Sunway International : 2023 Enironmental, Social and Governance Report

SUNWAY INTERNATIONAL HOLDINGS LIMITED

(Incorporated in Bermuda with limited liability)

Stock Code: 00058

ENVIRONMENTAL,

SOCIAL AND

GOVERNANCE REPORT

2023

Contents

About the Group	2
About this Report	3
Governance of Sustainable Development	5
Communication with Stakeholders	8
Employment and Labour Practices	10
Operational Practices	14
Community Investment	16
Environmental Protection	17
Summary of Environmental, Social and Governance Performance Indicators	20

SUNWAY INTERNATIONAL HOLDINGS LIMITED  •  ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT 2023

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About the Group

Sunway International Holdings Limited ("Sunway International"), together with its subsidiaries (collectively, the "Group") focuses on the manufacture and sales of pre-stressed high strength concrete piles as well as ready-mixed concrete, sand- lime bricks, aerated concrete products and eco-permeable concrete products. The business is operated by Guangdong Hengjia Construction Materials Co., Ltd ("Guangdong Hengjia"), a subsidiary of Sunway International. The Group has been committed to diversifying its business and improving its all-round competition advantages while continuously consolidating its business in the building materials industry.

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About this Report

This Report is the seventh Environmental, Social and Governance Report (the "Report") published by Sunway International. It is prepared in both Chinese and English, and is available on the website of The Stock Exchange of Hong Kong Limited (the "Stock Exchange") and the Group's website at http://www.hk0058.com/.

SCOPE OF REPORT

This Report highlights the performance of Group's core business, namely the "pre-stressedhigh-strength concrete piles and others"1 operating segment in terms of environmental protection and community care for the period from 1 January 2023 to 31 December 2023 (the "Reporting Period"). Consistent with the previous reports, the scope of this Report covers the production plant of Guangdong Hengjia located in Yangjiang, Guangdong Province. The Group understands that this Report does not cover all current operations of the Group. The Group will continuously improve the system of data collection and gradually expand the scope of disclosure to cover all the operations of the Group, in order to provide more comprehensive information to the stakeholders.

REPORTING STANDARD

This report is prepared in accordance with the Environmental, Social and Governance Reporting Guide (the "Guide") set out in Appendix C2 to the Rules Governing the Listing of Securities on the Stock Exchange, with the use of the four reporting principles of the Guide - materiality, quantitative, balance and consistency - as the basis for preparing the Report.

Reporting
principles	Definitions
Materiality	The report should reflect the significant
	economic, environmental and social impacts of
	the organization, or the areas that materially
	influence stakeholders' assessments and
	decisions regarding the organization.
Quantitative	An organization must ensure that key
	performance data can be calculated and clearly
	state and criteria and method of calculation.

Balance	The organization should prepare the reports in
	an unbiased manner to ensure that the positive
	and negative impacts are clearly stated, so that
	stakeholders can reasonably assess the overall
	performance of the organization.
Consistency	Consistent disclosure statistical approach should
	be adopted to enable stakeholders to compare
	environmental, social and governance data with
	the sustainability performance and progress of
	the organization.

Responses

Management interviews were used to identify and report on ESG issues of critical importance to the Group and its stakeholders.

E a c h u n i t w a s i n s t r u c t e d t o r e c o r d k e y environmental and social performance data, and professional consultants were engaged to assess carbon emissions and other key environmental performances, based on local guidelines and international standards, disclosed where appropriate. Intensity is calculated based on the total floor area of the business units included in the scope of this Report as at year-end date.

An accurate, objective and fair approach was adopted as the principle of preparation to explain the achievements of the Group in sustainability and the challenges it faced.

A consistent approach for statistics was adopted and, where practicable, historical data were provided for comparison.

1 Sales and manufacturing pre-stressedhigh-strength concrete piles as well as ready-mixed concrete, sand-lime bricks, aerated concrete products and eco- permeable concrete products and related processing.

SUNWAY INTERNATIONAL HOLDINGS LIMITED  •  ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT 2023

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About this Report

CONFIRMATION AND APPROVAL

All information contained herein has been collected from the official documents and statistics of Sunway International and Guangdong Hengjia, and the management and operation information collected in accordance with the Group's policies. The Report was approved by the board of directors on 27 March 2024.

FEEDBACK

The Group welcomes your opinions on the Report and other issues in relation to sustainable development. Should you have any enquiries or comments, please contact the Group through the following means such that the Group can constantly enhance its ESG performance:

Address:	3/F, Mandarin Commercial House, 38 Morrison Hill Road, Wanchai, Hong Kong
Email:	[e-mail]
Telephone:	(852) 2728 2322
Facsimile:	(852) 2728 2887

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Governance of Sustainable Development

Sunway International has always adopted good corporate governance as the foundation of the Group's sustainable development strategy. The board of directors places its emphasis on the Group's performance in sustainable development by formulating policies and measures to manage the operations in relation to the environmental and social performance and results. The Group reviews its sustainability-related policies in a timely manner to ensure timely compliance with the policies and measures.

The Group has established a Sustainability Task Force during the year, together with the board of directors will be in charge of reviewing and formulating the Group's sustainable development policies, measures and performance targets to be implemented by each business unit to fully adopt a sustainable business model in the long run. To enable the Group to effectively manage its sustainability-related policies and measures, Sunway International will continue to establish various sustainability-related targets and performance indicators in the future, as to measure and regularly review against the goals and targets if any set-up by the Management and the Board with the assistance of Sustainability Task Force, in order to track the sustainability progress of the Group.

In addition to the Group's sustainability practices, information relating to other good corporate governance practices of the Group are set out in the Corporate Governance Report in the Annual Report.

RISK MANAGEMENT

The Group's risk management mechanism is designed to assess and mitigate the risks associated with the Group's operations, and is managed by the Audit Committee of the Group, which reports to the Group's board of directors regularly. In addition to identifying and managing operational risks, including risks arising from economic, industrial, regulatory and operating conditions, the Group also identifies risks arising from the environment in which it operates, the supply chain-related environment and the society. The Group makes reference to academic research articles and the factory site environment in order to assess the Group's relevant environmental and social risks. In addition, we will determine the priorities and formulate corresponding measures in accordance with factors such as the scope and extent of the risks. These risks and management measures have been compiled into the Identification and Risk Assessment Control Procedures for Environmental Factors and Hazards and Policies on Managing Environmental and Social Risks of the Supply Chain documents, respectively. Relevant environmental risks are listed on page 17 of this Report, while supply chain environmental and social risks are listed on page 14.

SUNWAY INTERNATIONAL HOLDINGS LIMITED  •  ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT 2023

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Governance of Sustainable Development

COMPLIANCE MANAGEMENT

	Legislations with material impact
Aspects	on the Group

Related impacts and management measures

Disclosure of compliance

Emissions	the Environmental Protection Law of
	the People's Republic of China
	《中華人民共和國環境保護法》
	the Law of the People's Republic of
	China on Water Pollution Prevention
	and Treatment
	《中華人民共和國水污染防治法》
	the Law of the People's Republic
	of China on Atmospheric Pollution
	Prevention and Control
	《中華人民共和國大氣污染防治法》
	the Law of the People's Republic
	of China on Solid Waste Pollution
	Prevention and Control
	《中華人民共和國固體廢物污染環境
	防治法》
	the Law of the People's Republic of
	China on Energy Conservation
	《中華人民共和國節約能源法》
Employment	the Labour Law of the People's
	Republic of China
	《中華人民共和國勞動法》

Non-compliance with relevant laws and regulations may not only affect the environment in the vicinity of the Group's operations, but may also result in administrative and financial penalties.

The Group has put in place policies to manage the production of sewage, dust and exhaust gas and to continuously monitor the emissions from production.

The Group also has strict control on vehicle emissions, fully implementing the "Light Vehicle Pollutant Emission Limits and Measurement Methods (China Five Phases)"《輕型汽車污染物排放限值及測量方法(中國五階段)》 (GB18352.5-2013) and "Vehicle Compression Ignition, Gas Fuel Ignition Engines and Vehicle Exhaust Pollution according to the requirements of China national standard (Stage III, IV, V)"《車用壓燃式、氣體燃料點燃 式發動機與汽車排氣污染物排放限值及測量方法(中國III、IV、V階段)》 (GB17691-2005)

All vehicles of the Company are regularly tested annually, and all of them meet the emission standards.

Any act violating the relevant employment laws is detrimental to the rights and interests of employees and may result in loss of manpower, which may lead to litigation and fines in serious cases. Sound employment management can prevent the loss of talents and the Group maintains good communication with its employees to ensure the effective implementation of relevant policies.

During the Reporting Period, the Group did not violate any relevant laws and regulations that have a significant impact on the Group.

During the Reporting Period, the Group did not violate any relevant laws and regulations that have a significant impact on the Group.

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Governance of Sustainable Development

	Legislations with material impact
Aspects	on the Group	Related impacts and management measures	Disclosure of compliance

Health and safety	the Law of the People's Republic
	of China on the Prevention and
	Treatment of Occupational Diseases
	《中華人民共和國職業病防治法》
	the Law of the People's Republic of
	China on Work Safety
	《中華人民共和國安全生產法》
Labour standards	the Labour Contract Law of the
	People's Republic of China
	《中華人民共和國勞動合同法》
	the Policy and Procedures of the PRC
	on Prohibition of Forced Labour and
	Prisoners Labour
	《中華人民共和國禁止強迫勞工和
	罪犯勞工的政策和程序》
Product	the Law of the People's Republic of
responsibility	China on the Protection of Consumer
	Rights and Interests
	《中華人民共和國消費者權益
	保護法》
	The Law of the People's Republic of
	China on Product Quality
	《中華人民共和國產品質量法》
Anti-corruption	the Criminal Law of the People's
	Republic of China
	《中華人民共和國刑法》

Production safety incidents or lack of proper management of plant environment can result in substantial fines and threaten the health and safety of employees. The Group has formulated various measures to ensure a safe working environment. In addition, the Group arranges regular medical check-ups for employees for their well-being.

Situations such as child labour and forced labour not only violate local laws and regulations, but also violate international conventions and may have a negative impact on the Group's reputation. The Group strictly verifies the identity of new employees during recruitment and ensures that there is no forced labour.

Violations of relevant laws and regulations are detrimental to the rights of consumers and may bring the Group into disrepute. Sunway International has a comprehensive policy to manage product responsibility matters.

Acts of bribery, corruption, etc. can lead to litigation and affect the Group's integrity. In addition to our anti-corruption policy, the Group has also established reporting channels to deal with suspected corruption cases.

During the Reporting Period, the Group did not violate any relevant laws and regulations that have a significant impact on the Group.

During the Reporting Period, the Group did not violate any relevant laws and regulations that have a significant impact on the Group.

During the Reporting Period, the Group did not violate any relevant laws and regulations that have a significant impact on the Group.

During the Reporting Period, the Group did not receive any cases of corruption litigation against itself or employees, nor were there any breaches of laws and regulations that have a significant impact on the Group.

SUNWAY INTERNATIONAL HOLDINGS LIMITED  •  ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT 2023

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Communication with Stakeholders

The Group values the views of its stakeholders and takes their opinions into consideration when formulating its corporate sustainability management approach. The Group's stakeholders can be divided into two main categories, namely internal stakeholders comprising mainly staff members and external stakeholders including customers, suppliers, business partners, etc. During the Reporting Period, Sunway International has been in constant contact with the stakeholders through different channels to collect their views. The major communication channels between Sunway International and its stakeholders are as follows:

Categories of stakeholders	Major communication channels
Staff	Internal communication system, annual performance appraisal and consultation
	with staff from time to time
Customers	Customer satisfaction survey
Suppliers/business partners	Business meetings, email newsletters
Shareholders/investors	General meetings, the Group's website, publication of Group's news on the
	Stock Exchange, etc.
Community	Voluntary activities

MATERIAL SUSTAINABILITY ISSUES

During the Reporting Period, the Group identified, through judgement of the management and independent inputs from external consultant, with reference industry materiality mapping tools commonly in use i.e. MSCI and SASB, four ESG issues of importance to its enterprise and stakeholders. This Report focuses on the Group's commitment and policy initiatives in relation to these issues.

Material environmental and
social issues	Materiality of the issues	How the Group manages the issues

Provide a suitable employment	The Group regards the rights of its employees as the
environment for the staff	cornerstone of its operations and is committed to
	providing a fair employment environment for its employees
	based on legal compliance.

The Group has formulated comprehensive policies to protect the interests of its employees. Meanwhile, the Group provides various welfare benefits to its employees as a reward for their effort.

For details, please refer to the section "Employment and Labour Practices".

Provide a healthy and safe working environment

Maintaining a healthy and safe working environment is an important part of the Group's environmental, social and management philosophy. The Group is responsible to maintain the safety of the office and plant environment to ensure that employees work in a safe environment.

In addition to strict enforcement of existing policies and measures, the Group has also actively organised safety training to raise the awareness of its employees.

For details, please refer to the section "Employment and Labour Practices".

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Communication with Stakeholders

Material environmental and social issues

Provide development and training opportunities for the staff

Materiality of the issues	How the Group manages the issues
Sunway International values the training and development	Conducted annual appraisals for staff and formulated
of staff and aims at enhancing the competitiveness of staff	training programmes based on the needs of the staff.
and enhancing the performance of the Group.

Be responsible for the products or services provided

As a supplier of construction materials, the quality of the Group's products has a direct impact on the quality of construction, therefore, the Group needs to ensure the quality of its products meeting the expectations of its customers.

For details, please refer to the section "Employment and Labour Practices".

Product quality is monitored in accordance with various quality control procedures.

In addition, the Group maintained close communication with its customers to continuously improve the quality of its products.

For details, please refer to the section "Operational Practices".

The Chinese government has initiated strategic plan to achieve peak carbon emissions in 2030 and a target of carbon neutrality in 2060. The Group, as a socially responsible corporation, wholeheartedly supports this national drive for the humanity of a brighter shared future. The Group has hence been vigorously promoting a culture of environmental protection, and will ultimately plan to achieve ESG targets which are largely align with this overall national strategy, but this is subject to whether finding suitable practical solutions to adequately mitigate pollution and emissions, while at the same time, these solutions have to be economical in order to enable the Group to operate its viable businesses. Hence the Board of Directors together with the ESG working group have taken a prudent stance towards setting any specific targets for emissions, waste generation and energy conservation, and are still at the first stage of reviewing the ESG risk and opportunities of the overall business, to ensure that the Group can build the necessary infrastructure so that if any targets are set in the future, these are appropriately endorsed, put into action, then measured and evaluated to ensure they are met. If any of these targets are set the Group will provide further information in due course.

In the future, the Group will also expand when appropriate its stakeholder communication programme to invite stakeholders of different categories to provide their views on the Group's approach to sustainable development. Sunway International will continue its open-minded approach to listen and understand the expectations and views of stakeholders on various sustainability issues in order to improve the existing environmental, social and governance system. We will take full account of their views and balance their interests in making operational decisions.

SUNWAY INTERNATIONAL HOLDINGS LIMITED  •  ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT 2023

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