Essex Bio Technology : 2020 ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

2020 Environmental, Social and Governance Report

2020 ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

ABOUT THIS REPORT

The board of directors (the "Board") of Essex Bio-Technology Limited (the "Company", together with its subsidiaries, the "Group") hereby presents this environmental, social and governance (the "ESG") report for the year ended 31 December 2020.

The Board assumes full responsibility for the Company's ESG strategy and ESG reporting and is responsible for evaluating and determining the ESG-related risks, and ensuring that appropriate and effective ESG risk management and internal control system are in place.

The Board is of the opinion that good environmental conditions, social influence and governance structure are crucial to the development of the Group. As such, while seeking to pursue growth in its performances, the Group has also been constantly striving for excellence in such areas as environmental protection, social responsibility and corporate governance. The principles and benchmarks contained in the "Environmental, Social and Governance Reporting Guide" (the "ESG Reporting Guide") set out in Appendix 27 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited have been adopted by the Group as its standards which, together with the experience it has gathered, form the basis towards the establishment of a sound ESG framework.

Covering the businesses operated by the Group, this report sets out its strategies and practices in relation to environmental protection, social responsibility and operational governance in 2020, thereby allowing shareholders, investors as well as the general public to gain a more comprehensive and in-depth understanding of the Group's ESG issues and culture. This report has been prepared in accordance with the ESG Reporting Guide. There has been no change to the methods or key performance indicators as used in the last published ESG report.

The Group will publish its ESG reports annually informing our stakeholders and concerned parties of the latest information on the Group's relevant work on ESG. We welcome any constructive suggestions or comments.

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Environmental, Social and Governance Report 2020

2020 ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

STAKEHOLDER INVOLVEMENT AND MATERIALITY ASSESSMENT

The involvement of stakeholders represents an essential component of the Group's business development and of the performance of its social responsibility. The Group maintains an open communication with its stakeholders through a number of channels in order to understand and respond to their comments and demands in a timely manner, devoting itself to ongoing constructive, win-win interactions for promoting the sustainable development of the enterprise.

Through collecting and sorting the stakeholders' comments and issues of concern, the Group has determined the key parameters, which are disclosed in this report, with tracking of performance results and strategic planning regarding the work of ESG.

Based upon the aggregated results of the communication with the stakeholders for the year of 2020, the Group has decided that the following (set out in the order of priority) shall be its key ESG tasks:

1. Product responsibility
2. Supply chain management
3. Occupational health and safety
4. Employment practices and labour standards
5. Staff development and training
6. Anti-corruption
7. Use of resources and environmental protection
8. Waste management
9. Packaging materials
10. Emission of exhaust and greenhouse gases
11. Contribution to the community

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Environmental, Social and Governance Report 2020

2020 ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

1. ENVIRONMENTAL

The Group is principally engaged in the manufacturing, selling, marketing and distribution of pharmaceutical products.

Environmental protection is a cornerstone of the Group's long-term sustainable development. Through adopting practicable measures, the Group performs management over its emissions and use of resources in the course of its specific activities, thereby assuming its responsibility of environmental protection and playing an active role in this connection.

During the reporting period, there was no material breach of any applicable rules and regulations that have a significant impact on the Group in relation to the environment.

1. Emissions Management

Constantly concerned about the issue of emissions arising from its production and operations, the Group strictly complies with the various environmental protection laws and regulations and emission standards of the People's Republic of China (the "PRC"), where the principal production zone of the Group locates, and exercises maximum control over various types of emissions. There are seven production plants equipped in the factory in Zhuhai, which is the principal production zone of the Group.

During the reporting period, the principal emissions arising in the course of the Group's production include liquid waste, solid waste, exhaust and noise. In order to ensure that the relevant emission standards are met, the Group has formulated an internal "Protocol on Pollutant Emissions Management" in accordance with the requirements of the national environmental regulations of the PRC.

Key elements of the "Protocol on Pollutant Emissions Management" are as follows:

1. General liquid waste is required to be treated in a wastewater treatment facility located on the industrial site such that the treated water will meet the requirements of the respective emission standards relating to water pollutants.
2. Centralised collection is implemented in respect of general solid waste, whereby the environmental hygiene authorities are solely in charge of its removal, transportation and treatment.
3. The hazardous liquid and solid wastes arising in the course of a small number of product inspections are required to be separated for collection purposes, stored in a dangerous goods store, and handed over periodically to a professional institution licensed with the national environmental protection authorities for compliant treatment.

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Environmental, Social and Governance Report 2020

2020 ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

1. The Group strictly adheres to the Local Standards for Emission Limits of Air Pollutants of Guangdong Province such that its exhaust emissions comply with the requirements of the applicable regulations.
2. With regard to noise at the factory boundaries, the Group emphasises the selection of those electromechanical devices that are of low levels of noise and vibration, proactively employs noise insulation, acoustic and noise reduction measures and enhances the day- to-day repair and maintenance of its devices, so as to ensure the compliance of its noise emissions with the requirements of the national limits.

The Group's Environmental and Occupational Health and Safety (the "EHS") Management System Unit is responsible for supervising the management over its various emissions. In 2020, the Group was subject to non-periodic supervisory spot checks performed by the national environmental protection authorities, and the monitoring results indicated that its various emissions complied with the national and regional standards.

Key performance indicators
				2019
Air emissions	2020
			Intensity		Intensity
			(kg/number		(kg/number
		kg	of vehicles)	kg	of vehicles)
Nitrogen oxides	101.75	6.78	82.73	6.89
Sulphur oxides	0.57	0.04	0.98	0.08
Particulate matter		6.90	0.46	5.72	0.48

Greenhouse gas emissions	2020	2019
		Tonne	Tonne
Direct emissions	89.10	79.87
Indirect emissions (Note)	2,876.54	2,899.97
Other indirect emissions		20.45	22.11
Total		2,986.09	3,001.95

Note: Emission factor (average) of 0.6379 kg/kWh was used for purchased electricity in Guangdong Province.

The greenhouse gases produced by the Group were mainly due to indirect emissions generated from purchased electricity. In order to mitigate emissions, our staff are encouraged to disable the standby mode for all electrical appliances, including computers, photocopying machines and printers when they are not in use. They are also required to ensure that the windows and doors are closed when air-conditioners are on, and turn off the air-conditioners during non-office hours.

Total hazardous waste produced	2020	2019
Total hazardous waste produced (Tonne)	1.35	1.50
Intensity of hazardous waste
(g/unit of production volume)	0.05	0.05

The hazardous waste produced by the Group mainly consisted of wastewater solution containing methanol and acetonitrile. The intensity of hazardous waste measured by the unit of production volume was extremely low.

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