Tackling Climate Change - Environmental - Sustainability - 益海嘉里金龙鱼粮油食品股份有限公司

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Tackling Climate Change

Yihai Kerry continues to pay attention to international and national developments related to climate change and actively explores new models of low-carbon development to address climate change. We take corresponding countermeasures through the assessment of climate change risks.

Transition Risks
With the convening of the 26th United Nations Climate Change Conference (COP26) and the introduction of a series of goals and plans by the Chinese government, such as carbon emission peak and carbon neutrality, Yihai Kerry, as a Company focusing on sustainable development, is exploring more ways to reduce energy use and emissions, and low-carbon development models to support and respond to changes in national policies related to climate change. We strictly comply with relevant laws and regulations in our operating locations, follow the Company's Environmental Policy , continuously monitor emissions data through our data management platform, and continuously improve management, increase R&D and innovation, reduce fossil energy consumption,increase the use of renewable and clean energy, such as solar energy, continuously reduce GHG emissions, and proactively respond to climate change. We have also taken several measures, such as replacing coal with rice husk and recycling biogas, to reduce GHG emissions while effectively addressing the rising costs and financial risks associated with coal restrictions.

Physical Risks

The Company has developed contingency plans for extreme weather by region, based on the physical risks of each factory location,to mitigate operational risks and cost escalation risks associated with the occurrence of extreme weather during operations and along the supply chain.

Product Carbon Footprint

The Company helps conserve energy and reduce emissions in the value chain through the assessment of GHG emissions throughout the supply chain. In 2021, we completed carbon footprint verification for some of our core products and obtained carbon footprint certificates for relevant products, as follows:

• Carbon Footprint Report of Grease Products
• Edible Oil Carbon Footprint Verification Report
• Carbon Footprint Report of Edible Vegetable Oils and Grease Products
• Carbon Footprint Certificate of Xiangmanyuan Grade 1 SoybeanOil
• Carbon Footprint Certificate of Fatty Alcohol
• Carbon Footprint Certificate of Stearic Acid

Yihai Kerry's parent company, Wilmar International, together with 11 other global agricultural trading and processing companies, issued a joint statement during the 26th United Nations Climate Change Conference (COP26), committing to launch a program for the supply chain before the 27th Climate Change Conference to further promote the prevention of deforestation and help achieve the 1.5°C control target.On this basis, Yihai Kerry has contributed to the industry's green transformation by implementing effective action to reduce emissions and set reasonable targets.

Target:
• By the end of 2022, complete Scope 1 and Scope 2 GHG emissions inventory, covering 100% of the operations.
• By the end of 2022, complete the Scope 3 measurement of GHG emissions, covering 100% of the operations.
• In 2022, carry out carbon footprint certification of some core products.
• In 2022, carry out pilot carbon neutrality factory verification

Production and office emissions reduction
We uphold the adoption of clean energy, promote resource recycling, and carry out energy conservation and emissions-reduction measures. By the end of the 2021, the Company had reduced GHG emissions by 783,006 tons of CO₂e through the implementation of various energy-conservation and emissions-reduction measures.

**Initiatives to reduce GHG emissions in production**
Solar energy utilization	Biomass energy utilization (rice husks	Methane recycling
Yihai Kerry launched the construction of solarphotovoltaic power -generation facilities. By providing sites such as roofs of subsidiary factory buildings to professional institutions in order to lay solar panels and produce clean electricity, and adopting the mode of "Self-generation for self-use, surplus for the Grid", the proportion of renewable clean energy used by factories is increased and CO2 emission is reduced,In 2021,the Company had generated 11,251MW·h of electricity through the solar photovoltaic power generation projects in operation, reducing greenhouse gas emissions by 6,864 tons of CO2e. In addition, another 28 solar photovoltaic power generation projects were running. We plan to build solar photovoltaic power generation facilities in all Yihai Kerry factories, with total installed power of 200 MWp by 2030.	To reduce fossil energy consumption,reduce GHG emissions, and ensure stable electricity supply, and steam and heat required for production, Yihai Kerry is promoting the use of rice husks. Rice husks are used as fuel to produce the required steam,electricity and heat needed in production. In 2021, the Company had consumed about 351,296 tons of rice husks, reducing GHG emissions by 412,266 tons of CO2e.	By establishing biogas recycling facilities, Yihai Kerry has reduced GHG emissions caused by biogas generated in the factory's sewage treatment process. The collected biogas is fed into the boiler to produce steam and reduce the consumption of coal or natural gas in the boiler, while the excess biogas is burned through a flare to ensure minimal leakage of methane. In 2021,the Company had recycled 8,375,850 cubic meters of biogas, reducing GHG emissions by 115,392 tons of CO2e.

In addition, the Company promotes the green office concept by encouraging employees to use online conferencing to reduce GHG emissions generated by travel. Also, by using shared disks, servers and printing networks in office areas, we reduce the use of paper, thereby reducing GHG emissions in the office.

Internal storage and transportation

Yihai Kerry has adopted new models, new energy and new technologies to reduce direct GHG emissions in internal storage and logistics.


Storage and logistics model transformation	New energy facilities application	New Technology application
Yihai Kerry strive to shorten our supply chain. We plan to build an integrated, multi-format industrial park, intensify the inventory of various product lines and distributors, and integrate internal and external business orders to reduce logistics and GHG emissions. For example: a. Integrate unified storage and co-distribution: Improve inventory turnover and remove intermediate steps through the intensive sharing of inventory in all channels. b. Apply elevator transportation: Physically link multi-storey storage to the production location, and directly store the products in the storage area using elevators to reduce the use of vehicles in the factory and the cross-warehouse operation of forklifts. c. Optimize the picking strategy: Implement intelligent collection using the system algorithm.	Promote electric forklifts: Replace diesel forklifts with electric forklifts to reduce deisel usage. Use non-power fans: Use wind energy instead of electric energy for the ventilation equipment in storage areas, while still meeting storage ventilation standards. Use non-power bottom plates: Replace the original electric power plate with a non-powered bottom plate screen scraper to reduce power consumption.	Apply automated packaging: Automate woven bag packaging to replace manual operations, which reduce labor operation risks, save bags, and also reduce GHG emissions from packaging. Promote raw grain conveyor transportation: For raw grain shipped to the terminal, use a raw material belt conveyor to directly transport to the silo instead of using a vehicle. Vehicle reservation management: Reserve vehicles to reduce vehicle waiting time and optimize vehicle turnover. Stock up products in advance and operate storage activities in an orderly manner to improve the efficiency. Use electronic signatures: Develop online procurement functions for the transportation business, implement online tendering and electronic transportation contracts, and reduce the use of paper and express packaging materials.

Upstream and downstream transport logistics

The Company cooperates with carriers to achieve the refined management of fuel in transportation through informationization and standardization. Besides, by optimizing routes and integrating resources to shorten the supply chain, thus effectively shortening the transportation distance and reducing waste, so that we reduce Scope 3 GHG emissions.

Transportation Management Optimization

Implement vehicle standardization management: Establish and update the vehicle files of city delivery carriers in a timely manner to reduce fuel consumption and pollution emissions caused by aging equipment; encourage carriers to use clean energy transportation vehicles.

Establish the fuel consumption KPI analysis system: Enable urban delivery carriers to conduct a statistical analysis of vehicle fuel consumption data in multiple dimensions, investigate the cause of abnormal indicators, and reduce excessive fuel consumption caused by the vehicle itself, full load rate, route, business structure, etc.

Implement transportation visualization management: Implement the integration of manufacturing,logistics and the Internet with the help of the transportation capacity platform, increase the transparency of the whole transportation system and the visibility of transportation vehicles in transit,and manage the whole transportation life cycle. Systematically optimize distribution routes to arrange vehicle resources, improve operational efficiency,increase the vehicle loading rate and use efficiency,and reduce the number of vehicles used and GHG emissions.

Transportation mode optimization

One Inventory System: Use the existing network resources of the Company and dealers to build an efficient coordination system of production, sales and storage through technology, and build a cloud drive system to achieve comprehensive, optimal delivery of efficiency, cost and experience.

Change road transport to railway or sea transport: Use rail or sea transport, or other low-energy modes instead of road transport where possible,optimizing therail way / seatran sport a tion mode, and reducing carbon emission per ton of transportation.

Closed-loop transportation: Depending onthe route, model, and delivery time in the transportation plan, cooperate with suppliers to plan closed-loop vehicle scheduling to improve vehicle turnover efficiency and reduce the vehicle idling rate.

Unitizedtransportation : Circulate and share unitized logistics vehicles to effectively improve loading and unloading efficiency and reduce cargo damage during transportation.

Bulk transportation: Through sales linkage with customers and storage optimization, implement bulk transportation of packaged products, which greatly reduces the use of packaging materials such as woven bags.

Transportation facilities optimization

Road transport: Promote the application of renewable energy vehicles. In 2021,approximately 500 LNG vehicles and 30 electric vehicles were in use.

Ship transportation:

1、Promote the application of photovoltaic power in ships to replace traditional generators for monitoring equipment,AIS systems, VHF wireless telephones, etc. when ships are in berths. In 2021, 15 ships had been retrofitted with photovoltaic power, saving about 44.3 tons of fuel per year.

2、Shaft belt reconstruction project: Through shaft belt reconstruction, the main engine drives the ship's generator,making full use of the surplus power of the main engine. In 2021, 25 vessels had been rebuilt, saving about 374 tons of fuel per year.

3、Shore power system retrofit： Replace traditional fuel oil for power generation by shore power, reducing fuel consumption when ships arrive at the port. In 2021, the Taizhou and Dongguan terminals had set up shore power piles and connected five ships to the shore power system, saving about 61.8 tons of fuel per year.

4、Railway transportation: Use bulk grain trucks instead of gondolas, and use a special line to directly enter the site to unload the goods into the pit, in reducing dust pollution, manual handling and short-running of vehicles during the loading and unloading process, reducing diesel consumption by about 30.5 tons per year.

Upstream and downstream supply chain emissions-reduction action
In the upstream and downstream energy saving and emissions-reduction process, the Company provides assistance and cooperation for farmers and suppliers to reduce GHG emissions generated from the upstream supply chain's raw material cultivation, processing and production. We also reduce GHG emissions from the use of end product through product design and product packaging improvement action.

Energy conservation and emissions- reduction action in raw material cultivation	Principles of sustainable procurement: Yihai Kerry adheres to the principle of "No Deforestation, No Peat and No Exploitation", and requires the Company's bulk raw material farmers to adopt sustainable practices, including not cutting down forests with high conservation value or high carbon reserves, no new developments on peatland, and no burning for preparation or land clearing. The Company promotes the procurement of sustainable raw materials to reduce forest damage and GHG emissions caused by the cultivation of raw materials. Support for farmers: Yihai Kerry conducts publicity and training on technical standards and procedures, including the rational use or replacement of chemical fertilizers, by carrying out support action for small and medium-sized farmers, and using contract farming and other methods to reduce GHG emissions from cultivation.
Energy conservation and emissions- reduction action in supplier production and processing	Supplier assistance project: Yihai Kerry provides assistance for non-trade suppliers through end-to-end supply chain projects, and uses lean production experience to support suppliers to reduce energy and emissions in procurement, manufacturing, operation, etc. Energy conservation and emissions-reduction projects for raw material processing suppliers: Yihai Kerry has always encouraged all its raw material processors to adopt sustainable processing techniques to reduce GHG emissions during raw material processing.
Energy conservation and emissions-reduction action in Product use	Product packaging optimization project: For the end products, Yihai Kerry reduces GHG emissions caused by product packaging through product design optimization, such as selling bulk products and carrying out product packaging recycling. Support for customers to conserve energy and reduce emissions: Yihai Kerry supports its customers to carry out corresponding GHG emissions investigations, and works with them to achieve green development throughout the industrial chain.

Sustainability