汇川技术:Inovance 2022 Environmental,Social and Governance(ESG)

CONTENTS A Development Platform for Suitable Talent
01 About Inovance 03 04 Lean & Innovative Solutions 22 07 and Cultural Integration 51
Vision Mission & Values 03 R&D and Innovation System 22 Rights Interests and Benefits of 51
Regions 04 Product Quality Management 26 Employees
Main Business Units 05 Protection of Customers' 30 Occupational Health and Safety 57
Rights and Interests Employee Training and 60
Development
About this Report 01 Enterprising Low Strict and Diligent 02 ESG Governance System 06 05 Carbon Pioneer 34 08 Green Operation 65
Key Quantitative 75 ESG Framework 06 Low Carbon Products and 34 Environmental Management System 65
Performance ESG Strategy 08 Solutions Resource Management 66
Management of Material Topics 09 Responding to Climate Change 38 Emissions and Waste Management 68
Index Table 81
Business Power with
A Sincere and Reliable Sincere Dedication
03 Solid Corporate Governance 13 06 Responsibility Ecosystem 45 09 to Goodness 70
Corporate Governance System 13 Supply Chain Management 45 Community Communication 70
Operational Compliance and 20 Cross-industry Collaboration 49 and Volunteer Service
Anti-Corruption and Development Social Welfare and Charity 71Inovance 2022 Environmental Social and Governance (ESG) Report
About this Report Name of Company or Subsidiary Abbreviations in ReportJiangsu Kingway Rail Transit Equipment Co. Ltd. Kingway Rail
Shanghai BST Electric Co. Ltd. BST Electric
This Report is the third Environmental Social & Governance (ESG) Report of Inovance disclosing the Company's philos- Shanghai BNK Cable Co. Ltd. BNK Cable
ophy management methods work implementation and achievements in addressing substantive issues related to the
Yueyang Inovance Technology Co. Ltd. Yueyang Inovance
environment society and governance during the business operation process to stakeholders.
1 In addition "the Company" "We" and "the whole Company" in this Report all refer to Inovance Technology Co. Ltd.
Reporting Scope Reporting Period
The information disclosed in this Report covers Shenzhen InovanceTechnology Co.Ltd. Ltd. and its subsidiaries. Unless oth-
erwise specified it is consistent with the scope of Consolidated Financial Statement of annual report of Inovance (stock code: This report is an annual report covering the period from January 1 2022 to December 31 2022. For any information
300124.SZ). that goes beyond this time range explanations will be provided where necessary.
In particular the coverage of the quantitative performance disclosed in this Report includes the following three circumstances:
Reporting Framework
·The coverage of financial data and some social performance (including that of R&D and innovation and intellectual property
protection) disclosed in this Report is consistent with the scope of the Consolidated Financial Statement; This Report is prepared in accordance with Shenzhen Stock Exchange Social Responsibility Instructions to Listed Com-
·The coverage of some environmental performance (including that of energy management greenhouse gas emissions and panies (2006) Guidelines of Shenzhen Stock Exchange for Self-discipline Regulation of Listed Companies No.2 – Stan-
water resource use) disclosed in this Report covers the scope within Company's operational control including all organizations dard Operation of Listed Companies on ChiNext Market (2022) and Annex I of Guidelines of Shenzhen Stock Exchange
within the scope of the Consolidated Financial Statement as well as the Company's expatriate agencies (liaison offices); for Listed Companies' Handling the Business No. 2 – Matters Related to the Disclosure of Periodic Reports (2020).·The coverage of other social and environmental performance disclosed in this Report is the direct control scope of the Compa-
ny i.e. Inovance's companies and subsidiaries with operational locations in Shenzhen and Suzhou and the mentioned Compa- Notes to the Report's Data
nies and Subsidiaries are listed as below: All qualitative information and quantitative data in this Report are collected from Inovance's authentic operational re-
cords or financial reports. Should there be any discrepancy between financial data in this Report with our Consolidated
Companies and Subsidiaries Located in Shenzhen Subsidiaries Located in Suzhou Financial Statements 2022 the latter shall prevail.Suzhou Inovance Technology Co. Ltd. The financial data presented in this Report are denominated in RMB.Suzhou Monarch Control Technology Co. Ltd.Inovance Technology Co. Ltd.Inovance Electromechanical Systems Engineering (Suzhou) Co. Ltd.Shenzhen Inovance Information Technology Co. Ltd.Suzhou Inovance Automotive Co. Ltd. Reliability Assurance
Shenzhen Inovance Control Technology Co. Ltd.Suzhou Inovance Control Technology Co. Ltd. Inovance promises that there are no false records misleading statements or major omissions in the content of this Re-
Jiangsu Kingway Rail Transit Equipment Co. Ltd. port and the Company's board of directors is responsible for its authenticity accuracy and completeness.This Report is based on the principle of "balance" and discloses both positive and negative information about the
For further information on the scope and changes of quantitative performance disclosure please refer to the "Key
Company in an unbiased manner. There are no negative events that ought to have been disclosed that related to
Quantitative Performance" section.penalties form the competent authorities for violating relevant laws and regulations or that have had a significant
For the sake of convenience some main bodies involved in the disclosed information in the text are mentioned with negative impact.abbreviations. The corresponding relationship between these abbreviations and the companies or subsidiaries they
refer to are as follows: Contact Us
Name of Company or Subsidiary Abbreviations in Report Email of Inovance Sustainability Office : sustainability@inovance.com
Shenzhen Inovance Technology Co.Ltd. Inovance1 You can obtain more social responsibility information about Inovance through the Company's official website: http://
Suzhou Inovance Technology Co. Ltd. Suzhou Inovance www.inovance.com
Suzhou Inovance Automotive Co. Ltd. Inovance Automotive
01 02Inovance 2022 Environmental Social and Governance (ESG) Report
About Inovance Regions
Changchun
Inovance has more than 70 offices Changchun Weton Optoelectronic Tech-
Inovance is a high-tech Company engaged in the R&D in Suzhou Hangzhou Nanjing nology Co. Ltd
manufacturing and sales of industrial automation and new Shanghai Ningbo Changchun Beijing
energy products. The Company focuses on developing core Hong Kong and 6 R&D centers in
Shenzhen Suzhou Xi'an Nanjing EKSYS (Beijing) Technology Co. Ltd.technologies for information layer control layer drive layer
execution layer and sensor layer. It is committed to promot- Milan Italy and Stuttgart Germany.ing industrial upgrading improving the quality of life and Xi'an
Tianjin
Xi'an office Inovance Tianjin BST Electric Co.Ltd.fostering the development of civilization with innovative Technology Co. Ltd.automated digital and intelligent services and solutions.Dalian
Turkey Dalian Zhiding Technology Co. Ltd.Year of Incorporation: 2003 France Inovance Technology En-düstriyel Otomasyon Ltd. ?ti.Inovance Technology Nanjing
Company Name: Inovance Technology Co. Ltd. ("Ino- France SARL Changzhou Nanjing Inovance Technology Co. Ltd.vance" "the Company" or "we") Germany Changzhou Inovance New Energy Nanjing Inovance Industrial Vision Tech-
Inovance Technology Automotive Technology Co. Ltd. nology Co. Ltd.HQ Address: Inovance Building High-tech Industrial Europe GmbH Shanghai
Park Guanlan Subdistrict Longhua
District Shenzhen Shanghai BST Electric Co. Ltd.Suzhou
Hungary (Under Shanghai BNK Cable Co. Ltd. Suzhou Inovance Technology Co. Ltd.Stock Code: 300124.SZ Construction) Suzhou Inovance Automotive Co. Ltd.Shanghai Lane Precision Machine
Italy Suzhou Monarch Control Technology Co.Markets Served: 36 countries and regions including Tool Accessories Co. LtdInova Automation Italy Srl Ltd.China India Vietnam South Korea Ningbo Jiangsu Kingway Rail Transit Equipment
Russia Turkey and Egypt India Ningbo EST Technology Co. Ltd. Co. Ltd.Inovance Technology Pvt. Ltd. Jiaxing
Jiaxing BST Electric Co. Ltd.BST Machinery & Electronics (Jiaxing) Co. Ltd
Vision Mission & Values
Yueyang
Yueyang Inovance Technology Co. Ltd. Shenzhen
Shenzhen Inovance Technology Co.Ltd.Vision & Advancing industrial technology
Mission for a better world MOOXEE Precision Industry (Shenzhen) Co.Ltd.Foshan
Guangdong MJB Electric Co. Ltd Hong Kong
Inova Automation Co. Ltd.Customer first contribution
oriented uphold to openness
Core Values
and cooperation strive for
excellence Note: This chart only shows some major companies R&D Center Manufacturing Facility/Base
branches and subsidiaries of Inovance.
03 04Inovance 2022 Environmental Social and Governance (ESG) Report
Main Business Units
ESG Governance System
Automation
Provide professional industrial automation products and solutions for clients including AC drives ser-
vo systems control systems (PLC CNC) industrial vision systems sensors high-performance motors
high-precision lead screws industrial Internet and other core modules as well as solutions for opto-elec-
tro-mechanical-hydraulic-pneumatic integration.Inovance has established a comprehensive ESG framework to strengthen the foundation for ESG manage-
ment developed tailored ESG strategy to identify goals and paths and integrated stakeholder engagement
into the entire process of material topics management for comprehensive balanced and efficient ESG man-
agement. Moreover the Company's ongoing practices and achievements in ESG governance and manage-
Elevator & Escalator Solutions
ment have received wide acclaim from other parties.Provide electrical solutions for elevator manufacturers and the elevator after-sales service market. Our
main products include elevator control system/integrated controller human-machine interface access
control system control cabinet cables and harnesses electrical shaft system elevator IOT etc.NEV Electric Drive System & Charging System In February 2023 Inovance was selected as one of the "2022 Forbes China TOP 50
Sustainable Development Industrial Enterprises".Provide low-cost high-quality integrated product solutions and services for electric passenger and com-
mercial vehicles (including electric buses and logistics vehicles). Our main products include electric drive
system (motor motor controller e-powertrain) and vehicle-mounted charging system (DC/DC OBC PDU).ESG Framework
The Company has established a top-down ESG governance structure to coordinate the Company's ESG strategy and en-
Industrial Robotics sure the efficient implementation of ESG management measures for its sustainable development.The Company's Board of Directors oversees and manages ESG issues in a comprehensive manner and performs the deci-
Provide industrial robots and components to clients in 3C manufacturing lithium-ion battery silicon wafer sion-making authority on related strategies objectives and specific matters. In December 2022 the Company established
textile and many other industries. Our main products include SCARA robots six-axis joint robots vision sys-
tems high precision lead screws and control systems. the Sustainability Committee with the President as the head of the Committee and key personnel of ESG-related business
units and departments (including vice presidents and directors) as members. The Committee is responsible for overseeing
the progress of ESG management by our first-level management and our subsidiaries and tracking their progress. The
Sustainability Office under the Committee is responsible for promoting the implementation of management measures on
key ESG issues such as addressing climate change.Electric Traction System
The Sustainability Committee holds regular meetings to report the progress and performance of the Company's ESG
management to the Executive Management Team (EMT) including members of the Board of Directors and to listen to
Provide traction systems and services for metro and light rail. Our main products include traction converters their opinions and suggestions. The Company also incorporates ESG performance indicators into the management's re-
auxiliary converters high voltage boxes traction motors and TCMS.muneration system and applies appropriate rewards and clawbacks based on the annual appraisal results so as to further
enhance the proactiveness and sustainability of ESG governance and management.
05 06Inovance 2022 Environmental Social and Governance (ESG) Report
ESG Framework ESG Strategy
Board of Directors
The Company pays close attention to the internal and external impacts of ESG and sustainability and continuously
updates its ESG strategy for a more focused approach to achieve its ESG goals. In 2022 we integrated ESG management
EMT into all aspects of production and operation and all business decisions with focus on six dimensions: "Corporate Gov-
ernance" "Lean Innovation" "Low Carbon Pioneer" "Responsible Ecology" "Talent Development" and "Green Opera-
tions".Sustainability Committee
Sustainability Office Inovance ESG Strategy
Corporate Maintain a robust corporate governance system and improve it
Governance Create an internal compliance culture
Increase investment in R&D and innovation continuously
Lean Innovation Improve product quality and enhance quality management efficiency
Provide high quality services to customers
Practice low-carbon operation with a focus on "energy saving material conservation and effi-
ciency enhancement"
Responsibilities of the Sustainability Committee Low Carbon
In light of the national carbon peaking and neutrality goals provide new energy-related prod-
Pioneer
ucts and create lower-carbon products and solutions
Responsibilities of the Sustainability Committee Address climate risks and enhancing capabilities for climate change mitigation and adaptation
Develop the company-level sustainability (including ESG and corporate responsibility) strategy goals and guidelines
promote the implementation of such strategies and supervise the implementation of related tasks Responsibility Build a secure stable and resilient supply chain
Monitor the Company's sustainability risks (including but not limited to key issues such as addressing climate change Ecology Realize sustainable supply with a focus on survey and assessment of supply chain sustainability
safeguarding employee rights and interests and fulfilling corporate social responsibility) and develop appropriate
management measures
Coordinate the establishment implementation and continuous improvement of the sustainability management
system and make decisions on related issues to ensure that the Company's sustainability management complies Protect employees' rights and benefits
with relevant laws and regulations international standards and key stakeholder requirements; drive cross-discipline/ Talent Provide a sound and safe workplace
cross-process sustainability business alignment and enable end-to-end operational synergies in sustainability business Development
Foster all-round and sustainable development of employees
Promote corporate transparency on sustainability and review the Company's annual ESG report; conduct effective
communication with key stakeholders including investors customers rating agencies and regulators on sustainabili-
ty-related matters Improve environmental management system to ensure environmental compliance
Green Operations Enhance resource efficiency in manufacturing and operations to reduce life-cycle environmen-
tal footprint
0708
Subsidiaries
Business Divisions
EBO
Investment & Development Department
Audit Department
R&D Management Department
Quality Management Department
Process & IT Department
IP & Legal Center
Cost Management Department
Product Competence Center
Inovance Academy
Financial Management Department
ISC Management Department
Strategy & MKT Department
President's Office
HR Department
Board Secretary's OfficeInovance 2022 Environmental Social and Governance (ESG) Report
Management of Material Topics Representaatives Key Stakeholders or Proxy Topics of Concern Engagement Methods &
Organizations Channels
Customer service management Customer satisfaction research
Communication with Shareholders Data security and privacy After-sales service and complaint
protection channels
OEMs and key end- Responsible marketing Customer data and privacy The Company is committed to establishing a stable and longstanding communication mechanism with all stakehold-
users in automation Product and service quality management
ers. In 2022 we actively engaged with key stakeholders including customers employees shareholders investors and elevator management Customer communication
government and regulators suppliers and partners and community representatives and collected feedback and sug- industries NEV R&D and innovation Product lifecycle management
gestions on our ESG management through regular meetings management systems project correspondence and other manufacturers Green products and innovation Trade fairs
channels such as our website media outlets conferences reports and events so as to respond to their expectations Clients Climate change mitigation and Providing green and low carbon
and demands through focused management on issues of concern. adaptation products
ESG governance ESG disclosure
Shareholder Engagement Policy and Topics of Concern
Risk control
Information disclosure
Representaatives Anti-corruption
Key Stakeholders or Proxy Topics of Concern Engagement Methods & Institutional visitsChannels Climate change mitigation and Organizations Governments at all adaptation Correspondence
Economic performance General meeting of shareholders
levels in the place of Clean technology Policy implementation
Corporate governance Earnings presentations
operation SZSE
Emissions and waste management Actions against climate change
Anti-corruption Special announcements Government and Energy management Environmental management Domestic and foreign
shareholders key R&D and innovation Investor engagement activities
regulatory bodies systemWater resources management
investors (daily communication roadshows
Climate change mitigation and communication through the
Shareholders and adaptation platform of SZSE investmentinvestors Supply chain sustainability strategy sessions online communication） Suppliers of chips
modules electronic Sustainable supply chain Supplier training
Customer service management components and management
(CSM) other materials Responsible minerals researchResponsible marketing
Vice presidents Product and service quality Internal management meetings partner universities Public tender meetings
directors senior management Management training industry associations
Data security and privacy
protection Strategic cooperation negotiation
management of Corporate governance and chambers
branches and Internal emails R&D and innovation Exchange visits
subsidiaries R&D and innovation
of commerce
Daily communication standards Cross-industry collaboration and Industry-academia-research Suppliers and partners
Employees: senior Economic performance development development
cooperation
management Talent attraction and retention working groups
Employee benefits program
Employee training programs
Employee rights and benefits Performance appraisal and
Charity events and volunteerism
Community engagement and Public serviceemployee promotion
Employee/ union Employee training and development Employee volunteerism
representatives development
Employees' congress and union
NGOs charities Anti-corruption ESG disclosure
and other worker Talent attraction and retention Employee forum other social
representatives Community engagement and Occupational health and safety Safety management in production
Responsible marketing
organizations media
Employees: employees Occupational health and safety R&D innovation
promotion activities
other than senior R&D and innovation Environmental management measures Community Clean technology
management representatives system
Incentive mechanism for R&D Emissions and waste management
innovation
09 10Inovance 2022 Environmental Social and Governance (ESG) Report
Materiality Analysis Material Topic Analysis Results for 2022
Based on the results of the previous year's stakeholder survey and the assessment of the materiality of the issues (see Material Topic of High Material Topic of High
the "Materiality Analysis" of the 2021 ESG Report) the Company adjusts the identification and priority of material topics Importance Importance
Economic Performance Anti-Corruption Talent Attraction and Retention
with regard to the impact of the topics on the Company and on external stakeholders taking into account domestic and Responsible Marketing Risk Management Sustainable Supply Chain
Management
international ESG-related policies and regulations the latest policies of the stock exchange excellent ESG management Occupational Health and Safety Corporate Governance
Employee Training and Development R&D and Innovation
Cross-Industry Collaboration
practices and the external experts' opinions. and Development Employee Rights and Benefits Customer Service Management Clean Technology
Data Security and Privacy Protection Product and Service Quality
Management Green Products and
IPR Protection Innovation
Community Engagement and Climate Change Mitigation
Development and Adaptation
Materiality Analysis Process Public Service & VolunteerismEnergy Use
Emissions and Waste Management
Water Use
Identify corporate background
Corporate Governance
Topics
Business background: geo-
graphical location business Social Topics
activities business relation- Expert Analysis Material Topic of Low Importance Environmental Topics
ships etc. Adjustment of topics: Consol- Importance to External Stakeholders
ESG background: current idation deletion and adjust-
status of ESG management ment of presentation
of the Company impact on Note: For further information on the definition and boundaries of material topics please refer to "Appendix 2: Material Topics for 2022".Materiality adjustment: reas-
stakeholders sess and reorder materiality
to include new topics of high
impact Adjustments to Material Topics for 2022
Policy & Peer Benchmarking
Current Topics Previous Topics
Policy benchmarking: Identi-
fy ESG policies involved in the Topic Confirmation and Report Risk Management Risk Management and Control
business
of the topics: Material topics Anti-corruption Business Ethics
Peer benchmarking: Key top- of high impact are reviewed Customer Service Management Customer Rights Protection
ics concerned by peers and and approved by the Sustain- Presentation
companies in the value chain Data Security and Privacy Protection Customer Information Protectionability Committee after being Adjustment
tested and proposed by the Product and Service Quality Management Product and Service Quality
Sustainability Office Occupational Health and Safety Health and Safety
Report of the topics: Highlight Emissions and Waste Management Emissions Management
material topics of high impact
in the annual ESG report Climate Change Mitigation and Adaptation Addressing Climate Change
Current Topics Previous Topics
Topic Division Community Communication and Development
Community & Public Service
After analysis "Cross-industry Collaboration and Development" and "Climate Change Mitigation and Adaptation" are Charity Events and Volunteerism
included in this year's material topics of high impact and we have carried out targeted and focused management on Current Topics Reasons for Inclusions
them. "Employee Rights and Benefits" and "Industrial Cooperation and Development" are newly introduced to respond Respond to Industry Trends and Stakeholder New Topics Employee Rights and Benefits
to stakeholders' concerns. The presentation of some topics was adjusted to make them clearer and more precise for Concerns
stakeholders to understand. Cross-industry Collaboration and Development Respond to Industry and Policy Trends
1112
Importance to External StakeholdersInovance 2022 Environmental Social and Governance (ESG) Report
Solid Corporate Governance Responsibilities of the General Meeting of Shareholders the Board of Directors and the Board of Supervisors of Inovance
Three Boards Members Responsibilities
As the highest authority of the Company it shall exercise the following functions
and powers in accordance with the law:
Decide on the Company's business policy and investment plan;
Elect and replace directors and supervisors who are not employee representatives;
With "efficient operation governance first" as the guiding principle Inovance strictly complies with all regulatory
General Meeting Deliberate and approve the reports of the Board of Directors and the Supervisory
requirements to improve its governance structure for a robust and efficient corporate governance system. Mean- All shareholdersof Shareholders Board;
while the Company has established a sound risk management and internal control system for all-round risk Deliberate and approve the Company's annual budget plan and final accounting
prevention. We adhere to anti-corruption requirements and business ethics guidelines to improve our corporate plan;
governance across the Board. Deliberate equity incentive plans and employee stock ownership plans;
Deliberate the remuneration of directors and supervisors
Nine directors including
three independent
directors (1 female The Board of Directors is responsible for the General Meeting of Shareholders
independent director and its main duties include:
included). Board Convene general meetings of shareholders and report to them;
Corporate Governance System Board of members have Execute the resolutions of the general meeting of shareholders;Directors professional expertise
and industry experience Decide on the Company's business plan and investment programs;
in electrical engineering Manage matters corporate information disclosure;
The Company strictly complies with the requirements of laws regulations and regulatory documents such as the Company and automation Review the remuneration of the Company's executives
machinery finance
Law of the People's Republic of China the Securities Law of the People's Republic of China the Code of Governance for Listed accounting etc.Companies and the Rules Governing the Listing of Shares on the Shenzhen Stock Exchange GEM to improve its governance Review the Company's securities issuance documents and periodic reports
structure and governance system and continuously enhance its governance quality and risk prevention capability. produced by the Board of Directors and issue written review comments;
We have established the EMT the Executive Board the Board of Directors the shareholders' meeting and other bodies to Three supervisors Supervise the performance of duties of directors and senior managers and Board of
including one employee make proposals for the removal of directors and senior managers who violate
form a layered decision-making system. While value democracy and human rights we insist on centralization of authority Supervisors representative laws administrative regulations the Articles of Association or resolutions of
and pursuit harmony in diversity for decision-making to ensure efficient scientific and transparent management. shareholders' meetings;
Monitor and investigate abnormalities in Company operations
Governance Structure
Convening of the General Meeting of Shareholders the
The Company strictly complies with the relevant provisions of laws regulations and normative documents such as the Com- Board of Directors and the Board of Supervisors in 2022
pany Law of the People's Republic of China the Code of Governance for Listed Companies and the Rules Governing the List-
ing of Shares on the ChiNext Market of Shenzhen Stock Exchange. We have developed the Inovance's Articles of Association General Meetings Meetings of the Board Meetings of the
Such meetings considered
of Shareholders of Directors Board of Supervisors reviewed examined or heard
to clarify the operational norms of the General Meeting of Shareholders the Board of Directors and the Board of Supervisors approximately
and to clarify the responsibilities of the relevant organizations to further strengthen the compliance and comprehensiveness
of the governance structure and the performance of duties by its members. 2 times 11 times 8 times 98 reports on motions
Note: Details on the Board of Directors and the corporate governance structure can be found in "Corporate Governance" of Inovance 2022 Annual Report.
13 14Inovance 2022 Environmental Social and Governance (ESG) Report
Protection of Investors' Rights and Interests Shareholder Engagement
The Company strictly abides by the requirements of relevant laws regulations and normative documents such as the Securi- On the basis of transparent information disclosure the Company has established efficient and responsive investor en-
ties Law of the People's Republic of China the Rules Governing the Listing of Shares on the ChiNext Market of Shenzhen Stock gagement mechanisms and channels to better listen to investors' voices and enhance their understanding and recog-
Exchange and the Guidelines for the Management of Investor Relations of Listed Companies. We have formulated manage- nition of the Company. During the reporting period the Company engaged with investors through in-person reception
ment systems such as Inovance Investor Relations Management System and Inovance Information Disclosure Management and online communication proactively responding to their needs opinions and suggestions and working with them to
System to put in place measures for the protection of investors' rights and interests based on the principle of equality with a improve the Company's operation and management.special emphasis on the protection of the rights and interests of small and medium-sized investors.Major Measures for Shareholder Engagement
Information Disclosure
The Company fulfills its information disclosure obligations in accordance with the law and upholds relevant information dis-
closure compliance for listed companies. Under this premise we continued to improve the quality expand the width and en- Hold investor exchange sessions to share the Company's strategic direction business layout
hance the transparency of information disclosure to protect the rights and interests of investors. During the reporting period General Meeting business status and outlook
the Company issued more than 190 announcements. of Sharehoders Invite executives with relevant business knowledge to participate in investor exchange and
answer investors' questions
Three Basis : Process-based template-based and billboard-based disclosure
Five Examinations & Three Determinations : Carefully examine the rules guidelines cases Investor Reception Hold earnings presentations and receive investors for daily or ad hoc visits and research
Innovative history and essence in the process of announcement drafting; determine the logic core and
Disclosure description
Project-based operation：Establish information sharing and coupling mechanism with busi-
ness departments to promote the disclosure management by means of project operation Strengthen investors' knowledge of the Company's business and operation through telephone
email and online meetings
Set up "Investor Relations" page on the Company's official website to disclose the Company's
Information collection：Strengthen communication with lead departments and related
Online announcements and knowledge about the protection of investors' rights and interestspersonnel collect materials related to the company's operation and development finance Communication
Statutory and other aspects accumulate materials for the preparation of the annual report and interim Deliver important announcements latest trends and arrangements for investor engagement
Disclosure disclosure and make predictions meetings through Inovance's Investor Relations offcial WeChat account
Information review: Ensure that the information disclosed is true accurate and complete Actively responding to investors' inquiries on the SZSE's interactive platform
continuously improve the disclosure quality and fully disclose information that is beneficial to
investors' value judgment and investment decisions
Participate in road shows media interviews and receptions occasionally
Disclosure method: Release corporate ESG reports on a yearly basis and respond to investors' External Actively participate in on-site research teleconferences brokerage strategy meetings and
Voluntary concerns on voluntary disclosure other activities organized by investment management firms
Disclosure
Disclosure management: Organize relevant departments to participate in internal and exter-
nal ESG training to enhance their understanding of ESG and further improve disclosure quality
During the reporting period the Company answered 247 questions from investors through the SZSE's interactive platform
Since IPO the Company has obtained A ratings in the information disclosure assessment of SZSE for 12 consecutive years (irm.cninfo.com.cn/szse) representing a reply rate of 100%; received a total of 274 visits from domestic and international
as the only one among all listed companies on the ChiNext market of SZSE. In 2022 our 2021 ESG Report was selected into brokerage firms investment funds and individual investors involving more than 3600 investment institutions and 7600
SZSE's Excellent Cases of 2021 Disclosure Report of ChiNext Listed Companies. The environmental information disclosed investors. We also held regular earnings presentations to answer investors' questions.in our 2021 ESG Report has been included in the White Paper on Environmental Information Disclosure of SZSE's Listed
Companies for outstanding case study.
15 16Inovance 2022 Environmental Social and Governance (ESG) Report
Return to Investors Risk Management and Internal Control
The Company takes Inovance Articles of Incorporation Inovance 3-Year Shareholder Return Plan for 2021-2023 and other The Company has built a sound risk management framework in line with its business reality and operation mode in accor-
institutional documents as the basis for the protection of shareholders' rights and returns. While maintaining timely fair dance with the COSO-ERM framework. We have developed rules to define the responsibilities and operation mechanism
and healthy communication with investors the Company has been rewarding them through a sound dividend distribu- of management and launched practical efforts such as risk identification evaluation and audit according to the manage-
tion plan to ensure the long-term value of their investment. ment mechanism of the entire process to enhance our risk control and management capability in an all-round manner.As of the end of the reporting period the Company has paid cash dividends of RMB 4.678 billion cumulatively far exceed-
ing the total amount of RMB 1.941 billion raised from the Company's IPO.Risk Management Framework
Regulation of Connected Transactions Risk Management Risk Management Mechanism Risk Management Measures
System
The Company has formulated the Inovance Decision-making System for Connected Transactions with detailed provisions Risk identification and evaluation: Regularly
on the reporting of connected transactions recusal system decision-making authority and information disclosure to en- carry out risk identification and evaluation to
sure the fairness of the Company's decision-making on connected transactions. develop risk matrix and risk map
Internal control system: Establish internal
During the reporting period there were no major connected transactions and the decision-making procedures of minor control system and improve it to address risks
connected transactions were in compliance with the relevant laws and regulations and our Articles of Association. The Internal audit of risks: Launch internal audits
pricing of these connected transactions is fair and reasonable without prejudice to the interests of the Company and its Inovance Internal Risk Cover the entire process including "risk for risk management and formulate annual
Control Management identification and evaluation - risk response and
shareholders especially the interests of the small and medium-sized shareholders. audit plans for the implementation of audits System management - risk monitoring and reporting". for the Company and its subsidiaries
Risk reporting by employees: Set up
Honors and Awards channels such as President's Mailbox and "Whistle Blower" to encourage employees to
identify potential risks and hidden dangers in
production and operations and report them
in a timely manner
Selected as one of the 2022 "All-Asia Executive Team" by Institutional Investor
a prestigious financial magazine and named "Most Honored Company" in the
Industry Category (including Infrastructure) The Company has built an internal control system in compliance with the requirements of the Basic Standards for Enter-
prise Internal Control and the relevant guidelines of SZSE and has established a suitable system and management mech-
Selected as "Top 50 Most Valuable Listed Companies in ChiNext Market" in the 16th anism for internal control. We conduct internal control and evaluation accordingly to address potential risks.Awards of the Value of Listed Companies in China sponsored by Securities Daily
Honored as "Best Investor Relations Award for Listed Companies in China" in the 13th
"Tianma Award" sponsored by Securities Daily
Honored as "High Quality Listed Company" in the 7th "Golden Tangerine Award of
Times Finance" organized by Guangdong Times Media Group
Selected as one of the "Top Ten Companies of the Year" in the annual list of 2022 China
Business Network Capital Market Value List
17 18Inovance 2022 Environmental Social and Governance (ESG) Report
Internal Control System Operational Compliance and Anti-Corruption
Internal Control System Internal Control Mechanism Internal Control Evaluation
The Company has established a sound system and mechanism for compliance management based on laws and regu-
Build internal control systems with lations and codes of conduct related to data security and IPR protection. We continuously integrate compliance require-
focus on five dimensions: business Carry out internal control evaluation ments into all aspects of production and operation thus forming a compliance system that covers all aspects of corporate Inovance Internal Control Evaluation
System goal achievement asset and capital for the Company and its subsidiaries behavior and its management. We practice the principle of "sincerity and trust" based on this and build a clean business
security operational efficiency annually
Inovance Internal Control Procedures environment with a focus on anti-corruption management and integrity in workplace.compliance and reporting Evaluate the effectiveness of the
Inovance Internal Control Deficiency Integrate methods and tools such as Company's internal controls and issue
Identification Procedures KCP SOD and CT plan into business evaluation reports
processes Compliance Management
Strictly adhering to regulatory compliance we have formulated the Inovance Business Conduct Guidelines (BCG) Ino-
vance Conflict of Interest Management Measures and Inovance Employee Discipline Policy to define guide and restrain
In 2022 the Company developed guidance documents and templates for CT tools to further strengthen daily checks on behaviors of all employees at Inovance in a systematic manner.process compliance and promote the effectiveness of design and execution of process internal controls. We conducted in-
ternal control evaluation of the major areas of the Company's operation and management covering environment control
risk assessment activities control information transfer and communication and continuous monitoring with no material Compliance Management System1
omissions found. Based on the identification of deficiencies in its internal control over financial reporting and non-finan-
cial reporting the Company has not identified any material deficiencies or significant deficiencies in internal control over
reporting as mentioned above as of the benchmark date of the internal control evaluation report. Establish standard contract templates covering 7 major systems to ensure compliance for all types of
commercial and trade practices
In 2022 the Company placed emphasis on financial compliance audits internal control audits and special audits of major Trade Update the latest compliance requirements to templates annually for company-wide adoption in all
purchases and engineering construction management and urged closed-loop rectification of audit findings to promote Compliance business processes
continuous improvement of the Company's business processes and operational mechanisms. In 2022 the Company established an export control compliance system and initially developed compliance
guidelines for overseas sales in line with the changes in the Company's internal and external businesses
Conduct anti-money laundering-related compliance risk assessments
Integrate anti-money laundering-related requirements in procurement activities covering production
Anti-Money
Laundering materials assets frameworks and services
Check the authenticity and legality of transactions through supplier certification contract confirmation
invoice audit and verification of sporadic receipts to strengthen the supervision of economic behaviors
Actively carry out daily and special compliance training for all employees to enhance their compliance
awareness
Compliance Organize regular training on BCG and other standards for employees and introduce compliance stan-
Training dards and business ethics to all employees through lectures and signing of the standards
In 2022 we conducted company-wide assessment on key compliance matters in legal affairs and infor-
mation security3 and provided training on contract management for marketing managers and training
on import and export control compliance for domestic and overseas sales staff to enhance the compli-
ance awareness and capability of relevant personnel
1 For details of compliance management in data security and IPR protection please refer to chapter 4.3 "Data Security and Privacy Protection" and chapter 6.2 "Intellectual
Property Protection".
2 For details of the appraisal activities please refer to chapter "Data Security and Privacy Protection" and chapter "Intellectual Property Protection"
3 For quantitative performance of the such assessment please refer to the "Data Security and Privacy Protection"
19 20Inovance 2022 Environmental Social and Governance (ESG) Report
Anti-corruption and Integrity Building Lean & Innovative Solutions
The Company abides by business ethics and promotes responsible governance through the construction of anti-corruption
system and cultivation of integrity culture. We have stipulated fundamental provisions on anti-corruption in regulations such as
the BCG and Inovance Management Procedures of CSR and Business Ethics and further strengthened anti-corruption manage-
ment through measures such as the Inovance Workplace Accountability Management System Inovance Employee Discipline
Policy Inovance Gift Acceptance Policy and Inovance Honest Cooperation Agreement for suppliers.The Company established the Integrity and Honesty Working Committee in 2018. The Vice President is the director of the Com- Adhering to innovator's spirit Inovance pursues innovative practices in all aspects to continuously build and en-
mittee and the directors of each department are the integrity ambassadors who are responsible for coordinating and promot- hance its transformational capabilities. Motivated by an innovation mindset the Company strives for excellence
ing the implementation of integrity-related work and reporting the work progress to the Board of Directors on a regular basis. in creating quality products and services and provides first-class solutions and services for the industry with an
For anti-corruption whistleblowing the Company has formulated the Inovance Anti-Fraud Whistleblower System set up efficient innovation system to promote its high-quality and sustainable development.an anti-corruption whistleblower hotline and email and promoted them through the Company's official website "Integ-
rity Inovance" official WeChat account posters and other ways to ensure the transparency and availability of anti-corrup-
tion whistle blowing channels.The Company has established the Inovance Incentive Plan for Anti-Fraud Whistle blowers which specifies the incentive mech-
anism to encourage employees suppliers and partners to join our anti-corruption supervision. We have established a sound
system for investigating and handling anti-corruption complaints with the Audit Department as the sole department to receive R&D and Innovation System
complaints to ensure the independence and impartiality of the investigation results. In addition we strictly protect the personal
information of whistleblowers prohibit any form of illegal discrimination or retaliation and hostile behavior towards the people
involved in the investigation and take serious actions against those involved in the illegal disclosure of whistleblower informa- Technological innovation is the primary driving force of companies' development and the key support to build indus-
tion and retaliation against them. try-leading high-quality products and solutions. In 2022 Inovance further strengthened the foundation of its R&D plat-
form while forging ahead towards "digitalization + carbon peaking & neutrality" with growing innovation capability in data
governance improvement and product platform.Anti-corruption Complaint and Whistleblower Handling Procedures
Our R&D Framework
The Company has established an all-round R&D and innovation system for technological research development of plat-
form-based products and tailored products and implemented an IPD R&D model to align with the external environment
Receive reports from Investigate responsible Responsible departments company strategy customer needs and technology trends.whistleblower and conduct persons and departments for rectify the problems related
investigations accountability to internal control
In 2022 the Company promoted the cultivation of company-wide integrity and launched activities such as the signing of
integrity pledges lectures and training within the "Integrity Month". During the reporting period the Company initiated
the signing of Inovance Integrity Commitment Letter for all employees. Eighteen training sessions on integrity totaling 1555
hours were conducted with attendance of 18561.During the reporting period the Company has not received penalties from the competent authorities for violating the laws
and regulations related to corruption bribery extortion fraud and anti-money laundering.
21 22Inovance 2022 Environmental Social and Governance (ESG) Report
Inovance R&D Framework The Company has intensified its R&D investment strengthened its infrastructure platforms and enhanced talent training
to support sustainable innovation. In 2022 the Company established its Nanjing R&D center and launched many projects
to intensify the development of intelligent robots and energy storage technology. The Company has also set up a R&D
center in Stuttgart Germany to work on cutting-edge technologies in CNC systems and related areas. We organize train-
ing sessions and workshops for the heavyweight team based on IPD process improvement professional training for R&D
departments and regular training for managers and the whole team (see "Employee Training System" for details). We for-
mulate R&D incentive sandbox and rules based on differentiated R&D incentive strategies and attract and retain R&D staff
through personalized incentives such as project awards recognition and merit assessment as well as non-material incen-
tives such as promotion opportunities honors and culture. During the reporting period the Company invested a total of
RMB 2.226 billion in R&D. We have a total of 4793 R&D personnel accounting for 23.66%2 of our workforce.Empowerment by Data Governance
Keep up with leading technologies worldwide through technology research and pre-research and
make up for shortcomings in key technologies
Inovance Data governance plays a key role in achieving "Digital Inovance". The Company launched a data governance reform project
R&D Conduct forward-looking research on key devices to build core competitiveness
Framework in June 2021 to further fulfill the Company's digital strategy and support its business goal for "more satisfied customers and
Intensive development of lightweight compact technologies with a small ecological footprint for green
and low carbon development more efficient operations". In the project we improved our data management system from top to bottom established strate-
gies systems and processes as well as roles and responsibilities for data management.In 2022 the Company made great efforts on the formulation of data asset catalog and master data standards released seven
company-level master data standards for products materials customers suppliers personnel organizations and accounting
Plat- Develop standardized platform-based products with high performance great reliability and low cost to in five major business areas namely marketing R&D supply chain financial management and human resource manage-
form-based
Product De- provide customers with integrated product solutions ment. The Company also issued its first data asset catalog laying a solid foundation for future data governance.velopment Develop model-driven platform-based products with digital technology
Tailored Provide innovative and tailored solutions for industry customers
Product De- Establish development process for customer solution and equipment competitiveness and smooth
velopment the entire process covering technology research platform development and solution development
In 2022 the Company has fully implemented IPD 2.01 R&D process and equipment competitive development process and
initiated IPD process improvement efforts in its subsidiaries. Moreover the Company initiated the digital transformation of
IPD process with 4A design to promote more efficient management of demands markets technologies and product de-
velopment.
1 For more information on the Company's R&D system and IPD 2.0 please refer to the "Management Discussion and Analysis" section in Inovance 2022 Annual Report. 2 The percentage of R&D personnel is calculated based on the total number of employees reported in the Consolidated Financial Statements.
23 24Inovance 2022 Environmental Social and Governance (ESG) Report
Innovation Platform as a Driving Force Product Quality Management
Based on our core technologies in power electronics motor drive and control industrial control and communication The Company strictly abides by the Product Quality Law of the People's Republic of China and its own product standards
we provide OEM customers with "industrial control & process" solutions under the support of our automation product and fully implements its quality management principle which is "quality-centric ang highly responsive; excellence and full
platform. We are actively adopting and integrating innovative technologies such as material science software science in- participation; building a high-quality industrial chain; creating values for customers with excellent quality". We develop
formation technology artificial intelligence and opto-electro-mechanical-hydraulic-pneumatic integration to build more and manufacture our products with a sharp focus on customer satisfaction.advanced platforms for products and technologies such as industrial internet and industrial software. While helping cus-
tomers strengthen their business foundation we provide products and solutions in line with the trends of manufacturing
industry to meet their needs for intelligent transformation. Quality Lifecycle Management
In 2022 the Company continued to strengthen its basic technology platforms with a focus on automation digitalization The Company has formulated Inovance Quality Manual as the guiding document for quality management and established a sys-
and intelligence. We strive to build innovative platforms for energy products and industrial software products and support tem covering all processes guidelines templates and forms to provide a closed-loop process for product quality management.the intelligent transformation of factories across the industry based on our own experience in change management and
digital transformation. The Company has established a quality lifecycle management system covering product R&D procurement production and
marketing services to realize lean quality improvement through end-to-end management and continuous improvement. As of
For digital leapfrogging the Company has developed InoCube a model-driven digital platform and pooled expert re- the end of the reporting period the quality management systems of the Company and many of its subsidiaries were accredited
sources in lean operations and data to enable efficient manufacturing. Moreover we have launched a digital twin project to meet the relevant requirements of ISO 9001:2015 and other industry standards and obtained the certificates of accreditation.and promoted the development of digital tools such as full FA integration.During the reporting period the Company has not received penalties from the competent authorities for violating laws and reg-
To embrace the opportunities and challenges in software quality and efficiency we launched a training program to im- ulations related to product and service quality and safety nor have any of its products been recalled.prove our software engineering capabilities. We applied our intelligent innovations to the control of product development
process enabling a 20% improvement in software quality and a 30% increase in delivery speed. Our subsidiary Kingway Quality Lifecycle Management
Rail has initially completed the development and application of hardware and software for intelligent health management
of traction systems enabling efficient evaluation and management of core equipment. Quality Control
Ensure the compliance of Perform testing based on Carry out admission and Carry out comprehensive Set up the dedicated po-
In 2022 the Company successfully increased operation efficiency and facilitated its high-quality development through inno- products with safety stan- various standards during quality management of control over operators ma- sition for after-sale service dards in the development R&D to guarantee the suppliers by category and chinery equipment materials and quality complaint
vations in product platforms technologies processes and solutions with cost savings totaling RMB 11591100 for the year. stage compliance of products by level and extend qual- methods environment etc. providing customers with
Establish the dual safety with UL CE and other cer- ity requirements to key during manufacturing professional and timely
standards for products in tification standards Level-II suppliers Introduce safety testing aging technical service support.the development stage Conduct review at all stag- Perform different incom- testing and full functional The after-sale ser vice
and raise the requirements es in R&D to guarantee the ing inspections for differ- testing into the production and quality departments
on product safety success rate and efficiency ent suppliers including process and cover 100% analyze and follow up the
of product design and normal inspection exter- products quality problem until its
development nal inspection exemption solution
from inspection and strict-
er inspection
Product Product Material Production & Market
development R&D purchasing manufacturing services
Set up the supplier SQE Found a QCC improvement Combine ITR operation
organization dedicated to team which constantly im- and transformation to
Establish a Solid Foundation Team which assigns special per- material quality improve- proves any quality problem in strengthen the hierarchical
sonnel to analyze and improve a special design problem of the ment production and follows up its management of quality
previous year
Hold the supplier special solution problems and solve prob-
Found an NPI quality organization to strengthen the quality improvement evaluation Establish a lean improvement lems in a more efficient and
management for new products introduced meeting and organize organization and contribute comprehensive manner
Improve product quality as source i.e. design improvement activities such as special to the refined management of Incorporate the key custom-
reports and improvement manufacturing and zero defect er management team in the
awards zero through lean production CQM structure to conduct
measures targeted management and
Train quality personnel for improve efficiency
quality improvement and reg-
ularly organize reporting and
awarding activities such as the
quality conference to increase
employees'enthusiasm
Continuous Improvement
25 26Inovance 2022 Environmental Social and Governance (ESG) Report
Quality management system certification of Inovance and its branches and subsidiaries roles through the construction of IPMT thus supporting the achievement of strategic objectives in quality manage-
ment.In addition the Company has further enforced measures for quality management review and improvement establishment of
Inovance Technology Co. Ltd. quality management platform and quality culture system to continuously improve the effectiveness of quality management
Suzhou Inovance Technology Co. Ltd. and promote the quality awareness of all employees.Inovance Electromechanical Systems Engineering (Suzhou) Co. Ltd.Suzhou Inovance Automotive Co. Ltd.Ascona Technology (Shenzhen) Co. Ltd. Quality Audits
Ningbo EST Technology Co. Ltd.Jiangsu Kingway Rail Transit Equipment Co. Ltd. Organized annual internal review of quality management to identify areas needing improvement; continually optimize
Changchun Weton Photoelectric Technology Co. Ltd. management in combination with quality audits by customers
ISO 9001:2015 Shanghai BST Electric Co. Ltd. During the reporting period our subsidiary Kingway Rail completed 2 internal quality audits targeting key processes
Shanghai BNK Cable Co. Ltd and critical procedures identifying all blind areas for product quality tests
Guangdong MJB Electric Co. Ltd. The company received 63 on-site quality audits and 25 online quality audits from customers during the year
Tianjin BST Electric Co. Ltd.Shanghai Qingjiao Software Co. Ltd.BST Electric (Jiaxing) Co. Ltd Management Platform Construction
BST Electromechanical (Jiaxing) Co. Ltd.Dalian Smart Drive Technology Co. Ltd. Continuously promoted the application of MES for full product traceability and accurate recall procedure; provided all-
Xi'an office Inovance Technology (Shenzhen) Co. Ltd. round data and information for quality improvement through transparent production
ISO/TS 22163:2017 Jiangsu Kingway Rail Transit Equipment Co. Ltd.Multi-site Collaborative Management
IATF 16949:2016 Suzhou Inovance Automotive Co. Ltd.Strive to build a unified management system covering all subsidiaries and production bases
During the reporting period the subsidiary BST established its own Quality Center and completed the management
integration with the parent company Inovance
Comprehensive Quality Improvement Quality Culture Cultivation
In 2022 the Company launched a comprehensive quality improvement plan. With our adherence to quality standards enhance- Quality Training:
ment of quality awareness among all employees and commitment to quality integrity we listened to the voice of customers Carried out training on quality and product safety awareness for all new employees
made customer satisfaction a priority and conducted self-assessment. We were engaged in quality lifecycle management and Carried out special training on "Product Quality Law" covering all quality magement personnel of about 200
improvement by establishing stricter standards identifying defects tackling key challenges and taking concrete actions.Carried out advanced training on a monthly basis for SQE QE and FAE employees and skill examinations for frontline
For standard development the Company integrates the quality management process with the improvement of LTC IPD and employees.ISC. We updated and released technical review peer review and manufacturing quality management processes to realize the Carried out ITR training for personnel in R&D service marketing heavyweight team supply chain and other related
departments covering more than 80% of relevant personnel
nesting of quality processes. We established quality and process demand lists for key processes and material consistency man-
agement rules in line with the upgrade of automated equipment management. We also set up an index bank consisting of 25 Quality Conference:
indicators covering R&D production marketing supply and other areas to facilitate the operations of our heavyweight team. During our "Quality Month" we organized a quality conference for directors and higher managers with activities such
as quality oaths and negative quality rewards to help align the "dual integrity and dual safety" quality concept and cre-
For organization building the Company set up a special NPI quality organization and PQA organization in line with transforma- ate a quality improvement atmosphere with supervisors taking the lead and all employees participating
tion needs incorporated key customer quality management teams into CQM structure and connected quality management
27 28Inovance 2022 Environmental Social and Governance (ESG) Report
Company-wide Lean Production Protection of Customers' Rights and Interests
Striving for lean production the Company is constantly improving the factors of human machine material method and
environment to improve quality reduce cost and shorten delivery cycle. Meanwhile the Company takes customer needs To realize the goal for "more satisfied customers and more efficient operations" the Company adheres to the custom-
as the driving force for forming its own competitiveness needs. It is committed to creating a high-quality and intelligent er-centric approach and improves its customer service management continuously. While providing high-quality and
model of lean manufacturing in two dimensions: industrial engineering and management engineering. efficient solutions we protect the basic rights and interests of customers in a responsive manner build good customer
relationships and work hand in hand with customers for win-win development.In 2022 the Company initially built an IPS infrastructure covering more than 20 lean operation tools for its own business
and innovation needs. Through top-down strategy project improvement and Company improvement measures across
the value stream the Company aims to achieve lean operations across the value chain embracing "zero waste of resourc- Customer Service Management
es zero defective products 100% on-time delivery of orders company-wide improvement and healthy sustainability" and
cultivating a culture of excellence. The Company established a customer service system covering product sales and after-sales service customer commu-
nication and customer satisfaction management and developed appropriate systems and processes more standardized
and efficient management. In 2022 the Company released an updated version of the Rules for Product Return Cycle and
Priority Description and Rules for Calculating the Warranty Period of Spare Parts for On-site Replacement and its subsid-
Key Measures for Lean Manufacturing in 2022 iary Kingway Rail has developed the Management Process for Rapid Customer Response and completed the basic con-
struction of the customer service platform.Customer Service Management System and Management Progress
Management System 2022 Key Management Actions
Carried out special projects of improving the pass rate in repair
and inspection of faulty machine products special projects of
A sound domestic service network: improving the recovery rate of EU commissioning reports etc.Value Stream Lean Innovation Optimization of standard "Whistle Blower" Proposal for Set up the technical support service to optimize customer management by improving such indica-working hours Improvement hot-line and three-level spare part tors as inspection pass rate and report recovery rate
support network to timely respond Introduced the ITR process to integrate the resources of frontline
to customer demand engineers expert teams and R&D system and strengthen the
A professional service team: Build a product line application technology in the value stream in order
Established a value stream Improved the standard working Through the "Whistle Blower" customer service team consisting of to increase the proportion of problems solved in the service line
Product Sale direct employees the joint guarantee and production line by 30%improvement platform based hours across the entire produc- program we collected lean pro- center and certified engineers to
on ISC and promoted end-to- tion process to eliminate person- cess improvement proposals and After- Undertook product application tuning projects from 2248 cus-Sale Service provide professional and timely tomers as well as 249 development and duplication projects
end value stream analysis and nel waste and unnecessary work from all employees for ISC busi- services to customers and established project delivery teams for new strategic busi-
improvement for drive control ness and followed up on them nesses including energy storage and engineering plant to raise
motors robots and electrical Saved a total of 370000 man- in a timely manner to effectively the delivery success rate
assemblies. hours throughout the year effec- promote the improvement. Communication Diversified communication methods
tively improving the stability of with Customers and channels: Present the Company's Took the initiative to initiate 87 interactive visits to the middle
Carried out lean innovation product quality while optimizing A total of 4.38 effective improve- cutting-edge innovation achievements and senior management of 62 key customers during the report-
on 12 key product families work efficiency ment proposals per capita were by attending an exhibition or launching ing period collected 117 requirements from customers for ser-a technology tour display and discuss vice quality products and overseas business and reported the
completed 156 improvement made throughout the year Customer the solutions of technology upgrade with requirements to responsible departments for problem solving
projects trained 10 value stream improving product quality and Satisfaction customers to promote industrial trans-
managers and high-potential production safety while reducing Management formation and sustainable development
employees laying the founda- costs and increasing efficiency. Regular visits: Visit customers regu-
tion for cost reduction efficiency larly and collect customers' evaluation
enhancement digital transfor- of the Company Cooperated with a third-party institution to perform the annual
mation and continuous quality Customer satisfaction survey: Con- customer satisfaction survey and established a customer satis-
duct a comprehensive satisfaction faction improvement team to make improvements correspond-
improvement. survey and follow-up calls for custom- ing to the survey results
ers every year Put great efforts in UED user experience design to offer custom-
User experience management: Per- ers and consumers with better user experience
form customers' service experience
investigation at the user end
29 30Inovance 2022 Environmental Social and Governance (ESG) Report
The Company has established an efficient system including Quality Correction Process to manage customer feedback Management Framework Development
and complaints. Through a tiered processing mechanism covering service personnel product line personnel and R&D and
design personnel the Company has facilitated rapid resolution of customer feedback minimization of negative impact
and continuous improvement of product quality. During the reporting period the Company did not receive any customer The Information Security Department is responsible for the planning of information security control system and coop-
erates with IT legal personnel administration and other departments to build information security protection network
complaints regarding its products and services1.Each department clarified information security responsibilities and assigned information security specialists to coor-
dinate with the promotion and implementation of information security management in the Company; incorporated
information security-related KPIs such as average disposal time of security threats timely repair rate of security risks
Data Security and Privacy Protection and timely closure rate of security events into the process and IT department staff performance assessment system
In 2022 Inovance initially built the information security management framework for its subsidiaries and promoted the
The Company attaches great importance to protecting data security and privacy for itself and its customers and strictly framework's implementation in accordance with its own information security standards
complies with the Data Security Law of the People's Republic of China the Network Security Law of the People's Republic
of China the Personal Information Protection Law of the People's Republic of China the GDPR of the European Union and
other laws and regulations in the places of operations. The Company strictly fulfills its obligations on data security and pri- Security Technology
vacy protection and collects and uses personal information under the principles of lawfulness propriety and necessity.The Company adheres to the management principles of "raising awareness strengthening measures preventing risks Adopted advanced information security technology for lifecycle security availability and traceability of information
and safeguarding business". We have established an information security management system based on ISO 27001 re- assets
quirements and promoted the integration of information security into business processes and the implementation of Built an early warning system to enable visible controllable interceptable and traceable information management
standards for data security and privacy protection. In 2022 the Company deployed IPS and WAF on the Internet egress to defend against network and application attacks;
implemented partition isolation on multiple network segments of the intranet deployed network threat awareness
system to monitor threat traffic; deployed anti-virus and HIPS on terminals and installed data leakage prevention soft-
Data Security Management System and Management Progress ware; conducted double-factor authentication with bastion host for remote access and O&M and monitored adminis-
trator's operations
Compliance Management
Identified laws and regulations related to data security and privacy protection and established compliance manage- Business Continuity Management
ment mechanisms
Established a reward and punishment mechanism for information security and investigation and handling procedures
which are reviewed by internal legal affairs manager and external lawyers to ensure strict compliance with relevant Developed the Inovance IT Service Continuity Management Plan and IT Business Continuity Plan and regularly updat-
laws and regulations ed the IT contingency plans for key businesses to ensure the fulfillment of IT business continuity management
In 2022 we proactively learned about the requirements of GDPR for the establishment our European base and devel- Organize the administrators of key business systems to participate in IT business continuity exercises on a regular basis
oped compliance program according to the requirements and produce detailed exercise reports according to standard templates
Conduct an IT business continuity test once a year and ensure its architecture can meet RTO requirements with
third-party audits
Development of Management System
Established a management system comprising Inovance Information Security Strategy for Management Inovance In-
formation Security Management Strategy Inovance Internal Information Asset Management System Inovance External The information security management system of Inovance Automotive our subsidiary is subject to third-party audits on
Information Asset Management System Information Asset Transmission Regulation and Information Security Reward an annual basis. It also receives inspections on network and user privacy security from the government. As of the end of
and Punishment Regulations the reporting period it was accredited to meet the relevant requirements of ISO/IEC 27001:2013 and TISAX standards;
In 2022 we further improved management regulations such as Inovance Information Security Incident Management during the reporting period its network security management system was accredited to meet the requirements of ISO/
Framework Information Security Violation Cases and Penalties Computer Security Management Standards Informa- SAE 21434:2021 and obtained an accreditation certificate.tion Security Incident Investigation Procedures and updated the regulations for interdepartmental cross-regional file
transfer and approval. The Company continued to enhance all employees' awareness and ability for information protection by training assess-
ment and publicity on data security and privacy protection. In 2022 the Company organized more than 25 training ses-
1 Based on the reality of the Company's internal management "customer complaints" herein refers to those complaints related to products and services formally submitted by customers. sions and seminars on information security for all employees; launched information security and legal exams with 9292
31 32Inovance 2022 Environmental Social and Governance (ESG) Report
participants representing 97.27%7 of employees. The Company launched 26 campaigns on data security and privacy pro-
tection for all employees through a variety of channels of communication and set up annual bonus mechanism to encour- Enterprising Low Carbon Pioneer
age all employees to participate in the identification and report of security vulnerabilities.During the reporting period the Company has not receive any penalties from the competent authorities for violating laws
and regulations related to data security and privacy protection.To facilitate China's 30/60 goals for carbon peaking and carbon neutrality and global net-zero transition Inovance are
Socially Responsible Marketing adapting to energy transition through energy saving material conservation and efficiency enhancement with a focus on both products and customers. We are integrating digital technology and energy management practices to improve
our low-carbon operations while leveraging our technology and solutions to enable the low-carbon development of
The Company strictly complies with the Advertising Law of the People's Republic of China the Trademark Law of the Peo- the industry thereby contributing to climate change mitigation and adaptation with lifecycle emission reduction.ple's Republic of China and other national laws and regulations to carry out socially responsible marketing management.It conveys true accurate effective and user-friendly information to customers about product features usage efficiency In 2022 the Company established its "2850" and "3030" carbon reduction goals thus to be the pioneer and
potential risks instructions for safe use and O&M methods through channels such as in-package user manuals the Com- practitioner in achieving the national carbon peaking and carbon neutrality goals.Inovance "2850" and "3030" Carbon
pany's official website and official WeChat account. Reduction Goals.To achieve operational carbon peaking by 2028 and operational carbon neutrality by 2050;To reduce
major suppliers' GHG emissions by 30% compared to 2021 by 2030.During the reporting period the Company did not receive any penalties from the competent authorities for violating laws
and regulations related to product and service marketing information and labeling or other voluntary regulations.Socially Responsible Marketing Management System
Establish an information design process covering all products specifying the product lifecycle information involved
design key activities specification and requirements Inovance "2850" and "3030" Carbon Reduction Goals
Product Product information materials are provided by engineers from the project team of the R&D department and peer
Information reviews are organized for all key activities To achieve operational carbon peaking by 2028 and operational carbon
Management Third-party tests are conducted by the testing department during the product development phase and delivered neutrality by 2050;
and accepted by marketing representatives
Establish change procedures for product information to ensure timely update of product information
To reduce major suppliers’ GHG emissions by 30% compared to 2021 by 2030.Establish "Product Center" in the Company's official website and official WeChat account to introduce the
characteristics specifications and parameters of products; provide product data such as certificates drawings
Commu-
nication manuals and videos on official website with automatic updates
Channel Es- Introduce "Inovance for Mobile" APP to provide accurate and timely product information to customers
tablishment
Provide personalized information about Inovance's products and services actively through live streaming platforms
online summits WeChat Channels Douyin and other emerging platforms Low Carbon Products and Solutions
Training for customers on each product line including training courses videos and documents on product For the 30/60 carbon goals the Company actively grasps the opportunity to develop clean energy with a focus on strate-
Supporting selection installation tuning and maintenance gic collaboration of source grid load and storage. We provide green energy-saving and efficient products and solutions
Services Provide tiered management and professional training courses for customers and partners to promote knowledge in four major fields: industry power construction and transportation to facilitated industry-wide low-carbon practices
of our products in the ecosystem
beyond our own development. Meanwhile we keep exploring our products and technologies' potential for carbon re-
duction and pursues lifecycle green and low-carbon operations covering raw material procurement manufacturing and
7 Referring to the active employees covered by the Consolidated Financial Statements in the assessment period (June to July 2022); and in particular does not include production line
employees due to the characteristics of the employees' business. product use.
33 34Inovance 2022 Environmental Social and Governance (ESG) Report
Low Carbon Industrial Products and Solutions Power
Industry
Power grid
Energy saving
Collaborate with State Grid and Southern Power Grid to build national demonstration energy storage projects to support the
Launch energy-efficient MD600 series general-purpose inverter which supports international energy efficiency classification stable operation of new power systems
IE2 level and meets CE requirements to facilitate efficient energy management in digital factories Transplant millisecond control technology from automation to grid control for stable control of grid systems with increasing
Launch a solution for energy-saving renovation of reactor with permanent magnet direct drive motor saving energy by share of renewable energy
10%~20% enabling low-carbon manufacturing in chemical metallurgical pharmaceutical and other industries
Launch a retrofit solution for permanent magnet synchronous servo system of cable extrusion machine to support the im- Energy Storage
provement of power grid; the solution achieves 25% energy savings equivalent to a reduction in carbon emissions of 2.8 mil- Provide PCS for electrochemical energy storage systems and core components for flywheel energy storage systems;
lion tonnes/year
Launched the innovative All-liqcool energy storage terminal which enables a 20% increase in cycle life and supports the con-
Launch a solution for electric vertical injection molding machine for high precision injection while reducing energy consump- struction of distributed electric energy storage capacity
tion by 25% to 40%
Launched new solution for co-control high-capacity energy storage which significantly improves the speed consistency sta-
Introduce the optimal control theory of multi-variable and multi-output in the thermal management application of stentering bility and scalability of energy storage system
and sizing machines achieving energy savings of 15% in high energy consumption processes such as textiles
Material conservation
Create time-sharing drive solutions for integrated air compressor and synchronized machine enabling lighter and smaller
equipment Construction
Streamline the structure of machinery and equipment to improve productivity and resource efficiency; create resource-saving
solutions such as fully automated light inspection machines and direct-drive motor applications for water jet looms
Streamline the connection of cell sorting machine and high-speed sleeve labeling machine to achieve "one sole network" Building construction
Promote the comprehensive electrification of construction machinery and conduct exploration on
Efficiency enhancement the synchronization and four-quadrant control of crane machinery
Launch a digital platform for integrated energy management which was adopted in Suzhou base and enabled automated
and digital energy management for customers Building operation
Create efficient solutions such as valve control solutions for bending machines visual inspection solutions for pharmaceu- Provide integrated solutions for water and fluorine units in air-conditioning systems of buildings and enable energy saving
tical bottles and edible oils based on lean production improvement measures and indirectly help reduce carbon emissions and consumption reduction in HVAC systems of public buildings through excellent control algorithms
through the optimization of production speed and personnel deployment Continuously optimize the dispatching mechanisms of elevators with 4-quadrant controllers to boost low-carbon operations
Power
Thermal power Transportation
Integrated high-voltage inverter with "master-slave dual regulation of inverter-driven blade decoupling" solution to save up to
48% of electricity for cogeneration wind turbines Land transportation
Wind power Develop e-powertrain electric drive motor DC/DC OBC and other products and solutions for electric passenger cars and
commercial vehicles and participate in lithium-ion battery manufacturing to facilitate the development of new energy vehi-
Provide dual-drive electric pitch systems and intelligent yaw inverters for more than 10000 offshore wind turbines reducing cles in a multi-pronged approach.operation and maintenance costs while increasing power generation
Build a fully automated solution covering battery storage system and automatic battery swap system to further support the
Photovoltaic wide adoption of new energy vehicles
Develop a new generation of permanent magnet synchronous traction for local optimization global optimization and optimal
Provide PLC servo robot vision system and other products to support the manufacture of PV products and participate in the system efficiency through joint design enabling a comprehensive energy saving of 16%~20% in application
construction of 500 GW PV projects
35 36Inovance 2022 Environmental Social and Governance (ESG) Report
Transportation Responding to Climate Change
Water transportation
Launch exclusive inverters for the ship industry electric inland waterway vessels and solutions for DC grid-based electric Climate change mitigation and adaptation is the entry point for our low-carbon practices. The Company carries out climate
propulsion systems based on multiple energy sources helping the transformation of new energy technologies for ship information disclosure and identifies and ranks the impact of climate change-related risks and opportunities in accordance
power systems; with the recommendations of the Task Force on Climate-Related Financial Disclosures. We continuously implement mea-
Provide more than 200 sets of clean shore power systems for ports reducing carbon emissions by more than 560000 sures for energy saving efficiency improvement energy transition and carbon emission reduction. We aspire to further con-
tonnes trol climate risks seize climate opportunities and reduce our carbon footprint to the maximum extent possible.In 2022 the Company focused on the development and application of lightweight compact and small ecological foot- Climate Change Response System
print technologies. We created new increments in green and low-carbon efficiency of products by improving the efficiency
of production and product usage saving material and resource consumption. Governance
The Board considers the disclosure of climate change related management progress and quantitative performance in the Compa-
ny's ESG report on an annual basis;
Products with Green and Low-carbon Lifecycle
EMT reviews climate and energy-related policies directs related budget input plans reviews and monitors progress of actions
quantified performance and goal achievement on climate change issues; and provides resources and guidance to relevant execu-
Lightweight tive departments on climate issues
The Sustainability Committee oversees corporate climate risks and opportunities and develops appropriate management practic-
Replace sheet metal structure with plastic structure in high voltage inverter products and es; and the Sustainability Office is responsible for identifying and analyzing climate risks and opportunities guiding promoting and
introduce plastic molding through refined design to save steel use and reduce carbon emis- communicating our climate change efforts and following up with relevant executive departments to advance specific issues
sions in the upstream
Strategy
Compact
Identify and analyze significant climate-related risks and opportunities and assess their potential strategic and financial impact on
Introduce thin-wall molding technology in the PLC modules of GL20 platform project which the Company
reduces the weight of the housing by 50% while enabling an industry-leading thickness of
Each business unit carries out management and response actions for low-carbon product and solution development low-carbon
12 mm saves installation space improves utilization efficiency and helps to reduce lifecycle
production and operation and supply chain climate resilience around specific strategies for products and services investment and
carbon emissions of the product terminals.R&D production and operation and supply chain
Provide integrated MCS1 servo geared motor to shorten the machine by 40% while achieving
energy saving
Risk Management
Small ecological footprint Prioritize climate risks and opportunities according to their probability of occurrence and impact and identify major climate
risks and opportunities
Replace cold-rolled steel sheets with hot-dip galvanized sheets in the production of elevator
control cabinets and other products to reduce the use of powder spraying and potential en- Develop tailored risk elimination mitigation transfer or control measures based on the prioritization
vironmental impact Integrate climate risk management into company-wide risk management
Introduce plastic spray-free technology to replace the traditional "plastic + painting" process
in the production of elevator call boards which helps reduce carbon emissions while improv- Indicators and Targets
ing production efficiency
Conduct GHG inventory and accounting actively and disclose related performance in ESG reports
Participate in the CDP climate change questionnaire every year assess the climate change management performance through
During the reporting period the Company carried out Life Cycle Assessment (LCA) for key products in NEV-related market emission and energy indicators and develop improvement plans
and so on and integrated internal and external resources to improve its factor database and LCA capability so as to solidi- Include energy efficiency in the KPIs of the supply chain management department
fy the data foundation for products with green and low-carbon lifecycle. Proactively set operational carbon neutrality goals and carbon reduction goals for the value chain
37 38Inovance 2022 Environmental Social and Governance (ESG) Report
In 2022 the Company continued to conduct research on climate-related policies and benchmarking analysis against peer Significant Climate Risks and Opportunities
companies. Based on expert opinions and our business reality we identified and prioritized climate change risks and op-
portunities assessed strategic and financial impacts of major risks and opportunities and developed management mea- Types of Risk/ Potential Financial
sures to address them. Description of Risks/Opportunities Risk/Opportunity Management MeasuresOpportunity Impact
Physical Risks
Climate Risk and Opportunity Matrix for 2022 Extreme weather events such as typhoons and Yueyang base raises indoor elevation to effectively
floods caused by climate change are becoming avoid the risk of flooding from flooding
more frequent and more severe. If the Company's Operating Costs ↗
Acute Risks production sites are affected by these extreme Develop IMP for typhoon rainstorm power
weather events they may face situations such Asset value ↘ interruption food poisoning major infectious
as power outages and flooding or even lead to diseases and other environmental emergencies to
safety accidents or production suspension. enhance emergency handling capabilitiesHigh
Transformation Risks
Products & Services Current climate and environment-related
Acute Risks Resilience regulatory requirements are becoming Follow up on relevant regulations and policies and
increasingly stringent and laws and regulations respond to the latest policy requirements in a timely
Technical Risks Energy Sources Policy and Legal on energy and emissions are constantly Operating Costs ↗ manner
Risks introduced by the governments. If the Company
Market Liabilities ↗ Disclose information related to "climate change fails to meet regulatory requirements on GHG mitigation and adaptation" through ESG reports and
emissions and energy management it will face other channels
risks such as lawsuits and penalties.Under the influence of climate change the
development and iteration of low-emission
Further enhance our R&D and innovation capabilities
technologies may have a direct impact on
and develop low-carbon products and solutions
the Company's business and products. The
Chronic Risk by building an efficient R&D management system
Resource Efficiency Technical Risks Company needs to increase R&D investment in Operating Costs ↗ promoting data governance improvement in all
Market Risk products and technologies related to the new aspects and developing more advanced product
Policy and Legal Risks energy industry and participate deeply in the
Reputation risk platforms.technological changes on the supply side of
various industries.Opportunities
With favorable policies for carbon neutrality the
Low High demand for low-carbon products and solutions Provide green energy-saving and efficient products
from domestic and overseas customers and and services in the four major sectors of power
Probability of occurrence of risks and opportunities Products and consumers has further increased. We'll provide Revenue ↗ construction transportation and industry to help
Services
green low-carbon products and services to meet customers reduce their carbon footprint throughout
their needs and generate additional operating the product life cycle
income.Climate Risks: Physical Risks Transformation Risks Make concerted efforts on the integration of "source
grid load and storage" further explore emerging
Climate Opportunities: Opportunities Under China's 30/60 carbon goals emerging markets such as wind power and energy storage
markets for clean energy and other climate- and enhance our competitiveness in "digitalization +
Market friendly products and services are booming. The Revenue ↗ carbon peaking & neutrality".Opportunities Company is accelerating its expansion into new Non-Operating Costs ↘ Collaborate extensively with the upstream and
markets and strengthening partnerships for new downstream of the industry chain and the public
growth points and lower financing costs. sector on low-carbon technology development and
market participation enabling a comprehensive low-
carbon transition of the industry
3940
Impact of risks and opportunitiesInovance 2022 Environmental Social and Governance (ESG) Report
Types of Risk/ Potential Financial The Company actively promotes multi-energy complementary and energy-saving efficiency for equipment and facilities
Description of Risks/Opportunities Risk/Opportunity Management Measures
Opportunity Impact introduced green process efficient energy management and other measures and built green factories to promote efficient
Actively implement energy management measures use of energy while reducing GHG emissions. We are striving to promote lean improvement of production processes for
on the production and operation side to improve indirect emission reduction through resource saving waste avoidance and production efficiency optimization and further
resource efficiency
Enhance climate change resilience and build explore carbon reduction opportunities.Build new renewable energy facilities such
a green low-carbon ecosystem to further as distributed photovoltaic and small-scale
strengthen the Company's ability in grasping decentralized wind power at production bases in
climate opportunities. By consolidating Key Projects for Energy Saving and Carbon Reduction in 2022Yueyang Changzhou and other operational locations
infrastructure development achieving Revenue ↗ and formulate plans related to the use of renewable
Adaptability energy transition and improving climate risk power
management in the supply chain the Company Operating Costs ↘ Energy Efficiency Optimization
will be able to enhance its sustainable operations Develop low-carbon construction-related
in the context of climate change and ensure that specifications for bases under construction to
green and low-carbon products and solutions enhance the green and low-carbon benefits of Company introduction of frequency conversion technology motor control algorithms and control performance op-
will bring sustainable growth to the Company. infrastructure timization for motor systems such as fans pumps and compressors leading to optimization of permanent magnet
Carry out BCM projects to effectively improve security motor efficiency and improvement of energy efficiency;
stability and climate resilience in procurement
planning and ordering logistics etc. Suzhou base Changzhou base and other manufacturing bases were equipped with industrial waste heat recovery
devices to improve the energy efficiency of heating and domestic hot water. Waste heat recovery project for air
compressors at Suzhou plant enables electricity savings of 330000 kW-h/year equivalent to reducing 188.2 tons of
CO2 emissions.Suzhou base carried out energy efficiency improvement projects for air compressors pumps and other motor sys-
tems achieving electricity savings of 102600 kW-h/year equivalent to reducing 59.1 tons of CO2 emissionsLow Carbon Manufacturing and Operations The design of cooling systems in Changzhou base and industrial robotics base in Nanjing have been optimized.Changzhou base adopted centralized process cooling solution while industrial robotics base in Nanjing adopts
Reducing GHG emissions from manufacturing operations is one of our key efforts to address climate change and manage high-efficiency centrifugal units in the refrigeration room to improve energy efficiency.climate risks and opportunities. The Company takes energy management as the main path to reduce direct emissions
and practices low-carbon manufacturing operations on all fronts through energy saving efficiency improvement lean
process improvement energy transition and awareness-raising activities for all employees. Introduction of Green Processes
During the reporting period the Company's main energy sources included natural gas LPG and electricity. We have for-
mulated the Infrastructure Management System to regulate the use and management of energy sources. Integrated digital automated and intelligent technologies into production processes for cost reduction efficiency
improvement efficient energy management and manufacturing emission reduction
Automatic planning of spraying paths based on physical models of spraying material characteristics and small data
intelligence algorithms enabling significant improvements in spraying characteristics and 30% increase in efficien-
cy reducing material usage and indirect emissions
Major Energy Types and Usage
Direct
Energy Digital Energy Management
Natural gas: Staff canteen LPG: Staff canteen
With digital transformation built intelligent equipment factories and power chassis for industrial automation and
vehicle electrification to realize the conversion of mechanical energy to electric energy; achieved digital power
management with a focus on integration of "source grid load and storage"; promoted "strategic integration" to cre-
ate digital energy management solutions
Indirect In April 2022 the Company's independently developed digital energy management platform was formally adopted
Energy at Suzhou base. The platform provides a comprehensive solution for centralized dynamic monitoring and digital
Purchased power: Production and R&D In-house PV facilities: Production and R&D management of energy supply transmission and consumption providing high-quality data support for energy sav-
ing and carbon reduction for us and our customers.
41 42Inovance 2022 Environmental Social and Governance (ESG) Report
Energy-saving Design Workshop GHG Emissions Accounting
The Company takes GHG emission performance as a benchmark to measure climate change management perfor-
In August 2022 the Company held a workshop on energy-saving design for the second phase of Changzhou base mance and set up goals. We are moving toward net zero emissions across the value chain by developing a reliable data
which deeply explored energy-saving and consumption reduction opportunities from four dimensions: process
design equipment design infrastructure design and logistics hardware design; a total of 74 energy-saving projects base through GHG accounting and verification and continuously tracking our emissions performance and progress
were included in the rolling management with 25 having been put into practice. toward our goals.Since 2021 we have been conducting Scope 1 and Scope 2 GHG inventories in the Company on a yearly basis and dis-
closing the results in our ESG report. On such a basis we have gradually included indirect (Scope 3) emissions in our GHG
accounting. During the reporting period the Company conducted collaborative research on energy and emissions data
Green & Low-Carbon Demonstration Factory with 713 direct suppliers to support the refined measurement of Scope 3 emissions in "Purchased Products and Services".In addition our subsidiary Inovance Automotive has engaged a third-party agency to verify its Scope 1 Scope 2 and Scope
Yueyang base was designed to be a green low-carbon demonstration factory by introducing a smart micro-grid and 3 GHG emissions data for 2021 in accordance with ISO 14064-1:2018 and has obtained the verification statement.electric energy dispatching system with PV energy storage and control flexibility a 5G-enabled wireless data transmis-
sion network and a digital energy management platform for comprehensive monitoring and unified dispatching of
energy. PV and wind power facilities constructed by the Company were equipped to increase the proportion of green
power to over 30% to further promote the adoption of low-carbon energy. GHG Emissions Key Performance in 2022
The Company actively promotes the construction of renewable energy infrastructure gradually increases the proportion
Total greenhouse gas emissions
of renewable energy consumption and sets an energy transition goal based on its business needs: "by 2025 Changzhou
base will realize a 100% transition to green power". As of the end of the reporting period the Company has launched
construction projects of distributed PV facilities at several production based and achieved a total installed capacity of 4.7 2020 3.4% 96.6% 54929.43 tCO2e
MW of grid-connected power. Our total PV power generation in 2022 exceeds 5179000 kW·h equivalent to reducing CO2
emissions of 2953.3 tonnes. Meanwhile we are also actively exploring the development and application of diversified re- 2021 3.0% 97.0% 64938.65 tCO2e
newable energy sources and promoting the construction of small distributed wind turbines at our Yueyang base.The Company has further increased the promotion of green office concept and cultivated energy-saving culture. We 2022 2.0% 98.0% 81410.28 tCO2e
launched the "Energy Saving Month" campaign and published 16 articles on green office facilities to all employees Scope 1 Scope 2
spreading energy saving knowledge and encouraging them to support green and low-carbon office and mobility.Intensity of greenhouse gas emissions PV Power Generation
Total PV power Reducing emissions by
generation/MW·h
20204.77+7.7%
+2.3% 2953.3 tCO2e
5179(2022)
20213.62-24.1%48084700
20223.52-2.8%
Scope 1+Scope 2（tCO2e/ CNY 10000） 2020 2021 2022
43 44Inovance 2022 Environmental Social and Governance (ESG) Report
A Sincere and Reliable The Company focuses on the capability of suppliers in TQRDC and their risk management level and evaluates and con-trols sustainable risks of the supply chain in accordance with the Supplier Management Contract. The Company contin-
Responsibility Ecosystem uously conducts monthly assessments of quality and delivery performances of existing suppliers as well as semi-annual overall assessments of TQRDC and follows up supervises and manages risk points in the assessment conclusion until
such assessments are finished. Subsidiaries also assess their specific business suppliers through annual audit QPA flight
inspection material first inspection and other methods. In 2022 the Company actively responded to internal and external
development environments and focused on the construction of business continuity management system and localized
procurement thus further enhancing the resilience of the supply chain.Based on the realization of its own efficient stable green and low-carbon operation Inovance is committed
to carrying out sustainable management practice in a broader industrial ecosystem. It strengthens industrial Business Continuity Management
cooperation and opens up broader development space while strictly controlling supply chain risk and ensuring
safe and stable supply. Consequently it aims to create a comprehensive responsibility ecosystem. In 2022 the Company planed and implemented the BCM project formed a list of risks and the IMP targeting risk levels and
scenario combination of seven major circumstances including emergency earthquake fire power outage food poisoning
typhoon and heavy rain major infectious disease and network interruption. In addition the Company formulated the Busi-
ness Continuity Planning (BCP) regarding procurement planning and ordering logistics and other business areas.The BCM project effectively enhances the Company's response capability during the emergency reduces safety risk of the
supply chain and helps the Company achieve business continuity management across multiple regions and various busi-
ness types and in the whole link from suppliers to customers effectively ensuring sustainable implementation of various
Supply Chain Management production and operation activities.Localized Procurement
The sustainable supply capability is an important foundation for companies to provide first-class products and services to
the industry. The Company continuously strengthens its supply chain management capability achieves comprehensive The Company is gradually implementing localized procurement of the factory based on the construction progress of its own
production base focusing on local development of main structural material suppliers and the localized supply of accompa-
management of suppliers' safety stability business ethics environmental protection social responsibility and other ele- nying suppliers so as to improve supply efficiency and reliability.ments by enhancing the safety and risk resistance capability of the supply chain and strengthening responsible auditing In addition replacing imported goods with domestically produced components and structural parts is an essential means
and evaluation of the supply chain. In addition the Company also establishes good long-term cooperation with suppliers for the Company to reduce exclusivity and dependence and enhance supply chain safety. In 2022 the Company strength-
to promote the high-quality development of the entire industry chain. ened domestic component procurement and has significant improvements in domestication rates of core components.Some products have achieved 100% domestication of their core components effectively ensuring the safety of the Compa-
ny's own production and customer-end supply.Improving Resilience of the Supply Chain
The Company values collaborative cooperation and mutual growth with its suppliers. Through supplier incentives train-
The Company's suppliers can be classified into production material suppliers and non-production material suppliers ing and empowerment and deepening cooperation the Company continuously motivates its suppliers to carry out
based on the type of products and services they provide. The Company has established systems and processes such as high-quality practices thus further enhancing the comprehensive risk management effectiveness of the supply chain.Supplier Development Process Supplier AVL Management Work Guidance Supplier Performance Management Process
etc. and combined them with relevant documents such as supplier level operation guidance supplier portfolio manage-
ment specifications strategic supplier management specifications etc. so as to conduct hierarchical management of
suppliers. Based on the importance of the materials supplied by suppliers and their comprehensive impact on technology
quality responsiveness delivery & cost (TQRDC) the Company defines strategic suppliers and important suppliers as key
suppliers and carries out targeted management.In 2022 the Company focused on procurement reform to streamline the procurement process framework and update and
optimize documents such as Supplier Certification Management Process Supplier Performance Assessment Management
Process Purchase Order Issuance to Delivery Management Process etc. so as to further enhance the comprehensiveness
and targeted nature of supplier certification assessment and delivery management.
45 46Inovance 2022 Environmental Social and Governance (ESG) Report
Supplier Incentives Due Diligence Management for Responsible Minerals
Based on the Supplier Performance Management Process annual performance evaluations are conducted to encourage The Company's production process involves the use of gold (Au) and tin (Sn) mineral resources and prohibits the use of con-
outstanding suppliers. flict metals in the corresponding mineral categories.The Company formulates the Measures for Control and Management of Inovance Conflict Minerals by referring to documents
Supplier Training such as the OECD Due Diligence Guidelines for Responsible Supply Chains of Minerals from Conflict-affected and High-Risk
Areas and the Chinese Due Diligence Guidelines for Responsible Mineral Supply Chains clearly ruling that the Company does
The operational training is arranged for all suppliers involved in the use of new systems (such as SRM system and not support or use conflict metals produced in conflict mineral areas such as Congo and its surrounding countries and re-
mold system). gions and standardizing the management of the Company's conflict minerals.The annual quality counseling is provided for production-oriented suppliers covering topics such as quality man-
agement system construction environmental protection and workshop employee safety. During the reporting peri-
od 95% of core suppliers received training. Process of Due Diligence Management for Responsible Minerals
Continuous improvement of supplier empowerment coverage and quality is achieved through QPA flight inspec-
tion and special coaching.Confirming Customer's Requirements
Long-term Cooperation with Suppliers
Communicate with customers to understand their requirements for responsible mineral management
and convey their requirements to relevant departments.Focus on bottleneck materials and critical materials for which a continuous deep customization and joint develop-
ment is carried out with core suppliers.Promoted the cooperation and development of customized integrated packaging automotive-grade integrated
chip customization capacitor functional customization servo motor integrated solutions and PLC platform I/O Preliminary Evaluation
module easy-connection solutions during the reporting period.Conduct preliminary evaluation and trace the origin of conflict minerals during the sample confirmation
phase of device material and other samples at the R&D stage.ESG Management of the Supply Chain
The Company values the performance of its suppliers in terms of environment social responsibility business ethics etc. Supplier Selection
Through audit and evaluation the Company drives the improvement of ESG management levels of suppliers.For new suppliers the Company formulates the Inovance Supplier Management Contract and the Inovance Honest Cooper- Conduct investigations according to relevant requirements and select appropriate suppliers requiring
ation Agreement requires all of them to sign such documents and rules that all of them must provide products conforming suppliers to provide a Conflict-free Minerals Commitment.to relevant environmental protection requirements provide effective reports strictly abide by business ethics and engage in Require material suppliers that may involve potential conflict metal usage to provide a Conflict Minerals
Investigation Form based on the principles of the Responsible Minerals Initiative (RMI) and the specific
incorruptible self-discipline and honest cooperation. All new suppliers have signed such documents. In addition the Com- format of Conflict Minerals Reporting Template (CFSI-CMRT).pany requires a certification team to conduct on-site audits of new suppliers before admission evaluating their performance
in terms of environment health and safety as well as the enterprise social responsibility. Suppliers with unsatisfactory audit
results are required to make improvements. During the reporting period evaluations were conducted for 146 new suppliers
Evaluation and Inspection
and 91.8% of these suppliers passed corresponding evaluations.For existing suppliers the Company conducts regular audits of their practices in terms of environment labor and ethics. The
Evaluate and inspect the Conflict Minerals Investigation Form provided by suppliers to determine wheth-
Company signs the Inovance Supplier Management Contract with all suppliers who have formal procurement cooperation er the investigation results meet the requirements of relevant regulations; assist in promoting improve-
with it clearly defining relevant requirements for suppliers in management of environment social responsibility human ment for suppliers who do not meet relevant requirements.rights etc. In addition Inovance Automotive one of the Company's subsidiaries formulates relevant questionnaires about
sustainable development of suppliers in accordance with RBA urging suppliers to carry out corresponding management.
47 48Inovance 2022 Environmental Social and Governance (ESG) Report
Cross-industry Collaboration and Development Industry Communication and Standard Co-construction
Attended the 4th Innovation and Development Conference of Comprehensive Energy Service Industry and obtained the award of "Innovation Pioneer En-
terprise of Comprehensive Energy Service"
The Company seizes new opportunities of rapid growth and low-carbon transformation of the industry and not only Participated in the preparation and review of the Basic Requirements for Short-circuit Braking Technology of Electronic Motor Winding of Elevators Basic Requirements for Safety Bus and Entrusted Testing of Escalators and Moving Walks" as an important collaborator and published the Basic Requirements
achieves its own development but also strengthens comprehensive communication and collaboration with the industrial for Contactless Control Technology for Lifts
ecosystem. Based on respecting the intellectual property of all parties the Company empowers the innovation and reform Participated in a total of 33 industry and technical associations in 2022 with a total expenditure of about RMB 665532 for membership fees
of the whole industry thus opening up broader market and development space.Eco-Chain Management Talent Empowerment
Industrial Communication and Collaboration Launched the Outstanding Manager Training Camp OMT Project for customer management teams and established management synergy and deep con-nections with customers
Conducted the Channel CEO Training Camp ODT Project for Channel CEOs to achieve cultural integration and promote common development with chan-
nel partners
In 2022 through strategic cooperation integration of production education and research industry communication and
Organized the Outstanding Co-partner Training Camp OCT Project among the middle and senior managers of the enterprises invested by the Company so
standard co-construction ecological chain training and empowerment and other projects the Company launched exten- as to promote the incubation of the Company's industrial investment ecosystem and enhance efficiency synergies
sive and close communication with suppliers customers universities and research institutes industry associations and
other partners. The Company actively transferred and shared its business essence management experience and industry
advantages to the ecological chain and helps to share the responsibility as a promoter of industry technology develop- Intellectual Property Protection
ment and an explorer of management mode transformation.The Company strictly abides by relevant laws and regulations such as the Patent Law of the People's Republic of China Trade-
mark Law of the People's Republic of China Copyright Law of the People's Republic of China etc. and carries out corresponding
Key Practices of Industrial Communication and Cooperation in 2022 intellectual property management. In addition the Company has formulated and formed a complete system including the
Inovance Intellectual Property Management Manual Management Procedures for Risks of Intellectual Property Management
Industrial Cooperation Procedures for Resolution of Disputes on Intellectual Property Incentive Procedures for Intellectual Property etc.Cooperated with China National Offshore Oil Corporation and South Korean SK on relevant energy projects to accelerate the exploration and development
practices of deep-sea oil and gas resources In terms of protecting its own intellectual property the Company arranges patent engineers to carry out patent layout for its
Actively carried out further cooperation with partners such as Foundation Steel Yongfeng Group Panhua Group and SINOHYDO on issues such as domesti- own projects. By preparing relevant industry patent analysis reports or peer enterprise patent analysis reports it enhances the
cation of automation control technology and equipment integration of IoT technology and energy management construction of green intelligent factories understanding of research and development personnel on the status of intellectual property in the industry and further urges
and development of new energy solutions
research and development personnel to report their research results and apply for intellectual property in a timely manner. In
Co-construction of Production Education and Research addition the Company optimizes the Incentive Procedures for Intellectual Property and increases the bonus amount for patent
application award patent authorization award patent protection award and other awards in a bid to further stimulate employ-
Cooperated with Zhejiang University and Nanjing University of Aeronautics and Astronautics to establish a special working team for engineering ees' enthusiasm in applying for intellectual property. During the reporting period the Company conducted more than 40 special
joint master's and doctoral cultivation projects complete the enrollment and selection process for relevant talents and carry out formulation and
review of joint cultivation projects training sessions related to intellectual property which effectively improved the awareness of intellectual property protection
Established a laboratory together with the School of Automation Harbin University of Science and Technology and formally landed it. The Compa- among all employees.ny donated relevant products to support the implementation of scientific research
Co-built a training base together with Hebei Vocational University of Technology and Engineering to jointly cultivate talents in industrial engineering In terms of protecting the intellectual property of partners and the wider community the Company conducts due diligence or
Signed cooperation agreements with 38 colleges and universities relying on the project of matching employment and training based on the supply risk assessments before procurement financing and other activities to avoid infringement risks. During the reporting period
and demand of the Ministry of Education the Company conducted more than 200 patent risk investigations achieving 100% coverage of key project patent risk reviews. In
Conducted joint research together with well-known scientific research institutes such as the Institute of Semiconductors CAS Zhejiang University
and Soochow University on topics such as low-voltage high-current power source products and equipment visual system design addition the Company collaborated with suppliers to actively engage in patent protection effectively cracking down on coun-
Held occupational skill competitions in engineering capability intelligent manufacturing etc. together with universities such as Yanshan University terfeiting and forgery across the entire market. During the reporting period the Company has not receive any penalties from the
Changchun University of Technology and Hunan University of Technology and donated relevant products such as PLC competent authorities for violating intellectual property-related laws and regulations.Industry Communication and Standard Co-construction In 2022 the Company applied for 875 patents obtained 718 patent licenses and won the Excellence Award granted by "The 23rd
China Patent Award". Suzhou Inovance one of the Company's subsidiaries passed the supervision and review of a third party
Formally joined the Global Wind Energy Council (GWEC) to promote the upgrading and transformation of green energy that conducts certification by implementing the standard Enterprise Intellectual Property Management (GB/T 29490-2013) and
Conducted a technology exchange with LS Research Institute of Lanzhou LS Group on electrical control system and engaged in in-depth discussion on pro-
moting brand domestication and technical standardization of electrical control system obtained a certification of the intellectual property management system. In addition the subsidiary won the first prize of the Su-
zhou Excellent Patent Award and successfully applied for the 2022 Suzhou High-value Patent Cultivation Plan Project.
49 50Inovance 2022 Environmental Social and Governance (ESG) Report
A Development Platform for Employee Recruitment and Employment Management System
Suitable Talent and Cultural
Integration
Recruitment and Remuneration and Working Hours
Dismissal Promotion and Holidays
Inovance adheres to the "contributor-oriented" core value and strives to create a culture system that values Recruitment: Conduct the recruit- Salary: Continue to carry out the prin- Working hours: Formulate the In-
ment in accordance with the Inovance ciple of equal remuneration system for ovance Attendance Management
"person". The Company respects the rights and interests of employees develops individual differences and Employee Recruitment Management equal work provide employees with Measures and Management Proce-
actively creates an equal and inclusive working atmosphere. In addition it strengthens work safety management System Inovance Labor Contract salaries that meet the minimum wage dures for Social Responsibility and
guarantees the health of employees and creates a safe and healthy working environment for them. The Company Management Measures and other standards specified in relevant laws Occupational Ethics to ensure that the
also continues to be positive and creates a comprehensive employee development system so as to contribute relevant systems so as to ensure that or of industries in accordance with the Company abides by requirements for
the Company's recruitment process Management Procedures for Social working hours specified in applicable
more outstanding talents to the industry while working and growing together with employees. conforms to national legal regulations. Responsibility and Occupational Ethics laws and industry standards.and formulate the Inovance Salary
Dismissal: Standardize the dismissal Management System to standardize Holidays: Provide paid annual leave
process in accordance with local laws the Company's salary management. that is better than national policies
and regulations in the place where the maternity leave based on national re-
operation is conducted. Promotion: In 2022 the Company up- quirements as well as marriage leave
Rights Interests and Benefits of Employees dated the Inovance Qualification Man- funeral leave and paternity leave for agement System Management Regula- male employees based on local regu-
tions for Work License Implementation lations.and other relevant systems so as to
The Company attaches great importance to and guarantees the basic rights and interests of employees and actively em- further standardize the channels of em-
ployee promotion and development.braces group and individual differences to gather "diverse humanistic forces". We have incorporated human rights-related
guidelines such as securing personal safety promoting equal opportunities upholding anti-discrimination and violence
prohibition of child labor and forced labor and securing the right to participate in trade unions and collective bargaining
into BCG and established a healthy safe and inclusive working environment. On this basis the Company strives to provide The Company continues to conduct legal employment and establishes a system and management system to prohibit
employees with more personalized benefits and communication channels and is committed to creating a spiritual home child labor and forced labor. The Company has formulated the Labor Protection System for Female Workers and Minors
that employees long for. which promises to prohibit any behavior of employing or supporting child labor or forced labor. At the same time the
Company prohibits employees from paying deposits or storing identity cards when they are employed and prohibits any
force and involuntary labor including prison labor contract labor bonded labor slave labor or any labor behavior that
Employee Recruitment and Employment uses punishment as a means.We also pay attention to the construction of remedial procedures for child labor in order to protect the safety and health
Inovance strictly abides by the Labor Law of the People's Republic of China and other relevant laws and regulations and of minors. The Company and its subsidiaries have formulated relevant procedures for remedying child labor and has es-
establishes a sound management system for employee recruitment and employment focusing on dimensions such as tablished corresponding timely relief mechanisms such as treatment and compensation continued education guidance
recruitment and dismissal salary and promotion and working hours and holidays so as to concretely protect relevant ba- or sending them back to their hometowns based on physical conditions and compulsory education degrees of the parties
sic rights and interest of employees. Based on the implementation of standardized system of the whole Company some concerned. During the reporting period all formal employees of the Company were laborers over 18 years old and there
subsidiaries have formulated specific management systems according to their own operating conditions and carried out were no incidents of hiring child labor or forced labor.targeted employee recruitment and employment management.During the reporting period the Company has not receive any penalties from the competent authorities due to violations
of any laws and regulations related to employee recruitment and dismissal working hours and holidays promotion and
equal opportunities and other labor standards.
51 52Inovance 2022 Environmental Social and Governance (ESG) Report
Honors and awards The Company also provides job opportunities for people with disabilities and encourages them to be creative in the
workplace. The Company actively responds to national policies on placing people with disabilities by offering jobs such
as logistics cleaner assembly operator logistics operator and office clerks. A total of 86 people with disabilities were
employed in 2022.Received the "2022 Most Digitally Responsible Employer in China" by Forbes China;
Inovance Technology Pvt. Ltd. a subsidiary of the Company received the Outstanding Employee Benefits and Care
Employer Certification from the global workplace culture authority Great Place Work Institute.The Company attaches great importance to employee benefits and care and provides diverse benefits and regularly
organizes cultural activities so as to ensure a work-life balance for its employees and enhance their happiness and co-
hesion. Additionally we have formulated the Inovance Life Society Management System and Inovance Activity Safety
Employee Equality and Diversity Management System to standardize the safety and cost of employee activities.Inovance adheres to cultural values of equality and diversity creating an equal and inclusive working environment for em- Employee Benefit System
ployees. We adhere to the principles of fairness impartiality and openness in employee recruitment employment and work-
place promise equal opportunities in employment salary training promotion dismissal etc. and are committed to not
discriminating against employees based on race gender social class nationality religion disability or political affiliation.The Company opposes workplace harassment and discrimination and adopts a zero-tolerance policy towards any form of
workplace harassment. We actively create an equal and safe working atmosphere for employees. The Company has formu- Daily Benefits
lated the Guidelines for Prevention and Control of Sexual Harassment in Workplace and established a mechanism for pre- Provide daily benefits and subsi- Cultural and Sports Activities
venting and controlling sexual harassment in workplace to ensure the physical and mental health and safety of employees. dies to all employees including dining benefits dormitory services Conduct themed activities called "Four-Leaf Clover of Happi-
In 2022 the Company did not experience any confirmed incidents of harassment or discrimination. shuttle bus services commercial ness" for all employees of the Company including various types
insurance physical examinations of cultural and sports activities such as the annual meeting of the
allowance benefits communi- Company family day Mid-Autumn Festival party and marathon
Harassment Complaint Handling Procedures cation benefits team-building Progress in 2022: Planned and conducted music barbecues
expenses and activity expenses and marathons in Shenzhen and Suzhou with more than 70
teams and over 80 families participating in such activities with
an attendance of more than 500
Set up 23 life societies such as basketball football hiking yoga
and badminton in Shenzhen Suzhou and Xi'an and organize
Grasping the Basic Situation Investigation and Reporting Handling and Feedback corresponding sports activities
Promptly understand the situa- Establish an investigation team to Based on the investigation results the Progress in 2022: A total of more than 400 life society activities
tion through investigation and conduct special investigations. Sort handling team gives feedback on the han- were organized along with 22 life society activities such as the
evidence collection upon receiving the received information as well dling of the incident; company-level basketball and football matches with an atten-
complaints and conduct written re- as the information and evidences Mediate both parties involved in the com- dance of more than 5000 employee participants
cording and signature confirmation obtained via inspection and then plaint in case that both parties have the Actively conduct departmental activities such as the tug of war
while ensuring confidentiality; make them form an investigation willingness to mediate; team-building activity new employee meeting and departmen-
Provide a response opportunity for report and submit it to the handling For confirmed sexual harassment inci- tal trip
the accused considering their ex- team. Compile a research report dents the Company will give disciplinary
planation and response. and report it to the handling team. actions to the perpetrator such as transfer
warning and termination of labor con-
tract depending on the severity and im-
pact of the incident. If the incident violates
the law the perpetrator will be handed
over to the legal authorities for processing.
53 54Inovance 2022 Environmental Social and Governance (ESG) Report
Inovance values employee care and has established a sound employee The Company respects each employee actively communicates with employees establishes open and equal communi-
care system to create a positive organizational atmosphere and en- Daily care cation channels listens to employee voices through methods such as the Staff Representative Congress and Trade Union
hance the happiness and sense of belonging of employees. Inovance Forum Email to President and employee satisfaction survey thus helping employees solve problems.In 2022 we set up a political commissar system at the Headquarters
Assistance
and some subsidiaries and formulated the Management Measures for Protection for em- of female Psychologi- Employee Communication Channelsployees in cal care
Inovance's Political Commissar System. The political commissars are difficulty employee
responsible for implementing employee care measures as cultural am-
bassadors communication bridges and atmosphere experts. During the Protection
reporting period the Company conducted more than 1800 employee of female Staff Representative Congress and Trade Union
employee
care activities accumulatively through the political commissar system. The Company has established a staff representative congress
system and a trade union organization in which all employ-
ees participate ensuring that all employees have full rights
Employee Care System to know participate express and supervise and enjoy union benefits. It promotes the institutionalization standardization
and proceduralization.Daily Care The Staff Representative Congress negotiates and signs a
Collective Contract Wage Collective Negotiation Agreement
Special care actions such as the Singles Club Green Leaf Care and Warm Winter Care. and Special Protection Agreement for Female Staff with the
Festival consoling care actions such as the Army Day Veteran Care Women's Day Care and Birthday Care. Company to better protect the legitimate rights and interests
of employees. In 2022 all employees were guaranteed by the
Progress in 2022: Benefits and birthday cards were distributed to all employees for the Dragon Boat Festival Mid-Autumn Collective Negotiation Agreement.Festival Spring Festival and birthdays. Hot and cold weather subsidies and night shift subsidies were distributed to em-
ployees working in high and low temperatures and night shifts covering more than 3790 employees
INOVANCE Forum
Psychological Care The Company establishes the INOVANCE Fo-
rum to create an open platform for employees'
Disseminate psychological health knowledge through science popularization push and lectures targeting the psycho- expression and interaction allowing their ap-
logical health topics such as stress relief and anxiety relief. peals and ideas to receive rapid feedback and
Progress in 2022: Four psychological health science popularization activities were conducted for all employees with response and be resolved.an attendance of 9300. An external expert in the field of psychological health was invited to conduct an offline lecture Each year more than 2200 posts are sent in the
on psychological health with a total of 53 employees participating in it. One Chinese medicine themed lecture togeth- INOVANCE Forum per year 150 core issue feed-
er with free medical consultation service was organized with more than 30 employees participating in it. backs are collected with the problem closure
rate of 100%.Care for Female Employees
Distribute care packages for female employees on Women's Day via Inovance Trade Union. Employee Satisfaction Survey
Establish "Mom Station" nursing rooms at various bases and factory areas to create a good working environment for women. At the end of each year a satisfaction survey is conducted among
Progress in 2022: A total of 3160 care packages for female employees were distributed to all employees. all employees focusing on dimensions such as working envi-
ronment supervisor's management style career development
dedication cultural atmosphere etc. collecting real thoughts
Assistance for Employees in Need and needs from employees. Measures for improvement will be
formulated targeting core issues implemented by different de-
Establish the Care Fund Management System which provides assistance for employees and their immediate family partments and reviewed quarterly for improvement closure.members in the event of accidents serious illnesses natural disasters etc. The reimbursement ratio is up to 55% of the In 2022 the coverage rate of the Company's employee satisfac-
employee's direct expenses. tion survey exceeded 80% and the average score of satisfaction
Progress in 2022: A total of RMB1.306 million was paid from the Care Fund to support employees in need. was 4.47 points (out of 5).
55 56Inovance 2022 Environmental Social and Governance (ESG) Report
Occupational Health and Safety Sign the Safety Responsibility Agreement with all employees.Each base regularly signs safety agreements with suppliers and contractors and conducts safety training for
Safety them. In daily work each base supervises their safety to ensure that their workplaces meet relevant safety
The Company adheres to the safety policy of "safety first prevention as the mainstay and comprehensive governance" Management requirements.implements various occupational health and safety measures under a comprehensive EHS management system and for All Workers BST Electric one of the Company's subsidiaries makes a statistic of and analyzes suppliers' safety accidents
framework and creates a healthy safe and responsible working environment. through the EHS monthly meeting of the supply chain formulates corresponding monthly work safety
plans and punishes criticizes and educates violators.Work Safety
Conduct regular training of safety education for all employees to further enhance the safety awareness of all
employees.The Company strictly abides by laws and regulations such as the Work Safety Law of the People's Republic of China
In 2022 according to the requirements of different posts the Company carried out 64 special training sessions
and Regulations of Jiangsu Province on Work Safety has formulated management systems such as the Inovance EHS Safety Training in terms of three-level safety education and special equipment safety management for new employees safety
"Three-simultaneous" Management System of Construction Projects. On this basis the Company establishes a sound for All supervisors safety managers and other relevant employees with an attendance of 40437.work safety management system strictly ensuring workplace safety and avoiding safety accidents to the greatest extent. Employees Conduct a series of activities such as safety management training courses safety propaganda films and ban-
ners first aid training on-line knowledge quizzes VR virtual scene experience and fire emergency drills in
conjunction with the "Work Safety Month".Work Safety Management System
Management Systems Management Goals Management Frameworks
During the reporting period there was one accidental death after an internal tug-of-war competition organized by the
The proportion of employees with work- Establish a Work Safety Management Committee in which Company. The Company handled the situation properly and carried out post-incident disposal work in a timely manner
related injuries at level 10 or above in the the Chairman of the Board undertakes the Chief and the
Inovance EHS "Three- Company is less than or equal to 2‰ of Top Executive of the Committee and the Director of the reflected on and analyzed the causes of the accident. In addition the Company formulated and improved documents
simultaneous" Management the total number of employees. President's Office undertakes the Deputy Chief. such as the Inovance Activity Safety Management System and implemented relevant management measures to avoid
System of Construction Projects
The recordable injury accident index is The Committee is responsible for the overall management similar incidents to the greatest extent.Inovance Work-related Injury controlled within 0.8. of the Company's work safety the formulation of technical
Handling Management System
The training rate of three-level safety measures and occupational health and safety plans work
Inovance Research and education for new employees reaches safety inspection and supervision etc.Development Laboratory Safety 100%. The Committee establishes a Safety and Environmental
Management System Occupational Health Management
There are no major fire accidents Protection Department which is responsible for promoting
throughout the year. specific EHS management in the Company.Main occupational disease risks that the business is
involved and are identified by the Company include
noise dust and exposure to acrylic acid and ethyl
Institutional
Conduct safety acceptance evaluations "three-simultaneous" projects and monthly inspections at each acetate. We strictly abide by laws and regulations guarantee
Work base to identify safety risks and propose improvement suggestions and then follow up on rectification in a such as the Law of the People's Republic of China
Safety timely manner. on Prevention and Control of Occupational Dis-
Review
During the reporting period BST Electric one of the Company's subsidiaries has obtained the work safety eases and have formulated systems related to the
standardization (three-level) re-examination certification. occupational health such as the Inovance Safety Daily Risk
Performance Assessment System and the long-term protection management
goal of "zero occupational disease accidents". Based
Formulate the Chemical Management Procedures to clarify the management methods of relevant chemicals
Hazardous and prevent employees and the environment from being harmed by the chemicals. on system guarantee risk management and daily
Chemicals protection the Company has established a sound
Management Each base uniformly identifies hazardous chemicals and regularly conducts safety supervision and manage-
ment of hazardous chemicals and their warehouses so as to promptly discover and rectify relevant issues. occupational health and safety management system
and carried out corresponding certification.
57 58Inovance 2022 Environmental Social and Governance (ESG) Report
Companies and Subsidiaries with ISO 45001:2018 Certification Employee Training and Development
The Company actively creates a development platform that values "people" supports employees' personalized de-
Inovance Technology Co. Ltd. Shanghai BST Electric Co. Ltd. velopment and comprehensive capacity enhancement and empowers talent development across the entire industry
Suzhou Inovance Technology Co. Ltd. BST Electromechanical (Jiaxing) Co. Ltd. ecology. The Company adheres to the principles of matching talents to posts creating a cohesive and vibrant team
while widely attracting talents.Jiangsu Kingway Rail Transit Equipment Co. Ltd. Dalian Smart Drive Technology Co. Ltd.Shanghai BNK Cable Co. Ltd. Employee Training System
The Company upholds the talent concept of "responsibility professionalism and enterprising" and "pragmatism positivity
and diversity" and builds a comprehensive employee training system. We have formulated systems and procedures such as
the Inovance New Employee Training Management System Inovance Outsourced Training Management System Course Sys-
The Company promotes regular detection of occupational hazards and hidden occupational health-related dangers tem Document Training Management Procedures and to standardize the construction and management of the employee
at each base supervises and rectifies occupational disease risks and strengthens the management of occupational training system.health of employees. The Company provides employees with occupational physical examinations and establishes The Company sets up an internal training organization called Inovance Academy to accumulate internal organizational wis-
occupational health records for employees involved in occupational disease hazards. Based on identified hazards dom and establishes a scientific and systematic training system to provide employees with high-quality training projects. In
the Company also provides employees with Personal Protective Equipment (PPE) to ensure their health and safety at 2022 based on its own strategy and business requirements for each system the Company leverages Inovance Academy to
worksite. In 2022 all employees of the Company received occupational physical examinations and there were no new identify talent cultivation demands through annual surveys of parties related to senior managers' business resulting in the
cases of occupational diseases. addition of 6 professional projects. During the reporting period the cumulative training time for employees reached 279174
During the reporting period the Company has not receive any penalties from the competent authorities for violating hours and all employees accepted relevant training projects.laws and regulations related to occupational health and safety. Meanwhile the Company has set up an online learning platform to provide employees with more flexible and convenient
learning channels. As of the end of the reporting period a total of 20334 employees with a combined total of 377321 individ-
uals have used the platform for learning with a cumulative learning time of 394723 hours.Inovance Employee Training System
Eco-chain talent training
Distributor Fellow Plan Distributor Robot Engineer Series Training Outstanding Manager Training Camp OMT Project
Object Sales personnel under the channel system Object Robot channel technicians of the system Object Customer management
Keynote Approach and understand Inovance; Over- Keynote Be familiar with the functions application Keynote Establish management synergy and in-depth
come sales challenges and improve sales and operation of the robot products and connection with customers based on offline
ability improve the ability of independent design and online class
writing and optimization
Cover 126 channel partners and 388 trainees 16 Involve 88 trainees 60 hours for each single Cover 38 trainees from 13 enterprises 80 hours
training hours for each single training class. training class of training in total
Distributor EU Engineer Series Training Distributor Application Development Outstanding Distributor CEO Training Camp Engineer Series Training ODT Project
Object EU channel technicians of the system Object Channel technicians of the system Object Senior management of channels
Keynote Explain product applications conduct prac- Keynote Explain the functions and operations of ge- Keynote Enhance channel retention achieve cultural
tical operations and improve the value of neric products conduct exams and improve integration with partners and promote com-
technicians the ability to develop comprehensive solu- mon development
tions
Involve 88 trainees 60 hours for each single Involve 338 trainees 35 hours for each single Cover 65 channel partners and 69 trainees 45
training class training class hours in total
59 60Inovance 2022 Environmental Social and Governance (ESG) Report
Eco-chain talent training
New employee training
New Product Enablement Series Training BEST Business Training Outstanding Co-partner Training Camp OCT Project
Object All system channels Object Business of new channels and new Object Middle and senior management of In terms of new employee training the Company has launched projects such as the "New Power Training Camp NPT
business of channels enterprises invested by Inovance
Keynote Solve the problems in application of new Interpret channel policies of Inovance guide Boost the incubation of the ecosystem Project for Fresh Graduates" the "New Energy Training Camp NET Project for Social Recruiting" and the "New Employee
technological products in channels through Keynote the distribution process and practical oper- Keynote Inovance invests in and build the business Tutor Training Camp NTT Project" to focus on cultural integration and help new employees understand and recognize the
live streaming lecture tour and other ways ations and help channels integrate into the connections
system Company's cultural values and enhance their cultural understanding and identification in various learning ways. In 2022
Cover 2283 employees 162 training hours in Cover 174 trainees 140 hours for each single
total training class Involve 39 trainees 40 hours in total
the Company explored the live broadcast mode for on-line training camps based on the NET Project accumulating a lot
of experience and guidance materials for live broadcast training. We have also opened the "New Employee Tutor Training
Camp NTT Project" for new employee tutors designing scenario-based teaching and case discussions to help trainees
deepen their understanding of the course and master coaching skills for serving as tutors. A total of 1203 new employee
Professional talent training Management talent training tutors have been trained with certification rates steadily increasing across various systems.Marketing Manager Training Camp ART Business Pioneer Training Camp BVT Project Potential Management Talent Training Camp Project RMT Project
Object Senior marketing personnel Object Core business talent of heavyweight teams Object Key reserve cadres of each system
Keynote Improve the analysis of customer process Focus on the common problems in project Combine pre-training study offline training Professional talent training
and the ability of difficulty solving through Keynote operation and explore the reasons and solu- Keynote camp and actual practice and guide the
training camp and actual practice tions solutions of business and management
problems The Company has established a series of professional talent training camps that provide corresponding learning courses
Cover 50%+ senior marketing personnel includ- Cover 33 employees 54 hours in total Cover 100% key reserve cadres and cover 243 based on employees' growth paths. These training camps focus on business scenarios and pain points and summarize ing 2-stage training and 3-month actual practice trainees 172 hours for offline training camp
the best business practices in order to cultivate professionals in fields such as marketing research and development
Solution Representative Training Camp SRT Chief Product Officer Training Camp CPT manufacturing and functional areas. In 2022 we further developed scenario-based practical training modes based
Project Project New Manager Training Camp NMT Project on the "training-combat combination" concept incorporating the research on the problem-solving topics and other
Object Mainstay of vertical solution center Object MKT combat team Object New managers practical tasks into various training projects. We opened the "International Talent Training Camp ITT Project" for overseas
Keynote Clarify the business process and form the Keynote Combine the training given by internal and Keynote Output management cases experience and marketing personnel focusing on how to improve their abilities to plan and develop overseas markets and assisting the business template external experts and class exercises to up- personal development plan and help the
grade the ability of product and marketing role switching further development of the Company's internationalization. A total of 29 international talents were trained with an on-line
managers training time of 12 hours.Cover 35 trainees 53 hours in total Cover 67 product and marketing managers 120 Cover 81 trainees 74 hours for offline training hours in total. camp
Eco-chain Ability Promotion Training Camp International Talent Training Camp ITT
DMT Project Project Middle Manager Training Camp MMT Project Management talent training
Object Frontline managers of market channels Object Marketing personnel overseas Object Cadres at the level of directors and senior
managers
Keynote Combine training with actual practice to Keynote Cultivate internationalized talent through
The Company has summarized its own management experience and condensed reform ideas creating the "Management
Apply the long-term project feedback mech-
improve channel management external courses and online exchanges Keynote anism and expert resources to boost the Talent Training Camp RMT Project" "New Manager Training Camp NMT Project" the "Middle Manager Training Camp
rapid growth of managers MMT Project" and the "Top Manager Seminar TMT Project" with Inovance scenes and characteristics based on the "Three
Cover 77 trainees 72 hours for offline training Doings and Three Buildings" manager role model. In 2022 through the TMT project the Company organized senior Cover 38 employees 43.5 hours in total Cover 29 trainees 12 hours in total camp managers to learn about the Chairman's annual speech The Book of Changes and The Wisdom of The Book of Changes
combined with shared reading video watching expert sharing tool practice and other learning ways to help the core
R&D Project Manager Training Camp RPT
Project Top Manager Seminar TMT Project team move from leadership to business leaders. A total of more than 170 trainees attended the seminar with a cumulative
Object Project managers Secretary Training Camp PST Quality Manager Object Managers and senior experts above the concentration time of 30 hours.assistant director level
Keynote Focus on the common problems in project Training Camp QMT Product Manager Training
operation and explore the reasons and solu- Help the core management advance their Camp PMT Political Commissar System Training Keynote
tions leadership by means of annual lecture good Camp…… book sharing etc. Eco-chain talent training
Cover 34 employees 43.5 hours in total Cover more than 170 trainees 30 hours for massed learning
Considering the strategic planning and business development the Company summarizes the management essence
and wisdom that drive the rapid development of Inovance provides the eeco-chain customers with advanced concepts
Onboarding training and methods continuously promotes the accelerated growth of the Company's eco-chain talents and achieves the
common growth and win-win of eco-chain partners and the Company. We have opened projects such as the " Distributor
New Power Training Camp NPT Project for New Energy Training Camp NET Project for New Employee Tutor Training Camp NTT
Fresh Graduates Social Recruiting Project Application Development Engineer Series Training" " Distributor Robot Engineer Series Training" " Distributor EU
Object All new employees from campus recruitment Object All new employees from social recruitment Object New employee mentor Engineer Series Training" "Channel Fellow Plan" and "BEST Business Training" for Distributor engineering technicians
Introduce the community operation mode and other professionals as well as the "Outstanding Manager Training Camp OMT Project" "Outstanding Distributor Keynote Combine live streaming and offline training Strengthen course understanding and learn
and enhance cultural integration and learn- Keynote emphasize talent screening and values inte- Keynote the mentoring skills CEO Training Camp ODT Project" and "Outstanding Co-partner Training Camp OCT Project" for eco-chain managers.ing enthusiasm gration We empower the eco-chain capabilities in a multi-level and collaborative way comprehensively thus creating a cultural
Cover 99% new employees from campus re- Cover 99% new employees from social recruit- Cultivate 1203 new employee mentors 64 integration atmosphere.cruitment 413 hours in total ment 468 hours in total training hours in total
61 62Inovance 2022 Environmental Social and Governance (ESG) Report
Special training Talent Attraction and Retention
The Company carries out special training for empowering reform so as to effectively implement its reform work. In 2022 The Company focuses on employee development enterprise culture construction and talent incentives to strengthen employ-
the Company held a total of four special reform empowerment events covering IPD ISC and data projects with 1301
employees involved in a total of 26 training hours resulting in an average course satisfaction score of 94.4. In addition the ees' sense of identification and belonging thus attracting and retaining talents. In 2022 the Company formulated systems such
Company organized 24 special empowerment sessions regarding the data governance reform project with more than 1300 as the Inovance Annual Evaluation Management Measures clarifying the definition and hierarchy of award-winning evaluation.participants and a total training time of 69 hours.The Company has established special training and attraction projects for new employees and external experts to help them
Excellent instructors and high-quality courses are the soul of Inovance Academy. The Company continuously promotes
the construction of the instructor system cultivates and outputs excellent teaching resources for the Company and better integrate into the Company's environment. For new employees the Company focuses on cultural integration unified lan-
empowers employees' career development. In 2022 the Company developed the instructor system from two parts i.e. the guage scenario practice and other relevant contents based on a training system at three levels i.e. the Company department
"construction of a systematic instructor training system" and the "activation of director-level instructor group". This aims to and post levels and continuously optimizes on-boarding experience of employees. The Company also invites employee tutors
open up the path for professor-level instructor training clarify the requirements for professor-level instructor capabilities to communicate with new employees in advance increasing employees' understanding of the Company and helping them to
and optimize instructor training methods. During the reporting period the Company held a total of 5 primary instructor
certification classes 1 intermediate instructor certification class and explored the cultivation mode of the advanced better integrate into their team. For newly introduced experts the Company carries out the "Expert Care Project" and establishes
instructor class certifying a total of 168 primary instructors 39 intermediate instructors and 31 advanced instructors. a "One-Axis and Four-Line" expert management mechanism to help them establish professional influence through two main
The Company also actively cooperates with universities to carry out joint training projects thus cultivating talents that meet lines (i.e. integration and value) and two auxiliary lines (i.e. incentive and development).new demands in industry development. In 2022 the Company established special working teams in cooperation with
Nanjing University of Aeronautics and Astronautics and Zhejiang University so as to select outstanding engineering master's Through the construction and dissemination of enterprise culture the Company enhances employees' centripetal force and im-
and doctoral students for special training followed by sending them to the Company for special internships. The Company proves the cohesion of the talent team. In 2022 the Company launched the Cultural Middle-class Project which aims to conduct
and Hebei Vocational University of Technology and Engineering jointly built the "Inovance Training Base of Hebei Vocational ideological and cultural construction for all middle and senior employees covering more than 300 middle and senior cadres. At
University of Technology and Engineering" to jointly cultivate industrial engineering talents. During the reporting period the same time the Company launched "the Inovance Meeting Room of the 20th Anniversary" publicity with the theme of "Cele-
based on its achievements in the "innovation and practice of the automation technology application talents cultivation mode
dominated by Shenzhen Polytechnic – Inovance Industrial Alliance" the Company won the first prize of the 2021 Guangdong brating the 20th Anniversary of the Company" during which more than 20 senior executives and old employees were invited to
Provincial Education and Teaching Achievement Award (Vocational Education). share their Inovance story and show Inovance's culture. The Company also conducted three cultural seminars for management
personnel to deepen their recognition and understanding of cultural significance.In addition the Company uses incentive mechanisms and talent subsidies to motivate working enthusiasm of employees and
Employee Promotion and Development enhance their working efficiency.The Company provides four career channels for employees: expert manager project manager and skilled talent. It has also formu-
lated management systems such as the Inovance Qualification Management System to standardize talent management and pro- Employee Incentive
vide employees with clear career development paths. At the same time based on qualification standards the Company conducts
Carry out annual evaluation activities to provide employees with bonus and honor incentives; estab-
annual employee competence certification to guide employees' career development and achieve job-person matching. lish incentive mechanisms at the subsidiary level and carry out award presentations and internal
benchmark publicity.The Company has initially established a cross-post talent development path for versatile key-post talents and launched
Introduce equity incentive mechanisms to further share the struggle achievements with employees
reliable projects for key-post talents focusing on dimensions such as talent retention and capability improvement and Incentive and motivate management teams at all levels outstanding backbone personnel and key talents. As
helping relevant talents improve personal capabilities and achieve critical task goals. Mechanisms of the end of the reporting period the fourth to sixth phase of the equity incentive plans and the first
phase of the long-term incentive shareholding plan have been initiated. The newly released sixth
In addition all branches and subsidiaries build their own targeted employee career channel and capability evaluation phase of the equity incentive plan covers the Company's directors executives other middle man-
methods on the basis of the Inovance's qualification system construction project clarifying the current structural status of agement personnel and core technical personnel. This plan is divided into first granting and reserved
talents in each organization and the key capabilities required for different levels of posts and their current states. granting; 865 people were involved in the first granting accounting for 4.3% of the total number of
employees at that time and the granted shares account for 0.80% of the total equity of the Company.In terms of employee promotion and assessment the Company has formulated systems such as the Inovance Perfor-
mance Management System Inovance Staff Evaluation Guidelines and Inovance Cadre Performance Assessment Man-
agement System. The Company conducts a performance evaluation of all employees every six months and uses it as Help employees apply for talent subsidies to provide them with more benefits; Kingway Rail one of
the basis for employee promotion and salary adjustment. The Company has established a "contributor-oriented" salary Talent Subsidies the Company's subsidiaries organizes employees to apply for the Doubling Plan Talent Subsidy
system providing employees with industry-competitive salaries and offering rewards to contributors in strategic business Gusu Key Scarce Talent Subsidy Dongwu Key Talent Subsidy Living Quarter Allowance Plan Talent
Subsidy High-end Talent Subsidy etc.main business units and long-term excellent performance by combining with the Company's strategic orientation so as to
continuously stimulate the vitality of the organization and employees.
63 64Inovance 2022 Environmental Social and Governance (ESG) Report
Strict and Diligent Green Information Related to Environmental Management System
Operation Environmental Management Environmental Management System Environmental Protection GoalsSystems Certification
As of the end of the reporting period the following
Atmospheric pollutants: 100% subsidiaries have been certified as meeting ISO
Procedures for Identification up-to-standard emission 14001:2015 requirements and have obtained
and Evaluation of Environmental Solid waste: 100% compliant certification certificates:
Factors disposal; the product hazardous Suzhou Inovance Technology Co. Ltd.Implementing comprehensive environmental management and green production is an important way for Chemical Management waste generation intensity in 2022
Inovance to achieve responsible operation. The Company creates a compliant and transparent environmental Procedures is reduced by 10% compared to Jiangsu Kingway Rail Transit Equipment Co. Ltd.management system in strict accordance with relevant laws and regulations. While ensuring that its own Hazardous Waste Management 2021 (achieved) Shanghai BNK Cable Co. Ltd.emissions and waste are under control and compliant disposal we actively promote energy and resource Procedures Plant boundary noise: 100% up- Shanghai BST Electric Co. Ltd.to-standard emission
conservation and efficient utilization measures and continuously reduce the environmental impact of its own BST Electromechanical (Jiaxing) Co. Ltd.production and operation activities to jointly build a beautiful ecological environment.In addition the Company formulates emergency plans for sudden environmental incidents and files them with the local envi-
ronmental protection department. Each year it conducts regular emergency drills and evaluations for sudden environmental
incidents to improve the environmental emergency response capabilities of all employees. The Company actively cultivates
environmental protection capabilities and enhances relevant awareness of all employees. In 2022 a total of 10 special environ-
mental training sessions were conducted covering topics such as environmental regulations environmental pollution hazards
Environmental Management System and garbage classification and disposal. A total of 763 employees were trained with a cumulative training time of 836 hours.In 2022 the Company invested about RMB9.97 million in environmental facility maintenance environmental technology devel-
opment and other capital expenditures. During the reporting period the Company has not received any penalties from the com-
The Company constructs the environmental management system and ensures its effective operation in strict accordance petent authorities due to violations of environmental management laws and regulations related to illegal pollutant emissions
with requirements specified in national laws and regulations such as the Environmental Protection Law of the People's Re- leaks or waste generation. In addition there was no major environmental impact caused by such issues mentioned above.public of China Water Law of the People's Republic of China Law of the People's Republic of China on the Prevention and
Control of Environmental Pollution by Solid Wastes Water Pollution Prevention and Control Law of the People's Republic
of China and Law of the People's Republic of China on the Prevention and Control of Atmospheric Pollution as well as
other regulatory policies in its operational locations. The Company's environmental management policy is "Green Indus-
trial Control Harmonious Inovance and Beautiful World". Through measures such as the construction of corresponding Resource Management
management frameworks and systems formulation and implementation of goals and system certification the Company
is committed to achieving whole-process prevention and control of pollution and sustainable utilization of energy and re-
sources. Water Resource Management
The Company establishes the EHS Department to ensure the effective implementation and execution of various environ- The Company mainly uses municipal water in its production operation and has not caused any major direct or indirect impact
mental management measures under the guidance of environmental goals and policies. The Company prepares an envi- on water resources due to changes in the amount of water intake consumption drainage or storage. The Company formulates
ronmental self-monitoring plan and entrusts professional third-party organizations to conduct environmental monitoring an annual water resource utilization plan for each unit of water consumption and files it with relevant government departments
each year. Besides monitoring factors such as wastewater atmospheric pollutants and noise the Company also detected where the operation is located. We also appointed water conservation commissioners who have passed relevant professional
soil and groundwater pollutant and investigated soil pollution hidden dangers in 2022 and no exceeding of pollutant stan- competency assessments to carry out water resource management for these units.dards or relevant environmental impacts were found. In 2022 the Company continued to implement measures for the circulation of chilled water in the central air conditioning sys-
The environmental management systems of the Company and its subsidiaries are subject to internal audits each year tem at its subsidiary Suzhou Inovance a main water resource consumption unit achieving a recycling rate of 77.86% for indus-
and external audits are carried out in accordance with the requirements of ISO 14001:2015. Based on the audit results the trial water use in the whole area of Suzhou Factory which was equivalent to saving 116509 tons of fresh water consumption.Company continuously improves its environmental management status. 1 "Water consumption unit" here refers to a company or subsidiary that significantly consumes water resources.
65 66Inovance 2022 Environmental Social and Governance (ESG) Report
Packaging Material Management Emissions and Waste Management
The packaging materials used in the shipment of finished products include corrugated paper boxes expandable polyeth-
ylene honeycomb paper boxes wooden box etc. The Company attaches great importance to internal recycling of packag- The Company formulates the Inovance Waste Gas Emission Management System Inovance Domestic Sewage Discharge
ing materials to achieve reduction. For the surface mounting technology (SMT) all processed boards in the mounting link Management System Inovance Waste Management Procedures Inovance Hazardous Waste Management System and
are packed in recyclable packagings and after completion of production the packaging materials are internally prepared other internal systems in strict accordance with national and local governmental requirements in its operational locations.for reuse. We adopt targeted pollution prevention and control measures and classified treatment and disposal methods for different
types of emission and waste in order to strictly manage and control the discharge of wastewater emission of atmospheric
In addition the Company actively promotes a lifecycle management project for recycled packaging materials establishes pollutants and generation of solid waste and reduce its own environmental impact.the management system and standards for recyclable packaging materials and implements packaging material recycling
throughout the whole supply chain from suppliers to customers. Inovance Automotive one of the Company's subsidiar-
ies has achieved a reduction in wood consumption of about 600 tonnes per year through the promotion of sustainable Requirements and Treatment and Disposal Methods for Emissions and Waste
packaging while 12 customers of Suzhou Inovance which is also one of the Company's subsidiaries have started the us- Management in 2022
ing of recyclable packaging materials.Wastewater Discharge
In 2022 the Company continuously implemented corresponding management measures for reduction light-weighting
Internal management system: Domestic Sewage Discharge Management System
and recycling & regeneration of packaging materials to achieve cost reduction and efficiency enhancement while reducing Treatment facilities: septic tanks and cafeteria oil separators
resource consumption. Treatment method: The Company did not discharge any production wastewater and domestic sewage was
Domestic
collected and treated by the municipal sewage plant before being discharged in compliance with regulations.Sewage
Compliance with standards: Wastewater Quality Standards for Discharge to Municipal Sewers (GB/T 31962-
Key Projects of Packaging Material Management in 2022 2015) Standards for Pipe of Chengnan Sewage Plant etc.Testing indicators: pH total nitrogen COD NH3-N total phosphorus SS and petroleum substances
Atmospheric Pollutant Emission
Cancellation of Wooden Boxes for High-voltage Inverters
Internal management system: Waste Gas Emission Management System
Treatment facilities: Fiber filters activated carbon adsorption devices etc. In 2022 the subsidiary Suzhou Inovance
Actively communicated with customers and canceled the use of wooden boxes which helps save about 1500 tonnes of added two sets of waste gas treatment facilities
wood consumption per year. Treatment method: Primary filtration and activated carbon adsorptionProduction
Compliance with standards: Integrated Emission Standard of Air Pollutants of Jiangsu Province (DB 32/4041-2021)
Exhaust Gas
Testing indicators: Non-methane Hydrocarbon (Volatile Organic Compound NMHC) tin and its compounds
Reduction measures: Replaced the high-emission conformal coating with the conformal coating of low-VOCs
emission and replaced the ABS + mirror spraying scheme with the PMMA alloy material scheme of low-VOCs
Replacement of Wooden Boxes with Paper Boxes emission.Generation of Solid Waste
Replaced wooden boxes with high-strength paper boxes which helps save about 1000 tonnes of wood consumption per
year. Internal management system: Waste Management Procedures
Types of waste: Waste packaging materials waste electronic component leftover materials nitrogen filter elements tin
Non-hazardous
slag etc.Industrial Solid
Disposal method: Sold externally after being unified collection by the project team and entered compliant disposal by
Waste
third parties.Lightweight Design of Expandable Polyethylene Reduction measures: the Reverse Logistics Department entrusted the third party to recycle and reuse relevant waste.Internal management system: Hazardous Waste Management System
Types of waste: Waste organic solvents waste packaging containers waste rags and gloves waste liquid for surface
Used expandable polyethylene with high degradability to reduce environmental impact during disposal at the end of its life treatment waste grinding mud waste emulsions etc. Hazardous
cycle; reduced the density of EPE used in transportation from 18 kg/cm3 to 16 kg/cm3thorugh fine design which helps save Disposal method: All of them were entrusted to qualified third parties for compliant disposal.Waste
139 tonnes of expandable polyethylene consumption per year. Reduction measures: Cleaned wastewater was purified and recycled through process improvement; small
packages were replaced with large packages; alcohol soldering flux empty barrels and other reusable packaging
barrels were recovered.
67 68Inovance 2022 Environmental Social and Governance (ESG) Report
In 2022 the subsidiaries Suzhou Inovance and BNK Cable were listed as key polluting units by the environmental pro-
tection department. The Company strictly disclosed its pollutant information in strict accordance with relevant laws and Business Power with Sincere
regulations. See "Annex III: Details about Pollutants from Discharge and Emissions of Major Entities under Environmental
Regulation in 2022" for detailed discharge and emissions situation. Dedication to Goodness
The Company prepared an environmental impact evaluation report for construction projects in accordance with require-
ments and obtained approval from the environmental protection department. It also completed environmental protec-
tion acceptance upon completion and obtained an acceptance report; and applied for and obtained permits such as wa-
ter drainage and pollutant discharge. The subsidiary Suzhou Inovance Technology Co. Ltd. obtained a pollutant discharge Inovance adheres to the concept of "taking whatever from society and giving back to society accordingly"
permit in May 2020 (certificate No. 91320506678343007N valid for 5 years); and the subsidiary BNK Cable registered en- and actively fulfills its social responsibility. While continuously focusing on scientific and educational
terprise basic information main products raw and auxiliary materials emission of waste gas and discharge of wastewater undertakings and participating in public welfare and charity activities the Company is concerned about external
and discharge of industrial solid waste on the national pollution discharge permit management platform in June 2020 environmental changes and actively responds to social needs. It has carried out a series of communication and
(registration No. 91310115756967254W001W valid for 5 years). volunteer service activities around the local community where it operates striving to achieve dual benefits of
self-development and contribution to society.Community Communication and Volunteer
Service
The Company encourages employees to participate in social welfare undertakings by serving as volunteers. It has estab-
lished a dedicated volunteer association to coordinate and manage employee volunteer activities. The association works
together with party committees at all levels of the Company to provide support in terms of funding resource and platform
for employee volunteer activities.The Company actively responds to the calls from the local government and relevant departments where it operates and
carries out regular and specific volunteer service activities focusing on urban civilization construction environmental
protection public health and other fields. In 2022 the Party Committee of Suzhou Inovance responded positively to the
call of Taihu Street and established the "Inovance Civilized City Inspection Volunteer Service Team" mobilizing 83 party
member volunteers to participate in the urban civilization construction which was called "Woodpecker" action. The vol-
unteer association organized four Taihu river inspections and cleaning water sampling and publicity events three Taihu
Street community environmental protection actions two regional garbage picking and environmental protection hiking
activities and a series of environmental protection promotion and publicity activities under the theme of "Gathering New
Force Greening the Land" to help the whole society create a green and environmentally friendly atmosphere and enhance
environmental protection awareness. The cumulative service time of registered volunteers from employee volunteer as-
sociations participating in public health-related volunteer services exceeded 21500 hours.Moreover the Company takes volunteer service as a bridge to actively strengthen communication with the local com-
munity and build harmonious and friendly community relations. In 2022 the Company organized street and community
visits care lectures and friendship activities such as the "World No Tobacco Day Themed Lecture" and the "Teaching Rich-
ness · Care in Inovance Friendship Activity" with an attendance of more than 100 to related activities.
69 70Inovance 2022 Environmental Social and Governance (ESG) Report
Social Welfare and Charity Key Quantitative Performance
The Company also responds to social needs through public welfare and charity donations supporting the development of var-
ious social public undertakings. In April 2022 the Company urgently purchased 100000 new coronavirus antigen test kits and
donated them to local government through its subsidiary BST Electric supporting Shanghai's united fight against the epidemic. Economic Performance
The Company has long been concerned about public welfare investment in the field of science and education actively helps Scope of data statistics during the reporting period
poor students in mountainous areas and supports local education through foundations related to education development. In
2022 the Company launched a book donation and student living improvement activity for the Manwan Town School District The scope of economic performance statistics is consistent with the scope of Consolidated Financial Statement of the
in Yunxian County Lincang City Yunnan Province in order to contribute to the education undertaking in poor mountainous Company.areas. The Company donated RMB30000 through the Longhua District Charity Federation in Shenzhen to support education
assistance and consolidate poverty alleviation achievements in Donglan County Guangxi Province. It also directly donated Changes compared to the previous year
RMB485000 to the Education Development Foundation of Harbin Institute of Technology Education Development Foundation Since 2022 two new indicators have been disclosed namely "revenue growth rate" and "net profit growth rate
of Shanghai Ocean University and Education Development Foundation of Nanjing University of Aeronautics and Astronautics to attributable to shareholders of the listed company". Details of the data "net profit attributable to shareholders of the
promote the development of education undertaking. listed company after deducting non-recurring gains and losses" "net cash flow generated from operation activities" and
"weighted average return on equity" are available in the Company's 2022 Annual Report which will not be repeated here.Indicators Unit 2020 2021 2022
Revenue RMB 10000 1151131.68 1794325.66 2300831.24
Revenue Growth Rate % 55.76 55.87 28.23
Net Profit Attributable to Shareholders of the
Listed Company RMB 10000 210014.21 357340.46 431976.24
Net Profit Growth Rate Attributable to
Shareholders of the Listed Company % 120.62 70.15 20.89
Basic Earnings Per Share RMB/share 0.81 1.37 1.64
Corporate Governance Performance
Scope of data statistics during the reporting period
The scope of corporate governance performance statistics is consistent with the scope of Consolidated Financial
Statement of the Company.Changes compared to the previous year
Since 2022 new data related to anti-corruption has been disclosed. The data on composition of board of directors
and holding frequency of three boards (board of directors board of supervisors and board of shareholders) have been
reflected in the main text (see Section 3.1 "Governance Structure") which will not be repeated here.
71 72Inovance 2022 Environmental Social and Governance (ESG) Report
Anti-corruption The disclosure of data on "Packaging Material Management" are added.Indicators Unit 2022
Energy Management
Number of Training1 Sessions Related to Anti-corruption / 18
Proportion of Employees Participating in Training Related to
Anti-corruption % 100 Indicators Unit 2020 2021 2022
Total Number of Hours of Anti-Corruption Training Received by
Employees Hour 1555 Total Energy Consumption
1 MWh 85994 117551 149238
Number of Operating Sites 2 Where Anti-corruption Audits Have / 47 Total Direct Energy Consumption MWh 5426 4698 4118Been Conducted
Number of Operating Sites that Have Passed Anti-corruption / 47 Natural Gas m
3442662350336317129
Audits
Liquefied Petroleum Gas (LPG)2 L 84862 120828 91442
1 It refers to training activities in which employees sign the Business Conduct Guidelines and receive propaganda and education on anti-corruption content; the same below.
2 "Anti-corruption Audit" means an audit activity that includes a review of corruption; "Operating Site" means the corresponding company or subsidiary hereinafter. Total Indirect Energy Consumption MWh 80568 112853 145120
Purchased Electricity3 MWh 75868 108045 139941
Environmental Performance Self-built Photovoltaic Power Generation MWh 4700 4808 5179Energy Consumption Intensity MWh/RMB 1 million 7.47 6.55 6.49
Direct Energy Consumption Intensity MWh/RMB 1 million 0.47 0.26 0.18
Scope of data statistics during the reporting period
Indirect Energy Consumption Intensity MWh/RMB 1 million 7.00 6.29 6.31
The scope of environmental performance statistics covers the Company's direct control scope including companies and
1 The calculation is based on the General Rules for Calculation of the Comprehensive Energy Consumption (GB/T 2589-2020) and the China Energy Statistical Yearbook 2021. The average
subsidiaries located in Shenzhen and Suzhou (for a detailed list please refer to the "About This Report"). low heating value of natural gas is 38931 kJ/m3 (the maximum value within the reference scope).
2 The total LPG consumption data for FY2022 has been expanded to cover the Company's operational control scope and in addition the Company has made corresponding retrospective
In particular energy management greenhouse gas emissions and water resource use performance are uniformly covered adjustments to the FY2021 data and supplemented the disclosure of FY2020 data.3 The data of purchased electricity consumption for FY2020 and FY2021 have been retrospectively adjusted based on the corresponding historical data of the new subsidiaries added to the
on a prior-year basis the scope within Company's operational control i.e. for all organizations within the scope of the scope of consolidation in the current year.Consolidated Financial Statements as well as for the Company's subsidiaries and outposts (liaison offices).For all data related to "intensity" they are calculated with the Company's revenue (in RMB million) as the denominator Greenhouse Gas Emissions
with the coverage scope of the revenue data consistent with that of the Consolidated Financial Statement.Indicators Unit 2020 2021 2022
Note: Due to the retrospective adjustment of individual data for historical years the scope within operational control of the Company for 2020 and 2021 is described in the "About
This Report" section of the ESG report for 2021 (in addition to the subsidiary Dalian Zhi Ding Technology Co.Ltd. of which corresponding historical data was consolidated during Total GHG Emission1 Tonnes of CO equivalent 54929.43 64938.65 81410.28
the data retrospective adjustment process). 2
Scope 1 GHG Emission2 Tonnes of CO2 equivalent 1864.56 1933.36 1601.90
Changes compared to the previous year Scope 2 GHG Emission Tonnes of CO2 equivalent 53064.87 63005.29 79808.38
Starting from 2022 GHG Emission Intensity4 Tonnes of CO2 equivalent/RMB 1 million 4.77 3.62 3.52
The "Energy Management" section additionally includes six new indicators: "Total Energy Consumption" "Total 1 Total GHG emissions include Scope 1 and Scope 2 GHG emissions. The increase in total GHG emissions in FY2022 is mainly due to: 1) an expansion in the scope of data coverage (the
Direct Energy Consumption" "Total Indirect Energy Consumption" "Energy Consumption Intensity" "Direct Energy Company's direct control scope was expanded in FY2022 mainly due to the addition of new branches and outposts in FY2022); 2) higher energy demand due to the Company's organic growth and capacity increase (mainly is due to the increased consumption of purchased electricity but the consumption of direct energy (especially LPG) actually decreases). In addition
Consumption Intensity" and "Indirect Energy Consumption Intensity". The data on "Electricity Consumption per RMB the Company adjusted the data for FY2020 and 2021 retrospectively accordingly to include historical emissions data from the new subsidiaries added to the scope of consolidation.
2 Fixed combustion emissions from cooking equipment and mobile combustion emissions from own business vehicles forklifts and operational leased vehicles are calculated based on
1 Million Revenue" will no longer be disclosed; ISO 14064-1:2018 and the General Guideline of the Greenhouse Gas Emissions Accounting and Reporting for Industrial Enterprises (GB/T 32150-2015). The Company is not involved in
industrial process emissions and significant fugitive emissions. The GHG type incorporated involved is CO2. Among this the emission factors are calculated with reference to the "Guidelines
for Accounting Methods and Reporting of Greenhouse Gas Emissions of Enterprises in Other Industries (for Trial Implementation)" (2015) and parameters such as calorific value are taken
The "Water Resource Use" section additionally includes the data on "Total Water Withdrawal" and its breakdown by source as the corresponding default values in the Guidelines.and the data on "Total Water Consumption" and "Water Withdrawal Intensity "are revised and disclosed in this section; 3 The indirect emissions of purchased electricity is calculated based on ISO 14064-1:2018 and the General Guideline of the Greenhouse Gas Emissions Accounting and Reporting for Industrial Enterprises (GB/T 32150-2015). The GHG type incorporated into the calculation is CO2. For the calculation of emissions caused by purchased electricity in FY2022 the emission
factor for organizations whose operations are located in China refers to 0.5703 tCO2e/MWh in the Notice of the Ministry of Ecology and Environment on the Management of Greenhouse
The "Emissions and Waste Management" section additionally includes the data on "Total Particulate Matter (PM) Gas Emissions Reporting by Enterprises in the Power Generation Industry for 2023-2025 (2023); for organizations whose operations are located overseas the calculation refers to Climate
Transparency's corresponding emission factors for the power sector in each country for 2021.Emissions" and the non-substantive indicator "Total Exhaust Gas Emissions" will no longer be disclosed; 4 Data for FY2020 and 2021 are calculated based on retrospectively adjusted total GHG emissions.
73 74Inovance 2022 Environmental Social and Governance (ESG) Report
Water resource use Indicators Unit 2020 2021 2022
Volatile Organic Compounds (VOCs)4 Kg / 720.0 824.5
Indicators Unit 2020 2021 2022
Total Waste Generation5
Total Water Withdrawal1 m3 338754 435580 605987
Hazardous Waste 427 313 412
Municipal Water Supply m3 338754 435580 595987
Non-hazardous Waste 448 478 648
Directly Collected and Stored Rainwater m3 0 0 10000
1 Based on the Company's business reality the data in the Emissions and waste management section (including that of historical years) actually includes data from organizations within the
Total Water Consumption2 m3 / 357570 541028 Company's direct control that generate significant pollutant emissions or solid waste from manufacturing in the corresponding year. The increase in emissions and waste data in FY2022
is mainly due to 1) the expansion of the scope of organizations included in the calculation (from Suzhou Inovance in previous years of FY2021 to Shenzhen Inovance Suzhou Inovance
Inovance Automotive (Suzhou and Changzhou bases) Kingwei Rail and Xi'an R&D Center); 2) the increase in energy consumption due to the growth of the Company's business.Water Withdrawal Intensity3 m3/RMB 1 million 29.43 24.28 26.34
2 The "Domestic Wastewater Discharge" data for 2021 corresponds to the "Total Wastewater Discharge" here.
he correspondence between the indicators and historical data was adjusted; the specific values were also retroactively adjusted according to the expanded range. The increase in total 3 Pollutants NOx and SO2 are not included in the Company's production waste gas emissions.water intake in 2022 is mainly due to: 1) a significant expansion of the data coverage (including all consolidated companies and subsidiaries as well as expatriate agencies); 2) increased 4 It is calculated based on the monitoring value of the non-methane hydrocarbon (NMHC).water demand resulting from the Company's stable operation and business growth. 5 Here the "Hazardous Waste" reported by the Company includes waste organic solvents waste packaging containers waste wipes and gloves surface treatment waste waste grinding
2 Total water consumption for both FY2021 and 2022 is calculated using the following formula: Total water consumption = Total water withdrawal - Total water discharge. The Company will sludge waste emulsions and other hazardous wastes listed in the National Hazardous Waste List while the "Non-hazardous Waste" includes waste paper skin waste wood pallet waste
continue to improve the measurement of water consumption data and retrace the historical data. copper waste iron waste aluminum waste plastic bags etc.
3 Both the FY2020 and 2021 data were calculated based on the retrospectively adjusted total water withdrawals.
Packaging Material Management
Indicators Unit 2022 Social Performance
Total Packaging Material Usage1 Ton 4875
1 Including the usage of paper boxes and foam materials within the statistical scope. Scope of data statistics during the reporting period
The scope of social performance statistics covers the Company's direct control scope including companies and
Emissions and Waste Management1 subsidiaries located in Shenzhen and Suzhou (for a detailed list please refer to the "About This Report").In particular the statistical scope of performance related to R&D and innovation and intellectual property protection is
Indicators Unit 2020 2021 2022 consistent with the scope of the Company's Consolidated Financial Statements.Total Wastewater Discharge
Total Water Discharge2 m3 / 22213 64959 Changes compared to the previous year
Total Wastewater Pollutant Emissions Starting from 2022
Chemical Oxygen Demand (COD) Ton 15.08 17.86 37.66 The "Employee Employment" section additionally includes two new indicators: "Proportion of Employees Covered
Ammoniacal Nitrogen (NH3-N) Ton 1.07 1.21 2.65 by Collective Negotiation Agreement" and "Social Insurance Coverage Rate". The number of employees divided by
Suspended Solid (SS) Ton 15.46 18.35 36.25 gender employment type age and education level is revised to be calculated as a percentage of the total number
of employees;
Total Phosphorus Ton 0.15 0.17 0.32
In the "Product and Service Quality Management" section the "Proportion (Sales Volume) of Recalled Products
Total Nitrogen Ton 2.83 3.14 5.73
Due to Safety and Health Reasons in Total Number of Already Sold or Delivered Products" has been merged with
Tin and Its Compounds Ton / 0.017 0.021 relevant indicators and will no longer be disclosed;
Animal and Vegetable Oils Ton 1.52 1.68 3.13
The "Customer Service Management" section will additionally include two new indicators: "Number of Complaints
Total Atmospheric Pollutant Emissions3 Received about Products and Services" and "Customer Satisfaction";
Particulate Matter (PM) Kg / / 329.5 New data are disclosed in the "Intellectual Property Protection" and "Occupational Health and Safety" sections.
75 76Inovance 2022 Environmental Social and Governance (ESG) Report
R&D and Innovation Indicators Unit 2020 2021 2022
Hong Kong Macao Taiwan and Overseas
Regions / 10 13 53
Indicators Unit 2020 2021 2022
Number of New Suppliers Implementing
R&D Investment RMB 10000 102323.35 168545.72 222926.89 Evaluation from Environment Labor / 114 206 146
Ethics and other Aspects
Proportion of R&D Investment 1 % 8.89 9.39 9.69 Proportion of New Suppliers Evaluated
from Environment Labor Ethics and % / 100 91.8
Total Number of R&D Personnel Person 2513 3560 4793 other Aspects
Proportion of R&D Personnel2 % 19.53 21.02 23.66 Proportion of Suppliers that have Signed
Anti-corruption Agreement1 % 100 100 100
1 Proportion of R&D Investment = R&D Investment (RMB 10000) / Revenue (RMB 10000) × 100%; here the coverage of revenue is consistent with that of the Consolidated
Financial Statement. 1 Based on the Company's definition of supplier materiality level only production material suppliers are counted and disclosed here.
2. Proportion of Research and Development Personnel = Total Number of Research and Development Personnel / Total Number of Employees x 100%; here the scope of "Total 2 During the reporting period some of the new suppliers of the subsidiary Kingwei Rail did not pass the evaluation and the Company did not recognize them as qualified
Number of Employees" is consistent with that of the Consolidated Financial Statement. suppliers for the time being until they rectified and passed the subsequent evaluation.
3 Here the "Anti-corruption Agreement" refers to the Supplier Honest Cooperation Agreement which specifically includes anti-corruption-related content.
Product and Service Quality Management Intellectual Property Protection
Indicators Unit 2021 2022 Indicators Unit 2020 2021 2022
ales Volume of Products Recalled Due to Safety and Health Reasons in Number of Patent Applications / 501 731 875
Already Sold or Delivered Products RMB 10000 0 0
Number of Patents Granted / 323 467 718
Proportion of Products Recalled Due to Safety and Health Reasons in
Already Sold or Delivered Products1 % 0 0 Number of Trademark Applications / 65 108 28
1 Proportion of Products Recalled Due to Safety and Health Reasons in Already Sold or Delivered Products = Sales Volume of Products Recalled Due to Safety and Health
Reasons in Already Sold or Delivered Products (RMB 10000) / Total Sales Volume (RMB 10000) × 100%. Number of Trademarks Approved / 102 46 81
Customer Service Management Employee employment
Indicators Unit 2020 2021 2022
Customer Service Management Unit 2021 2022
Total Number of Employees Person 8229 11043 13342
Number of Complaints Received about Products and Services1 / 0 0
Proportion of Employees by Gender
Complaint Handling Rate % / /
Female % 22.02 24.08 24.58
Customer Satisfaction2 Point 8.2 9.2
Male % 77.98 75.92 75.42
1 Based on the Company's actual internal management the "customer complaint" here refers to formal complaints from customers regarding products and services.
2 It is calculated based on customer satisfaction scores obtained from the customer satisfaction survey (out of a maximum score of 10). Proportion of Employees by Age
Under 30 years old % 54.32 51.44 47.01
Supply Chain Management Between 30 and 50 years old % 45.08 48.06 52.45
Above 50 years old % 0.60 0.50 0.54
Proportion of Employees by Employment Type
Indicators Unit 2020 2021 2022
1 Full-time Labor Contract Employees % 88.37 93.26 98.25Total Number of Suppliers / 775 826 1103
Employees of Other Types of
Chinese Mainland / 765 813 1050 Employment1 % 11.63 6.74 1.75
77 78Inovance 2022 Environmental Social and Governance (ESG) Report
Indicators Unit 2020 2021 2022 Employee Promotion and Development
Proportion of Employees by Education Level
PhD % 0.22 0.24 0.30 Indicators Unit 2020 2021 2022
Proportion of Employees who Receive
Master's Degree % 14.23 13.10 16.55 Regular Performance and Career % 100 100 100
Bachelor's Degree % 28.36 31.30 36.20 Development Evaluations
1 Based on the Company's actual management probationary employees are not subject to regular performance and career development evaluations. Therefore probationary employees
Junior College Degree or Below % 57.19 55.36 46.95 are not included in the calculation of this data.Proportion of Employees Covered by
Collective Negotiation Agreement2 % 100 100 100
Social Insurance Coverage Rate % 100 100 100 Volunteer Service
1 "Other Types of Employment" involves the interns probationers student workers dispatched workers and post-retirement employment with a relatively small proportion.
2 Based on the Company's actual management probationary employees are not covered by collective negotiation agreement. Therefore when calculating this data the denominator is Indicators Unit 2020 2021 2022
the total number of employees (excluding probationary employees).Number of Employees Participating in
Volunteer Activities Person 40 50 393
Occupational Health And Safety Cumulative Duration of Employee
Volunteer Services Hour 240 200 36460
Indicators Unit 2020 2021 2022 Average Duration of Employee Volunteer Services1 Hour 6.0 4.0 92.8
Number of Employees of Occupational Person / / 349 1 The significant increase in the average duration of employee volunteer services in 2022 is mainly due to the Company's increased investment and participation in emergency volunteer Disease Risk Posts services for unexpected events.Number of Newly Added Employees with
Occupational Diseases Person / / 0
Employee Physical Examination Coverage
1 % 100 100 100 Social WelfareRate
1 Based on the Company's actual management probationary employees are not eligible for the annual physical examination uniformly organized by the Company. Therefore probationary
employees are not included in the calculation of this data. Indicators Unit 2020 2021 2022
Total Amount Invested into Community RMB 6247000 145000 1460112
Employee Training Public Welfare1
Among which Amount Donated to
Charity Projects2 RMB / 30000 667232
Indicators Unit 2020 2021 2022 Investment Amount by Field
Employee Training Coverage Rate % 65.16 100 100 Education Assistance RMB 555000 135000 687232
Proportion of Employees by Gender1 Environmental Protection RMB / 3000 /
Female % 65.31 100 100 Labor Needs RMB / 5000 /
Male % 65.29 100 100 Medical Health RMB 5000000 / 587379
Average Duration of Employee Training Hour 20.03 15.00 23.51 Cultural and Sports Undertakings RMB / 2000 /
Proportion of Employees by Gender2 Community Construction3 RMB / / 185501
Female Hour / 15.00 23.56 1 RMB692000 of the community public welfare investment in FY2020 was invested in areas other than those listed below and is therefore not shown here.
2 Refering to the amount corresponding to the donated project for which a donation receipt has been issued under uniform monitoring (printing) by the Ministry of Finance.
Male Hour / 15.00 23.50
3 A portion of the amount invested in the "community construction" in FY2022 are donated to local foundations in India where one of our subsidiaries operates whose final practical
orientation depends on the respective foundation.
1 Training Coverage Rate of Employees by Gender = Total Number of Trained Employees of that Gender / Total Number of Employees of that Gender x 100%. Based on the Company's
actual management this data is calculated excluding production line employees.
2 Average Duration of Employee Training by Gender = Total Duration of Training for that Gender / Total Number of Trained Employees of that Gender x 100%. Data disclosed for 2021 has
been retrospectively adjusted based on this calculation method.
79 80Inovance 2022 Environmental Social and Governance (ESG) Report
Index Table Contents Chapters
Article 26 Protection of Customers' Rights and Interests
Report Index of Shenzhen Stock Exchange's Guidelines for Article 27 Environmental Management System
Social Responsibility of Listed Companies Low Carbon Products and Solutions
Article 28 Environmental Management SystemResponding to Climate Change
Resource Management
Contents Chapters
Article 29 Resource Management
Article 2 ESG Strategy Emissions and Waste Management
Article 3 ESG Strategy Article 31
Environmental Management System
Corporate Governance System Resource Management
Operational Compliance and Anti-Corruption Article 32 Community Communication and Volunteer ServiceArticle 4 Cross-industry Collaboration and Development
Index Table Article 33
Community Communication and Volunteer Service
Article 5 Social Welfare and CharityAbout this Report
Article 34 Management of Material Topics
Article 7
Article 35 ESG Framework
Article 8 ESG Strategy
Article 9 ESG Strategy
Corporate Governance System Product Quality Management
Article 10
Article 36 Rights Interests and Benefits of Employees
Article 11 Occupational Health and Safety
Environmental Management System
Article 12 Community Communication and Volunteer Service
Article 13 Rights Interests and Benefits of Employees
Article 14 Rights Interests and Benefits of Employees
Article 15 Occupational Health and Safety
Article 16 Rights Interests and Benefits of EmployeesEmployee Training and Development
Article 17 Rights Interests and Benefits of Employees
Article 18 Employee Training and Development
Article 19 Rights Interests and Benefits of Employees
Article 20 Protection of Customers' Rights and Interests Cross-industry Collaboration and Development
Article 21 Product Quality ManagementProtection of Customers' Rights and Interests
Article 22 Product Quality Management
Article 23 Operational Compliance and Anti-CorruptionSupply Chain Management
Article 24 Operational Compliance and Anti-Corruption
Article 25 Protection of Customers' Rights and Interests
81 82Inovance 2022 Environmental Social and Governance (ESG) Report
Report Index of Self-regulatory Guidelines for Listed Compa- Contents Chapters
nies on the Shenzhen Stock Exchange No. 2 - Standardized Op- 9.9: (3) Environmental investment and environmental technology development Environmental Management Systemeration of Listed Companies on the Growth Enterprise Market
9.9: (4) Management of pollutant emissions Emissions and Waste ManagementKey Quantitative Performance
9.9: (5) Construction and operation of environmental Contents Chapters protection facilities Emissions and Waste Management
9.1 Overview ESG Strategy 9.9: (6) Waste treatment and disposal recycling of Corporate Governance System waste products for comprehensive use Emissions and Waste Management
Operational Compliance and Anti- 9.9: (7) Voluntary agreements with environmental
Corruption authorities
Resource Management
9.2 Business Principles Protection of Customers' Rights and 9.9: (8) Rewards by environmental authorities Not applicableInterests
Cross-industry Collaboration and Low Carbon Products and Solutions
Development 9.9: (9) Other voluntary disclosures Responding to Climate Change
Key Quantitative Performance
9.3 Social Responsibility Strategic Planning and Mechanisms ESG FrameworkESG Strategy 9.10 Environmental Protection Policy Implementation
Environmental Management System
Resource Management
9.4: (1) Social responsibility system 9.11 Disclosure of Environmental Information Emissions and Waste Management
9.4: (2) Shortages and problems in implementing
ESG Framework
ESG Strategy 9.12: (1) Product safety laws and industry standards Product Quality Managementsocial responsibility About this Report Product Quality Management
9.4: (3) Improvements and specific timelines 9.12: (2) Production environment and process Occupational Health and Safety
9.5 Giving back to shareholders Corporate Governance System
9.12: (3) Product quality and safety mechanism and accident response plan Product Quality Management
9.6 Financial soundness Corporate Governance System
Product Quality Management
Rights Interests and Benefits of Other production and product safety Protection of Customers' Rights and
9.7 Protection of employee rights Employees 9.12: (4) responsibilities Interests
Occupational Health and Safety Occupational Health and Safety
Comply with environmental protection laws Operational Compliance and Anti-9.8: (1) and industry standards Environmental Management System 9.13: (1) Employee management system and measures Corruptionto deal with irregularities Rights Interests and Benefits of
9.8: (2) Environmental Protection Plan Responding to Climate Change EmployeesEnvironmental Management System
9.13: (2) Occupational hazards and safety measures Occupational Health and Safety
9.8: (3) Natural Resources Use Responding to Climate ChangeResource Management 9.13: (3) Employee Training Employee Training and Development
9.8: (4) Pollutant disposal Emissions and Waste Management
Rights Interests and Benefits of
9.8: (5) Pollution prevention and control facilities Emissions and Waste Management Employees
9.13: (4) Other employee protection responsibilities Occupational Health and Safety
9.8: (6) Payment of taxes related to environmental Environmental Management System Employee Training and protection Development
9.8: (7) Supply chain environmental security Supply Chain Management
9.14 Ethics of science R&D and Innovation System
9.8: (8) Other environmental protection Low Carbon Products and Solutions
Low Carbon Products and Solutions
responsibilities Responding to Climate Change 9.15 Supervision and inspection Management of Material Topics
9.9: (1) Environmental Protection Policy Objectives and Results Environmental Management System
9.9: (2) Total resource consumption Key Quantitative Performance
83 84Inovance 2022 Environmental Social and Governance (ESG) Report
Annexes English Abbreviations Interpretation
EU End User
F
Annex I: Glossary FA Factory Automation
FAE Field Application Engineer
This Annex provides explanations of English abbreviations used in the report related to professional terminology laws and G
regulations standards and guidelines and other proper nouns so as to ensure accurate understanding of relevant infor-
mation by readers. GDPR General Data Protection Regulation (REGULATION (EU) 2016/679)
GWEC Global Wind Energy Council
English Abbreviations Interpretation H
A HCl Hydrogen Chloride
ABS Acrylonitrile Butadiene Styrene HIPS Host Intrusion Prevent System
APP Application Software I
B IE International Energy Efficiency Class
BCG Business Conduct Guidelines (of Inovance) IMP Incident Management Plan
BCM Business Continuity Management ISO/SAE 21434:2021 ISO/SAE 21434:2021 Road vehicles — Cybersecurity engineering
BCP Business Continuity Planning
ISO/IEC 27001:2013 ISO/IEC 27001:2013 Information technology — Security techniques — Information security
BOD5 Biochemical Oxygen Demand After 5 Days
management systems — Requirements
ISO 14001:2015 ISO 14001:2015 Environmental management systems — Requirements with guidance for use
C
ISO 14064-1:2018 ISO 14064-1:2018 Greenhouse gases — Part 1: Specification with guidance at the organization CE Conformité Européenne level for quantification and reporting of greenhouse gas emissions and removals
CEO Chief Executive Officer ISO 9001:2015 ISO 9001:2015 Quality management systems — Requirements
CFSI-CMRT Conflict Minerals Reporting Template by Conflict-Free Sourcing Initiative I/O Input/Output
CNC Computer Numerical Control IPD Integrated Product Development
COD Chemical Oxygen Demand， IPMT Integrated Project Management TeamCOSO-ERM Enterprise Risk Management—Integrating with Strategy and Performance (2017) by Committee of Sponsoring Organizations of the Treadway Commission IPO Initial Public Offerings
p.27
CQM Customer Quality Management IPS Inovance Production System
CT Compliance Test IPSp.30 Intrusion Prevention System
D ISC Integrated Supply Chain
DC/DC DC-to-DC converter IT Information Technology
E ITR Issue to Resolved
EHS Environment，Health & Safety KEMT Executive Management Team KCP Key Control Point
ESG Environmental Social & Governance KPIs Key Performance Indicators
85 86Inovance 2022 Environmental Social and Governance (ESG) Report
English Abbreviations Interpretation English Abbreviations Interpretation
L SOD Segregation of Duties
LCA Life Cycle Assessment SQE Supplier Quality Engineer
LTC Lead to Cash SRM Supplier Relationship Management
M SS Suspended Solid
MES Manufacturing Execution System T
NPI New Product Introduction TCMS Train Control and Management System
N TISAX Trusted Information Security Assessment Exchange
NH3-N Ammoniacal Nitrogen TQRDC Technology Quality Responsiveness Delivery & Cost
NMHC Non-Methane Hydrocarbon U
NPI New Product Introduction UED User Experience Design
O UL Underwriter Laboratories Inc (Certification)
OBC On-Board Charger V
OEM Original Equipment Manufacturer VOCs Volatile Organic Compounds
P VR Virtual Reality
PCS Power Conversion System W
PLC Programmable Logic Controller WAF Web Application Firewall
PM Particulate Matter *
PMMA Polymethyl Methacrylate 3C Computer Communication & Consumer Electronic
PPE Personal Protective Equipment 4A Business Architecture Data Architecture Application Architecture & Technology Architecture
PQA Product Quality Assurance
Q
QCC Quality Control Circle
QE Quality Engineer
QPA Quality Process Audit
R
RBA Responsible Business Alliance
RMI Responsible Minerals Initiative
RTO Recovery Time Objective
S
SCARA Selective Compliance Articulated Robot Arm
SMT Surface Mounted Technology
87 88Inovance 2022 Environmental Social and Governance (ESG) Report
Annex II: Material Topics of High Impact in 2022 Boundary of TopicMaterial
Topic of High Definition of Topic Supply Production Products Position
The Table below presents the ESG material topics of high impact obtained after screening by materiality threshold and Impact Chain and and Operation Services
impact analysis for the year 2022 as well as their definitions boundaries and corresponding chapters & sections where
Customer Service
related information is disclosed. Here the "boundary of topic" refers to the links that may have a significant impact on Inovance has established systems and
such ESG issues along the Company's value chain after preliminary identification which are divided into three categories: measures for customer service customer
Management
Customer complaint & handling responsible Responsible
"supply chain" "production and operation" and "products and services". Service marketing and other customer relationship ○ Marketing
Management management including disclosure of data Key Quantitative
related to customer satisfaction customer Performance - Customer Service
Boundary of Topic service and complaints. Management
Material
Topic of High Definition of Topic Supply Production Products PositionImpact and and Inovance ensures that its own products or Quality Lifecycle Chain Operation Services services comply with laws and regulations Management
Corporate Governance Product and and industry standards and meet customers'
Comprehensive
main requirements for safety and quality. Quality Service Quality Improvement
Inovance has established an anti- Management In addition its standards are in line with ○ ○
corruption management system which Anti-corruption and requirements for human health and personal
Key Quantitative
Performance
Anti- includes the construction of anti- Integrity Building
and property safety and such standards - Product and
corruption corruption system risk identification ○ ○ Key Quantitative
include relevant management systems and
management of conflict of interests Performance - Anti- measures.Service Quality
Management
construction of claim channels promotion corruption
and training of integrity culture etc. Employee
Inovance provides competitive salary and Promotion and
Inovance has established a comprehensive benefits carries out workplace diversity Development
risk management system by implementing Talent and inclusion construction promotion and Talent Attraction and
Risk basic risk management processes in Risk Management Attraction and
development opportunities and special Retention
various aspects of corporate management ○ and Internal Control Retention incentive policies so as to attract and retain
○ Key Quantitative
Management and during operations thus improving talents. This includes the disclosure of Performance
ESG risk management and cultivating a data related to employee assessment and - Employee
good risk management culture. promotion. Promotion and
Development
Inovance has built an effective "three-
board and one-level" (board of Inovance has established systems and measures related to supplier admission Improving Resilience directors board of supervisors board of classification and assessment a management of the Supply Chain shareholders and senior management ESG Management of
Corporate level) governance framework to promote Governance Sustainable system and measures to enhance supply
Governance the diversification and independence ○ Structure Supply Chain chain safety and sustainable supply capability ○
the Supply Chain
of the board of directors ensure the Management and systems and measures related to supplier
Key Quantitative
ESG management and green procurement. Performance - company's standardized operation and This includes the disclosure of data related to Supply Chain ensure scientific standardized and
transparent corporate governance. supplier statistics risk assessment etc.Management
Social Inovance exchanges information and shares
resources with related industries throughout
Inovance's management system and the entire value chain such as automation
R&D progress in the field of technological Our R&D Framework Industrial power and new energy vehicles and
innovation includes the progresses in terms Empowerment by Cooperation participates in research and formulation of Industrial
R&D and of management system plan platform
Data Governance
Innovation Platform and
industry-related policies and standards. In ○ ○ ○ Communication and
products under research related to the ○ ○ Development addition it promotes the exchange transfer CooperationInnovation Company's research and development as a Driving Force and transformation of innovative research
innovation as well as the impact on the Key Quantitative and development achievements and
Company and research and development Performance – R&D empowers systems and measures related to
ethics and innovation culture. and Innovation industrial development.
89 90Inovance 2022 Environmental Social and Governance (ESG) Report
Boundary of Topic
Material Annex III: Details about Pollutants from Discharge
Topic of High Definition of Topic Supply Production Products PositionImpact and and and Emissions of Major Entities under Environmental Chain Operation Services Regulation in 2022
Environment
Inovance actively promotes the application According to the relevant regulations of the Ministry of Ecology and Environment China Securities Regulatory Commis-
of cleaning measures and the using of clean sion and Shenzhen Stock Exchange the emission data for the subsidiaries of the Company that have been listed as Major
energy during the production process and Low-carbon
also actively provides solutions related to Products and Entities under Environmental Regulation (now referred to as "Key Environmental Regulation Units") for the year 2022 are
Clean cleaning technology to respond to policy Solutions shown as below.Technology demands accelerates the development of ○ ○ Low-carbon
market space and has an impact on clean Production and
energy technology through its own innovation Operation
capabilities and strategic development Name of Name of major
Company and Discharge/ Number
Approved
strategies. Emission of Distribution Average
Discharge/ Annual annual Excessive
or specific Emission total discharge/
subsidiary pollutants pattern outlets
of outlets concentration standards emissions total emissions emission
Inovance provides green products with Processed
comprehensive environmental benefits to meet
such as "energy saving material saving NMHC discharge 4 Within the 3 3standard factory area 2.45 mg/m 60 mg/m 0.73 t/a 0.8048 t/a NoneGreen and efficiency enhancement" through Low-carbon
Products and product's full lifecycle management design ○ Products and and then
Innovation optimization and other means and promotes Solutions discharged
the measures and achievements related to
research and development of new green Processed
products. to meet Tin and Its discharge Within the 6.15×10-4 mg/ 3
Compounds standard 2 factory area m3 5 mg/m 0.018 t/a 0.0263 t/a None
Inovance establishes a management system Climate Change and then
to cope with climate change carries out risk Response System dischargedClimate
Change identification and further scenario analysis.Greenhouse Gas
Discharge Within the
Mitigation and In addition it reduces its own operational ○ ○ ○
Accounting COD via pipe 2 factory area 278 mg/L 350 mg/L 16.7 t/a 18.866 t/a None
Adaptation carbon emissions as well as the discoloration
Key Quantitative
Discharge Within the
of strategies measures and relevant data in Performance - SS 2 172 mg/L 220 mg/L 18.6 t/a 19.57 t/a None
climate risk. Greenhouse Gas
via pipe factory area
Emissions
NH -N Discharge 2 Within the 3
Suzhou via pipe factory area
25 mg/L 30 mg/L 1.2 t/a 1.34 t/a None
Inovance Total Discharge 2 Within the Phosphorus via pipe factory area 4.2 mg/L 5 mg/L 0.18 t/a 0.1904 t/a None
Total Nitrogen Discharge 2 Within the via pipe factory area 40 mg/L 50 mg/L 3.21 t/a 3.466 t/a None
Animal and Discharge Within the
Vegetable Oils via pipe 2 factory area 67 mg/L 100 mg/L 1.73 t/a 1.888 t/a None
Waste Organic
Solvents Waste
Packaging
Containers
Waste Rags Entrusted
and Gloves to qualified
Waste Liquid third
Not Not Not
applicable applicable Not applicable applicable 351 t/a 470 t/a None
for Surface parties for
Treatment disposal
Waste Grinding
Mud Waste
Emulsions etc.
91 92Name of Name of major
Company and Discharge/ Number
Approved
Emission of Distribution Average
Discharge/ Annual annual Excessive
or specific Emission total discharge/
subsidiary pollutants pattern outlets
of outlets concentration standards emissions total emissions emission
Integrated
Emission
Standards
PM Organized Within the 3 of Air 0.00498 t/emission 1 factory area 1.1 mg/m Pollutants a / /
of Shanghai
(DB 31/933-
2015)
Emission
Standard
of Air
NMHC Organized 2.82 mg/m3 Pollutants emission for Printing 0.0492 t/a / /
Industry
(DB 31/872-
2015)
Organized 1 Within the HCl emission factory area ＜ 0.3 mg/m
3
Integrated 0.3 t/a / /
Emission
Methyl Isobutyl Organized ＜ 0.0009 mg/ Standards
Ketone emission m3 0.0009 t/a / /of Air
Organized Pollutants Cyclohexanone emission ＜ 0.33 mg/m
3
of Shanghai 0.33 t/a / /
(DB 31/933-
Butanone Organized 0.0025 mg/m3 2015) 0.0000436 emission t/a / /
Emission
Standard
BNK Cable Organized Within the of Cooking Cooking Fume emission 1
3 0.00368 t/
factory area 0.2 mg/m Fume of Shanghai a
//
(DB 31/844-
2014)
Non-methane Organized 3
Hydrocarbon emission 1.69 mg/mWithin the Integrated
0.02 t/a / /
1 Emission
HCl Organized
factory area
2.0 mg/m3 Standards emission 0.0238 t/a / /of Air
Non-methane Organized Pollutants 3
Hydrocarbon emission 3.62 mg/m of Shanghai 0.0374 t/a / /
1 Within the (DB 31/933-
HCl Organized
factory area
emission 7.3 mg/m
3 2015) 0.0754 t/a / /
pH Centralized discharge 1
Within the
factory area 7.3 / /
SS Centralized 1 Within the discharge factory area 21 mg/L 0.98 t/a / /
Integrated
COD Centralized 1 Within the 23 mg/L Wastewater discharge factory area 1.07 t/a / /Discharge
NH -N Centralized 1 Within the
Standard (
3 discharge factory area 2.53 mg/L DB 31/199- 0.12 t/a / /
2018)
Animal and Centralized 1 Within the Vegetable Oils discharge factory area 0.19 mg/L 0.001 t/a / /
BOD Centralized 1 Within the 5 discharge factory area 7.6 mg/L 0.36 t/a / /
93Shenzhen Inovance Technology Co. Ltd. Location：Inovance Building High-tech Industrial Park
Guanlan Subdistrict Longhua District Shenzhen
www.inovance.com
Tel： (0755)2979 9595 Fax: (0755)2961 9897
Customer Service Hotline: 4000-300124
Suzhou Inovance Technology Co. Ltd. Location：No. 16 Youxiang Road Yuexi Town Wuzhong District Suzhou
www.inovance.com
Tel：(0512)6637 6666 Fax: (0512)6285 6720
Customer Service Hotline: 4000-300124