COSCO SHIPPING International Hong Kong : 2022 - ESG Report

(Incorporated in Bermuda with limited liability) Stock Code : 00517

Annual Report 2022

Green and Smart

Shipping Leads

the Future

Environmental, Social and Governance Report

1. ABOUT THIS REPORT

This report ("Report") presents the environmental, social and governance ("ESG") performance of COSCO SHIPPING International and its subsidiaries (the "Group"), and the joint venture, Jotun COSCO, with the goal of meeting stakeholder expectations.

1. Reporting Period and Boundary

This report covers from 1 January to 31 December 2022 (the "reporting period"). It encompasses the sustainability performance of our main business divisions, including ship trading agency, insurance brokerage, supply of marine equipment and spare parts, production and sale of coatings, and trading of other shipping-related products and services. Except specified, the general disclosure in this report reflects the ESG-related strategies, policies, objectives, management approach and initiatives adopted by the Group. The key performance indicators ("KPIs"), which cover all the Group's subsidiaries, are presented in aggregate numbers. Although the joint venture Jotun COSCO's environmental and social data are not consolidated, this report also includes information on its pertinent ESG activities. Overall, the reporting boundary remains the same as the prior year.

1. Reporting Standards and Principles

This report is prepared in accordance to the Environmental, Social and Governance Reporting Guide (the "ESG Guide") under Appendix 27 of the Main Board Listing Rules published by The Stock Exchange of Hong Kong Limited (the "HKEX"). In order to define the report content and quality of information presented in this report, we followed the principles set forth in the ESG Guide. These principles include:

Materiality

Quantitative

Balance

Consistency

To ensure that ESG	To assess the progress of
issues identified remain	our ESG initiatives and
relevant and material	targets, quantitative metrics
to our business	are regularly collected and
operations and	monitored.
stakeholders,
stakeholder
engagement and
materiality reviews are
conducted.

To present an unbiased snapshot of our sustainability performance, this report highlights both our achievements and areas for improvement.

To compare ESG performance in a meaningful manner using consistent methodologies. In the case of any change in methodology or scope of data compilation, remarks are provided.

As a responsible corporate citizen, we strive to consistently improve our sustainable operating environment and practices with the objective of maximising long-term shareholder returns and contributing back to the communities in which we operate.

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Environmental, Social and Governance Report

2. PHILOSOPHY AND POLICIES OF CORPORATE ENVIRONMENTAL, SOCIAL AND GOVERNANCE MANAGEMENT

2.1 Sustainability Vision

Sustainability is an integral part of our business concept and daily operations. While we are conscious of the difficulties our sector faces, we also recognise the expectations of our stakeholders, including regulators, in terms of sustainability performance. Thus, we are working towards the integration our strategy and operations with our sustainability vision, in order to seize the potential presented by the sustainability transition.

As the COSCO Kansai Companies accounted for more than 90% of the Group's energy consumption, we established the following sustainability-related goals for the COSCO Kansai Companies and sought to achieve them by 2030, relative to 2020 baseline:

• Reduce greenhouse gas emission (scope 1 and scope 2) by 10%.
• Reduce Volatile Organic Compound ("VOC") and Benzene emission by 5%.
• Reduce energy usage by 10%.

Working towards the above targets, the COSCO Kansai Companies has gradually increased the proportion of water- based coatings used in production to more than 50% over the past 3 years in an effort to reduce overall VOC emissions. In accordance with the aforementioned sustainability-related aims, the Group will regularly measure and monitor its energy usage and pertinent emissions while also looking for ways to increase the overall cost and production efficiency.

2.2 Environmental, Social and Governance Structure

The Group maintains abreast of the rising expectations regarding the current ESG Guide issued by HKEX, which places a significant emphasis on the participation of the Board in the governance of ESG issues. We continue to be firmly rooted in the Group's environmental and social objectives and outlined specific roles for the Board and the governance structure within the Group, establishing a strong foundation for our long-term success in sustainable development.

2.3 Board Statement

The Board recognises the importance of implement effective sustainability practice and actively incorporate ESG factors into its critical business decisions. The Board is ultimately accountable for our ESG strategy and reporting, while overseeing the management approach and strategy for various ESG issues. An ESG Committee is in place to support the Board in monitoring the Group's ESG-related strategies, policies and development plans. The ESG Committee consists of an Executive Director, a Deputy General Manager and a representative from each of Operation Management Division, Executive Division, Strategy Development Division, Human Resources Division and Public Relations Division.

The ESG Committee meets at least once a year or as needed to identify and address ESG-related opportunities, topics and risks. It will also develop the Group's ESG vision, strategies and targets in order to steer the Group's ESG direction and assess the performance. In light of the tightening regulatory requirements, the ESG Committee is responsible for overseeing the preparation of ESG reports and the Group's adherence to pertinent laws and regulations. The ESG Committee updates the Board annually on its work, progress and/or recommendations regarding ESG-related matters.

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2.4 Environmental, Social and Governance Management Approach

Several ESG factors are taken into consideration when developing the Group's various strategies in order to support sustainable development for the Group. Due to the diverse nature of the Group's business operations, our policies are tailored to the business models of subsidiaries, and their ESG risk assessments are conducted independently. As the business environment evolves swiftly, we continue to enhance our policies to ensure their applicability by reassessing our management approach and keeping abreast of the most recent market trends, industry development, and regulatory needs.

The Group's subsidiaries have created their own environmental policies in accordance with the Environmental Management System Certification's management measures from the International Organisation for Standardisation ("ISO"). This is in response to the growing public concern for environmental protection and tightening ecological restrictions. In addition to receiving accreditation from reputable bodies, we are devoted to minimising the environmental impacts of our activities. To lower our VOC emission, we continue to invest in and modernise our equipment. In response to the regional contingency plan of Qingdao, Jotun COSCO has developed "One Factory One Policy" (一 廠 一 策 ), which defines the emergency procedures for combating air pollution.

To address the issue from a societal viewpoint, we are committed to supporting occupational health and safety ("OHS") and product quality in our operations, with the goal of maintaining the highest OHS and quality standards. Our accreditations for Quality Management System Certification (ISO9001), Environmental and Energy Management System Certification (ISO14001), and Occupational Health and Safety Management Systems (ISO45001:2018) have all been maintained.

With a vast network of subsidiaries, the Group works to improve its internal coordination in order to promote its sustainable growth. While the Group continues to play a strategic role in formulating the overall sustainability and development plan, subsidiaries are required to provide their annual quantitative performance data and highlights of their management approach, practices, and initiatives to the headquarters for review every year. The status of strategy implementations and other ESG-related matters are tracked and reported to promote efficiency.

3. DETERMINING MATERIALITY

3.1 Stakeholder Engagement

Stakeholder feedbacks are essential to our future success. We appreciate the views of our stakeholder groups that are impacted by our operations and/or potentially influenced by our operations, as well as those external organisations with expertise in areas that we deem significant. We communicate with them across multiple platforms and collect their thoughts and ideas on a regular basis. These viewpoints are vital for our ongoing evaluation as well as the formulation of corporate strategies and plans for sustainable development.

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The following is a summary of the communication channels that correlate to the specified stakeholders in our everyday operations:

Stakeholder groups	Communication channels	Purposes	Frequency
Government authorities	•	Questionnaires	•	Compliant operation	•	Irregular
	•	Meetings	•	Governance on the
	•	Site visits		environmental
	•	Information submission		management
			•	Social aids
			•	Tax compliance
Shareholders and	•	Post-results roadshows	•	Communicate and report	•	Semi-annual/annual
investors	•	Company visits		the Company's latest	•	Real-time
	•	Investment Summits		developments and future		communication such
	•	Telephone conferences,		directions		as meetings, calls and
		emails, WeChat, etc.				emails
Employees	•	Training and educational	•	Reduce employee	•	Annual
		activities		turnover	•	Weekly meetings, or
	•	Employee satisfaction	•	Enhance occupational		monthly, quarterly or
		survey		safety and health		annual work summary
	•	Annual staff meeting		awareness
	•	Work meetings
Business partners,	•	Company visits	•	Maintain stable and	•	Semi-annual/annual
customers and	•	Telephone conferences,		efficient supply chain	•	Irregular meetings
suppliers		emails and other		management
		electronic means
	•	Social media
	•	Inspection and
		evaluation
Local communities	•	Community projects	•	Create social benefits	•	Annual
and Non-	•	Collaborative projects
Government
Organisations
("NGOs")

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