Policy Statement on Sustainable Supply Chain

CITIC Pacific Special Steel Group Co., Ltd. is committed to building a sustainable supply chain, expanding their own sustainable development requirements to business partners, and gradually establishing a unified development value of sustainable supply chain. To this end, the Company has formulated a sustainable supply chain management policy to standardize all aspects of the supply chain to meet the Company's sustainable development needs.

The Company promotes sustainable supply chain management, and improves supplier inspection, admission, supervision, assessment and exit. The Company especially clarifies the identification, standard formulation, supervision and assessment of ESG risks such as environment, society, business ethics, corruption and bribery, and implements them during the on-site supplier admission review stage. The Company has implemented a closed-loop supplier management from sourcing, admission, supervision, assessment, and exit by utilizing big data platforms and information systems, establishing an honest, fair, and transparent supply chain system to promote the sustainable development of suppliers and the healthy improvement of the industrial chain.

1. Environment
The Company will inspect the environmental requirements and compliance of supplier testing equipment, production environment, working condition, and whether they have passed EMS certification. To make contributions for the construction of an environmentally friendly society, the Company continues to purchase energy-saving and environmentally friendly products that passed green label products certification, energy-saving product certification, or other nationally recognized certifications, and prohibits the purchase of products with high pollution and environmental risk.

2. Human Rights
The Company requires suppliers not to discriminate in any way against race, nationality, ethnicity, faith, religion, social status, family background, age, gender (especially prohibiting any form of discrimination against female workers, especially pregnant women), sexual orientation, disability, language use and marital status. The Company requires suppliers not to force labor or use child labor, ensure working conditions, and effectively protect employees’ physical and mental health and safety, and safeguard their freedom of association and collective bargaining rights.

3. Occupational Health & Safety
Suppliers should provide suitable labor protection equipment for all employees and maintain a safe and healthy working environment that meets or exceeds the conditions required by occupational safety and health regulations. The supplier should ensure that competent personnel obtain permits before performing services in each area of the Company, and ensuring that the activities they engage in do not pose health and safety hazards to their employees and the local population. Meanwhile, suppliers must provide training to their employees in environmental, sanitation, occupational health, and safety.

4. Incorruptible Procurement
The Company requires all suppliers to establish anti-corruption policies, sign the Supplier Code of Conduct or make relevant commitments, and use compliance mechanisms for verification or due diligence. With domestic suppliers, the Company has fully signed the Anti-Corruption Cooperation Agreement and relevant documents to regulate their cooperation behavior with the aim to block integrity risks from the source of business and optimize contract performance terms.
All members of the Company's procurement center have signed the Integrity Commitment Letter to ensure clean communication between procurement personnel and suppliers, fully fulfilling all their responsibilities. The Company deepens comprehensive benchmarking and identifying differences, enhances value creation capabilities, and continues to carry out relevant activities, implements the cultivation project for leading enterprises, enhances strategic management and capital management capabilities, and comprehensively improves factor efficiency.
In the daily supplier management, the Company mainly focuses on supervising their integrity, honesty, law, quality, safety, environmental protection, violations, and other aspects. Once they meet the prohibition standards, they will be immediately banned.
During the daily supplier’s participation in bidding and supply, the supervisory department and the user unit shall supervise the supplier's behavior.

5. Continuity of cooperation
To ensure timely access to required materials and avoid shortages, the Company establishes stable cooperative relationships with different suppliers and strategic partnerships with key suppliers. The Company continues to communicate with suppliers to help them with cost reduction and quality improvement. By enabling a co-development between the Company and suppliers, while maintaining cooperation enthusiasm and stability, the Company is dedicated to create a mutually beneficial win-win situation.

6. Digitalization
The Company is accelerating the construction of digitalization, utilizing big data platforms and information systems, fully leveraging the empowering and leading role of digital technology in industrial development, deepening the construction of unified information infrastructure in the ecosystem, building a digital economy with data as the key element, and promoting the integrated development of the real economy and digital economy. The Company has developed a digital supply chain platform that integrates management with shared services and digital empowerment through penetrating supervision, as a result, the Company’s intelligent governance capabilities are being steadily developed. The platform includes modules such as material management, supplier management, bidding management, plan management, contract management, settlement management and inventory management which has greatly improved the intelligence, visualization, and compliance level of the entire business chain. Through data empowerment, the cost of supply chain management is further reduced, and efficiency is further improved.

7. Empowering supplier’s ESG management
Through forms of activities like training, communications and collaborative discussions, the Company empowers suppliers to cultivate ESG capabilities and awareness. By conducting ESG investigations with suppliers, the Company comprehensively identifies ESG risk points in their business. For perennial suppliers, the Company’s subsidiaries have incorporated them into the Company's integrated management to promote the Company's ESG concepts. For other suppliers, the Company has also incorporated ESG concept requirements into contract terms, such as requiring them to use higher emission standards or new energy vehicles.

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