XINAO
Environmental, Social and Governance
(ESG) Report
Zhejiang Xinao Textiles Inc.
Address: Guanzhuang Bridge, Chongfu Town, Tongxiang City, Zhejiang Province, China
Phone: +86 573 88455801
CONTENTS
Environment Social Governance
Pollutant Discharge
Waste Disposal
Social Contribution
Innovation-Driven
Data Security & Customer Privacy
Employees
Arrangement for Corporate
ESG Governance 19
Note on ESG data: The ESG data and information presented in this report are derived from the original operational
records of the Company and its subsidiaries.
This is the fourth Environmental, Social and Governance (ESG) Report of Zhejiang Xinao Textiles Inc. which discloses Note on financial data: The financial data in this report is in RMB. In case of any inconsistency between the financial data
to stakeholders the concepts, management approaches, efforts and achievements on ESG topics in its operations. and the financial report, the financial report shall prevail.
Scope of the Report Reliability Assurance
The Company warrants that this report contains no false records, misleading statements, or material omissions. The
This report covers Zhejiang Xinao Textiles Inc. and its subsidiaries (hereinafter referred to as the "Company", which
report has been reviewed by the Board of Directors, which assumes full responsibility for the authenticity, accuracy, and
is consistent with the scope of the consolidated financial statements in the annual report of XINAO (stock code:
completeness of its content.
The scope of entities in the Company's consolidated statements is as follows:
Access to the Report Contact
This Report is available as an E-document in both simpli- XINAO ESG Management Committee
Full Name Short Name fied Chinese and English versions. In the event of any am-
Address: Guanzhuang Bridge, Chongfu Town, Tongx-
biguity in the understanding of the two texts, the simpli-
ZHEJIANG XINAO TEXTILES INC. XINAO TEX iang City, Zhejiang Province, China
fied Chinese version shall prevail. Both versions of the
Report can be downloaded from the Company's WeChat Phone: +86 573 88455801
ZHEJIANG NEW CHUWA WOOL CO., LTD. NEW CHUWA
Official Account (XINAO) and the website of Shanghai E-mail: esg@xinaotex.com
ZHEJIANG HOUYUAN TEXTILE INC. HOUYUAN TEX Stock Exchange (http://www.sse.com.cn/).
NINGXIA XINAO CASHMERE CO., LTD. XINAO CASHMERE
XINAO TEXTILES (YINCHUAN) CO., LTD. XINAO YINCHUAN
Principles of the Report
Principles for De?ning the Content of the Report
JIAXING FEIXUN SPECIAL FIBER TECHNOLOGY CO., LTD. JX FEIXUN
ZHEJIANG HONGDE CASHMERE PRODUCTS CO., LTD. HONGDE CASHMERE Context of Sustainability Completeness
ZHEJIANG TAIYUAN TEXTILES CO., LTD. TAIYUAN TEX Taking into account the characteristics of the industry in which the The scope of disclosures in this report is consistent with the scope
Company operates and the business it conducts, topics of materi- of the Company's consolidated financial statements.
SHANGHAI JINGHENG TEXTILE TECHNOLOGY CO., LTD. JH TECH ality related to management that are of concern to various stake-
holders have been identified in this report and constitute the
NINGXIA MODERN TEXTILE INDUSTRY RESEARCH INSTITUTE CO., LTD. TEXTILE INSTITUTE primary focus of this disclosure.
TODD&DUNCAN LIMITED T&D UK Principles for the Quality of the Report
XINAO TEXTILES (VIETNAM) COMPANY LIMITED XINAO VN
Timely Balanced
TAIYUAN INTERNATIONAL(AUSTRALIA)PTY LIMITED TAIYUAN INTL
This is an annual report. The Company endeavors to publish the The contents of this Report reflect objective and truthful facts, and
report as soon as possible after the end of the reporting year in disclose both positive and negative information related to the
XINAO (HONGKONG) LIMITED XINAO HK Company in an impartial manner.
order to provide stakeholders with timely information for deci-
sion-making.
XINAO TEXTILES (EUROPE) S.R.L. XINAO EU
XINAO TEXTILES UK LIMITED XINAO UK
Accurate Comparable
TODD & DUNCAN KINROSS LIMITED T&D KINROSS
To the extent possible, the accuracy of the information contained The statistics and disclosure method of the same quantitative
in this report is ensured. For the quantitative information, the disclosure items in this report are as consistent as possible across
caliber of the data, the basis of calculation and the assumptions different reporting years; if there is a change in the method of
have been explained to ensure that the margin of error of the
Time Frame calculation will not mislead the users of the information. The quan-
data collection, measurement or calculation, the relevant data will
be retrospectively adjusted, and the circumstances and reasons for
titative information and notes are detailed in the chapter of “ESG the adjustment will be explained in the notes to the report, so as
Data Sheets and Notes” of this report. to enable stakeholders to conduct a meaningful analysis and
This report covers the period from 1 January, 2025 to 31 December 2025, consistent with the scope of the annual assess the development trend of the Company's ESG data level.
The Board of Directors of the Company guarantees that the
report. Some information extending beyond this timeframe will be indicated where relevant. contents of the Report are free from false records, misleading
statements or material omissions.
Basis of the Report
Verifiable Perspicuous Quantified
This report is prepared in accordance with the Guidelines No. 14 of Shanghai Stock Exchange for Self-Regulation of The cases and data in this Report come This report contains tables and model This Report discloses key quantitative
Listed Companies – Sustainability Report (Trial) (released in April 2024), Guide No. 4 for Self-Regulatory Supervision from the original records or financial diagrams as a supplement to the text so indicators and, to the extent possible,
reports of the actual operation of the that stakeholders can better understand historical data.
on Listed Companies of the SSE – Compilation of Sustainable Development Reports (revised in January 2026), and Company, and the sources of the the text. To facilitate faster access to
the Guidelines No. 1 of Shanghai Stock Exchange for Self-Regulation of Listed Companies – Standardized Operation disclosed data and the calculation information for stakeholders, this Report
process are traceable and supportive of provides a table of contents and a guide
(revised in May 2025), while taking the United Nations Sustainable Development Goals (SDGs) as a guiding refer- external verification. index of ESG standards.
ence for the report.
XINAO XINAO
ESG Report 2025 ESG Report 2025
This marks XINAO’ s fourth consecutive year of releasing its ESG report. For us, this document is not merely a static
Value Perpetuated Through Endeavor
year-end recap nor a self-affirming subjective statement, but rather a candid dialogue with all stakeholders—it embodies
a transparency “verifiable at any moment,” and a sincerity that is “accessible to everyone.”
The year 2025 concludes the “14th Five-Year Plan” , and simultaneously begins a new chapter as we embark on the jour-
ney toward the “15th Five-Year Plan” . Standing at this historical juncture between two five-year periods, we are more
aware than ever that an enterprise’ s value lies not only in the profits it generates but also in what it contributes to the
world. It is with this reflection that we have distilled our year-long exploration and consolidated experience into this
report, presenting it openly to every friend and stakeholder who takes an interest in XINAO.
Over the past year, our ESG initiatives have yielded tangible outcomes. In the realm of carbon reduction, we invested
over 17 million yuan to upgrade energy-consuming equipment, optimize production processes, deploy in-house photovol-
taic systems, and increase the procurement of green electricity, thereby driving a reduction of 0.94% in the emission
intensity per unit revenue. On the social front, we remained committed to fostering goodwill through compassionate
engagement, contributing to communities via philanthropic donations, and upholding our values through volunteer ser-
vices. We firmly believe that the value of social contributions lies not in the scale of investment, but in the warmth of
actions and the breadth of their impact. In terms of governance, we continued to refine our ESG governance structure
and supervisory mechanisms, enhancing the quality of information disclosure in alignment with SSE requirements to
Chairman of XINAO
ensure corporate governance operates with full transparency.
April, 2026
Amidst the wave of globalization and the ongoing green transformation of the textile industry, we hold a fundamental
vision: to share sustainable warmth with the world. Guided by this objective, we are committed to becoming a lead-
ing global provider of green, high-end wool textile solutions. This entails building on our expertise in the wool textile
industry, honoring nature’ s gifts, and leveraging technological innovation, eco-friendly processes, recycled materials, and
cross-value-chain collaboration to make textile products more environmentally sound, higher in quality, traceable, and
sustainable—thereby advancing both corporate and societal value while preserving the ecological environment. To that
end, we have developed the “WARMTEX 2030” sustainability strategy framework, equipped it with concrete imple-
mentation steps, clarified milestone objectives and accountability distribution for each phase, and established periodic
strategic monitoring and goal assessment mechanisms to ensure a closed-loop process from vision to implementation!
The year 2026 marks the 35th anniversary of XINAO’ s founding. Looking back, what we cherish most is our unwavering
identity—a company that takes responsibility toward the environment, acts sincerely with partners, and holds itself to
high standards. Looking forward, our original aspiration remains unchanged. We hope to join hands with all sectors of
society, forging ahead with more tangible efforts to transform every sustainable development goal into a beautiful reality
within reach.
XINAO XINAO
ESG Report 2025 ESG Report 2025
English Name Committing Wholeheartedly to Professional Excellence
Zhejiang Xinao Textiles Inc.
Pursuing Refinement and Strength
Listing Date Listed on
December 31, 2014 Shanghai Stock Exchange
Stock Facts
Stock abbreviation Stock code
XINAO 603889.SH
Zhejiang Xinao Textile Inc. (Stock Code: 603889.SH), established in
a leading global supplier of mid-to-high-end worsted wool yarn and
has been recognized by the Ministry of Industry and Information
Technology (MIIT) as a “Model Champion Enterprise in Worsted Wool
Yarn Manufacturing.”
The Company specializes in the R&D, production, and sales of wor-
sted wool yarn, cashmere yarn, and wool tops. It has established a
fully integrated industrial chain that spans from raw wool selection to
scouring, top-making, chemical treatment, dyeing, and spinning. Its
products are widely used in apparel, fashion accessories, home
textiles, and industrial applications. HEADQUARTERS – Tongxiang, Zhejiang
XINAO TEX – Spinning
As a key player in the wool spinning sector, XINAO has built a global
production and trade network. Its production bases are located in
China (Jiaxing, Zhejiang; Ningxia), the United Kingdom, and Vietnam,
while its trade operations cover key markets including China (Jiaxing,
Shanghai, Hong Kong), Australia, Italy, and the UK. The Company
serves over 5,000 clients across approximately 30 countries and
regions worldwide.
XINAO TEX has been accredited as a National High-Tech Enterprise,
National Green Factory, MIIT Green Design Model Enterprise, and
MIIT Green Supply Chain Management Enterprise. It hosts several
R&D platforms, including the National Development Base of Woolen Tongxiang, Zhejiang Tongxiang, Zhejiang Lingwu, Ningxia
NEW CHUWA – Top and Modification Treatment HOUYUAN TEX – Dyeing and Finishing XINAO CASHMERE – Spinning, Dyeing and Finishing
Yarn Products, the China Wool Textile Industry R&D Center of Wor-
sted Woolen Yarns Technology, a Provincial Enterprise Technology
Center, a Provincial Enterprise Institute, and the first Knitwear Devel-
opment Center (KDC) jointly founded with International Wool Secre-
tariat (IWS). With its robust comprehensive capabilities, the Company
continues to strengthen its brand influence and core value.
The Company is steadily advancing its intelligent transformation to
consolidate its global leadership in worsted wool yarn. Concurrently,
it is expanding into high-value-added product lines such as cash-
mere, fancy yarns, and functional fiber blends, striving to build a
sustainable competitive edge. Lingwu, Ningxia Tay Ninh, Vietnam Scotland, UK
XINAO YINCHUAN – Spinning XINAO VN – Spinning, Dyeing and Finishing T&D UK – Spinning, Dyeing and Finishing
XINAO XINAO
ESG Report 2025 ESG Report 2025
Review of the 14th Five-Year Plan
Environmental Performance
Operation Income Net Profit Attributable to Shareholders
Greenhouse gas emissions directly reduced Renewable energy consumption
of the Listed Company by emission reduction measures
Unit：100 million yuan Unit：100 million yuan 29,211.97 tCO₂e 2,980.17 tce
Clean energy consumption Reuse water consumption
Waste cyclic utilization Renewable resource consumption
Social Performance
Total number of employees (end of period) Number of employees from ethnic minorities
Income generation per capita Coverage rate of work-related injury insurance
for employees
Total Assets Basic Earnings Per Share Coverage rate of workplace safety liability Coverage rate of employee training
insurance
Unit：100 million yuan Unit：yuan/share 100 % 100 %
Amount of investment in R&D Total duration of employee volunteer service
Governance Performance
Proportion of female senior executives Percentage of directors covered by
anti-commercial bribery and anti-corruption training
Percentage of management personnel covered Percentage of front-line employees covered by
by anti-commercial bribery and anti-corruption anti-commercial bribery and anti-corruption training
training
XINAO XINAO
ESG Report 2025 ESG Report 2025
ESG Rating Items Ratings
Memberships and Initiatives
We endorse the "Ten Principles of the UN Global Compact" A
We support the "17 United Nations Sustainable Development Goals (SDGs)" Updated: May 2025
ESG Rating from Wind
We have joined the "Green and Low-Carbon Alliance of China Wool Textile Industry"
We participate in the "Climate Innovation 2030 Initiative" and the "Life Cycle Assessment Working Group"
of China National Textile and Apparel Council
We are part of the Ten-Year Plan under the China Green Foundation's "Planting Trees, Nurturing Hearts" campaign
A
Updated: 2025Q4
ESG Rating from SynTao Green Finance
AA
Updated: 2025Q4
ESG Rating from Sino-Securities Index
AAA
Updated: May 2025
ESG Rating from QL ESG
Honors and Recognitions Received in 2025
Honors Awarded by A+
Shanghai Securities News ESG Rating from CCXGF Updated: 2025Q4
“Shanghai Securities Eagle · Golden Quality” ESG Award www.cnstock.com
Top 20 ESG Performers in Consumer Discretionary Sector Among A-Share Listed Companies
Top 20 ESG Standouts in Textile, Apparel and Jewelry Industries for A-Share and HKEX-Listed Sino-Securities Index
Companies
华证ESG荣誉证书
ESG New Benchmark Enterprise Award Stockstar
荣获2025年A股上市公司可选消费行业ESG绩效
Top 500 Charitable and Public Welfare Enterprises in China's Manufacturing Sector TOP20
Center for Shared Prosperity and
Top 500 Charitable and Public Welfare Enterprises Among China's Private Manufacturing Firms
Human Resources Development Research of
Top 500 Charitable and Public Welfare Enterprises Among China's Private Enterprises Beijing Institute of Technology ?????? ????
Top 500 Charitable and Public Welfare Enterprises Among China's High-Tech Firms
Zhejiang University / Institute for Public Policy
Top 100 Best CSR Performers Among Listed Companies in Zhejiang Province of Zhejiang Province
Zhejiang Association for the Promotion of
Top 100 Best ESG Performers Among Listed Companies in Zhejiang Province Corporate Social Responsibility and China Chengxin
Green Finance Technology (Beijing) Co., Ltd.
Zhejiang Association for the Promotion
ESG Pioneer Enterprise in Zhejiang
of Corporate Social Responsibility
XINAO XINAO
ESG Report 2025 ESG Report 2025
In April 2024, the Shanghai Stock Exchange (SSE) issued the Guidelines No. 14 of Shanghai Stock Exchange for
Self-Regulation of Listed Companies – Sustainability Report (Trial) (hereinafter referred to as the “SSE Guidelines ” ), In compliance with the Shanghai Stock Exchange's Guidelines on Materiality Analysis, and in alignment with the
requiring listed companies to disclose sustainability information that is financially material and/or impact material. United Nations Sustainable Development Goals (SDGs), the Company has conducted a materiality assessment of
The Company actively identifies material topics and, in accordance with the SSE Guidelines, enhances disclosure on ESG-related topics from both impact and financial materiality perspectives.
four core aspects—governance, strategy, management of impact, risk and opportunity, indicators and targets—for
topics with financial materiality. Given the holistic nature of sustainability management, the Company integrates dis-
closure of closely related content—such as strategies, indicators and targets for material topics—within the chapters Double Materiality Assessment Process
“Assessment of Topic Materiality” and “Arrangement for Corporate ESG Governance” . The specific loca-
tions for disclosure of the four core aspects of each topic are detailed in the table below:
Access information on corporate strategic planning.
Comprehend the external market environment in which the company
operates.
Gaining Insight into the
Identify value chain segments impacted by relevant topics and key stake-
Context of Corporate
holders affected.
Activities and Business
Relationships
Conduct preliminary identification and screening of ESG topics, taking
into account the characteristics of the Company’ s business segments,
benchmarking against standards, policy analysis, and peer comparisons.
Summarize and form a list of material ESG topics for the Company,
Developing a List of taking the 21 topics outlined the Guidelines as the basis, and identifying
The comprehensive governance structure for sustainability is detailed in the "Gover- Topics other potential material topics.
nance Structure for Sustainability" section.
Governance
The governance structure for financially material topics is elaborated in the corre-
sponding chapters of the main text.
Establish appropriate assessment methodologies and materiality thresh-
An analysis of the impacts, risks, and opportunities pertaining to financially material olds to evaluate the impact materiality of a topic (scale, scope, and irre-
topics, along with corresponding financial implications, is detailed in the "Conclusion mediability of impact) and its financial materiality (possibility of occur-
Strategy of the Materiality Analysis of the Topics". rence and extent of financial consequences).
Plans, strategies, and approaches for addressing ESG-related impacts, risks, and Assessment and
opportunities are elaborated in the respective chapters of the main text. Validation of Topic Integrate the outcomes of impact and financial materiality to prioritize
Materiality topics and develop a materiality matrix.
Management
of Impact, The management processes and control measures pertaining to impacts, risks, and
Risk and opportunities are elaborated in the corresponding chapters of the main text.
Opportunity
Make focused disclosure in the annual ESG report on material topics
identified as high-priority upon review and approval by the Board's Strat-
Details on management indicators for material topics and the performance during egy and Sustainability (ESG) Committee of the Company.
Indicators 2023–2025 are provided in the "ESG Data Sheets and Notes".
and Targets
Report on the Topics
Sustainability strategic objectives and their achievement status for 2025 are avail-
able in the "Reporting on Sustainability-Related Information".
XINAO XINAO
ESG Report 2025 ESG Report 2025
Due Diligence Risks Opportunities
The Company conducts due diligence based on the list of material topics formulated through stakeholder engage-
ment, identifying, analyzing, and categorizing the impacts of each ESG topic over short-term (0–1 year [inclusive]), Policy and Regulatory Risk
medium-term (1–5 years [inclusive]), and long-term (beyond 5 years) horizons on external economic, environmental, Market
and social dimensions, as well as the risks and opportunities posed to the Company’ s operations and business
Changes and uncertainties in government policies, laws, and regulations
Opportunity
model. Based on this, targeted management actions are implemented.
may result in additional operational costs for the Company; failure to Shifts in market demand, innovation,
In determining the impact materiality of ESG topics, the Company conducts a comprehensive analysis that consid- strictly comply with relevant legal requirements and internal policies or expansion into emerging markets
ers industry characteristics, corporate strategic planning, and resource allocation priorities. It focuses on actual or could adversely affect the Company's financial status and operational may present opportunities for the
potential impacts—both positive and negative—that the Company exerts on the external economic, social, and envi- qualifications. Company to drive revenue growth
ronmental spheres. The materiality of these impacts is evaluated based on their scale, scope, and irremediability. and enhance competitive advantage.
For determining financial materiality, the Company emphasizes the potential impact of each ESG topic on financial
performance and clarifies the principal types of risks and opportunities it may present. This serves as a foundational
basis for subsequent formulation of management strategy, implementation of control measures, and establishment
of indicators and objectives.
Market Risk
The Company identifies risks and opportunities associated with material sustainability topics and, for those deemed
financially material, further analyzes the specific manifestations of these risks and opportunities within topic man- Product and
agement processes. Fluctuations in market factors (including but not limited to price volatili-
ty, liquidity changes, and supply-demand dynamics) may expose the Service
Company to potential financial losses. Opportunity
Innovation or optimization of existing
products and services may present
new opportunities to more effective-
ly meet customer needs.
Reputational Risk
Negative perceptions or actions by the public toward the company or
its products/services may lead to reputational damage and adversely
impact normal business operations. Energy Source
Opportunity
Leveraging clean energy alternatives,
energy efficiency improvements, and
green policy incentives can reduce
Technological Risk reliance on conventional energy sourc-
es, alleviate environmental pressure,
Uncertainties arising from technological innovation and application may facilitating green transformation and
negatively affect operations, including inefficiencies in R&D, data securi- value enhancement.
ty breaches, ethical controversies, environmental side effects, and com-
pliance issues, potentially undermining operational stability.
Resource
Efficiency
Opportunity
Optimizing resource utilization and
Physical Risk minimizing waste contribute to
productivity gains, fostering more
Long-term or short-term climate change and extreme weather events efficient and sustainable operational
may directly or indirectly negatively impact the company's assets, infra- practices while unlocking potential
structure, supply chain, and business operations. benefits for the enterprise.
XINAO XINAO
ESG Report 2025 ESG Report 2025
Stakeholder Communication Topics of Concern to Key Stakeholders, Communication & Response Methods
To advance the double materiality assessment in a systematic manner, the Company prioritizes stakeholder engagement Key Stakeholders Topics of Concern Communication & Response Methods Chapters Disclosed
as a core component and formulated the “Stakeholder Communication Management Procedures” . These procedures
•Conduct shareholders meeting &
define the fundamental principles, scope of coverage, division of responsibilities, process guidelines, and safeguarding
measures to provide institutional guidance for standardized communication practices. The Procedures explicitly require investor exchange
that engagement efforts cover key stakeholder groups, including shareholders (investors) and creditors, employees, cus- •Innovation-driven •Promote regular and irregular •Social: Sustainable Value
Shareholders
tomers, suppliers and partners, community organizations, as well as relevant governmental and regulatory authorities. In •Anti-commercial bribery and information disclosure Sharing
(investors)
with all relevant stakeholders, achieving standardized and orderly communication processes alongside efficient and & Creditors •Anti-unfair competition development Mode of Operation
smooth interaction. •Establish complaint reporting &
Adhering to a philosophy of continuous and effective communication, the Company places high importance on interac- oversight mechanism
tion with stakeholders and continuously refines diversified communication mechanisms and channels. By integrating
•Establish internal communication
annual specialized communications with routine day-to-day engagement, the Company actively listens and responds to channels for information exchange
the core concerns and demands of stakeholders, thereby providing robust support for optimizing ESG management •Improve compensation & benefit system
practices and enhancing management quality and efficiency. •Employment & employee rights •Enrich activities for employees
Employees •Strength workplace safety management
•Occupational health & safety •Protect occupational health •Social: Sustainable Value
•Employee training & •Expand channels for employee Sharing
development development
•Standardize employee performance
appraisal & promotion
•Safety & quality of products •Strengthen quality control
and services •Increase investment in R&D and •Environment: Sustainable
•Innovation-driven innovation Green Products
Customers •Data security & customer privacy •Conduct customer satisfaction survey •Social: Sustainable Value
•Tackle climate change •Improve customer privacy measures Sharing
•Ecosystem and biodiversity •Deepen ecological conservation •Governance: Sustainable
conservation practices Mode of Operation
•Anti-unfair competition •Regulate market business conduct
•Standardize supplier management
•Promote transparent & fair purchase
•Deepen strategic cooperation •Social: Sustainable Value
•Supply chain security
Suppliers & initiatives Sharing
•Anti-commercial bribery &
Partners •Conduct industry exchanges and •Governance: Sustainable
anti-corruption
visits Mode of Operation
•Anti-unfair competition
•Improve the commercial conduct
framework
•Boost rural revitalization
Community •Rural revitalization
•Launch social welfare projects •Social: Sustainable Value
Organizations •Social contribution
•Participate in community volunteer Sharing
activities
•Tackle climate change •Identify risks of climate change
•Pollutant discharge •Improve environmental management
systems
Government & •Waste disposal
•Environmental compliance •Strength emissions management
Regulatory •Environment: Sustainable
management •Implement energy saving and
Authorities Green Products
•Energy utilization consumption reduction
•Water resources utilization •Standardize environmental
•Circular economy information disclosure
XINAO XINAO
ESG Report 2025 ESG Report 2025
the Topics Topics
Impacts Risks & Opportunities
Financial Impacts
Stakeholders Subject Types of Risks & Period of
Types of Impact Scope of Impact
to Primary Impact Opportunities Impact
In 2025, among the 21 topics identified and screened, a total of 7 topics demonstrated both financial materiality Physical Risk
Increase in operating
and impact materiality. 2 topics were financially material but not impact material, while 10 were impact material but Technological Risk Short term costs
Policy and Regulatory Risk Medium term
not financially material. The remaining 2 topics lacked both financial and impact materiality. The specific categoriza- Actual Upstream of the value
Market Risk Decrease in
Customers chain Long term operating income
tion is as follows:： Tackle Positive Impact Reputational Risk
Climate Government & Internal corporate
Potential Resource Efficiency
•Topics with both financial and impact materiality: tackle climate change, pollutant discharge, energy utiliza- Change Regulatory operations Opportunity
Negative Impact Decrease in
tion, water resources utilization, innovation-driven, safety & quality of products and services, and employees； Authorities Downstream of the Product and Service Short term
Opportunity operating costs
value chain Medium term
•Topics with financial materiality but not impact materiality: waste disposal, anti-commercial bribery & Market Opportunity Increase in operating
Long term
Energy Source Opportunity income
anti-corruption； Resilience Opportunity
•Topics with impact materiality but not financial materiality: ecosystem and biodiversity conservation, envi- Short term
Increase in operating
Internal corporate Policy and Regulatory Risk
ronmental compliance management, circular economy, data security and customer privacy, supply chain security, Medium term
Government & operations Reputational Risk costs
Pollutant Potential Long term
rural revitalization, social contribution, due diligence, stakeholder communication and anti-unfair competition； Discharge Negative Impact Regulatory
Downstream of the
Authorities
value chain Medium term Increase in operating
•Topics with neither financial nor impact materiality: ethics of science and technology, and equal treatment Market Opportunity
income
Long term
of SMEs.
Short term
Internal corporate Policy and Regulatory Risk Increase in operating
Medium term costs
Government & operations Reputational Risk
Waste Potential Long term
Disposal
Regulatory
Negative Impact Downstream of the
Topic Matrix of Double Materiality in 2025 Authorities value chain Market Opportunity
Medium term Increase in operating
Long term income
Upstream of the value Short term
chain Technological Risk Increase in operating
High Government & Medium term costs
Energy Actual Regulatory Internal corporate Long term
Utilization Positive Impact Authorities operations
Energy Source Opportunity Medium term Decreasecosts
in operating
Both financial and Downstream of the Increase in operating
•Ecosystem and biodiversity conservation Market Opportunity Long term
impact materiality value chain income
•Environmental compliance management Short term
Materiality for economic, social, and environmental impacts
•Tackle climate change Internal corporate Technological Risk
Increase in operating
Medium term
•Circular economy Water
Actual Government & operations costs
•Pollutant discharge Resources Regulatory Long term
•Data security & customer privacy Utilization
Positive Impact Downstream of the
•Energy utilization Authorities value chain Resource Efficiency Medium term Increase in operating
•Supply chain security Financial materiality, Opportunity Long term income
•Water resources utilization but not impact materiality
•Rural revitalization Increase in operating
•Innovation-driven Actual Internal corporate Market Risk Short term costs
•Social contribution Shareholders Technological Risk Medium term Decrease in operating
•Safety & quality of products and services Innovation- Positive Impact (investors) & Creditors
operations income
•Due diligence
•Employees Driven Potential Downstream of the
Medium term Increase in operating
•Stakeholder communication Customers value chain Market Opportunity
Impact materiality, but Negative Impact Long term income
•Anti-unfair competition
not financial materiality Increase in operating
Safety and Actual Policy and Regulatory Risk Short term costs
Internal corporate
Quality of Positive Impact operations
Reputational Risk Medium term Decrease in operating
income
Products Customers
Potential Downstream of the Decrease in operating
and Product and Service Medium term costs
Negative Impact value chain
Neither financial nor Services Opportunity Long term Increase in operating
income
impact materiality Actual Short term
Positive Impact Increase in operating
Reputational Risk Medium term costs
Potential Internal corporate Long term
Employees Employees
•Ethics of science and technology •Waste disposal Negative Impact operations
Short term
Increase in operating
•Equal treatment of SMEs •Anti-commercial bribery & anti-corruption Potential Market Opportunity Medium term income
Negative Impact Long term
Anti-Com- Upstream of the
Actual value chain Reputational Risk Medium term Increase in operating
mercial Shareholders (investors) Long term costs
Bribery Positive Impact & Creditors Internal corporate
and Potential operations
Suppliers & Partners Medium term Increase in operating
Anti-Cor- Downstream of the Market Opportunity income
Negative Impact Long term
ruption value chain
Low Materiality for corporate finances High Note: The Company defines the period of impact as short-term (0-1 year [inclusive]), medium-term (1-5 years [inclu-
sive]), and long-term (over 5 years).
XINAO XINAO
ESG Report 2025 ESG Report 2025
tional needs while ensuring diversity in gender, age, cultural and educational backgrounds, and professional expertise. Board
members comprise seasoned experts with professional backgrounds in law, finance, and senior management experience in large
Governance enterprises, offering valuable insights and recommendations to the Company. As of the end of 2025, the Board consisted a total
of 9 members (including 2 female directors), 3 of whom are independent external directors. For detailed information, please refer
to the Annual Report 2025 of Zhejiang Xinao Textiles Inc.
Corporate Governance Structure Board ESG Management Guideline and Policy
In strict compliance with the laws and regulations such as the Company Law of the People's Republic of China, the Securities Law
Adhering to the core principle that “sustainability creates long-term value,” the Board of Directors fully integrates
of the People's Republic of China, the Code of Corporate Governance for Listed Companies , as well as the relevant provisions of
environmental (E), social (S), and governance (G) factors into the Company’ s strategic planning, operational deci-
the Shanghai Stock Exchange, the Company establishes a corporate governance mechanism comprising the Shareholders’ Meet-
sion-making, and risk management systems.
ing, the Board of Directors, and the Management, each with distinct responsibilities and mutual oversight, thereby continuously
enhancing the transparency and effectiveness of corporate governance. Committed to compliance as the baseline, green development as the direction, social responsibility as the mis-
sion, and transparent governance as the safeguard, the Board pledges to balance the interests of diverse stake-
The Company places high importance on the effective implementation and operational feasibility of governance regulations. In
holders and propel the Company toward synergistic growth in economic, social, and environmental performance.
systematic revision and update of internal regulations—such as the “Articles of Association of Zhejiang Xinao Textiles Inc.” , “Rules
of Procedure for Shareholders Meetings”, “Rules of Procedure for Board of Directors”, “Working System for Independent Directors”,
and “Information Disclosure Management System”—were carried out to further elevate the standard of corporate governance. Board ESG Management Policy
Corporate Governance Structure
Incorporate ESG development objectives into corporate strategy framework to ensure
Board of Strategy ESG initiatives align closely with core business directions, industry trends, and regu-
shareholders Integration latory requirements. Drive the implementation of the strategy by establishing quanti-
Strategy and sustainability Policy fiable ESG Key Performance Indicators (KPIs).
(ESG) committee
Integrate ESG risks into the Company's comprehensive risk management system,
Audit committee
Risk Prevention with a focus on preventing and controlling potential risks in areas such as climate
Board of and Control
change, pollutant discharge, energy utilization, safety and quality of product and
directors service, and workplace safety, thereby mitigating negative impacts on business oper-
Policy ations.
Nomination committee
Unlock growth opportunities in the ESG domain, increase investment in green tech-
Remuneration and Value nology R&D to drive sustainable upgrades in products and services; enhance system
appraisal committee
Creation for safeguarding employee rights and development to strengthen organizational
cohesion; foster regular communication with stakeholders to cultivate a responsible
Management Policy corporate brand image.
Board of Shareholders and Protection of Shareholder Rights
The Board of Shareholders serves as the supreme governing body of the Company, exercising its authority in accordance with the
law. The Company places high importance on the protection of shareholder rights and interests, particularly those of minority
shareholders. It safeguards and continuously refines mechanisms for shareholder participation and voting, maintains clear and Management Fulfillment of Duties
accessible communication channels with investors, and strives to make every shareholder feel equally and genuinely valued by the
Company. Shareholders' meetings are convened annually to guarantee that all shareholders enjoy equal standing and are able to
exercise their rights effectively. In 2025, the Company conducted 3 General Shareholders' Meetings. The Company's management team performs its duties in strict compliance with laws, regulations, and internal corporate policies,
rigorously executing resolutions passed by the shareholders' meetings and board of directors to ensure the Company's sustained
Board Construction and stable operation. The General Manager, Deputy General Managers, Chief Financial Officer, and Board Secretary constitute the
Company's senior management. As of the end of 2025, there were a total of 6 senior executives, 3 of whom are female.
The Company places great emphasis on board governance and has established standardized mechanisms and rules for director The compensation plan for senior management is subject to review and approval by the board of directors. It is primarily com-
election, appointment, removal, and deliberation. It continuously refines the board's structure to enhance its independence and posed of a base salary and performance-based incentives. The Company incorporates ESG indicators, including greenhouse gas
diversity, thereby maximizing the board's professional expertise and providing robust support for the Company's sustainable devel- emission reduction performance, implementation of innovation projects, product quality, workplace safety, and compliance man-
opment. agement into the performance evaluations of its management team. Performance-based compensation is then awarded according
Directors are elected by the shareholders' meeting and are accountable to it. Acting in the best interests of all shareholders, direc- to the evaluation outcomes, thereby promoting the effective implementation of the Company’ s sustainability strategy. For detailed
tors adhere to the principles of diligence, integrity, and pragmatism in fulfilling their duties. The Board has established four spe- information on the total remuneration and shareholding status of senior management, please refer to the Annual Report 2025 of
cialized committees—Strategy and Sustainability (ESG) Committee, Audit Committee, Nomination Committee, and Remuneration Zhejiang Xinao Textiles Inc.
and Appraisal Committee—to support its decision-making processes. In 2025, the Board convened 8 meetings.
XINAO XINAO
ESG Report 2025 ESG Report 2025
ESG Governance Structure 4.2 Reporting on Sustainability-Related Information
The Company actively identifies and manages the impacts of its business and operational activities, and continuously improves its
ESG governance structure to ensure the efficient promotion of ESG work. The Board of Directors of the Company is the leading
and decision-making body for ESG work, and the Board’ s Strategy and Sustainability (ESG) Committee is the research and man-
Concept of Sustainability
agement body for ESG work. The Company has set up an ESG Management Committee within its management team, with the
General Manager of the Company serving as the chairman of the ESG Management Committee to plan and implement ESG prac- Amidst the tide of globalization and the green-oriented transition of the textile industry, the Company has consistently adhered to
tices. The functions and subsidiaries of the Company form the ESG working group to carry out specific ESG tasks. the concept of sustainability. Centered on the mission of "Sharing Sustainable Warmth with the World," it strives to build a
greener, low-carbon, and common prosperous future. Guided by its sustainability vision of "Becoming a Globally Leading Pro-
ESG Governance Structure Chart vider of High-End Green Wool Textile Solutions", the Company employs continuous technological innovation, eco-friendly pro-
cess renovation, and cross-value-chain collaboration to safeguard the ecological environment while simultaneously enhancing both
corporate and societal value. Embracing the sustainability mission of "Pioneering the Green-oriented Transition in the Wool
Board of Directors Textile Industry to Make Textile Products More Eco-Friendly, High-Quality, Traceable, and Sustainable," the Company
Decision-making collaborates with global value chain partners to collectively address climate change challenges, promote resource recycling, refine
Strategy and Sustainability (ESG) responsible supply chain systems, and foster a sustainable ecosystem within the wool textile industry.
Committee
ESG Management
Committee
General Concept of Sustainability
Management Manager
Deputy General Heads of
Managers Subsidiaries
Vision Mission
ESG Working Group Sharing
Implementation Becoming a Globally Sustainable Pioneering the Green-oriented
Headquarters
Subsidiaries Leading Provider of Transition in the Wool Textile
Functions
High-End Green Wool Warmth with Industry to Make Textile
Textile Solutions
the World Products More Eco-Friendly,
High-Quality, Traceable, and
Composition & Terms of Reference of the ESG Governance Structure
Sustainable
Tier Composition Terms of Reference
The highest-level ESG governance body, responsible for formulat-
Members of the Board of ing corporate ESG management policies and strategies, and
Directors authorizing the Strategy and Sustainability (ESG) Committee to
oversee and make decisions on relevant matters.
Develop long-term corporate development strategies and enhance
Decision- sustainability capabilities. Conduct research and assessment on
Members of the Strategy
making major sustainability trends and relevant risks and opportunities
and Sustainability (ESG)
Committee
facing the company; provide guidance and oversight for the Framework for Sustainability Strategy
formulation and implementation of ESG objectives, thereby offer-
ing critical support for the Company's sustainable development.
To comprehensively implement the United Nations 2030 Sustainable Development Goals (SDGs), the Company has developed the
Establish corporate ESG objectives, identify material ESG topics,
develop management policies, and evaluate corporate sustainabili- "WARMTEX 2030" sustainability strategy framework. Grounded in the concept of sustainability and building upon the core
Senior executives with ty performance. Continuously monitor the progress of ESG strate- operations of the wool textile industry, this model aims to deeply responds to the needs of stakeholders—including customers,
Management
ESG-related knowledge gy implementation, and regularly report ESG work progress and supply chain partners, the industry, and society at large. Through sustainable initiatives, the Company strives to energize wool
management outcomes to the Strategy and Sustainability (ESG) textile sector, empower brand partners, strengthen responsible supply chains, protect ecological environments, and contribute to a
Committee and the Board of Directors.
sustainable global future.
Core members from func- Develop ESG work plans and action programs, coordinate and
oversee the implementation of ESG initiatives, and monitor the
Implementation tional departments and
progress of ESG objectives alongside business development strat-
subsidiaries egies.
XINAO XINAO
ESG Report 2025 ESG Report 2025
“WARMTEX 2030” Sustainability Strategy Framework Planning of Sustainability
To effectively implement its sustainability vision, the Company adopted a “Comprehensive Development, Plan-
WA R M T E X
ning-Led” approach and formulated the “XINAO Sustainability Planning for the 15th Five-Year Plan Period
(2026-2030)” by the end of 2025. This plan outlines phased objectives for the 2026-2030 period:
Years of Quality · Synergy (2026-2027): Focused on “Deepening Quality Control and Upgrading Collabora-
tive Co-creation” , this phase aims to fortify the baseline of ESG responsibilities through product quality enhance-
ment, and strengthen the foundation for sustainability via cross-entity collaboration;
Years of Intelligent Innovation · Empowerment (2028-2029): Centered on "Developing Technological IP
and Promoting Intelligent Operations", this stage emphasizes driving operational efficiency through technologi-
cal innovation, and enhancing industrial resilience via digital and intelligent upgrades.
Wisdom Accountable Recycling Multifaceted Talent Ethical X Attitude
Powered Sourcing Low-carbon Innovation Diversity Business Brand Year of Ecology · Symbiosis (2030): Dedicated to "Cultivating Industrial Ecosystem and Practicing Symbi-
otic Development", this final phase focuses on promoting circular synergy across the industrial chain through
ecological integration, achieving synergistic value creation for both the enterprise and the socio-environmental
Leveraging Establishing Practicing Driving Building a Adhering to Elevating
landscape.
digital and a green and the concept innovation diverse and the principles brand
intelligent compliant of recycling across inclusive of integrity building Concurrently, centering on the three core dimensions of "Sustainable Green Products, Sustainable Value Shar-
technologies sourcing and technology, talent and through ing, and Sustainable Mode of Operation," and supported by the seven pillars of "WARMTEX" (Wisdom Pow-
to upgrade system, low-carbon processes, ecosystem compliance, sustainability ered, Accountable Sourcing, Recycling Low-carbon, Multifaceted Innovation, Tablet Diversity, Ethical Business, and
the entire prioritizing develop- and that empha- upholding principles, X Attitude Brand), concrete actions are implemented with clearly defined milestone objectives and accountability
operational sustainable ment, management sizes gender fair trade communicat- allocations at each phase. Through regular strategic monitoring and performance evaluation mechanisms, a
workflow, suppliers, promoting to overcome equality and practices and ing green closed-loop procession is ensured, translating strategic vision into tangible execution.
enhancing and ensuring the recycling developmen- diverse anti-unfair and
efficiency the and reuse of tal bottle- competencies, competition, compliant
and reducing implementa- production necks and fostering and values, and
costs, tion of materials enhance the employee reinforcing enhancing
thereby environmen- and energy, core growth and the baseline social
empowering tal and and competitive- team for compli- recognition
green social minimizing ness of development. ance and influence
production responsibility resource corporate operations. of the brand.
and lean throughout waste and sustainability.
management. the supply carbon
chain. emissions.
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ESG Report 2025 ESG Report 2025
Indicators, Objectives and Annual Progress of Sustainability
In alignment with relevant laws and regulations, the requirements of the SSE Guidelines, and its own development needs, the
Sustainability Planning for the 15th Five-Year Plan Period (2026-2030) Company has established scientifically grounded sustainability objectives. These are formulated with reference to China national
strategies—such as Rural Revitalization, Carbon Peak and Carbon Neutral—as well as international frameworks including the
United Nations Sustainable Development Goals (SDGs) and the Paris Agreement. Centered on the management of material ESG
topics, the Company advances its ESG practices comprehensively across multiple dimensions, including governance structure
development, risk control implementation, and information disclosure standardization. Through these concerted efforts, the Com-
Becoming a Globally Leading Provider of High-End Green Wool Textile Solutions pany has achieved significant progress in sustainability and contributes tangibly to the realization of the United Nations SDGs.
Vision Pioneering the Green-oriented Transition in the Wool Textile Industry to Make SDGs
Material
Indicators Objectives
Progress
Mission Textile Products More Eco-Friendly, High-Quality, Traceable, and Sustainable Topics in 2025
Tackle Climate (with 2020 as the base year)
Cumulative reduction of total GHG Emis- 132,000 tCO₂e 29,211.97 tCO₂e
Change sions by 2030
Completion rate of pollution detection 100% 100%
Sustainable Pollutant
Comprehensive Planning- Green Discharge
Development Led Products Compliance rate for pollutant discharges 100% 100%
Accuracy rate of waste sorting and storage 100% 100%
Years of Quality · Years of Intelli- Year of Ecology
Synergy gent Innovation · · Symbiosis Harmless disposal rate of hazardous waste 100% 100%
Empowerment
(with 2020 as the base year)
•Deepening •Developing •Cultivating Cumulative consumption of renewable 22,000 tce 8,800.99 tce
Development Quality Control Technological IP Industrial
Energy energy by 2030
Utilization (with 2020 as the base yar)
Planning •Upgrading •Promoting Ecosystem Cumulative total energy conservation by 17,000 tce 4,303.28 tce
Collaborative Intelligent •Practicing 2030
Co-creation Operations Symbiotic
Water Water reuse rate by 2030 Not less than 45% 36.44%
Development
Resources
Utilization (with 2020 as the base year)
Cumulative total water savings by 2030 3,250,000 t 707,441.13 t
Sustainable The proportion of R&D investment to
Three Core Seven Major Not less than 2.5% 2.27%
Value revenue
Innovation-
Dimensions Pillars Sharing Driven
The proportion of R&D personnel Not less than 10% 9.97%
Safety and Quality
of Products Handling rate of complaints from customers 100% 100%
Sustainable Sustainable Sustainable and Services
Green Products Value Sharing Mode of Operation Coverage rate of work-related injury
insurance for employees 100% 100%
Signing rate of workplace safety liability
W
A
R
M
T
E
X
agreements 100% 100%
Employees
Wisdom Powered
Accountable Sourcing
Recycling Low-carbon
Multifaceted Innovation
Talent Diversity
Ethical Business
X Attitude Brand
Completion rate of safety hazard
rectification 100% 100%
Dimensions
Pillars Coverage rate of employee training 100% 100%
Sustainable Coverage rate of anti-commercial bribery and 100% 100%
Mode of anti-corruption training for directors
Operation Anti-Commercial
Bribery and Coverage rate of anti-commercial bribery and
Anti-Corruption anti-corruption training for management staff
Coverage rate of anti-commercial bribery and
anti-corruption training for front-line staff
XINAO XINAO
ESG Report 2025 ESG Report 2025
The Company has systematically integrated ESG-related objectives into its performance appraisal framework, with
and ensuring the implementation of established ESG goals, the Company deeply aligns management performance
The Company has established an ESG supervision mechanism with clearly defined responsibilities. The Board of Direc- evaluations with their performance on core ESG topics.
tors, along with its subordinate Strategy and Sustainability (ESG) Committee and Audit Committee, comprehensively
manages the Company’ s ESG-related impacts, risks, and opportunities through a full-cycle approach. This includes ESG Mechanisms of Supervision and Appraisal
approving ESG development strategies, assessing potential risks, setting core objectives, overseeing implementation,
reviewing performance outcomes, and ensuring transparent communication. The Internal Audit Sector maintains func-
tional independence from other business units. It conducts specialized evaluations of the effectiveness of ESG risk and Info. Supervision
opportunity management, issues monitoring opinions, proposes optimization suggestions, and reports regularly to man- Report procedures Appraisal
agement on its oversight activities. Mechanism and Mechanism
measures
ESG Supervision Process
•The Company's ESG •Institutional Level：Develop special- •The Company incorpo-
Management Commit- ized systems such as the “Environmen- rates GHG emission
tee provides compre- tal, Social, and Governance (ESG) Man- reduction performance,
hensive periodic reports agement System” to clarify supervisory implementation of inno-
to the Board of Direc- responsibilities. vation projects, product
tors and its subordinate quality, workplace safety,
•Establish a dedicated ESG governance structure. committees—namely, •Organizational Level： The Board of and compliance man-
the Strategy and Sus- Directors and its subordinate Strategy agement into the core
tainability (ESG) Com- and Sustainability (ESG) Committee appraisal indicators for
mittee and the Audit exercise overarching supervision, while relevant responsible per-
Committee—on the the ESG Management Committee sonnel, thereby promot-
progress and comple- serves as the core executive oversight ing accountability
tion status of ESG-relat- body. The committee convenes dedicat- through quantifiable
ed objectives. ed sessions at regular intervals to evalu- assessment.
•Review the list of material ESG topics and assess the impact of identified risks ate and prioritize ESG-related impacts,
and opportunities on the Company's overall strategy. •The Company compiles risks, and opportunities, subsequently
ESG reports on an reviewing and approving key perfor-
annual basis, which are mance indicators and strategic objec-
disclosed to the public tives within the company's ESG frame-
after review. For major work.
ESG matters such as
•Integrate core ESG risk factors into business strategies and risk management environmental compli- •Supervision Procedures：An annual
processes, while concurrently building an internal oversight mechanism for ance incidents, an specialized ESG compliance audit is
ESG matter management. immediate special conducted to examine areas such as
reporting mechanism is environmental emissions, supply chain
adopted. management, and employee rights.
Identified issues are promptly rectified
and tracked to ensure closed-loop man-
agement.
•Ensure full disclosure of ESG impacts, risks, opportunities, corresponding
measures, and progress toward achievement of objectives. Review and publish
the ESG report to communicate with stakeholders.
•Dynamically update, refine, and optimize the ESG governance system on an
ongoing basis.
XINAO XINAO
ESG Report 2025 ESG Report 2025
Sustainable Green Products
Priority actions on environmental dimensions
· Tackle Climate Change
· Pollutant Discharge
· Waste Disposal
· Ecosystem and Biodiversity Conservation
· Environmental Compliance Management
· Energy Utilization
· Water Resources Utilization
· Circular Economy
The SDGs to which this chapter is dedicated
Greenhouse gas emissions from corporate operations are categorized into direct and indirect emissions. Direct The Company regularly identifies and assesses short-, medium-, and long-term risks and opportunities posed by
emissions originate from stationary source combustion of natural gas and liquefied petroleum gas, mobile source climate change to its operations and finances. In alignment with national and local policy requirements and integrat-
combustion of on-road vehicles such as gasoline and diesel trucks, and non-road vehicles such as diesel forklifts, ing its operational realities, it evaluates the probability of occurrence and degree of impact of each risk and oppor-
fugitive emissions from refrigerants and fire extinguishers, and process-related emissions from carbon-containing tunity, developing a climate risk and opportunity matrix. Simultaneously, the Company assesses the impacts of
chemicals. Indirect emissions result from outsourced electricity and steam used for production and office activities. physical and transformation risks stemming from climate change in the context of business development, proactive-
These emissions comprise seven major greenhouse gases: carbon dioxide (CO₂), methane (CH?), nitrous oxide (N₂O), ly explores growth opportunities in areas such as products and services, and resource efficiency. Climate risk and
hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulfur hexafluoride (SF?), and nitrogen trifluoride (NF?). opportunity management is deeply integrated into the Company's strategic planning system, with tailored mitigation
and adaptation strategies developed to address climate impacts.
The Company closely monitors the trend of global climate change and actively responds to national climate-related
policies such as the State Council’ s “Action Plan for Carbon Dioxide Peaking Before 2030” and “Responding to Matrix of Climate-related Risks and Opportunities
Climate Change: China's Policies and Actions” . By establishing a systematic climate change management frame-
work, the Company fully integrates climate change mitigation and adaptation efforts into its daily operational man-
agement. In 2025, the allocated investment for greenhouse gas emission reduction initiatives amounted to 17.5718
million yuan.
High
Governance
The Company has established a three-tier governance structure for tackling climate change comprising the "Deci-
sion-making - Management - Implementation", with clearly delineated responsibilities and authorities across each tier.
This structure ensures stratified coordination, implementation and closed-loop management of climate-related initiatives: Policy and
Market risks Acute physical risks Resource efficiency
legal risks
Degree of impact of risks and opportunities
Decision-Making
Products
Reputational risks Technology risks
and services
Responsible for reviewing and approving climate-related strat-
egies and management.
Board's Strategy and
Sustainability (ESG)
Committee
Management
Responsible for researching and formulating climate-related strat-
egies, objectives, and management practices, as well as identify-
ESG Management ing and controlling climate-related risks and opportunitie.
Committee and
Executive Management
Chronic Market
Adaptability Energy sources
physical risks opportunities
Implementation
Responsible for organizing, arranging, and managing
Enterprise Management climate-related tasks, ensuring the implementation of these
Section, General Section of initiatives, and providing regular progress reports.
Safety and Environment at
the Headquarters, and
all subsidiaries
At the institutional level, the Company has formulated the "Climate Change Management System". Furthermore, the
Company regularly organizes training sessions on climate and carbon-related topics to enhance the professional Low Probability of occurrence of risks and opportunities High
capabilities of employees in relevant positions. This ensures their effective participation in the formulation and
implementation of the Company’ s climate strategies. In 2025, the Company organized specialized training for all
relevant departments, covering areas such as carbon emissions in the textile enterprises, product carbon footprint
accounting, and carbon management system development. Climate-related opportunities Climate-related risks
XINAO XINAO
ESG Report 2025 ESG Report 2025
Climate-related Risks and Opportunities & Responses
Types of Risk Period Potential Types of Risk Period Potential
Description Financial Responses Description Financial Responses
or Opportunity of Impact or Opportunity of Impact
Impact Impact
Depreciation of The adoption of green packaging,
Extreme weather such as typhoons green raw materials and green
fixed assets •Formulate contingency
and floods poses a threat that could design, the optimization of produc-
result in damage to the Company's Increase in oper- plans for extreme weather Resource tion technology and processes, and Medium-to Decrease in oper-
•Increase the proportion
Acute Risks Short term and conduct regular emer- ating costs
production plants and equipment, ating costs Efficiency the improvement of production -long term
o f re n e w a b l e e n e rg y
loss of personnel and disruption of gency drills. efficiency will help to increase the
Physical Risks
Decrease in oper- usage can lower direct
business activities. efficiency of resource utilization.
ating income •Maintain constant moni- energy costs, meet the
toring of climate data and As customer demand for green, green demands of down-
Extreme temperature environments
Increase in operat- optimize the layout of low-carbon and intelligent products stream customers, and
can affect the proper operation of Short-to-
production bases and Products and increase, the development of related Increase in operat- help the Company achieve
temperature-sensitive production ing costs medium-to-
Chronic Risks Medium-to warehouses in accordance Services products and the provision of relat- ing income its low-carbon develop-
equipment, and rising sea level can Decrease in oper- long term
-long term with sea-level rise trends. ed services can drive rapid business ment goals.
affect the Company's normal opera- ating income growth.
Transformation Opportunities
tions in coastal areas.
•Actively identify ener-
The Company may face the upgrad- With increasing demand for green gy-saving potential and
ing of manufacturing equipment Increase in operat- and low-carbon products and
Short-to reduce product carbon
and process technology and the ing costs services driven by the “dual-carbon”
-medium Market Medium-to Increase in operat- emissions through smart
Technology Risks elimination of old equipment due to goals, strengthening product devel-
term Decrease in oper- Opportunities -long term ing income factory development, tech-
the tightening of policy and regula- opment and expanding into new
ating income n o l o g i c a l i n n ova t i o n ,
tory requirements. •Increase investment in markets will enhance market com-
petitiveness. process optimization, and
new energy-saving tech-
With the continuous introduction of the application of ener-
carbon emission reduction policies nologies and equipment, Increasing the use of clean or
Short-to- gy-efficient equipment and
at home and abroad, as well as the strengthen the capacity for renewable energy can reduce Decrease in oper- technologies.
R&D and innovation of Energy Sources carbon emissions and address the medium-to-
gradual tightening of regulatory ating costs
Policy and Short-to- risk of energy price hikes in the long term •Expand into emerging
requirements, the Company needs Increase in operat- technologies and green
Legal Risks to meet the relevant requirements in medium-to- products. future. m a r ke t s a n d d e e p e n
ing costs
production, operation, sales and long term Deepen collaboration between collaborations, introduce
•Comprehensively imple-
Transformation Risk
services, and to strengthen its own universities, enterprises and indus- more low-carbon products
operational carbon accounting, ment various energy con- tries, participate in clean energy-re- Decrease in oper-
and services that align
product carbon footprint measure- servation and emission lated projects, actively seek solutions ating costs
Adaptability Medium-to with market demands and
ment and other related work. reduction measures, and for green and low-carbon products,
-long term Increase in operat- expectations.
strive to reduce carbon promote green manufacturing, and
Low-carbon related policies affect ing income
the supply and demand in the emissions. improve adaptability to climate
market. If the Company fails to change.
•Persistently advance the
provide appropriate products or R&D and production of Note: The Company defines the period of impact as short-term (0-1 year [inclusive]), medium-term (1-5 years [inclusive]), and long-term (over 5 years).
services to its customers, it will lead Increase in operat- low-carbon products,
to a decrease in its competitiveness Medium-to Analysis reveals that the current financial impact of climate change on the Company primarily manifest as fluctuations in production energy
ing costs extending low-carbon attri-
Market Risks in the market and increase in the consumption costs and increased environmental protection expenditures. Overall, the impact remains manageable and has not materially
-long term
cost of raw materials or decrease in Decrease in oper- butes to customers and all adversely affected the Company’ s current operating results. Looking ahead to the next fiscal year, should persistent extreme weather condi-
the demand for energy-intensive ating income end-use scenarios across tions drive further rises in energy costs, the Company may face additional pressure on production costs and cash flow. Mitigation measures,
products, which will result in com- the value chain. including the advancement of photovoltaic projects and energy-saving retrofits, are expected to partially offset such cost increases, and the
promised products and may lead to •Regularly compile overall impact is projected to remain controllable. Furthermore, the Company's strategic direction and business model exhibit strong climate
the loss of customers. resilience. Ongoing initiatives such as the development of smart factories and the adoption of green, low-carbon production practices are
requirements and inquiries
expected to enhance the Company’s capacity to effectively counter external disruptions induced by climate change.
Stakeholders are increasingly con- from all stakeholders and
cerned about the Company's perfor- actively respond to their Through the formulation of a climate transition plan, the Company continues to strengthen its climate resilience, enabling it to adequately
mance in addressing climate concerns. adapt to and address the diverse impacts of climate change. Recently, the Company has implemented energy-saving upgrades for equipment
Reputational change, including strategies and Medium-to Decrease in oper- such as air compressors and transformers to lower energy consumption, while also deploying photovoltaic projects to substitute conventional
Risks objectives, management measures, -long term ating income energy sources with cleaner alternatives, thereby increasing the share of renewable energy and optimizing the overall energy mix. Moving
etc. Failure to carry out climate forward, the Company will further integrate its value chain into climate management considerations, actively promote carbon neutrality initia-
change response action may affect tives across the supply chain, and contribute to industry-wide green and low-carbon development. Concurrently, leveraging technological inno-
the Company's reputation. vation, the Company aims to provide carbon neutrality solutions to society, aligning its business strategy with the demands of a zero-carbon
societal transition and achieving synergistic progress between commercial growth and green, low-carbon objectives.
XINAO XINAO
ESG Report 2025 ESG Report 2025
Development Strategies for Tackling Climate Change
Reduction of Greenhouse Gas Emissions from Operations：Analysis of the Company's historical
GHG emission structure indicates that Scope Ⅱ emissions account for over 90% of its total operational
GHG emissions, with electricity consumption being the predominant contributor. Consequently, enhanc-
Climate Mitigation and
Focused Areas Greenhouse Gas Reduction ing energy efficiency and optimizing the renewable energy mix have become priority initiatives for GHG
Adaptation Solutions emission reduction. Detailed management measures are elaborated in the "Energy Utilization" Chapter.
Taking 2020 as the base year, the Company In terms of Energy Efficiency: The Company actively implements energy conservation and
has verified its GHG emissions, formulated a carbon reduction measures across all production phases to continually improve energy efficien-
sustainability plan oriented toward green and cy. In 2025, initiatives such as production process redesign, equipment upgrades, and process
Climate-related Core: Enabling Sustainable
low-carbon objectives, and put forward a com- improvements were projected to reduce annual emissions by 3,905.16 tons of carbon dioxide
Commitments Warmth to be Shared Globally equivalent.
mitment at the operational level: to achieve
carbon peaking before 2030 and carbon In terms of Energy Mix: The Company is committed to optimizing its energy structure and
Low-Carton
neutrality by 2050. increasing the proportion of clean energy usage. In 2025, through the utilization of photovoltaic
Manufacturing power, green certificate electricity, and solar water heating systems, the Company effectively
•Energy-saving and consumption-reducing avoided the emission of approximately 13,812.88 tons of carbon dioxide equivalent. Notably, a
self-invested distributed photovoltaic power generation project with an installed capacity of 736
technological upgrades
kWp, developed by NEW CHUWA, has been commissioned, providing robust support for clean
•Utilization of renewable energy sources •Climate mitigation solutions energy substitution.
•Lean management practices
Development Path Assessment of Product Carbon Footprint：As an industry pioneer in carbon footprint quantification,
•Implementation of green logistics •Climate adaptation products
XINAO TEX has proactively advanced life cycle assessment (LCA) projects for representative products.
•Reduction of product carbon footprint The Company has publicly disclosed carbon footprint data for 3 types of wool yarns, including CASH-
•Carbon credits or offsets (VCS) FEEL medium-color wool yarn and Basolan worsted wool knitting yarns (top dyeing & hank dyeing),
while its subsidiary XINAO CASHMERE has released such data for 6 types of cashmere yarns across
Systematic Support Organizational Support Institutional Support Talent Support Digitalization Support two major categories: CASHQUEEN and PRESTIGE. Additionally, XINAO TEX participated as a key draft-
ing unit in establishing the group standard “Product Carbon Footprint—Product Category Rules—Wool
Yarn” (T/CNTAC 203-2024 T/CWTA 1-2024).
Management of Impact, Risk and Opportunity
The Company proactively addresses various challenges arising from climate change by systematically integrating the Zero-carbon Tencel Blends：Blend “Tencel Lyocell Fiber with Climate Actions” (Zero-Carbon Tencel
management of climate-related risks and opportunities into its comprehensive operational risk management framework. ) with natural fibers such as wool, cashmere, and organic cotton to create affordable luxury yarns that
This integration has established a standardized process for managing climate-related risks and opportunities: through the are smooth, drapey, resilient, and eco-friendly.
implementation of a full-cycle control mechanism encompassing "identification, assessment, and supervision," the Com- Low-carbon diacetate fiber blend：Blend low-carbon diacetate fibers sourced from sustainably
pany conducts periodic dedicated evaluations to identify climate-related risks and opportunities. It scientifically assesses managed pine and eucalyptus forests and farms with natural fibers such as wool, TENCEL, and mul-
their potential impact on business operations in terms of scope and duration, and formulates tailored management strat- berry silk to develop mid-to-high-end yarns that are lightweight, soft, and refreshing—ideal for premium
summer apparel.
egies and actionable measures accordingly. This approach ensures the systematic and regularized management of
climate-related risks and opportunities. Bio-based Nylon Blends：Leveraging cutting-edge LINCSPUN textile technology, spin bio-based
Low-Carton
nylon derived from non-petroleum sources with wool to enhance elasticity and abrasion resistance while
Products
Process for Managing Climate-Related Risks and Opportunities maintaining biodegradability, making it ideal for athleisure wear.
Bio-based polylactic acid (PLA) blends：Blend PLA derived from renewable plant resources with
wool to create yarns that are lighter, more breathable, quick-drying, antimicrobial and anti-mite, expand-
Statistics on the physical and transformational climate risks and opportunities for each ing their applicability to spring-summer collections and athleisure wear segments.
asset in the short, medium and long term based on the actual climate risk profile, Recycled nylon blends：Blend recycled nylon sourced from discarded fishing nets with natural fibers,
Identification rank them according to their degree of impact on the total assets, report to the ESG maintaining superior performance while significantly reducing energy consumption and carbon emis-
Management Committee for review. sions during production.
The ESG Management Committee conducts an assessment of short-, medium- and
Assessment long-term climate risks and opportunities at least once a year and reports the results
to the Board's Strategy and Sustainability (ESG) Committee for review.
The Board's Strategy and Sustainability (ESG) Committee formulates strategies, poli-
cies and mechanisms to tackle climate change based on the results of the climate
risk assessment, and delegates to management and implementation team the Com-
Supervision pany’ s strategies and objectives for ESG and addressing climate-related topics, and
the ESG Management Committee supervises the implementation team in practicing
the tasks of ESG and addressing climate risks.
XINAO XINAO
ESG Report 2025 ESG Report 2025
The wastewater pollutants generated from the Company's production and operation primarily include chemical oxygen demand (CODcr) The Company has established a comprehensive framework for pollutant discharge control, centering on the dynamic tracking of envi-
five-day biochemical oxygen demand (BOD5), ammonia nitrogen (NH3-N), total phosphorus (TP), total nitrogen (TN), total zinc (TZn), ronmental regulations and the routine surveillance of pollutant discharges. Concurrently, it has formulated a coordinated development
dissolved chromium (DCr), suspended substances (SS), adsorbable organic halogen (AOX), etc. The Company applies for the national strategy encompassing environmental technology R&D and the dissemination of eco-friendly practices, with a core focus on achieving
pollutant discharge permit in strict accordance with the requirements of the state and local governments, implements standardized compliance with discharge standards and advancing green, low-carbon development. Guided by the principle of "Compliance as the
sewage declaration and registration, establishes an online monitoring and early warning mechanism for water treatment, formulates a Foundation, Monitoring as Safeguard, Technology as Enabler, and Communication as Unifier," the Company prioritizes regula-
self-monitoring scheme for pollutant discharge permit and set up a supporting wastewater treatment system to make sure all treated tory adherence as the cornerstone of discharge management. It ensures effective implementation through continuous monitoring, drives
wastewater is uniformly discharged through designated outlets in compliance with standards. pollution reduction and efficiency gains alongside green product innovation via technological R&D, and highlights achievements in pollu-
tion control and sustainable operations through diversified communication channels.
The air pollutants generated from the Company's production and operation are mainly total suspended particulates, malodors (ammonia
and hydrogen sulfide), acetic acid, sulfuric acid mist, sulfur dioxide, nitrogen oxides, volatile organic compound, and canteen fumes. The
Company implements comprehensive and effective oversight of exhaust emissions throughout the entire process and ensures that all Management of Impact, Risk and Opportunity
emission indicators comply with local and industry emission standards through rigorous exhaust treatment technologies and routine
monitoring measures. The Company has established a closed-loop risk management process for pollutant discharge, which is specifically divided into the following
four core stages, forming a full-cycle management system comprising “Identification, Assessment, Response, and Optimization.”
The Company strictly abides by relevant laws, regulations and management rules such as Water Pollution Prevention and Control Law of
the People’ s Republic of China, Atmospheric Pollution Prevention and Control Law of the People's Republic of China , and Noise Pollution
Prevention and Control Law of the People's Republic of China . A range of measures have been implemented to mitigate the negative Risk Management Process for Pollutant Discharge
environmental impacts arising from production and operational activities. In 2025, the subsidiaries, NEW CHUWA and HOUYUAN TEX
were designated as key entities under environmental supervision by their respective local ecological and environmental authorities. The
Company disclosed accurate information regarding the pollutant discharge and ecological-environmental administrative permits of these Drawing upon production process characteristics, equipment operational status, and
key supervised subsidiaries in compliance with the regulations of the China Securities Regulatory Commission (CSRC), the Stock current industry regulatory requirements, a systematic investigation is conducted to
Exchange and the Ministry of Ecology and Environment (MEE). identify potential risk points throughout the entire wastewater, exhaust gas, and noise
emission processes. Special emphasis is placed on recognizing typical risk scenarios
In 2025, the Company did not incur any significant administrative penalties nor face any criminal liabilities pertaining to pollutant such as failures in wastewater treatment facilities, exceedances of exhaust emission
discharge.
Identification concentration limits, and malfunctioning of noise control equipment. A comprehensive
risk inventory is established to ensure no risk oversight.
Governance
The Company has established a three-tier governance structure comprising the "Decision-making - Management - Implementation",
which operate in a coordinated manner with clearly defined responsibilities and collaborative divisions of labor. This structure ensures
the systematic implementation of pollution control initiatives: Based on the likelihood of risk occurrence and the extent of their impact on the envi-
ronment and the enterprise, identified risks are quantified and categorized into high,
medium, and low risk levels. This classification provides a basis for formulating precise
Decision-Making
response strategies, with priority given to key risks that pose significant environmental
Assessment impacts and have a high probability of occurrence.
Responsible for reviewing and approving strategies and manage-
Board's Strategy and ment related to pollutant discharge.
Sustainability (ESG) Differentiated control measures are implemented according to risk levels: For
Committee high-risk items, emergency response plans are activated immediately to rapidly con-
tain risk escalation and mitigate environmental impact. Medium-risk items are
addressed through optimized operational procedures, enhanced routine equipment
Management
maintenance, and improved inspection mechanisms to reduce the probability of
Responsible for researching and formulating governance strategies occurrence at the source. Low-risk items are incorporated into regular monitoring
and annual work plans related to pollutant discharge, as well as
Response protocols, with periodic tracking of risk status to prevent escalation.
ESG Management identifying and controlling associated risks and opportunities.
Committee and
Executive Management Regular post-event evaluations are conducted to assess the effectiveness of pollutant
discharge risk management, analyzing the efficacy of response measures and identi-
Responsible for the organization, coordination, and management of fying vulnerabilities in risk control. Based on the evaluation outcomes, management
Implementation
pollutant discharge-related operations, as well as day-to-day opera- strategies shall be dynamically adjusted to continuously optimize the risk manage-
ment process, thereby achieving precise control over pollutant discharge risks and
tion and maintenance of pollution control equipment to ensure
proper functionality and periodically report on implementation
Optimization balancing corporate sustainability with environmental protection objectives.
General Section of Safety
and Environment at the progress. Manufacturing subsidiaries strictly adhere to environmen-
Headquarters, and tal standards in equipment operation to guarantee that pollutant
all subsidiaries discharges comply with regulatory requirements.
In the domain of pollutant management, the Company adopts a systematic approach to advance the comprehensive life-cycle manage-
The Company has formulated the “Measures for the Management of Three Wastes and Noises” as the institutional foundation for envi- ment of pollutants, grounded in compliance, safeguarded by monitoring, driven by technology, and supported by communication. For
ronmental operation control. It obtains the National Pollutant Discharge Permit in strict compliance with national and local regulatory wastewater management, efforts are deployed across dimensions such as source control, process treatment, and segregated collection.
requirements and standardizes mandatory procedures such as pollutant discharge reporting and registration. For wastewater discharge, Through process optimization, reclaimed water reuse, and separate drainage systems for stormwater and sewage, the Company effec-
an online water quality monitoring and early-warning mechanism has been established, along with a self-monitoring plan under the tively reduces both the volume of wastewater generated and the concentration of pollutants. In terms of air emissions management, the
Pollutant Discharge Permit. A standardized wastewater treatment system has been implemented to ensure compliant discharge through focus is placed on source reduction and process control. By upgrading technologies and retrofitting equipment, the Company mitigates
a unified outlet. For waste gas and noise, comprehensive process control is applied, supported by specialized treatment facilities and harmful gas emissions and fugitive releases, continuously enhancing its management standards. Regarding noise control, measures
routine monitoring to ensure all indicators strictly meet local and industrial emission standards. include the selection of low-noise equipment, installation of acoustic barriers, and regular inspection of vibration damping performance,
thereby effectively minimizing the impact of noise on the surrounding environment.
XINAO XINAO
ESG Report 2025 ESG Report 2025
Wastewater Management Overview of Wastewater Reduction Initiatives for 2025
Wastewater Discharge Standards, Key Control Indicators and Treatments
Design and Implementation of a Sludge Discharge and
Key Control Aeration System in Hydrolysis Tanks：The implementation
Companies Types Executive Standards Indicators Treatments Source Control of a dedicated sludge discharge and aeration system in its
hydrolysis tanks by HOUYUAN TEX has enhanced the water
Following treatment by grease traps and Process Optimization for Shrinkage Control：Through the recovery rate, resulting in a 9.7% reduction in wastewater
Domestic Integrated wastewater discharge standard COD, BOD5, generation per unit of production output.
septic tanks within the plant premises, the refinement of anti-shrinkage treatment protocols, NEW CHUWA
XINAO TEX NH3-N, TP, SS,
sewage (GB 8978 – 1996) effluent is discharged into the municipal has reduced the application quantities of softeners and other auxil- Initiation of a Reclaimed Water Reuse System Project：
etc. sewage network. iary chemicals, thereby diminishing the concentration of chemical XINAO CASHMERE has commenced the construction of a
After collection by the wastewater treat- contaminants in wastewater at the source. reclaimed water reuse system. Upon completion, the project is
ment station, the effluent undergoes physi- Design and Construction of a Proprietary Dosing System： projected to reduce annual wastewater generation by
cochemical treatment and two-stage A/O HOUYUAN TEX optimized its pre-treatment process via a self-de- 243,000 tons.
Industrial CODcr, BOD5, process for preliminary purification. Once it signed sodium hypochlorite dosing apparatus. This reduces the
NEW wastewater, Discharge standards of water pollutants meets the regulatory standards, it is burden on subsequent treatment stages and effectively lowers
TP, TN, SS, discharged into the municipal sewerage
CHUWA domestic for woolen textile industry both the chromaticity and contaminant levels of the effluent.
NH3-N, etc.
sewage (GB 28937 – 2012)
network and conveyed to a centralized
wastewater treatment plant for advanced Synergistic Water Saving and Emission Reduction： Water Enhanced Treatment
treatment, where it is treated to compliance conservation efforts inherently lead to a corresponding reduction in
before final discharge. wastewater discharge. Details of the 2025 water saving initiatives
are outlined in the “Water Resources Utilization” chapter.
T h e h i g h - te m p e ra tu re wa s tewa te r
discharged from dyeing vats within the
plant premises undergoes heat exchange
via a thermal energy recovery unit and is
subsequently cooled by a cooling tower, Waste Gas Management
after which it is directed to the wastewater
equalization tank. There, it mixes with Waste Gas Emission Standards, Key Control Indicators and Treatments
low-temperature effluent from dyeing vats,
Industrial floor wash water from workshops, back-
The indirect discharge limits in the CODcr, BOD5,
HOUYUAN wastewater, wash wastewater from the water purifica-
SS, NH3-N, TP, tion station, and domestic sewage. The Companies Executive Standards Key Control Indicators Treatments
TEX domestic Discharge standards of water pollutants
TN, AOX, etc. combined stream is treated in the plant’ s
sewage for dyeing and finishing of own preliminary treatment facility before Discharged up to the standard after
textile industry (GB 4287 – 2012) being conveyed to a water reclamation Integrated emission standard of air pollutants filtration through the dust removal
system for further treatment and reuse. The (GB 16297 – 1996) Total suspended particulates
system
surplus volume is discharged into the
XINAO TEX
municipal sewer network and sent to a
centralized wastewater treatment plant for Emission standard of cooking fume Discharged up to the standard after
Canteen fumes treatment by fume purifier
advanced treatment to meet regulatory (GB 18483 – 2001)
standards before final discharge.
Industrial Table 2 Indirect discharge limits in Upon conveyance through the pipeline Ammonia, hydrogen sulfide and Discharged at high altitude after treat-
Emission standards for odor pollutants
network, the effluent undergoes treatment ments of oxidation + alkali absorption (+
XINAO wastewater, Discharge standards of water pollutants CODcr, NH3-N, (GB 14554 – 93) odor concentrations
at the industrial park's wastewater treat- photocatalytic oxidation)
CASHMERE domestic for dyeing and finishing of TP, TN, etc. ment plant until compliant standards are
sewage textile industry (GB 4287 – 2012) met before discharge. Discharged in the workshop after treat-
Total suspended particulates,
NEW ment by dust removal equipment
Domestic sewage collected via septic tanks
Integrated emission standard of air pollutants non-methane hydrocarbon,
Maximum allowable discharge Discharged at high altitude after treat-
Domestic is first channeled into the NEW CHUWA’ s CHUWA (GB 16297 – 1996) hydrogen chloride ment of alkali liquor two-stage spray
concentrations of Class 3 in
JX FEIXUN COD, NH3-N, internal sewage pipeline network, and after absorption
sewage Integrated wastewater discharge standard preliminary treatment, it is discharged into
(GB 8978 – 1996) etc.
the municipal sewage system. Emission standard of cooking fume Discharged up to the standard after
Canteen fumes
(GB 18483 – 2001) treatment by fume purifier
Industrial Water Environment and Water
BOD5, NH3-N, The entire volume of wastewater is direct-
wastewater, Services (Scotland) Act 2003 Table 2 of Discharged up to the standard after
T&D UK TP, TZn, DCr, ed to on-site treatment facilities for Ammonia, hydrogen sulfide and
domestic Water Environment (Controlled Activities) processing prior to discharge. Emission standards for odor pollutants treatment by high-density blue light
(Scotland) Regulations 2005 SS, etc. odor concentration plasma-driven catalytic equipment
sewage (GB 14554 – 93)
High-temperature effluent discharged from Discharged outwards through high
dyeing vats within the plant undergoes heat Non-methane hydrocarbons,
exchange through thermal energy recovery HOUYUAN Integrated emission standard of air pollutants positioned windows, increase the
units and is subsequently cooled by cooling (GB 16297 – 1996) total suspended particulates number of ventilation windows to
towers. It is then directed to the wastewater TEX ensure fresh air in the workshop
equalization basin, where it combines with
low-temperature wastewater from dyeing Emission standard of cooking fume Discharged up to the standard after
vats, floor washdown water from work- Canteen fumes treatment by fume purifier
Industrial (GB 18483 – 2001)
COD, BOD5, shops, backwash wastewater from the
wastewater, National Technical Regulation on Industrial water purification station, and domestic
XINAO VN SS, NH4 XINAO Table 3 of
domestic Wastewater (QCVN40:2011/BINMT) sewage. The mixed wastewater undergoes Discharged up to the standard though
（in N） , primary treatment at the plant’ s dedicated Emission standard of air pollutants for boiler Sulfur dioxide, nitrogen oxides
sewage CASHMERE exhaust funnel
TN, TP, etc. pretreatment facility before being conveyed (GB 13271 – 2014)
to a water reclamation system for further
treatment and reuse. The residual volume National Technical Regulation on Industrial Emission of Methanol, diethylamine, ben- Discharged up to the standard after
of treated water is discharged into the
XINAO VN Inorganic Substances and Dusts (QCVN19:2009/BTNMT) zene, 2-pentanone, neon, filtration through the dust removal
industrial park’ s centralized wastewater
National Technical Regulation on Industrial Emission system or the exhaust hood
treatment system for advanced treatment nitrogen oxides, sulfur diox-
to meet regulatory standards prior to final of Organic Substances (QCVN20: 2009/BTNMT) ide, carbon monoxide
discharge.
XINAO XINAO
ESG Report 2025 ESG Report 2025
Overview of Waste Gas Reduction Initiatives for 2025
Case
Routine Environmental Monitoring Strengthens the Foundation of
Upgrading of Air Conditioning Systems：XINAO TEX has Environmental Compliance
completed the renovation of air conditioning systems in Spin-
ning Workshop No. 7 and the Re-combing Workshop No. 1,
Source Reduction enhancing the efficiency of dust filtration and collection to In response to increasingly stringent environmental regulations and intensified regulatory oversight, envi-
effectively reduce particulate emissions. ronmental compliance has become a crucial safeguard for stable corporate operations. As an industrial
manufacturing company, XINAO TEX collaborates with specialized testing agencies to conduct systematic
Enhancement of Dust and Exhaust Gas Collection
Systems：NEW CHUWA has installed dust collection and environmental monitoring of key factors such as wastewater discharge, exhaust emissions, and equip-
capture devices in high-dust-generation processes such as ment noise across the entire production process, effectively fulfilling its corporate environmental responsi-
fiber opening. Additionally, a high-pressure micro-mist system bilities.
has been implemented in the top-processing workshop to
suppress the dispersion of loose wool fibers and dust. Simulta- In 2025, XINAO TEX completed a total of 36 tests on rainwater retention pond samples and conducted
Promotion of Bio-enzyme Chlorine-Free Shrink-Resis- neously, the sealing performance of exhaust gas collection 73 statistical analyses of the inflow and outflow volumes of natural water and wastewater. The Company
tance Technology：NEW CHUWA has established industrial- hoods has been optimized to minimize fugitive emissions and
ized production capacity for this technology, which can effec-
also performed targeted testing of wastewater, exhaust gas, and noise within the plant premises. Addi-
exhaust gas leakage.
tively prevent the release of harmful gases at the source. tionally, two specialized tests were carried out on drinking water, with a focus on critical safety indicators
Implementation of Automated Dye Delivery Systems： such as microorganisms and heavy metals. By establishing a routine environmental monitoring system
Phasing out Solvent-based Softeners：HOUYUAN TEX has HOUYUAN TEX has expanded the application of automated and implementing traceable management of test results, the Company achieved zero anomalies in all
eliminated the use of certain solvent-based softeners, thereby weighing and sealed delivery systems for dyes and chemicals, annual monitoring outcomes. All production pollutant discharge met compliance standards, and drinking
reducing the sources of VOCs generation. reducing material volatilization and fugitive emissions resulting
water quality achieved a 100% pass rate, successfully attaining the goal of zero environmental safety
from manual operations.
risks.
Process Control
Noise Management
Noise Emission Standards and Treatments
Companies Executive Standards Main Sources Treatments
XINAO Choose low-speed, low-noise
Emission standard for Industrial
TEX, Spinning equipment, equipment, and consider adding
enterprises noise at boundary
XINAO water pumps, fans, etc. acoustic enclosures and vibra-
(GB 12348 – 2008)
CASHMERE tion-proofing for noisy motors.
Insulate the sound by insulation
National Technical Regulation on Vibration Spinning equipment, facilities and the building itself,
XINAO VN
(QCVN 27: 2010/BTNMT) water pumps, fans, etc. and regularly check the vibration
damping effect of the facilities.
XINAO XINAO
ESG Report 2025 ESG Report 2025
Management of Impact, Risk and Opportunity
cle from generation, classification, collection, storage, treatment, to recycling and reuse. Potential risk points—such as misclassification,
During its operational processes, the Company generates two main categories of waste: non-hazardous waste and hazardous waste. mixing of hazardous and non-hazardous waste, non-compliant disposal practices, and delays in regulatory adaptation—are systematically
Non-hazardous waste includes production scraps such as waste yarn and waste fiber, reclaimed yarn and reclaimed fiber, as well as office identified and compiled into a risk register. These risks are subsequently categorized by level based on their probability of occurrence
and domestic waste such as waste packaging drums/boxes, sludge, beverage bottles, food wrappers, napkins, toilet trash, and kitchen and the magnitude of their impact on both the environment and corporate operations. Tiered response measures are implemented
waste. Hazardous waste comprises items such as inner packaging film bags for dyes, waste chemical packaging, waste oil drums, waste according to risk ratings, and control effectiveness is periodically evaluated. Management practices are dynamically adjusted in line with
resin, and spent lubricants. regulatory updates and technological advancements to ensure continuous process improvement and closed-loop control.
The Company strictly adheres to relevant national and local laws, regulations, and normative documents, including the Law of the People's For the treatment of hazardous waste, the Company entrusts all such materials to licensed third-party operators authorized for hazard-
Republic of China on the Prevention and Control of Environmental Pollution by Solid Wastes, the Regulations on the Safety Management of ous waste management. The entire process is tracked to ensure full traceability and closed-loop oversight. As for non-hazardous waste,
Hazardous Chemicals, and the Standard for Pollution Control on Hazardous Waste Storage (GB18597-2023), conducting full-process man- the Company prioritizes comprehensive resource recovery through resale, with disposal serving as a supplementary option, thereby
agement of all waste types in accordance with established procedures. enhancing the overall recycling rate of non-hazardous waste.
In 2025, the Company did not experience any incidents of non-compliant waste disposal, nor did it face any litigation arising from waste
management-related matters. Waste Types & Disposal Measures
Types Contents Disposal Measures
Governance
Inner film bags of dyes, waste chemical packaging,
Entrust qualified units for standardized disposal
The Company has established a three-tier waste governance structure comprising the "Decision-making - Management - Implementation". waste oil drums, etc.
This framework clearly delineates the responsibilities and scope of authority for each tier and department throughout the waste manage- Hazardous waste Waste resin Entrust qualified units for standardized disposal
ment process, thereby achieving stratified coordination and ensuring the effective implementation of accountability in waste governance.
Spent lubricants Entrust qualified units for standardized disposal
Sell to waste recycling entities for comprehen-
Leftovers such as waste yarn and waste fiber,
sive and circular utilization in the development
reclaimed yarn and reclaimed fiber
Decision-Making
Industrial of new products
Non- waste Waste packaging drum, box, etc. Periodically collected by supplier
Responsible for reviewing and approving strategies and manage- hazardous Sludge Hand over to qualified entities for incineration
ment related to waste disposal.
Board's Strategy and waste Beverage bottles, food wrappers, napkins, toilet trash, etc. Entrust the Sanitation Department for disposal
Sustainability (ESG) Domestic
Committee Entrust qualified entities for harmless disposal
waste Kitchen waste
and resource recovery
Management
Responsible for researching and formulating governance frame-
Overview of Waste Reduction Initiatives for 2025
works and annual work plans related to waste disposal, as well as
identifying and controlling risks and opportunities associated with
ESG Management
Committee and waste disposal. Source Reduction
Executive Management Implementation of Half-Portion Meal System：The corporate cafeteria has optimized the variety and quality of its menu offerings through satisfac-
tion surveys, introducing a half-portion meal mechanism to reduce kitchen waste at the source.
Application of Automated Delivery Systems： HOUYUAN TEX has expanded the use of automated weighing and sealed delivery systems for
Implementation
Responsible for formulating waste disposal policies, supervising
dyes and chemicals, minimizing material waste and packaging waste caused by manual operations.
their implementation, and facilitating communication and coordi-
nation with external regulatory bodies, as well as identifying and Process Recycling
General Section of Safety
classifying the waste generated during daily operations to ensure Process recycling can effectively reduce waste generation. Specific actions for the year 2025 are detailed in the “Circular Economy” chapter.
and Environment at the
Headquarters, and proper collection and preliminary treatment.
all subsidiaries
Comprehensive Utilization
Recycling of Production Leftovers：Production leftovers such as waste yarn and waste fiber, reclaimed yarn and reclaimed
fiber are collected and supplied to partner organizations for use in low-percentage carded wool and cashmere products. In
The Company has formulated management systems such as the “Measures for the Management of Three Wastes and Noises” to establish 2025, the Company comprehensively utilized approximately 3,157.65 tons of production leftovers.
rigorous oversight and standardized control over the entire lifecycle of waste—spanning generation, categorization, collection, storage, and
Recovery and Extraction of Lanolin：NEW CHUWA extracts crude lanolin from wool-scouring wastewater, which is then
disposal.
supplied to recycling entities for further refinement into premium products including refined lipid, vitamin D3, and cholesterol.
A total of 1,223.6 tons of lanolin were recovered and processed in 2025.
Strategy Sludge Incineration for Steam Generation：NEW CHUWA collects sludge and transfers it to a local thermal power plant
for incineration, generating steam for operational use. In 2025, incinerated sludge produced approximately 23,000 tons of
steam.
The Company has established a comprehensive lifecycle planning framework for waste disposal, integrating dynamic tracking of waste-re- Recycling of Packaging Materials： Packaging materials such as waste cartons and packaging drums are collected and sent
lated laws and regulations along with recycling and reuse technologies into its long-term development strategy. This approach lays a solid to partner facilities for regeneration. The Company comprehensively utilized 472.45 tons of packaging materials in 2025.
foundation for standardized waste management and recycling upgrading. Guided by a “compliance-led, resource-driven, and employ-
ee-empowered” waste management strategy, the Company prioritizes regulatory adherence as the baseline for proper waste disposal, Extraction of Resources from Food Waste： Food waste is separately collected and transferred to certified processors for
centers on recycling research to enhance circular economy value, and reinforces staff training to strengthen workforce-wide accountability oil extraction and organic fertilizer production. In 2025, XINAO TEX, NEW CHUWA and HOUYUAN TEX were projected to
and capabilities in waste disposal. collectively extract approximately 7.6 tons of oil and produce 19 tons of organic fertilizer from their food waste.
XINAO XINAO
ESG Report 2025 ESG Report 2025
The Company maintains ongoing oversight of its operational impacts on biodiversity, rigorously adhering to regulatory
frameworks such as the Law of the People's Republic of China on Prevention and Control of Soil Contamination, the Strictly adhere to the “Ecological Conservation Red Line” to protect natural elements such as
State Council's Regulation on Groundwater Management, and the Opinions on Further Strengthening Biodiversity Protec- mountains and vegetation, ensuring project design harmonizes with the ecological environment;
tion issued by the General Office of the State Council. It conducts systematic risk identification and potential hazard Planning and Prior to site selection, conduct comprehensive ecological baseline surveys to identify key local
screening for ecological and biodiversity conservation, integrating ecological protection principles throughout the entire Design Phase species and their habitat characteristics, assess potential impacts on biodiversity and natural
project lifecycle—from design and construction to operation and maintenance. Through concrete measures, the Compa- resources, and formulate targeted strategies to safeguard the integrity of endemic species and
ny implements robust environmental protection practices in project locations. their habitats.
Acknowledging that wastewater, exhaust gases, and waste generated during production may contribute to pollution of
local water bodies, soil, and air—thereby disrupting ecological balance and impairing regional biodiversity—the Company
has incorporated ecosystem and biodiversity conservation as a critical priority in its operational development. It strictly
Strictly comply with biodiversity conservation laws and regulations, conducting environmental
complies with national laws and regulations governing production activities, explicitly prohibiting direct discharge of impact assessments in accordance with the "Three Simultaneities" principle;
industrial and domestic wastewater. Through these efforts, the Company actively upholds and protects biodiversity in
areas where it operates. Construction Optimize construction plans to minimize project duration and material consumption, prioritize
biodiversity-friendly materials and equipment, and rigorously control pollutant discharge during
Phase construction;
Implement ecological restoration in affected areas and establish long-term maintenance mecha-
nisms to facilitate ecosystem recovery.
Operation and Conduct regular environmental risk inspections to promptly identify and resolve potential issues;
Maintenance Conduct ecological conservation education activities to foster a positive atmosphere where
Phase employees actively participate in environmental protection.
As of 2025, all of the Company’ s production and operational facilities are situated within established industrial parks, with
land use designated exclusively for industrial purposes and none falling within ecological conservation redline zones.
None of the operational sites are located inside natural reserves or areas characterized by high biodiversity. There has
been no identified instance of the Company’ s operations, products, or services causing significant adverse impacts on
biodiversity.
Animal Welfare Protection
In the realm of animal welfare protection, the Company prioritizes responsible sourcing of core raw materials such as
wool and cashmere. Concurrently, it implements animal welfare requirements throughout the entire production process
and actively participates in various animal protection initiatives, comprehensively eliminating any form of animal cruelty.
During During
Purchase Production
Prioritize animal-friendly raw materials：Give purchasing Stringent control the use of hazardous chemi-
preference to animal fibers obtained through humane farming, cals： Strictly control the addition of chemical
with increased sourcing of wool (tops) certified by the Responsi- reagents during the dyeing and printing process,
ble Wool Standard (RWS), as well as cashmere certified by Good and prohibit the use of dyes and auxiliaries that
Cashmere Standard (GCs) and Sustainable Fibre Alliance (SFA). pose direct harm to animals.
Establish a dedicated supplier evaluation system：Conduct Continuously optimize production processes：
compliance audits for suppliers of animal-derived raw materials Refine core printing and dyeing techniques to
to assess whether their entire process of animal breeding and reduce energy consumption and pollutant
processing adheres to animal welfare standards, ensuring that discharge during manufacturing, thereby minimiz-
the source materials meet the relevant requirements for animal ing adverse impacts on the surrounding wildlife
welfare. habitats.
XINAO XINAO
ESG Report 2025 ESG Report 2025
The Company strictly adheres to applicable environmental laws and regulations in all jurisdictions where it operates, implementing Energy management constitutes one of the cornerstones of green manufacturing and low-carbon development, serving
environmental management activities in a standardized and systematic manner. In accordance with the provisions of the Environ- as a critical lever for the Company to achieve its low-carbon transition. The primary energy sources consumed during
mental Protection Tax Law of the People's Republic of China, the Company fully pays its environmental protection taxes and fees.
corporate production and operational activities encompass electricity, steam, gasoline, diesel, natural gas, and liquefied
In 2025, no environmental emergencies occurred within the Company, nor were there any records of significant administrative
penalties or circumstances involving environmental-related criminal liability. petroleum gas.
Adhering to the environmental management principle of “Energy Saving and High Efficiency, Pollution Prevention and Sus-
tainable Development” , the Company has formulated specialized management documents such as the “Procedures for Identifi-
Major Types of Energy and Their Usage Scenarios
cation and Evaluation of Environmental Factors” , enabling comprehensive coverage of all environmental impact factors. These
management systems are rigorously implemented throughout the entire production and operation process to ensure effective
control of various environmental risks. In 2025, the Company conducted environmental protection training for all employees, with
total annual investment in environmental protection reaching 26.5032 million yuan.
In compliance with the ISO 14001:2015 Environmental Management System, the Company carries out systematic work including Gasoline：running of own automobiles
environmental factor identification, compliance evaluation, internal audits, and management reviews. Furthermore, the Company
Diesel： running of own trucks and forklifts
requires subsidiaries at all levels to be adequately staffed with full-time and part-time environmental management personnel and Direct Energy Natural Gas：boilers, canteen
to establish robust, routine mechanisms for risk hazard investigation and reporting, thereby continuously strengthening the safe-
guards of the environmental management system. By the end of 2025, XINAO TEX, NEW CHUWA, HOUYUAN TEX, and XINAO Liquefied petroleum gas：canteen
CASHMERE had all obtained ISO 14001 Environmental Management System certification.
The Company strictly implements the “Three Simultaneities” system in environmental protection, conducting environmental impact
assessments and acceptance checks for new, modified, and expansion projects to ensure environmental risks are effectively con-
trolled from the design and construction stages. Additionally, through measures such as identification of environmental risk factors,
pollutant control, environmental supervision and auditing, and environmental emergency management, the Company minimizes
environmental risks during production and operation. Municipal grid and photovoltaic power generation：
Indirect Energy for the production facilities
Environmental Compliance Management Measures Steam：for processes of dyeing, washing, drying, etc.
Types Management Measures
Share Performance of Energy Utilization
Identification of •Conduct systematic environmental factor identification on an annual basis, encompassing all stages of
Environmental the production and operational process, while integrating regulatory updates and operational realities
Risk Factors into dynamic screening.
Share of direct energy
consumption（%） 12.16% 12.32% 13.35%
•Conduct in-depth investigations and specialized remediation of various pollution sources to control
contamination risks at their origin.
•Strictly implement the requirements stipulated in the Pollutant Discharge Permit and commission
third-party agencies to perform annual inspections of discharge data from environmental protection
Pollutant Control facilities. Share of indirect energy
•Utilize environmental monitoring platforms to track the operational status of environmental protection consumption（%） 87.84% 87.68% 86.65%
facilities in real time, ensuring stable operation performance and compliant pollutant discharge.
•Regularly upload data, including Pollutant Release and Transfer Register (PRTR) data via the Institute of
Public and Environmental Affairs (IPE), proactively subjecting operations to public oversight.
Share of renewable
•Conduct annual internal audits and external reviews covering all business operations, alongside compre- 4.41% 6.83% 7.95%
Environmental hensive external audits for system certification renewal every three years, ensuring the continuous energy consumption（%）
validity of system certification throughout the operational period.
Supervision
•Carry out regular environmental risk and hazard screening as a routine practice, and promptly imple-
and Audit ment corrective actions for identified environmental concerns to ensure closed-loop management of
potential hazards. Share of non-renewable
energy consumption（%） 95.59% 93.17% 92.05%
•In accordance with relevant regulations, including the Notice on the Issuance of Interim Measures for
the Administration of Contingency Plans for Environmental Emergencies and the National Environmen-
tal Emergency Response Plan issued by the Ministry of Ecology and Environment, an “Environmental
Environmental Emergency Response Plan” has been formulated based on the production processes, pollution-gener-
ating stages, and environmental risks. This plan has been submitted to the local competent authority 2023 2024 2025
Emergency of environmental protection for filing as required.
Management •Implement enterprise accident risk management in accordance with environmental impact assessment Adhering to the energy management concept of “Energy Conservation and Consumption Reduction, Efficient Utilization
and approval requirements. By 2025, the Company conducted 7 environmental emergency drills to and Sustainable Development” , the Company strictly abides by the laws and regulations as well as management provi-
train employees' emergency response capabilities, enhance skills in preventing and handling environ- sions such as Energy Conservation Law of the People's Republic of China, Measures for Industrial Energy Conservation
mental emergencies, and mitigate potential environmental hazards caused by such events.
and Supervision, Power Conservation Management Program, and constantly strengthens the management of energy utili-
zation throughout the entire process.
XINAO XINAO
ESG Report 2025 ESG Report 2025
Governance
Overview of Energy Conservation Initiatives for 2025
The Company has established a three-tier energy utilization governance structure, comprising the "Decision-making -
Management - Implementation". This structure clearly delineates the responsibilities and authorities at each tier to facili-
tate coordinated planning and effective execution of energy utilization management: Optimization of Anti-Shrinkage Treatment Optimization of Functional Mode：XINAO
Process：Through adjustment of process CASHMERE replaced two hot-air dryers with
parameters and improvement of operational Radio Frequency dryers, upgrading the energy
Decision-Making
procedures, NEW CHUWA successfully supply structure from the former hybrid model
reduced steam consumption. Comparative Improve Optimize of “steam + electricity” to an all-electric config-
analysis between pre- and post-improvement Process Energy uration. This adjustment enables a saving of
Responsible for reviewing and approving strategies and manage- periods indicates a reduction of approximately comprehensive energy consumption of about
Board's Strategy and ment decisions concerning energy utilization matters. 0.31 tons of steam consumption per ton of 0.134 tons of standard coal equivalent per ton
wool top output. of dyed product.
Sustainability (ESG)
Committee
Management
Responsible for researching and formulating energy utilization strat-
egies, objectives, and management practices; approving significant
decisions and projects; and identifying and controlling energy-relat-
ESG Management ed risks and opportunities. Upgrading of Air Compression and Refrigeration Drying Equipment：XINAO TEX replaced three Grade 3 energy
Committee and efficiency air compressors with Grade 1 energy efficiency units and newly installed two energy-saving refrigeration dryers for
Executive Management optimal compatibility. Post-renovation, an annual electricity saving of approximately 840 MWh is anticipated.
Retrofit
Energy-saving retrofitting of Carbon Fiber Blades：NEW CHUWA carried out retrofit on two fan blades in the Basolan
Equipment Workshop. Through comparative analysis of production capacity and electricity consumption data, the post-renovation results
Implementation
show a saving of 4.71 kWh per ton of output, with an electricity savings rate of 22.76%, equivalent to annual electricity savings
of about 35.3 MWh.
Responsible for organizing, scheduling, and managing energy utili- Retrofitting of Air Conditioning Supply and Return Air Systems：NEW CHUWA completed the retrofit of front and rear
Equipment Section, zation activities, with regular reporting on implementation progress. process air conditioning in the Top-Making Workshop No. 1 along with fan blade replacement. This is projected to achieve
Production Section at annual electricity savings of approximately 522.7 MWh.
the Headquarters, Upgrading of Air Compression and Transformer Equipment：HOUYUAN TEX updated two air compressors and four
and all subsidiaries transformers. Under continuous annual operation, this upgrade is expected to result in electricity savings of around 407 MWh
per year.
Upgrading of Tubular Lighting Systems：XINAO CASHMERE Spinning Workshop replaced the original 160 LED T8 tubes
The Company has formulated multiple energy management regulations and established an Energy Management System with 168 T8 oval tubes, achieving a single-tube electricity saving rate of roughly 40% and anticipated annual savings of about
in compliance with Energy Management Systems – Requirements with guidance for use (GB/T 23331-2020). The 5.11 MWh.
accountability system for energy management is comprehensively implemented throughout the entire production and Replacement of Dyeing Steam Pipelines：XINAO CASHMERE exchanged the steam pipelines in the dyeing workshop.
operation process, ensuring that responsibilities are clearly assigned and reinforced at every level. Additionally, the Com- According to monitoring and calculations, approximately 78.68 cubic meters of natural gas per ton of dyed product can be
conserved.
pany regularly conducts energy conservation awareness campaigns and training programs for all employees, with spe-
Renovation of Solar Water Heating System：By retrofitting the solar water heating system, XINAO CASHMERE enhanced
cialized training provided for managerial staff, to enhance overall energy-saving consciousness across the organization. hot water utilization efficiency. Compared to the original boiler steam heating method, this system can yield annual natural gas
savings of around 400,000 cubic meters.
Strategy
The Company consistently prioritizes energy utilization management throughout its entire operational lifecycle. It
strategically coordinates the R&D and application of novel energy-saving technologies, alongside the construction of
clean energy facilities such as solar power installations. Specialized energy management plans are formulated, with
regular assessments conducted to evaluate progress in reducing energy consumption, thereby continuously enhanc-
ing the professionalism of energy management. Concurrently, the Company implements a core energy utilization
strategy centered on “Technology Empowerment, Clean Energy Transition, and Brand Enhancement” . This
approach focuses on upgrading energy-saving technologies and equipment as key drivers, optimizing the energy
consumption structure through the strategic deployment of clean energy, and promoting green achievements to
communicate the Company's low-carbon values and elevate its brand image.
Management of Impact, Risk and Opportunity
The Company adopts a closed-loop management system for energy utilization risk management. Through comprehen-
sive collection of internal and external information related to energy utilization, the Company identifies potential impacts,
risks and opportunities related to energy utilization, assesses the possibility of occurrence, degree and scope of impact of
the risks and opportunities, formulates and implements risk response and opportunity utilization strategies, and evaluates
the effectiveness of the implementation, so as to ensure continuous optimization of the Company's management of
energy utilization.
XINAO XINAO
ESG Report 2025 ESG Report 2025
The Company maintains key production facilities across two countries globally and two provinces/autonomous regions in China, imple-
The Company's water usage mainly falls into two categories: production water and domestic water. Domestic water is uniformly menting location-specific water management measures to safeguard water security for its operations and neighboring communities. In
supplied by the municipal water system, while production water is sourced based on the specific conditions of each project loca- compliance with regulatory requirements, the Company employs water metering instruments and conducts periodic water risk assess-
tion, including municipal water supply, surface water, groundwater, rainwater, purchased steam water, and recycled production ments and water balance tests. These procedures enable the analysis of current water utilization, identification and repair of leakage
water. points, and enhancement of water efficiency through equipment upgrades, technological improvements and recycling systems, thereby
As a textile dyeing and printing enterprise, the Company is acutely aware of the high dependence of its production and operation achieving efficient and sustainable utilization of water resources. Concurrently, the Company evaluates the status of water resource
on water resources. Core production processes such as pre-treatment, dyeing, and post-treatment are all closely related to water development and utilization within the watersheds or regions where its production bases are located, assesses the impact of water with-
resource utilization. Therefore, it strictly adheres to laws and regulations such as the Water Law of the People's Republic of China, drawal on local water bodies and surrounding stakeholders, and implements targeted control measures while continuously evaluating
the Environmental Protection Law of the People's Republic of China, the Law of the People's Republic of China on Prevention and their rationality and effectiveness.
Control of Water Pollution, attaches great importance to water resource management, continuously improves the management
system, and deepens management concepts to promote efficient utilization and scientific control of water resources.
Overview of Water Resources Conservation Initiatives for 2025
In 2025, the Company carried out water withdrawal operations in full compliance with regulatory requirements, with no incidents
of non-compliance or violations recorded.
Technical Upgrades for
Recycling and Reuse
Governance Efficiency Enhancement
The Company has established a three-tier governance structure for water resource utilization, comprising the "Decision-making - Man- Optimization of Anti-Shrinkage Treatment Process：Through Initiation of Reclaimed Water Reuse Sys-
agement - Implementation", with clearly delineated core responsibilities and authorities at each tier. This structure enables stratified systematic optimization of process parameters and operational tem：XINAO CASHMERE commenced the
coordination and effective execution of water resource management initiatives: procedures for anti-shrinkage treatment, NEW CHUWA achieved a construction of a reclaimed water reuse
reduction of 1.63 tons in rinsing water consumption per ton of system to enable the recycling of terminal
tops produced, alongside a decrease of 0.31 tons in externally water resources. Upon completion, the system
Decision-Making
sourced steam water intake. is projected to reclaim 243,000 tons of water
Replacement of Dyeing Steam Pipelines：XINAO CHASHMERE annually.
Responsible for reviewing and approving water resources utilization replaced the steam pipelines in its dyeing workshop, thereby mini- Implementation of Rainwater Harvesting
strategies and management matters. mizing steam loss. This modification resulted in approximately 1 ton System：XINAO VN established rainwater
Board's Strategy and
of steam water savings per ton of dyed products. collection, conveyance, and storage facilities
Sustainability (ESG)
Committee Renovation of Solar Water Heating System：XINAO CASH- to form a rainwater reuse system. In 2025, a
MERE retrofitted its solar water heating system to enhance hot total of 36,000 tons of rainwater was collect-
water utilization efficiency. Compared to steam heating, the entire ed and utilized for dyeing production.
system saves approximately 1.67 tons of steam water per ton of
Management
Lead the formulation of strategic objectives and overarching poli-
dyed products.
cies for water resources management, approve major water
resources management decisions and projects, and coordinate the Upgrading of Drying Equipment：XINAO CASHMERE phased
ESG Management identification, assessment, and control of water-related risks and out two hot-air dryers, leading to savings of about 1.7 tons of
Committee and steam water per ton of dyed products.
opportunities.
Executive Management
Implementation
Responsible for organizing, coordinating, managing, and imple-
menting water resources utilization initiatives, with regular reporting
General Section of
on execution progress.
Safety and Environment
at the Headquarters,
and all subsidiaries
The Company actively fosters a water conservation culture by displaying water-saving awareness signage in office areas and organizing
employee participation in water conservation awareness training and educational activities. These efforts enhance staff awareness of
water conservation and promote the rational utilization of water resources.
Strategy
Guided by the overarching objective of sustainable water resource utilization, the Company has integrated the investigation and assess-
ment of water resources at project sites, the formulation of scientifically-informed water usage plans, and the deployment of water recy-
cling and conservation technologies into its holistic development strategy. This approach systematically incorporates the water needs of
neighboring communities, thereby harmonizing corporate water consumption with regional water resource protection and aligning
diverse stakeholder interests. Furthermore, the Company implements a comprehensive water resource utilization strategy characterized
by “Scientific Assessment, Technology Enablement, Ecological Stewardship, and Multi-stakeholder Collaboration” . Informed
decision-making is underpinned by precise water resource research and assessment, while the upgrading of water recycling and conser-
vation technologies serves as the core driver for utilization efficiency. Community engagement and coordination act as pivotal conduits
for balancing the water-related interests of all parties involved.
XINAO XINAO
ESG Report 2025 ESG Report 2025
The Company strictly complies with the provisions of the Circular Economy Promotion Law of the People's Republic of China, integrating
the concept of circular utilization comprehensively into its entire production and operational processes. The range of resources currently
being recycled includes both production materials generated during manufacturing, such as reclaimed yarn and fiber, and recovered
Advancement of Water Recycling in Production：
process water, and condensate, as well as various packaging materials such as cartons, plastic tubes, and woven bags. Through the
implementation of measures such as water recycling, packaging reduction, and the recovery and reuse of waste materials, the Company All production units have sustained efforts to reuse
process water, cooling water, and recover condensate.
actively embodies the principles of the circular economy, thereby supporting the industry’ s transition towards green and low-carbon Reuse
development. The total volume of reused water reached 1,097,758.2
tons in 2025.
Overview of Circular Economy Initiatives for 2025
Enhancement of Packaging Material Circulation：
XINAO TEX strengthened the internal circulation and
Continuous Promotion of Paperless Operations： reuse of packaging materials among subsidiaries. In
The Company has enhanced digital workflow efficiency through the implementation of Feishu soft- 2025, 18,905 cartons (approx. 34 tons), 328,000 paper
ware and optimization of the OA system, significantly reducing paper consumption. tubes (approx. 15.42 tons), and 29.46 tons of woven
bags were recycled. HOUYUAN TEX concurrently imple-
Reduce mented internal recycling initiatives, reusing 13.45 tons
of recycled packaging bags and 4.68 tons of cartons in
Development of Recycled Product Lines：
In collaboration with partners, the Company launched product lines incorporating recycled materi-
Recycle als. The usage of recycled polyester and nylon tops reached approximately 97.87 tons in 2025,
accounting for 6.35% of annual chemical fiber consumption.
Optimization of Cone Yarn Packaging Standards：
By refining packaging specifications for cone yarn, XINAO TEX adjusted the unit weight from 1 kg
per cone to 1.1 kg per cone, effectively reducing packaging material consumption per ton of prod-
uct. In 2025, this initiative saved approximately 33,000 paper tubes (approx. 1.55 tons) and 1,300
cartons (approx. 2.34 tons).
Reprocessing of Production Waste：
XINAO CASHMERE developed specialized recycled concept products based on the recyclability of
waste materials such as yarn waste and fiber residues. Approximately 34 tons of waste materials
were repurposed in 2025.
Waste Heat Recovery for Domestic Water Heating：
XINAO TEX utilizes waste heat recovered from air compressors to heat domestic water. Following
Improvement of Anti-Shrinkage Treatment Process： the upgrade of air compression systems in 2025, approximately 190 tons of water per day (at
NEW CHUWA optimized the anti-shrinkage treatment methodology, resulting in a reduction of 50°C) are heated using recycled thermal energy.
approximately 34.8 kg of softeners and auxiliaries per ton of wool top output.
XINAO XINAO
ESG Report 2025 ESG Report 2025
Sustainable Value Sharing
Priority actions on social dimensions
· Rural Revitalization
· Social Contribution
· Innovation-Driven
· Ethics of Science and Technology
· Supply Chain Security
· Equal Treatment of SMEs
· Safety and Quality of Products and Services
· Data Security & Customer Privacy
· Employees
The SDGs to which this chapter is dedicated
Key Initiatives for Social Contribution in 2025
In alignment with the common prosperity strategy and the policy direction of rural revitalization, the Company strictly adheres to rele- A donation of 100,000 yuan was made to the Shanghai Donghua University Education Development
vant laws, regulations, and policy requirements, including the Law of the People's Republic of China on Promotion of Rural Revitalization, Foundation for student scholarships and teaching grants.
and the Measures for Implementation of the Accountability System for Rural Revitalization.. Leveraging its own resources, the Company
A charitable donation of 180,000 yuan was made to the Ningxia Youth Development Foundation, the
has initiated explorations into rural revitalization efforts. A dedicated Rural Revitalization Task Force has been established to carry out
sustainable and feasible support initiatives across areas such as consumption assistance, public welfare aid, employment support, and Ningxia Charity Promotion Association, and Lingwu Charity Association.
ecological improvement, thereby contributing to the development of assisted regions. Public Yarns valued at approximately 87,800 yuan were sponsored to industry partners and academic institutions
Welfare for research and design purposes.
XINAO CASHMERE conducted a caring outreach initiative, providing grain and oil supplies worth around
Donations
XINAO EU donated 700 euros to support cancer research.
T&D UK contributed 1,350 pounds to external charitable causes.
Joining the Ten-Year Plan of “Tree Planting and Heart-Nurturing”
initiated by the China Green Foundation, the Company collaborated
with base partners to undertake a systematic afforestation project
within the Tengger Desert Edge-locking Ecological Zone in Alxa,
Inner Mongolia. Through the annual planting of desert shrub forests
over a decade, it will complete the construction of the “XINAO
Desert Forest” ecological barrier.
Ecological Actively participated in the establishment of the “China Textile and
Apparel Edge-Locking Eco-Forest” , translating ecological sustain-
Restoration ability principles into concrete actions. In 2025, 50 employee volun-
teers engaged in tree-planting initiatives and completed a 28-kilo-
meter desert trek, demonstrating their commitment to green devel-
opment through practical endeavors and contributing to the
harmonious coexistence between humanity and nature.
The Company organized staff to participate in public welfare moun-
tain-cleaning volunteer services, clearing forest litter and maintain-
ing the ecological environment through practical actions to practice
Mountain the concept of green environmental protection. Through regular
Cleanup ecological conservation activities, the initiative reinforces employ-
ees’ environmental awareness and social responsibility, thereby
and Green supporting the construction of ecological civilization. In 2025, a total
Conservation of 67 employees participated in the activities and successfully com-
pleted a 25-kilometer mountain trial cleanup.
Under the guidance of Party building, a volunteer team led by Party members has been established to
deepen the integration of Party leadership with mass organizations, consistently enhancing the cohesion,
combat effectiveness, and leadership of the Party organization. By the end of 2025, 6 Party branches had
been set up, with a total of 177 Party members, 2 probationary members, and 6 activists seeking Party
membership. Leveraging this solid foundation in Party building, the Company encourages employees to
prehensive support—including funding, resources, and platforms—for volunteer activities, thereby facilitat-
Collaborative ing their efficient service delivery.
The Company strictly adheres to relevant laws, regulations, and policy documents, including the Law of the People's Republic of China Volunteer Party Branches Party Members Probationary Party Members Activists of Party Application
on Donation for Public Welfare, the Charity Law of the People's Republic of China, to conduct charitable activities and volunteer services
Empowerment
in a regulated manner. It has formulated the “Management System for External Donation” to further clarify the decision-making proce-
dures, implementation standards, and oversight mechanisms for external donations, thereby ensuring compliance, transparency, and 6 177 2 6
effectiveness in all donation activities. Furthermore, upholding the social responsibility philosophy of “Common Prosperity and Benevo-
In 2025, the XINAO “Party-Mass Home” officially commenced operations. Featuring the themes of “Forging
lent Wealth Management” , the Company actively explores pathways for in-depth integration of public welfare initiatives with its core
Unity Through Shared Purpose” and the “Five-Heart Project” , it carried out external publicity and
business operations. This has led to the development of a distinctive public welfare model characterized by "engaging employees in
Party-mass activities. Through these initiatives, a cohort of volunteers has been cultivated to serve both
charitable endeavors and aligning philanthropy with business activities."
the community and employees, accumulating over 160 hours of service.
XINAO XINAO
ESG Report 2025 ESG Report 2025
As a leading enterprise in the wool textile industry and a national high-tech enterprise, the Company strictly adheres to relevant laws, Looking ahead, the Company will continue to steer product development toward greening, differentiation, and multi-scenario applicability:
regulations, and policy documents such as the Law of the People's Republic of China on Scientific and Technological Progress and the
Outline of the National Strategy for Innovation-Driven Development. This ensures the compliant execution and high-standard implemen-
tation of the Company's technological R&D and product innovation initiatives. Establish a technology platform centered on ‘wool/cashmere + novel
functional fibers’ , focusing on cutting-edge green materials such as
Governance recycled nylon and zero-carbon Lyocell, while integrating green technol-
ogies to forge sustainable core competitiveness.
The Company has established an innovation-driven governance structure comprising the "Decision-making - Management - Implemen-
tation" to ensure the systematic advancement and standardized implementation of innovation-driven initiatives:
Low-Carbon
The Board's Strategy and Sustainability (ESG) Committee is responsible for reviewing Fashion •
Decision- and approving strategies and management matters related to innovation-driven initiatives; Greening
making
The ESG Management Committee and Executive Management are responsible for
researching and formulating innovation-driven strategies, objectives, and management
Management practices, as well as identifying and controlling associated risks and opportunities;
Transcend category boundar-
ies, expand product portfolio
through internal and external
The Technology Section, Product Development Section, Information Section at Premium synergies to include premium
the Headquarters, along with all subsidiaries, are responsible for organizing, arranging, Market • cashmere and fancy yarns,
and managing innovation-driven activities, and regularly reporting on their implementation thereby establishing a high-val-
Implementation progress.
Differentiation
ue-added technical brand.
At the institutional level, the Company has developed regulatory documents such as the “Procedures for Product Design and Develop-
ment Control”, “Management System for Technological Innovation”, and “Management Regulations for Information System”, continuously
advancing scientific research and digital-intelligent innovation.
Align with the consumption
Strategy trends for wool and cashmere
materials, strategically expand
yarn applications beyond tradi-
Guided by national strategy, the Company adheres to innovation-driven development, anchoring its direction within the wool textile
tional apparel into outdoor
industry. It proactively advances foundational research and cutting-edge technology exploration, concentrating on three core domains:
sports, home textiles, and
functional yarns, eco-friendly processes, and circular materials. This systematic approach builds a robust technological reserve, laying a
solid foundation for the enterprise's sustained innovation and growth. The Company deepens its dual-drive strategy of “industry-universi- Broadband industrial yarns. Simultaneously,
leverage AI and trend simula-
ty-research collaboration” and “market demand orientation” . On one hand, it establishes long-term, stable industry-university-research Strategy •
cooperation mechanisms to facilitate the transition of innovations from laboratory to industrialization. On the other, it anchors innovation tion databases to precisely
to market needs, precisely aligning with consumption upgrade trends and exploring multi-scenario application potential to achieve Multi-scenario match end-user demands,
efficient synergy between R&D and market demands. thereby cultivating a diversified
Furthermore, the Company will establish a routine mechanism for tracking industry technology developments, promptly identifying growth trajectory.
cutting-edge trends and incorporating them into its technology reserve system. Through multi-dimensional market research—including
consumer insights, competitor product analysis, and application scenario assessment—it will refine R&D directions. Management
processes for the technology repository will be optimized to enable categorized storage, dynamic updates, and efficient deployment of
technological achievements.
XINAO XINAO
ESG Report 2025 ESG Report 2025
Management of Impact, Risk and Opportunity Innovation Network Construction
The Company has established an innovation network centered on a multi-tiered R&D platform, combining “internal consolidation with
Internal Core Support
external collaboration” . Focusing on tackling technical challenges within the wool textile industry, it has overcome numerous bottlenecks
The Company fosters a culture of research and innovation, maintaining a commitment to high-level R&D investment as
in blended fiber processing technologies. Through strategic intellectual property deployment, it accelerates the commercialization of
the primary driver for technological breakthroughs. It continues to enhance the construction of scientific research plat-
innovations, achieving deep integration between technological innovation and industrial upgrading, thereby cementing its leading posi-
tion within the sector. forms, thereby comprehensively strengthening independent R&D capabilities. In 2025, the Company's R&D expenditure
reached 114.6381 million yuan, accounting for 2.27% of its operating revenue, thereby providing substantial financial
support for technological innovation and process upgrades. By the end of 2025, the Company employed 444 R&D
Innovation Platform Development personnel, constituting 9.97% of the total workforce. The R&D team included 5 professionals with mid-to-senior titles,
among the industry leaders in terms of overall scale and professional expertise.
Leveraging an experienced core R&D team and a deep international cooperation
network, the Company has established innovation R&D centers in locations such as
Global Deployment· Jiaxing (Zhejiang Province), Yinchuan (Ningxia Province), Italy, and Scotland.
Development of By integrating regional technological and resource advantages according to local con- External Resource Collaboration
High-Standard R&D ditions, a standardized, efficient, and sustainable R&D management system has been
System constructed, laying a solid foundation for cross-regional technological collaboration The Company deepens its integrated industry-university-research-application strategy, establishing extensive cooperative
and the practical application of innovation outcomes. relationships with enterprises in downstream sectors such as worsted fabrics, home textile fabrics, warp-knitted fabrics,
and apparel yarns to precisely align with market application needs. Concurrently, it engages in joint development projects
with premium international fiber suppliers, promptly introducing and assimilating novel materials from Europe, America,
Japan, and other regions. Through innovative integration of these materials with wool, the Company has developed a
range of yarn products with distinctive functionalities, thereby effectively enhancing product added value and market
competitiveness.
Actively integrating premium internal and external innovation resources, the Company Multi-level
has successfully developed a multi-tier R&D innovation platform system. It has estab- Empowerment?
lished five core innovation entities: the National Development Base of Woolen Creation of Innovation
Yarns Product, Enterprise Technology Center of Zhejiang Province, Enterprise
Platforms and High-Tech
Research Institute of Zhejiang Province, Enterprise Technology Center of the
Enterprise Matrix
Ningxia Hui Autonomous Region, Ningxia Research Center of Cashmere Engi-
neering Technology. These platforms provide end-to-end support for technology
R&D, product innovation, and process upgrading. By the end of 2025, XINAO TEX,
HOUYUAN TEX, and XINAO CASHMERE had all obtained recognition as National
High-Tech Enterprises, forming a synergistic high-tech enterprise matrix.
Centered on end-to-end digital and intelligent transformation, the Company has com-
Digital-Intelligent pleted the transition of its core business systems from a standalone ERP to an inte-
Upgrade? grated "ERP+MES+WMS" framework. The initiative incorporates specialized applica-
Strengthening tions such as automated warehouses, intelligent spinning machinery, AGV dispatching,
End-to-End Operational and pilot energy consumption management solutions. It also accelerates the R&D and
Efficiency deployment of 5G and AI technologies to enable seamless end-to-end data flow. The
establishment of digital platforms including 0A, CRM, BI, and ESB supports group-level
management control and cross-domain process coordination, streamlines the entire
sales chain, implements centralized customer management, and unifies archives and
credit administration. Future efforts will focus on integrating wool and cashmere cus-
tomer management via an MDM system. Furthermore, emphasis on R&D and produc-
tion has led to the introduction of a specialized intelligent equipment management
system. Building upon existing MES functionalities, this system enables comprehensive
digital management covering equipment ledgers, maintenance schedules, fault logs,
and spare parts inventory, thereby enhancing equipment management efficiency and
operational precision.
XINAO XINAO
ESG Report 2025 ESG Report 2025
Innovation Outcomes Transformation
Case
Process Breakthroughs · R&D of Domestic Wool-Cotton Blended Worsted Yarn and
Overcoming Blending Breakthrough in Localized Raw Material Substitution
Bottlenecks
The Company focuses on addressing key technical challenges in
Confronted with industry challenges including China's high reliance on imported wool, low utilization of domestic
the wool spinning industry, successfully resolving difficulties in the
worsted blending process of wool/long-staple cotton and breaking fine-count wool, and quality shortcomings in domestic wool-cotton yarns—such as insufficient strength, excessive hairi-
through technical barriers in high-proportion superfine denier ness, and poor color fastness—which hinder their suitability for lightweight, multifunctional fabric requirements, XINAO
Lyocell-wool blended spinning. The innovative LINCSPUN technol- TEX initiated a specialized R&D project for domestic wool-cotton blended worsted yarn.
ogy is introduced, which employs a composite modification design
combining wool and filament to effectively overcome industry-wide The project targeted core technical bottlenecks in blending domestic wool with cotton, specifically addressing quality
issues such as insufficient strength and pilling propensity in conven- challenges such as yarn evenness and strength stability. Ultimately, the finished yarn met all specifications for police
tional wool yarns. Furthermore, the Company actively expands the uniforms, achieving quality comparable to imported materials of the same grade and successfully substituting imported
application boundaries of natural fibers by developing worsted
wool with domestic alternatives. Approved for China's new standardized uniforms in 2025, this product has effectively
composite products blending wool with cotton, linen, and spun silk.
Through iterative process optimization, key technical hurdles in strengthened the self-reliance and global competitiveness of the domestic textile raw material supply chain.
dyeing, top-making, and spinning of multi-fiber blends are success-
fully overcome.
New Product Incubation ·
Expanding Diversified
Portfolio
Leveraging its core technology platform, the Company incubates
innovative products including high-end cashmere yarns, outdoor
functional yarns, and fancy yarns, driving product diversification and
value-added upgrades. Concurrently, the Company provides
customized yarn solutions tailored to specific client requirements
and diverse application scenarios. In 2025, the Company success-
fully launched 15 core worsted fancy yarn products, which have
received positive market feedback.
Patent Portfolio ·
Strengthening Technical
Barriers
Throughout 2025, the Company intensified its intellectual property
planning and management, filing 6 invention patent applications .
The cumulative number of valid patents has reached 104, among
which 25 invention patents have been deeply integrated into core
business operations, providing essential technical support for prod-
uct upgrades and process optimization. As of the end of 2025, the
Company has been recognized with 7 provincial-level high-tech
product awards, undertaken 85 provincial new product trial
projects, and completed 47 provincial scientific and technological
achievement appraisals, demonstrating remarkable efficacy in the
industrialization of innovation outcomes.
XINAO XINAO
ESG Report 2025 ESG Report 2025
The Company’ s core operations do not involve scientific research or technological development activities in ethically sensitive fields such
as life sciences or artificial intelligence. In strict compliance with relevant regulations, including the Opinions on Strengthening the Gover- Management Process Description
nance of Science and Technology Ethics and theMeasures for Scientific and Technological Ethics Review (for Trial Implementation), the
Company integrates ethical principles into key phases of its operations—such as R&D project initiation, process optimization, and com- •Request for new supplier addition when existing qualified suppliers are unable to meet require-
Application ments pertaining to cost, delivery or quality.
mercialization of results—tailored to the specific characteristics of technological R&D and product innovation in the wool textile industry.
This approach mitigates potential social and environmental risks and upholds a responsible innovation ecosystem within the sector.
•Suppliers are required to have a certain production scale, as well as competitiveness in terms of
capacity, quality, price, transportation, service and brand. Provide relevant certificates such as
their product quality certificates, quality and environmental system certificates, as well as
Supplier Admission Management
survey of environmental protection commitment letters.
potential suppliers
The Company implements a four-tier classification system for procured materials based on their impact on finished product quality.
•Fill out the “Supplier Information Registration Form”.
These categories are defined as Class I (raw materials), Class II (outsourced processing), Class III (accessories), and Class IV (others),
enabling refined and precise control over procurement materials.
The Company has established a comprehensive supply chain governance structure, with the Purchasing and Outsourcing Section over- Approval of
sample from •Upon successful qualification of samples provided by a potential supplier, they will be included
seeing core functions including procurement planning, supplier evaluation, and end-to-end process management. Institutional docu- as a newly added supplier.
suppliers
ments such as the “Supplier Management Procedures” and “Procedures for the Control of Purchasing and Outsourcing Process” have
been formulated, which clarify standards for supplier classification, admittance, assessment, and day-to-day management. Through
these measures, differentiated tiered control is applied to various supplier categories, ensuring the standardized and regulated advance- •Verify the qualification of suppliers, review the implementation and operation of their quality
ment of supply chain management. management (raw materials, process, outgoing quality control, etc.) and environmental system.
On-site
assessment •Fill in the “Supplier On-site Survey Form” and “Supplier Social Responsibility Assessment Form”,
and those not reaching 80 scores won’t be included in the qualified suppliers until their rectifica-
tions are completed.
Inclusion of •Sign documents such as the “Supplier Commitment on Social Responsibility” and the “Supplier
new qualified Commitment on Anti-Bribery/Anti-Corruption” with new suppliers to mitigate potential social
suppliers responsibility risks.
Daily Management of Qualified Suppliers
•Compile monthly statistics for Class I and Class II suppliers on their quality indicators, cost indica-
tors related to delivery times, and environmental information. Class I suppliers are assessed on a
semi-annual cycle, while Class II suppliers are evaluated on an annual cycle.
Assessment
management •Include supply quality, contract fulfillment, service provision and support capability, price
competitiveness, self-improvement ability, quality system, environmental protection, safety, etc.,
in supplier evaluation, evaluate suppliers regularly and fill in “Supplier Assessment Form” to
reduce supply chain risks.
•If a Class I supplier is rated C in the assessment cycle, relevant departments shall organize on-site
review, propose rectification items, and track the rectification results.
Review
• If a Class I supplier is rated A in the assessment cycle, it will be rewarded with an increase in the
procurement ratio and a reduction in the payment cycle.
•Any supplier whose materials or services have major quality accidents or whose supplies have
been continuously unqualified shall be disqualified.
Supplier Exit
Management •A supplier who has not provided goods for a consecutive one-year period shall have their
qualified status revoked. Should a need for resupply arise, the supplier shall be treated as a new
supplier and undergo a reassessment process.
XINAO XINAO
ESG Report 2025 ESG Report 2025
Sustainable Supply Chain Development Supplier Empowerment
Deep Technical Empowerment to Strengthen Supply Capabilities
With supply chain collaboration and procurement optimi- The Company deeply embeds the concept of sustainable
zation as the core focus, the Company aims to establish procurement throughout the entire procurement lifecycle,
an agile supply chain network and deepen the implemen- promoting the adoption of green development practices Guided by the principle of growing alongside key suppliers, the Company focuses on in-depth engagement to
tation of the Group’ s integrated procurement strategy. across the upstream and downstream segments of the continuously enhance the overall quality and operational efficiency of the supply chain. Technical and quality
Concurrently, the safety stock management system is supply chain. Simultaneously, it closely links sustainable management professionals are deployed on-site at supplier facilities to provide tailored guidance, helping sup-
optimized through collaborative engagement with supply supply chain management with core business functions pliers strengthen production management, quality control, and stable supply capabilities. Leveraging long-term
chain stakeholders to define safety stock standards for such as R&D, production, and sales. Through supply chain and stable partnerships, the Company and its suppliers have established an experience-sharing mechanism to
material categories. This strengthens control over the optimization, the Company achieves cost reduction, quali-
collaboratively study industry best practices, optimize production processes, and ensure the quality consisten-
continuity and stability of material supply, mitigates poten- ty enhancement, and improved outsourcing efficiency,
cy of raw materials and supplies from the source.
tial risks such as supply disruptions, and continuously while fulfilling environmental protection and social respon-
improve the overall risk sibility objectives to bolster
resilience of the supply long-term competitiveness.
chain. In 2025, the Company Additionally, the Company is
conducted comprehensive
Building an Integrating establishing a fair, transpar-
procurement tenders for Agile Supply Sustainable ent, and accountable supply Collaborative Engagement for Industry Advancement
dyes and bulk chemicals to Chain Procurement chain system, incorporating
sustainability criteria into new
ensure timely and accurate
Network Principles supplier admission reviews, The Company organizes seminars and technical exchange sessions to share cutting-edge industry
delivery of materials, laying a
and implementing environ- practices and technological achievements, promoting synergistic development and mutual growth
solid foundation for orderly
production and operations. mental and social risk man- across the supply chain. In 2025, the Company engaged in deep dialogue with key partners such
agement to ensure sustain- as The Woolmark Company and Australian woolgrowers to explore pathways for industrial innova-
Sustainable able compliance of products tion and sustainable development. Through the empowerment of new quality productive forces,
Supply Chain and services from the outset. the Company aims to enhance the natural qualities of wool and contribute to reshaping the
global high-end wool market landscape.
Development
Key raw materials, including A preferential selection
raw wool, wool top, loose mechanism for green suppli-
cashmere, and cashmere Deepening Prioritizing ers has been established,
Strengthen Compliance Management to Solidify Collaboration Foundations
top, are 100% biodegradable emphasizing partners with
and renewable natural active
Collaboration Green and outstanding performance in
fibers. The Company also on Sustainable Low-Carbon environmental protection,
The Company has drafted and implemented the “Supplier Audit Management Measures” , conducting audits
engages in sustainable Raw Materials Suppliers energy conservation, and
and providing audit support for core suppliers and subcontractors. By sharing compliance management expe-
project collaborations with carbon reduction. This initia-
suppliers. In 2025, the tive continuously drives the
rience and remediation strategies for common issues, the Company drives the establishment of a robust com-
proportion of traceable greening upgrade of raw pliance system within the supply chain, ensuring healthy and sustainable cooperative relationships.
materials certified under RWS, NATIVA, GRS, GOTS, and and packaging materials. In procurement processes relat-
GCS accounted for 24.22% of total raw material ed to project construction, IT equipment, office furniture,
consumption at XINAO TEX, 15.68% at XINAO CASH- and computers, suppliers are required to comply with
MERE, and 52.96% at T&D UK. These efforts reinforce national and industry standards as well as green procure-
the foundation of a green supply chain through the certifi- ment specifications. Priority is given to energy-efficient
cation and application of sustainable source materials. and environmentally friendly products, reinforcing the
Company’ s commitment to ecological protection and
efficient resource utilization throughout the entire process.
The Company strictly complies with relevant laws and regulations, including the Law of the People’s Republic of China on the Promotion
of Small and Medium-sized Enterprises and theRegulation on Ensuring Payments to Small and Medium-sized Enterprises. It implements
refined management of financial ledgers, establishes and monitors each payment milestone to ensure the transparency and timeliness
of capital flow, thereby effectively preventing payment delays and fully safeguarding the legitimate rights and interests of small and
medium-sized enterprises, as well as maintaining a favorable business environment.
In 2025, the Company's accounts payable (including notes payable) balance remained below RMB 30 billion, accounting for no more
than 50% of total assets. There were no instances requiring public disclosure of overdue payments to small and medium-sized enter-
prises via the National Enterprise Credit Information Publicity System.
In terms of tax transparency, the Company rigorously adheres to national tax laws and regulations, completing the declaration and pay-
ment of various taxes, such as value-added tax and corporate income tax, on schedule. It also implements relevant tax policy require-
ments to effectively mitigate tax-related risks. The Company diligently fulfills its statutory obligations for tax information disclosure and
ensures the transparency, accuracy, and standardization of tax filing through the establishment of a standardized tax management
system. During the expansion of overseas operations, the Company strictly complies with the tax and regulations where it operates,
upholds the principle of tax fairness, and continuously enhances the tax compliance management for its international business.
XINAO XINAO
ESG Report 2025 ESG Report 2025
In the realm of product quality and safety, the Company has proactively implemented a series of targeted initiatives, centered on Total
The Company strictly abides by the laws and regulations such as the Product Quality Law of the People's Republic of China, the Law of Quality Management and guided by customer service management, with the responsible use of chemicals serving as a critical safe-
the People's Republic of China on the Protection of Consumer Rights and Interests, and establishes a life-cycle quality management guard. These measures are specifically designed to address various potential risks, such as oversights in key quality inspections, improp-
system covering product R&D, design, procurement, production, market services. Through end-to-end process control and continuous er handling of non-conforming products, insufficient reliability of test results, and inadequate implementation of quality management
optimization and improvement, the Company has achieved a lean upgrade of product quality. protocols.
In 2025, the Company did not experience any major liability incidents involving penalties imposed by regulatory authorities due to viola-
tions of laws and regulations concerning safety or quality of product and service, nor were there any instances requiring product recalls.
Total Quality Management
The Company has established and rigorously implements standardized quality control procedures, embedding continuous improvement
initiatives throughout the entire operational workflow to effectively meet customer quality expectations and strictly adhere to internation-
Governance al quality management standards. In parallel, the Company advances its quality management system certification efforts, with entities
including XINAO TEX, NEW CHUWA, HOUYUAN TEX, and XINAO CASHMERE having obtained ISO 9001 Quality Management System
The Company has established a three-tier governance structure for safety and quality of products and services, comprising the "Deci- certification by the end of 2025.
sion-making - Management - Implementation". This structure clarifies the scope of authority and responsibility at each tier, thereby A comprehensive quality management framework has been implemented, covering critical stages from product development to
achieving stratified control and coordinated advancement of quality-related initiatives: post-sales support, thereby ensuring consistently high standards in both products and services.
Quality Management Procedure
The Board's Strategy and Sustainability (ESG) Committee is responsible for reviewing and approv-
Decision- ing strategies and management practices related to safety and quality of products and services;
making
•Ensure that products meet product safety standards during the development phase.
Product •Set product safety targets at the development phase to improve product safety-related requirements.
Development
The ESG Management Committee and Executive Management are responsible for researching
and formulating strategies, objectives and management practices related to safety and quality of prod-
ucts and services, as well as identifying and controlling associated risks and opportunities; •Conduct tests according to various standards during the R&D process to ensure that the product meets
Management the certification standards.
Product
•Review at each stage of R&D to ensure the success and efficiency of product design and development.
R&D
The QC Section, Marketing Section, International Trade Section, Domestic Sales Section, Cen-
tral Laboratory at the Headquarters, along with all subsidiaries are responsible for organizing,
arranging, and managing activities related to safety and quality of products and services, and regularly
reporting on their implementation progress; The QC Section is responsible for controlling product quali- •Carry out supplier introduction and quality management by categorizing and rating.
ty; the Marketing Section, International Trade Section, and Domestic Sales Section are responsible for Material •Inspect incoming materials for different suppliers.
Implementation product sales, after-sales service, customer communication, and satisfaction management; and the Cen-
Procurement
tral Laboratory conducts performance testing from raw materials to finished products, including incom-
ing testing of raw materials (such as woolen tops, synthetic fibers, and filaments, etc.), spinning testing,
and back-end testing.
•Control comprehensively of the elements in the manufacturing process, such as operators, machinery and
equipment, materials, methods, and environment, etc.
Strategy Manu- •Conduct routing and sampling inspection, incoming and outgoing inspection to the qualified materials,
The Company has established a dynamic tracking mechanism for quality-related laws and regulations to monitor updates, amendments, facturing continuously improve the quality problems in the production process.
and revisions in real time. By integrating safety and quality assurance for products and services into its long-term development strategy,
the Company has defined the core direction for quality advancement, thereby laying a solid foundation for top-level design in safety and
quality governance. Guided by the “Quality Leadership” strategy, the Company regards safety and quality of Products and Services as
a core competitive advantage, embedding stringent safety and quality control requirements throughout the entire operational process—
from production and operations to customer service and management. This approach facilitates the establishment of a comprehensive, •Set access to professional after-sales customer service and quality complaint to provide customers with
end-to-end safety and quality management system. Moreover, the Company prioritizes the continuous improvement of product quality professional and timely technical service support.
and service standards through refined process control and multi-dimensional capability enhancements. These efforts contribute to build- Market
ing a premium brand image and reinforce its commitment to a quality-driven development path in both domestic and international mar- Service •Quality-related departments analyze quality problems and follow up until they are solved.
kets. As a result, the Company consistently earns long-term customer trust and achieves sustained growth in market share with
enhanced quality and expanded reach.
XINAO XINAO
ESG Report 2025 ESG Report 2025
Enhancing Quality Management through Multi-Pronged Measures
Technical Breakthroughs to Strengthen Case
Systematic Foundation? Quality Control of Woolen Yarn
Implementing Closed-Loop Management
The CV value for yarn evenness and the -30% Thin Place index are key parameters for measuring the core quality and
of Nonconformity Across the Entire Process performance of woolen yarn. They directly impact customer experience and satisfaction, and are central to product
and service quality control. With the improvement of product quality as its core objective, XINAO CASHMERE estab-
The Company standardizes procedures for managing nonconformity from both business process and field process lished a dedicated technical task force focused on two main directions: “precise control of quality indicators” and “opti-
perspectives, establishing a closed-loop management system that covers identification, marking, segregation, evalua- mization of production processes.” After two years of continuous effort, through technological R&D, precise equipment
tion, disposal, and improvement. Clear accountability is assigned to respective departments at each stage, thereby calibration, and iterative optimization of production processes—with a particular focus on ring spinning and mule spin-
strengthening quality control throughout the entire process. Furthermore, the Company, in strict accordance with the ning production stages—the company achieved precise control and steady improvement of quality indicators, thereby
relevant laws and regulations of its own country or exporting countries, formulates specialized policies such as “Proce- fortifying the product quality control system from the source of production.
dures for the Control of Marking, Traceability and Recall” and carries out product recall drills on a regular basis to rein- By 2025, this initiative yielded marked improvements in product quality, significantly boosting core product attributes
force product quality compliance. In 2025, the Company recorded zero product recall incidents due to potential safety and market competitiveness. Moreover, it enabled end-to-end quality control empowerment through technological
risks or quality issues. innovation.
Data-Driven Approach?
Building a Closed-Loop Data System
for Raw Materials and Production Customer Service Management
Establishing enduring and stable trust-based relationships with clients constitutes a fundamental pillar for the Company's sustainable
development. Adhering to a “customer demand-centered” service philosophy, the Company continuously refines its end-to-end custom-
At the raw material stage, integration of ERP, QMS, and OA systems enables a digital closed-loop from “purchasing
er service system across pre-sales, in-sales, and after-sales stages. This is achieved through the implementation of institutional docu-
and receiving” to “incoming inspection” and “quality assessment,” ensuring controllable quality at the source. At the
ments such as the “Management Measures for Measurement of Customer Satisfaction” and the “Procedures for the Control of Handling
production stage, inspection data is fully integrated into the MES system, enabling real-time data collection, analy-
Customer Complaint” , which standardize service delivery and enhance managerial efficiency. The Company remains committed to
sis, and early warning to achieve dynamic monitoring of process quality.
providing professional and reliable product service guarantees to its clients.
Digital Intelligence Empowerment? Product Sales and After-Sales Services
Upgrading the Intelligent Analysis Platform
and IoT Applications
Dedicated Dedicated Professional
The quality analysis platform is upgraded to support automatic comparison and trend analysis of key indicators for all Service Network Service Team
yarn varieties, providing precise, visual data support for quality improvement. Digitalization is being extended to the
equipment level through pilot projects for Internet of Machines / Internet of Things (IoT), accelerating comprehensive
intelligent empowerment in production.
Establish an independent trend forecasting A fully staffed contingent of business
system to enable swift and precise responses to and technical professionals is
Capability Assurance? client requirements. allocated to deliver exclusive
Strengthening Testing Technology one-on-one support for premium clients.
and Professional Expertise
•Analysis and Release of Trend Forecasts. Every year, Italian color experts •By the end of 2025, the Company has estab-
are invited to analyze and forecast the domestic and international trends of lished offices and localized marketing teams
woolen knitwear in the next 1-2 years, and the theme colors of the seasons in key markets, including the United States,
Comprehensive product testing and inspection capabilities are in place, preventive testing and inspections are con- spring/summer and autumn/winter are released in March and August every the United Kingdom, France, Germany,
ducted to address potential quality issues across all production stages. Error-proofing, fool-proofing, and equipment year. Leveraging the leadership of fashion trends and digital analysis of custom- Japan, South Korea, and Nordic countries. Its
er demands, precise stocking service is launched to provide rapid response to marketing footprint covered most domestic
automation solutions are prioritized for control. A triple-assurance mechanism involving “personnel comparison,
customer demands. provinces as well as nearly 30 overseas
equipment calibration, and third-party benchmarking” ensures the accuracy and reliability of test data. Through
countries and regions. Through coordinated
pre-job training and specialized upskilling programs, a series of trainings on quality control knowledge, quality analy- •Cutting-Edge Design Services. Internationally renowned British fashion
efforts between local marketing personnel
sis, and improvement tools are conducted to enhance frontline quality execution. designers are engaged to provide avant-garde patterns and sample garment
and headquarters, the Company has
designs, offering clients inspiration and references. Additionally, customized
achieved precise and localized customer
brand services are extended to key clients, including bespoke pattern develop-
engagement.
ment and exclusive trend reports.
Cultural Development? •Targeted Development of Differentiated Products. In alignment with
•The Company maintains a dedicated techni-
cal service team that works in close collabo-
Reinforcing Company-Wide Quality Risk market development trends and client-specific individualized requirements,
ration with the sales department to provide
targeted development of differentiated products is conducted to systematically
Control Awareness enhance product accessibility.
customers with on-site technical consultation
and rapid-response support throughout the
•Value Extension of Sustainable Trends. In alignment with global sustainable entire process—from pre-sales to in-sales
fashion movements, the Company undertook a comprehensive upgrade of its and after-sales. By 2025, this service model
Efforts to cultivate a quality culture are underway, leveraging continuous improvement and innovative practices to product hangtags by 2025. The initiative included transitioning entirely to has been progressively implemented with
holistically elevate overall quality management standards. In 2025, the Company implemented a series of targeted FSC-certified eco-friendly paper while reinforcing anti-counterfeiting measures notable results, demonstrating marked
quality management initiatives to strengthen company-wide quality awareness and risk control capabilities. Regular and implementing an end-to-end traceability system. By transforming premium improvements in both the on-site responsive-
quality supervision inspections, product spot checks, and periodic quality meetings are institutionalized to facilitate origin credentials and refined quality into visible trust verification throughout the ness of the technical service team and their
in-depth analysis and drive corrective actions, ensuring effective management of quality risks. product journey, this upgrade supported brand partners in enhancing their ability to deliver professional solutions.
image and collectively advancing a sustainable future.
XINAO XINAO
ESG Report 2025 ESG Report 2025
Customer Engagement and Satisfaction Management
Multifaceted Communication Channels and Dissemination Matrix Routine Customer Visits
Through the development of both offline and online platforms, the Company enhances information
exchange, showcases its cutting-edge innovation outcomes, and systematically disseminates a wide Assign internal personnel to conduct regular customer visits to comprehensively gather their evaluations
range of operational information and brand initiatives. and feedback on the Company's products and services.
•Actively participate in prominent international industry exhibitions. In 2025, the Company made notable
•The Company proactively orchestrates specialized interactive visits targeting key accounts, systematically collecting
appearances at globally recognized events such as SPINEXPO for international fashion yarns and knitwear, PER-
both routine and personalized requirements from customers regarding service, quality, and product offerings.
FORMANCE DAYS, FUNCTIONAL FABRIC FAIR, and ISPO MUNICH, comprehensively showcasing its core compe-
tencies and innovative product achievements. These needs are promptly relayed to corresponding responsible departments to facilitate their resolution. In 2025,
the Company deepened its focused customer engagement initiatives, with XINAO TEX completing specialized
interactive visits for 57 core key accounts, achieving a 100% resolution rate for all identified client requirements.
Standardized Customer Satisfaction Survey
A unified “Customer Satisfaction Questionnaire” is distributed to both domestic and international clients
to systematically and comprehensively collect customer satisfaction evaluation data.
•Specialized surveys were conducted to evaluate the user experience and product experience across the entire
pre-sale, in-sale, and after-sale processes. In 2025, XINAO TEX, NEW CHUWA, and HOUYUAN TEX carried out
customer satisfaction surveys among their respective cooperative clients. The results indicated that customer satis-
•Leverage New Media Platforms.The Company has established a comprehensive communication framework faction scores for all entities exceeded 90 points.
comprising four core platforms—WeChat Official Accounts, Tik Tok, Xiaohongshu (the red note), and WeChat
Video Channel. This integrated approach enables precise promotion of diverse yarn products and sustainability
initiatives among business partners and end consumers. As of the end of 2025, the WeChat Official Accounts have
garnered over 27,000 followers, while Tik Tok followers exceeded 7,900, reflecting a consistent enhancement in
brand reach and communication efficacy.
Customer Complaint Closed-Loop Management
Establish an efficient and seamless customer complaint handling mechanism, designate dedicated per-
sonnel to manage complaint resolution, and standardize core operational requirements such as
response efficiency for customer appeals.
•The Company has established a customer complaint management module within its OA system to systematize
•Develop International Corporate Website. The official corporate website has undergone a comprehensive
and standardize the recording and efficient handling of customer complaints, thereby enhancing the operational
upgrade. The redesigned websites adopt an upgraded brand visual identity to strengthen brand distinctiveness.
efficiency of the entire complaint resolution process. In addition, a multi-dimensional customer complaint handling
Additionally, navigation logic and interactive features have been optimized to ensure seamless multi-device com-
patibility, thereby significantly improving user browsing experience. system has been developed through channels such as the customer feedback hotline (0573-88455805) and the
corporate website. All complaints are categorized, assigned to dedicated personnel for follow-up, and managed in
•Systematic Upgrade Showroom. In 2025, XINAO TEX completed a comprehensive upgrade of its concept
a closed-loop manner to strictly fulfill the requirement that “every complaint must be resolved.” In 2025, the opera-
showroom, transforming intangible brand concepts and technical terms into a tangible spatial experience.
tional effectiveness of the complaint management system continued to improve, achieving a 100% resolution rate
for all reported issues.
Customer Complaints Handling Procedure
Collect Investigate Respond
Collect customer feed- Investigate by relevant Respond to customer of
back, receive and departments, formu- the handling state, track
prejudge complaints. late solutions, and the implementation of
rectify preventive mea- corrective and preventive
sures. measures, and close
complaints.
XINAO XINAO
ESG Report 2025 ESG Report 2025
Responsible Use of Chemicals 6.8 Data Security & Customer Privacy
In the field of chemical management, the Company has established a Chem-
The Company places paramount importance on data security and customer privacy protection, strictly adhering to relevant laws, regula-
ical Management Committee to construct a well-defined organizational
tions, and normative documents such as the Data Security Law of the People's Republic of China, the Sybersecurity Law of the People's
framework with clear hierarchies and accountability. The Chair of the Com-
Republic of China, the Personal Information Protection Law of the People's Republic of China, the Regulations for the Protection of
mittee provides overarching guidance for the formulation and implementa-
Personal Information of Telecommunications and Internet Users, and the Regulations of the Peoples Republic of China for Safety Protec-
tion of chemical management policies; while heads of functional depart-
=KHMLDQJ+RX\XDQ7H[WLOHV,QF tion of Computer Information Systems, etc. Data security and privacy protection policies are comprehensively integrated across all busi-
ments and subsidiaries lead the overseeing of advancement and execution of $*+
ness lines and throughout the entire data management lifecycle. In 2025, the Company did not experience any data security incidents or
management objectives; and dedicated chemical management specialists ??????????????ň
customer privacy breaches, nor were there any lawsuits arising from such matters.
are responsible for the comprehensive implementation of the Chemical Man-
agement Manual. (%
The Company establishes a comprehensive data security and customer privacy management framework, implementing a three-tier gov-
ernance structure comprising the “Data Security and Customer Privacy Leadership Group” , the “Data Security and Customer Privacy
The Company strictly adheres to laws, regulations, and client requirements
WK1RYHPEHU Prevention and Control Group” , and the “Data Security and Customer Privacy Emergency Response Group” . This structure clearly delin-
related to chemical registration, usage, disclosure, and management. Uphold-
eates the responsibilities and operational divisions at each level, enabling end-to-end oversight of data security and customer privacy.
ing the principle of “minimizing chemical use to the greatest extent
The Data Security and Customer Privacy Leadership Group, chaired by the General Manager who serves as the primary responsible
possible,” it focuses on mitigating the potential impacts of chemicals on human health and the ecological environment. Leveraging its person for data security and customer privacy, is tasked with overall supervision, strategic planning, and decision-making on critical mat-
internally developed chemical management policies and the aforementioned dedicated management structure, the Company imple- ters related to the Company's data security and privacy initiatives. The Data Security and Customer Privacy Prevention and Control
ments a full lifecycle management approach covering key stages such as procurement, access control, evaluation, and use. Through Group, led by the Information Section with collaboration from various business units, conducts routine development and maintenance of
comprehensive and systematic control measures, the compliant and safe use of chemicals is rigorously ensured. In 2025, the Company the data security and privacy system, along with daily governance activities. The Data Security and Customer Privacy Emergency
achieved a 100% compliance rate in chemical procurement access and on-site usage, with zero chemical-related safety incidents Response Group, composed of deputy general managers overseeing respective functions and heads of core business departments, is
recorded. responsible for handling emergency incidents related to data security and privacy. This group also conducts periodic drills to mitigate
potential risks effectively, thereby continuously enhancing the Company's data disaster recovery capabilities and advancing the overall
Life Cycle Management of Chemicals
level of security risk prevention and control.
Concurrently, the corporation implements a comprehensive, full-lifecycle data protection mechanism for client information, ensuring that
all customer data and documentation are uniformly stored within a dedicated data management system. This system enforces standard-
ized control over access and extraction through a hierarchical authorization framework, thereby effectively mitigating the risk of mali-
Chemical Procurement cious data breaches from the source. With regard to critical operational data generated during production—including capacity metrics,
•When purchasing chemicals, require suppliers to provide documentations such as qualifications raw material specifications, and process parameters—the Company has instituted rigorous end-to-end governance procedures, explicitly
and certifications, material safety data sheet (MSDS) and chemical safety labels, and identify prohibiting arbitrary export activities. Additionally, by leveraging the ERP system, the organization has allocated refined access privileges
the content of hazardous substances in the products or components they provide. to sales personnel at various levels, thereby strengthening the safeguarding of proprietary data such as product specifications and
color-matching schemes tailored to specific clients. The Company strictly prohibits the transfer or repurposing of customized product
parameters and color design data for one client to any other customer order, thereby ensuring both the uniqueness and confidentiality
of bespoke information.
Chemical Admission Data Security Measures
•When admitting chemicals, formulate internal control standards and management processes
for chemical substances that are in line with its own operations and in accordance with interna-
tional, national and industrial standards such as RoHS and REACH, and implement and regularly
update chemical control lists and catalogues. Perform routine login of log analysis on critical information systems to
identify potential cyberattacks and malicious access.
Login Log Analysis
Chemical Evaluation Set dynamic verification code for systems such as collaborative platforms
•When evaluating new chemical, analyze and manage the risks that they may pose to operation- that are universal, mobile, and highly applicable to different places to
al safety, human health, and the environment, and confirm the acceptance and effectiveness Dynamic Verification Code increase the cost and difficulty of malicious accesses and attacks.
of the risk control measures.
Install firewalls and network antivirus software on front-end hardware for
cyber security.
Chemical Use Terminal Security Control
•When using the chemicals, register the detailed information of chemicals involved in all
products, services and activities to identify the hazardous characteristics of chemicals, and
clearly stipulate that the receipt of chemicals must be registered and documented by special- Participate in the cyberattack and defense drill coordinated by the cyber
ized personnel. security supervision brigade of the public security bureau, and make
response, rectification and security improvement according to the report of
Cyber Attack Defense Drill the cyber security attack and defense drill.
XINAO XINAO
ESG Report 2025 ESG Report 2025
The Company, building upon its practical operations in the high-end green wool textile industry, strictly adheres to the stipulations of a
series of relevant laws, regulations, and policy requirements, including the Labor Law of the People's Republic of China, the Labor Con- •Recruitment Management：Develop the “Measures for the Management of Recruitment and
tract Law of the People's Republic of China, the Regulations on the Implementation of the Labor Contract Law of the People's Republic Employment of Production Line Employees” and the “Measures for the Management of Recruitment and
Employment of Non-Production Line Employees” . Guided by the fundamental principles of legality and
of China, the Social Insurance Law of the People's Republic of China, the Trade Union Law of the People's Republic of China, the Law of
compliance, and adhering to the recruitment tenets of equality, fairness, and non-discrimination, the Com-
the People's Republic of China on Prevention and Control of Occupational Diseases, the Work Safety Law of the People's Republic of pany standardizes the recruitment process for all positions, ensuring transparency and procedural rigor
China, and theRegulations on Work-Related Injury Insurances, etc. This ensures comprehensive protection of employees' legitimate throughout the recruitment workflow.
rights and interests as well as their occupational health and safety. •Separation Management： Establish the “Measures for the Management of Employee Separation" which Recruitment
standardize the exit formalities according to different types of separation, such as resignation, dismissal, and
In 2025, the Company recorded zero labor disputes or significant employee turnover incidents, with no instances of unlawful or and
contract expiration. The procedures define the standard requirements for critical stages, including salary
non-compliant practices such as child labor or forced labor. Occupational health and safety management achieved notable outcomes, settlement, social security transfer, and job handover, thereby comprehensively safeguarding employees'
Separation
with zero fatal workplace accidents and no administrative penalties imposed by regulatory authorities for violations of occupational lawful rights and interests during the separation process.
health and safety laws and regulations. •Retirement Management：Develop the “Measures for the Management of Retirement and
Re-employment “, clearly define the procedures for employee retirement, the eligibility criteria for post-re-
Governance tirement re-engagement, and the corresponding regulatory framework. This ensures a balance between
safeguarding the rights and interests of retirees and addressing the talent needs of corporate operations.
The Company has established a tiered, interconnected employee management framework comprising the “Decision-making—Manage-
ment—Implementation,” with clearly defined responsibilities and authorities at each level to ensure the orderly advancement of initiatives
related to employee rights protection, occupational health and safety, and employee training and development:
•Working Hour Management：Develop the “Attendance Management Measures” , fully implement the
standard working hours system, rationally plan employee work duration, and safeguard employees' right to
rest.
Working
The Board's Strategy and Sustainability (ESG) Committee takes the lead in overall •Holiday Management：Establish the “Measures for the Management of Leave and Vacation” under which
Hours and employees are entitled to national statutory holidays in accordance with the law. Concurrently, employees
coordination, responsible for reviewing and approving strategic plans and key decisions Holidays
Decision- pertaining to employee rights and occupational health development;
may apply for various types of leave—including personal leave, sick leave, work-related injury leave,
marriage leave, maternity leave, birthday leave, and bereavement leave—in accordance with company regu-
making lations, thereby comprehensively safeguarding employees’ entitlement to holidays.
The ESG Management Committee and Executive Management are responsible for •Remuneration Management：Develop the “Compensation Management Measures” to establish a multidi-
mensional remuneration framework comprising base salary, performance-based pay, etc., and standardize
driving the implementation, spearheading the research and formulation of strategic objec- the approval procedures for new hires and salary adjustments, as well as the requirements for payroll distri- Remune-
tives and institutional systems related to employee management, while simultaneously bution and confidentiality management. ration
Management identifying, assessing, and managing risks and opportunities in the field of employee man- •Benefits Management：Develop the “Measures for the Management of Welfare Subsidies” to establish six
and
agement; major categories of benefits, including social insurance, paid leave, cash allowances, and position-based Benefits
subsidies, thereby standardizing the allocation criteria and scope of application for each type of subsidy.
The Human Resources Section and the General Section of Safety and Environ-
ment at Headquarters, in collaboration with subsidiaries, are responsible for
day-to-day supervision and administration of employment and rights protection, occupa- •Establish multiple institutional frameworks including the “Management System for Production Safety Objec-
Health tives” , “Management System for Production Safety Responsibility” , “Management Measures for Labor
Implementation tional health and safety production, as well as employee training and competency develop-
and Protective Articles” , “Emergency Preparedness and Response Control Procedures” , “Procedure for Hazard
ment.
Safety Identification, Assessment and Control” , and “Regulations on Employee Health Examinations” , providing
comprehensive and systematic institutional support for occupational health and safety management.
•Formulate the “Employee Training Management Measures” to establish a comprehensive training system
that covers all staff, standardizing the entire process from training planning and implementation to evalua-
tion and records management. Through tiered contracting, post-training assessment, and follow-up monitor-
ing, the effectiveness of training outcomes is ensured.
Training
and
•Develop the “Measures for the Management of Employee Selection, Appointment, and Career Develop- Develo-
ment” , establish four distinct career development tracks: management, technical, skilled, and functional. This
pment
framework facilitates both lateral mobility across tracks and vertical progression within each track, while
standardizing the entire process of employee selection, competitive appointment, deployment, and internal
transfers.
XINAO XINAO
ESG Report 2025 ESG Report 2025
Strategy Management of Impact, Risk and Opportunity
Focusing on the core of risk prevention and control throughout the employee lifecycle, the Company has established an integrated man-
agement process that synergistically coordinates “Employment & Employee Rights, Employee Benefits & Care, Occupational Health &
Legal and Compliant Employment Strategy Safety, and Employee Training & Development.” This framework ensures that employee risk management is embedded across all stages,
with the four modules functioning as interconnected and mutually reinforcing components in a closed-loop system. Risk control require-
The Company strictly adheres to labor and employment laws and regulations, upholding the principles of compliant ments are deeply integrated at each phase: during recruitment and onboarding, safety training and rights awareness activities are con-
employment practices, and resolutely prohibits any form of illegal activities, including the employment or support of child ducted simultaneously to mitigate risks related to safety cognition and rights understanding from the outset; the employee training and
labor, forced labor, and other unlawful practices. The explicit prohibition includes requiring employees to pay deposits or development system prioritizes workplace safety and risk prevention as core components, enhancing employees’ ability to identify and
surrender identity documents upon hiring, and strictly eliminating prison labor, bonded labor, debt bondage labor, servi- respond to risks through specialized training; furthermore, the implementation of employee risk management is linked to rights protec-
tude, and all forms of punitive or compulsory labor. Through the establishment of robust employment management
tion and incentive mechanisms, which in turn drive participation in training and reinforce safety management compliance. Through the
processes, the Company strengthens compliance oversight across all stages, reinforces the baseline for lawful employ-
coordinated implementation of these four modules, the Company not only safeguards employee rights and enhances competencies but
ment, standardizes the management order of corporate labor practices, and safeguards the fundamental labor rights and
interests of employees. also establishes a comprehensive risk prevention framework that spans the entire employee lifecycle.
Employment & Employee Rights
Equal and Inclusive Development Strategy
The Company upholds the principle of “fairness, impartiality, and transparency” in employment, ensuring equal opportuni-
•The Company develops targeted recruitment plans for various positions based on operational needs,
ties for employees across all processes, including recruitment, compensation, training, promotion, and termination, while
strictly prohibiting discrimination based on race, gender, religion, and other factors. A special committee for female conducting hiring activities through multiple channels such as online recruitment platforms,
employees has been established to address their practical needs through platforms such as the “Tongxin” council room live-streamed interactions, and in-person interviews. This approach ensures equal employment oppor-
and the “Sisterhood Mutual Support” initiative. The Company maintains a zero-tolerance policy against workplace harass- tunities for job seekers while offering competitive market-based compensation packages. Additionally,
ment and has implemented a comprehensive mechanism for preventing and addressing sexual harassment in the work- Diversified the Company continues to intensify its efforts in recruiting overseas talent, with a strategic focus on
place. These efforts are dedicated to fostering a safe, equitable, harmonious, and inclusive work environment that safe- Recruitment staffing for its Vietnam-based international projects. By leveraging brand promotion initiatives to attract
guards employees' physical and mental well-being as well as their lawful rights. local community residents, the Company aims to build highly localized management teams, thereby
ensuring the efficient operation of its overseas projects.
Labor Union Rights Protection Strategy
The Company establishes trade unions in accordance with the law, utilizing employee representative assemblies as a plat-
form to build a communication bridge between staff and the enterprise, thereby effectively safeguarding the legitimate •While maintaining normal business operations, the Company provides equal development opportunities
rights and interests of employees. Trade unions, representing the employees, enter into the “Collective Contract” with the and corresponding welfare benefits for women, middle-aged and older individuals, ethnic minorities,
Company, engaging in equal consultations on matters such as labor contracts, wages and benefits, occupational safety, and flexible employment personnel. In 2025, the Company employed a total of 2,672 female employ-
and the protection of female employees. Serving as the foundation for formulating labor rules and regulations, the “Collec-
Workplace
ees, 1,028 employees aged 50 and above, 837 domestic ethnic minority employees, and 435 over-
tive Contract” ensures that all systems and major decisions affecting the vital interests of employees are communicated Inclusivity
seas employees.
through public notifications, thereby protecting employees' rights to information and participation.
Occupational Health and Safety Strategy
•The Company establishes diversified platforms for democratic communication and appeals, encom-
The Company adopts the “Safety First, Prevention Foremost, and Comprehensive Management” as its core principle, passing various channels such as a care hotline, official WeChat account, employee representative
establishing a management system centered on the Work Safety Responsibility System. By implementing risk identifica- forums, staff feedback surveys, dedicated email addresses, bulletin boards, and consultation rooms
tion, assessment, and process-wide control, the Company strengthens the enforcement of safety management measures. (Employee Mediation Committee), thereby safeguarding employees' rights to voice their concerns and
It actively promotes the development of a safety culture, integrates safety concepts into daily operations, and conducts requests.
comprehensive safety training for all employees. These efforts enhance employees’ safety awareness and emergency
response capabilities, thereby reinforcing production safety safeguards in all aspects and ensuring occupational health and
workplace safety. Employee Communication and Grievance Channels
Democratic
Talent Development Empowerment Strategy Communication
The Company has established a “People-Centric” talent development platform, adhering to the principles of positioning
individuals in roles that best match their competencies and aligning responsibilities with appropriate talent. This approach
attracts and retains exceptional professionals, fostering a cohesive and high-performing team dynamic. By supporting
personalized career progression and enhancing employees’ comprehensive capabilities, the Company empowers talent
Care Hotline Dedicated Email
cultivation across the entire industrial ecosystem. By implementing open, fair, and equitable promotion principles, the
Company refines and optimizes scientific advancement procedures, precisely identifies exceptional individuals, and con-
structs clear career development pathways for them. This approach facilitates the synchronization of employee value
creation and enterprise growth, achieving a harmonious resonance between individual and organizational success.
XINAO XINAO
ESG Report 2025 ESG Report 2025
Employee Benefits & Care Employee Care Platform
The Company adheres to a people-oriented approach and establishes a comprehensive employee care system encompassing “Welfare
Protection and Life Support” by integrating local site conditions, traditional cultures, and employee preferences in host countries.
Concurrently, it actively develops an “Employee Care Platform” through diverse initiatives such as recreational and sports activities, hous-
Recreational and sports activities
ing and employment support, and mutual assistance and support programs, thereby holistically enhancing employee satisfaction, sense
of belonging, and overall well-being. •Internal Activities：the 3rd women’ s Excellence Showcase and female employees’ Garden Party themed “Blooming with
Grace, Growing Toward the Sun” ; Rice Dumpling Competition on the Dragon Boast Festival themed “Sharing the Fragrance
of Zongzi” ; College Student Character Development Program themed “Setting Sail for New Dreams, Soaring with Youth” ;
Employee Benefits System
Philanthropic mountain cleanup trailwalk to the Moganshan Mountain themed “The Power of Youth and Aspiration”.
•External Activities：Tongxiang Basketball Match, Esports Tournament, and Employee Fun Sports Meeting.
•Employee benefits include shuttle services on select routes, complimentary accommoda-
tion, social security insurance (including pension, medical, unemployment, work-related
injury, and maternity insurances) and housing provident fund, commercial insurance,
Daily Benefits regular health check-ups, paid annual leave, holiday gifts and care packages, team-build- Housing and Employment Support
ing activities, corporate outings, and other routine perks.
•Complimentary accommodation：Dormitories are provided at no cost to non-local employees, with shared accommo-
dations available for dual-career couples. Utility charges are waived within specified usage limits.
•Monetary benefits and subsidies：Social security allowances, transportation (long-dis-
tance) subsidies, housing allowances, communication subsidies, birthday benefits, holiday •Family service center：equipped with dance room, gym, leisure bar, consultation room, reading room, etc.
benefits, referral bonuses, retirement benefits, and family planning subsidies •Schooling and care for children： assist non-local employees in addressing their children’ s educational needs; In 2025,
•Job position-related subsidies：Perfect attendance awards, year-end bonuses, profes- the Company organized summer camp themed “Little Migratory Birds”, benefiting 106 employees’ children.
sional title allowances, high-temperature subsidies, on-duty allowances, and compa- •Establishing dedicated lactation rooms：provide comfortable and secure feeding and milk expression facilities for
ny-mandated leave compensation
Cash Allowance breastfeeding employees.
•Special rewards for excellence：outstanding civilized employee awards, operational
skill competition awards, exemplary work team awards, various sales achievement
awards, QC circle excellence evaluation awards
Mutual Assistance and Support
•Medical Subsidy Fund：On top of social insurance reimbursements, employees can claim an additional 70% reimburse-
ment from the Company for out-of-pocket expenses. In 2025, the Company allocated 453,800 yuan in subsidies for
employees.
•Participation in the Employee Medical Mutual Aid Program of Tongxiang Federation of Trade Union：The full
cost of the medical mutual aid scheme is covered by the Company's union funds. In 2025, the Company contributed
•Assistance to Employees in Financial Hardship：In 2025, 20 employees facing financial difficulties received support,
with a total of 100,000 yuan distributed as aid funds.
XINAO XINAO
ESG Report 2025 ESG Report 2025
Occupational Health & Safety
Case
The Company places great emphasis on the identification, assessment, and control of safety risks throughout the entire production
process. Following a comprehensive assessment, the risks associated with the Company’ s work safety operations include safety risks Stay vigilant on safety awareness,
during the construction phase of projects, workplace safety risks during the production and operation phase, and risks related to chemi-
cal management. At the same time, occupational hazard factors identified within the scope of operations primarily include noise, fur strengthen the protective shield for development
dust, formic acid, acetic acid, sulfur dioxide, hydrogen peroxide, sodium hydroxide, sodium carbonate and other dusts, laying the founda-
tion for precise prevention and control.
At this critical juncture—marking the conclusion of 2025 and the beginning of 2026—the Company organized a com-
To strengthen the systematic management of work safety risks, the Company has established and implemented a dual prevention
prehensive safety inspection across all facilities and invited experts from the Tongxiang Municipal Bureau of Emergency
mechanism combining internal and external controls. Through multifaceted efforts—including system optimization, compliance audits,
Management to conduct specialized safety training. Participants included team leaders, managers at or above that
on-site investigations, accident reviews, and hazard identification—the Company employs a multi-pronged approach to mitigate various
level, and personnel in key positions. To consolidate the achievements of previous efforts and effectively translate train-
potential safety risks and enhance the professionalism and effectiveness of its work safety risk management.
ing principles into practical applications, XINAO TEX, NEW CHUWA, and HOUYUAN TEX simultaneously launched a
The Company continues to advance the standardization of work safety, strictly adhering to the “Three Simultaneities” principle—where two-week special campaign for self-inspection and self-correction in work safety. The campaign mandated a thorough,
safety facilities are designed, constructed, and put into operation concurrently with main projects—to fortify safety defenses at the full-coverage screening of potential safety hazards across all areas, with the establishment of a registry for identified
source. At the same time, the Company consistently improves its comprehensive safety monitoring system, which covers critical areas issues, and the implementation of closed-loop rectification measures. At the same time, the Company clarified the
such as major hazard source control, fire alarm systems, and fire control, with the objective of preventing and reducing industrial acci- work safety responsibilities of all employees, requiring managers to strictly fulfill their “Dual Responsibilities in Each
dents and safeguarding the lives and assets of both the enterprise and its employees. Companies including XINAO TEX, NEW CHUWA, Role” , and all employees to diligently fulfill their job-specific safety duties. The Company will continue to improve its
and HOUYUAN TEX have successfully passed reassessments for work safety standardization and were awarded Enterprise (Textile) of safety management system and vigorously advance the “Safety through Technology” initiative, ensuring high-quality
Work Safety Standardization Class 2, demonstrating the Company’ s ongoing compliance and improvement in work safety management corporate development through a high level of safety.
standards. In 2025, the Company invested 11,985,900 yuan in workplace safety.
Multidimensional Management of Occupational Health and Safety
•The Company establishes and continuously enhances its Occupational Health and Safety Management
System across three key dimensions: institutional safeguards, risk management, and daily protection.
Efforts to certify the system are concurrently advanced to strengthen management standardization. By the
end of 2025, entities including XINAO TEX, NEW CHUWA, HOUYUAN TEX, and XINAO CASHMERE had all
Establish a Standardized successfully obtained ISO 45001 Occupational Health and Safety Management System certification.
Management System •Adhering to the principle of “zero tolerance for hidden risks,” the system establishes “100% completion rate
of hazard rectification and 100% coverage of workplace safety training” as its occupational health and
safety management objectives. It constructs a comprehensive three-dimensional hazard identification and
remediation framework comprising “daily inspections + specialized checks + systematic platforms +
inspection readiness.” Concurrently, a “Permit Module for Safety Production and Operation” is developed
within the OA system, enabling high-risk operations to be managed through a standardized, closed-loop
online process.
•The Company coordinates efforts across its subsidiaries to ensure the routine monitoring of occupational
hazard factors and the identification of occupational health risks, establishing a comprehensive manage-
ment mechanism encompassing “monitoring-identification-correction-supervision” control mechanism to
effectively mitigate occupational disease risks. In 2025, the Company achieved 100% coverage in the
monitoring of occupational hazard factors.。
Strengthen Routine •The Company provides regular occupational health examinations and distributes personal protective equip-
Protective Control ment (PPE) tailored to identified hazard factors, thereby ensuring comprehensive protection of employees'
occupational safety. Additionally, the Company maintains a systematic occupational health record system,
which centrally archives documentation such as the inventory of protective facilities and equipment, main-
tenance and inspection logs, and employee health examination reports. In 2025, the Company achieved
•In strict compliance with the “Implementation Measures of Liability Insurance of Safe Production” , HOUYU-
AN TEX and NEW CHUWA purchase liability insurance of work safety for key personnel, including those
involved in hazardous chemical operations and management, sewage treatment and special operations.
•To comprehensively enhance employees’ emergency response capabilities and safety awareness, the Com-
pany positions prevention as the primary line of defense in risk management. It provides subsidiaries with
health and safety management requirements and guidance, while also implementing “Mobile Red Flag”
evaluation activities in production workshops. Through diversified measures such as emergency drills,
awareness campaigns, and incentive-based assessments, the Company systematically strengthens
Enhance Overall employees’ emergency response and practical safety skills. In 2025, the Company routinely organized
Safety Competency various emergency drills, including safety evacuations, hazardous chemical leaks, and electrical shock
accidents. It also participated in the large-scale emergency firefighting drill organized by the Chongfu
Town Trade Union Federation. Concurrently, the Company conducted specialized training on topics such
as first aid, anti-fraud, and occupational disease prevention. Throughout the year, the Company completed
safety education and training for a total of 23,953 employee participations.
XINAO XINAO
ESG Report 2025 ESG Report 2025
Multidimensional Empowerment for Talent Development
Employee Training & Development
The Company consistently maintains the conviction that talent is the fundamental force driving sustained corporate development. In the
Establish a Systematic Training Platform
realm of talent cultivation, it deepens efforts in nurturing talent and constructing a robust talent pipeline, focusing on three core compe-
tencies: General Competency, Professional Expertise, and Leadership Capability. By comprehensively reviewing training curriculum and •Leveraging its existing team of in-house trainer team, the Company has established a dedicated “Training Academy” platform to
thoroughly integrating training resources, the Company has established an all-encompassing, multi-tiered development system. Tailored systematically conduct various training programs. In 2025, the training programs reached 62,862 participants, with cumulative train-
professional empowerment frameworks are designed for employees at various levels and across different occupational categories. ing expenses amounting to 296,000 yuan and a total training duration of 104,959.5 hours.
Annually, the Company conducts systematic business needs surveys to precisely identify training priorities. Concurrently, it meticulously •The Company continues to innovate talent cultivation models by implementing specialized training programs such as the Sales
develops diversified training initiatives, including leadership enhancement, onboarding and integration for new employees, and profes- Onboarding Bootcamp, the "Dual-Mentor" Cultivation and Role-Competition Reporting & Launch Ceremony for textile university
sional skill refinement. These programs holistically empower employees in their career growth, supporting them in realizing their profes- students, and the Empowerment Program for New-Generation Management Cadres. Adopting an innovative "2+1" progressive cultiva-
sional aspirations and fostering harmonious, synchronized development with the enterprise to collectively scale new heights of achieve- tion approach—comprising cognitive learning, job rotation, and mentorship across three developmental phases—the Company estab-
ment. lishes a comprehensive talent development system for versatile professionals. This initiative provides robust human capital support for
the Company’s sustainable growth and the implementation of its broadband development strategy.
Employee Development System
Facilitate Diversified Career Advancement Pathways
Types Contents Key Initiatives
•With a core focus on enhancing employee competencies and fostering value creation, a four-tier professional advancement frame-
work has been established, encompassing “technical skills, technological expertise, functional specialization, and managerial leader-
New Employee Onboarding：Campus
ship”. This framework facilitates the planning of diversified professional development trajectories for employees.
Recruitment Orientation and Social •In 2025, a comprehensive onboarding training
Recruitment Training Programs program and general competency courses were
Overseas Talent Empowerment：Coun- successfully delivered for 243 new employees
Senior Technical Senior Top
Skill
Technology
Function
Management
General try-Specific Cultural Adaptation, Business recruited from both social channels and campus
Technician Expert Expert Manager
Competency Etiquette, and Cross-Border Security Man- recruitment initiatives.
agement •In 2025, 1 cross-cultural exchange activity were
Empowerment Senior Senior Senior
organized for international talents, including over- Technician Specialist Manager
Fundamental Knowledge：corporate Engineer
open courses, online classrooms, labor seas staff and expatriates, capacity-building training
emulation, knowledge contest of little wool programs reached 246 participants.
Senior Intermediate Intermediate
master, QCC group activity Specialist Manager
Worker Engineer
Engineer Training：continuing education •In 2025, a cumulative total of 3 continuing educa- Intermediate Junior
Engineer Specialist Supervisor
training for engineers tion and training sessions were organized for engi- Worker
Technician Training：specialized skills neers, covering professionals from various fields
training course, skill levels certification, with a total attendance of 13 participants. Primary Assistant Clerk Clerk
independent appraisal of junior and inter- •In 2025, 26 specialized skill training programs were
Worker Engineer
Professional
mediate professional and technical qualifi- conducted, cultivating 26 technicians through a “du-
Expertise cations, technical seminar, dual-mentorship •The Company has institutionalized the regular practice of competitive recruitment for managerial positions and autonomous assess-
al-mentor + project-based” training model.
Empowerment + project-based training model ment of technical and skilled personnel. This market-oriented and scientifically grounded approach to talent selection effectively
•In 2025, 1 sales boot camp for new hires were held, guides employees’ career development and ensures precise person-position alignment. As of the end of 2025, the Company had con-
Induction Training：sales onboarding providing pre-job training for 13 sales trainees. ducted a cumulative total of 107 competitive selections for management positions, among which 57 candidates were successfully
bootcamp, one-on-one on-the-job training Through a mentorship system, one-on-one appointed and assigned to management roles across various divisions. Additionally, 1,032 employees had obtained vocational skill
through a mentor-apprentice system, prac- on-the-job guidance was delivered to 7 new level certifications (as of the end of the period), with 9 individuals achieving technician-level certification (spinning operatives) through
tical simulation in customer development employees, alongside 2 practical customer develop- the Company's inaugural self-organized skills training and assessment program conducted in 2025. Furthermore, 330 employees had
and sales ment and sales simulation exercises. acquired professional technical qualifications via accreditation (as of the end of the period), 78 of whom obtained certification through
the Company's internal evaluation process. These initiatives have yielded marked achievements in strengthening the talent pipeline.
Leadership Development for Senior
Executives：advanced training program Strengthen a Multi-tiered Incentive System
for comprehensive competency enhance-
Leadership ment of senior management •In the short term, the Company conducts annual across-the-board salary adjustments and performance-based pay reviews, while
Capability •In 2025, 5 sessions of leadership empowerment establishing internal honorary awards alongside selection and recognition mechanisms. These initiatives aim to motivate employees
Leadership Development for Mid-Level training programs had been executed cumulatively, through both material and spiritual dimensions, thereby fostering long-term retention and professional growth. In 2025, through equi-
Empowerment Managers：master skills studio covering an aggregate of 69 participants. table and impartial evaluation processes, the Company recognized 6 benchmark units, 6 outstanding managers, 4 innovation elites, 6
Leadership Development for Frontline top sales performers, 3 technical champions, 8 XINAO craftsmen, 6 exemplary coaches, 16 rising stars, 36 model citizens, and 165
Managers：leadership bootcamp for advanced contributors.
newly appointed team supervisors •In the medium to long term, the Company is committed to refining its long-term incentive mechanisms by implementing measures
such as equity-based incentives, thereby establishing a benefit-sharing mechanism between employees and enterprise owners. This
approach effectively attracts and retains outstanding managerial talent and core business backbone personnel, consolidating the
Company's key talent base. In 2025, the Company steadily advanced its equity incentive initiatives and completed the unlocking of
shares for the second restricted period of the 2023 Restricted Stock Incentive Plan, with a total of 4,062,300 shares being released
from restrictions.
XINAO XINAO
ESG Report 2025 ESG Report 2025
Sustainable Mode of Operation
Priority actions on governance dimensions
· Anti-Commercial Bribery and Anti-Corruption
· Anti-Unfair Competition
The SDGs to which this chapter is dedicated
The Company is committed to upholding professional, trustworthy, and ethical business standards in all commercial transactions and
Throughout the entire operational chain, the Company proactively identifies and assesses the impacts, risks, and opportunities related to
collaborations. It conducts its operations in strict compliance with the United Nations Convention Against Corruption as well as relevant
laws and regulations such as the Company Law of the People's Republic of China, the Criminal Law of the People's Republic of China, anti-commercial bribery and anti-corruption, conducting detailed analyses of their likelihood of occurrence, severity of impact, and scope
the Supervision Law of the People's Republic of China, the Civil Procedure Law of the People's Republic of China, the Criminal Proce- of coverage. For identified risks, the Company employs a dynamic and regularly updated risk register to ensure accuracy and compre-
dure Law of the People's Republic of China, etc. With the objective of fostering a fair, transparent, and integrity-based operational envi- hensiveness in risk identification. Simultaneously, the Company holds its partners within the wool textile industry chain to the same strin-
ronment, the Company has integrated probity and ethical conduct into its corporate culture, firmly opposing all forms of corrupt practic- gent standards, integrating integrity and compliance into every phase of business collaboration. Together, they cultivate a corporate
es that undermine corporate credibility and reputation, thereby establishing a solid compliance foundation for the implementation of its culture of clean and sound governance, jointly building a responsible commercial ecosystem across the wool textile value chain. This
sustainability strategy. effort lays a solid compliance foundation for value-chain synergy under the “WARMTEX2030” sustainability broadband strategy.
In 2025, the Company experienced no incidents or litigation cases related to commercial bribery or corruption.
Governance Promoting a Culture of Clean and Honest
Upholding business ethics as a fundamental principle, the Company anchors its governance objectives to responsible practices, with a
primary focus on establishing robust anti-corruption systems and fostering a culture of integrity. This has led to the creation of a
•A stratified and categorized integrity compliance training framework has been established, featuring
multi-tiered, interconnected anti-commercial bribery and anti-corruption governance structure encompassing the “Decision-making—
periodic specialized sessions on anti-commercial bribery and anti-corruption. These programs are
Management—Implementation” levels:
designed to cover the board of directors, middle-to-senior management, and all frontline staffs, ensur-
ing continuous updating of compliance knowledge among relevant personnel. Anti-commercial bribery
Integrity and anti-corruption course are integrated as mandatory components of onboarding training for new
employees. Through methods such as case study analysis and in-depth interpretation of pertinent
Spearheaded by the Board's Strategy and Sustainability (ESG) Committee, this tier Training
is responsible for reviewing and approving overarching strategies and key decisions related regulations, new hires gain a comprehensive understanding of the Company’ s compliance manage-
Decision- to anti-commercial bribery and anti-corruption. ment requirements. In 2025, the Company successfully executed targeted training programs on
making anti-commercial bribery and anti-corruption, achieving a participation rate of 100%.
•The Company strengthens integrity governance across the supply chain by integrating anti-commercial
bribery requirements into partnership guidelines. It executes “Anti-Commercial Bribery Agreement”
The ESG Management Committee, in conjunction with Executive Management, with key suppliers to specify ethical collaboration obligations and forces a blacklist mechanism for
leads the formulation of strategic targets and management mechanisms, while concurrent-
Management Integrity violators. Furthermore, the Company has incorporated integrity clauses into all procurement and
ly identifying and managing associated risks and opportunities. service contracts. Efforts were continued throughout 2025 to ensure that all suppliers signed the “An-
Collaboration
ti-Commercial Bribery Agreement” or entered into procurement and service contracts containing
equivalent integrity clauses, achieving a coverage rate of 100% among core suppliers.
The Board Office and respective subsidiaries are tasked with the implementation,
supervision, and execution of anti-commercial bribery and anti-corruption measures, ensur- Complaint & Report Mechanism
Implementation ing the effective translation of governance policies into tangible outcomes.
•Establish a comprehensive compliance reporting system, incorporating a full-process acceptance and
At the institutional safeguard level, the Company has established the “Administrative Procedures for Anti-Commercial Bribery” which Improve feedback mechanism. Standardize the procedures for addressing complaints and reports, proactively
explicitly defines acts of commercial bribery and corruption such as improper benefits, kickbacks, and bribe-inducing gifts. Correspond- Reporting encourage and earnestly accept supervision from all sectors of society.
ing tiered disciplinary measures—ranging from warnings and fines to termination of employment contracts and pursuit of legal liability— and
have been implemented. Additionally, the Company has implemented a two-pronged constraint mechanism: on one hand, suppliers are
required to sign the “Anti-Commercial Bribery Agreement” or enter into procurement and service contracts that include integrity clauses;
Acceptance Report Hotline Report Email
on the other hand, senior management and procurement personnel are encouraged to sign the “Clean Practice Agreement” to strength- Mechanism 0573-88226086 sjhg@xinaotex.com
en internal staffs’ commitment to integrity and self-discipline.
Strategy
The Company, grounded in its commitment to compliant operations and brand reputation development, has integrated anti-commercial
bribery and anti-corruption principles into its core corporate values and overall framework of organizational culture. It establishes com-
prehensive compliance control requirements across all business processes and builds a robust anti-bribery and anti-corruption compli-
Strengthen
•Implement stringent confidentiality measures for informer’ s personal data, strictly prohibit any form of
ance management system covering key operations such as procurement and sales. This ensures that anti-corruption and anti-bribery Protection
discrimination, retaliation, or hostile actions against investigators, and impose serious accountability on
standards are embedded into all dimensions of corporate management. Centered on the core strategies of “full lifecycle business of Informer
personnel responsible for disclosing informer data or engaging in retaliatory actions.
process transparency control, compliance-based counterparty onboarding, and organization-wide compliance awareness Rights
cultivation” , the Company has established a three-tier compliance defense mechanism against bribery and corruption. This system
enables holistic and integrated oversight at the levels of business transactions, partner interactions, and employee awareness, thereby
mitigating the risks of commercial bribery, corruption, and other violations at the source and ensuring the compliance and integrity of
the Company’s business activities.
XINAO XINAO
ESG Report 2025 ESG Report 2025
Case Intellectual Property Protection
Fostering Integrity Through Learning and Driving Development
Through Party-League Collaboration
•Training and Compliance Awareness Enhancement：Specialized intellectual property training sessions are deliv-
On April 11, 2025, the Party Committee of XINAO, in collaboration with its Youth League Committee, organized a joint ered to core business departments to comprehensively elevate staff awareness of intellectual property protection
Party-League building activity alongside an integrity education session involving over 100 Party and League members. and compliance management. It is explicitly mandated that all personnel must adhere to the principle of respecting
During the event, all participants visited the XINAO Party-Mass Home, where they gained insights into the Company’ s intellectual property rights of others, and are strictly prohibited from acquiring, disclosing, using, or disposing of intel-
developmental history and the achievements of Party building, reflecting on the practical implementation and evolution lectual property assets belonging to others through improper means or in any unauthorized form.
of integrity-driven management under the guidance of Party leadership. Subsequently, a special Party lecture was
•Patent Strategy and R&D Roadmap：During the development of high-end green woolen textiles, patent applica-
delivered by an instructor from the Tongxiang Municipal Party School. Centered on the theme “Deeply Understanding
the Central Committee’ s Eight-Point Decision and Striving to Be Exemplary Cadres in the New Era,” the lecture tions are filed concurrently for core technological innovations, establishing a comprehensive intellectual property
focused on the core principles of the Eight-Point Decision. Through analysis of typical cases, it highlighted the protection framework. Furthermore, through in-depth analysis of proprietary and industry-wide patent data, critical
profound consequences of disciplinary violations and misconduct, with particular emphasis on anti-commercial bribery gaps in core technology protection are accurately identified, thereby providing evidence-based guidance for optimiz-
and anti-corruption. The session aimed to reinforce Party members and cadres’ awareness of discipline, compliance, ing R&D directions and formulating operational strategies. In 2025, 23 new patent applications were filed for core
and integrity in professional conduct, urging them to strictly abide by disciplinary boundaries, standardize the exercise technologies related to novel woolen textiles products, forming an end-to-end intellectual property protection
of authority, and solidly fortify their ideological and ethical defenses against corruption. By integrating integrity educa- network spanning raw materials, manufacturing processes, and finished products.
tion deeply into Party-League collaboration, this activity promoted a culture of learning and integrity, uniting Party and
League members in a concerted effort to safeguard high-quality enterprise development. •Novelty Search and Infringement Risk Mitigation： Prior to key intellectual property-related activities such as
technological innovation, new product launches, or external exhibitions, rigorous novelty searches are conducted by
designated departments to identify and address potential infringement risks proactively. During the development of
new technologies, processes, and technical transformations, evidence-based IP literature analysis shall guide the
establishment of scientific research directions and technical pathways. This approach elevates the baseline for R&D
initiatives while effectively circumventing redundant development and intellectual property disputes. By 2025, a total
of 4 IP novelty searches were completed for activities such as technological innovation and product exhibitions, with
zero infringement incidents recorded throughout the year.
Grounded in the developmental requirements of its green and high-end wool textile business, the Company strictly adheres to relevant
laws and regulations, including the Criminal Law of the People's Republic of China, the Anti-Unfair Competition Law of the People's
Republic of China, the Patent Law of the People's Republic of China, the Trademark Law of the People's Republic of China, the Copy- Responsible Marketing
right Law of the People's Republic of China, the Anti-Monopoly Law of the People's Republic of China, etc. Taking as core guiding docu-
ments such as the “Implementing Regulations of the Patent Law of the People's Republic of China,” the “Patent Examination Guidelines,”
the “Implementing Regulations of the Trademark Law of the People's Republic of China,” and the “Trademark Examination and Review
Guidelines,” the Company standardizes the management of anti-unfair competition practices and solidifies the foundation for compliant •Compliance Management： Aligning with its strategic positioning in the high-end green woolen textile sector, the
operations. In 2025, the Company did not encounter any litigation or significant administrative penalties resulting from unfair competition Company strictly conducts responsible marking in strict compliance with national laws, regulations, and industry stan-
activities. dards. Through diverse channels such as the corporate website, industry exhibitions, product launches, and new
Departments including the Technical Section, Product Development Section, Marketing Section, International Trade Section, Domestic media platforms, the Company delivers truthful, accurate, and intelligible compliance data—covering product
Sales Section at the corporate headquarters, together with all subsidiaries, collaborate to implement and are specifically responsible for features, performance, potential risks, safety precautions, and maintenance procedures—to clients and consumers.
organizing, executing, and managing daily tasks related to anti-unfair competition efforts, including intellectual property protection and No complaints regarding inaccurate marketing data were recorded in 2025.
responsible marketing, and submit regular progress reports to the management. In terms of institutional safeguards, the Company has
formulated specific management systems, such as the “Administrative Procedures against Unfair Competition” , which clarify review •Compliance Review：The Company establishes a full-process review mechanism for marketing materials of new
processes, judgment criteria, and accountability entities for marketing and promotional content. Strict requirements are imposed to products. Thorough reviews are conducted on planned releases, including detailed product specification sheets and
ensure that all promotional data is authentic, accurate, and compliant, expressly prohibiting false statements, exaggerated claims, and user manuals, with a focus on identifying intellectual property infringement risks and non-compliant expressions that
other improper content. This provides a clear institutional framework for anti-unfair competition initiatives. In 2025, the Company rigor- violate the Advertising Law of the People’ s Republic of China, thereby ensuring that all marketing materials are legal
ously advanced the implementation and performance enhancement of anti-unfair competition measures, conducting specialized risk and compliant. In 2025, the approval rate for new product materials reached 100%, with no instances of non-compli-
control initiatives and training. ant marketing materials being released.
By aligning with market demands in the wool textile industry and leveraging its own strengths in green, high-end products, the Compa-
ny fosters a healthy cooperative ecosystem with industry peers as well as upstream and downstream partners across the value chain,
proactively seizing market opportunities under the framework of compliant development.
XINAO XINAO
ESG Report 2025 ESG Report 2025
Adhering to the principle of “comparability,” the Company discloses data performance that reflects the effectiveness of its ESG manage-
ment and, to the extent possible, retroactively provides corresponding figures for historical years. Starting from 2024, the Company has Indicators Unit 2023 2024 2025
further refined the data collection process, optimized the scope of certain data statistics and disclosure standards, and implemented
retrospective adjustments to some previously disclosed data from earlier years.
Total wastewater discharge m? 1,273,986.83 1,434,805.87 1,537,897.99
Unless otherwise stated, the scope of statistical data presented in the reporting period aligns with the scope of the Company's consoli-
dated financial statements.
Industrial wastewater discharge m? 1,189,010.83 1,315,409.87 1,291,217.49
Data Sheet on Environmental Dimensions
Data Sheet on Tackling Climate Change Domestic wastewater discharge 8 m? 84,976.00 119,396.00 246,680.50
Indicators Unit 2023 2024 2025
Wastewater discharge per unit of
m?/t 47.05 46.43 51.11
product 9
Total greenhouse gas emissions tCO₂e 115,016.13 128,693.85 133,053.39
Wastewater discharge per unit of
m?/million yuan 287.04 296.40 304.40
revenue 10
Scope I Total greenhouse gas
emissions 1 tCO₂e 7,053.79 8,017.38 8,159.69
Chemical Oxygen Demand (COD)
t - - 352.11
discharge in wastewater 11
Scope II Total greenhouse gas
emissions 2 tCO₂e 107,962.34 120,676.47 124,893.70
Biochemical Oxygen Demand (BOD)
discharge in wastewater 11 t - - 68.72
Greenhouse gas emissions per unit of
product 3 tCO₂e/t 4.25 4.16 4.42
Ammonia Nitrogen (NH3-N) discharge
in wastewater 11 t - - 23.63
Greenhouse gas emissions per unit of
revenue 4 tCO₂e/million yuan 25.91 26.59 26.34
Total Nitrogen (TN) discharge in
t - - 49.00
wastewater 11
Direct greenhouse gas emission
reductions attributable to mitigation tCO₂e - 15,600.91 29,211.97
measures 5、6 Total Phosphorus (TP) discharge in
t - - 2.11
wastewater 11
Scope I tCO₂e - 2,089.71 4,130.03
Total waste gas emission m? - 1,961,619,705.40 2,710,873,312.00
By scope
Scope II 6 tCO₂e - 13,511.20 25,081.94 Waste gas emission per unit of
m?/t - 63,477.87 90,088.84
product 12
Re-engineer the
tCO₂e - 1,318.80 1,937.93 Waste gas emission per unit of
production process m?/million yuan - 405,227.71 536,571.85
revenue 13
Retrofit equipment tCO₂e - 4,202.73 7,967.40 Particulate Matter (PM) emission in
t - - 7.42
waste gas 14
By emission
reduction tCO₂e - 48.16 476.51 Sulfur Oxide (SOx) emission in waste
Improve technique t - - 0.24
measures gas 14
Replace fuel tCO₂e - 694.82 1,780.80 Nitrogen Oxide (NOx) emission in
t - - 1.43
waste gas 14
tCO₂e - 9,336.40 17,049.33 Volatile Organic Compounds (VOCs)
Others 7 t - - 0.34
emission in waste gas 14
XINAO XINAO
ESG Report 2025 ESG Report 2025
Data Sheet on Waste Disposal
Indicators Unit 2023 2024 2025 Indicators Unit 2023 2024 2025
Total waste generation t 14,032.96 16,874.59 16,705.21 Purchased electric power MWh 121,236.47 143,127.09 156,377.50
Consumption of
Total hazardous waste generation t 15.62 15.31 19.25 purchased MWh 109,761.11 124,556.26 135,969.12
conventional power
Total non-hazardous waste Indirect Consumption of
t 14,017.34 16,859.28 16,685.96 purchased green-
generation MWh 800.00 7,799.60 9,126.00
energy certified power 23
Total non-hazardous industrial t 13,653.26 16,469.04 16,278.63 consum- Consumption of
waste generation ption 20 purchased MWh 10,675.36 10,771.23 11,282.38
photovoltaic power
Total non-hazardous domestic
t 364.08 390.24 407.33 Total consumption of
waste generation t 139,585.95 151,686.16 140,420.10
purchased steam
Hazardous waste generation per unit
kg/t 0.58 0.50 0.64
of product 15
Total energy consumption tce 31,995.05 36,425.74 37,508.12
Hazardous waste generation per unit
kg/million yuan 3.52 3.16 3.81
of revenue 16 Consumption of direct
By energy tce 3,891.17 4,486.90 5,006.53
energy
Non-hazardous waste generation per consumption
kg/t 517.71 545.57 554.51
unit of product 17 Consumption of indirect
correlation tce 28,103.88 31,938.84 32,501.59
Non-hazardous waste generation per energy
kg/million yuan 3.16 3.48 3.30
unit of revenue 18 Consumption of
renewable energy 24 tce 1,410.33 2,486.54 2,980.17
Data Sheet on Environmental Compliance Management Share of renewable
By renewable %
energy consumption 25
energy
Indicators Unit 2023 2024 2025 attributes Consumption of
tce 30,584.72 33,939.20 34,527.96
non-renewable energy 26
Annual environmental expenditure 19 10,000 CNY 1,279.78 1,512.56 2,650.32
Share of non-renewable
% 95.59 93.17 92.05
Penalties for major administrative punishment or energy consumption 27
criminal liability imposed by relevant ecological
and environmental authorities for environmental tce/t 1.18 1.18 1.25
product 28
incidents during the reporting period
Energy consumption per unit of
tce/million yuan 7.21 7.52 7.42
revenue 29
Data Sheet on Energy Utilization
Clean energy consumption tce 5,005.67 6,490.29 7,229.62
Indicators Unit 2023 2024 2025
Natural gas tce 3,595.35 4,003.78 4,249.44
Natural gas m? 2,703,272.92 3,010,358.96 3,195,069.27
Share of natural gas 30 % 71.83 61.69 58.78
Gasoline l 121,067.37 111,943.04 108,647.11
Solar energy tce 1,312.00 1,527.94 1,858.59
Diesel l 103,763.96 102,556.37 104,961.62
Direct
energy Share of solar energy 31 % 26.21 23.54 25.71
Liquefied petroleum gas m? 51.26 43.32 52.86
consum-
ption 20
Self-generated solar Others (green-certified) 32 tce 98.32 958.57 1,121.59
MWh 0 0 812.56
power 21
Solar water heating 22 MWh - 1,661.20 3,027.88 Share of others 32 % 1.96 14.77 15.51
XINAO XINAO
ESG Report 2025 ESG Report 2025
Data Sheet on Water Resources Utilization
Note 1: [Calculation method] Scope I greenhouse gas emissions originate from the combustion of natural gas, gasoline, diesel, and
liquefied petroleum gas by the Company, fugitive emissions from refrigerants and fire extinguishers, and process emissions
Indicators Unit 2023 2024 2025 from carbon-containing chemicals. The accounting method for fugitive refrigerant emissions is based on the AR6 WGI
Chapter 7 Supplementary Material officially released by the IPCC in 2021, while the accounting method for emissions from
Water withdrawal t 1,693,988.95 1,823,490.16 1,914,423.62 other categories refer to the Accounting methods and reporting guidelines of greenhouse gas emissions for industrial
enterprises in other sectors officially issued by the National Development and Reform Commission in 2015.
Municipal water supply t 907,959.00 1,050,674.00 1,218,613.30 Note 2: [Calculation method] Scope II greenhouse gas emissions arise from the Company’s procurement of conventional power and
steam. These emissions are accounted for using a market-based approach. Specifically, for T&D UK, the emission factors
for purchased conventional power are derived from the 2023–2025 factors published in Greenhouse gas reporting: conver-
Surface water t 501,587.00 481,019.00 412,492.00
sion factors, which are 0.20707, 0.20705, and 0.17700 tCO₂/MWh respectively; for XINAO VN, the emission factor is based
on the 2011 value of 0.6766 tCO₂/MWh from Quy ??i N?ng l??ng sang TOE (B?ng tính h? s? phát th?i CO₂ theo các d?ng n?ng
Ground water t 83,953.00 61,520.00 41,900.00 l??ng); for XINAO EU, factors are sourced from Efficiency and decarbonization indicators in Italy and in the biggest European
Countries —using the 2023 factor of 0.4138 tCO₂/MWh from the 2024 edition, and the 2024 factor of 0.3711 tCO₂/MWh from
the 2025 edition (the 2024 value is applied for 2025); for domestic power procurement in China, the emission factor of
Rain water t 60,904.00 78,591.00 102,525.00 0.6096 tCO₂/MWh is adopted from the Announcement on the Release of the CO₂ Emission Factor of Power in 2023 (Decem-
ber 2025) jointly issued by the Ministry of Ecology and Environment and the National Bureau of Statistics. The emission
Purchased steam water 139,585.95 151,686.16 138,893.32 factor for purchased heat adopts 0.11 tCO₂/GJ with reference to the Accounting methods and reporting guidelines of green-
t
house gas emissions for industrial enterprises in other sectors.
Note 3: [Calculation method] Greenhouse gas emissions per unit of product = Total greenhouse gas emissions / Output
Water withdrawal per unit of product 33 t/t 62.56 59.01 63.62
注3： [Note of scope] Output refers to the total output of each manufacturing enterprise within the scope of the consolidated
statements presented in the form of final products for sale after internal consolidation and offset, the same applies hereinaf-
Water withdrawal per unit of revenue 34 t/million yuan 381.67 376.69 378.93 ter.
Note 4: [Calculation method] Greenhouse gas emissions per unit of revenue = Total greenhouse gas emissions / Revenue
Reused water consumption t 1,220,207.24 1,120,967.29 1,097,758.22
Note 5: [Calculation method] The reduction in greenhouse gas emissions directly attributable to mitigation measures is calculated
as the cumulative total emission reductions achieved by respective companies through implemented abatement initiatives
Cooling reused water consumption t 10,450.00 37,529.67 44,522.00 (incomplete statistics) by the end of the reporting period, with 2020 serving as the baseline year.
Note 6: [Note of change] In 2025, the Company commissioned its self-generated photovoltaic power generation project while
Reclaimed reused water consumption 1,076,746.00 910,192.00 899,315.00 simultaneously increasing the procurement of green certified electricity and photovoltaic power. These initiatives have
t
continuously expanded the replacement of conventional grid power with renewable energy sources for the Company's
operational sites, leading to a substantial enhancement in emission reduction benefits.
Steam condensate consumption t 49,912.90 67,532.80 45,271.50
Note 7: [Note of scope] Other emission reduction measures are greenhouse gas emissions reduced by the use of photovoltaic power
and green-certified power.
Other reused water consumption t 83,098.34 105,712.82 108,649.72 Note 8: [Note of change] The Company's domestic wastewater discharge volume in 2025 shows a significant deviation from the
Water reuse rate 35 % 41.87 38.07 36.44 Note 9: [Calculation method] Wastewater discharge per unit of product = Total wastewater discharges / Output
Note 10: [Calculation method] Wastewater discharge per unit of revenue = Total wastewater discharges / Revenue
Total water consumption 36 t 420,002.12 388,684.29 376,525.63 Note 11: [Note of Scope] The statistical scope comprises NEW CHUWA and HOUYUAN TEX, both listed in the environmental informa-
tion disclosure roster, alongside significant manufacturing subsidiaries including XINAO CASHMERE, XINAO VN, and T&D
UK. The remaining manufacturing subsidiaries, whose effluent solely originates from domestic wastewater, have not been
included in the accounting of pollutant discharge volumes.
Note 12: [Calculation method] Waste gas emission per unit of product = Total waste gas emissions / Output
Data Sheet on Circular Economy
Note 13: [Calculation method] Waste gas emission per unit of revenue = Total waste gas emissions / Revenue
Note 14: [Note of scope] The statistical coverage includes the significant manufacturing subsidiaries, namely NEW CHUWA and XINAO
Indicators Unit 2023 2024 2025
CASHMERE; other manufacturing subsidiaries solely generate fugitive emissions of atmospheric pollutants, for which pollut-
ant emissions have not been accounted.
Waste cyclic utilization t - 187.07 149.44
Note 15: [Calculation method] Hazardous waste generation per unit of product = Total hazardous waste generation / Output
Note 16: [Calculation method] Hazardous waste generation per unit of revenue = Total hazardous waste generation / Revenue
Share of recycled waste 37 % - 1.11 0.89
Note 17: [Calculation method] Non-hazardous waste generation per unit of product = Total non-hazardous waste generation / Output
Note 18: [Calculation method] Non-hazardous waste generation per unit of revenue = Total non-hazardous waste generation /
Total resource consumption t - 46,556.38 48,392.16 Revenue
Note 19: [Note of change] In 2025, additional investments in environmental protection facilities were made for the newly
Renewable resource consumption t - 27,278.37 28,868.52 constructed projects of HOUYUAN TEX, resulting in an annual increase in environmental expenditure compared to
Proportion of renewable resource
% - 58.59 59.66
consumption to total resource consumption 38
XINAO XINAO
ESG Report 2025 ESG Report 2025
Note 20: [Calculation method] Direct energy consumption encompasses natural gas, gasoline, diesel, liquefied petroleum Data Sheet on Social Dimensions
gas (LPG), self-generated photovoltaic power, and solar water heating. Indirect energy consumption includes
procured conventional power, green certified power, photovoltaic power, and purchased steam. The conversion Data Sheet on Employment and Employee Rights
factors for standard coal equivalent of each energy type are based on the General rules for calculation of the
comprehensive energy consumption (GB/T 2589-2020).
Note 21: [Note of change] The Company's self-generated photovoltaic project commenced operation in 2025, which Indicators Unit 2023 2024 2025
represents a new energy consumption source not present in previous reporting periods.
Total number of employees (end of period) people 3,979 4,265 4,455
Note 22: [Note of change] In 2025, the Company continued to advance the substitution of renewable energy sources by
expanding the application scope of solar water heating systems, resulting in a significant increase in solar thermal
consumption compared to 2024. Male people 1,577 1,703 1,783
Note 23: [Note of change] Commencing in 2024, the Company has increased its consumption of Green Certified power,
resulting in a rise in indirect renewable energy consumption compared to the previous year. Proportion of male 1 % 39.63 39.93 40.02
Note 24: [Note of change] Renewable energy consumption comprises self-generated photovoltaic power, solar water By gender
heating, purchased green certified power, and purchased photovoltaic power. Commencing in 2024, the Company Female people 2,402 2,562 2,672
has increased its utilization of solar water heating and green-certified power, resulting in a higher renewable
energy consumption compared to the previous year.
Proportion of female 2 % 60.37 60.07 59.98
Note 25: [Calculation method] Share of renewable energy consumption = Renewable energy consumption / Total energy
consumption x 100%
Full-time employment contracting people 3,502 3,785 3,984
Note 26: [Calculation method] Non-renewable energy consumption encompasses natural gas, gasoline, diesel fuel, liquefied
petroleum gas (LPG), as well as conventionally procured electric power and steam.
Part-time people 12 11 8
Note 27: [Calculation method] Share of non-renewable energy consumption = Non-renewable energy consumption / Total By form of
energy consumption x 100% employment
Labor dispatching people 0 0 0
Note 28: [Calculation method] Total energy consumption per unit of product = Total energy consumption / Output
Note 29: [Calculation method] Total energy consumption per unit of revenue = Total energy consumption / Revenue
Other forms of employment 3 people 465 469 463
Note 30: [Calculation method] Share of natural gas = Natural gas consumption / Clean energy consumption x 100%
Note 31: [Calculation method] Share of solar energy = Solar energy consumption / Clean energy consumption x 100% 30 and under people 588 814 811
Note 32: [Note of scope] Within clean energy sources, the “Others” refers to green certified power.
[Calculation method] Share of others = Other (green-certified) energy consumption / Clean energy consumption By age 30 to 50 people 2,478 2,494 2,616
x 100%
Note 33: [Calculation method] Water withdrawal per unit of product = Water withdrawal / Output 50 and above people 913 957 1,028
Note 34: [Calculation method] Water withdrawal per unit of revenue = Water withdrawal / Revenue
Note 35: [Calculation method] Water reuse rate = Reused water consumption / ( Water withdrawal + Reused water Number of employees from ethnic minorities people - - 837
consumption ) x 100%
Note 36: [Calculation method] Total water consumption = Water withdrawal - Total wastewater discharge Proportion of ethnic minority employees 4 % - - 18.79
Note 37: [Calculation method] Share of recycled waste = Waste cyclic utilization / Total waste generation x 100%
Number of employee turnover people 745 798 971
Note 38: [Calculation method] Proportion of renewable resource consumption to total resource consumption = Renewable
resource consumption / Total resource consumption x 100%
Employee turnover rate 5 % 15.77 15.76 17.90
Labor contract signing rate 6 % 100 100 100
Social insurance coverage rate 7 % 100 100 100
Number of employees included in collective
people 3,474 3,675 3,923
negotiation agreement (end of period) 8
Number of employees subject to periodic performance
or career development appraisal (end of period) people 1,001 1,004 1,056
Proportion of employees subject to periodic performance
or career development appraisal in all employees 9 % 25.21 23.54 23.70
Remuneration per capita 10 10,000 CNY 9.67 9.70 9.72
Revenue generation per capita 11 10,000 CNY 106.52 106.74 108.45
XINAO XINAO
ESG Report 2025 ESG Report 2025
Data Sheet on Safety and Quality of Products and Services
Data Sheet on Occupational Health & Safety
Indicators Unit 2023 2024 2025
Indicators Unit 2023 2024 2025
Total number of complaints received on products
case(s) 518 619 319
Number of employees in occupational disease and services
people 1,958 2,121 2,258
risk positions
Handling rate of complaints on products and
% 100 100 100
services 19
Morbidity rate of occupational diseases % 0 0 0
Product recall rate 20 % 0 0 0
Position transfer rate due to occupational
% 100 100 100
contraindications 12 Proportion of products recalled due to safety and
% 0 0 0
Amount invested in work-related injury insurance health concerns to all products sold 21
for employees Amount involved in major liability accident damages
Coverage rate of work-related injury insurance for related to safety and quality of products and services 10,000 CNY 0 0 0
% - 100 100 that occurred during the reporting period
employees 13
Amount invested in workplace safety liability
insurance for employees
Data Sheet on Data Security & Customer Privacy
Coverage rate of workplace safety liability
% - 100 100
insurance 14
Indicators Unit 2023 2024 2025
Investment in workplace safety 10,000 CNY - - 1,206.81
Specific amount involved in data security incidents 10,000 CNY 0 0 0
Proportion of workplace safety investment to
% - - 0.24
revenue 15
Specific amount involved in customer privacy breaches 10,000 CNY 0 0 0
Number of general work-related accidents among
accident(s) 64 73 37
employees 16
Number of other safety accidents accident(s) 0 0 0 Data Sheet on Innovation-Driven
Number of work-related fatalities people 0 0 0
Indicators Unit 2023 2024 2025
Amount of investment in R&D 10,000 CNY 11,120.66 11,069.89 11,463.81
Data Sheet on Employee Training & Development Proportion of R&D investment to revenue 22 % 2.51 2.29 2.27
Number of R&D personnel (end of period) people 405 483 444
Indicators Unit 2023 2024 2025
Total number of employees trained (end of period) people 3,966 4,096 4,455 Proportion of R&D personnel 23 % 10.18 11.32 9.97
Total number of participations of employee Number of patents applied during the reporting period patent(s) 22 19 23
person-time(s) - 55,319 62,862
trainings
Coverage rate of employee training 17 % 99.67 96.04 100 Of which number of invention patents applied patent(s) 2 6 6
Amount of expenditure on employee training 18 10,000 CNY 37.28 218.38 29.60 Number of patents authorized during the reporting period patent(s) 17 9 6
Of which number of invention patents authorized patent(s) 5 2 0
Accumulated number of valid patents patent(s) 156 144 104
Number of invention patents applied to the main business patent(s) 22 24 25
XINAO XINAO
ESG Report 2025 ESG Report 2025
Data Sheet on Supply Chain Security Data Sheet on Rural Revitalization and Social Contribution
Indicators Unit 2023 2024 2025 Indicators Unit 2023 2024 2025
Cash expenditures for projects of poverty alleviation
Total number of suppliers supplier(s) 762 818 732 10,000 CNY 202.84 249.74 0
and rural revitalization 31
Total number of suppliers in Chinese Mainland Value of expenditure on commodities for projects of
supplier(s) 585 638 616 10,000 CNY 1.60 3.50 3.16
poverty alleviation and rural revitalization
Total number of suppliers in Hong Kong, Macau, Number of people benefiting from projects of poverty
supplier(s) 177 180 116 people - 18,601 500
Taiwan, and overseas alleviation and rural revitalization
Number of suppliers certified by quality management Cash expenditure for projects of external donations
supplier(s) - 170 195 10,000 CNY 326.84 367.62 28.72
system and public benefits 31
Proportion of suppliers certified by quality Value of expenditure on commodities for projects of
% - 20.78 26.64 10,000 CNY 10.60 4.54 13.07
management system 24 external donations and public benefits
Number of suppliers certified by environmental Number of employee participations in volunteer
supplier(s) - 133 176 person-time(s) 50 20 210
management system activities
Proportion of suppliers certified by environmental Total hours of employee volunteer services 32
% - 16.26 24.04 hour(s) 100 40 428
management system 25
Number of suppliers certified by occupational health
supplier(s) - 130 188
and safety management system
Proportion of suppliers certified by occupational
% - 15.89 25.68
health and safety management system 26
Note 1: [Calculation method] Proportion of male = Number of male employees / Total number of employees (end of period) x
Number of suppliers assessed on environment, labor, 100%
supplier(s) 34 94 220
ethics, etc. 27 Note 2: [Calculation method] Proportion of female = Number of female employees / Total number of employees (end of period) x
Number of qualified suppliers assessed on 100%
supplier(s) 34 85 179
environment, labor, ethics, etc. 27 Note 3: [Note of scope] Other forms of employment encompass retired retainers, temporary workers, etc.
Proportion of qualified suppliers assessed on Note 4: [Calculation method] Proportion of ethnic minority employees = Number of employees from ethnic minorities / Total
% 100 90.43 81.36
environment, labor and ethics, etc. 28 number of employees (end of period) x 100%
Number of suppliers that have signed Note 5: [Calculation method] Employee turnover rate = Total number of employee turnover (excluding age-eligible retirements) /
supplier(s) 224 268 598
anti-commercial bribery agreements 29 (Total number of employee turnover + Total number of employees) x 100%
Note 6: [Calculation method] Labor contract signing rate = Number of employees who have signed labor contracts / Number of
employees who should have signed labor contracts x 100%
Note 7: [Note of scope] The Company buys accident insurance for employees in other forms of employment than full-time em-
Data Sheet on Equal Treatment of SMEs ployment contracts.
[Calculation method] Social insurance coverage rate = Number of employees covered by social insurance (end of period)
/ Number of full-time employment contract employees (end of period) x100%
Indicators Unit 2023 2024 2025
Note 8: [Note of scope] 100% coverage of collective negotiation agreement in companies and subsidiaries that are unionized.
Balance of accounts payable (including notes payable)
at the end of the reporting period 10,000 CNY - 45,378.22 41,242.68 Note 9: [Calculation method] Proportion of employees subjects to periodic performance or career development appraisal in all
employees = Number of employees subjects to periodic performance or career development appraisal (end of period) /
Proportion of balance of accounts payable (including notes Total number of employees (end of period) x 100%
% - 7.98 6.46
payable) to total assets at the end of the reporting period 30
Note 10: [Calculation method] Remuneration per capita = Total employee remuneration expenditure / Total number of employees
(adjusted based on attendance)
Amount overdue at the end of the reporting period 10,000 CNY - 0 0
Note 11: [Calculation method] Revenue generation per capita = Revenue / Total number of employees (adjusted based on atten-
Amount overdue to SMEs at the end of the reporting dance)
period Note 12: [Calculation method] Position transfer rate due to occupational contraindications = Number of employees transferred due
to occupational contraindications / Total number of employees with occupational contraindications x 100%
Note 13: [Calculation method] Coverage rate of work-related injury insurance = Number of employees insured against work-related
injuries / Total number of employees who should be insured against work-related injuries x 100%
Note 14: [Calculation method] Coverage rate of workplace safety liability insurance = Number of employees covered by workplace
safety liability insurance / Total number of employees required to be covered by workplace safety liability insurance by the
local Emergency Management Agency x 100%
XINAO XINAO
ESG Report 2025 ESG Report 2025
Note 15: [Calculation method] Proportion of workplace safety investment to revenue = Investment in workplace safety / Revenue x Data Sheet on Governance Dimensions
Note 16: [Note of change] The Company attaches great importance to workplace safety management. In 2025, the Company
further improved the workplace safety management system, comprehensively conducted specialized workplace safety Data Sheet on Corporate Governance
training for all employees, and as a result, the number of general work-related injuries decreased compared to 2024.
Note 17: [Calculation method] Coverage rate of employee training = Total number of employees trained (end of period) / Total
number of employees (end of period) x 100% Indicators Unit 2023 2024 2025
Note 18: [Note of change] Data shows significant variation as expenditures for renovation of training venues and procurement of
supporting equipment and facilities were incurred in 2024, whereas no such expenses were recorded in 2023 or 2025. Number of board of directors people 9 9 9
Note 19: [Calculation method] Handling rate of complaints on products and services = Total number of complaints on products and
services handled / Total number of complaints on products and services x 100% Number of female directors on the board people 2 2 2
Note 20: [Calculation method] Product recall rate = Number of products recalled / Total number of products sold and distributed x
Note 21: [Calculation method] Proportion of products recalled due to safety and health concerns to all products sold = Number of
products recalled due to safety and health concerns / Total number of products sold x 100% Number of independent directors on the board people 3 3 3
Note 22: [Calculation method] Proportion of R&D investment to revenue = Amount of investment in R&D / Revenue x 100%
Note 23: [Calculation method] Proportion of R&D personnel = Number of R&D personnel (end of period) / Total number of employ- Proportion of independent directors on the board 2 % 33.33 33.33 33.33
ees (end of period) x 100%
Note 24: [Calculation method] Proportion of suppliers certified by quality management system = Number of suppliers certified by Number of shareholders’ meetings held time(s) 4 3 3
quality management system / Total number of suppliers x 100%
Note 25: [Calculation method] Proportion of suppliers certified by environmental management system = Number of suppliers certi- Number of board meetings held time(s) 8 10 8
fied by environmental management system / Total number of suppliers x 100%
Note 26: [Calculation method] Proportion of suppliers certified by occupational health and safety management system = Number of Board member attendance rate 3 % - - 100
suppliers certified by occupational health and safety management system / Total number of suppliers x 100%
Note 27: [Note of change] Throughout 2025, the Company continued to strengthen ESG management within its supply chain by Total number of senior executives people - - 6
further expanding the scope of supplier ESG assessments. This resulted in an increase in both the number of suppliers
evaluated on environmental, labor, and ethical criteria and the number of qualified suppliers.
Proportion of female senior executives 4 % - - 50
Note 28: [Calculation method] Proportion of qualified suppliers assessed on environment, labor and ethics, etc. = Number of quali-
fied suppliers assessed on environment, labor and ethics, etc. / Number of suppliers assessed on environment, labor and
ethics, etc.
Note 29: [Note of change] For the 2023–2024 period, the statistical scope covered only those suppliers that had signed Data Sheet on Anti-commercial Bribery and Anti-corruption
the “Anti-Commercial Bribery Agreement.” In 2025, the scope was expanded to include suppliers that had either
signed the “Anti-Commercial Bribery Agreement” or whose procurement and service contracts incorporated
integrity-related clauses. This adjustment accounts for the notable variation observed between 2024 and 2025.
Indicators Unit 2023 2024 2025
Note 30: [Calculation method] Proportion of balance of accounts payable (including notes payable) to total assets at the
end of the reporting period = Balance of accounts payable (including notes payable) at the end of the reporting Total number of directors covered by anti-commercial
people - 9 9
period / Total assets x 100% bribery and anti-corruption training
Note 31: [Note of change] Commencing in 2025, the Company has adjusted the donors of its title endowment charity Percentage of directors covered by anti-commercial
common prosperity funds. Consequently, philanthropic expenditures previously allocated directly by the Compa-
% - 100 100
bribery and anti-corruption training
ny have been correspondingly reduced, leading to a decline in cash outlays for poverty alleviation and rural revi-
talization initiatives, as well as external donations and public welfare projects, compared to 2024. Total number of management personnel covered by
people - 67 77
anti-commercial bribery and anti-corruption training
Note 32: [Note of change] The Company intensified its employee volunteer services program in 2025 by organizing a
range of initiatives including ecological conservation activities such as mountain cleanup and green preserva- Percentage of management personnel covered by
% - 100 100
tion, public awareness campaigns for social welfare, as well as joint Party-masses development programs. These anti-commercial bribery and anti-corruption training
expanded engagements resulted in an increase in total volunteer service hours compared to 2024. Total number of frontline employees covered by
people - 3,873 4,378
anti-commercial bribery and anti-corruption training 5
Percentage of frontline employees covered by
% - 92.26 100
anti-commercial bribery and anti-corruption training
Number of corruption cases proposed and concluded
against the issuer or its employees during the case(s) - 0 0
reporting period
XINAO XINAO
ESG Report 2025 ESG Report 2025
Guide Index against the Guidelines No. 14 of Shanghai Stock Exchange for Self-Regulation
Data Sheet on Anti-unfair Competition
of Listed Companies – Sustainability Report (Trial)
Indicators Unit 2023 2024 2025 Dimension No. Topic Corresponding Article Corresponding Chapter
Amount involved in litigation or significant
administrative penalties due to the Company's
unfair competition behavior during the reporting
period
Ecosystem and biodiversity Ecosystem and Biodiversity
Environmental
Note 1: [Calculation method] Proportion of female directors on the board = Number of female directors on the board / Number of Environmental Environmental
board of directors x 100%
Note 2: [Calculation method] Proportion of independent directors on the board = Number of independent directors on the board / 6 Energy utilization Article 35 Energy Utilization
Number of board of directors x 100%
Note 3: [Calculation method] Board member attendance rate = Number of board meetings actually attended by directors / Total 7 Water resources utilization Article 36 Water Resources Utilization
number of board meetings requiring director attendance) x 100%
Note 4: [Calculation method] Proportion of female senior executives = Number of female senior executives / Total number of 8 Circular economy Article 37 Circular Economy
senior executives x 100%
Note 5: [Note of scope] The management tier encompasses departmental heads or equivalent positions and above within the
Company and its subsidiaries, while all employees not belonging to the management tier are categorized as frontline staff.
Ethics of Science and Technology
Note: The Company does not engage in
Ethics of science Article 43 scientific research or technological develop-
such as life sciences or artificial intelligence;
therefore, this topic is not material.
Social
Equal Treatment of SMEs
Note: The Company’ s accounts payable
balance (including notes payable) does not
exceed RMB 30 billion, accounting for no
no overdue payments to SMEs that require
disclosure via the National Enterprise Credit
Information Publicity System. Consequently,
this topic is not material.
Safety and quality of Safety and Quality of
Data security & Data Security &
Due diligence Article 52 Due Diligence,
Stakeholder communication Article 53 Due Diligence,
Governance
Anti-Commercial bribery Anti-Commercial Bribery
XINAO XINAO
ESG Report 2025 ESG Report 2025
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