XCMG's Environmental, Social, and Governance Activities in 2023

In the current context of globalization and sustainable development, companies need to excel not only economically but also in environmental protection, social responsibility, and governance (ESG). As a world-leading construction machinery manufacturer, XCMG is committed to setting a benchmark in the ESG domain.This article aims to summarize XCMG's ESG performance in 2023, analyzing our environmental management initiatives, social responsibility practices, and employee care, while also forecasting future development directions.

Practices and Achievements in Environmental Protection

• Climate change responses

To tackle climate change, XCMG undertook systematic actions in 2023, achieving notable results.

First, the group released an outline for a carbon peak and carbon neutrality action plan. It initiated the construction of a carbon emission control system across the industrial chain and developed a digital carbon emission management platform. This resulted in a comprehensive package of carbon reduction and pollution control solutions for the construction machinery industry. In 2023, XCMG's total greenhouse gas emissions amounted to 391,285.29 tons, a decrease of 33,269.01 tons compared to 2022, representing a year-on-year reduction of 7.84%.

Furthermore, XCMG systematically planned new energy technology routes, including electric, hybrid, and hydrogen energy solutions, addressing various technical challenges within the industry. The company led the industry by launching unmanned, electric construction machinery and new energy heavy trucks. It also vigorously promoted the development of integrated new energy products and hydrogen fuel cell systems, continuously increasing the market share of green products. XCMG was recognized as one of the first outstanding enterprises in China's carbon peak initiative, empowering high-quality and sustainable development through green design and intelligent manufacturing. In 2023, revenue from XCMG's new energy products increased by 108.9% year-on-year.

• Green Production

XCMG Machinery emphasizes environmental protection in its production and business operations, actively creating an environmentally friendly enterprise. In 2023, XCMG did not experience any major environmental pollution incidents, achieved 100% compliance with pollutant discharge standards, and had 24 subsidiaries certified with the ISO 14001:2015 Environmental Management System.

In terms of resource and energy management, XCMG continued to strengthen water resource management in 2023, fully implementing water-saving practices to prevent waste. The company developed an energy management system, established an energy management platform, and, leveraging a real-time energy monitoring system, created targeted energy-saving and carbon-reduction strategies for electricity, steam, and natural gas. These measures effectively improved the efficiency and transparency of the company's energy and carbon emission management, achieving energy conservation and consumption reduction throughout the industrial chain. By the end of 2023, 15 subsidiaries had obtained ISO 50001:2018 Energy Management System certification.

In 2023, XCMG also made significant progress in emissions management, with substantial reductions in wastewater, exhaust gas, and noise emissions compared to 2022.

Beyond these macro-level advancements, XCMG has integrated environmental awareness into office spaces and employee activities, encouraging everyone to start with small actions such as saving a sheet of paper, a drop of water, or planting a tree. By making environmental protection a habit, XCMG embeds sustainable practices into daily work and life.

Employee Care

XCMG Machinery is committed to fulfilling its responsibilities towards employees by strictly adhering to lawful employment practices, continuously optimizing employee welfare systems, implementing talent development programs, and enhancing employee care initiatives to create a warm and supportive environment for its workforce.

 In 2023, XCMG further advanced its employee care efforts by distributing a total of 2.5653 million RMB in relief funds to employees facing financial difficulties. The company also introduced more comprehensive protection agreements for female employees, fully implementing humane policies such as maternity leave, medical check-ups, and special dining arrangements during pregnancy and breastfeeding periods.

In terms of employee development, XCMG employs a performance-oriented compensation mechanism, offering a diverse range of benefits including overseas allowances, transportation subsidies, high-temperature allowances, and meal allowances to fully motivate and engage its employees.

To continuously improve its talent development system, XCMG actively invests in various forms of training activities. In 2023, the company conducted training sessions for a total of 400,000 participants, with an investment exceeding 26 million RMB.

Social Responsibility

In 2023, XCMG remained focused on its "Help with Love" public welfare philosophy, actively engaging in global social welfare actions across six key areas: rescue, health, education, and environmental sustainability. By giving back to society, XCMG underscores its image as a world-class corporate citizen. Our efforts have reached countries such as Brazil, Thailand, and Bangladesh, where we have provided genuine assistance and care to vulnerable groups, including children and the elderly.

Since 2016, XCMG Machinery has partnered with the Poverty Alleviation Foundation to construct household water cellars in drought-affected areas. Employing advanced water harvesting technologies, the company collects rainwater during the rainy season, which is then filtered and distributed for drinking and agricultural use during the dry season. By the end of 2023, XCMG had built 161 household water cellars and 20 school water purification systems, ensuring the basic water needs of local farmers, livestock, and production purposes were met, thus significantly improving the community's quality of life.

Future Outlook

In the future, XCMG will persist in its commitment to sustainability across three key dimensions: environmental, social, and governance. Environmentally, the company will continue to advance its dual carbon plan by developing new energy products and enhancing environmental management efficiency. On the social front, XCMG will maintain its status as a globally responsible brand by promoting technological innovation, reinforcing safety production management, and prioritizing talent development. Governance-wise, XCMG is dedicated to intelligent transformation and digital upgrading, improving internal control and compliance management, and driving industrial transformation towards a high-end, intelligent, green, service-oriented, and internationalized direction.