On April 21, 2022, CITIC Limited released its 2021 Environmental, Social and Governance (ESG) Report. The report, detailing ESG practices of CITIC Limited while highlighting specific stakeholder concerns, offers an overview of the Company’s initiatives and achievements in environmental protection, social responsibility, and corporate governance over the past year, especially in the areas of the “Dual-Carbon” strategy, labor management, technology innovation, and rural revitalization. By presenting the outstanding progress made by CITIC Limited in embedding the ESG thinking into the whole process of corporate governance and business operation, this report provides market participants with useful information for ESG investment decision-making.
Responsibility to the environment: formulate a “Dual-Carbon” strategy to drive green development
In response to major national targets during the “14th Five-Year Plan” period, CITIC has taken the initiative to embrace the low-carbon transition and embarked on the path of green development, striving to set a standard for all SOEs in contributing to the “Dual-Carbon” goals and practicing ESG responsibilities in the capital market.
In 2021, the Company formulated a “Dual-Carbon” strategy. This strategy, with priorities on “two increases and one reduction”, is aimed at bolstering efforts related to the attainment of carbon peaking and carbon neutrality. Among the “two increases”, the first refers to the greater role of green finance in providing financing solutions for the transition to a low-carbon economy, while the second refers to the Company’s increased commitment to expanding low-carbon benefits across the entire industry chain and ecosystem. As for “one reduction”, this refers to a low-carbon transition in all the Company’s existing businesses generating medium to high carbon emissions, as well as current investments with high environmental impact. By the same token, the Company has pledged to “low carbon emission”, “emission reduction”, and “low environmental impact” in all its business layouts going forward.
The seminar on “The Road to Carbon Peaking and Carbon Neutrality” held by CITIC with the launch of “Dual-Carbon” Strategy on May 10, 2021.
With high attention dedicated to environment-related risks in its comprehensive risk management system, CITIC Limited has added relevant descriptions and management approaches for climate and environmental risks in its newly released Measures for Comprehensive Risk Management, while actively experimenting with incorporating climate and environmental risks into its risk management system.
CITIC Limited is committed to embedding the concept of green development into all five of its business segments——Comprehensive Financial Services aspires to be a leader in green finance, enabling the transition to a low-carbon economy; Advanced Intelligent Manufacturing seeks to be a pioneer in green and low-carbon technology, creating new momentum for “curve overtaking”; Advanced Materials strives to be a safeguard for the green and low-carbon industry chain, ensuring the supply security of key resources for low-carbon transition; New Consumption aims to be a driving force for green and low-carbon consumption, promoting low-carbon consumption attitudes and behaviors among general consumers; New-type Urbanization endeavors to be a constructor of green and low-carbon cities, empowering carbon reduction and decarbonization efforts both in production and lifestyle.
In developing green finance, CITIC Bank’s total balance of green loans stood at RMB 205.425 billion by the end of 2021, registering an increase of 122.80%. As the lead underwriter for the first batch of carbon-neutral bonds in China, CITIC Securities helped China Energy and Shenzhen Metro complete the issuance of carbon-neutral bonds, with an aggregated issuing scale of RMB 7 billion.
In reducing pollutant emissions, CITIC Heavy Industries has completed the renovation project of mechanical vacuum pumps and regenerative heating furnace, saving its energy consumption by 6,820 tons of standard coal and reducing carbon dioxide emissions by 18,760 tons per year; CITIC Dicastal, on the other hand, has been carrying forward the application of low-carbon technologies throughout its processes, with a pilot project at KSM Chengdu Plant successfully reducing carbon emissions by 62%.
In resource and energy conservation, CITIC Mining International has introduced advanced material crushing technology and reduced the total energy consumption per WMT of concentrate by approximately 7%. By tackling key issues in raising the quality of efficiency of energy use, Daye Special Steel has managed to cut power consumption throughout its production processes, achieving a 7.3% reduction in gas consumption per ton of rolled steel compared to last year’s target and a 61 million kWh reduction in purchased electricity.
In developing a sound ecological environment, CITIC Environment Chaonan Circular Economy Industrial Park has been up and running, forming a “six-in-one” service model that has integrated industrial production, wastewater treatment, reuse of reclaimed water, centralized water supply, combined heat and power generation, and solid waste disposal. This one-stop service model for textile printing and dyeing industrial park provides a replicable model as well as valuable experiences for developing third-party governance of environmental pollution in circular economy industrial parks nationwide.
CITIC Environment Chaonan Circular Economy Industrial Park
Responsibility to employees: refine talent planning to pool resources for growth
With its long-term development goals in mind, CITIC Limited has made conscious efforts to build itself into a talent-oriented organization, with high attention paid to offering greater trust, respect, treatment, and inclusive support for its employees, while encouraging a shift of mindset from the “management of human resources” to the “development of human capital”.
In improving compensation and benefits schemes, CITIC Limited has continued to strengthen the correlation between employee compensation and work performance, providing competitive salaries to outstanding talents, thus effectively boosting employee motivation and team morale. According to the requirements of the local governments, CITIC Limited has achieved full coverage of basic social insurance for all its employees, with corporate pension and supplementary medical insurance schemes established for employees in domestic subsidiaries and MPF paid for employees in Hong Kong.
In employee development, the Company has carried on with the evaluation and granting of senior and deputy senior professional titles under the requirement of the “14th Five-Year Plan”, with 53 employees awarded senior professional titles and 87 employees awarded deputy senior professional titles in the past year. External organizations were involved in the evaluation and granting of 79 senior, medium, and junior professional titles. 10 employees of the Company were recommended as candidates for National Key Talents Program, 5 were enlisted as candidates for the honorary title of Outstanding Talents and Engineers, and 10 were enlisted as candidates for National Engineering Survey and Design Masters.
In safety management, the Company has managed to build a strong sense of responsibility and bottom-line thinking towards safe production, thus effectively ensuring personal and property security in the past year. Notably, CITIC Heavy Industries has revised its safety management system with the relaunch of five rules and regulations including the “Accountability System for Production Safety” and “Measures for Production Safety Assessment”.
Responsibility to customers: improve product and service to build a technology-based conglomerate
By fully leveraging its comprehensive strengths, CITIC Limited has devoted continued efforts in making itself a leading technology-based conglomerate in China with international competitiveness. This is demonstrated by the successful implementation of a series of “trademark projects” by CITIC Construction, especially the on-schedule delivery of Chongli Prince City Ice and Snow Town project, a key supporting project in the Zhangjiakou competition area of the Beijing 2022 Winter Olympics, which contributed significantly to the successful holding of the Games. Aside from this, CITIC Securities has established a customer complaint & assurance mechanism, which clarifies the responsible departments and persons for complaint handling, and included the handling of customer complaints into the compliance assessment system. CITIC Press, on the other hand, has applied itself to the improvement of product quality and business processes through active research on user needs and service monitoring, which in turn drives better customer experience.
Chongli Prince City Ice and Snow Town
Under the strong commitment of CITIC Limited to building a technology-based conglomerate, CITIC Heavy Industries, CITIC Pacific Special Steel, and CITIC Engineering have actively engaged in national-level research projects, with a number of breakthroughs achieved in the fields of high-end manufacturing, special materials, and intelligent construction. A typical example is CITIC Dicastal’s Aluminum Wheel No. 6 factory in Qinhuangdao, which was awarded a world-class “Lighthouse Factory”. On January 13, 2022, CITIC Limite held the first Science and Technology Innovation Conference and announced its “14th Five-Year Plan” for Science and Technology Development, accompanied by the launch of ten major science and technology innovation projects, including the “Full-Stack Cloud Development Project for Information Technology Application and Innovation in Financial Industry” and “Key Equipment Project for Transforming Automobile Manufacturing”.
CITIC Dicastal’s Aluminum Wheel No. 6 factory in Qinhuangdao
CITIC Limited has made sustained efforts in protecting the legal rights of its customers including individual privacy, the right to stay informed, etc. CITIC Bank effected data masking for sensitive information related to personal profile, assets, account balance, etc. CITIC Securities has launched a number of investor education sessions dedicated to specific themes such as deepening the reform of the New Third Board and the establishment of the Beijing Stock Exchange.
Responsibility to industries: expand synergy to promote cross-industry development
By capitalizing on the synergy effect across industries, CITIC Limited has applied itself to deepening the cooperation between government and business, seeking opportunities for beneficial combinations with industrial giants, while expanding its “circle of friends” across industries to achieve mutual benefit and win-win situation. The year 2021 alone witnessed over 100 meetings between the Company’s senior management and industrial partners, with dozens of field research trips made to Sichuan, Guangdong, Qinghai, and Hunan provinces, resulting in the signing of strategic cooperation agreements with nine provincial and municipal governments and 13 enterprises to leverage the cooperation opportunities in financial services, high-end manufacturing, healthcare and elderly support, modern agriculture, etc.
In building a virtuous industrial ecosystem, CITIC Dicastal has implemented a classified management system for its suppliers, with monthly performance evaluations conducted on the quality, cost, delivery, and service for each class of material suppliers, thus eliminating and retaining supplies based on their actual performance.
In protecting intellectual property rights, CITIC Press has stepped up the crackdown on copyright infringement and piracy by participating in activities of the “Anti-Piracy Alliance of 15 Beijing Publishing Houses” and other organizations to devise a better course of action in combating copyright infringement and piracy.
The Company has always regarded anti-corruption as a top priority for internal risk control, with sustained efforts in improving the establishment of discipline inspection agencies as well as their responsibilities and staffing both at the company and subsidiary levels. In the past year, 9 integrity supervisors from different subsidiaries were cross-deployed to various departments. Apart from this, the Company has also organized integrity education activities, circulated typical cases of disciplinary violations and dereliction of duty, reflected on the root causes of the misconduct, and proposed targeted rectification measures.
Responsibility towards communities: rise to the mission and build a better future together
Bearing firmly in mind its social responsibilities as a state-owned enterprise, CITIC Limited has devoted continued efforts to support the “five revitalization tasks” in industry, talent, culture, ecology, and organization, with a total of over RMB 78 million funding provided to Yuanyang and Pingbian counties in Yunnan, Qianjiang District in Chongqing, and Shenzha County in Tibet.
CITIC stays committed to public welfare undertakings including education relief, construction of culture, sports, and health facilities, support for disadvantaged groups, and improvement of community infrastructure. In 2021, the donations made by CITIC Limited totaled about RMB 120 million, which included over RMB 30 million of disaster relief funds to flood-hit Hena.
“Dream Classroom” education relief activity by CITIC in paired-up assistance counties
As a company listed in Hong Kong, CITIC Limited has made active contributions to improving people’s livelihood in Hong Kong and Macau. Notably, CITIC’s volunteer team has organized a series of activities in the local community, including caregiving services for low-income groups and the elderly who live alone, anti-epidemic supplies giveaways, awareness campaigns targeted at environmental protection, and efforts for maintaining the stability and prosperity of Hong Kong, which fully demonstrated its corporate commitment to integrate with, take root in and contribute to Hong Kong. As for overseas charity work, 2021 marks the 10th consecutive year of Sino Iron’s sponsorship for the education activities at Clontarf Aboriginal College as well as the co-organization of activities for its students, targeted at improving the education quality and employability of the aboriginal youth in remote areas.
“Caregiving Service for Communities” by CITIC Hong Kong and Macau Employee Association
In volunteer services, CITIC has established a youth volunteer organization consisting of over 30 teams with more than 12,500 volunteers throughout the system. In the past year, the organization has carried out volunteer services in over 20 cities and regions including Beijing, Hebei, Henan, and Chongqing, covering a wide range of areas including caregiving for children of migrant workers, support for people with disabilities, financial knowledge campaigns on campus, education relief, campaigns for more greenery and less smog, and overseas cultural assistance. In the year 2021, CITIC Limited has organized 440 volunteer activities, involving 20,000 of its employees who have devoted a total of 38,000 service hours.
The new development goals and strategies carved out by the “14th Five-Year Plan” have added new contents, raised new requirements, and provided new momentum for the ESG work. By rising to its missions in the new era, CITIC Limited is committed to building itself into an outstanding enterprise, raising high-quality development to brand new levels, and serving as a role model for central enterprises and Hong Kong-listed companies in fulfilling social responsibilities.Back