Community Engagement Lu Thai Textile Co. Ltd01

About this Report

Reporting Entity

The Reporting Entity is "Lu Thai Textile Co. Ltd." which can be referred to as "We" "the Company" "Lu Thai" "Lu Thai Company" and "Lu Thai

Textile" unless otherwise specified in the main text.Report Boundary

The time span of this Report is mainly from January 1 to December 31 2021. In order to maintain the continuity and comparability of information

some content is beyond the above time span. The information involved is from the internal data of the Company information submitted by subsidiaries

and public information. Unless otherwise specified all amounts in this Report are expressed in RMB.References

This Report is formulated in line with the China Social Compliance 9000 for Textile & Apparel Industry (CSC9000T) the Social Responsibility

Management System (SA8000) and the core solution of the Standards for Sustainability Reporting of Global Reporting Initiative (GRI). Also the 2030

Agenda for Sustainable Development (A/RES/70/1) of the United Nations is referred to.Disclaimer

This Report is released in both Chinese and English. If there is any discrepancy the Chinese version shall prevail. Forward-looking statements

included in this Report refer to the statements of the business activities events or development trends that may happen in the future or will happen

soon as predicted or expected by the Company except for the statements of historical facts. The actual results or development trend may significantly

differ from these forward-looking statements due to variable factors. The Company is not obliged or responsible to update the forward-looking

statements made by the Company in this Report before April 27 2022 unless otherwise required by regulatory authorities.02 03

Contents

Chairman's Statement 04

Production and Operations Environmental Protection

About Us /Responsible Production and Operations /Deepen Green and Low-carbon Development

Business Operations 06 Production Safety Management 28 Address Climate Change 56

Development History 08 Management of Chemicals 31 Energy Management 56

Supply Chain Management 33 Water Resources Management 58

COVID-19 Control 34 Atmospheric Pollutant Management 59

Waste Management 59

Employee's Rights and Benefits Community Engagement

Strategies and Management /Build a Harmonious Workplace Environment Together /Strive to Be an Excellent Corporate Citizen

Management of Sustainable Development 10 Health and Safety 38 Contribute to Community Development 62

Participation by Stakeholders 12 Respect and Equality 39 Welfare and Charity Actions 63

Initiatives and Industry Contributions 12 Training and Development 42

Benefits and Caring 45

Corporate Governance Product Services

/Building Excellent Corporate Governance /Provide Ace Services Key Performance Report 65

Business Vision 16 Product Innovation 50

Governance Structure 17 Sustainable Textiles 51 GRI Content Index 68

Compliance Management 19 Quality Management and Control 52

Business Ethics 21 Customer Relationship Management 53 Reader Feedback 75

Research & Development 2104 Sustainability Report 2021 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Engagement Lu Thai Textile Co. Ltd 05

Chairman's Statement

Dear friends on behalf of the Board of Directors of Lu Thai Textile I would like to express my

heartfelt gratitude for your long-term support for the Company!

In the face of the complicated and grim world economy the pandemic and uncertainties in

the external environment in the past year Lu Thai Textile delivered an answer sheet that beat

expectations to the industry and the market by adhering to the "customer-centered" concept hard

work and diligence constantly promote the strategies of "Improve Quality and Efficiency" and

The power of green & "Overall Internationalization" and focus on market expansion structural adjustment and capacity enhancement. The Lu Thai Speed and the Lu Thai Spirit have been carried forward during the

following processes: First the Company has implemented the two tasks of fighting against the

sustainability pandemic and maintaining production and achieved the two goals of raising revenue and profit. Second it has launched projects and maintained the stable operations of production bases

abroad. Third Lu Thai has developed new products and expanded new markets. Fourth it has

reinforced its capacity and retained its employees.In 2021 driven by the goal of "green development" we vigorously promoted sustainable

development. The Company earnestly performed tasks to conserve energy and reduce

consumption such as the analysis of energy consumption the project of rooftop photovoltaic

power generation and the plan for research on "carbon emission reduction" to reduce carbon

emissions during production. Meanwhile it established the standards of ESG duty performance

for suppliers and promote the industry chain to actively shoulder social and environmental

responsibilities. Additionally Lu Thai constantly promoted the R&D of biomass raw materials

and sustainable and eco-friendly materials fabrics and pushed forward technological innovation

centering on environmental protection.In 2021 we kept intensifying the protection of employees' rights and interests in the same

year by centering on employees. Specifically we conscientiously strengthened occupational

safety to protect the basic rights and interests of employees. Also we carried out activities such

as the excellent employee assessment skill competitions the evaluation and employment of

technicians and technological and management innovation. Concurrently we created a self-

value realization platform for employees and cultivated and practiced the corporate culture of

"loving employees". In addition the dual channel model of career development was perfected.The Company promised no discrimination in employment and provided all employees with fair and

broad development opportunities and channels.In 2021 we earnestly performed our responsibilities and continuously deepened

responsible production operations and management. We actively adopted measures for

pandemic prevention and control and despite the grim situation protected employee health and

delivered customers' orders on time and of good quality. In the meantime the Company deeply

pushed forward the safety control of chemicals ensured a healthy production environment and the

compliance of chemical substances in products endeavored to reduce the discharge of pollutants

and wastes into water and air and strove to become an environmentally responsible enterprise.The year 2022 marks the 35th anniversary of Lu Thai and ushers in a new phase of development

of the Company. We will redouble our effort to adhere to the customer-centered concept hard

work and diligence more firmly implement the strategies of "Improve Quality and Efficiency"

and "Overall Internationalization" and constantly promote green and low-carbon production to

contribute to the sustainable development of the industry!

Liu Zibin

Chairman of the Board

April 27 202206 Sustainability Report 2021 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Engagement Lu Thai Textile Co. Ltd 07

About Us Lu Thai Milan Office Lu Thai Textile Co. Ltd. Tokyo Office Japan Lu Thai Textile(America) Co. Ltd.Business Operations

Lu Thai Textile Co. Ltd. has already become the largest world-renowned manufacturer of high-grade yarn-dyed fabrics and premium-brand shirts

and established a complete industry chain ranging from spinning dyeing and finishing garment making to brand marketing. Besides the Company

has also set up 19 holding subsidiaries three offices and over 40 manufacturing factories in eight countries including China the U.S.A. Italy Japan

India Vietnam Cambodia and Burma. It is an international textile and garment enterprise integrating R&D design manufacturing and marketing

services with a focus on industry chain integration and comprehensive innovation.As at the end of 2021 Lu Thai Textile possessed total assets of RMB12.99 billion and net assets of RMB8.37 billion. It produced 223 million meters

of textile fabric and 14.45 million pieces of shirts in the year. In 2021 the Company recorded operating revenue of RMB5.24 billion and a net profit

attributable to shareholders of the listed company of RMB348 million representing a year-on-year increase of 10.25% and 257.22% respectively.The Company's production and business performance has always been ranked among the best in the textile industry nationwide. The Company has

been recognized as a high-tech enterprise National Industrial Design Center Stated-accredited Enterprise Technology Center national enterprise

technical center and China National Accreditation Service for Conformity Assessment (CNAS)-accredited lab. Furthermore it has won many honorary

titles such as the "National May First Labor Medal" the "Prize for Outstanding Contribution in Chinese Philanthropy" the "National Quality Award"

the Third "China Industry Award" and the "Single Champion Demonstration Enterprise in the Manufacturing Industry".Vanguard Apparel Co. Ltd.Polaris Apparel Co. Ltd. Continental Textile Co. Ltd.Lu An Garments Co. Ltd.08 Sustainability Report 2021 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Engagement Lu Thai Textile Co. Ltd 09

20152019

2021

Development History The trial production of 2017 The Lu Thai

Vanguard Apparel Co. Textile Fabric The strategic

Ltd. was conducted. The Company Museum and cooperation

started its new 30- the Lu Thai

Continental Textile Co. year voyage. A project of Lu Development

Ltd. held a ceremony high-level forum on Museum were Thai Textile

for the Phase I trial the theme "Gather opened. The Lu and Xiniu

production of the spinnery. the Top Wisdom of Thai Industrial Intelligent

WORLD FIRST-CLASS AND CENTURY LUTHAI The Company was the Industry Plan Design Summit

recognized as a "Five- Lu Thai's Future was held.Manufacturing

2013 starred Chinese Industrial Development" was was initiated.

Enterprise in the held to plan the

The construction

2010 Lu Thai Milan of the Functional Performance of Corporate development vision

Office was Fabric Intelligent

Social Responsibilities. for the next three

Lu Thai opened. Ecological Park

2006 decades.2008 School of The "set of technologies Project began.

Textile and The

Lu Thai and equipment for

The Company was

The Company Company recognized as a The construction Apparel

Group was automatic digital cheese was was granted "National Industrial of the Lu Thai Shandong

incorporated. dyeing" jointly developed recognized the "National Design Center" knitting project

2004 University of based on the "industry-as a National Quality making it the first began and The Company Technology university-research-

Yarn-dyed Award". enterprise to win Phase I was put

The Zichuan passed the was founded. application" cooperation

Fabric Product this honor in Zibo into production.2000 Urban Sewage SA8000 was granted the First Prize

R&D Base. City.Treatment Plant Social of the State Scientific and The construction

1998 Lu Thai invested by Responsibility Technological Progress The water reuse of Lu Thai (Tan

became the Company Management Award. project was Chau) Textile

1995 The Company A-share listed. was put into System completed. Co. Ltd. began.

passed the

operation. Certification.It passed ISO14001 Beijing

1990 the ISO Environmental Sichuang The Lu Thai

1987 9001 Quality Management Apparels Sports Square Lu Thai

Management System Co. Ltd. was was put into

Textile

Zibo No. 7 System Certification. opened. use.Company

Cotton Mill Certification.was opened Ranguang

Lu Thai's formally. Textile Co.predecessor

Ltd. was

was

acquired.established.

2009

The Lu Thai Textile

and Apparel

Engineering 20182012

Research Institute 2014 The construction

was founded. A grand

2007 ceremony was Lu Thai (America)

of the Phase 2020

The Company held because Textile Co. Ltd. was

II project of

Lu Thai was was granted the opened. the yarn-dyed Lu Thai issued 2003 the Phase recognized as a Second Prize of production line of RMB1.4 billion of II project

"Stated-accredited the State Scientific The trial production Continental Textile convertible bonds.The Company of LuFeng

Enterprise and Technological of Polaris Apparel began.passed the Company The Phase I

1993 Technology Progress Award for Co. Ltd. was OHSAS18001 Limited was put conducted. The construction project of the Center" by five its key processing

1997 Occupational into production. of the Phase II Functional Lu Thai Textile departments technology of ultra-Health The Company project of Lu An Fabric Intelligent

Company was including high count pure The Company Lu Thai became and Safety won the "Global 2016 Garments began. Ecological Park

1988 restricted into the National cotton fabrics and won the B-share listed. Management Performance was put into

a joint-stock 2005 Development its industrialization title "China Excellence Award". The yarn-dyed Lu Thai's System production.Lu Thai Textile enterprise Yunjinchuan 1999 and Reform high-flux films Advanced production line operating revenue Certification

Company a with foreign Clothing LuFeng Commission for printing and Enterprise with The Company was of Continental exceeded RMB10 The project of

China-Thailand investment and Manufacturing Beijing Lu Thai Zibo Luqun Company and the Ministry dyeing wastewater an Excellent granted the Third Textile Co. Ltd. billion a new start colored spun

joint venture was renamed Lu Thai Co. Ltd. was Shirt Co. Ltd. Textile Co. Ltd. Limited was of Science and and recycling Performance "China Industry was put into of the new 30- yarns was put into

incorporated. Textile Co. Ltd. acquired. was established. was established. established. Technology. technology. Model (2012)". Award". trial production. year voyage. production.10 Sustainability Report 2021 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Engagement Lu Thai Textile Co. Ltd 11

Strategies and Management

Management of Sustainable Development

Lu Thai Textile vigorously manages sustainable development aligns with the 17 Sustainable Development

Goals (SDGs) of the United Nations as the basic standards comprehensively analyzes its actions and

shortcomings and makes pertinent improvements.Th

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Throughout the year a total of RMB252.91 million

was invested in scientific research. The Company

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fem12 Sustainability Report 2021 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Engagement Lu Thai Textile Co. Ltd 13

Participation by Stakeholders Sustainability-related Certifications

Stakeholders Concerns Communication method Actions of Lu Thai Textile Luthai and its overseas subsidiaries have obtained the certifications for sustainable raw materials under GOTS Global Organic Textile Standard

OCS Organic Content Standard GRS Global Recycled Standard OEKO-TEX STANDARD STeP and OEKO-TEX STANDARD 100. By reducing the

Safe and eco-friendly environmental footprint of raw materials the Company demonstrates its commitment and ability to responsibly purchase and produce sustainable

production Contribute the enterprise's experience to the products as well as its emphasis on sustainable raw materials.industry's development

Honest and compliant

Legal operations

operations Contribute the enterprise's strength to improve

Be subject to supervision the people’s livelihood

Governments Employment enhancement Contribute the enterprise's wisdom to protect the

Fulfillment of social environment

responsibilities

Improve the product quality management system

Product quality Customer visits Improve the customer relationship management

Responsible marketing Customer service hotline system

Customers Respect customers' opinions Open business operations Conduct the customer satisfaction survey

Visit customers regularly

The general meeting of

Corporate governance and shareholders Compliant operations openness and

profitability On-site survey transparency

Shareholders Honest and compliant Telephone consulting Safeguard the legitimate rights and interests of

and investors operations Interaction Easy of the shareholders by law

Shenzhen Stock Exchange

Participation in industry organizations

Help the poor and join public welfare activities

A harmonious community Supervision by the masses

relationship Energy conservation emission reduction and

Visit communities tree planting The Company has joined industry organizations and attended multiple industry seminars to contribute to the industry make progress with its peers

Communities Contribute to the community

Social donation Promote employment and develop local and create a better future of the Chinese textile industry.and the public economy

suppliers

Industry organizations Role of the Company Industry organizations Role of the Company

The Trade Union and the Improve the remuneration management systemRespect human rights

employee representative Improve employee cultivation and promotion The China Chamber of Commerce The China Research Institute of

Remuneration and benefits A Sixth Vice Chairman A Vice Chairman Organization

assembly mechanisms for Import and Export of Textiles Enterprise CultureOrganization

Career development channels (CCCT)

Employees Open employee complaint Diverse communication channelsHealth and safe production channels The China Cotton Textile A Sixth Vice Chairman Help employees in need

The China Dyeing and Printing A Sixth Vice Chairman Association (CCTA) Organization

Association (CDPA) Organization

Continuously improve supplier management

Exchange visits among senior The China Council for Brand A Standing Director

procedures and strengthen the control of

management personnel The China National Garment A Seventh Standing Director Development (CCBD) Organization

Green and low-carbon operational risks

Exchange and cooperation in Association (CNGA) Organization

development Strengthen contract management and

experience and technology The China Federation of Industrial

Honest and compliant standardize credible procurement A Fifth Member OrganizationValue chain Routine communication The China Textile Engineering A 26th Standing Director Economics (CFIE)

partners operations Share experience and technology and exchange Society (CTES) Organization

Exchange through industry needed goods

conferences The China Association for

Build industry-university-research platforms The China Association of Consumer Products Quality and A First Member Organization

A Standing Director

Enterprises with Foreign Safety Promotion

Organization

Investment (CAEFI)

The China Association for Quality

A member

Initiatives and Industry Contributions The China National Textile and A Fourth Standing Director

(CAQ)

Apparel Council Organization

The International Textile

A member

Manufacturers Federation (ITMF)

The China Textile Enterprise A Ninth Vice Chairman

Higg Index Association (CTEA) Organization

The China Association of Plant

The Company and all its subsidiaries use the Higg Factory Environment Module (FEM)as a A memberEngineering (CAPE)

standard tool for environmental assessment and set a 50% fundamental objective and a 75%

aggressive objective. The Chinese Association for Textile A Fifth Standing Director

Enterprises Culture Construction Organization The China Nonwoven & Industrial

Since the use of Higg FEM all companies have achieved the fundamental objective. The A Member OrganizationTextiles Association (CNITA)

Company scores 74% on average in Higg FEM self-assessments.14 Sustainability Report 2021 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Engagement Lu Thai Textile Co. Ltd 15

Corporate Governance

Building Excellent Corporate

Governance

Sound corporate governance guarantees sustainable development as well

as lays the foundation for core competitiveness. Lu Thai Textile continued

to optimize corporate governance structure improve corporate governance

capability implement compliance management capacity building of risk

management and control and business ethics development and push forward

technology innovation in order to contribute to stable operation holistically and

achieve high-quality growth.Promote peaceful and inclusive societies for

sustainable development provide access to

justice for all and build effective accountable

and inclusive institutions at all levels.Strengthen the means of implementation

and revitalize the Global Partnership for

Sustainable Development.UN Sustainable Development Goals16 Sustainability Report 2021 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Engagement Lu Thai Textile Co. Ltd 17

Business vision Governance structure

Mission: Creating wealth contributing to the society clothing the world and weaving our way to every corner of the globe Organizational structure

The Company continued to improve the basic governance structure composed of the General Meeting of Shareholders the Board of Directors the

Board of Supervisors and senior management whose rights and responsibilities were defined in accordance with the Company Law the Securities

Clothing the world and weaving our way to every corner of

Creating wealth and contributing to the society Law the Code of Corporate Governance for Listed Companies the Guidelines for Articles of Association of Listed Companies the Guidelines of the the globe Shenzhen Stock Exchange for the Normative Operation of Listed Companies and other relevant laws regulations and regulatory documents in order

to ensure efficient normative operations.The Company has always created value for its customers sought Holding fast to the inheritance and innovation in the textile

happiness for its employees created wealth for the society industry the Company aims to create beautiful life through yarn Organizational Chart of Lu Thai Textile Co. Ltd.and gained benefits for its shareholders. It realized value while decorate happy life with fabric enrich the world with clothes and

developing the economy and serving the society. It also fulfilled contribute to the progress in the textile and garment civilization

its responsibility by saving resources protecting the environment and harmonious development of the society. General Meeting of

and engaging in public welfare. Through these efforts it assisted Shareholders

in comprehensive and coordinated development of the material

civilization cultural and ideological progress and ecological

civilization and shared the fruits of cultivation with all members of

the public.Vision: World-class and World-class and century Luthai Board of Supervisors Board of Directors

From the perspective of space From the angle of time

Strategy Nomination Remuneration Audit

The Company will seize the development trend in the industry Beyond textile the Company will embark on a journey of scientific Committee Committee Committee Committee

create a world-class high-end brand and tap the development development featuring environmental protection low carbon

potential and lead the progress in the industry via technological technology and humanity. In this way it will stand out in market

innovation across the globe. competition and make its undertakings ever-lasting.President

Values: People foremost policy rigorous scientific attitude client-oriented principle and integrity for win-win outcome

People foremost policy Rigorous scientific attitude Client oriented principle Integrity for win-win outcome Senior Management

Giving top priority to human Rigorous responsible and Focused on customer The Company aims to

resources the Company conscientious the Company demands as always the establish stable mutually

upholds the philosophy of seeks for ever greater Company endeavors to trusted ever-lasting and win-

"respecting people relying on perfection. Modest prudent provide products to the win partnership based on

people cultivating people and efficient and innovative satisfaction of its customers. integrity quality and service. Wholly-owned Production Functional Holding Branch Offices

for the people" and respects it applies a realistic and With client-oriented It abides by commercial Subsidiaries Business Unit Departments Subsidiaries

labor knowledge talent pragmatic approach. Moreover production and operation ethics keeps its word serves

and creation. It advocates it follows the guiding principles it makes agile response to customers heartily treats

for equal opportunities fair of unity and discipline industry market changes runs its employees sincerely and

competition and appointment and ambition and commitment business in an innovative cooperates with suppliers

of people by abilities. Besides to excellence. It also adopts manner provides customers earnestly. It unites people

it cares about and has deep practical and realistic methods with excellent products and improves satisfaction of

love for its employees by makes overall plans and takes services and dynamically related parties and achieves

providing them with a good all factors into consideration meets personalized demands win-win cooperation through Development of the Board of Directors

environment for working and gives prominence to of customers to improve honest operation.living and learning. By doing the key points to boost customer satisfaction and Attaching great importance to board development Lu Thai Textile continued to improve the board structure and functions gave full play to the roles

so the Company shares the institutional regulated and loyalty. of board committees paid attention to the independence and diversity of composition and actively conducted training for the directors and the

fruits of development with standardized work and achieve management. By doing so the Company ensured efficient board operation and scientific decision-making thereby improving the overall management

its employees and grows sound stable and sustainable and operation efficiency. The Company's Board of Directors comprises 12 members including four independent directors. A total of nine Board

together with its employees. development. meetings were held in 2021 with full attendance of the directors. During the Reporting Period 44 topics were deliberated covering policy revision

regular reporting profit distribution and related-party transactions.18 Sustainability Report 2021 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Engagement Lu Thai Textile Co. Ltd 19

Board governance structure

Date of service

Name of director Gender Age Position

The Board of Directors perform its duties in strict accordance with the Articles of Association and the Rules of Procedure of the Board of Directors. commencement

The Board of Directors has established the Strategy Committee the Audit Committee the Nomination Committee and the Remuneration Committee.These special committees make full use of their expertise to make scientific decisions on the Company's development issues.Liu Zibin Male 56 Chairman President June 6 2007

Xu Zhinan Male 91 Vice Chairman May 6 2004

Name of committee Main responsibility Functioning of committee

Hidetoshi Fujiwara Male 81 Director May 7 1998

Chen Ruimou Male 77 Director April 16 2000

Conduct feasible study on the Company's long-term Chairman: Liu Zibin

strategic development plans and major investment Members: Xu Zhinan Hidetoshi Fujiwara Chen

decisions determine the Company's development Ruimou Zeng Facheng Liu Deming Qin Guiling

Zeng Facheng Male 70 Director June 6 2007

Strategy Committee plans improve investment decision-making process Zhang Hongmei Zhou Zhiji Pan Ailing Wang

enhance scientific decision-making and improve Xinyu and Qu Dongmei

the quality and effectiveness of major investment In 2021 the committee held one meeting with full

Liu Deming Male 30 Director May 12 2017

decision. attendance of the members.Qin Guiling Female 55 Director May 7 1998

Zhang Hongmei Female 51 Director June 6 2016

Study and formulate the criteria and procedures

Chairman: Zhou Zhiji

for selection of the Company's directors and senior Independent

Members: Liu Zibin Xu Zhinan Wang Xinyu and Zhou Zhiji Male 57 March 10 2019

Nomination Committee management optimize the structures of the Board Director

Pan Ailing

of Directors and the management and improve

In 2021 no committee meeting was held.corporate governance structure.Independent

Pan Ailing Female 56 June 6 2016

Director

Independent

Wang Xinyu Male 54 June 6 2016

Director

Formulate and review renumeration policies and

plans formulate and implement assessment and Chairman: Zhou Zhiji

evaluation criteria improve the assessment and Members: Liu Zibin Pan Ailing and Wang Xinyu Independent

Remuneration Committee Qu Dongmei Female 52 June 10 2019

evaluation system for the Company's directors In 2021 the committee held four meetings with full Director

and senior management and formulate scientific attendance of the members.effective renumeration management policies.Compliance management

Responsible for the communication supervision

Chairman: Wang Xinyu Adhering to operations with integrity law-abiding principles and compliance Lu Thai Textile has always emphasized that integrity and law-abiding

and review of the Company's internal and external

Members: Zhou Zhiji and Qin Guiling principles are the foundation of the Company and always abide by the values of "integrity and win-win situation". Under the philosophy of operations

Audit Committee audits strengthen the Board's effective oversight

In 2021 the committee held seven meetings with with integrity the Company continued to strengthen the compliance management system improve compliance management policies optimize

of the management enhance internal control

full attendance of the members. auditing procedures and implement internal control in order to safeguard healthy sustainable development.capabilities and improve internal control policies.Compliance management system

Following the philosophy of operations with integrity the Company continued to improve the compliance management system strengthened the effect

of internal auditing and established the Self-assessment Control Matrix based on the procedure documents in order to determine the assessment

scope and priorities. With all procedures assessed the on-site testing identified deficiencies made suggestions for improvement and timely produced

Board diversity the Internal Control Self-assessment Report to ensure effective internal control assessment.To promote normative and institutionalized business operations the Company considering its realities formulated the Regulations on Internal Auditing

The Company values the diversity of the Board members whose job responsibilities are determined by their professional experience. In 2021 the in accordance with the Internal Auditing Standards and the Basic Norms for Corporate Internal Control promulgated by the Ministry of Finance and

Board members included four directors with foreign nationalities accounting for 33% and four female directors accounting for more than 30%. the relevant laws and regulations. By doing so it effectively improved the overall management and risk prevention capabilities.20 Sustainability Report 2021 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Engagement Lu Thai Textile Co. Ltd 21

Internal control auditing Business Ethics

The Company values the implementation of internal control. Following its 18 guidelines for internal control the Company tested and assessed the

system development and implementation of the internal control of the Head Office and holding subsidiaries. As a result deficiencies in design and The Company attaches great importance to business ethics and strictly complies with laws and regulations and requirements of regulatory authorities

implementation were identified and improved effectively. In 2021 the Company assessed the internal control of six subsidiaries issuing the internal of countries where it operates. It has formulated and constantly improved regulations and standards effectively regulated the business behavior of

control assessment matrix with internal control audit coverage of 89.33%. company personnel and business partners to safeguard the Company's regulatory operation.Indicator (Unit) 2019 2020 2021

Internal control audit coverage (%) 94.26 90.35 89.33 Code of conduct for employees Complaint reporting mechanism Anti-corruption and bribery

Note: Internal control assessment coverage is the ratio of the total assets of the assessed entities to the Company's consolidated total assets

The Company continues to build the The Company encourages The Company strictly abides by the

code of conduct management system shareholders to advise and comment anti-corruption laws and regulations

Compliance performance for employees requires employees to on its operation actively improves of countries where it operates. It

strictly work in line with laws guides the complaint reporting mechanism continues to enhanced the supervision

and supervises them to comply with widens report channels including mechanism of anti-corruption

Objects Indicators 2019 2020 2021

rules and regulations and operate reporting via letters phone calls conforms to the anti-corruption rules

Quantity of non- according to laws and regulations. e-mails or in person and pledges to and pledges in the Company and

Senior leaders 0 0 0

conformance events By doing so it is ensured that rules protect the whistleblower's privacy. with business partners and devoted

Middle-level cadres and Quantity of non- and policies can be implemented to constructing a relationship of

000

related functions conformance events to promote the sound development integrity fairness and mutual respect

Quantity of non- of businesses. Meanwhile through with shareholders. The Company has

Employees 0 0 0

conformance events the promotion of corporate culture formulated the annual audit for relevant

Standard unqualified Standard unqualified Standard unqualified publicity and education training of laws regulations. In 2021 the Company

Shareholders External audit results

audit opinions audit opinions audit opinions inspection and supervision of employee has audited the purchasing business

Quantity of non- behaviors and other measures the of Brand Promotion Department and

Suppliers 0 0 0

conformance events Company urges employees to abide by the sales business of Global Marketing

ethical standards and improves their Department including aspects such

moral accomplishment to ensure the as the selection of purchasing unit

value of integrity and promote ethical management of bidding and tendering

Information disclosure behaviors. sales procedures sales pricing and

goods payoff. As a result no corruption

or fraud has been detected in 2021.Research & Development

Innovation remains the major driver for enterprise's development. Lu Thai Textile continues to ramp up spending in scientific and technological R&D

and pushes the transformation of intelligent and digital textile. Also it seeks for drives and strong support for the enterprise's long-term development

through the organic integration of information and industrialization.Scientific and technological R&D

The Company establishes the "Four-in-One" innovation mode of "letting the enterprise play the major role adopting the customer-oriented approach

underpinning scientific and technological institutions and universities and forming alliance with strategic customers and major suppliers". Moreover

it forms the three-level innovation R&D system of mass innovation and company-wide engagement that the institution of textile garment engineering

takes the lead product lines and breakthroughs of professional technologies work as the major line and quality control teams from all plants and

workshops work as entities. By doing so it continues to enhance the internal innovative mechanism develop scientific and technological innovation

platforms deepen the industry-university-research cooperation and lay a solid foundation for the Company's innovation development.The Company established and improved the information disclosure mechanism which received positive feedback from investors: Ramp up spending in scientific and technological innovation

The Company continues to ramp up support increase spending in scientific and technological innovation. In 2021 the Company has spent RMB252.91

million in scientific and technological innovation. At the end of 2021 the Company undertook eight national scientific and technological innovation

As at the end of 2021 the Company has been rated as Grade A for four consecutive years in the information disclosure assessment by platform and four provincial platforms and its two technological results passed the provincial and ministerial science evaluation and reached the

the Shenzhen Stock Exchange. advanced international level. Moreover it received more than 40 rewards concerning national provincial and ministerial scientific and technological

progress award. Among them 11 were First Prize of national and provincial and ministerial level one was the First Prize of National Scientific and

The Company releases its performance results as well as major and temporary announcements to investors of A and B shares via Technological Progress Award and three were Second Prize of National Scientific and Technological Progress Award. Furthermore it undertook 17

Internet media (cninfo.com) designated by the China Securities Regulatory Commission as well as Securities Times Shanghai Securities scientific and technological plans of provincial and ministerial level received 386 authorized patents eight software copyrights and host or engaged

Journal China Securities Journal and Ta Kung Pao. in the formulation of 46 national and industrial standards.The Company responds in real-time to investors' messages and questions via the "Interaction Easy" of the Shenzhen Stock Exchange. In Develop scientific and technological R&D platforms

2021 a total of 160 questions were replied with a response rate of 100%.

The Company highlights the building and development of scientific and technological innovation platforms establishing core technology platforms in

the major phrases of research design and test to improve core technologies in the whole process.22 Sustainability Report 2021 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Engagement Lu Thai Textile Co. Ltd 23

Textile garment testing and

Textile garment research platform Textile garment design platform experimental platforms Key R&D projects:

Project of "key technology and industrialization of high-quality and non-iron weft-knitted fabrics of shirts"

With the help of technological platforms Lu Thai Engineering Research Institute Lu Thai has the testing device and The Company adopts the industry-university-research cooperation model and joins hands with Wuhan Textile University to master the overall

such as the national enterprise of Textiles & Garment has used design equipment for fabric material fabric technology and industrialized application of high-end weft-knitted shirt fabrics. The manufactured fabric not only has advantages of machine-knitted

technical center national demonstration resources from National Industrial garment as well as dyeing and fabrics such as tight in structure shrink-resistant and straight rich patterns and colors but it is also soft and comfortable hygroscopic and flexible as

base for introducing talents and Design Center Shandong Provincial finishing additives set up laboratories knitted fabrics. Moreover it overcomes the weakness of deformation of machine-knitted and knitted fabrics stays in good condition after hand washing

national yarn-dyed fabric R&D base Industrial Center Fabric Design that meet international standards and machine washing and matches people's pursuit of comfort environmental protection maintaining of form and convenience to wear and follows

and Shandong Provincial Engineering of Italian Designer Workshop and including the thermostatic laboratory the trend of the times.Technology Research Center Lu Thai Enterprise Brand Design Center to build fabric material testing laboratory fabric

Engineering Research Institute of the textile garment design platform. and garment laboratory and chemical

Textiles & Garment has set up the Lu The platform has integrated textile and analysis and synthesis laboratory. Also

Thai Research Institute Office five garment trendy design textile new it has equipped professional testing Major cooperation with universities: Donghua University

technical offices of fiber textile dyeing material design popular fabrics design technology teams that are experienced

and finishing garment functional and garment brand design which and familiar with domestic and overseas

fabric and low carbon and one central represents the major backbone of the standards to actively build the domestic The Company has established the "National Collaborative Innovation Center of Key Technologies for Textile Industry" with Donghua University for

laboratory. Production operation enterprise's independent brand building and overseas integrated testing and researches of fiber new material technology and key technologies of eco-friendly dyeing and finishing.departments of yarn-dyed fabric knitted and promotes the Company to take leap experiment platform in the fabric and

fabrics garment printing and dyeing from creation to creativity. garment industry.and functional fabric product lines

cooperates and explores in a long- Major cooperation with universities:Qingdao University

term and close way and are dedicated

to cutting-edge technological research.The Company signed the strategic collaboration agreement with Qingdao University in 2016 and carried out in-depth cooperation with it in scientific

Also they have paved a path based on

research talent cultivation and social services generating fruitful results. In terms of scientific research Qingdao University and the Company jointly

fabric but transcended traditional fabric

establishes the "Lu Thai Group--Qingdao University Research Center" and the "National Collaborative Innovation Center of Key Technologies for

in terms of scientific and technological

Textile Industry" to dedicate to the research of industrial textile and marine biopolymer fibers. In terms of talent cultivation the Company has set up

innovation quality improvement brand

the "Lu Thai Scholarship" in the College of Textiles &Clothing and opened the "Class of Lu Thai Internationalized Talent Reserve". A number of brilliant

promotion low carbon and energy

students from textile universities worked in Lu Thai became backbones for the enterprise's development. During the collaboration the Company has

saving and enterprise culture building.explored the new model to cultivate talents through "scholarship + internship + employment + customized high-caliber talents".Protection of intellectual property rights

The Company attaches great importance to the protection of intellectual property rights constantly improves the protection system of intellectual

property rights sets up teams for the protection of intellectual property rights and patents. Moreover it formulates trademark management standards

patent application management procedures stands against the infringement of trademark rights patent rights and copyrights and continues to

improve the holistic operation efficiency in protecting intellectual property rights. In 2021 the Company filed 13 government project applications of

national provincial and ministerial level developed 102 new products and techniques and carried out 32 projects on technological improvement.Moreover it received 117 authorized patents and three software copyrights and hosted and formulated five industrial standards.Industry-university-research cooperation

The Company collaborates with many universities and scientific institutes ranging from the training of basic talents and core technology R&D. Lu

Thai has explored and established an all-round industry-university-research collaboration mechanism with many institutes. By the end of 2021

Signing ceremony of strategic collaboration between Lu Thai and Chairman Liu Zibin addressed at the Opening Ceremony of the Lu Thai-

the Company has established long-term cooperation relationship with universities such as Donghua University Hong Kong Polytechnic University Qingdao University -Qingdao University Class of 2021 and the Distribution Ceremony of "Lu

Jiangnan University and Qingdao University. Working together with them on the R&D of new technology new material and new products the Thai Textile Scholarship"

Company has realized the integration of enterprises and schools and effectively improved the Company's R&D capability.Shandong University of Technology

Key R&D projects:

Project of "management processing technology and industrialization of anti-bacterial/virus fabric" The Company has cooperated with Shandong University of Technology to establish the Lu Thai School of Textile and Apparel.We also work together to establish laboratories share platforms of scientific research devices and realize the scientific and technological

integration in terms of scientific program research and project application.Collaborated with relevant institutions including Wuhan Textile University the Company has used existing technologies to build action mechanism and A part-time teaching team including Taishan Scholars senior experts of enterprises and technological backbones has been built to realize the

process systemic analysis to develop brand-new anti-bacterial and anti-virus products. These products are resistant to bacterial for a long time non- integration of teaching resources between the school and enterprise.ironing soft hygroscopic and comfortable to wear which not only improves the level of liquid ammonia functional products but enriches the product's The Company utilizes comprehensive strengths of the school and enterprise introduces more opportunities for students to practice and gain

functions and make the Company more competitive in the international market. internship and invests in RMB1 million in the school for cooperative talent cultivation every year. Meanwhile the Lu Thai Scholarship has

been set up to encourage students to work hard realizing the "integration of nurturing talent" in the talents jointly cultivated by the school and

enterprise.24 Sustainability Report 2021 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Engagement Lu Thai Textile Co. Ltd 25

Technological upgrading of product lines

Xiniu intelligent manufacturing factory project

As an international company Lu Thai Textile has long dedicated to maintaining the industry-leading production technology level and continued to study

research and upgrade the production technology and efficiency. In 2021 as the internal and domestic market landscape changed textile companies

with cutting-edge technologies high product efficiency and high quality gained popularity in the international market and their market advantages Lu Thai has long been pursuing the upgrading of traditional manufacturing to intelligent manufacturing and is dedicated to becoming the global

became more salient. Hence the Company has paid close attention to frontier market changes actively conducted research on customer's demand provider of cloth solutions with leading fabric at its core. In 2021 the Company signed the strategic collaboration with Xiniu Intelligent Manufacturing

and undertook several projects technological innovation for product production lines. which helped build the intelligent manufacturing factory through its Xiniu Intelligent Manufacturing platform realize the old-to-new capacity reform and

automatic and intelligent building. Both sides have cooperated in areas such as intelligent manufacturing fabric supply and ecological collaboration.Xiniu Intelligent Manufacturing builds platforms of higher level for Lu Thai's development offers stronger technological support to manufacturing

management and provides larger development spaces for the upgrading from traditional manufacturing to intelligent manufacturing and the

optimization of ecological strategies.Automatic package line of spinning double-twisting

The Company has introduced the automatic package line of spinning double-twisting. The package line is developed based on the automatic solution

and experience as well as the production reality of Lu Thai which helps resolve the low efficiency problem in the procedure of manual testing of tube

yarn and manual stacking and reduce worker's intensity significantly. After upgrading the double-twisting workshop the production labor had been

reduced by 60% and more than RMB700000 of cost was saved every year.Automatic package line of spinning double-twisting

Intelligent workshop of sampling factory

Lu Thai Xiniu manufacturing factory

As the manufacturing base for Lu Thai to develop new fabric types

the sampling factory is responsible for manufacturing samples and

prototypes for Lu Thai's manufacturing workshops and overseas

manufacturing workshops as well as manufacturing fabric samples

for customers. The workshop has applied domestic and overseas

equipment of top brands. With the independently-developed ERP

system and the MES system developed together with external

platform as entities the intelligent management platform and

intelligent manufacturing control platform has been established.Based on the Industrial Internet of Things the Company has created

the applied mode of mixed cloud independently. After building

the data transmission platform through open-source system it

has realized the information interaction of basic data between

the headquarters and overseas subsidiaries order information

and sample manufacturing information as well as the intelligent

manufacturing of sampling factory.Intelligent workshop of sampling factory26 Sustainability Report 2021 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Engagement Lu Thai Textile Co. Ltd 27

Production and Operations

Responsible Production and

Operations

Lu Thai is committed to providing safe and healthy environments good

cooperation methods and reliable products for stakeholders such as our

employees suppliers and customers. In the pursuit of responsible production

and operations the Company continues to improve the way of management

refine work safety mechanism intensify the pandemic control strengthen

the safety management on chemicals implement suppliers' high standards

of requirements thus guaranteeing the rights and interests of stakeholders

from many respects of production and operations and achieving responsible

production and operations.Ensure sustainable consumption and production

patterns.UN Sustainable Development Goals28 Sustainability Report 2021 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Engagement Lu Thai Textile Co. Ltd 29

Production Safety Management Identification and prevention of production safety risks

The Company has established a sound dual prevention system for

Production safety is the fundamental assurance for the healthy and sustainable development of enterprises. It is always of paramount importance hierarchical control of production safety risk and investigation andfor enterprises to continuously strengthen production safety management. The Company implements the principle of “safety first prevention first governance of hazards and persists in risk prevention and earlyand comprehensive management” firmly fosters the idea of safe development and promotes the safety production of legalization standardization identification. In terms of hierarchical risk control the Company identifies

normalization systematization so as to lay a solid foundation for safety goal. the risk hazards in operating activities and equipment and facilities in each

sector every year classifies the types and consequences of possible

Construction of safety management system and mechanism incidents and determines the hierarchy of control and the corresponding

accountable person according to the category. In 2021 the Company

The Company strictly complies with laws and regulations and requirements of regulatory authorities of countries where it operates and carries has identified a total of 269 risk hazards in various production and

out all kinds of production and operating activities in accordance with laws and regulations. The Company has established the Safety Production operating activities. In response to each risk hazard the Company has

Committee and safety production management organizations and staff 46 safety management personnel. The Company has conducted strict formulated specific risk control measures to prevent and control risks in

management in accordance with safety standardization and double systems standards and requirements including the establishment of regulation terms of standard specification safety training distribution of supplies

on safety production targets management the setting-up of annual safety control measures. Besides the Company has established production safety for labor conservation and protection on-site supervision and inspection

accountability system signed the Responsibility Letter for Safety Production Targets at all levels every year and implemented strict supervision and emergency response drills and timely handling of incidents.assessment to ensure the thorough fulfillment of production safety targets.Carrying out special safety inspection

Prevent the accidents of major

Eradicate fire risks and environments and occupational In terms of risk hazard investigation in 2021 the Company

personal casualties health and safety has carried out routine inspections to each department and

subsidiary and has found more than 3000 safety hazards

in 10 aspects such as fire safety equipment electrical and

chemicals; conducted a total of 39 comprehensive inspections

on seasonal holiday and special occasions. In response to

the identified safety hazards the Company has organized

The Company's specialized personnel to go to the site to confirm and prepare

safety control rectification plans and follow up relevant cases.targets in 2021

Eliminate grand electromechanical

equipment accidents Avoid traffic accident

Organizing various special safety training sessions

In terms of safety training in 2021 the

Company has carried out a series of

Implementing production safety standardization is a long-term mechanism for the Company's safe production. With solid promotion of production special training such as pre-employment

safety up to standard the Company has identified safety laws regulations standards and specifications applicable to the textile industry but and on-the-job training external training

also formulated detailed rules for safe production and operational rules. Among them Regulations of Safety Training Management Remediation related to qualification certification of

and Management Regulations on Safety Inspection and Accident Hazards Regulations on Control of Labor Protection Tools Regulations on safety management and occupational

Electrical Safety Management Safety Management Regulations on Warehouses Safety Management System for Hazardous Chemicals Safety health first aid training special equipment

Management System for the Storage Handling and Use of Liquid Ammonia Safety Management System for Construction Works by External training and certified safety engineer

Units combine the standardized management system with current systems of the Company which increases the control of different operational training implemented the government's

processes. In 2021 the Company invited third-party tech companies to perform review and reexamination under the secondary standard of safety special action requirements on "deep

standardization. learning deep training wide examination"

for safety production and achieved the

normalization of safety training and

learning. In addition the Company has

conducted "Safety Production Month"

activities with the theme of "implementing

Intensify efforts in prevention and investigation on production safety accident safety responsibility and promoting

safety development" and the purpose

of preempting and defusing major risks

eliminating potential safety hazards in

In 2021 the Company continued to improve and implement the System for Report Emergency Rescue and Investigation on Production Safety a timely manner and effectively curbing

Accident identified hidden accidents and emergences to make sure a timely response will be made when these happen and minimize the production safety incidents to create a

injury and loss from possible accidents. The Company stipulated that drills for contingency plan should be practiced regularly. For instance sound environment for safety production.drills for special planning should be conducted at least once each year and on-site response drills be exercised at least once in every six In the whole year of 2021 the Company

months. The Company has defined responsibility and authority related to prevention and investigation on production safety accident carried has conducted more than 100 various

out surveys analyses and actions on accidents incidents and other poor safety performances and adopted appropriate correction and safety training sessions with over 15000

prevention measures that will eliminate the negative effects immediately avoiding recurrence of such incidents. trainees.Fire control publicity poster30 Sustainability Report 2021 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Engagement Lu Thai Textile Co. Ltd 31

As a key unit of fire safety the Company always adheres to the principle of "prevention first combining fire prevention and firefighting full

"Safety Production Month" activities in various forms

participation and addressing both symptoms and root causes" and takes effective measures to ensure fire safety. Each department has set up fire

safety management group headed by the chief accountable person and continued to improve institutional documents such as Hot Work Management

System Fire Inspection System and Electricity Safety Management System. In 2021 the Company has conducted a series of fire safety activities

including fire equipment and facilities examination fire safety hazard investigation visible fire monitoring firefighting and evacuation drills for fire

safety firefighting training and organizing "119 Fire Safety Publicity Month" activities to improve each production unit and employee's capacity for

During the "Safety Production Month" campaign in June 2021 the Company has conducted a variety of activities such as publicity board

fire safety emergency response. Among them 304 fire emergency drills were organized from production workshops and warehouses to dormitories

design special training on safety production investigating potential safety hazards award-winning essay contests making short videos

on safety dissemination emergency response drills and so on. All employees have participated in the activities and raised their safety and canteens; 165 firefighting knowledge contests were held; over 12000 people were organized to participate in more than 60000 hours of online

awareness. learning. At the same time the Company also actively promotes the construction of "smart firefighting" and leverages the "sky eye" role played by the

emergency rescue center in monitoring facilities to establish a three-dimensional full-coverage and accurate fire prevention and control system with

The Company organized various departments to carry out publicity board design activities with the theme of "implementing safety "information sharing and unified command" achieving the smart interaction between automatic sprinklers and various alarms systems. In 2021 there

responsibility and promoting safety development" which had created a total of 48 boards. was no major fire safety incident in the Company.All departments and subsidiaries organized a total of 277 teams to participate in the investigation of potential safety hazards in the

"Investigation Protection Promotion" activity with a total number of 6000 participants and a total of 2500 identified safety hazards

and finally selected 36 outstanding teams.The "Together for Safety" award-winning essay contest received a total of 65 outstanding essays from various departments. Management of Chemicals

All departments actively participated in the "Dong Hua Cup" Douyin short video competition for safety publicity and made a total of

35 short videos and finally won a second prize and two third prizes. The Company controls the whole process of procurement transportation storage use and disposal of chemicals and continues to strengthen the

safety management of hazardous chemicals and major hazard installations. The Company has formulated and implemented management systems

The Company organized 65 safety education and publicity sessions for shifts of each factory focusing on the basic knowledge of and regulations such as the Safety Management System for Hazardous Chemicals Regulations on the Supervision and Inspection of Hazardous

safety the causes of recent safety incidents across the country and relevant preventive measures.Chemicals Safety Management System for the Storage Handling and Use of Liquid Ammonia and Regulations on the Supervision and Inspection

of Major Hazard Installations of Liquid Ammonia specifying each operation in a comprehensive and detailed way. The Company has established a

chemical flow ledger record system for standardized management and has clarified personal responsibilities to prevent the outflow and illegal use of

precursor chemicals and explosive chemicals. In addition the Company implements safety training of hazardous chemicals through which employees

can master how to prevent and control the risk of hazard installations. The Company continues to complete the Emergency Plan of Hazardous

Chemicals and carries out emergency drills for various accidents improving employees' capabilities of emergency rescue and evacuation. The

Company has organized the plants to carry out 17 emergency drills of hazardous chemicals in 2021.Fire control publicity board art

Production safety emergency management

The Company has established a sound production safety emergency

management system and actively carried out emergency response

drills to comprehensively improve its capacity for emergency response

and accident rescue. For example it has formulated Regulations on

Emergency Preparedness and Response Management and other rules

and regulations Emergency Preparedness and Response for Fire

Accidents Emergency Preparedness and Response for Hazardous

Chemicals Leakage Accidents Emergency Preparedness and Response Emergency drills of hazardous chemicals

for Natural Gas Leakage Accidents and other response plans. In

2021 the Company engaged a third-party safety technology company

to prepare and revise the response plans for the headquarters and

subsidiaries and engaged experts to carry out the deliberation and

approval of those plans; organized each factory to conduct a total of 498 With the strict limitation and restriction of chemicals from products and production ever growing whether it is considered from the legality in law and

emergency response drills including 58 special response drills and 440 regulations or from the health of workers consumers and environment it's our duty to carry out the management of chemicals. For that the Company

on-site disposal drills; organized each department to carry out a total of has established the whole process management system of chemicals covering input process and output and has been devoted to providing healthy

26 on-site disposal emergency drills during the "Emergency Rehearsal and green textiles which can be traced by the whole industrial chain and trusted by consumers through the prevention and control of sources and the

Training" conducted in the "Safety Production Month". Carrying out on-site disposal emergency drills inspection and supervision of process and products.32 Sustainability Report 2021 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Engagement Lu Thai Textile Co. Ltd 33

Supply Chain Management

Input control Process control Output control

The Company sets up and continually improves supplier and evaluation system. In order to ensure the openness and transparency of the procurement

process bidding evaluation is jointly completed by evaluation experts from multiple departments. The Company has established an expert database

The control of textile chemicals The Company has made an The Company appoints a lab of bid evaluation and the assessment experts are selected from this database. The experts should sign a Letter of Commitment promising to conduct

before production aims to reduce inventory list of chemicals for the recognized by the Zero Discharge independent evaluation. At the same time the Audit Department would supervise the whole procurement process of suppliers. In terms of qualification

the risks while using by reducing the effective management of chemicals of Hazardous Chemicals (ZDHC) review of suppliers the Company conducts on-site audits on them to fully understand their production and quality control processes as well as their

toxicity and refining the management and the identification analysis program to carry out four to five tests fulfillment of social responsibilities. In terms of daily management the Company signs anti-bribery agreements with suppliers regularly evaluates

system of chemicals. The Company and elimination of chemical of routine parameters and ZDHC them and tests the safety of their products. In 2021 the Company organized various departments to evaluate qualified suppliers and finally took

has built a database of ecological substances and has formulated MRSL parameters every year and immediate rectification suspension cancellation of the qualification of those suppliers and other measures for 39 suppliers with various problems.safety information to fully respond the Safety Management Process has formulated a detection list of

to the regulations and standards as of Textile Chemicals Provisions for hazardous substance data to build

well as the restriction requirements the Management of Procurement a database covering detection data

of MRSL for customers and has of Sizing Agents Dyestuffs and of chemicals wastewater in each

established a set of strict sampling Auxiliaries Dyeing Auxiliary Safety procedure dirt and hazardous

testing and analyzing procedures Testing Operation Instructions and substances in finished products. Then

Strengthen supplier compliance management

such as chemical incoming approval other procedural documents. based on the comparative analysis

hazardous substance analysis of the detection data the source

hazardous substance identification investigation and the elimination of

and treatment among others. hazardous substances are carried out.The internal control evaluation carried out by the Audit Department at the end of each year comprehensively covers supplier management so as to

timely find out the loopholes and risks in the supplier management process which lays a solid foundation for the construction of a responsible supply

chain. The main contents of internal control evaluation include:

Whether a reasonable supplier evaluation and access system

For upstream suppliers the Company has formulated the Declaration of Environmental Conformity of Chemicals and Declaration of Environmental is established to examine the authenticity and legitimacy of the

Conformity for Raw Materials and Auxiliaries which requires them to sign and confirm the conformity of the supplied products and to provide relevant suppliers' qualification and reputation.legal certification materials or safety commitments (TDS MSDS safety commitments or statements positive lists and related GOTS BLUESIGN

certifications etc.) to ensure the conformity of raw materials and chemical. Meanwhile the Company will transfer the requirements for hazardous

substances of laws and regulations standards and branded customers to upstream suppliers on time to promote the shared information of supply

chain and work together for the elimination of hazardous substance.The Company pays high attention to the openness and transparency of chemical information and data. The Company continuously improves its Whether the supplier management system and

management level of chemicals by the exchange and interaction of Parties of Interest while enhancing its credibility. The Company uploads the supplier elimination system are set up so as to

Pollutant Release and Transfer Registration System (PRTR) data toxic substance detection data and supplier related information to the IPE (Institute conduct real-time management assessment

of Public and Environmental Affairs) website and ZDHC Gateway uploads the inventory list of chemicals to Cleanchain from which related customers and evaluation on the quality price delivery

can learn about the names manufacturers average monthly consumption of chemical products used by the Company environmental protection Whether the suppliers are selected according timeliness supply conditions qualification and

certification and ZDHC MRSL compliance level etc. of the chemicals and uploads the chemical inventory list to the CIE platform of China National to the principle of fair and just competition reputation operating status of materials or

Textile and Apparel Council synchronously. and the quality assurance agreement is signed The main content services provided by suppliers and adjust the

with the suppliers on the basis of effectively of internal control selection or retention of them according to the

preventing the risk of fraud. evaluation assessment results.The Company actively integrates the factors of sustainable development into the supply chain management process. The Company gives priority

to suppliers who have passed ISO9001 Quality Management System Certification ISO14001 Environmental Management System Certification

ISO45001 Occupational Health and Safety Management System Certification Green Factory Certification and other authoritative certifications and

gives priority to purchasing products that have passed Bluesign GOTS/OCS GRS and other certifications. In 2021 the Company established the

Supplier Code of Conduct which sets forth requirements for suppliers from four aspects: business ethics human rights and labor standards health

and safety and environmental and chemical management. It covers integrity and law-abiding corruption and bribery information confidentiality

employment and rights of laborers work environment and training preventing accidents and injuries environmental protection conformance of

chemicals “three wastes” management and other subdivided fields which aims at promoting suppliers’ awareness of sustainable development

accelerating the practices and improving the performance of sustainable development.The Company attaches great importance to win-win cooperation with suppliers. The Company regularly carries out technical exchanges with strategic

suppliers to jointly develop products. Besides it explores the construction of digital procurement platform committed to creating an efficient green and

intelligent supply chain. The Company adopts ERP system in supply chain management. As a new generation of integrated and collaborative platform

based on Internet service/technology architecture it could effectively shorten the procurement business management cycle and make the supplier

system realize orderly and monitored operation contributing to more standardized and transparent supplier management.34 Sustainability Report 2021 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Engagement Lu Thai Textile Co. Ltd 35

COVID-19 control While carrying out effective pandemic prevention and control overseas subsidiaries took the initiative to assume their social responsibilities and

supported local governments in pandemic control by donating money and pandemic supplies. Continental Textile donated nucleic acid testing

reagents RT-PCR sampling groups facemasks protective suits and other supplies worth over VND100 million to the local public security bureau

As the COVID-19 pandemic becomes a normal trend pandemic control has become an important daily business to ensure the continuous operations donated acid testing reagents worth VND49.5 million to infrastructure companies in the industrial park and donated medical facilities worth VND298

of the Company. The Company actively conducts daily monitoring work including the sampling and inspection of imported containers registration and million to University Medical Shing Mark Hospital.nucleic acid testing of outbound and overseas personnel etc. It also focuses on the vaccination against COVID-19. In 2021 the number of the staff

members who have been administered three doses of COVID-19 vaccines has reached more than 30000. Lu An Garment actively cooperated with the local government and management committee in pandemic prevention and control donated money to

the local government and the social security bureau to support pandemic prevention and control and helped the local government quickly control the

Compared with that of China the overseas pandemic is spreading rapidly and pandemic control is more severe. Lu Thai’s overseas subsidiaries all pandemic. In February 2022 the An Giang Provincial People's Committee held an economic work summary conference in the context of pandemic

have taken active measures to fight the pandemic involving daily health monitoring of employees implementation of day-to-day disinfection publicity normalization at which Lu An Garment was awarded the "Excellent Enterprise for 2021" and delivered a speech as the enterprise representative.of pandemic prevention and control knowledge routine nucleic acid testing regular distribution of protective materials for employees such as masks

isolation clothing and face shields and so on coordinated arrangement of vaccination etc. to positively assure the health and safety of the staff and

strive to minimize the impact of the pandemic on production and operation.Lu Thai's Overseas Subsidiaries Took Active Pandemic Prevention and Control Measures

The places where Lu Thai's overseas subsidiaries are located had widespread outbreaks of COVID-19 in 2021. In light of pandemic development

all subsidiaries kept intensifying pandemic control methods and took strict pandemic control measures including measuring body temperature every

day disinfecting every employee that entered and left workshops strictly requiring the wearing of facemasks keeping distance and having meals at

different hours disinfecting the factory environment and strictly managing visitors and foreign materials for meticulous prevention of imported cases

and to cut off the transmission of COVID-19 as much as possible. In addition subsidiaries organized regular COVID-19 quick tests among employees

to identify positive cases and timely cut off transmission and arranged vaccination for employees. As at the end of 2021 over 95% of the employees

had received the second dose of the COVID-19 vaccine.Overseas subsidiary delivering speech as representative enterprise

Overseas subsidiary donated to University Medical Shing Mark Hospital

Normalized epidemic prevention and control of overseas subsidiary Employees dispatched abroad regularly took nucleic acid tests Dining seats were partitioned off in the canteen of overseas subsidiary36 Sustainability Report 2021 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Engagement Lu Thai Textile Co. Ltd 37

Employee's Rights and Benefits

Build a Harmonious Workplace

Environment Together

The Company always believes that talents are the source driver of the

Company's development and adheres to the people-oriented culture featuring

the care and love for employees. While maintaining its healthy stable and

sustainable development the Company has allowed its employees to share

its developmental achievements achieving the transformation from treating

employees well and caring for them to loving them. The Company attaches

great importance to employees' occupational health and regards it as its

responsibility to ensure the health and safety of every employee. The Company

constantly carries out projects for improving the quality of employees and

establishes a scientific performance and salary management system so as to

build a dual channel for the growth and success of various talents.Promote sustained inclusive and

Achieve gender equality and sustainable economic growth full and

empower all women and girls. productive employment and decent

work for all.Reduce inequality within and

among countries.UN Sustainable Development Goals38 Sustainability Report 2021 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Engagement Lu Thai Textile Co. Ltd 39

Health and Safety Respect and Equality

The Company attaches great importance to employees' occupational health and safety and therefore it has established a sound occupational health Human rights and labor rights protection

management system and reinforced the detection of occupational hazards and on-site personnel protection striving to protect the occupational health

of every employee.The Company has always adhered to the principle of equal and friendly employment. It strictly complies with the laws regulations and requirements

of regulatory authorities of the countries where the Company operates and actively supports the international conventions including the International

Covenant on Economic Social and Cultural Rights and the Elimination of Discrimination in respect of Employment and Occupation so as to build an

equal friendly occupational platform for employees.The Company has conducted regular physical examinations and occupational health

education and training for employees established occupational health surveillance The Company believes that talents are the basis for the operation and sustainable development of companies. As to the recruitment and retention of

archives for employees and adhered to the standardized management featuring "one talents the Company adheres to the "all-inclusive" concept accepts all talents and promises not to determine employees' salary and rank based on

archive for one person". their gender age nationality ethnicity religion color language domicile place and other personal characteristics unrelated to work. The Company

respects the rights of every employee and provides equal and free development space for every employee.The Company has established a system for occupational hazards registration and

strengthened interdepartmental communication to improve the protection against

occupational hazards in various ways.The Company is committed to putting an end to

During the interview the Company takes the initiative all forced or compulsory labor. Employees are free

The Company has conducted regular declarations of occupational hazards and set up to check the interviewee's identity card and graduation to leave the workplace after completing the work

occupational-disease-prevention facilities. certificate to avoid wrongly recruiting child labor and needed to be done within standard working time. The

Measures taken minor workers who have not completed the compulsory declaration system must be implemented for overtime

education. work to ensure that overtime work is a voluntary act of

employees.The Company promotes health care knowledge publicity event monthly and provides

first-aid medical kits for employees. In 2021 the Company replenished first-aid medical

kits 298 times.In some areas of Southeast Asia which have poor

In the course of production and operation cooperating

In 2021 no major public health events occurred in the Company. transportation systems the Company hires vehicles with the local government or third-party institutions the

to shuttle employees to and from work solving the

Company actively carries out due diligence on human

problem of employees who have trouble getting to work

rights protection.due to local poor transportation systems.The Company actively carries out identification of and responds to occupational hidden dangers. It also requires all new employees to take pre-

employment physical examination before being exposed to occupational hazards doing so to prevent people with occupational contraindications from

engaging in hazardous operations. Besides the Company requires employees to take occupational health check-ups when they leave their posts to

ensure that employees leave their posts in good health and that their rights and interests are protected.Safeguard the rights and interests of employees

Occupational hidden The Company has established a sound salary and welfare system for employees. Their primary endowment insurance injury insurance basic medical

Countermeasures

dangers insurance maternity insurance and unemployment insurance are paid by the Company according to law. All national legitimate holidays including

paid annual leave family leave marriage leave nursing leave and industrial injury leave are offered according to national standards. Moreover the

Company works actively to smooth the channels for employees to air their opinions. Communication channels including trade unions a congress

Take measures of confinement ventilation and dust removal for the dust from cotton blender machine and of the staff and workers and complaint mechanisms have been developed and improved. Employee satisfaction surveys are conducted regularly to

scutching machine during pre-spinning make sure that the management receives employees' opinions and gives feedback in time so that their legal rights are protected.Dust Adopt the approach of wet sweeping for the workshop to take away the dust accumulated on the surface as Overseas subsidiaries must obey the local laws and regulations continuously optimize their salary and welfare system and provide employees with

much as possible living and working conditions better than the local average.Equip adequate labor protection tools and distribute dust masks that conform to international specifications

Indicator (Unit) 2019 2020 2021

High temperature and Distribute items for heatstroke prevention for high-temperature posts in the workshop

Employment contract signing rate (%) 100 100 100

high humidity Add exhaust systems in the workshop

Social insurance coverage (%) 100 100 100

Noise and vibration Equip employees with disposable noise-reducing earplugs and replace them regularly

Signing rate of collective bargaining agreement (%) 100 100 10040 Sustainability Report 2021 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Engagement Lu Thai Textile Co. Ltd 41

Democratic management

Indicator (Unit) 2019 2020 2021

To make sure employees' comments and suggestions are heard and responded to the Company has fostered a complaint mechanism led by the

Trade Union. A box of reasonable suggestions is available to collect employees' opinions on work-related topics including employer-employee Burma (%) 5 5 5

relations working conditions salary and benefits and occupational health and hygiene. The suggestion notes in the box will be sorted summarized

and sent to the Company's leaders by the Trade Union every month thus guaranteeing the timely feedback and handling of employees' suggestions. Vietnam (%) 22 23 29

The Company proactively opens up factory affairs to employees so as to guarantee the right to information and participation of each employee and

achieve democratic management. Its production departments at home and abroad all develop sound Trade Union or workers' congress systems Cambodia (%) 9 9 10

so that employees can receive timely negotiations on their needs Employees can make comments via E-mail suggestion box and social media at

any time. Based on their comments suggestions and complaints the Company and the Trade Union launch timely surveys formulate measures for Employee Turnover

improvement and give feedback.Total number of new employees 6335 3969 6081

(person)

Employee satisfaction survey

Employee turnover rate 20 20 19

The HR department conducts regular employee satisfaction surveys of all staff members. Survey teams make questionnaire featuring employee

groups. Diversity surveys are carried out according to six aspects including overall approval of the Company work environment team cooperation

immediate supervisor personal growth and salary and welfare. An Employee Satisfaction Survey and an Improvement Report of Employee Employee Training

Satisfaction are produced based on the final results. As for the problems revealed in the survey HR Department of the Company addresses holistic

problems of the Company while other departments are responsible for their internal problems. Training participants (person) 26413 22583 22632

Diversity and Inclusion Average training hour (hour) 56 46 47

Training coverage rate (%) 100 100 100

Indicator (Unit) 2019 2020 2021

Employee diversity

Total number of incumbent 26413 22583 22632 Equal pay

employees (person)

The Company’s employee salary system is classified as the by-the-hour salary system and the by-the-piece. On this basis the Company continuously

Total number of male employees 11622 9845 9593 improves the employees’ salary structure system providing a fair and reasonable salary mechanism for employees and promises not to treat

(person) employees differently in terms of salary and promotion opportunities for their gender beliefs nationalities and other non-work-related ability elements.Proportion of male employees (%) 44 44 42

Caring for female employees

Total number of female employees 14791 12738 13039

(person) As a labor-intensive textile industry the Company has a great number of female employees. Lu Thai always attaches great importance to the

protection of the rights and interests of women workers and realizes the humanistic culture construction of harmonious and equal development in

Proportion of female Employees (%) 56 56 58 the process of development and construction. The Company promises equality between men and women in employment remuneration training

opportunities promotion dismissal or retirement and other employment matters. The Company makes all decisions fairly based on employees’

working ability without any discrimination against their gender family responsibility marital status political opinion age or other areas. In order to

Employee age better safeguard the legitimate rights and interests of female employees and help them improve their value the Company has formulated various rules

and regulations such as the Labor Protection Regulations for Female Employees clearly stipulating female employees’ education and activities labor

Total number of employees aged 14527 11009 10520 protection system and facilities as well as health examination so as to standardize and institutionalize the work of female employees. At the same

under 30 (person) time various activities such as training seminars rewards physical examination and benefits distribution are carried out for female employees only.Proportion of employees aged under 55 49 47 Since Mr. Liu Zibin Chairman of the Company signed the CEO statement on the Principle of Empowerment of Women in 2020 the Company has

30 (%) actively pursued a series of internal initiatives to continuously improve the protection of women's rights within the Company.

Total number of employees aged 11886 11574 12112

above 31 (person)

Proportion of employees aged above 45 51 53

31(%)

Education Level of Employees

Bachelor or above (person) 1245 1411 1336

Junior college (person) 5151 4641 4576

High school or below (person) 20017 16531 16720

Nationality

China (%) 64 63 56 Zibo General Trade Union's staff mental health experts carried out women mental Award-winning female employees

health lecture to the Company42 Sustainability Report 2021 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Engagement Lu Thai Textile Co. Ltd 43

Development of reserve talent pool

Our Actions

Reserve talent pool has been established for key positions to serve to the Company's development and targeted career development and training

The Company introduced a gender-equality employment policy to regulate equal employment at the institutional level. plan has been formulated for key talents at all levels. The Company will track the development of reserve talents when they take positions and then

carry out systematic training through training courses study tours and job rotation. Individualized and targeted training will be designed for talents

The Company provides the promotion channel with gender equality and implements the dual-channel mode of career development under the guidance of mentors thus contributing to their fast development.which is parallel to the technical route and management route ensuring female employees’ fair career development and providing

greater development space for female employees based on their vocational skills.The Company constructs a women-friendly training system to improve the knowledge structure and skills of women workers. Nearly Career planning

900 sessions of training were conducted in 2021 involving over 60000 female employees.

The Company has established Female Employee Committee composed of representatives of outstanding and authoritative women Excellence Plan

workers in different departments to coordinate and solve difficulties in female employees’ work to improve the benefits system of Elite plan Top manager advanced

women workers.Flying Plan Middle Manager training project

The Company elects female model staff and carries out many activities including “excellent employee assessment” “skill Sailing Plan First-line Manager Remodeling Projectcompetition” “technology recognition” “star salesperson” and “Lu Thai craftsperson” giving spiritual and material rewards to Training program for new Incubation Project 5 years -

employees. In the past five years nearly 50 commendation conferences with approximately RMB23 millions of rewards were employees 3-5 years

organized every year commending over 50000 people women employees accounting for over 60%. 1 to 2 years Senior executives -- managing

Department heads - business

The Company gives holiday gifts to all female employees every March 8. 0-1 year Backbone employees -- managing departments Performance-oriented

Graduate employees -- self- managing others Company interest Cross-departmental

management Balance between individual maximization support strategy collaboration

Basic skills training and group

From individual success to

group success

Training and Development

Promotion channel

Talent training

The Company has established management-expertise dual channel for career development carrying out targeted training for excellent first-line

backbone employees to ensure talent training and promotion. Employees get promoted by position or title changing in the management career path The Company has developed a sophisticated Lu Thai vocational training

while getting promoted with reference to the Company's title appraisal system in the expertise career path. Besides vertical promotion employees can mechanism and designed a variety of vocational training courses in terms

also achieve horizontal promotion by transferring to different position sequence. This offers employees multi-dimensional development. of expertise and management. A total of 22632 employees took part in the

vocational training in 2021 with a coverage rate of 100%.The Company will carry out periodic title appointment work and professional and engineering technicians appointed will be rewarded with monthly

allowances during the tenure.Training participants (person)

201926413

Management career path Expertise career path Carrying out teamwork training for campus-

recruited new employees 2020 22583

202122632

Top manager Senior expert

Average training hour (hour)

Middle manager Expert

201956

202046

First-line manager Core backbone 2021 47

Meeting of duty appraisal and appointment for Training coverage rate (%)

Backbone technical positions

2019100

First-line personnel 2020 100

2021 10044 Sustainability Report 2021 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Engagement Lu Thai Textile Co. Ltd 45

Promote skill development

Case The Forklift Skill Competition held by Storage Management Department

Lu Thai has carried out various skill competitions encouraging employees to improve expertise in the competitions to make clear their career

development orientation and objectives and to apply know-how to work through practice. In this way employees will rise up to overcome difficulties

The forklift skill competition covering some parks and zones and several types of forklifts was held by the Storage Management Department

through exploration and creation so as to constantly enhance group cohesiveness and drive the Company's development towards a learning-oriented

in October 2021. A total of 98 participants from different parks and groups took part in the skill competition of electro forklifts internal

expertise-oriented and creative top-level enterprise. Meanwhile the Company has carried out professional certification thus helping employees to be

combustion forklifts reach forklifts and clamping forklifts. Employees' technical skills were greatly improved and their awareness of

the top-level professionals.emphasizing skill learning was raised in the competition which in turn increased the efficiency of production management.Case The 31st Technical Skill Competition

The Company held a technical skill competition from April to June in 2021 in order to promote the superior corporate culture and build a

highly qualified team with expertise creativity determination ambition faith willingness to take responsibility and spirit of utter devotion.Besides a positive atmosphere would be created to urge employees to learn skills and put them into practice. A total of 53 companies

and 9750 personnel covering 729 types of work in total took part in the competition. After mobilization meeting training and learning drill

of vocational skills and trial and final match winners were rewarded with presents and bonus including 20 champions of individual skill

competition over 3000 winners over 700 excellent workers with multiple skills and 93 outstanding teams. All participants from production

units to groups and employees improved their capabilities to some extent in the skill competition.Forklift technical skill competition

Benefits and caring

Lu Thai invariably provides all its employees a

comprehensive living condition with family-like The Company rationalizes the

care which includes clothing food shelter and varieties of dishes and supplies

transportation. The Company is dedicated to specialties on the basis of

improving the employee daily care system involving advocating the health concept

various aspects like work life and entertainment. with reducing oil salt and sugar

Moreover the Company attaches importance to at its core.employees’ satisfaction and requirement towards Develop the

logistics in order to improve their accommodation special menu and

conditions. strike a balance Seasonal fruits

between meat are supplied in

Care about the lives of employees and vegetable lunches to enrich

to safeguard employees’ diets.Individual event final of the skill competition Since the textile industry is the labor-intensive employees’ health.industry a large number of employees centrally

live and work in the park where the Company is.Therefore the Company sets up the Logistics

Management Department for the accommodation of

employees and protects all aspects of employees’

rights and interests with respect to their lifestyle Rationally plan In summer ice

when they’re in the park. for the food

Case Lu An Garments held the skill competition creams and supply through

The Company has placed considerable emphasis cold drinks are scientific

on improving the food quality for employees as well available in calculation to

as focusing on improving the dining services. In lunches to cool reduce waste.From May to mid-June in 2021 upholding the idea of practicing skills in need and dealing with bottleneck problems in production Lu Thai order to achieve the purpose a survey of employee employees off.Make a reasonable

aimed to improve employees' technical skills and carried out the annual technical skill competition in its factory in Vietnam to keep pace with accommodation satisfaction is conducted regularly combination of the stable food

the corporate headquarters. As a result over 150 winners were selected out from 1529 participants. every year and dishes are continuously improved like rice and noodles according

to satisfy more employees. to employees’ dietary

In 2021 the degree of satisfaction of employees preferences.living and dining at the Company rises by 2.1%

compared with the last year.46 Sustainability Report 2021 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Engagement Lu Thai Textile Co. Ltd 47

The Company ceaselessly optimizes the apartment management to provide employees with diversified accommodation

options making the Company an industry leader in overall apartment construction. Carry out Golden Autumn Scholarship Activity

The Company carries out Golden Autumn Scholarship Activity every year encouraging the children of employees to receive higher education. If their

Air conditioners and free Wi-Fi are available in all dormitories in the Company. children are admitted to universities a one-off scholarship of RMB3000 to 5000 will be given to them.Janitors conduct an everyday indoor clean-up and deal with the sanitary dead ends regularly.The bedding is changed regularly and the Bedding Change Office is set up to meet the standard of changing the bedding as long as it gets

dirty.Care about employees in difficulty

Chess & card rooms and TV rooms are set up on each floor to enrich employees’ spare time.Smoking is prohibited in dormitories but separate rooms for smoking are set up for employees to use.Everyday disinfection is conducted in apartments and public areas. In order to better care about the life of employees and solve the practical difficulties in their lives the Trade Union formulated the Visit and Assistance

Management Measures of Lu Thai Textile Co. Ltd. making the visit and assistance more standardized. The Company's grass-roots branches went

Unattended 24-hour supermarket is set up to provide convenient life services for employees. deep into the front line of production understand the living condition of employees through multiple channels take the responsibility of "the first

Safety management mechanism has been established by carrying out daily patrols nighttime joint inspection and indoor fire evacuation insider" actively find out the state of mind of employees and take the initiative in solving their problems. The Company has set up the Lu Thai Relief

drill regularly. Foundation to start the assistance procedures when an employee suffers from serious illness. Over ten thousand yuan are donated to employees to

help them go through difficulties.Carry out dormitory cultural construction and hold the civilized dormitory comparison and appraisal every year.In 2021 the Company's Trade Union relieved 106 employees in difficulty and distributed relief fund of RMB319500.Carry out cultural and recreational activities

The Company regularly organizes various cultural and recreational activities to enrich employees' spare time improve their state of mind guide them

to achieve work-life balance promote their sense of belonging to the Company and strengthen the Company’s cohesion.Continental Textile Co. Ltd. held flower

Case The 21st Staff Football League Case

arrangement contest on Women's Day.In October 2021 the Company organized the 21st Staff Football In order to celebrate the International Women's Day the trade

Unattended supermarket Undergraduate apartment League in which more than 200 employees including referees union of Continental Textile Co. Ltd. held a flower arrangement

athletes and employee representatives participated. The games contest with the theme of "Vietnamese Women". The award-

were divided into group-stage and knockout matches lasting winning employees said "This contest provides an opportunity

for 5 days and 10 participating teams played 24 matches. for female employees to show their creative talents and also

Through the match the cohesion among employees was built to brings an unforgettable Women's Day to everyone. Thank

develop the sportsmanship in the arena the spirit of combating the company for organizing this event which strengthens the

in the post and the spirit of striving in the struggle. All players friendship and solidarity among colleagues!"

concentrated on "fighting" to make wonderful achievements.The scene of the football match Overseas subsidiary held flower arrangement contest in

International Women's Day

Overseas subsidiary presented gifts to employees Overseas subsidiary presented gifts to employees

at the Mid-Autumn Festival48 Sustainability Report 2021 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Engagement Lu Thai Textile Co. Ltd 49

Product Services

Provide Ace Services

Lu Thai always insists that quality is the most important for a business to

survive and develop. We regard product quality as the foundation of our

enterprise continuously introduce modern management concept and

production technologies worldwide and constantly improve the capability of

quality control and management.Build resilient infrastructure promote

inclusive and sustainable industrialization

and foster innovation.UN Sustainable Development Goals50 Sustainability Report 2021 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Engagement Lu Thai Textile Co. Ltd 51

Product Innovation

Case Develop fluorine-free decontamination fabric to fill the technical gap of domestic industryLu Thai always adheres to the principle that “innovation is the driverfor enterprise’s development”. We pay great attention to functional

innovation advocate market-oriented innovation and creative design Generally white cotton fabrics have defects such as low whiteness poor wrinkle resistance and

set the innovative products as role models and devote to providing poor stain resistance. Lu Thai through researching and developing optimized techniques and

more diversified and cutting-edge products to international customers. In putting them into effect successfully designed and developed a block microcrystalline fluorine-

2021 the non-iron yarn-dyed weft-knitted shirts and four-level non-iron free finishing agent for anti-stain and developed easy decontamination and non-iron resin

linen shirts developed by Lu Thai won the honor of "2021 Top Ten Textile one-bath short-process and low-temperature finishing technology. The two-way bridging effect

Innovative Products". of non-iron resin on decontamination finishing agent and cellulose molecules improved the

Being reliant on the existing R&D technology foundation the Company decontamination grade and washing fastness and solved the problem of decreased whiteness

is dedicated to breaking through the difficulties in industrial technologies caused by conventional high-temperature treatment realizing the green industrial production of

and leading the innovation of the industry. In 2022 the Company short process.will focus on introducing green products featuring recycled cottons The non-iron resin one-bath short-process and low-temperature finishing technology is supported

degradable materials sewage dyeing technique and Supercritical by a number of independent intellectual property rights which promoted the development of

Fluids Dyeing technique and submit patent applications for highlighted functional fabrics of white shirt. The fabrics produced by this technology have irreplaceable

technologies such as antibacterial and antiviral dazzling dyeing and

Blue Eco-Mist a fabric developed by Lu Thai with alkali-free advantages in terms of whiteness value easy decontamination hydrophilicity and durability and

plant dyeing products.environmentally friendly dyeing process have been recognized by customers industry partners and other stakeholders. According to China

National Textile and Apparel Council the technology has filled the gap in China and reached

advanced international level which has promoted the development and structural upgrading of Fluorine-free decontamination

China's textile industry. fabric

Case Development of eco-friendly cotton fabric

Lu Thai has been dedicated to the development and application of the

environmentally friendly products. Since the R&D phase of raw materials we Sustainable Textiles

strive to make everything perfect. We actively develop green eco-friendly cottons

and insist on protecting the ecological balance when developing products.An increasing number of textile and garment enterprises have come to realize that product operation is crucial to the sustainable development of the

The Company developed antibacterial fabrics with functional cotton. By earth and human beings. In this connection a new trend is calling on the textile industry to develop recycled harmless and green products. At Lu

extracting organic raw materials from marine resources such as kelp seaweed Thai we are committed to providing consumers with green textiles that are sustainable healthy and eco-friendly. Our company and TAL Apparel co-

and shells and combining with cotton fibers we have produced the eco- founded Lulian New Materials Co. Ltd. to develop and research green textiles from raw materials technologies and products.friendly fabric with natural cotton characteristics increased natural antibacterial

and insulation functions. This very fabric is ecologically degradable and

environmentally friendly as well.The Company improves the percentage of the use of biodegradable and recyclable raw materials to meet

Raw material innovation

Our own eco-friendly cotton fabric the new development concept of green vogue.We work hard to develop the application of energy-efficient and eco-friendly technologies to better

Technological innovation

achieve energy conservation and emission reduction.Case Research and develop digital printing fabric of "making a good start" uniforms to make contribution to the Tokyo Olympics

The Company continues to explore innovative application solutions for the full life cycle of textile products

Product innovation

In July 2021 the Chinese Olympic delegation wore the uniforms designed with the theme of "making a good start" and participated in the thus leading us in continuous innovation with efficient and sustainable materials and eco-friendly products.opening ceremony of the Tokyo Olympics. The uniforms themed “making a good start” symbolize the wishes and expectation for the Chinese

Olympic athletes. The printed fabric of men’s uniforms was designed and produced by Lu Thai Textile Co. Ltd.The design of "making a good start" fabric was inspired by the graphic pattern of China's national flag which best represents China reflecting Since its establishment the Company has successfully developed a variety of materials featuring low energy consumption and low emissions such as

the Chinese delegation’s spirit of solidarity and fight for the motherland’s honor. In order to highlight the warmth of red and the tolerance of biomass functional fabrics multi-color emission reduction fabrics no-dye fabrics and so on. These materials give a strong boost to the development of

yellow and fully enhance the layering of the printing the Company adopted the unique low-carbon circular economy in textile industry.patent technology of polar white selecting the exquisite white as the backdrop to make

the five stars and ribbon patterns more glittering.The fabric of "making a good start" uniforms was produced by digital inkjet printing with

higher fineness than traditional screen printing optimizing the color separation plate

making and size making process. It also made the print on demand possible reduced

ink waste and lowered the COD value of printing and dyeing wastewater as well as

wastewater chromaticity.In terms of manufacturing technique the fabric of "making a good start" uniforms was

made by formaldehyde-free non-ironing technology which overcame the defect of

poor wrinkle resistance in cotton fabrics and retained its soft texture. Meanwhile the

formaldehyde-free fabric is safer and healthier for the wearer and completely realized

the combination of beauty comfort easy care and non-toxicity. Lu Thai participated in the fabric design of the

"making a start" uniforms for China’s Olympic

delegation52 Sustainability Report 2021 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Engagement Lu Thai Textile Co. Ltd 53

The Company continues to promote quality culture construction activities. Adhering to the principle of "quality is the foundation of the company and

Case Development of Biomass Functional Fabrics skill is the foundation of the business" the Company regularly organizes all departments and offices to carry out skill competition excellent employee

assessment evaluation of quality improvement activities QC team proposals and other activities every year constantly strengthens the quality

awareness of all employees and establishes the atmosphere and concept of "quality first" throughout the Company.A growing number of environmentally-benign chemical products can be made from abundant biomass resources which are green renewable

and sustainable. The great use of biomass fabrics expands the source of raw material for chemical fibers and to some extent relieves the

dependence on petroleum resources. Biomass fibers made from these fabrics are ecological green and recyclable. Case Spinnery actively improves quality control and carries out QC investigation project

At Lu Thai based on biomass fibers SOLOTEX SORONA T400 PA56 PLA and other 100% biomass fiber woven fabrics and biomass

fiber interwoven fabrics we have developed a series of high-quality fabrics which are eco-friendly comfortable elastic non-ironing

moisture-absorbent fast drying anti-bacterial deodorant and anti-ultraviolet. These versatile fabrics can be used as casual shirts dynamic Spinnery is the original yarn production unit of the Company. Since 2021 the yarn supply has been in short supply. In order to ensure that

jeans fashionable sportswear as well as jackets windbreakers and trousers. As we innovate and develop consumers’ demands for high- subsequent orders are fulfilled on time with high quality the spinnery has continuously improved quality control and preservation maintenance

performance and multi-functional products has been met. In addition the Company alleviates the textile industry's dependence on petroleum carried out optimization work from fine adjustment of equipment to process quantification and twist adjustment and the employees have

resources and bolsters the momentum of the green low-carbon and sustainable development of the textile industry. studied and improved step by step to successfully solve the long-standing problem of doffing and broken ends. In addition the spinnery lays

emphasis on and encourage scientific research innovation. It has already released 12 QC topics and has set up a scientific research group

that studies the application properties of equipment specifically.The Company is not only committed to the growth of eco-friendly fabrics but also actively cooperates with downstream buyers and industry partners

to carry out product carbon footprint and water footprint inventory improving the scale of carbon inventory and promoting sustainable development of

textile industry. Customer Relationship Management

To promote the communication between the Company and customers and to know

Quality Management and Control more about their needs the Company actively carries out the customer relation

maintenance. For existing customers during the process of cooperation the

Company actively promotes the company's high-quality products and servicesThe Company attaches great importance to quality management and control of products adheres to the principle of “quality is the most important actively obtains customers' product needs customizes customers' productelement of enterprise survival and development" continues to introduce international advanced management concept and modes and continuously development and designs different exhibitions according to customers' markets and

improve capability of quality control and management. In 1995 the Company obtained the ISO9001 quality management system certification. In 2007 needs by visiting them and attending industry conferences exhibitions and product

the Company began to introduce and implement the excellent performance management mode and established the development concept of "quality recommendation meetings so as to promote products better.is the foundation of an enterprise's life". With "meeting the needs of customers and the market continuously improving and advancing in quality" as

At the beginning of every December the Company carries out customer satisfaction

the Company's quality policy the Company avoids the possible harm of products to personal safety and health and is committed to providing safe

survey and issues questionnaires which include the contents about pre-sales

reliable high-quality and environment friendly products and services.consultation and information acquisition research and development and design

product quality delivery process after-sales service etc. The key survey subjects

are strategic customers and valuable customers. The Company investigates the

customer satisfaction and customer loyalty in all links of business transactions.Indicator (Unit) 2019 2020 2021 According to the results of the investigation the Company finally drafted a

satisfaction report whereby we knew our advantages and disadvantages in the

process of cooperation and made specific improvement. In addition the Company

Number of registered teams

958 957 930 gives customers feedback in time and fully meets customers’ needs.

(team) Business promotion meeting for clients

Promoter (person) 192 192 192

Number of participants (person) 10959 9901 9163

Number of released sessions

108108103

(session)

Number of released projects

834804760

(project)54 Sustainability Report 2021 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Engagement Lu Thai Textile Co. Ltd 55

Environmental Protection

Deepen Green and Low-carbon

Development

With the national “peak carbon emissions and carbon neutrality” goals of

3060 green and sustainable development has become a general trend. New

judgments are being formed at home and abroad around green development.New demand breeds new opportunities and new exploration calls for new

cooperation. Committed to consultation joint construction and shared benefits

and pursuing open green and sustainable development Lu Thai seeks

to work with all parties to create high quality green textiles for the world.We continually strengthen resource conservation management deepen

environmental management promote green production and actively construct

green factories and green ecosystem of textile economy thus contributing to

energy saving and carbon reduction as well as environmental management.Ensure availability and sustainable

Ensure access to affordable reliable

management of water and

sustainable and modern energy for all.sanitation for all.Conserve and sustainably use the

Take urgent action to combat

oceans seas and marine resources

climate change and its impacts.for sustainable development.Protect restore and promote sustainable

use of terrestrial ecosystems sustainably

manage forests combat desertification

and halt and reverse land degradation

and halt biodiversity loss.UN Sustainable Development Goals56 Sustainability Report 2021 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Engagement Lu Thai Textile Co. Ltd 57

Address Climate Change

The statistics system of energy consumption

Against the background of the industry’s high concern and advocacy for the early realization of the “carbon peaking and carbon neutrality” goals Lu

Thai accelerates the research and development of green products and vigorously promotes energy conservation and carbon reduction in production

and operation. To response to the national policy of addressing climate change we actively advance photovoltaic power generation project. At the end

of 2021 the Company officially launched the rooftop photovoltaic project. It is expected to complete the grid-connected power generation in the middle The main sources of electric power consumption are frequency conversion equipment LED lamps energy-saving blowers and other facilities

of 2022. We subsequently plan to promote it in the Company’s industrial parks and subsidiaries to contribute to regional ecological and environmental and equipment.protection construction. Heat energy mainly comes from waste heat recovery condensate water recovery etc.In 2021 we conducted a SWOT analysis of carbon reduction action to identify and better tackle potential climate change risks and to lay the Natural gas mainly comes from gas waste heat recovered by low nitrogen combustion equipment and the gas waste heat recovery by flue gas

foundation for the company’s future action strategy of “carbon peaking and carbon neutrality”. waste heat recovery equipment.Strengths Weaknesses

The energy we use is mainly purchased Lack of proven engineering experience in

from suppliers avoiding the risk of the field of renewable energy generation or

stranding the assets of our own power heat supply;

plant and the risk of high carbon lock-in W Total 588733 tonnes CO2-eq

Lack of experience in setting long-term

and having the advantage of flexibility in

carbon reduction targets and implementingthe transition to "carbon neutrality”. S

such plans.Category 1 emissions

T Category II emissions Opportunities Threats 13561tonnes CO2-eq

O 575172 tonnes CO2-eq

New energy technologies are developing In the case of little disclosure of carbon

green electricity is entering the emission information or if the trend of

age of parity and the trend towards carbon emission deviates from the goals

decarbonization of electricity is of downstream branded customers

accelerating. enterprises may face the risk of being Mobile sources emissions Consumption of purchased power

replaced.Upstream low-carbon new materials are 861tonnes CO -eq 424671 tonnes CO -eq

gaining popularity in the capital market. Under the background of “dual carbon” and 2 2If we can set up low-carbon raw material “control over energy consumption intensityresources such as bio-based materials and and total energy consumption” there may

recycled materials as soon as possible be power and production restrictions.we will have an advantage in long-term Enterprises with low energy self-sufficiency

competition. and high energy consumption index have Stationary source emissions Consumption of purchased heat

more long-term risks. 12700 tonnes CO2-eq 150501 tonnes CO2-eq

We are actively conducting research on carbon reduction action strategies. We will continually refine the Company's carbon emission management

measures by increasing green power procurement adjusting energy consumption structure and increasing cooperation on low-carbon technologyresearch in the supply chain so as to gradually achieve the Company's goal of "carbon neutrality”.Energy Management

Upholding the principal principle of "promoting total resource conservation and recycling" Lu Thai comprehensively promotes energy conservation

and creates a green resource-saving and environment-friendly enterprise actively.In 2021 the Company continued to promote the work of energy conservation and emission reduction developed construction of measurement

management system promoted the construction of on-line systemic detection system for energy ensured the rationality and authenticity of the

statistics of energy consumption data and achieved comprehensive information monitoring of energy consumption data. The Company continues

to promote the application of frequency conversion magnetic levitation technology and improves the utilization efficiency of waste heat and waste

temperature and carries out improvements in various projects such as gas-saving water-saving and waste heat recovery in knitting and weaving

dyeing and finishing and other operating processes by optimizing the existing system to formulate new regulations improving technology and making

new drawings etc. The Company has performed a large-scale transformation of the co-generation of heat and power on the existing factory buildings

dormitories and other existing buildings. The cumulatively transformed heating area is more than 200000 square meters. This transformation has

effectively reduced the energy loss in energy transmission improved the effective load of the equipment and improved the overall energy utilization

efficiency of the Company.58 Sustainability Report 2021 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Engagement Lu Thai Textile Co. Ltd 59

Water Resources Management

Case A themed activity hosted by the Company

Water conservation

On June 4 2021 the World Environment Day and the 34th anniversary of the Company it carried out a theme activity which included

Lu Thai actively carries out water resources management and devotes to reducing its wastewater discharge and increasing water recycling. The more than 30 environmental liaison employees and other workers from different departments. Attendees studied in detail the processing of

Company has established a long-term mechanism for water conservation formulated plans for unit water consumption and annual conservation wastewater from production and daily activities the production of reclaimed water and the indicators. In addition they accomplished cleanup

assigned and implemented water conservation goals to each section and working team and clarified responsibilities for all levels. The Company strictly in Zhangxianghu Wetland Park.implements the water conservation system of "synchronization on three levels" and "fulfillment on four levels" in project construction reconstruction

and extension to ensure that the project subjects and conservation measures are designed constructed and put in use synchronously and the water

utilization units fulfill their plans goals measures and management systems for water conservation.The Company encourages all production departments to actively carry out water-saving technique innovation to attach importance to and research

on "less water and even no water" production technology as a key target to implement techniques such as half-cylinder dyeing overflow dyeing small

bath ratio dyeing; constantly increase investment on water recycling and reuse projects to further promote and guarantee the future development of

water recycling.The Company actively carries out the construction of recycled water reuse projects and through employing professional talents increasing

investment and strengthening control measures has overcome technical problems of dealing with wastewater with high COD that with high chroma

and membrane pollution and realized the complete treatment and large-scale reuse of wastewater. The Company has in cooperation with expert

team of Donghua University developed the high-throughput wastewater treatment technology with durable membrane for printing and dyeing

wastewater filtration which effectively reduces the COD concentration and maintains the water production rate of filtered recycled water above A themed activity hosted by the Company

65%. The use of the technology has achieved positive influence on improving regional natural resources and environment alleviating water supply

constraints in the basin and avoiding water pollution and has played a leading role and good example for sustainable development in the industry.In 2021 the Company won the title of "Benchmarking Enterprise of Water Conservation of the Year 2021 in Shandong Province" being the only textile

enterprise among the 13 awarded enterprises.Wastewater management

The Company has continued to upgrade its available sewage treatment facilities and adopted USAB four-step methods to handle desizing wastewater

alone. Compared with the traditional processing technique of hydrolysis and acidification this approach is more efficient than the treatment of sewage Atmospheric Pollutant Management

of high-concentration COD relieves the load shock to treatment system brought by water of high-concentration COD and lowers systemic risks for

the system in the meantime. In 2021 the release of COD in sewage discharge of the Company totaled 345 tons while ammonia nitrogen emissions The Company actively takes measures to deal with air pollutants strived to reduce exhaust emissions during production and minimized the

registered 8 tons reducing 1% and 11% respectively year on year. environmental burden to the society caused by production operations. All the gas boilers in the factories were modified with low nitrogen combustion

technology which effectively reduced nitrogen oxide emissions. By the end of 2021 the Company had fully achieved the centralized collection and

treatment of exhaust emissions from fabric finishing process and will further reduce exhaust gas emissions in the future.The volume of COD emissions in wastewater discharge The volume of ammonia nitrogen emissions in

(ton) wastewater discharge (ton)

Waste Management

2019 572 2019 24 The Company strives to manage waste classification and statistical work and carries out hazardous waste identification according to the Directory

of National Hazardous Wastes. The main hazardous wastes generated in the production operations of the Company include waste oil waste oil

2020 349 2020 9 barrels waste paint buckets waste detergent barrels liners contaminated by chemical dyes waste lead-acid batteries laboratory waste liquid etc.;

the main non-hazardous wastes brought by the production operations is the sludge. The Company constructed hazardous waste storage facilities in

2021 345 2021 8 strict accordance with the requirements of Standard for Pollution Control on Hazardous Waste Storage and signed contracts with qualified hazardous

waste disposal companies that were responsible for the transfer and disposal of all the hazardous wastes.Industrial wastewater discharge (10000 cubic meters)

Hazardous waste generation (ton) Non-hazardous waste generation (sludge) (ton)

2019444

201956201920912

2020305

202051202014552

2021353

2021 44 2021 1508360 Sustainability Report 2021 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Engagement Lu Thai Textile Co. Ltd 61

Community Engagement

Strive to Be an Excellent

Corporate Citizen

The Company adheres to the mission of "creating wealth contributing to

the society clothing the world and weaving our way to every corner of the

globe". On the basis of creating corporate benefits promoting the growth

of employees solving employment problems and creating tax revenue the

Company actively undertakes social responsibilities supports public welfare

undertakings strives to create harmonious public relations and practices the

responsibilities and obligations of corporate citizenship with practical actions.End hunger achieve food security

End poverty in all its forms everywhere. and improved nutrition and

promote sustainable agriculture.Ensure inclusive and equitable

Ensure healthy lives and promote

quality education and promote

well-being for all at all ages.lifelong opportunities for all.Make cities and human settlements

inclusive safe resilient and sustainable.UN Sustainable Development Goals62 Sustainability Report 2021 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Engagement Lu Thai Textile Co. Ltd 63

Contribute to Community Development

In the process of global operation and development Lu Thai always keeps in mind the corporate mission of "creating wealth and contributing to the

society" realizes value in developing economy and serving society and shares development achievements with society. The Company attaches great

importance to the construction of social responsibility actively participates in the textile industry association and various chambers of commerce in the

country where it is located promotes the development of the local industry provides a good working environment to build harmonious labor-capital

relations increases local employment and contributes to the local economic development and the improvement of people's living standards.The Company always keeps in mind give back to society and vigorously supports the development of community infrastructure. We funded the

construction of Lu Thai Stadium Lu Thai Avenue in Zibo City Lu Thai Cultural Road Lu Thai Wenyuan the zoo and other parks that are open to the

public in Zichuan District so as to provide employees and citizens with places for leisure sports culture and entertainment activities and promote the

harmonious development of the community.Case Assist economically weak villages

Overseas subsidiary carrying out employee capacity-building activity Employees working in overseas subsidiary

Lu Thai actively helps needy people in their daily life providing material supplies to 48 families in need. Welfare and Charity Actions

Adhering to the concept of humanist care paramount Lu Thai always pays attention to social welfare undertakings earnestly and insists on rewarding

and benefiting the society while increasing the revenue for the Company and income for employees. For years the Company has spent more thanRMB500 million in social welfare undertakings such as “helping the impoverished supporting education donating money to schools honoring theelderly community support and environmental protection”.Every year Lu Thai's Trade Union organizes all subordinate companies and employees to carry out a One-Day Donation Showing Benevolence

activity bringing together the strength of the whole company to set a role model for the industry and give love to vulnerable groups. In 2021 through

the One-Day Donation Showing Benevolence activity Lu Thai donated a total of RMB5.2 million. The donation recipients included Veteran Cadre

Activity Center of Shandong Province Donghua University Education Development Foundation and Shandong University of Technology and the

Chairman of the Company personally donated RMB1 million to the Centenarians Project in Zichuan District to help vulnerable groups support the

development of industrial education and comprehensively improve the Company’s construction work of corporate social responsibility.Case The Chairman Liu Zibin visited the elderly at the Double Ninth Festival

From October 11 to 13 2021 with the Double Ninth Festival around the corner Liu Zibing the Chairman and President of the Company paid

a visit to the centenarians and the senile elderly in Zichuan District giving the elderly festival greetings good wishes and festival cash gift. He

Helping needy households kindly asked the elderly about their daily life health condition medical insurance and children’s work etc. and brought warmth to the heart of

the elderly.Lu Thai has always attached great importance to the communication with the local community where the factory is located since it began to build it

in Southeast Asia in 2014. All factories of the Company are located in industrial parks set up by the local government and there is no risk of land

disputes and community conflicts.In the process of overseas operations the Company actively carries out local procurement. For locally purchased products with obvious price

advantages and logistics advantages the Company gives priority to local products to promote the development of local economy. The Company

actively hires local employees to provide sufficient jobs for the local area. The Company establishes overseas factories and employs local employees.It provides employees with regionally competitive salary and a working environment beyond the local average level and provides a sound salary and

welfare system and career promotion channels. It also vigorously promotes local managers and provides local people with jobs while bringing broader

career prospects. Transcontinental Textile Co. Ltd. has created 3400 jobs in Vietnam with Vietnamese nationals accounting for 94.4% of its workforce

by the end of 2021. Since the establishment of the factory in Vietnam in 2015 Lu An Garments Co. Ltd. has established a stable recruitment channel

based on the principle of "friendship mutual benefit and win-win". It has established contract employment relationship with 5293 people and created

more than 2000 jobs. In 2021 Lu An Garments has recruited 1454 employees and trained them all. Chairman Liu Zibin visited the senior elderly64 Sustainability Report 2021 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Engagement Lu Thai Textile Co. Ltd 65

Key Performance Report

Case The School Opening Ceremony of Lu Thai Youth Top Class and the Granting Ceremony of “Lu Thai Textile Scholarship”

Firmly believing that talent cultivation is the root of a country Lu Economic Performance

Thai continuously deepens the cooperation between schools

and the Company to establish effective ways of new models

for cultivating talents in vocational education. Lu Thai has

joined hands with College of Textiles and Clothing of Qingdao Indicator (Unit) 2019 2020 2021

University to establish Lu Thai Youth Top Class to cultivate

talents and bring fresh graduates for the development of the

Company. Revenue (RMB100 million) 68.01 47.51 52.38

On October 9 2021 the school opening ceremony of Lu ThaiYouth Top Class and the granting ceremony of “Lu Thai Textile Payments to contractors and service providers (RMB100 3.94 3.50 2.49Scholarship” of grade 2021 was held in Lu Thai Academy with million)

37 outstanding teachers and 117 excellent students receiving

annual recognition awards. Total employee remuneration (including compensation and

16.9014.2714.41

benefits) (RMB100 million)

The granting of scholarships for Lu Thai Youth Top Class

Payments to capital providers (RMB100 million) 5.21 1.69 1.4

Payments to the government (RMB100 million) 6.5 3.69 3.27

Retained economic value (RMB100 million) 9.03 0.45 2.66

Environmental Performance

Data related to Wastewater and Sewage

Indicator (Unit) 2019 2020 2021

COD (Chemical Oxygen Demand) in discharged wastewater

572349345

(ton)

Ammonia nitrogen content in discharged wastewater (ton) 24 9 8

Industrial wastewater discharge (10000 cubic meters) 444 305 353

Air Pollutant Emissions

The donation certificate showing that overseas Overseas subsidiary gave presents to local children on Children’s Day Indicator (Unit) 2019 2020 2021

subsidiary made a donation to the local social

security bureau of Vietnam

Sulfur dioxide in emitted exhaust gas (ton) 1 1 1

Nitrogen oxides in emitted exhaust gas (ton) 11 7 6

Waste Discharge

Indicator (Unit) 2019 2020 2021

Hazardous waste generation (ton) 56 51 44

Non-hazardous waste generation (sludge) (ton) 20912 14552 1508366 Sustainability Report 2021 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Engagement Lu Thai Textile Co. Ltd 67

Greenhouse Gas Emissions

Indicator (Unit) 2019 2020 2021 Indicator (Unit) 2019 2020 2021

Mobile sources emissions (tons of carbon dioxide

1079692861

equivalent) Proportion of female Employees (%) 56 56 58

Stationary source emissions (tons of carbon dioxide

12115 9931 12700 Employee age

equivalent)

Category 1 emissions (tons of carbon dioxide Total number of employees aged under 30 (person) 14527 11009 10520

131941062413561

equivalent)

Consumption of purchased power (tons of carbon dioxide Proportion of employees aged under 30 (%) 55 49 47

484748361897424671

equivalent)

Total number of employees aged above 31 (person) 11886 11574 12112

Consumption of purchased heat (tons of carbon dioxide

167193130325150501

equivalent)

Proportion of employees aged above 31 (%) 45 51 53

Category II emissions (tons of carbon dioxide

651941492223575172

equivalent) Education level of employees

Total (tons of carbon dioxide equivalent) 665135 502846 588733

Bachelor or above (person) 1245 1411 1336

Energy Consumption Density Junior college (person) 5151 4641 4576

Indicator (Unit) 2019 2020 2021 High school or below (person) 20017 16531 16720

Greenhouse gas emission density (tons of carbon dioxide Nationality

1032.21090.51154.6

equivalent per million revenue)

China (%) 64 63 56

Total energy emission density (tons of standard coal per

167.5179.6190.5

million revenue)

Burma (%) 5 5 5

Human Resources Vietnam (%) 22 23 29

Protection of Employees' Rights and Interests

Cambodia (%) 9 9 10

Indicator (Unit) 2019 2020 2021

Employment contract signing rate (%) 100 100 100

Social insurance coverage (%) 100 100 100 Employee Turnover

Signing rate of collective bargaining agreement (%) 100 100 100

Indicator (Unit) 2019 2020 2021

Number of female employees with parental leave during the

1256949695

year (person) Total number of new employees (person) 6335 3969 6081

Number of male employees with parental leave during the

265162113

year (person) Employee turnover rate 20 20 19

Employee Diversity

Indicator (Unit) 2019 2020 2021 Employee Training

Employee diversity

Indicator (Unit) 2019 2020 2021

Total number of incumbent employees (person) 26413 22583 22632

Training participants (person) 26413 22583 22632

Total number of male employees (person) 11622 9845 9593

Proportion of male employees (%) 44 44 42 Average training hour (hour) 56 46 47

Total number of female employees (person) 14791 12738 13039 Training coverage rate (%) 100 100 10068 Sustainability Report 2021 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Engagement Lu Thai Textile Co. Ltd 69

GRI Standards Index Disclosure Content Page Number

102-26 Role of highest governance body in setting purpose values and strategy 18

Disclosure Content Page Number 102-27 Collective knowledge of highest governance body 19

101 Foundation 1 102-29 Identifying and managing economic environmental and social impacts 17-18

Organizational profile

102-30 Effectiveness of risk management processes 18

102-1 Name of the organization 6

102-35 Remuneration policies 18

102-2 Activities brands products and services 6

102-36 Process for determining remuneration 18

102-3 Location of headquarters Back cover

102-37 Stakeholders’ involvement in remuneration 183941

102-4 Location of operations 6-7

Stakeholder engagement

102-5 Ownership and legal form 6

102-40 List of stakeholder groups 12

102-6 Markets served 6-7

102-41 Collective bargaining agreements 39

102-7 Scale of the organization 6-765-66

102-43 Approach to stakeholder engagement 12

102-8 Information on employees and other workers 18-1966-67

102-44 Key topics and concerns raised 12

102-9 Supply chain 33

Reporting practice

102-11 Precautionary Principle or approach 19-2029

102-45 Entities included in the consolidated financial statements 7

102-12 External initiatives 13

102-47 List of material topics 12

102-13 Membership of associations 12-13

102-50 Reporting period 1

Strategy

102-52 Reporting cycle 1

102-14 Statement from senior decision-maker 4-5

102-53 Contact point for questions regarding the report Back cover

102-15 Key impacts risks and opportunities 56

102-54 Claims of reporting in accordance with the GRI Standards 1

Ethics and integrity

102-55 GRI content index 68

102-16 Values principles standards and norms of behavior 1621

Economic

102-17 Mechanisms for advice and concerns about ethics 2140

Governance GRI 201: Economic Performance

102-18 Governance structure 17 201-103 Management approach disclosures 6-7

102-21 Consulting stakeholders on economic environmental and social topics 12 201-1 Direct economic value generated and distributed 665

102-22 Composition of the highest governance body and its committees 17-19 201-2 Financial implications and other risks and opportunities due to climate change 56

102-23 Chair of the highest governance body 19 GRI 203: Indirect Economic Impact

102-24 Nominating and selecting the highest governance body 17-18 203-103 Management approach disclosures 62-6370 Sustainability Report 2021 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Engagement Lu Thai Textile Co. Ltd 71

Disclosure Content Page Number Disclosure Content Page Number

203-1 Infrastructure investments and services supported 62-64 GRI 306: Effluents & Waste

203-2 Significant indirect economic impacts 396265 306-103 Management approach disclosures 58-59

GRI 204: Procurement Practices 306-1 Water discharge by quality and destination 5865

204-103 Management approach disclosures 2133 306-2 Waste by type and disposal method 5965

GRI 205: Anti-Corruption GRI 308: Supplier Environmental Assessment

205-103 Management approach disclosures 21 308-103 Management approach disclosures 33

205-2 Communication and training about anti-corruption policies and procedures 21 Social

GRI 206: Anti-competitive Behavior GRI 401: Employment

206-103 Management approach disclosures 19-20 401-103 Management approach disclosures 38-42

Environmental 401-2 Benefits provided to full-time employees that are not provided to temporary or part-time employees 39

GRI 301: Materials 401-3 Parental leave 4166

GRI 403: Occupational Health and Safety301-103 Management approach disclosures 50-52

GRI 302: Energy 403-103 Management approach disclosures 2128-2938

403-1 Occupational health and safety management system 28-3238

302-103 Management approach disclosures 56-57

403-2 Hazard identification risk assessment and incident investigation 28-3238

302-3 Energy intensity 66

403-3 Occupational health services 38

GRI 303: Water

403-5 Worker training on occupational health and safety 29-31

303-103 Management approach disclosures 58-59

403-6 Promotion of worker health 38

303-1 Interactions with water as a shared resource 58

Prevention and mitigation of occupational health and safety impacts directly linked by business

303-2 Water sources significantly affected by withdrawal of water 58 403-7 38 relationships

303-4 Water discharge 5865 403-8 Workers covered by an occupational health and safety management system 29-3139

GRI 305: Emissions 403-10 Work-related ill health 38

305-103 Management approach disclosures 5759 GRI 404: Training and Education

305-1 Direct (Scope 1) GHG emissions 5766 404-103 Management approach disclosures 42-43

305-2 Energy indirect (Scope 2) GHG emissions 5766 404-1 Average hours of training per year per employee 414367

305-4 GHG emissions intensity 66 404-2 Programs for upgrading employee skills and transition assistance programs 43-45

305-5 Reduction of GHG emissions 5766 GRI 405: Diversity and Equal Opportunity

305-7 Nitrogen oxides (NOx) sulfur oxides (SOx) and other significant air emissions 5965 405-103 Management approach disclosures 41-4272 Sustainability Report 2021 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Engagement Lu Thai Textile Co. Ltd 73

Disclosure Content Page Number Feedback

405-1 Diversity of governance bodies and employees 4066-67

Dear readers

GRI 406: Non-Discrimination

Thank you for reading our sustainability report. In order to improve the quality of the report and improve our ESG management we sincerely hope to

406-103 Management approach disclosures 39

listen to your opinions and suggestions and choose the following ways to give us feedback:

GRI 407: Freedom of Association and Collective Mailing Address: No.81 Songling East Road Zichuan District Zibo City Shandong Province

407-103 Management approach disclosures 39-40 Telephone: 0533-5188888

: Your InformationGRI 408 Child Labour

Name: Contact Tel:

408-103 Management approach disclosures 39

Organisation: Title:

GRI 409: Forced or Compulsory Labour Fax: E-mail:

409-103 Management approach disclosures 39

Choice(Please mark √ in the corresponding position)

GRI 411: Indigenous Rights

Content Very good Good Fair Poor Very poor

411-103 Management approach disclosures 3962

GRI 412: Human Right Assessment This report provides a complete and accurate description of the

significant economic social and environmental impacts of Luthai Textile.

412-103 Management approach disclosures 39-40

This report responds to and discloses information about the concerns of

GRI 413: Local Communities stakeholders.

413-103 Management approach disclosures 39 The information indicators and data disclosed in this report are clear

accurate and complete.

413-1 Operations with local community engagement impact assessments and development programs 34-3562

This report is easy to read i.e. its structure content wording and layout

GRI 414: Supplier Social Assessment are well designed.

414-103 Management approach disclosures 1233

GRI 415: Public Policy Opening questions

415-103 Management approach disclosures 4-558 1.What do you like the most of this report?

You can scan the QR code for quick

GRI 416: Customer Health and Safety feedback to us:

416-103 Management approach disclosures 31-32 2.What other information do you think that should be included in this report?

GRI 419: Socioeconomic Compliance

3.What are your suggestions that how we can better prepare our sustainable development

419-103 Management approach disclosures 19-21 progress report in the future?Lu Thai Textile Co. Limited

Address: No.81 Songling East Road Zichuan District Zibo City Shandong Province

Telephone: 0533-5188888

http://www.lttc.com.cn