Recently, XCMG Machinery released its first bilingual (Chinese-English)

"2023 Environmental, Social and Governance (ESG) Report"

publicly disclosing

the company's practices and achievements in green development, fulfillment of social responsibility,

and strengthening of corporate governance

which drew attention from over a thousand foreign media outlets.

What is ESG?

ESG is the abbreviation of Environmental, Social and Governance. It is a form of non-financial reporting that companies use, in addition to financial reports, to demonstrate their efforts and achievements in sustainable development, social responsibility and good governance.

This time, XCMG's bilingual ESG report was covered by more than 1,298 media outlets, including AP NEWS, Yahoo! Finance, Asahi Shimbun, Yonhap, Seeking Alpha, Finanzen.net, Kyodo News and AFPBB News, and was disseminated overseas in 9 languages including English, French, German, Spanish, Portuguese and Japanese.

PART 1

Grounded in "Governance"

Guided by strategic planning, XCMG accurately identifies changes, responds scientifically and proactively seeks transformation, unswervingly building a connotative high-quality development model and *** capability support, with key indicators continuing to lead the industry. Implementing the development policy of "high quality, risk control, *** and steady growth," it pursues efficient governance and compliant operations and strives to improve the quality of corporate operations. At the same time, it standardizes information disclosure, maintains smooth investor communication, pays dividends continuously and steadily, and issues an announcement on the action plan to promote the "dual improvement of quality and returns," effectively safeguarding investors' rights and interests. It has fully launched the No. 1 Project of intelligent transformation, digital transformation and networked connectivity, focusing on the "Six Classics and Six Latitudes" blueprint and enhancing refined operations and process management capabilities through intelligent upgrading, digital transformation and networked connectivity.

Through a series of scientific and effective operation and management systems, XCMG's overall business performance has moved upward. In 2023, XCMG Machinery achieved operating revenue of RMB 92.848 billion and net profit attributable to shareholders of RMB 5.326 billion, up 23.51% year on year, with net profit excluding non-recurring gains and losses of RMB 4.497 billion, up 29.47% year on year. Key indicators such as revenue and profit continued to rank ** in the domestic industry.

PART 2

With "Environment" as a Priority

As the first company in the industry to release a carbon peak and carbon neutrality action plan outline, XCMG has laid out and planned pure electric, hybrid and hydrogen technology routes, as well as core component industries such as battery cells and batteries, motors and electronic controls, and battery charging and swapping station infrastructure. In the wave of a new round of technological revolution and industrial transformation, it is accelerating on the new energy electrification track, with complete sets of products applied in mainstream scenarios such as urban construction, mining and ports, and road transportation, providing global customers with quality services and green solutions. It strictly complies with laws and regulations related to environmental protection, strengthens resource management and emissions management, and effectively integrates the concept of green development into the company's daily office and operational processes. It has installed rooftop photovoltaics and electric vehicle charging piles, continuously explores the application of renewable and clean energy, and implements the concept of green and low-carbon development.

In 2023, new energy accounted for 19.64% of XCMG's energy use, and revenue from new energy products increased by 108.9% year on year, doubling for two consecutive years and contributing nearly 10%. In terms of low-carbon emissions control, in 2023 XCMG invested a total of RMB 110 million in environmental protection, reducing waste gas emissions by 1.66 billion cubic meters and wastewater emissions by 86,000 tons, leading the industry in low-carbon development.

▲ XCMG's pure electric loader product, adopting the industry's first "three-motor" technical solution

While developing green products, XCMG also puts the concept of sustainable development into practice in production and daily operations, promoting the green and low-carbon transformation and upgrading of the industrial chain. According to the ESG report, as of the end of 2023, four subsidiaries of XCMG Machinery had obtained national certification as green factories, eight subsidiaries had obtained provincial certification as green factories, and 24 subsidiaries had obtained ISO14001:2015 environmental management system certification.

PART 3

Committed to "Society"

Standing together with customers and industrial chain allies through thick and thin, XCMG continues to deepen exchanges and cooperation, supports local development, and drives high-quality and sustainable development for all stakeholders. Adhering to the "Four Orientations," it implements an innovation-driven development strategy, continues to increase investment, focuses on high-end breakthroughs, and drives industrial innovation and development through scientific and technological innovation. It adheres to the main strategy of internationalization, strengthening the equipment manufacturing industry, expanding the real economy and building a *** brand. Focusing on safe development, it holds fast to the safety bottom line and safeguards the company's high-quality development with high-level safety management. Putting employees first, it continuously improves compensation and benefits, training and promotion systems, pays attention to employees' occupational health, and creates a warm harbor for employees. Caring for people's livelihood and bravely shouldering social responsibility, it supports livelihood projects, enthusiastically engages in public welfare and volunteer activities, and demonstrates the responsibility of a public company through concrete actions.

In 2023, XCMG's annual R&D investment was RMB 5.019 billion, and customer satisfaction reached 98.6%. It actively participates in the Belt and Road Initiative and builds a win-win ecosystem. It now has nearly 40 overseas subsidiaries and more than 300 overseas distributors, with products exported to more than 190 countries and regions worldwide, covering more than 95% of the countries and regions along the Belt and Road. At the same time, XCMG actively fulfills its corporate social responsibility and participates in public welfare undertakings. For many years, XCMG has continued to promote its "global responsibility brand" and actively carried out social welfare actions worldwide. Take XCMG's public welfare efforts in Ethiopia as an example. As of the end of 2023, the company had completed the construction of 161 household water cellars and water purification systems for 20 schools, solving residents' water shortages during the dry season.

▲ Beneficiaries of the "African Water Cellar" project

In recent years, the ESG concept has reached global consensus and plays a key role in promoting China's high-quality economic and social development. As a state-owned listed company, XCMG has achieved remarkable results in the ESG field.

In the future, XCMG will continue to uphold the spirit of innovation, strive for breakthroughs, and deeply integrate ESG management into its development strategy and daily operations, striving to create new quality productive forces with distinctive industry characteristics and XCMG's own identity, and contributing more to promoting sustainable development.