance in the short term. At the long-term

management same time by saving water and recycling water the Company Responding to Climate Change Supplier performance evaluation actions supplier conferences can reduce its dependence on water resources.(annually)Chemicals and Hazardous

Substances Social responsibility surveys on-site audits (irregularly)

Product

Medium-term Suppliers As environmental protection policies and customer

4 lifecycle requirements gradually tighten binding standards on product Product and Service Safety and Daily communication and visits (real-time) long-term

Customers

Suppliers management carbon footprints may emerge in the future.Quality

Sustainable Procurement If pollutant emission management is inadequate the Company Short-term Government and

Business Ethics Emissions and

may face fines lawsuits and regulatory sanctions and may

5 medium-term regulation authorities also encounter public criticism damaging the Company’s

waste

long-term Community and the public reputation and even affecting production permits and business

development.Implementing circular economy provides the Company with

opportunities to reduce resource costs enhance supply

Innovation and Intellectual External exhibitions industry exchange meetings (irregularly) Circular Medium-term 6 Suppliers chain resilience and explore new business areas. Through

Property Rights economy long-term innovative recycling and reuse models the Company can not Internal technical exchange meetings (irregularly) only improve competitiveness but also attract consumers and

Opportunities in Clean Tech

Industry Associations investors who are focused on sustainability.Investors

Short-term Customers Building new factories in areas vulnerable to extreme weather

Responding to

7 medium-term The Management (floods high temperatures typhoons) may pose a risk of Environmental Policies and Media reports (irregularly) climate change production stoppages and work delays due to the damage to long-term Suppliers

Management the Company infrastructure caused by severe weather.Company website WeChat official account news updates (real- Community and the public

Responding to Climate Change time)

Community and the Corporate Citizens and Public Public welfare and volunteer activities (irregularly) Investors Seizing opportunities in clean tech not only promotes the Opportunities in Medium-term

Public 8 Customers Company’s green transformation but also helps it maintain Welfare Clean Tech long-term a competitive advantage amid increasingly stringent Industry associations environmental regulations and market demand shifts.

19 202024 Environmental Social and Governance Report ESG Management

No. Topics Impact Scope Stakeholders Affected Main Risks/Opportunities Conclusion of Materiality Assessment

Suppliers

Chemicals If chemical management is improper it could cause safety

Medium-term

9 and hazardous Customers incidents harm employee health and result in direct financial losses

2024 Materiality Matrix

long-term Government and and reputational damage. If products contain harmful substances substances

regulation authorities exceeding the standard limit it will affect business orders.Highest

Labour rights

Medium-term If employee recruitment management is poor there are risks of

Responding to Climate Change

10 and talent Employees forced labour child labour etc. The Company will face penalties

long-term

retention from local governments damaging its public image and reputation.Innovation and Intellectual Property Rights

Product and Service Safety and Quality

The Company’s occupational health and safety facilities and Labour Rights and

equipment are widely distributed. If supervision is inadequate Talent Retention Sustainable Procurement

Occupational Short-term safety hazards may not be detected in time and employees Human Capital

11 health and medium-term Employees may fail to wear protective equipment properly. If government Development Opportunities in Clean Tech

safety long-term and regulation authorities discover these problems and issue Emissions and Waste

administrative penalties the Company will face negative impacts Chemicals and Energy Management

and fines.Water Resources Hazardous Substances

Human capital Medium-term Increasing employee development and training helps the Company Management

Occupational Health and Safety

12 Employees cultivate high-quality core talent improve teamwork and enhance

development long-term Circular Economy Business Ethicsproductivity.Product Lifecycle Management

Innovation and Short-term Investors Through technological innovation and business model

Corporate Citizens and Public Welfare Risk and Compliance Management13 intellectual medium-term Customers innovation the Company can improve operational efficiency

property rights long-term Industry associations reduce costs and attract more investors and customers.Environmental Policies and Management

Product and Short-term If the Company neglects product and service safety and Suppliers

14 service safety medium-term quality management it may lead to product defects or safety Cyber and Information Security Customers incidents. Recalls and compensation losses will result in direct

and quality long-term financial costs and affect market share and customer loyalty. Corporate Governance

Cyber and If the Company fails to effectively protect customer data and

Medium-term Suppliers

15 information privacy it may lead to data breaches privacy violations and

long-term Customers cyberattacks resulting in legal lawsuits regulatory penalties

security and reputational damage.If environmental and social risks in the supply chain are not

Short-term

Sustainable Suppliers effectively managed it may result in environmental pollution

16 medium-term labour rights violations and other issues which will affect the procurement Customers

long-term Company’s reputation and disrupt the stability and long-term

sustainability of the supply chain.Corporate Short-term By supporting social development the Company can not only Lowest Materiality to the Company's finance Highest

17 citizens and medium-term Community and the public create positive impacts but also enhance employee cohesion

public welfare long-term and social recognition.Government and

Corporate Medium-term Good corporate governance helps the Company improve Only Impact Materiality Both Financial Materiality and Impact Materiality

18 regulation authorities governance performance promoting business sustainability

governance long-term The Management and market adaptability.Neither Financial Materiality nor Impact

Only Financial Materiality Government and Materiality

regulation authorities If anti-commercial bribery and anti-corruption measures

Medium-term

19 Business ethics Employees are ineffective the Company will face increased risks of

long-term legal actions and regulatory penalties potentially leading to Note: Among the 21 topics set in the Guidelines the Company does not involve “Ecosystem and Biodiversity Protection” or “Ethics The Management significant financial losses and reputational damage. of Science and Technology”; “Stakeholder Engagement” and “Due Diligence” are necessary processes for the Company to identifySuppliers and analyse ESG topics which are addressed in the “Double Materiality Assessment" section and are not included as ESG topicsin the “Materiality Matrix”; the remaining topics are addressed in the main body of the report or in the indexes. The Company has

Government and independently identified topics such as “Corporate Governance” “Risk and Compliance Management” “Opportunities in Clean Tech”

Risk and Short-term regulation authorities If the Company fails to conduct timely compliance and risk “Chemicals and Hazardous Substances” and “Product Lifecycle Management” all of which are addressed in the corresponding

20 compliance medium-term Investors management the likelihood of violations increases and the

chapters of the report.management long-term Company will face legal lawsuits and public pressure.The Management

2122

Materiality of economic social and environmental impacts2024 Environmental Social and Governance Report ESG Management

Contribution to the United Nations Sustainable Development Goals (SDGs)

SDGs

The proportion of electricity generated The proportion of recycled packaging The coverage of anti-discrimination and

Metrics Greenhouse gas emission intensity Workplace injury rate Average training hours per employee

from renewable sources materials for finished products anti-harassment training

Reduce greenhouse gas emission intensity

by over 30% from 2020 levels by 2030 The proportion of recycled packaging Achieve over 95% coverage in anti-

The proportion of electricity generated from Reduce workplace injury rate by 5% from Increase average training hours per

Targets Achieve carbon neutrality by 2050 and strive materials for finished products reaches 25% discrimination and anti-harassment training renewable sources remains ≥15% annually 2024 to 2026 compared to the previous year employee by 30% from 2022 levels by 2030

for full product lifecycle carbon neutrality by by 2030 by 2030

2060

Average training hours per employee was

Greenhouse gas emissions per unit revenue The proportion of electricity generated from The proportion of recycled packaging The coverage rate of anti-discrimination and

2024 Progress Workplace injury rate was 0.30% 39.66 hours an increase of 29% compared

are 0.127 tCO2e/RMB10000 renewable sources was 16.00% materials for finished products was 22.07% anti-harassment training was 86%to 2022 levels

Gradually phased out high energy

consuming production equipment

such as transformers air conditioners Installed distributed photovoltaic power Conducted anti-discrimination and Explored the application of green

air compressors and motors and generation energy storage facilities and Strengthened employee health and safety Developed targeted training programs for anti-harassment training ensuring no packaging including foldable reusable

continuously applied smart energy smart microgrid systems. protection mechanisms ensured adequate different levels and job categories covering discrimination in hiring compensation Annual Key Actions packaging leased recyclable packaging

systems. rest time and reduced repetitive strain job skills professional knowledge and training promotion opportunities etc.Purchased green electricity from renewable and reducing packaging air transport injuries. management capabilities. based on race religion gender nationality

Invested heavily in R&D for new energy sources such as solar and wind. volume. age marital status or disability.vehicle thermal management technology

and eco-friendly refrigerants.

23 2404 Feature

Innovating for the

Future Leading the

Technological Frontier

Topics

Innovation and Intellectual Property

Rights Opportunities in Clean Tech

SDGs

R&D innovation achievements

R&D investment Revenue proportion Annual patent Authorised

applications patents granted

RMB1351798800 4.84%

1341460

25 262024 Environmental Social and Governance Report Feature: Innovating for the Future Leading the Technological Frontier

Sanhua Intelligent Controls ad- Innovation and Intellectual Property Management System R&D and Innovation

heres to the development strategy Governanceof “focusing on excellence and in- R&D and Innovation Management StructureEstablish an R&D and innovation management structure based on anovating for success” and strictly “Marketing Department – Technical Management Departments of Busi- The Company continuously improves its R&D and innovation management structure. Theness Units” framework and formulate management regulations for tech-

nology development and design review. Marketing Department is responsible for market research and product strategy while the technical complies with the Law of the Peo- Business unit technical departments collaborate with development man- management departments of business units oversee the large-scale production and optimisation

ple’s Republic of China on Scientific agement departments to carry out intellectual property management. of R&D outcomes actively promoting the transformation of innovative achievements.and Technological Progress the

R&D and Innovation Management Structure

Patent Law of the People’s Republic Strategy

Marketing Department Technical Management Departments of Business Units

of China and other relevant laws Develop and adjust product R&D strategies and plans in response to

identified market risks policy and regulatory risks and product and ser-

regulations and requirements. Conducts regular market research monitors market Responsible for the large-scale production and man-vice opportunities. trends and builds an information resource database. ufacturing of R&D outcomes. Implements more en-

Position clean technology as a key strategy leveraging market opportu-

The Company has established ergy-efficient technological solutions based on local nities in the low-carbon economy to develop more stable safer precise Participates in formulating product strategies con- policies market demand and operational costs.and eco-friendly solutions. ducts in-depth evaluations of technical targets and

an innovation and intellectual products provides R&D recommendations and over-

sees the setting and execution of product line goals.property management system to

Impacts Risks and Opportunities Management

standardise the R&D process and

The Company has established internal regulatory frameworks such as the Regulations of

drive technological advancements Improve R&D innovation management processes continuously optimis- Technology Development Project the Regulations of Scientific and Technological Project

ing full-value chain management in the refrigeration and air-conditioning

transitioning from a “cost leading” product components and automotive components sectors. Management and Awards the Regulations of Design Review Management the Regulations of

Enhance internal management and external collaboration mechanisms Technical Review Management and the Control Procedures for New Product Development. By

model to a “technology leading” by engaging in industry-academia-research projects with universities and

conducting R&D innovation training programs to strengthen employees’ maintaining a structured R&D process and continuous investment in research the Company

model. innovation capabilities. accumulates technological expertise and expands market opportunities.R&D and Innovation Strategy

Metrics and TargetsThe Company adheres to the strategy approach of “reserve one generation develop onegeneration and apply one generation” establishing a comprehensive talent acquisition and Cover key metrics such as R&D investment valid patent applications and

authorised patents. internal training system to build a highly skilled workforce. By leveraging cutting-edge technology

the Company continues to expand into international markets increasing R&D investment to drive

breakthroughs and applications of key technologies.Through market research and policy tracking the Company identifies risks and opportunities

converting external changes into internal R&D directions. It regularly evaluates the financial

impact of R&D innovation risks and adjusts its R&D strategies accordingly ensuring that research

outcomes serve as a driving force for business growth.

27 282024 Environmental Social and Governance Report Feature: Innovating for the Future Leading the Technological Frontier

R&D and Innovation Risks and Opportunities R&D and Innovation Management Mechanism

Risk/Opportunity Type Description Financial Impact The Company promotes digital process of the product lifecycle management improves R&D

Failure to continuously launch competitive new products or technologies management efficiency enables end-to-end digital operations and continuously optimises the full-

may lead to pressure from domestic and international competitors posing

R&D costs increase value chain management process for its products by identifying market demands assessing risks and a risk of market share decline.Market Risk

If the market trend changes such as the negative growth of heat pumps Revenue decreases opportunities developing management tools and monitoring goals and implementation progress.due to the unsatisfactory effect of switching from gas to heat pumps in

Europe the Company's products will be delayed or inventory will be caused.R&D and Innovation Management Process

Governments worldwide are introducing stricter environmental regulations

such as the European Union’s F-Gas Regulation and the relevant regulations

Policy and Regulatory Risk on low-GWP refrigerant alternatives in the United States which have led

Operating costs

to increasing demands for the reduction of fluorinated greenhouse gases. increase

Failure to promptly adjust production and sales strategies could result in Conduct regular research on customer demands monitor market and industry

compliance risks restricted market access fines or sanctions. Identification development trends establish a resource database and identify current and

anticipated risks and opportunities in R&D innovation.The transition to green low-carbon technologies in NEVs industry presents

Product and Service opportunities for technological innovation and market expansion. The R&D costs increase

Company proactively explores advancements in NEV thermal management

Opportunity technology and collaborates with leading research institutions to gain a Revenue increases

competitive edge in industrial transformation.The development of new energy promotes the growth of thermal Based on identified risks and opportunities analyze the associated financial impact

management demand in fields such as photovoltaic inverters and energy Evaluation comprehensively evaluate the feasibility and expected benefits of R&D projects and

storage. The development of AI accelerates the expansion of data centres formulate product R&D directions and strategies for the next 3–5 years.Market Opportunity and promotes the upgrading of cooling technology. The Company can Revenue increases

expand product applications by leveraging the advantages of thermal

management technology and seize the market opportunities brought by the

rapid development of new energy and data centres.The Company has always been committed to providing customers across the globe with more efficient smarter Continuously increase R&D investement emphasize industry-academia-

and cleaner thermal management solutions. Focusing on the core strategy of clean technology through Management research collaboration and international R&D deployment and drive technological

innovation through comprehensive management and incentive mechanisms to

continuous innovation and accumulation and leveraging the transformative impact of a green future significant

enhance market competitiveness.progress has been made in core business areas such as automotive components and refrigeration and air-

conditioning product components helping customers achieve sustainability commitments.Under the automotive components business the Company continues to expand its business leading advantages

with products such as electronic expansion valves electronic water pumps and electric oil pumps covering three Business units formulate full-value chain planning for products setting

key scenarios: cabinet thermal management battery thermal management and electrical/control system thermal

comprehensive targets related to cost integration and other key product attributes.management. In 2024 the Company's revenue from the automotive components business was RMB11386559

thousand accounting for 40.74% of the total revenue. Monitoring Through the process of "collecting customer needs – analyzing competing

products – proposing product solutions – conducting review meetings" the

Under the refrigeration and air-conditioning product components business the Company actively promotes Company tracks the progress of R&D projects and evaluates the achievement of

the application of new eco-friendly refrigerants and heat pump technology committed to reducing the energy objectives.consumption of refrigeration equipment. The Company's electronic expansion valves four-way reversing valves

micro-channel heat exchangers and other products are widely used in air conditioners refrigerators washing

machines industrial refrigeration cold-chain transport heat pump heating and data centres empowering

energy-efficient buildings heating ventilation and air-conditioning systems and household appliances thermal

management systems. In 2024 the Company's revenue from the refrigeration and air-conditioning product

components business was RMB16560605 thousand accounting for 59.26% of the total revenue.

29 302024 Environmental Social and Governance Report Feature: Innovating for the Future Leading the Technological Frontier

R&D and Innovation Actions and Achievements Key Honors and Awards of R&D and Innovation

Key Actions and Achievements of R&D and Innovation in 2024 National Enterprise Technology Centre Post-doctoral Research Workstation

Eco-Friendly Refrigerant Substitution National Development and Reform Commission Ministry of Human Resources and Social Security

National Postdoctoral Committee

Actively explored refrigerant substitution pathways in the air-conditioning industry expanding the application of clean

refrigerant technologies such as CO ? refrigerant and R134a refrigerant. The Company’s related products offer advantages in

energy conservation environmental protection high-pressure resistance and low global warming potential (“GWP”).The brazed plate heat exchanger adopted R290 eco-friendly refrigerant (low GWP value). Compared to its previous generation

refrigerant charge was reduced by 37% while heat exchange performance improved by more than 20% on average. National Technology Innovation Demonstration Provincial High-Tech Enterprise

Enterprise

Thermal Management Technology Department of Science and Technology of Zhejiang Province Ministry of Industry and Information

Department of Finance of Zhejiang Province State Taxation Technology China

The “Key Technologies and Industrial Applications of Intelligent Low-Carbon Thermal Management for NEVs” project achieved Administration Zhejiang Provincial

substantial innovation reaching an internationally leading level.The Company’s thermal management valve island integration modules electronic expansion valves battery coolers and

electric oil pumps held the largest global market share.The electronic expansion valve was awarded the “Manufacturing Industry Single Champion Product (2023–2025)” by the Zhejiang Provincial Key Enterprise Research Institute for Zhejiang Provincial Science and Technology Leading

Ministry of Industry and Information Technology (MIIT) China. Intelligent Control for Refrigeration Household Appliances Enterprise

Department of Science and Technology of Department of Science and Technology of

Energy Storage Technology Zhejiang Province Zhejiang Province

The full-stack energy storage thermal management solution won the “2024 Best Liquid Cooling Technology Solution Award”

and the “2024 Best Thermal Management Technology Solution Award” in China’s energy storage industry.National Manufacturing Industry Single

Industry-Academia-Research Collaboration Zhejiang Provincial Industrial Internet Platform Champion Enterprise

Actively built an “Industry-Academia-Research” platform collaborating with Tsinghua University Shanghai Jiao Tong Department of Economy and Information of Ministry of Industry and Information Technology

University Xi’an Jiaotong University South China University of Technology National University of Singapore University of Zhejiang Province China

Illinois and Beijing University of Chemical Technology etc. to conduct joint research projects. Multiple research results were

published in top-tier academic journals.Industry Development Collaboration“Most Influential Enterprise in Automotive“Aipulanke Core Technology Award”Thermal Management Industry”Led and participated in the formulation of one national standard five industry standards and four group standards such as

Maximum allowable values of energy efficiency and energy efficiency grades for cold store (box) and refrigerant compressor

condensing unit Technical Specification for energy storage battery integrated cooling system Liquid cooled heat sinks for Appliances & Electronics World Expo (“AWE”) World Vehicles Thermal Management System Tech

energy storage battery etc. Innovation Conference (“WVTMS”)

Actively engaged in industry symposiums and technical exchange meetings to stay informed on industry developments.

31 322024 Environmental Social and Governance Report Feature: Innovating for the Future Leading the Technological Frontier

Case Recognised as a National Manufacturing Industry Single Champion Enterprise Intellectual Property Protection

Sanhua Intelligent Controls has established internal regulations such as the Regulations of Intellectual Property the

In March 2024 Zhejiang Sanhua Automotive Components Co. Ltd. (referred Regulations of Patent Work and the Regulations of Intellectual Property Rewards and Remuneration to define the

to as “Sanhua Automotive”) a subsidiary of the Company was awarded reward mechanisms for the application and authorisation of intellectual property rights such as patents technical

the Manufacturing Industry Single Champion title by MIIT for its thermal secrets and software copyrights.management integrated component products. These products integrate Technical personnel from each business unit are responsible for identifying intellectual property opportunities

refrigerant-side modules water-side modules control modules and damping compiling documents submitting applications and managing follow-up procedures. The development management

modules into highly integrated structural components reducing space

department handles the registration application approval and archiving of intellectual property rights.occupation and enabling vehicle lightweighting which in turn lowers carbon

emissions during end-use. In 2024 the Company invited external experts multiple times to provide training on Theory of Inventive Problem

The Company continuously enhances automation levels in production Solving (TRIZ) and conducted customised workshops on R&D project management and popularisation of

assembly logistics and inspection processes driving the upgrade of intelligent intellectual property laws. These initiatives expanded employees’ innovative thinking.manufacturing. Core components of Sanhua Automotive’s products have

achieved independent processing. Equipment such as turret machines CNC Zhejiang Sanhua Automotive Components Co.machines and punching machines have been fully automated with robotic Ltd. was awarded “National Manufacturing Case Patent Law Knowledge Trainingloading processing and unloading establishing a technology-driven new- Industry Single Champion Enterprise” by MIIT

quality productivity model. In January 2024 following the enactment of the Implementation Regulations of the Patent Law of the People’s

Republic of China and the Patent Examination Guidelines the Company promptly organised a training session

to interpret the revision to the Patent Law implementation regulations and examination guidelines. Nearly 60

key personnel responsible for intellectual property management and operations across various business units

attended the training. The course covered revised provisions on patent applications examinations and rights

Case NEVs Smart Low-Carbon Thermal Management Technology Received Multiple Patents protection enhancing participants’ ability to apply patent regulations in practice.In February 2024 Sanhua Automotive’s project on “Key Technologies and Industrial Applications of Intelligent Low- To ensure effective R&D management the Company has established reasonable R&D targets and regular progressCarbon Thermal Management for NEVs” underwent a scientific evaluation organised by the Technology Evaluation

Committee of the Chinese Association of Refrigeration. To address the challenge of heat transfer enhancement review mechanisms. It adopts the Objectives and Key Results (OKR) method to track the progress and achievement

in the confined spaces of NEVs with high heat flux densities the Company proposed a new flow path damping of R&D objectives and conducts monthly quarterly and annual assessments of technical R&D personnel. The

and fluid distribution configuration and invented novel fish-scale chevron wave and dot-wave heat exchanger Company continues to increase its investment in R&D related to clean technology including R&D expenses in the

structures. These innovations enabled uniform flow distribution between plates significantly improving heat flux fields of NEVs thermal management technology and eco-friendly refrigerant technology. The Company's strategic

density in heat exchangers. goal is to increase investment in R&D of clean technologies and plans to increase R&D investment by more than

This project has resulted in 16 core international patents and 52 national invention patents as well as the revision 10% year-on-year in 2025 compared to 2024.and formulation of 12 industry and group standards. It represents substantial innovation in high-efficiency

heat exchanger technology for NEVs high-precision electronic expansion valve technology compact thermal Intellectual Property Performance in 2024

management valve island integration technology and intelligent manufacturing systems for thermal management

products reaching an internationally leading level.Metrics 2024 Progress

Annual patent applications (units) 1341

Annual patents granted (units) 460

Among them invention patents (units) 185

Utility model patents (units) 223

Design patents (units) 52

33 3405 Feature

Low-Carbon

Transition and Climate

Change Response

Topics

Responding to Climate Change

Energy Management

SDGs

Carbon Neutrality Declaration

Committed to reducing carbon emission intensity by more than 30% from 2020 levels by 2030

achieving carbon neutrality by 2050 and striving for full product lifecycle carbon neutrality by

2060.2024 Environmental Social and Governance Report Feature: Low-Carbon Transition and Climate Change Response

Responding to Climate Climate Change Management System Climate Change Governance Structure

Change Governance The Board of Directors as the highest-level governing body is fully responsible for formulating and

overseeing climate-related strategies targets and policies to ensure alignment with the Company’s long-term

Establish a climate change governance structure composed of the Board

of Directors the Strategy Management and ESG Committee and the ESG development goals. The Board conducts regular assessments of climate-related risks and opportunities Faced with the severe challenges of global

Working Group formulate relevant management regulations. monitoring their potential impacts on the Company’s long-term development.climate change Sanhua Intelligent Con-

trols recognises the profound impact cli- The Strategy Management and ESG Committee conducts in-depth research on climate-related strategic

issues and provides advisory recommendations to the Board. The Committee regularly reviews the execution

mate change has on corporate operations Strategy

of climate-related strategies and targets promptly identifying and addressing implementation challenges

business expansion and supply chain col-

while reporting progress to the Board.laboration. The Company actively responds Conduct comprehensive identification and analysis of key climate-

related risks and opportunities through department interviews and The ESG Working Group is responsible for formulating detailed climate change response plans and actionto China’s “2030 Carbon Peaking and 2060 expert assessments evaluating their current and anticipated financialCarbon Neutrality” goals and strictly com- impacts on strategic planning and business models.plans coordinating departments to ensure effective execution of climate-related targets and collaborating

with business units to ensure company-wide implementation of climate initiatives while tracking and

plies with local GHG emissions-related reporting progress across departments.laws regulations and requirements. The Impacts Risks and Opportunities Management

Company proactively identifies climate-re-

lated risks and opportunities relevant to Utilise a systematic process to identify assess prioritize and monitor Climate Change Strategy

climate-related risks and opportunities integrating them into the overall

its business incorporating climate change corporate risk management framework. The Strategy Management and The Company follows the International Financial Reporting Standards Sustainability Disclosure Standard

into its strategic planning and operational ESG Committee reviews and approves all evaluations and analyses. No.2 – Climate-related Disclosure (IFRS S2) framework for classifying and defining climate-related risks

practices to effectively manage associat- Develop and implement systematic energy conservation and emission and opportunities aligning with its business characteristics and market conditions. Based on likelihood of

reduction projects increasing R&D investments to lower the carbon

ed challenges and potential impacts. footprint of products. occurrence and extent of impact the Company assesses and prioritizes the materiality of climate-related

risks and opportunities ultimately identifying two major risks and two major opportunities.The Company’s current GHGs primarily

stem from direct emissions from opera- Metrics and Targets

tions (e.g. combustion of gasoline diesel

and natural gas) indirect emissions from Track and analyse GHG emissions and other relevant metrics and

continue to track the progress of the Company’s carbon reduction and

purchased electricity and steam and indi- carbon neutrality targets to evaluate the effectiveness of climate change

rect emissions from value chain including management.upstream leased assets downstream

transportation and distribution and down-

stream leased assets.

37 382024 Environmental Social and Governance Report Feature: Low-Carbon Transition and Climate Change Response

Dimensions of Climate-related Risk and Opportunity Assessment

Risk/Opportunity

Description Affected Value Chain Financial ImpactType

Time Horizon of Impact

The Company proactively complies with Production Costs: R&D Climate-related risks and opportunities are categorised into short-term (0–3 years) mid-term (4–10 years) and long- hydrofluorocarbon (“HFC”) phase-out investment increases

term (11–30 years) based on their expected impact period. Policy and policies and collaborates with leading Revenue: revenue from

regulatory Self-owned operations

Short-term: Focus on current climate change factors and trends ensuring the effectiveness of the climate technology institutions to advance the related product sales opportunity

management system by improving the identification of compliance obligations potential impacts and development and application of eco- increases

immediate risks and opportunities. friendly alternatives.Mid-term: Address potential future developments including new technology advancements changes in The Company’s proactive efforts in Production Costs: R&D

environmental legislation and standards and emerging market trends. advancing NEVs thermal management investment increases

Long-term: Consider broader climate change effects such as increasing resource scarcity and social Market system technologies align with the

Revenue: revenue from

Self-owned operations

transformations and evaluate their impact on the Company’s long-term sustainability business model opportunity growing demand for low-carbon high- related product sales

supply chain and product lifecycle. efficiency solutions enhancing its increases

market competitiveness.Extent of Impact Risks and Opportunities Management Mechanism

Assess based on financial impact regulatory and compliance requirements and time horizon dimensions. The Company has established a systematic process for identifying assessing prioritising and managing

climate-related risks and opportunities fully integrating them into the overall corporate risk management

framework. The Strategy Management and ESG Committee is responsible for reviewing and approving climate-

Likelihood of Occurrence related assessments and analyses to ensure the scientific accuracy and effectiveness of response measures.Evaluate based on probability of occurrence geographic factors and industry relevance.Climate-related Risks and Opportunities Management Process

Using a systematic approach the Company analyses operations supply chains

Identification and market trends to identify climate-related risks and opportunities including

Climate-related Risks and Opportunities regulatory changes shifts in market demand and the impact of climate events.Risk/Opportunity

Description Affected Value Chain Financial ImpactType Analytical tools are employed to assess the identified risks and opportunities

Evaluation evaluating their potential financial impact likelihood of occurrence and extent of Operating Costs: facility

Frequent extreme weather events (e.g. financial influence on business operations.Upstream value chain maintenance expenses increase

heatwaves heavy rainfall floods) may

Physical - acute self-owned operations

disrupt production facilities and supply Asset Depreciation: accelerated

physical risk downstream value depreciation of infrastructure Based on the assessment results climate-related risks and opportunities are chains leading to delays in production and

chain may lead to premature Prioritization prioritized according to their relevance to the Company’s products and their level delivery as well as additional repair costs.decommissioning of materiality. These are then integrated into the Company's risk management

system to clarify priority areas for action.Policy-driven requirements for clean

energy adoption may result in higher initial

Transition – policy Operating Costs: electricity

procurement costs for green electricity Self-owned operations Targeted response strategies are developed including risk mitigation measures

and regulatory risk expenses increase Management

compared to traditional power sources and opportunity management plans which are embedded into the Company’s

increasing overall operational costs. business decision-making and operational processes.

39 402024 Environmental Social and Governance Report Feature: Low-Carbon Transition and Climate Change Response

Climate Change Management Actions GHG Emissions Distribution in 2024

The Company actively responds to climate change by implementing various measures to enhance risk

GHG Emissions by Business Sector

management and climate resilience. In terms of risk response the Company has developed detailed

emergency response plans to ensure rapid action during extreme weather events minimising production

downtime and ensuring employee safety. For clean energy adoption the Company has installed distributed

photovoltaic (“PV”) generation and energy storage facilities while purchasing green power certificates to 63.64%

support clean energy development and reduce carbon emissions. In the optimisation of energy management

the Company has introduced a smart energy system to monitor real-time energy consumption across

business units workshops and high-energy-consuming equipment. This system aggregates and analyses

total energy consumption and structure to improve overall energy efficiency.The Company’s eco-friendly refrigerant technology sector is susceptible to climate transition risks while

its NEVs thermal management technology sector aligns with climate-related opportunities. As climate 36.36%

risks intensify and demand for low-carbon technologies increases the Company has adjusted its business

model by expanding investments in low-carbon and eco-friendly technologies enhancing the environmental

Refrigeration and air-conditioning product components Automotive components

sustainability of its products and services and driving a transition toward greener and more sustainable

business operations.Climate Change-related Metrics and Targets

GHG Emissions by Source

In 2024 the Company strategically set a GHG emissions reduction target of reducing carbon emission

intensity by more than 30% from 2020 levels by 2030 and a long-term goal of achieving carbon neutrality by 18.21%

2050 and striving for full product lifecycle carbon neutrality by 2060.

GHG Emissions in 2024

5.58%

Metrics 2024 Progress

Total amount of GHG emissions (Scope 1 and Scope 2) (tCO2e) 356264.97

GHG emissions (Scope 1) (tCO2e) 64880.18 76.21%

GHG emissions (Scope 2) (tCO2e) 291383.89

GHG emissions (Scope 3) (tCO2e) 77049.86

Combustion energy Electricity Steam

GHG emissions per unit of revenue (Scope 1 and Scope 2) (tCO2e/RMB10000) 0.127

414206

Corporate Governance:

Transparency

Responsibility and Value2024 Environmental Social and Governance Report Corporate Governance: Transparency Responsibility and Value

Corporate Governance Corporate Governance Structure

Sanhua Intelligent Controls strictly complies with the Company Law of the People’s Republic of China the Securities Law The Company has established a corporate governance framework centred on the Shareholders’ Meeting with the Board

of the People’s Republic of China the Self-regulatory Guidelines No. 1 for Companies Listed on Shenzhen Stock Exchange — of Directors Board of Supervisors and Senior Management working together to ensure effective checks and balances.Standardised Operations of Companies Listed on the Main Board issued by Shenzhen Stock Exchange and other relevant Internal governance policies such as the Articles of Association the Rules of Procedure of the Shareholders’ Meeting the

laws and regulations. The Company remains committed to corporate governance under the rule of law laying a solid Rules of Procedure of the Board of Directors and the Regulations of Investor Relations Management have been formulated

foundation for its development with a high-standard governance system. to standardise corporate governance procedures ensuring transparent and fair decision-making.Corporate Governance Management System Corporate Governance Structure

Governance

Establish a corporate governance structure consisting of the Shareholders’ Meeting Board of Directors Board of Supervisors and Shareholders’ Meeting

Senior Management.The Board of Directors has four specialised committees: the Audit Committee the Nomination Committee the Remuneration and The Board of Supervisors

Evaluation Committee and the Strategy Management and ESG Committee.The Board of Directors

Strategy

Identify corporate governance-related risks and opportunities such as related party transactions board independence and conflict of The Strategy Management The Nomination The Remuneration and The Audit Committee

interest. and ESG Committee Committee Evaluation Committee

Strengthen board independence and enhancing conflict of interest management help improve transparency build shareholder trust

and mitigate regulatory risks thereby enhancing decision-making efficiency and compliance.Impacts Risks and Opportunities Management The Shareholders’ Meeting serves as the highest authority within the Company responsible for reviewing strategic

directions and major decisions to ensure operational transparency and maximise shareholder interests. The Board

Regularly evaluate the impact of legal and regulatory changes shareholder expectations and market trends on the corporate governance of Directors consists of 9 members including 3 independent directors and 1 female director. To ensure professional

system monitor related risks and opportunities and develop response plans. specialisation and operational efficiency the Board has established the Strategy Management and ESG Committee the

Ensure continuous optimisation of the governance structure through periodic performance monitoring and strategic adjustments. Audit Committee the Nomination Committee and the Remuneration and Evaluation Committee. The Board of Supervisors

reports to the Shareholders’ Meeting and supervises the performance of the Board of Directors and Senior Management

and actively monitors corporate operations protects shareholder rights and ensures that decision-making processes

comply with legal and regulatory requirements.Metrics and Targets

According to the Articles of Association the Company clarifies that the Shareholders' Meeting has the authority to elect

Review key governance metrics such as the number of information disclosure announcements and investor research activities to and replace non-employee representative directors and supervisors in accordance with the law and to decide on their

ensure timely and accurate disclosure strengthening communication transparency. remuneration matters. The Board of Directors and the Board of Supervisors propose a compensation plan which is

reviewed and determined by the Shareholders' Meeting regarding the amount and payment method of the compensation.

45 462024 Environmental Social and Governance Report Corporate Governance: Transparency Responsibility and Value

The Nomination Committee is responsible for nominating and electing Board members ensuring that they possess In terms of compensation management the remuneration package for executive directors includes base salary performance-

professional expertise and extensive experience to effectively drive the Company’s strategic initiatives. As of the end of the based salary and position-related allowances/subsidies. To ensure alignment between the personal interests of directors

reporting period the Nomination Committee comprised 3 members including 2 independent directors meeting corporate and the Management with the Company’s long-term development goals their compensation policies are closely linked

governance requirements and best practices to maintain the Nomination Committee’s independence and impartiality. to the Company’s sustainability and ESG objectives. The Board incorporates the Company’s ESG performance into the

Management’s performance evaluations including safety production (e.g. workplace injury rate) and compliance and internal

control performance (e.g. audit issue rectification rate) which serve as key factors in determining executive compensation.

2024 Directors Supervisors and Senior Management Composition & Meeting Summary

Information Disclosure and Investor Relations Management

Board of Directors Board of Supervisors and Senior Management

In terms of information disclosure the Company has designated Securities Times Shanghai Securities News and CNINFO

website as its official disclosure channels to ensure authenticity accuracy timeliness and accessibility of corporate

Board of Directors Independent Directors Female Director

information. Additionally the Board Secretary is responsible for managing investor relations organising and implementing

9 3 1 daily investor relations management and responding to investor inquiries through phone email and the interactive members members member

platform. These efforts strengthen communication with investors and fully safeguard their right to information. In 2024 the

Company published 196 announcements and other disclosures via public channels and responded to 108 investor inquiries

Board of Supervisors Employee Supervisor on the interactive platform.

3members 1member The Company has established a reasonable profit distribution policy to ensure that dividend payments align with its long-

term development strategy. Based on business performance capital needs and shareholder returns the Company will

reasonably arrange cash dividends continuously enhancing shareholder returns and corporate value.Meetings of the Three Governing Bodies

Shareholders’ Meetings Board of Directors Board of Supervisors

Meetings Meetings

5119

Resolutions Discussed at Resolutions Discussed at Resolutions Discussed

Shareholders’ Meetings Board of Directors Meetings at Board of Supervisors

Meetings

398046

47 482024 Environmental Social and Governance Report Corporate Governance: Transparency Responsibility and Value

Risk and Compliance Management Risk and Compliance Management Actions

The Company identifies monitors and inspects compliance risks throughout its production and operations in a timely

Sanhua Intelligent Controls strictly adheres to the Audit Law of the People’s Republic of China the Basic Internal Control manner through legal professional work such as contract review and dispute resolution systematically reviewing potential

Norms for Enterprises the Provisions of the National Audit Office on Internal Auditing and other relevant laws and risk issues and providing targeted improvement suggestions based on identified issues. At the beginning of the year a

regulations. The Company has established internal policies including the Internal Audit System and the Regulations plan is formulated to conduct overall research on risk issues and carry out specific compliance work providing special

of Contract Management to ensure that risk and compliance management is standardised scientific and efficient compliance suggestions and improvement plans to promote the overall compliance of the Company.safeguarding the Company’s compliant operations. To further strengthen compliance awareness the Company formulates a training plan at the beginning of the year and

regularly organises regulatory training sessions to communicate the latest legal and compliance requirements to all

Risk and Compliance Management Mechanism employees so as to enhance the employee’s ability to mitigate legal risks and maintain compliance ensuring that all

business activities adhere to relevant laws regulations and industry standards. This approach minimises compliance risks

The Company has established a risk and compliance management structure comprising the Board of Directors Audit and supports the Company’s sustained and healthy development.Committee and Internal Audit Office with clearly defined responsibilities. The Audit Committee is responsible for supervising

To foster a strong compliance culture the Company conducts compliance awareness training for employees in key positions

and evaluating the Company’s risk compliance management and internal control procedures including monitoring the

and has established a legal compliance section on the “Sanhua E-Learning Platform” where compliance training materials

internal control system and reviewing key findings from risk compliance investigations. The Audit Committee reports to

and a business-related legal and regulatory database are available for employees. Additionally the Company has launched

the Board of Directors on progress quality and significant issues discovered in risk management and internal control work.a Legal Compliance Knowledge Portal on its OA system featuring regular or timely release of compliance news guidelines

The Internal Audit Office is responsible for implementing the directives of the Audit Committee conducting internal control

and management policies to guide compliance execution and promote compliance culture.assessments identifying and evaluating potential risks and ensuring the effectiveness and compliance of the internal

control system through periodic audits. It also provides timely recommendations for continuous improvement. In 2024 the Company

The Company has implemented a “Three Lines of Defence” mechanism for risk and compliance management ensuring Approximately

conducted

comprehensive and effective risk identification assessment and response. 26

training sessions covering risk management compliance

management and legal education. 3000 employees were covered.“Three Lines of Defence” Risk and Compliance Management System

Business supervision

The First Line consisting of business departments that are responsible for daily operations and management and for designing

and implementing relevant internal control measures to address risks.Functional supervision

The Second Line consisting of functional departments assisting the first line of defence in establishing and improving its control

procedures and performing supervisory duties to ensure that work is implemented.Internal audit and supervision

The Third Line consisting of internal audit and supervision departments regularly providing independent evaluations of the

effectiveness of control procedures and conducting awareness publicity to employees.

49 502024 Environmental Social and Governance Report Corporate Governance: Transparency Responsibility and Value

Business Ethics Business Ethics Governance

The Company has established a business ethics governance structure based on the Board of Directors the Audit

Sanhua Intelligent Controls places great emphasis on business ethics management and strictly complies with the Criminal Committee and the Compliance Audit and Legal Departments framework. The Board of Directors shall assume the ultimate

Law of the People’s Republic of China the Anti-Unfair Competition Law of the People’s Republic of China the Anti-monopoly responsibility for the Management implementation and supervision of business ethics. Based on the internal policies such

Law of the People’s Republic of China the Anti-Money Laundering Law of the People’s Republic of China and other relevant as the Agreement of Employees’ Integrity the System of Integrity Return Visit and the Cooperation Agreement of Integrity

laws and regulations. The Company maintains a zero-tolerance policy toward corruption and takes all necessary measures the roles and responsibilities of each department are clearly defined to ensure effective and systematic business ethics

to prevent and combat unethical practices. In 2024 the Company did not experience any violations related to anti-bribery governance.anti-corruption or anti-unfair competition regulations. In 2024 the Company published the Sanhua Intelligent Controls Business Ethics Statement reaffirming its strong

commitment to ethical business practices. This statement not only reflects the Company’s dedication to responsible

Business Ethics Management System operations but also provides clear behavioural guidelines for employees business partners and customers.Governance

Business Ethics Management Mechanism

Establish a business ethics management structure comprising the Board of Directors the Audit Committee the Legal Audit and

Compliance Departments and formulate an integrity management system. The Company conducts business ethics audit at all operations and comprehensively identifies integrity risks through

audits and supervision to ensure that risk assessments cover all business units. Anti-corruption measures are embedded

in annual project audits and exit audits allowing the Company to identify potential issues in sensitive positions and key

Strategy business areas and implement targeted supervision plans. The Internal Audit Office regularly conducts anti-corruption

audits proactively identifying fraud risks and ensuring swift investigation and resolution of detected issues.Identify business ethics-related risks and opportunities including corruption risks unfair competition risks and money laundering risks.Improving whistleblowing channels and conducting integrity training requires additional management costs and operational The Company regularly reviews the business ethics policies and their implementation launches accountability and

complexity but also enhances transparency builds stakeholder trust and reduces legal and compliance risks. punishment procedures for employees who violate the regulations on business ethics and imposes verbal criticism

disciplinary review and termination of employment depending on the severity of the violation.Impacts Risks and Opportunities Management Employee Integrity Management

Use audits employee feedback and risk assessments to identify potential integrity risks in business operations particularly in project

The Company conducts ongoing integrity training and awareness publicity for all employees to reinforce ethical and

audits supply chain management and sensitive positions.Regularly conduct unfair competition risk assessments to prevent behaviours related to unfair competition and monopoly. compliance awareness ensuring that employees fully understand and adhere to business ethics requirements. In 2024 the

Company conducted 8 business ethics training sessions. For high-risk areas such as infrastructure projects the Company

implemented special supervision programs to strengthen integrity and compliance management.Metrics and Targets To enhance transparency the Company has established multiple reporting channels enabling employees and external

partners to report ethical concerns anonymously. The Company strictly protects whistleblower information at every stage

Cover signing rates of employee and supplier integrity agreement and audit coverage of high-risk positions. including reporting registration record-keeping and investigation. In 2024 the Company received 12 internal and external

reports through its whistleblowing program.

51 522024 Environmental Social and Governance Report Corporate Governance: Transparency Responsibility and Value

Supply Chain Anti-Corruption Management Anti-Unfair Competition Management

In supply chain anti-corruption management the Company requires all suppliers and subcontractors to sign the Cooperation Preventing and managing unfair competition is a key focus of the Company’s compliance management system. The

Agreement of Integrity to ensure that the cooperation of suppliers partners and other third parties always comply with Company has implemented a systematic risk assessment mechanism to analyse potential unfair competition risks in core

the Company’s anti-corruption requirements. At the same time the Company visits suppliers and timely understands and business operations supply chain collaborations and market competition including risks related to price manipulation

grasps the staff dynamics of the procurement system. Anti-corruption policies and requirements are embedded in the third- market monopolies and exclusionary agreements. The Company conducts continuous compliance oversight and regular

party due diligence process. The Company conducts strict background checks and risk assessments before establishing reviews ensuring that all business activities comply with fair competition requirements.partnerships particularly concerning anti-corruption compliance. Contract clauses explicitly require third parties to comply

To effectively manage unfair competition risks the Company provides legal training to all employees covering the clear

with the Company’s anti-corruption policies.definition and typical cases of the crime of infringing trade secrets in relevant laws and regulations to improve employees’

legal awareness. Employees are required to sign confidentiality agreements explicitly prohibiting the disclosure use or

illegal sharing of trade secrets as well as stealing or transmitting trade secrets to competing entities.The Company conducts specialised training for key positions (e.g. sales marketing and procurement teams) to ensure full

understanding of legal obligations and compliance requirements. A dedicated compliance advisory channel is available for

employees to seek guidance on competitive business interactions.Business Ethics Metrics and Targets in 2024

Metrics 2024 Target

Employee signing rate of the Employee Integrity and Self-Discipline Agreement (%) 100 100

Proportion of procurement personnel receiving anti-corruption training (%) 100 100

Supplier signing rate for the Integrity and Self-Discipline Cooperation Agreement (%) 100 90

Audit coverage of business conduct risks in high-risk positions (%) 100 100

535407

Foundation of Trust:

Quality Safety and

Security2024 Environmental Social and Governance Report Foundation of Trust: Quality Safety and Security

Product and Service Safety and Quality Product and Service Management Structure

The Company has established a product quality and customer service management structure led by the quality production

Sanhua Intelligent Controls strictly complies with the Product Quality Law of the People’s Republic of China the Metrology process and technical departments. The Quality Management Department is responsible for formulating non-conforming

Law of the People’s Republic of China the Standardisation Law of the People’s Republic of China and other relevant laws and product and hazardous substance management policies. The Production & Manufacturing Department manages identification

regulations. The Company has established a comprehensive quality management system and implements comprehensive isolation and review of non-conforming products during the production process. The Sales Marketing and Quality Management

quality control to ensure that products meet national industry and customer requirements. In 2024 the Company did not Departments oversee pre-sales in-sales and after-sales service ensuring high product quality and customer satisfaction.experience any product recalls due to safety or health concerns related to sold or shipped products.The Company has established internal regulations such as the Product Customer Complaint Information Feedback and Handling

Process and the After-Sales Service Control Procedures. It has also developed a four-level quality system framework consisting

Product and Service Safety and Quality Management System

of Quality Manual Regulations Control Procedures Standardised Forms. In 2024 the Company passed ISO 9001 Quality

Governance Management Systems Certification and IATF 16949 Automotive Industry Quality Management System Certification.Establish a product and service management structure comprising quality production process and technical departments each | Product Quality and Safety

responsible for quality management at different stages including development design raw materials manufacturing and final

product release. Product Quality Strategy

Based on the internal operations the Company proactively identifies external market and regulatory requirements assesses

Strategy quality risks and potential opportunities and develops corresponding response strategies. Each identified risk/opportunity is

assigned to a responsible department with a defined response timeline.Timely identify external market and regulatory requirements assess internal operational risks related to product quality and their Product Quality and Safety Risks and Opportunities

potential impacts and develop proactive response strategies.Risk/Opportunity Type Description Financial Impact

Impacts Risks and Opportunities Management Poor product quality management — including design flaws technical bottlenecks in Operating costs

Market Risk manufacturing processes or unresolved human-caused quality issues — may lead to increase

a decline in customer satisfaction and lost orders. Strengthen end-to-end quality control and customer complaint resolution and implement activities including enhancement of quality Revenue decreases

mechanism quality management training etc. According to EU regulations traditional R32 refrigerants are being phased out while

Strictly control hazardous substances in products in accordance with QC080000 Hazardous Substance Process Management R290 refrigerants with extremely low global warming potential (GWP) are emerging Operating costs

Standard GB/T 3051-014 Automotive Restricted Substances Requirements EU RoHS and REACH regulations etc. Product Opportunity as the primary alternative. This shift presents an innovation opportunity for the increase

Company helping it gain a first-mover advantage in new refrigerant technology Revenue increases

comply with stricter environmental regulations and enhance market competitiveness.Metrics and Targets 2024 Product Quality and Safety Risk Rectification Plan (Example)

Cover key metrics such as number of complaints against products and complaint handling rate. Stage Risk Description Response Measures Completion Status

Employees lack quality Conducted strict process discipline

Human-Caused awareness and do not fully inspections.Quality Issues adhere to process discipline Required new employees to undergo Completed

leading to repeated human- standardised training and pass as-

caused defects. sessments before starting work.Abnormal low-temperature Upgraded software version advanced

After-Sales startup for 10P units. sampling timing by 500ns during

Quality Issues open-loop drive phase and adjusted Completed

current loop bandwidth.

57 582024 Environmental Social and Governance Report Foundation of Trust: Quality Safety and Security

Product Quality and Safety Management Process Key Initiatives of Product Quality and Safety Management in 2024

The Company has established a comprehensive product quality and safety management process covering 19 key control Strengthening Policy Standards

stages including contract review design and development production process control product delivery product monitoring Updated the Quality Manual to align with external laws and regulations and improved the scope of application and business

and measurement and non-conforming product control. scenarios of the quality management system.Revised the Non-Conforming Product Management Process introducing Non-Conforming Product Identification Cards and

Pending Processing Product Identification Labels to improve control over incoming material inspections and defect notifications.Product Quality and Safety Management Process Optimised daily management document templates including the Rework & Scrap Record Form Non-Conforming Product

Disassembly Ledger and Daily Production Defect Report etc.Risk and opportunity identification analysis: Based on internal production conditions and

external market demands the Company develops the Risk and Opportunity Identification

Identification & Analysis Analysis Evaluation Form to detect potential quality risks and opportunities. Detailed Enhancing Quality Training

response measures are formulated based on impact categories assigning responsibilities Conducted continuous quality improvement training for all business units covering internal auditor training the Five Core Tools

and deadlines for resolution. of the Automotive Industry quality problem solving tools and report (8D Report 8 Disciplines Problem Solving Report) usage

skills product application failure mode analysis etc.Supplier Quality Management

Quality audits: Quality audits are conducted monthly in accordance with the Compliance

Evaluation Control Procedure including process audits and product audits. Quality risks are Conducted monthly supplier quality evaluations. Organised supplier conferences quality review meetings and quality support

mitigated through Quick Response Quality Control (QRQC) corrective/preventive actions etc. programs to ensure alignment with the Company’s quality standards.Evaluation & Audit Internal audits: Internal audits are conducted annually by each business department based

on the Internal Audit Control Procedure. Identified issues result in corrective/preventive action

plans with a 100% closure rate.Each year the Company establishes quality improvement activity targets and plans tracking project progress monthly

through three key initiatives: Quality Control Circles (QCC) KICCHIRI Standardised Quality Management (Keep Improvement

for Customer’s Confidence Harmony Innovation Reliability and Integrity) Defect-Free Production Program. These

initiatives aim to enhance employees’ quality awareness and solidify quality improvement results.Quality inspections: The Company strictly adheres to the “Three Inspections” (Initial

Inspection In-Process Inspection Final Inspection) policy ensuring that there are no

abnormalities in the transmission of the previous process. Material Testing: Raw materials

undergo sampling tests on the size and performance before entering production. Process

Control: The Company ensures equipment process parameters dimensions and

Monitoring & performance data meet specifications before processing begins. Before the product leaves

Improvement the factory it is necessary to verify that the person machine material method process and

test meet the quality requirements and customer specific requirements.Traceability & recall: Based on the Control Procedures for Product Identification and

Traceability and Product Recall Management Measures the Company tracks quality issues

recalls defective products and minimises financial losses.In 2024 the Company continuously improved its product quality management standards and levels by strengthening policy Quality System Learning Map Co-Creation Workshop QCC Quality Improvement Results Presentation

standards enhancing quality training and facilitating supplier quality management.

59 602024 Environmental Social and Governance Report Foundation of Trust: Quality Safety and Security

2024 Quality Improvement Milestones

Case Training Program for Enhancing Quality Management System EffectivenessIn 2024 the Company organised a two-day training program titled “Enhancing Quality Management System Effectiveness – R&DQuality Management Training”. The training covered core R&D processes including Product Planning & Technology Planning

Function Definition & Breakdown Design Control (Review Validation and Verification) Product Safety & Special Characteristics

Classification Manufacturing Design & Validation Supplier Development Product & Process Changes etc. This program helped

employees gain a comprehensive understanding of full-process quality management in product design and development.

4DI Virtual Soldering Defect Reduction Assembly Operations Optimisation

ACC Laser Welding Quality Enhancement UV Coating Defect Reduction

17WG2 Stator Injection Moulding Optimisation PCB Screw Tightening Quality Improvement

61 622024 Environmental Social and Governance Report Foundation of Trust: Quality Safety and Security

Customer Relationship Management Customer Service Metrics and Targets in 2024

The Marketing Sales and Quality Management Departments of Sanhua Intelligent Controls are responsible for pre-sales in- Metrics 2024 Target

sales and after-sales customer management. In 2024 the Company revised the Product Customer Complaint Information

Feedback and Handling Process and optimised the Problem Resolution and Escalation Management Process by refining the Complaint handling rate (%) 100 100

classification criteria for issue severity levels. The process now includes escalation or de-escalation requirements at three

key stages: process initiation root cause analysis and responsibility determination. Customer complaints are categorised by

severity into Major Important A-Category B-Category and C-Category quality issues. Each complaint is logged into the OA

system as a Customer Quality Information Feedback Form which enables full-process online tracking until the issue is resolved.| Customer Service Management Process Hazardous Substance Management

The Company has established a comprehensive global after-sales service network enabling customers to report product Sanhua Intelligent Controls complies with the QC080000 Hazardous Substance Process Management Standard GB/T 3051-

quality issues through official after-sales service channels. After-sales personnel can promptly dispatch professional 014 Automotive Restricted Substances Requirements the EU RoHS Directive (Restriction of the Use of Certain Hazardous

technical experts for on-site assessment sample analysis and failure investigation assisting customers in conducting Substances in Electrical and Electronic Equipment) and the EU REACH Regulation (Registration Evaluation Authorisation

failure analysis and issue resolution. and Restriction of Chemicals) as well as other relevant laws and regulations.In 2024 at the request of external customers the Company conducted Responsible Business Alliance (“RBA”) audits and

Customer Complaint Handling Process Responsible Supply Chain Initiative (“RSCI”) audits to assess social responsibility compliance in the electronics industry.During production the Company strives to use raw materials with minimal hazardous substance content such as lead-free

Verifying Compliant Verify product details quality data and customer demands then have the Customer no-clean solder paste to reduce air pollutant emissions and mitigate occupational health risks in the workplace.Information Complaint Engineer confirm whether the issue falls within the Company’s responsibility.If it is confirmed as the Company’s responsibility the Company assesses the quality status

Product Containment of the product and provides interim measures and investigation progress to the customer

within 24 hours.The responsible department is required to confirm and review the causes of the quality

Root Cause Analysis issue within 48 hours and provide a written analysis report.In the event of a situation causing the production stoppage or product quarantine of the

customer the After-sales Quality Management Department sends personnel to the site for

Rectification &

disposal to minimise losses.Validation

The Company initiates a Quality Anomaly Risk Review Form conduct testing or risk control

investigations as necessary and promptly communicate with the customer to clarify timelines.

63 642024 Environmental Social and Governance Report Foundation of Trust: Quality Safety and Security

Cyber and Information Security | Information Security Management Structure

The Company has established a management structure consisting of the Information Management Centre and IT

Sanhua Intelligent Controls strictly abides by the Data Security Law of the People’s Republic of China the Personal Departments across all business units and has implemented strict secure use and management of information networks

Information Protection Law of the People’s Republic of China and other laws and regulations. The Company prioritises security establishing a four-level system consisting of Management System Regulations Management Standards and

confidentiality and information security for customers employees and suppliers and continuously improves its information Evaluation Forms. To safeguard information security the Company employs data encryption access control security

security management system. In 2024 the Company did not experience any information security breaches or customer auditing and monitoring desktop management controls and private cloud. In 2024 the Company passed ISO 27001

privacy leaks. Information Security Management System certification.Cyber and Information Security Management Policy

Cyber and Information Security Management System

Level 1 Information Security Management System Manual Information Security Strategy Statement of ISMS

Governance

Applicability

Establish a management structure consisting of the Information Management Centre and IT Departments across all business units. Level 2 Regulations of Computer Application and Information Security Information Security Compliance

Management Procedure Internal Information Security Audit Procedure Information Asset Security Each business unit is assigned with ITBPs to coordinate between IT and business departments.Management Procedure

Level 3 Network Security Management Standards IT Equipment Security Management Standards

Confidentiality and Information Security Management Standards Third-Party Information Security

Strategy Management Standards

Identify operation risks trade secret leakage risks market opportunities and product opportunities. Enhance information security Level 4 Third-Party Access Confirmation Form Supplier Information Security Self-Assessment Form Corrective

capabilities and implement digital tools to mitigate risks and improve competitiveness. and Preventive Action Form Information Security Risk Assessment Report

Impacts Risks and Opportunities Management

Conduct regular system audits and special audits across business units to assess compliance with ISO 27001 and internal

management system requirements. | Information Security Strategy

Perform third-party information security due diligence and standardise data retention and time recording. The Company closely monitors external cybersecurity threats and regulatory changes continuously identifying information

security risks and potential opportunities. To address risks such as operational disruptions and trade secret leaks the

Company has developed response strategies clearly defining responsibilities and deadlines for each department. This

ensures effective management of information security reduces risk impacts and enhances market competitiveness.Metrics and Targets

Cyber and Information Security Risks

Cover key metrics such as information security audits data and privacy breaches

information security training etc.Operation Employee or third-party negligence or system failures may result in data loss or damage leading to

Risk business disruptions.Trade Secret Potential hacker attacks phishing scams or malware infections could compromise production data

Risk R&D results or other trade secrets.

65 662024 Environmental Social and Governance Report Foundation of Trust: Quality Safety and Security

| Information Security Risk Management Mechanism 2024 Risk List and Remediation (Example)

The Company follows the Information Security Risk Management Procedures and the Internal Information Security Audit Controlling Point Audit Results Risk Assessment Remediation Measures Completion Status

Procedure conducting regular system audits and special audits across business units to evaluate whether the Company’s

R&D production and other OA management systems as well as the operational procedures of relevant personnel comply Employees were found Risk of unautho-

Require strong pass-

with ISO 27001 and internal management systems requirements. using weak passwords rised access via Passwords and enabling password words and disable brute-force at- Completed

Cyber and Information Security Risk Management Process auto-save. password auto-save.tacks.Conduct internal audits based on ISO 27001 Information Security Management System Office computers have Employees must en-

requirements covering 13 control domains including information security policy access auto-lock enabled but Risk of leakage of sure their computers

control asset security and communication security to identify potential risks. Unattended employees fail to man- production R&D are password-pro-

Identification Perform quarterly information security audits across business units to identify access User Devices and employee Completedually lock screens when tected when unat-

control risks in accordance with the Access Control Security Management Guidelines. leaving their desks. personal data. tended.Regularly conduct vulnerability scans on databases servers and computers identifying and

tracking the number of security vulnerabilities.| Information Security Due Diligence

Sort out the disposal records of assets in status alerts across business units assess the

Evaluation severity and priority of potential risks based on threat intelligence analysis. Sanhua Intelligent Controls considers third-party information security due diligence as a critical component of supply

chain and partner management. The Company has established and implemented a Third-Party Information Security Due

Diligence Procedure under the Supplier Security Management Procedure to ensure that all collaborations with suppliers

partners and service providers comply with applicable information security laws regulations and internal policies.Prioritize identified risks based on the Risk List and Remediation Recommendations and Before establishing partnerships the Company conducts information security risk assessments on all third parties

audit reports ensuring clear bases for corrective actions. evaluating data protection capabilities cybersecurity measures and compliance status. During partnerships the Company

Prioritisation Review whether the vulnerability remediation rates meet the established target and if performs regular audits questionnaire surveys and on-site inspections to continuously monitor third-party information

necessary develop accelerated plans for high-priority unresolved vulnerabilities.security management practices.| Information Retention and Record Management

The Company has developed and implemented a comprehensive record retention plan ensuring that business financial

Continuously monitor vulnerability remediation rates and improvement progress to ensure

security objectives are met. and compliance records are managed in accordance with legal requirements and industry standards.Conduct internal status detection assessments enabling real-time monitoring of security The plan clearly defines the retention periods storage requirements and disposal procedures for different types of records

Monitoring alerts and tracking remediation progress to enhance information security management

capabilities. including business contracts and agreements (all customer and supplier contracts are retained for 10 years after contract

Require new employees and approved suppliers to sign a Confidentiality Agreement termination) personnel records (employment contracts salary records and training archives are retained for 5 years after

strengthening data security controls and preventing information leaks. employee departure) and environmental and compliance records (emission data energy usage environmental impact

assessments documents are retained for at least 5 years) ensuring data completeness traceability and security.

67 682024 Environmental Social and Governance Report Foundation of Trust: Quality Safety and Security

| Employee Information Security Training & Awareness Sustainable Procurement

In 2024 the Company conducted information security training and campaigns for new employees and technical personnel

through various formats including monthly email updates featuring data breaches and privacy leak cases security Sanhua Intelligent Controls not only focuses on the stability and security of the supply chain but also considers suppliers’

reminders displayed on personal computer desktop calendars periodic security-related wallpapers automatically pushed to ESG performance as one of the key evaluation criteria. The Company emphasises on reviewing suppliers’ policies and

employee computers and E-learning online courses. practices in reducing environmental impact and safeguarding labour rights to ensure compliance with the Company’s

requirements and standards.Sustainable Procurement Management System

Governance

The Strategy Procurement Centre is responsible for the construction and implementation of the Company’s procurement system

regulations and processes promoting the informatisation of procurement processes identifying and developing core procurement

competencies etc.Security Reminder on the Desktop Wallpaper – Weak Password Security Reminder on the Desktop Calendar – Third-Party Network Access The Procurement Departments in business units are responsible for the specific work of supplier management and procurement.Protection Security

Strategy

In the process of using the office collaboration OA system employees are required to input personal information (including

employee birthdays phone numbers home addresses ID card numbers etc.). To fully respect and protect employees' Identify key risks including operation risks policy and regulatory risks and analysing potential impacting factors based on external

market conditions and internal operations.personal information the company sends an “OA System Employee Information Collection Notice” and “Visitor InternetAccess Authentication Disclaimer” to all employees outlining the purpose scope usage and corresponding protective

measures for collecting employee personal information in order to obtain employees’ consent before gathering any

Impacts Risks and Opportunities Management

information.Cyber and Information Security Metrics and Targets in 2024 Ensure supplier compliance and risk control through stringent supplier management processes.Conduct annual audits and on-site audits of qualified suppliers to ensure their compliance in terms of environmental labour and

business ethics.Metrics 2024 Target Implement incentive mechanisms to prioritise outstanding suppliers for new projects regularly evaluating supplier performance and

promoting continuous optimisation and compliance management of the supply chain.Customer complaints related to information security and privacy breaches (cases) 0 ≤2

Critical information security incidents major information security incidents (cases) 0 ≤1

Metrics and Targets

Number of information security training attended by all technical personnel 5 ≥1

Core business system availability (%) 100 ≥99.9 Cover metrics and targets such as the proportion of key suppliers assessed for social responsibility and sustainable procurement

training etc.

69 702024 Environmental Social and Governance Report Foundation of Trust: Quality Safety and Security

| Supply Chain Management Structure Supply Chain Risk Management Process

The Company clearly stipulates that the Strategy Procurement Centre is responsible for promoting procurement activities Background Investigation: Before supplier admission publicly available information is used

to assess supplier credit risk. According to the Regulations of Supplier Audit Management

including constructing and implementing procurement system regulations and processes promoting procurement

Identification and new suppliers must complete system registration and audit.informatisation and identifying and developing core procurement competencies etc. to promote the efficient implementation Analysis Analysis: For suppliers who fail the initial audit an Analysis of Potential Supplier Audit

of related work of the procurement system. The Procurement Departments set up by various business units are responsible Report is conducted assessing business conditions production capacity product quality

for supplier management material inspection optimising procurement processes and informatisation formulating and and industry certifications from multiple perspectives.executing material procurement strategies and ensuring that the Company’s production and development needs are met.The Company has formulated internal regulations such as the Procurement Execution Management Process the Regulations CSR Compliance Review: Key production suppliers undergo Corporate Social Responsibility (CSR)

audits to ensure compliance in environmental protection labour practices business ethics etc.of Supplier Designation the Regulations of Supplier Performance Evaluation and Procurement Control Procedures. These

Inspection and Performance Rating: Suppliers are rated quarterly based on quality price service new product

regulations clearly define procurement processes supplier selection and evaluation standards to ensure long-term Evaluation development and delivery punctuality etc. An annual excellence evaluation for suppliers is

partnerships with qualified suppliers while enhancing supply chain efficiency and quality. conducted.Annual Review: Key suppliers undergo on-site audits or self-assessments based on the Supplier

Quality System Review Checklist.| Supply Chain Management Strategy

The Company improves procurement and logistics management efficiency through digital systems and proactively addresses Performance Evaluation: According to the Regulations of Supplier Performance Evaluation

risks and opportunities in supply chain management. The Company’s Supplier Relationship Management (SRM) platform covers suppliers are assessed on workplace safety occupational health working hours wages

supplier management demand management price management execution coordination and financial coordination etc. compliance etc.helping to reduce risks related to supply chain disruptions or non-compliance while enhancing collaboration efficiency within the Monitoring Incentive Mechanism: Suppliers with an A performance in quarterly evaluations are given

priority for new projects with a 10% supply proportion increase in the following quarter

supply chain. capped at 80%. Suppliers rated A annually receive awards or certificates at the Company’s

For finished goods shipment operations the Company has introduced the Order to Warehouse System (OTWB) which manages annual supplier conference.orders transportation and costs to optimise business processes and reduce risks in transportation and inventory management.| Supply Chain ESG Management

Supply Chain Risks The Company signs agreements with suppliers such as the Supplier Code of Conduct Basic Supply Agreement Cooperation

Type Description Financial Impact Agreement of Integrity and Environmental and Safety Agreement which include ESG-related provisions to ensure suppliers

fulfil their environmental and social responsibilities. At the same time the Company emphasises the diversification of

suppliers and advocates prioritising cooperation with supplier enterprises owned by minority/disadvantaged groups

and women. The Company organises regular training for internal procurement personnel on hazardous substances and

If raw and auxiliary materials fail to arrive on time due to market fluctuations natural disasters Revenue management systems such as ISO 14001 ISO 45001 and SA8000 to strengthen their sustainability capabilities.Operation Risk transportation issues or supplier-related problems it will impact the Company’s production

schedule. decreases The Company actively pays attention to the performance of suppliers in terms of ESG and explicitly incorporates ESG-

related factors into standards such as supplier admission evaluation annual audit etc. Among them the Company actively

promotes the control of hazardous substances in the supply chain the reduction of pollutants and hazardous waste and

explicitly includes provisions related to hazardous substances in the supplier CSR audit checklist and performance rating

system which include prohibiting illegal discharge of hazardous substances such as wastewater exhaust gas or waste

residue etc. continuously monitoring and effectively treating hazardous wastewater and exhaust gas properly handling

If labour rights violations (such as child labour forced labour or unfair compensation) exist

Policy and Operational costs hazardous solid waste striving to reduce toxic emissions in the supply chain etc.in the supply chain the Company’s reputation may suffer leading to customer loss legal

Regulatory Risk

disputes and other issues. increase The Company requires suppliers and subcontractors to sign the Cooperation Agreement of Integrity and the audit

department conducts special audits on fraud risks in business projects. The Company also signs Recycling Agreements

with suppliers dealing with hazardous chemical packaging and Hazardous Substance Guarantee Agreements with suppliers

handling toxic and hazardous substances to ensure supply chain safety and environmental compliance.

71 722024 Environmental Social and Governance Report Foundation of Trust: Quality Safety and Security

| Conflict Minerals Management

Regarding conflict minerals management the Company requires suppliers to sign the Supplier Code of Conduct which

includes relevant clauses on conflict mineral management to ensure all suppliers understand and comply with the conflict

minerals policy. The Company requires suppliers to cooperate with their upstream supply chain to trace the sourcing of

“gold tungsten tantalum and tin” to the smelting level. For suppliers identified as having potential conflict mineral risks

corrective actions must be taken to ensure compliance. Suppliers who are unable to make corrections will have their supply

qualifications suspended or revoked.

737408

Social Value:

Respect

Development and

Contribution2024 Environmental Social and Governance Report Social Value: Respect Development and Contribution

Labour Rights and Talent Retention | Employee Compensation and Performance

The Company has established a scientific and comprehensive performance evaluation system based on the principles of

Sanhua Intelligent Controls strictly adheres to the Civil Code of the People’s Republic of China Labour Law of the People’s gender equality equal pay for equal work and distribution according to labour. Performance evaluations for management

Republic of China Labour Contract Law of the People’s Republic of China Law of the People’s Republic of China on the at all levels are linked to the Company’s business objectives and the Company offers a reasonable salary structure with

Protection of Rights and Interests of Women Special Rules on the Labour Protection of Female Employees and other competitive compensation levels. The Company is committed to creating a community where employees and the Company

relevant laws and regulations. It also follows international conventions related to labour rights such as the United Nations share common interests striving to inspire employees’ creativity and enthusiasm.Global Compact and the 10 core conventions of the International Labour Organisation including the Equal Remuneration Variable performance pay is included in the salary structure for all employees including the Management production

Convention Minimum Age Convention Worst Forms of Child Labour Convention Discrimination (Employment and workers sales and functional positions etc. Variable performance compensation is dynamically adjusted based on individual

Occupation) Convention Forced Labour Convention Abolition of Forced Labour Convention Occupational Safety and Health performance and the Company’s overall business performance ensuring fair and just compensation distribution. Additionally

Convention Freedom of Association and Protection of the Right to Organise Convention Right to Organise and Collective the Company actively promotes employee stock incentive plans. In 2024 the Company granted 24.91 million restricted stock

Bargaining Convention Promotional Framework for Occupational Safety and Health Convention covering working hours units to 1933 participants through its restricted stock incentive plan and 560000 stock appreciation rights to 47 foreign or

salary and benefits work safety prohibition of child labour and forced labour etc. overseas work recipients through a stock appreciation right incentive plan accounting for approximately 10% of the total

number of employees at the end of the reporting period promoting the joint development of the Company and its employees.In 2024 the Company did not experience any incidents of legal penalties related to labour standards including employee

recruitment and dismissal working hours and leave promotion and equal opportunity nor any violations regarding child | Employee Communication and Engagement

labour or forced labour.The Company encourages employees to actively voice their opinions and offers multiple communication and feedback

The Company has formulated internal regulations such as the Employee Handbook and Quota-based Employees channels including the “Department Head’s Mailbox” “Employee Complaint Form” and the Sanhua Employee Service

Regulations which ensure strict compliance with national standards and regulations in employment salary and working Platform making it easy for employees to express their views or provide suggestions. The Company emphasises

hours social security health and safety training etc. These measures continuously improve employee protection safeguarding the independence and confidentiality of the grievance process ensuring that feedback is handled properly

mechanisms and effectively safeguard the legal rights of employees. and protecting the safety of employees who make complaints thus providing a transparent and secure communication

In 2024 the Company established and publicly disclosed the Sanhua Intelligent Controls Labour and Human Rights environment. The Company conducts regular employee engagement and satisfaction surveys every year covering work

environment system and mechanism workshop management welfare subsidies and other aspects. In the 2024 survey

Statement which clearly outlines the Company’s commitments and measures regarding working hours compensation

the satisfaction score was 94 out of 100.employee diversity discrimination equality and development. The Company ensures equal treatment of all candidates

with no discrimination in employment compensation training or promotion opportunities based on race religion gender The Company encourages employees to voluntarily join the labour union and regularly holds the congress of workers and

nationality age marital status or disability etc. The Company’s human resources management system also implements staff to ensure that employees’ voices are fully expressed. Employee representatives sign collective labour agreements

the function of ID card reading to verify the identity of new employees ensuring that employees are over 18 years old before with the Company to protect employees’ rights regarding labour compensation working hours rest and leave occupational

being hired. In 2024 the Company set a diversity target for its workforce which is the proportion of female employees health and safety training insurance and benefits special protection for female employees and minors etc.reaches 38% by 2030 up from 34% at the end of the reporting period. The Company values the welfare of its employees and the maintenance of their daily lives and is committed to providing

employees with a fair working schedule aiming to promote a balance between work and personal life ensuring that all

Employee Employment and Rights Management System employees are guaranteed a living wage that meets their basic needs.Working Hours and Compensation Female Employee Protection

The Company contributes to all employees’ social insur- In compliance with legal requirements the Company

ance and housing fund and provides fair compensation has set regulations for female employees during

adequate rest time and a safe and comfortable workplace. pregnancy maternity leave and breastfeeding ensuring

Salaries are paid on time monthly with clear communica- no discrimination or unjust salary reduction during these

tion about the salary structure and calculation methods. periods.Employees can view their salary details including perfor-

mance allowances bonuses social insurance housing

fund and taxes etc. through the human resources man-

agement system.

77 782024 Environmental Social and Governance Report Social Value: Respect Development and Contribution

Employee Welfare Management System

Case Various Employee Roundtable Meetings

Non-Statutory Benefits Care and Support Employee Assistance for Financial Hardships The Company has established a

communication bridge between

the Management and employees

Provide meal subsidies housing Invite renowned medical experts The Company has established by organising roundtable meetings

subsidies and transportation sub- to provide free medical consul- the “Sanhua Family” relief fund for frontline workers new university

sidies for all employees along with tations for employees and offer to support employees in need. graduates and holidays. These

holiday benefits for events such apartment accommodations. The employee’s direct relatives meetings provide the Company with an

as Chinese New Year International Provide summer camp services who suffer from major illnesses opportunity to understand employees’

Women’s Day Summer Festival and assist employees’ children and are unable to afford their ex- living conditions and work-related

Mid-Autumn Festival quarterly with school enrolment. penses due to family difficulties issues formulate action plans and

labour protection benefits etc. or employees who suffer from assign responsible parties to address Open a “Mommy Room” for

Assist high-level talents and skilled accidents that cause temporary employees’ concerns and suggestions breastfeeding female employees

workers in applying for govern- living difficulties will get a certain ultimately enhancing team cohesion.making it easier for them to nursement talent evaluation and certifi- amount of relief fund.while at work. Since the “Mommycation programs. Room” was opened the Women’s In 2024 the fund helped 17

Purchase commercial insurance Committee of the Labour Union employees with a total of

beyond the legal requirements for has provided breastfeeding educa- RMB124900 in aid disbursed.some employees including acci- tion to female employees during

dent medical insurance transpor- their breastfeeding period. By the Roundtable Meeting Scene

tation accident insurance etc. end of 2024 approximately RMB

In 2024 a total of 172 female em- 20000 had been invested in the

ployees took maternity leave for “Mommy Room” with about three

a total of 16901 days; 199 male users per day.employees took paternity leave for The canteen has set up a halal Case Spanish Language Classes

a total of 2609 days. food counter to respect the dietary

customs of ethnic minorities.The Company hosted beginner-

level Spanish language classes in

Hangzhou and Shaoxing. The courses

were developed and taught by the

Company’s senior Spanish language

instructors. The aim of these classes

was to help employees gain a deeper

appreciation for Mexican culture while

increasing their interest in the Spanish

language and improving their Spanish

language skills.Event Scene

Mommy Room

79 802024 Environmental Social and Governance Report Social Value: Respect Development and Contribution

Human Capital Development Key Training Programs of Talent Development in 2024

Leadership Training

Sanhua Intelligent Controls enhances employees’ professional skills and managerial abilities through a multi-level training

system. At the same time the Company encourages employees to participate in degree programs and professional The Company customised an experiential training program for the leadership development coaching camp focusing on coaching

leadership and self-discovery.certifications helping to closely align employees’ career development with the Company’s goals.

27 participants engaged in two days of in-depth learning exploring the five key elements of coaching leadership and experiencing

The Company has built a comprehensive employee training system covering talent development programs for different levels the concept that “state precedes action”. This training sparked enthusiasm in participants helping them embrace challenges in both

and sequences. This system aims to improve employees’ professional knowledge skills and managerial abilities. For leadership work and life laying the foundation for practicing positive leadership.development the Company has programs such as “Navigator” “Voyager” “Initiator” “New Manager” and “Management TraineeProgram” targeting senior management middle management grassroots management newly promoted managers and high-

potential grassroots employees. These programs provide training in strategic planning team leadership basic management

KPO Training Camp

skills etc.To strengthen employees’ professional skills the Company offers several elite classes and specialised training camps The KPO training camp an essential part of the Company’s lean talent development system aimed to refine participants’ lean skills

including quality elite class production planning elite class procurement elite class financial elite class HR business partner through practical on-site training improving overall operational efficiency.training camps IT project manager training camps and marketing youth training camps. The Company also has programs Senior lean employees conducted KPO lean improvement knowledge training for the participants explaining the improvement

focused on future high-potential talents and senior-level talent development. These programs aim to foster employees’ career logic methods and practical applications of three major themes: in-line efficiency non-decreasing increments and off-line

efficiency. Participants together with colleagues from production quality process and maintenance departments formed a cross-

growth and personal development through diverse training opportunities ensuring they unleash their potential in various fields. departmental team to jointly promote on-site improvement initiatives.The Company places great emphasis on supporting employees’ educational advancement and actively encourages them

to participate in degree courses and professional certifications. The Company offers comprehensive support for further

education for all employees and has established a scholarship program to reward employees with associate degrees pursuing

undergraduate degrees. Additionally the Company provides subsidies and rewards for employees seeking professional Digitalisation Project

certifications such as the intermediate engineer qualification.In response to the Company’s overall digital transformation strategy the material digitalisation project aimed to establish

For career advancement the Company has established dual career paths for management and professional roles. It has standardised processes and improve the transparency and traceability of material information.developed internal regulations such as the Regulations of Position and the Regulations of the Qualification to create qualification A total of 47 participants took part in a one-day training and system hands-on session helping various business units familiarise

standards for technical positions and job series career development paths providing clear direction for employees’ skill themselves with system specifications and related operations.enhancement and career growth which aligns with the Company’s strategic goals.Talent Development Management System

The Company has formulated the Regulations of the Evaluation of Professional Talents and established

a Professional Talent Evaluation Committee responsible for capability certification and assessment.Advanced Talent For promotion to level 4 and below employees must submit an application and score sheet. After Human Capital Development Metrics and Targets in 2024

Evaluation department recommendations HR review and committee evaluation it is submitted for approval by

the general manager. For promotion to level 5 and above employees must meet the required score and

pass a professional skills certification defence by the Professional Talent Evaluation Committee. Metrics 2024 2030 Long-Term Targets

39.88

Average training hours per employee (Hours) 39.66

(Increase by 30% compared to 2022) The Company conducts Individual Development Plan (IDP) sessions to understand employees’ career

Personal preferences desired promotion positions and record their core strengths and areas for development. Anti-discrimination and anti-harassment training coverage (%) 86 ≥95

Development Plan Customised action plans are created to address areas where employees need improvement.The Company has developed the Regulations of the Cultivation of R&D Talent Production Line to support

R&D Personnel

the development of innovation capabilities at every stage from selection training appointment to

Training

retention promoting continuous innovation.

81 822024 Environmental Social and Governance Report Social Value: Respect Development and Contribution

Occupational Health and Safety | Occupational Health and Safety Management Structure

The Company has established an occupational health and safety management structure consisting of the Board of

Directors the Smart Manufacturing and Quality Management Centre and the EHS Offices of various business units. The

Sanhua Intelligent Controls’ occupational disease hazard positions mainly include coating reflow soldering manual Smart Manufacturing and Quality Management Centre serves as the specific executive body for work safety management

soldering red glue dispensing wave soldering etc. The Company complies with laws and regulations such as the Work responsible for formulating regulations of occupational health and safety regularly monitoring and measuring EHS-related

Safety Law of the People’s Republic of China and the Prevention and Control of Occupational Diseases Law of the People’s metrics and continuously optimising EHS performance. Each business unit of the Company has an EHS office with full-

Republic of China ensuring a safe and healthy working environment for employees. In 2024 the Company did not time managers responsible for occupational health and work safety matters. They also establish relevant assessment

experience any major safety responsibility accidents. regulations to monitor and rectify safety hazards and violations within the factory.Each business unit of the Company has established internal regulations such as the System of Work Safety the Work

Occupational Health and Safety Management System

Safety Responsibility System the Regulations of Safety Hazard Identification the System of Occupational Disease Hazard

Governance Monitoring and Evaluation etc. to ensure the establishment of a safe workplace and a sound occupational disease

prevention and monitoring mechanism. In 2024 the Company passed the ISO 45001 Occupational Health and Safety

Establish a governance structure consisting of the Board of Directors the Smart Manufacturing and Quality Management Centre and Management System certification.the EHS Offices of various business units and formulate systems related to work safety and hazard identification.| Work Safety and Occupational Health Management Mechanism

The Company systematises the identification and monitoring of environmental factors and hazards enhancing its risk

Strategy identification and management capabilities. The Company also regularly conducts occupational health check-ups to reduce

the incidence of occupational diseases.Through regular safety hazard inspections identify risks and opportunities related to occupational health and safety and create a list

of medium and high-risk hazards.Occupational Health and Safety Risks

Type Risk Description Financial Impact

Impacts Risks and Opportunities Management

Improve the occupational health and safety risk management process by developing detailed management measures and operating The safety and occupational health protection facilities and equipment within the factory

procedures. Health and Safety are widely distributed. Inadequate supervision may result in failures not being detected

Regularly conduct physical examinations for employees exposed to occupational disease hazards upgrade safety facilities distribute Protection Risk in a timely manner. Employees may also fail to wear protective equipment leading to

protective equipment and implement occupational health and safety management measures. penalties if regulatory authorities detect violations.Operational costs

increase

If environmental factors and hazard sources are not properly monitored and occupational

Metrics and Targets

Hazard Source diseases are not effectively prevented and controlled employees may need to be

Identification Risk reassigned to lower-risk positions or production may need to be halted affecting the

Include metrics such as the number of production safety accidents work-related injury rates etc. Company’s stable operations.

83 842024 Environmental Social and Governance Report Social Value: Respect Development and Contribution

In 2024 the Company and its business units further optimised internal regulations such as the Regulations of Occupational | Occupational Health and Safety Initiatives

Disease Prevention the System of Fire-related Work Operation and the Standards of Key Position Personnel Certification

Management to improve and standardise the work safety management process. At the same time the Company and its In 2024 the Company strengthened the management of work safety and occupational health by conducting comprehensive

business units established and improved safety hazard inspection and emergency response procedures commissioning training hazard inspections and emergency drills optimising job environments promoting automation upgrades improving

qualified third-party institutions to conduct a comprehensive evaluation of the safety status to ensure the scientific and employee safety awareness and enhancing health protection levels reflecting its commitment as a responsible employer.effective risk management process continuously improving the Company’s overall safety management level.Key Initiatives of Occupational Health and Safety

Work Safety and Occupational Health Risk Management Process

Work Safety Management

Identify safety hazards based on the Regulations of Safety Hazard Organised occupational health and safety training: Safety officer certification lockout/tagout procedures fire escape accident

Identification and create a company-level medium and high-risk hazard list.Identification prevention and emergency response pallet handling hazardous chemicals management etc. Develop Post Operation Procedures based on the work safety risks of each Implemented safety facility upgrades and distributed protective equipment based on the EHS Management Element Checklist

position. and EHS Typical Hazard Compilation.Regularly conducted emergency drills for scenarios such as mechanical injuries heatstroke chemical spills electric shocks and

fires to enhance emergency response capabilities.Hire a qualified third-party institution to compile the Safety Status Evaluation

Assessment Post job risk points and hazard factors in the workshop to remind employees to operate safely wear protective gear and provide Report assessing the current work safety situation.emergency measures and rescue phone numbers.Safety Prioritise the identified safety hazards by their risk level creating a

Production Prioritisation

Occupational Health Management

company-level medium and high-risk list focusing on high-risk items first. Arranged pre-employment in-service and post-employment health checks for employees exposed to occupational disease

hazards and standardised hazard notifications and the use of personal protective equipment.Regularly rotated employees in occupational disease hazard positions to safeguard their health rights.Conduct regular safety hazard inspections identify frequently occurring Regularly promoted the Prevention and Control of Occupational Diseases Law of the People’s Republic of China conducted

problems compile a list of hazards and issue warnings to business units. occupational disease prevention training and raised employees’ health awareness.Monitoring Include images of common problems and hazards in the hazard

compilation along with corrected operation demonstration images.Emergency Management and Automation Improvement

Developed a Work Safety Accident Emergency Response Plan to activate emergency response in the event of an accident

Conduct hazard source identification annually based on the System of minimising the scope of damage.Occupational Disease Hazard Monitoring and Evaluation and the Hazard Source Introduced automated machinery to reduce fatigue and repetitive movements that led to musculoskeletal injuries optimising

Identification Identification Risk Assessment and Risk Control Management Procedures. tasks such as empty box handling reaching and height adjustments to improve work efficiency and convenience.Update the list of occupational disease hazard positions and risk factors.Hire a qualified third-party institution to compile the Occupational Hazard

Assessment Status Evaluation Report identifying hazard sources and assessing

occupational hazard positions and related factors.Occupational Prioritise the updated list of occupational hazard positions based on the

Health Prioritisation severity of the hazards focusing on high-risk positions and factors.Regularly conduct pre-employment in-service and post-employment health

checks to ensure the continuous protection of employees’ occupational

Monitoring health and safety.Continuously monitor the updated occupational hazard positions and

factors ensuring that protective measures are in place. Routine First Aid Demonstration Fire Extinguisher Practical Demonstration

85 862024 Environmental Social and Governance Report Social Value: Respect Development and Contribution

Case Improvement in Finished Product Inspection Automation

At the Company’s relevant inspection positions there was a problem with the long and frequent transportation distance of empty

boxes when changing finished product boxes with the need to adjust the height of each box multiple times using a foot-operated

hydraulic cart. To address this the Company introduced a custom-built stacking mechanism which allows for automatic sliding of

finished product boxes and automatic falling of empty boxes increasing the box-changing efficiency by 76%.Case 180° Semi-Automatic Rotating Material Rack

In relevant testing positions there were frequent hand-reaching and downward grabbing movements when placing semi-finished

Safety Administrator Training Promotion of the Prevention and Control of Occupational Diseases Law products. By introducing a custom-built 180° rotating module the Company improved the work path reducing the placing and

picking time by 1 second per unit with clear product batch placement at five units per batch. This innovation improved both work

efficiency and convenience.| Occupational Health and Safety Metrics and Targets

Each business unit of the Company has established a System of Work Safety Responsibility achieved safety level two or

three standardised enterprise certifications and required all employees to sign the Work Safety Responsibility Letter. The

Company has also developed Environmental and Safety Goals Metrics and Management Plans with regular reviews of goal

achievement.Occupational Health and Safety Metrics and Targets in 2024

Metrics 2024 Target

Occupational diseases severe injuries and major

1 None

work safety incidents (cases)

Reduce by 5% compared to the

Job Risk Point Notification Cards Chemical Operation Safety Protection Warning Signs Work injury incident rate (%) 0.3

previous year (2024-2026)

87 882024 Environmental Social and Governance Report Social Value: Respect Development and Contribution

Corporate Citizens and Public Welfare

In order to fully implement corporate social responsibility Sanhua Intelligent Controls is committed to supporting In the area of educational assistance the parent company Sanhua Holding Group Co. Ltd. (hereinafter referred to as

community development through public welfare and charity projects in areas such as volunteer service promoting industry “Sanhua Holding”) has established the “Sanhua Scholarship and Education Fund”. In 2024 Sanhua Holding donated RMB20

development and helping students and the needy promoting social harmony and sustainability. million to Xinchang Middle School and RMB1.7 million to Youth and Children's Psychological Growth and Development

Centre in Xinchang County to implement the “Student Care and Development Digital Empowerment” project providing

In 2024 the Company donated RMB100000 to the Shangyu District Charity Federation in Shaoxing City to assist vulnerable timely and professional psychological support for children and families in need. To promote the development of the

groups. In addition the Company encourages employees to participate in voluntary blood donation. Employees who refrigeration industry Sanhua Holding established the Xia Anshi Scholarship to incentivise talent in the refrigeration sector.volunteer for blood donations are provided with care packages and given time off. In 2024 there were nearly 80 blood In 2024 Sanhua Holding donated RMB20000 to the Qixing Subdistrict “Hanging Single to Help” Fund in Xinchang County

donors with a blood donation volume exceeding 27000 millilitres. supporting low-income families and vulnerable groups affected by illness or disability.

899009

Environmental

Protection: Clean

Circular and Natural2024 Environmental Social and Governance Report Environmental Protection: Clean Circular and Natural

Environmental Policies and Management The Company and its subsidiaries including Zhejiang Sanhua Automotive Components Co. Ltd. Zhejiang Sanhua

Commercial Refrigeration Co. Ltd. and Hangzhou Sanhua Microchannel Heat Exchanger Co. Ltd. are key environmental risk

control units in Zhejiang Province.Sanhua Intelligent Controls is committed to reducing its environmental footprint in operations and promoting a green low-carbon Given the alignment of “Environmental Policies and Management” with other environmental topics in Governance andtransformation. Through a strict environmental management system and efficient resource utilisation the Company integrates Impacts Risks and Opportunities Management relevant information is disclosed under the “Environmental Policies andenvironmental protection into daily operations and strategic planning continuously optimising energy use waste management Management” topic and is not repeatedly described in individual topics.and pollution control measures to achieve the coordinated development of the economy society and the environment.| Environmental Governance Structure

The Company strictly complies with laws and regulations such as the Environmental Protection Law of the People’s Republic of

China the Atmospheric Pollution Prevention and Control Law of the People’s Republic of China the Water Pollution Prevention and The Company has established an environmental governance structure consisting of the Board of Directors the Smart

Control Law of the People’s Republic of China the Noise Pollution Prevention and Control Law of the People’s Republic of China the Manufacturing and Quality Management Centre and the EHS Offices of various business units. In collaboration with various

Law of the People’s Republic of China on the Prevention and Control of Environmental Pollution by Solid Waste and Regulations business units the Company has developed internal management systems including the Legal and Regulatory Compliance

of the Prevention and Control of Solid Waste Pollution in Zhejiang Province. An environmental management system has been Obligations and Compliance Evaluation Procedure the Environmental Factors Identification and Evaluation Control Procedure the Risk

established and environmental protection responsibilities are comprehensively implemented to ensure that all production and and Opportunity Response Control Procedure the Energy Regulations the Manual of Energy Management System the Wastewater

operational activities comply with national and local environmental standards. and Air Pollutant Control Procedures the Solid Waste Control Procedures the Regulations of Hazardous Waste the Management

In 2024 the Company has not been subjected to major administrative penalties or criminal liabilities related to environmental Regulations of Safety and Environmental Assessment etc. These systems clarify the environmental management processes and

incidents by ecological or environmental authorities. responsibilities and the Board of Directors assumes the responsibility for the management and supervision of environmental

management strategies and performance targets ensuring that environmental protection requirements are implemented across

Environmental Management System all business processes and continuously strengthening the system and execution of environmental management. In 2024 the

Company passed ISO 14001 Environmental Management System certification with a coverage rate of 94%.Governance

To further strengthen environmental responsibility the Company considers environmental performance as one of the evaluation

Establish an environmental management structure consisting of the Board of Directors the Smart Manufacturing and Quality factors for executive compensation. Each year the Company and its business units set environmental goals for department

Management Centre and the EHS Offices of various business units and develop internal management systems such as compliance heads. If the goals are not achieved the performance rewards of the respective department heads are reduced. In the event

evaluation procedures and environmental control procedures.of an environmental pollution incident the relevant performance evaluations are conducted in accordance with the applicable

assessment and management regulations.Strategy In 2024 the Company developed and published the Sanhua Intelligent Controls Environmental Statement which outlines core

goals related to energy and GHGs water resource utilisation pollution management chemicals and waste management and eco-

Identify environmental risks and opportunities including policy and regulatory changes technological innovations market demand

design of products to promote the active fulfilment of environmental protection responsibilities. The business scope includes the

shifts changes in the natural environment reputational risks etc. Evaluate their potential impacts on business operations supply

chain management and financial performance and provide support for developing response strategies. Company and its wholly owned subsidiaries and holding subsidiaries and operational activities include the Company's production

and business operations products and services distribution and logistics waste management etc.Impacts Risks and Opportunities Management

Through identification and evaluation of environmental factors by various departments develop risk management plans and

implement the “Three Lines of Defence” mechanism to ensure that environmental impacts risks and opportunities are effectively

managed and addressed.Metrics and Targets

Key metrics include no major environmental pollution incidents in the year compliance with wastewater and waste gas emission

standards VOCs emission intensity waste generation intensity etc.

93 942024 Environmental Social and Governance Report Environmental Protection: Clean Circular and Natural

| Environmental Management Mechanism | Environmental Management Initiatives

The Company fully recognises the materiality of environmental risks and opportunities to its sustainability. Through In 2024 the Company focused on standardising emergency drills strengthening evaluations and audits and conducting

systematic identification assessment and management of environmental-related risks the Company actively seizes the continuous monitoring and inspections to ensure the effective implementation of environmental protection measures

opportunities presented by green transformation and low-carbon development promoting a win-win situation for both further enhancing environmental management capabilities.environmental protection and economic benefits.Environmental Factors Identification and Management Process Key Initiatives of Environmental Management

Identify external factors that may impact the environment based on daily operational activities. Standardising Emergency Drills

The identification dimensions include risk and opportunity categories external factors

Identification and Regularly update the Emergency Response Plan for Environmental Incidents to ensure the plan aligns with the latest stakeholders etc.Determination environmental risks and legal/regulatory requirements. Use the Environmental Factors Record and Determination Form to identify and document all Regularly conduct different types of emergency drills within each business unit including hazardous chemical leakage drills and

potential environmental risks ensuring comprehensive coverage of all business areas. evacuation drills to ensure a quick response and minimise environmental damage during an incident.Strengthening Evaluations and Audits

Perform a detailed assessment of identified environmental factors. The evaluation dimensions

include occurrence frequency (the likelihood of risk/opportunity events) severity (the extent of Based on EMS system audits and external requirements annually conduct ISO 14001 EMS audits for all EMS-certified production

Assessment and impact after an event occurs) and risk coefficient (the specific impact of the risk on company and operation sites.Prioritisation operations). Risk and opportunity levels are then prioritised. Irregularly conduct third-party environmental audits covering all production and operation sites at least every three years to

The evaluation results help the Company identify environmental risks that need immediate ensure environmental standards are strictly met.response and potential environmental opportunities that can be utilised. Conduct environmental assessments for all significant changes and new projects evaluate potential environmental impacts and

implement appropriate control measures.For high-priority risks and opportunities develop corresponding management measures Continuous Monitoring and Inspections

led by the responsible departments specifying the content implementation deadlines and

Management and supervision mechanisms. Based on the risk identification results high-priority environmental factors will be included in the List of Key Environmental Factors

Improvement Regularly review the effectiveness of the environmental management system to ensure and corresponding control measures will be implemented based on their severity.continuous optimisation and improvement of environmental risk management. EHS departments in each business unit organise monthly environmental inspections to ensure the effective execution of daily

environmental management and to promptly address any issues found.Actively promote environmental technology transformation projects to improve resource utilisation efficiency and reduce

pollutant emissions through technological means.Major Environmental Risks and Opportunities

Environmental Management Metrics and Targets in 2024

Environmental Risks Environmental Opportunities

Metrics 2024 Target

Failure to timely identify and evaluate updates to envi- Stricter environmental protection requirements and

ronmental laws and regulations and not updating inter- regular inspections by regulatory authorities promote Major environmental pollution incidents 0 None

nal systems accordingly which may lead to violations. the Company’s environmental protection efforts VOCs emissions per unit revenue 0.0045

reduce the likelihood of environmental liability incidents 0.005 (kg / RMB 10000) (Decrease by 10% from 2024 level by 2030)

Environmental management facilities and equipment and enhance overall environmental performance.are widely distributed. Insufficient monitoring may Amount of waste generated per unit revenue 0.0126

0.0139

result in failures that go unnoticed and unrepaired in- (tons / RMB 10000) (Decrease by 10% from 2024 level by 2030)

creasing the likelihood of environmental damage.

95 962024 Environmental Social and Governance Report Environmental Protection: Clean Circular and Natural

Resource Management

| Energy Management | Energy Management Initiatives

The types of energy used by Sanhua Intelligent Controls include gasoline diesel natural gas purchased electricity and In 2024 the Company further strengthened energy-saving and emission reduction measures by promoting energy

purchased steam. efficiency reducing energy waste and increasing renewable energy usage. The Company implemented a series of

The Company strictly adheres to laws and regulations such as the Energy Conservation Law of the People’s Republic of innovative projects and technological upgrades to drive green transformation and achieve sustainability goals.China and the Energy Law of the People’s Republic of China as well as internal management systems such as the Energy

Regulations and the Manual of Energy Management System to ensure efficient and compliant energy use in production and

operations. In 2024 the Company passed ISO 50001 Energy Management System certification.Key Initiatives of Energy Management

Energy Management System Promoting Energy Efficiency

Eliminating High-Energy Consumption Equipment: Replaced outdated high-energy-consuming transformers with efficient

Governance equipment saving about 158.4 MWh annually.High-Energy Consumption Air Conditioner Renovation: Implemented a centralised air conditioning control software to monitor Establish an energy management structure consisting of the Board of Directors the Smart Manufacturing and Quality Management and optimise air conditioning performance in real-time. The standardised arrangement of drainage pipes helps improve system

Centre and the Equipment and Power Departments of various business units. efficiency and regular cleaning further enhances energy performance.The Smart Manufacturing and Quality Management Centre is responsible for the overall management of energy consumption. Upgrading Air Compressor Technology: Replaced inefficient air compressors with more efficient models improving the overall

efficiency of the air compression process.Replacing Old Water Pump Motors: Replaced outdated cooling tower water pump motors improving system efficiency and

Strategy reducing electricity consumption saving approximately 57000 kWh annually.Identify potential energy inefficiencies waste and environmental impacts and strengthen response mechanisms to external factors

such as energy price fluctuations and supply instability.Reducing Energy Waste

Impacts Risks and Opportunities Management Heat Recovery: Utilised a heat pump to recover waste heat generated during production and converted it into hot water for

production line cleaning reducing the need for purchased hot water. A large single-stage screw compressor was used to recover

waste heat turning previously wasted thermal energy into usable energy.Conduct energy audits and risk assessments build a smart energy IoT management platform and develop carbon emission calculation

software to monitor energy consumption in real-time across business units workshops and high-energy-consuming equipment.Regularly generate monthly energy analysis reports and present them to senior management to adjust energy management strategies

in a timely manner.Increasing Renewable Energy Usage

Roof mounted photovoltaic: Installed distributed photovoltaic power generation energy storage facilities and smart microgrid

systems. Utilised solar energy to provide electricity for production equipment.Metrics and Targets Outsourcing green electricity: Increased the proportion of electricity generated from renewable energy by directly purchasing

green electricity and obtaining green electricity certificates.Set a target of “the proportion of electricity generated from renewable sources remains ≥15%”. In 2024 the Company’s electricity generated from renewable energy accounted for 16.00%.

97 982024 Environmental Social and Governance Report Environmental Protection: Clean Circular and Natural

| Water Resources Management Emissions and Waste

The water resources used by Sanhua Intelligent Controls mainly come from municipal water supplies and are utilised

in the production process equipment cleaning as well as for employee daily life and office needs. The Company adopts Sanhua Intelligent Controls is committed to reducing pollutant emissions and improving the efficiency of waste treatment

multiple measures to ensure the rational use of water promote water conservation and implement water quality protection and resource utilisation. The Company comprehensively identifies pollution sources in the production process clarifies the

measures to minimise environmental impact. types of air pollutants water pollutants and waste generated by each production process and develops and implements

2024 Water Resource Conservation Actions measures for reducing hazardous substance emissions and waste in strict accordance with relevant regulations covering

all production and operation sites to ensure that pollutant emissions meet environmental protection standards.Reducing Waste and Consumption Promoting Circular Use

Pollutants and Waste Types and Involved Processes

Adjusted production processes and optimised Promoted wastewater reuse management

water usage to reduce pure water consump- treating various types of wastewaters includ-

tion. ing steam condensate welding wastewater Pollutants and Waste Types Processes Involved Main Pollutants and Waste Types

More than 90% of water used for product test- wash tank hot water and rinsing water. After

ing was recycled after sedimentation. purification the treated water is reused. Sulfuric acid mist tin and its compounds non-methane

Recycled water was used for toilets and land- The Company’s wastewater treatment station Electroplating pickling hydrocarbons trichloroethylene smoke particulate

scaping irrigation. processes approximately 1200 tonnes of pro- Air Pollutants welding injection matter sulphur dioxide nitrogen oxides etc.duction wastewater per day with about 45000 moulding ultrasonic

tonnes of wastewater reused in 2024. polishing gas

combustion brazing Chemical oxygen demand suspended solids petroleum

hydrophilic coating total phosphorus biochemical oxygen demand

Water Pollutants ammonia nitrogen anionic surfactant solids etc.Hazardous waste: Sludge waste cutting fluid waste

| Circular Economy oil waste cleaning agents ethylene glycol waste PCB

boards waste packaging barrels waste electronic

Sanhua Intelligent Controls follows laws and regulations such as the Circular Economy Promotion Law of the People’s Machining exhaust products waste activated carbon etc.treatment testing

Republic of China aiming to promote the efficient use of resources and minimise waste treatment. The Company General solid waste: Waste cardboard waste mixed

Waste cleaning materials scrapped stators scrapped oil pumps waste

encourages the organic combination of production consumption disposal and reuse achieving a win-win situation for

iron etc.economic benefits and environmental protection. Household waste

2024 Circular Economy Promotion Actions

Reducing Single-Use Packaging Promoting Packaging Recycling and Reuse

The Company changed the packaging method for Encouraged suppliers to use recyclable packaging

an electronic expansion valve to circular packaging materials for components such as plastic baskets

using pallet boxes instead of traditional single-use and other eco-friendly materials.packaging. About 48000 sets are reused annually Returned raw material packaging to suppliers for

with the inner lining having a lifespan of 2 years reuse and sold auxiliary materials from injection

and the outer box lasting 3 years. moulded parts to third parties for recycling.The turnover boxes and boarding boxes used for Classified waste materials based on their com-

shipping products can be recycled. After the prod- position such as waste solder dross waste pins

uct is delivered to the customer the empty boxes and scrap metal and sold these materials to third

used by the customer are transported back to the parties for recycling.Storage and Transportation Department and can

be distributed to various factories for reuse. Each

box can be reused approximately 14 times per year.

99 1002024 Environmental Social and Governance Report Environmental Protection: Clean Circular and Natural

Pollution and Waste Management System | Pollution and Waste Management Initiatives

Governance Pollutant Emissions

Establish a pollution and waste management structure consisting of the Board of Directors the Smart Manufacturing and Quality In 2024 the Company continued to advance pollutant reduction by optimising processes upgrading equipment and

Management Centre and the EHS Offices of various business units. effectively reducing the generation and emissions of waste gases wastewater and noise.Strategy Key Pollution Emission Measures

Identify and assess various risks and opportunities such as legal liabilities and fines due to pollutant emissions exceeding limits

Oil Mist Smoke and Exhaust Gas Treatment Improvements

environmental pollution and reputational risks from improper waste disposal and improving environmental protection technologies

to reduce emissions. Implement waste resource recovery and recycling to improve resource recovery efficiency. The machining workshop adopted a centralised oil mist collection system discharging via external pipes to address uneven

disposal efficiency at individual equipment.Welding smoke in the assembly workshop was switched from single-point bag collection to centralised water spray process.Impacts Risks and Opportunities Management Injection moulding workshop adopted a combination of precise single-point collection and centralised piping to collect exhaust

gases adjusting damper angles to ensure that each collection point meets airflow standards. The honeycomb activated carbon

was replaced with granular activated carbon to enhance adsorption and increase collection efficiency.While ensuring compliance with environmental protection regulations strive to optimise production processes and waste disposal The manual acid washing process for product cleaning was replaced with automatic water-based cleaning to reduce acidic

procedures not only reducing environmental pollution risks but also converting green technology and resource recovery into new

wastewater and exhaust gas emissions.market opportunities.Shot Blasting Equipment and Smelting Furnace Dust Removal Process Improvements

Metrics and Targets

Shot blasting equipment used a multi-stage filtration process including settling hoppers cyclone dust collectors for preliminary

Set goals for achieving compliant emissions of waste gases wastewater and noise as well as compliant waste disposal. filtration and a Venturi wet scrubber for deep filtration. The discharged gases met national standards via high-altitude emission devices.For the smelting furnace smoke was captured by a dust collection hood pre-treated by pipes and fire prevention coolers then purified

through a cyclone dust collector and pulse bag dust collector. Dust collection efficiency exceeded 90% and the dust removal efficiency

exceeded 97% ensuring compliant emissions.In line with regulatory and external requirements the Company hires qualified third-party institutions to regularly test

pollutants such as exhaust gases wastewater and noise issuing third-party certified test reports. In the event of an

accident the Company follows the “Four No Spares” principle (i.e. no spares until the cause of the accident has been

investigated no spares until the person responsible for the accident has been dealt with no spares until the public havebeen educated and no spares until preventive measures have been taken) adhering to the principle of “No concealment Nofalse reporting No delayed reporting and No procrastination in reporting”.Case The “Commercial Refrigeration and Air-Conditioning Intelligent Control Component TechnologicalTransformation Project”

The Company enhanced its product industry chain and increased product added value by purchasing advanced domestic

equipment such as fully automatic cleaning devices tunnel furnace equipment and laser welding machines. The project optimised

the process by using low-pollution raw materials improving process continuity and other methods to reduce waste generation. After

reaching full production capacity the project is expected to generate an annual sales revenue of approximately RMB70 million and

an annual total profit of approximately RMB20 million.

101 1022024 Environmental Social and Governance Report ESG Data and Notes

Waste Disposal ESG Data and Notes

The Company strictly categorises and manages waste according to the Solid Waste Control Procedures ensuring proper

scientific and safe disposal of waste to minimise environmental pollution.Economic Data

Key Waste Disposal Measures Metrics Unit 2022 2023 2024

Total assets RMB10000 2796121.42 3189058.48 3641574.84

Waste Classification and Disposal

Revenue RMB10000 2134754.97 2455780.21 2794716.45

According to procedural requirements the Company separates household waste and production waste setting up three types Net profit RMB10000 260805.16 293371.47 311172.58

of waste bins in production areas for recyclable waste non-recyclable waste and hazardous waste. Each container is clearly

labelled for easy identification. Total taxes paid RMB10000 62233.27 71797.96 105764.05

Except for recyclable waste all other waste is entrusted to qualified third-party disposal services. A Third-Party Waste Disposal

List is maintained to ensure that the waste disposal plan can be promptly adjusted if the third-party changes.Business Ethics Data1

Hazardous Waste Disposal

At the beginning of each year each production department identifies and counts the types and quantities of hazardous waste Metrics Unit 2022 2023 2024

generated summarising them into the Hazardous Waste Management Plan. Coverage of directors receiving anti-commercial

Each production workshop sets up temporary storage points based on the types of hazardous waste. Each waste container is % / / 100bribery and anti-corruption training

clearly marked and mixing of waste types is prohibited.Average hours of anti-commercial bribery and Hazardous waste storage areas are equipped with barriers and drainage pipes with facilities to prevent wind rain and leakage. Hours / / 4.00

anti-corruption training received by directors2

The storage period for hazardous waste does not exceed one year and any extension requires approval from the environmental

protection department. Percentage of operational points covered by

% 100 100 100The Company has established a hazardous waste management ledger and submits online reports to the Environmental business ethics audits3

Protection Bureau in accordance with the Regulations of Hazardous Waste Transfer.Number of corruption-related lawsuits filed

The Company promotes the digitalisation of hazardous waste warehouses adding video surveillance and electronic weighing against the Company or its employees and / 0 0 0

systems to enable traceability (from generation to disposal) using QR codes. concluded during the reporting period

Number of cases in which the Company was

sanctioned by relevant authorities for unfair

/000

In addition the Company actively conducts training related to solid waste disposal including but not limited to hazardous competition or violations of antitrust laws during

the reporting period

waste disposal the entire process management of hazardous chemicals and on-site safety hazard management

continuously enhancing employee environmental awareness and operational standards. This ensures that all employees Amount involved in lawsuits or significant

administrative penalties due to improper conduct RMB10000 0 0 0

have a clear understanding of the relevant management requirements and can implement them in accordance with by the Company during the reporting period

regulations.Number of illegal or non-compliant incidents

related to the protection of trade secrets / 0 0 0

(including intellectual property)

Note 1: The Company began tracking and disclosing the average hours of anti-commercial bribery and anti-corruption training received by directors starting in

2024.

Note 2: [Calculation Formula] Average hours of anti-commercial bribery and anti-corruption training received by directors = Total hours of anti-commercial

bribery and anti-corruption training received by directors / Total number of directors at the end of the reporting period.Note 3: [Calculation Formula] Percentage of operational points covered by business ethics audits = Number of operational points audited for business ethics

during the reporting period / Total number of operational points * 100%.

103 1042024 Environmental Social and Governance Report ESG Data and Notes

Innovation and Intellectual Property Data Sustainable Procurement Data

Metrics Unit 2022 2023 2024 Metrics Unit 2022 2023 2024

R&D investment amount RMB10000 98895.45 109683.42 135179.88 Total number of suppliers1 / 6221 7291 7564

R&D investment amount as a percentage of revenue1 % 4.63 4.47 4.84 Mainland China / 3760 3870 3950

Number of R&D personnel / 2243 3241 3578 By region Hong Kong Macau Taiwan and

/246134213614

Overseas

Number of R&D personnel as a percentage of total

2 % 15.09 18.28 18.08employees Percentage of direct suppliers signing the supplier

%100100100

code of conduct2

Number of patent applications during the reporting

/89312931341

period Percentage of target suppliers providing

3 % 100 100 100information on conflict minerals

Number of patents granted during the reporting period / / 211 460

Percentage of direct suppliers signing contracts

Number of valid patents during the reporting period / 3581 3792 4252 4 % 100 100 100containing ESG-related provisions

Note 1: [Calculation Formula] R&D Investment amount as a percentage of revenue = R&D investment amount for the reporting year / Revenue for the reporting Percentage of procurement personnel receiving

year * 100%. % 100 100 100training on sustainable procurement5

Note 2: [Calculation Formula] Number of R&D personnel as a percentage of total employees = Number of R&D personnel / Total number of employees * 100%.Note 1: [Calculation Formula] Total number of suppliers at the end of the reporting period = Number of suppliers in Mainland China at the end of the reporting

period + Number of suppliers in Hong Kong Macau Taiwan and Overseas at the end of the reporting period.Note 2: [Calculation Formula] Percentage of direct suppliers signing the supplier code of conduct = Number of direct suppliers signing the supplier code

Product and Service Safety and Quality Data of conduct at the end of the reporting period / Total number of direct suppliers * 100%. Direct suppliers refer to those who provide raw materials parts or

components required for the Bill of Materials (BOM) of the product.Note 3: [Calculation Formula] Percentage of target suppliers providing information on conflict minerals = Number of target suppliers providing information on

Metrics Unit 2022 2023 2024 conflict minerals / Total number of target suppliers * 100%. Target suppliers refer to suppliers in the categories of electronic components or bulk commodities

related to conflict minerals. The Company signs the Supplier Code of Conduct with target suppliers committing not to use any minerals from conflict regions

Number of incidents of violations of laws and

/ 0 0 0 in the supply chain and ensuring all suppliers are fully aware of and comply with the Company's conflict minerals policy.regulations related to products and services Note 4: [Calculation Formula] Percentage of direct suppliers signing contracts containing ESG-related provisions = Number of direct suppliers signing contracts

containing ESG-related provisions / Total number of direct suppliers * 100%.Amount involved in major safety and quality incidents

RMB10000 0 0 0 Note 5: [Calculation Formula] Percentage of procurement personnel receiving training on sustainable procurement = Number of procurement personnel

related to products and services receiving sustainable procurement training / Total number of procurement personnel * 100%.Total number of complaints received regarding

/1175

products and services

Complaint handling rate for products and services1 % 100 100 100

Labour Rights and Talent Retention Data

Sales amount of products sold or delivered that were

RMB10000 0 0 0

recalled for safety and health reasons

Metrics Unit 2022 2023 2024

Note 1: [Calculation Formula] Complaint handling rate for products and services = Number of complaints handled regarding products and services / Total

number of complaints received regarding products and services * 100%. Total number of employees / 14860 17732 19787

Female employees / 6776 6551 6722

By gender

Male employees / 8084 11181 13065

Cyber and Information Security Data Employees working in Mainland / 10926 13120 14429

China

By region

Metrics Unit 2022 2023 2024 Employees working in Hong Kong / 3934 4612 5358

Macau Taiwan and overseas

Number of confirmed incidents of leakage theft or

/000

loss of customer data Employees aged over 50 / 1457 1421 1651

Amount involved in customer privacy breach incidents RMB10000 0 0 0 By age Employees aged 30 to 50 / 9147 10091 10391

Amount involved in data security incidents RMB10000 0 0 0 Employees aged below 30 / 4256 6220 7745

105 1062024 Environmental Social and Governance Report ESG Data and Notes

Metrics Unit 2022 2023 2024 Metrics Unit 2022 2023 2024

Number of senior management employees / 42 85 90 Total training hours for employees Hours 455860.50 689225.36 753686.63

Percentage of female employees in senior Average training hours per employee3 Hours 30.68 38.87 39.66

1 % 7.14 7.06 15.56management

Female employees Hours 29.30 47.34 48.21

Employee turnover rate2 % 11.65 17.39 21.25 By gender

Male employees Hours 31.83 33.90 34.96

Female employees % 9.81 17.58 20.92

By gender Percentage of employees receiving diversity anti-

4 % 78.00 80.00 86.00Male employees % 13.14 17.29 21.58 discrimination and anti-harassment training

Employees in mainland China % 6.25 13.44 14.48

Note 1: The Company began tracking and disclosing the number of employee training sessions starting in 2024.By region Employees in Hong Kong Macau

% 23.83 26.90 14.70 Note 2: [Calculation Formula] Training coverage rate for each category of employees = Number of employees in the category receiving training / Total number

Taiwan and overseas of employees in the category * 100%.Note 3: [Calculation Formula] Average training hours per employee for each category = Total training hours for employees in the category / Number of

Employees aged over 50 % 13.27 19.94 34.57 employees in the category.By age Employees aged 30 to 50 % 6.30 13.14 17.82 Note 4: [Calculation Formula] Percentage of employees receiving diversity anti-discrimination and anti-harassment training = Number of employees receiving

diversity anti-discrimination and anti-harassment training / Total number of employees * 100%.Employees aged below 30 % 20.86 22.96 24.68

Percentage of employees covered by unions/collective

%71.6091.5092.001

agreements3 Occupational Health and Safety Data

Percentage of employees covered by employee

% 71.60 91.50 92.00 Metrics Unit 2022 2023 2024

representative elections4

Percentage of employees participating in occupational

Note 1: [Calculation Formula] Percentage of female employees in senior management = Number of female employees in senior management / % 100 100 100health examinations2

Total number of senior management employees * 100%.Note 2: [Calculation Formula] Employee turnover rate for each category = Number of employees leaving in the category during the reporting Number of lost workday accidents3 / 24 90 104

period / (Number of employees in the category at the end of the reporting period + Number of employees leaving in the category during the

reporting period) * 100%. Number of workdays lost due to work injuries / / 3117 2326

Note 3: [Calculation Formula] Percentage of employees covered by unions/collective agreements = Number of employees who joined the union /

4

Total number of employees * 100%. The contract is signed by employee representatives and covers employees who have joined the union. Employee work injury insurance coverage rate % 100 100 100

Note 4: [Calculation Formula] Percentage of employees covered by employee representative elections = Number of employees eligible to Employee work injury insurance investment amount RMB10000 / / 1278.17

participate in employee representative elections / Total number of employees * 100%. All employees who have joined the union are eligible to

participate in the employee representative election. Employee occupational safety liability insurance

%//32.80

coverage rate5

Employee occupational safety liability insurance

RMB10000 / / 334.56

Human Capital Development Data investment amount

Percentage of operations covered by health and safety

%100100100

Metrics Unit 2022 2023 2024 risk assessments

6

Labor contract signing rate % 100 100 100 Note 1: The Company began tracking and disclosing the employee work injury insurance coverage rate and investment amount as well as the employee

occupational safety liability insurance coverage rate and investment amount starting in 2024.Social insurance coverage rate % 100 100 100

Note 2: [Calculation Formula] Percentage of employees participating in occupational health examinations = Number of employees participating in occupational

Number of employee training sessions1 / / / 6853 health examinations / Number of employees in occupational disease risk positions at the end of the reporting period * 100%.Note 3: The Company started tracking and disclosing the number of lost workday accidents including those from overseas factories in 2023 so the data

Total expenditure on employee training RMB10000 / 762.89 829.74 shows a growth trend.Note 4: [Calculation Formula] Employee work injury insurance coverage rate = Number of employees covered by work injury insurance during the reporting

Employee training coverage rate2 % 63.06 76.29 81.65 period / Total number of employees * 100%.Note 5: [Calculation Formula] Employee occupational safety liability insurance coverage rate = Number of employees covered by occupational safety liability

Female employees % 60.01 72.45 80.77 insurance during the reporting period / Total number of production employees * 100%.By gender

Male employees % 65.61 78.54 82.13 Note 6: [Calculation Formula] Percentage of operations covered by health and safety risk assessments = Number of operational points assessed for health

and safety risks during the reporting period / Total number of operational points * 100%.

107 1082024 Environmental Social and Governance Report ESG Data and Notes

Corporate Citizens and Public Welfare Data1 Metrics Unit 2022 2023 2024

Non-hazardous waste

Metrics Unit 2024

Total non-hazardous waste generated t 8786.49 10145.82 33597.57

Charitable donation amount RMB10000 12.48

Non-hazardous waste generated per RMB10000 of

Times of employee volunteer services / 439 t/RMB10000 0.004 0.004 0.012revenue

Total volunteer service hours by employees Hours 895 Waste paper t / / 2881.66

Note 1: Starting in 2024 the Company began tracking and disclosing key metrics related to charitable donations and employee volunteer services within the Domestic waste t / / 16302.41

6

scope of Sanhua Intelligent Controls and its subsidiaries. By type

Industrial solid waste t / / 10929.94

Emissions and Waste Data1 Others t / / 3483.56

Hazardous waste

Metrics Unit 2022 2023 2024

Total hazardous waste generated t 5713.26 5575.81 5386.88

Environmental Management

Hazardous waste generated per RMB10000 of

t/RMB10000 0.003 0.002 0.002

Environmental protection investment amount RMB10000 2721.10 3370.96 3432.76 revenue

Proportion of employees receiving environmental- Waste solvents or chemicals t / / 906.38

%100100100

related training2

Waste oil/lubricants from property

t / / 263.02

Proportion of operational sites covered by environ- By type7 management% 100 100 100

mental risk assessments3

Electronic products t / / 115.27

Pollutant Discharge

Others t / / 4102.21

Wastewater and water pollutants

Total wastewater discharge m3 1784248.70 1945599.99 3027711.46 Note 1: In 2024 the Company expanded the scope of data collection related to emissions and waste to include additional domestic and overseas factories.Where possible data for 2022 and 2023 were retrospectively adjusted to improve comparability. However for certain indicators data for 2022 and 2023

Of which: Industrial wastewater discharge m3 / / 2153879.86 remain unavailable resulting in higher figures for some indicators in 2024.Note 2: [Calculation formula] Proportion of employees receiving environmental-related training = Number of employees who received environmental-related

Of which: Domestic wastewater discharge m3 / / 873831.60 training / Total number of employees * 100%.Note 3: [Calculation formula] Proportion of operational sites covered by environmental risk assessments = Number of operational sites assessed for

Total nitrogen (TN) discharge t / / 27.29 environmental risks during the reporting period / Total number of operational sites * 100%.Biochemical oxygen demand (BOD) Note 4: In 2024 the Company continued monitoring water pollutant emissions to collect and disclose data on water pollutant discharges. The main types of

t / / 40.72 water pollutants include total nitrogen (TN) biochemical oxygen demand (BOD) chemical oxygen demand (COD) and ammonia nitrogen (NH3-N).discharge

By type ? Note 5: In 2024 the Company continued monitoring air pollutant emissions to collect and disclose data on air pollutant discharges. The main types of air

Chemical oxygen demand (COD) pollutants include volatile organic compounds (VOCs) nitrogen oxides (NOx) sulphur oxides (SOx) and particulate matter (PM).t 190.71 222.16 231.10

discharge Note 6: Other non-hazardous waste includes metal scraps kitchen waste wood foil paper etc. Since 2024 the Company has further improved the statistical

and management mechanisms for non-hazardous waste and disclosed disaggregated data on different types of non-hazardous waste generated.Ammonia nitrogen (NH3-N) discharge t 5.53 9.19 11.03 Note 7: Other hazardous waste includes sludge waste packaging materials used batteries etc. Since 2024 the Company has further improved the statistical

and management mechanisms for hazardous waste and disclosed disaggregated data on different types of hazardous waste generated.Air pollutants

Volatile organic compounds (VOCs)

t / / 14.04

emissions Resources Management Data1

By type ? Nitrogen oxides (NOx) emissions t 14.29 16.62 16.09 Metrics Unit 2022 2023 2024

Sulphur oxides (SOx) emissions t 3.38 4.28 5.33

Energy Management

Particulate matter (PM) emissions t 31.31 37.04 33.05

Integrated energy consumption2 tce 58351.33 74852.32 121388.73

Waste Disposal

Integrated energy consumption per RMB10000 of

tce/RMB10000 0.027 0.030 0.043

Total waste generated t 14499.75 15721.63 38984.44 revenue

Waste generated per RMB10000 of revenue t/RMB10000 0.0068 0.0064 0.0139

109 1102024 Environmental Social and Governance Report ESG Data and Notes

Metrics Unit 2022 2023 2024 Responding to Climate Change Data

Natural gas consumption m3 11893953.75 14432218.06 28692650.45

Metrics Unit 2022 2023 2024

Diesel consumption Liter 190875.78 201550.51 834285.59

Total GHG emissions (Scope 1 + Scope 2) tCO2e 209647.27 253251.65 356264.97

Gasoline consumption Liter 170958.18 224397.11 261273.45

GHG emissions per RMB10000 of revenue (Scope

Total electricity consumption3 MWh 316443.75 402683.82 615802.92 tCO2e/RMB10000 0.098 0.103 0.1271 + Scope 2)

By type

Of which: Electricity from non-renew- 2

MWh 296418.67 351541.74 517264.11 Scope 1 GHG emissions tCO2e 26623.03 32262.17 64880.18

able sources

By scope Scope 2 GHG emissions3 tCO2e 183024.24 220989.48 291383.89

Of which: Electricity from renewable

4 MWh 20025.08 51142.08 98538.81 Scope 3 GHG emissions ?sources tCO2e 36750.93 39575.24 77049.86

Purchased steam consumption GJ 93402.84 165035.36 180690.56

Note 1: In 2024 the Company expanded the scope of its GHGs inventory by including additional domestic and overseas factories. Where possible data for

Proportion of electricity generated from renewable 2022 and 2023 were retrospectively adjusted to enhance comparability. However for certain indicators data for 2022 and 2023 remain unavailable resulting in

%6.3312.7016.00

energy higher total GHG emissions and emissions intensity in 2024 compared with the previous two years.Note 2: Scope 1 GHG emissions include direct emissions from the combustion of natural gas gasoline for official vehicles diesel for forklifts and diesel for

Water Resource Management stationary sources. The calculation methods and emission factors refer to the China Energy Statistical Yearbook (2022) among others.Note 3: Scope 2 GHG emissions include indirect emissions from the consumption of purchased electricity and purchased steam. The carbon emission factor

Total water consumption m3 3643299.45 4002069.09 4496122.51 for purchased municipal electricity is the national average electricity CO2 emission factor (excluding non-fossil energy under market-based transactions)

published in the Notice on the Release of the 2022 Electricity Carbon Dioxide Emission Factors (December 2024) by the Ministry of Ecology and Environment

Water consumption per RMB10000 of revenue m3/RMB10000 1.707 1.630 1.609 of China and the National Bureau of Statistics: 0.5856 tCO2/MWh. For other countries and regions electricity emission factors refer to relevant documents

published by local governments or regulatory authorities.Municipal water supply m3 / / 3533936.51

By source Note 4: Scope 3 GHG emissions include indirect emissions arising from upstream leased assets downstream transportation and distribution downstream

Surface water m3 / / 962186.00 leased assets and other activities. The calculation methods and emission factors refer to the World Input-Output Database (WIOD) Lifecycle GHG Emission

Factors for Chinese Products Beijing Low-carbon Travel Emission Reduction Methodology (Trial) UK DEFRA Conversion Factors US EPA GHG Emission Factors

Circular Economy Hub and other relevant sources.Total weight of recycled water m3 474237.89 642244.00 1501076.90

Proportion of recycled water in total water con-

%13.0216.0533.39

sumption5

Total weight of finished product packaging materials

t 12590.73 16142.05 14565.52

used

Total weight of recycled finished product packaging

t 1921.75 2523.30 3214.36

materials

Recycling rate of finished product packaging

materials6

%15.2615.6322.07

Weight of recycled waste t / / 7415.54

Note 1: In 2024 the Company expanded the scope of data collection related to resources by including additional domestic and overseas factories. Where

possible data for 2022 and 2023 were retrospectively adjusted to improve comparability. However for certain indicators data for 2022 and 2023 remain

unavailable resulting in higher figures for some indicators in 2024.Note 2: Total integrated energy consumption includes consumption of natural gas gasoline for official vehicles diesel for forklifts and stationary sources

purchased municipal electricity and green electricity rooftop photovoltaic power generation and purchased steam.Note 3: [Calculation formula] Total electricity consumption = Consumption of electricity from non-renewable sources + consumption of electricity from

renewable sources.Note 4: Electricity from renewable sources includes directly purchased green electricity photovoltaic power generation within Company premises and verified

Green Electricity Certificates.Note 5: [Calculation formula] Proportion of recycled water in total water consumption = Total volume of recycled water / Total water consumption × 100%.Note 6: [Calculation formula] Recycling rate of finished product packaging materials = Total weight of recycled finished product packaging materials / Total

weight of finished product packaging materials used * 100%.

111 1122024 Environmental Social and Governance Report Indexes

Indexes Disclosure Location

Sustainable Procurement

Supply chain security

ESG Data and Notes

Self-Regulatory Guidelines No. 17 for Companies Listed on Shenzhen Stock

The balance of accounts payable (including notes payable) of the Company at the

Exchange — Sustainability Report (For Trial Implementation) Content Index end of the reporting period does not exceed RMB30 bn or represent more than 50

Equal treatment of SMEs percent of the total assets. Therefore it does not fall within the mandatory disclosure

scope specified in the Guidelines. The Company ensures timely payments to small

and medium-sized enterprises.Disclosure Location Product and Service Safety and Quality

Product and service safety and quality

ESG Data and Notes

Feature: Low-Carbon Transition and Climate Change Response

Climate response

ESG Data and Notes

Cyber and Information Security

Data security and customer privacy

Emissions and Waste ESG Data and Notes

Pollutant discharge

ESG Data and Notes

Emissions and Waste

Waste disposal Labour Rights and Talent Retention

ESG Data and Notes Human Capital Development

Employees

The Company’s production and operations are primarily located in industrial parks or Occupational Health and Safety

Ecosystem and biodiversity protection

urbanized areas where the direct impact on ecosystems or biodiversity is minimal. ESG Data and Notes

Environmental Policies and Management

Environmental compliance management Due diligence Double Materiality Assessment

ESG Data and Notes

Stakeholder engagement Double Materiality Assessment

Energy Management

Energy utilization

ESG Data and Notes Business Ethics

Anti-commercial bribery and anti-corruption

ESG Data and Notes

Resources Management

Water resources utilization

ESG Data and Notes Business Ethics

Fair competition

ESG Data and Notes

Resources Management

Circular economy

ESG Data and Notes Corporate Governance Corporate Governance

Corporate Citizens and Public Welfare

Rural revitalization Risk and Compliance

ESG Data and Notes Risk and Compliance ManagementManagement

Corporate Citizens and Public Welfare

Social contributions

ESG Data and Notes Innovating for the Future Leading the Technological FrontierOpportunities in Clean

Low-Carbon Transition and Climate Change Response

Feature: Innovating for the Future Leading the Technological Frontier Self-disclosed Topics Tech

Innovation ESG Data and Notes

ESG Data and Notes

Chemicals and

The Company is currently in the R&D stage in the field of bionic robot Product and Service Safety and Quality

Hazardous Substances

electromechanical actuators primarily focusing on optimizing product prototypes. It

Ethics of science and technology

has not yet entered large-scale commercial application and therefore has not been Product Lifecycle Emissions and Waste

involved in real-world scenarios that may give rise to ethical concerns in technology. Management Resources Management

113 1142024 Environmental Social and Governance Report Indexes

GRI Content Index GRI STANDARD DISCLOSURE LOCATION

Zhejiang Sanhua Intelligent Controls Co. Ltd. has reported the information cited in this GRI content index for the period Feature: Low-Carbon Transition and Climate

Statement of use

from 1 January 2024 to 31 December 2024 with reference to the GRI Standards. Change Response

Corporate Governance: Transparency

GRI 1 used GRI 1: Foundation 2021 Responsibility and Value

2-24 Embedding policy commitments

Social Value: Respect Development and

Contribution

GRI STANDARD DISCLOSURE LOCATION Environmental Protection: Clean Circular

2-1 Organizational details About Sanhua Intelligent Controls and Natural

2-2 Entities included in the organization’s sustainability reporting About the Report GRI 2: General 2-25 Processes to remediate negative impacts Double Materiality Assessment

Disclosures 2021

2-3 Reporting period frequency and contact point About the Report 2-26 Mechanisms for seeking advice and raising concerns Double Materiality Assessment

2-4 Restatements of information ESG Data and Notes For details please refer to the respective 2-27 Compliance with laws and regulations

sections of the report.

2-5 External assurance Not Conducted

Feature: Innovating for the Future Leading

2-28 Membership associations

2-6 Activities value chain and other business relationships About Sanhua Intelligent Controls the Technological Frontier

Social Value: Respect Development and 2-29 Approach to stakeholder engagement Double Materiality Assessment

2-7 Employees

Contribution

2-30 Collective bargaining agreements Labour Rights and Talent Retention

Social Value: Respect Development and

2-8 Workers who are not employees

Contribution 3-1 Process to determine material topics Double Materiality Assessment

2-9 Governance structure and composition GRI 3: Material 3-2 List of material topics Double Materiality Assessment

Topics 2021

2-10 Nomination and selection of the highest governance body 3-3 Management of material topics Double Materiality Assessment

2-11 Chair of the highest governance body Corporate Governance 201-1 Direct economic value generated and distributed About Sanhua Intelligent Controls

Role of the highest governance body in overseeing the

2-12 GRI 201: Financial implications and other risks and opportunities due to Feature: Low-Carbon Transition and Climate

management of impacts 201-2Economic climate change Change Response

2-13 Delegation of responsibility for managing impacts Performance

GRI 2: General 201-3 Defined benefit plan obligations and other retirement plans Labour Rights and Talent Retention2016

Disclosures 2021 2-14 Role of the highest governance body in sustainability reporting ESG Governance Mechanism For details please refer to the Sanhua 201-4 Financial assistance received from government

Intelligent Controls 2024 Annual Report.

2-15 Conflicts of interest Corporate Governance

GRI 204:

Due to confidentiality requirements it is not

2-16 Communication of critical concerns Double Materiality Assessment Procurement 204-1 Proportion of spending on local suppliers

disclosed to the public at this time.Practices 2016

2-17 Collective knowledge of the highest governance body ESG Governance Mechanism

Business Ethics

2-18 Evaluation of the performance of the highest governance body Corporate Governance 205-1 Operations assessed for risks related to corruption ESG Data and Notes

2-19 Remuneration policies Corporate Governance GRI 205: Anti- Communication and training about anti-corruption policies and 205-2 ESG Data and Notes

corruption 2016 procedures

2-20 Process to determine remuneration Corporate Governance

Business Ethics

205-3 Confirmed incidents of corruption and actions taken

Due to confidentiality requirements it is not ESG Data and Notes

2-21 Annual total compensation ratio

disclosed to the public at this time. GRI 206: Anti-

Legal actions for anti-competitive behavior anti-trust and Business Ethics

2-22 Statement on sustainable development strategy Statement of the Chairman competitive 206-1

monopoly practices ESG Data and Notes

Behavior 2016

Feature: Low-Carbon Transition and Climate

Change Response 207-1 Approach to tax

Corporate Governance: Transparency

Responsibility and Value 207-2 Tax governance control and risk management

2-23 Policy commitments GRI 207: Tax For details please refer to the Sanhua

Social Value: Respect Development and 2019 Stakeholder engagement and management of concerns related Intelligent Controls 2024 Annual Report.Contribution 207-3 to tax

Environmental Protection: Clean Circular

and Natural 207-4 Country-by-country reporting

115 1162024 Environmental Social and Governance Report Indexes

GRI STANDARD DISCLOSURE LOCATION GRI STANDARD DISCLOSURE LOCATION

301-1 Materials used by weight or volume ESG Data and Notes 306-1 Waste generation and significant waste-related impacts Emissions and Waste

GRI 301: 301-2 Recycled input materials used ESG Data and Notes 306-2 Management of significant waste-related impacts Emissions and Waste

Materials 2016

301-3 Reclaimed products and their packaging materials ESG Data and Notes GRI 306: Waste 306-3 Waste generated ESG Data and Notes

2020

302-1 Energy consumption within the organization ESG Data and Notes Emissions and Waste306-4 Waste diverted from disposal

ESG Data and Notes

302-2 Energy consumption outside of the organization ESG Data and Notes

306-5 Waste directed to disposal Emissions and Waste

GRI 302: Energy

302-3 Energy intensity ESG Data and Notes

2016 GRI 308: Supplier 308-1 New suppliers that were screened using environmental criteria Sustainable Procurement

302-4 Reduction of energy consumption Energy Management Environmental

Assessment Negative environmental impacts in the supply chain and

302-5 Reductions in energy requirements of products and services Energy Management 308-2 Sustainable Procurement2016 actions taken

303-1 Interactions with water as a shared resource Resources Management 401-1 New employee hires and employee turnover ESG Data and Notes

303-2 Management of water discharge-related impacts Resources Management GRI 401:

GRI 303: Water Benefits provided to full-time employees that are not provided Employment 401-2 Labour Rights and Talent Retention

and Effluents 303-3 Water withdrawal ESG Data and Notes to temporary or part-time employees2016

2018

303-4 Water discharge ESG Data and Notes 401-3 Parental leave Labour Rights and Talent Retention

GRI 402: Labor/

303-5 Water consumption ESG Data and Notes Due to confidentiality requirements it is

Management 402-1 Minimum notice periods regarding operational changes

not disclosed to the public at this time.Operational sites owned leased managed in or adjacent to Relations 2016

304-1 protected areas and areas of high biodiversity value outside

403-1 Occupational health and safety management system Occupational Health and Safety

protected areas

The Company’s production and operations

Significant impacts of activities products and services on Hazard identification risk assessment and incident GRI 304: 304-2 are primarily located in industrial parks or 403-2 Occupational Health and Safety

biodiversity investigationBiodiversity 2016 urbanized areas where the direct impact

304-3 Habitats protected or restored on ecosystems or biodiversity is minimal. 403-3 Occupational health services Occupational Health and Safety

IUCN Red List species and national conservation list species Worker participation consultation and communication on

304-4 403-4 Occupational Health and Safety

with habitats in areas affected by operations occupational health and safety

Feature: Low-Carbon Transition and GRI 403: 403-5 Worker training on occupational health and safety Occupational Health and Safety

305-1 Direct (Scope 1) GHG emissions Climate Change Response Occupational 403-6 Promotion of worker health Occupational Health and Safety

ESG Data and Notes Health and Safety

2018 Prevention and mitigation of occupational health and safety

Feature: Low-Carbon Transition and 403-7 Occupational Health and Safetyimpacts directly linked by business relationships

305-2 Energy indirect (Scope 2) GHG emissions Climate Change Response

ESG Data and Notes Workers covered by an occupational health and safety 403-8 Occupational Health and Safety

management system

Feature: Low-Carbon Transition and

GRI 304: 305-3 Other indirect (Scope 3) GHG emissions Climate Change Response Occupational Health and Safety403-9 Work-related injuries

Biodiversity 2016 ESG Data and Notes ESG Data and Notes

Feature: Low-Carbon Transition and 4 0 3 - Occupational Health and SafetyWork-related ill health

305-4 GHG emissions intensity Climate Change Response 10 ESG Data and Notes

ESG Data and Notes 404-1 Average hours of training per year per employee ESG Data and Notes

Feature: Low-Carbon Transition and

305-5 Reduction of GHG emissions GRI 404: Training Programs for upgrading employee skills and transition

Climate Change Response 404-2 Human Capital Developmentand Education assistance programs

305-6 Emissions of ozone-depleting substances (ODS ) Not Applicable 2016 Percentage of employees receiving regular performance and Human Capital Development

GRI 304: Nitrogen oxides (NOx) sulfur oxides (SOx) and other significant career development reviews ESG Data and Notes

305-7 ESG Data and Notes

Biodiversity 2016 air emissions

117 1182024 Environmental Social and Governance Report Indexes

GRI STANDARD DISCLOSURE LOCATION

Labour Rights and Talent Retention

GRI 405: Diversity 405-1 Diversity of governance bodies and employees ESG Data and Notes

and Equal

Opportunity 2016 Due to confidentiality requirements it is 405-2 Ratio of basic salary and remuneration of women to men

not disclosed to the public at this time.GRI 406: Non-

discrimination 406-1 Incidents of discrimination and corrective actions taken Labour Rights and Talent Retention

2016

GRI 407:

Freedom of

Operations and suppliers in which the right to freedom of

Association 407-1 Labour Rights and Talent Retention

association and collective bargaining may be at risk

and Collective

Bargaining 2016

GRI 408: Child Operations and suppliers at significant risk for incidents of child

408-1 Labour Rights and Talent Retention

Labor 2016 labor

GRI 409: Forced

Operations and suppliers at significant risk for incidents of

or Compulsory 409-1 Labour Rights and Talent Retention

forced or compulsory labor

Labor 2016

ESG Management

Social Value: Respect Development and

Operations with local community engagement impact

413-1 Contribution

assessments and development programs

Environmental Protection: Clean Circular

GRI 413: Local and Natural

Communities

2016 ESG Management

Social Value: Respect Development and

Operations with significant actual and potential negative

413-2 Contribution

impacts on local communities

Environmental Protection: Clean Circular

and Natural

GRI 414: 414-1 New suppliers that were screened using social criteria Sustainable Procurement

Supplier Social

Assessment 414-2 Negative social impacts in the supply chain and actions taken Sustainable Procurement

2016

Assessment of the health and safety impacts of product and

GRI 416: 416-1 Product and Service Safety and Qualityservice categories

Customer Health

and Safety 2016 Incidents of non-compliance concerning the health and safety 416-2 ESG Data and Notes

impacts of products and services

417-1 Requirements for product and service information and labeling Product and Service Safety and Quality

GRI 417: Incidents of non-compliance concerning product and service

417-2 Product and Service Safety and Quality

Marketing and information and labeling

Labeling 2016

Incidents of non-compliance concerning marketing

417-3 Product and Service Safety and Quality

communications

GRI 418:

Substantiated complaints concerning breaches of customer Cyber and Information Security

Customer Privacy 418-1

privacy and losses of customer data ESG Data and Notes

2016

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