Shandong Lixing Advanced Material Co., Ltd. 2022 Social Responsibility Report

Shandong Lixing Advanced Material Co., Ltd.

2022 Social Responsibility Report

1. Foreword

In 2022, Shandong Lixing Advanced Material Co., Ltd. (the Company) continued to strengthen basic management and refine internal operations. It worked to improve its social responsibility efforts in targeted poverty alleviation, energy conservation, environmental protection, workplace safety and employee care. It promoted low-carbon living, enhanced brand value and supported green, healthy and sustainable development of the lithium-ion battery electrolyte industry.

2. Company Overview

Founded in 2015 and located in the chemical industrial park of the Tancheng Economic Development Zone in Linyi, Shandong Lixing Advanced Material Co., Ltd. is a nationally recognized high-tech enterprise. It has received recognition as a technology-based SME, a Shandong specialized, refined, distinctive and innovative SME, a Shandong Gazelle Enterprise, a Linyi Smart Manufacturing Enterprise, one of Linyi's 50 industrial enterprises selected for progressive development, an industrial enterprise with a One Enterprise, One Technology R&D center, and the entity establishing Linyi's key enterprise laboratory for lithium-ion battery electrolyte solvents. As an innovation-driven developer and manufacturer of lithium-ion battery electrolyte solvents and environmentally oriented solvents, the company mainly produces propylene carbonate, ethylene carbonate, ethyl methyl carbonate, diethyl carbonate and dimethyl carbonate, providing tailored products, services and solutions primarily for the new energy, polyurethane, leather and foundry industries.

Lixing Advanced Material began construction of its lithium-ion battery electrolyte solvent project (PC,EC,EMC,DEC) in 2015. Specializing in fine chemicals, it places strong emphasis on product innovation and has substantial production and R&D capabilities. The company established an industry–university–research base and joint laboratory with Tianjin University of Science and Technology, whose professors provide regular training and specialist talent. It also established an application R&D center with Linyi University to explore new product applications and address market demand and application issues for new products.

Throughout its development, the company has focused on product quality and environmental safety, establishing a scientific and efficient quality management system. It has obtained ISO9001 quality management, ISO141001 environmental management, ISO45001 occupational health and safety, and ISO50001 energy management certifications, and its main products have completed formal EU REACH registration. European and US warehousing centers are being prepared. Products are sold across China and exported to Europe, the United States, South Korea, Japan, Brazil and Russia.

3. Key Performance Indicators

In 2022, the company used innovative thinking to drive continuing improvements in products and management. Refined management, technical upgrades and other measures reduced costs, increased efficiency and further enhanced asset value. A comparison of relevant performance over the past three years follows:

Indicator	2020	2021	2022
Total profits and taxes (RMB 10,000)	73.55	1081.65	870.36
Employment contract signing rate (%)	100	100	100
Social insurance coverage (%)	100	100	100
Medical examination coverage (%)	100	100	100
Occupational disease cases (persons)	0	0	0
Employee training coverage (%)	100	100	100
Employee satisfaction (%)	93	94	98
Employee turnover (%)	6.05	6.76	7.42
Customer satisfaction (%)	95.98	97.39	96.63
Customer complaint resolution rate (%)	100	100	100
Product acceptance rate (%)	100	100	100
Work-related accidents (cases)	0	0	0
Accident fatalities (persons)	0	0	0
Safety training coverage (%)	100	100	100

4. Community Support and Assistance

Never forget social responsibility, company development, hardworking employees or standardized management: these principles define the company's purpose. For many years, Lixing has regarded giving back to society as its mission and responsibility, actively supporting poverty alleviation in nearby villages and towns and participating in public-interest initiatives.

While building the company through technology and recruiting specialist talent, it has continued to recruit and train available workers from surrounding rural areas. By the end of 2022, it had cumulatively recruited and trained more than 600 such workers, representing 70% of its total workforce. Many young rural employees have become key contributors, and some outstanding individuals have entered senior management, helping neighboring communities develop and prosper.

In 2022, the company made 20 visits to retired employees, providing a total of RMB 25670. The Lixing Care Fund provided RMB 23143.35 to 5 employees hospitalized due to illness; RMB 50000 supported 10 employees facing hardship; wedding gifts totaling RMB 5600 went to 7 employees; and RMB 20000 was paid in condolences following the deaths of employees or family members.

5. Environmental Protection and Low-Carbon Development

The company is committed to environmental protection and has implemented the Three Simultaneities requirement: environmental facilities are designed, built and commissioned alongside the main project. Integrated resource use, energy-saving upgrades to major equipment and dust recovery from collectors have delivered significant energy-saving and emissions-reduction results.

To support the campaign for cleaner skies, the company prepared a plant-specific emergency implementation plan for heavily polluted weather. Based on air-quality forecasts and the severity and duration of pollution, production restrictions and shutdowns are linked to 3 warning levels: Level III, Level II and Level I, represented by yellow, orange and red respectively. Level I (red) is the highest. During restricted production or shutdowns, the company will further strengthen controls on air pollutant emissions.

In accordance with provincial environmental protection and economic and information technology authorities' requirements for staggered production, Shandong Lixing Chemical Co., Ltd. actively implemented staggered production and air pollution prevention measures, achieving a 100% completion rate for staggered production.

To control environmental emergencies promptly, prevent major incidents and pollution from spreading, organize effective rescue and assistance, and protect the surrounding environment, the company developed an Environmental Emergency Response Plan. Based on the National Environmental Emergency Response Plan and related documents, and adapted to actual conditions, it follows the principles of prevention first, self-rescue first, unified command and clearly assigned responsibilities.

The company practices 5S management and continuously promotes cleaner production, with daily inspections, weekly reporting and monthly assessments. It strictly controls escapes, emissions, drips and leaks, while strengthening cleanliness, greenery, lighting and appearance across the site to create a garden-style factory.

The company continues to expand the integrated use of waste resources as an example of circular economic development. Reusing materials such as waste dust helps relieve resource shortages, reduce environmental pollution and the land occupied by waste, and turn waste into useful resources, delivering clear social and economic benefits.

6. Workplace Safety

The company consistently prioritizes safety, prevention and integrated management. It implements and strictly follows workplace safety laws and regulations to meet its safety targets. It continually improves safety management, invests substantial resources and takes a range of measures to maintain and improve workplace safety.

(1) Responsibility System for Safety Targets

Each year, overall safety targets and tasks are quantified and allocated through every organizational level down to teams and individual positions, with safety responsibility agreements signed at each level. These specify targets and rewards or penalties for major accidents, minor injuries and work-related medical costs, creating a culture in which everyone is responsible for safety. In 2022, the targets agreed at the start of the year were met: there were no major fires or production, property or traffic accidents, no fatalities or serious injuries from safety incidents, no theft of company property and no work-related medical expenses.

(2) Safety Education and Training

A comprehensive training system provides safety education for principal and supervisory managers, safety personnel, new recruits, transferred and returning employees, outsourced workers and visitors. Training is also provided before introducing new processes, technologies, equipment or materials. National, provincial and municipal laws and regulations, together with accident cases from relevant enterprises, are reviewed promptly. Weekly team safety activities provide ongoing education.

(3) Occupational Protection

In accordance with occupational health requirements, employees receive a full range of protective equipment, including helmets, workwear, safety footwear and gloves. The company provides a safe working environment, focusing on potentially hazardous areas and factors. Following a people-first approach, it advances standardized safety management and inherently safer operations, making employees' personal safety and health the foremost priority of occupational health and safety work.

(4) Workplace Safety Month

Supported by leaders at every level, careful organization and active employee participation, Safety Month activities were carried out effectively. Activities included launch meetings, viewing accident case videos, reviewing the company's recent incidents, displaying safety banners, studying operating procedures, identifying and correcting hazards, safety essay competitions, sharing experience, safety cartoon selections, safety noticeboards, all-employee training, signature campaigns, a special safety noticeboard and issue of the Lixing newspaper, and safety examinations for all staff. Together they reinforced the month's theme.

The company evaluated six areas: organization and management, the number and quality of hazard corrections, examination results, noticeboards, essay competitions and cartoons. During Safety Month 2022, 259 hazards were identified and corrected, with investment exceeding RMB 1.5 million. Recognition went to 1 outstanding collective, 6 workshops and 38 individuals. The essay contest awarded 1 first, 2 second and 3 third prizes; experience sharing awarded 1 first, 2 second and 3 third prizes; cartoons received 1 first, 2 second and 3 third prizes. There were 6 outstanding noticeboards: 1 first, 2 second and 3 third prizes. A total of 46 instructors were recognized.

7. After-Sales Service

In recent years, production and sales have risen steadily, showing favorable development. The company has stable raw material supplies, advanced processing technology and a significant competitive advantage in product quality.

The company conducts business with integrity and serves customers sincerely, emphasizing punctuality, reliability, attentive service and genuine support for customers' interests. It has long complied with national law, operated lawfully, fulfilled supply contracts and actively supported major national projects. Over the years, Lixing's propylene carbonate and ethylene carbonate have won the confidence of many customers through excellent, consistent quality and a dependable reputation.

8. People First

The company has always followed a people-first employment philosophy, creating opportunities and helping employees succeed. During its development it has built a strong team of technical professionals, now a key strategic resource for growth. Recruiting specialists remains an important means of sustaining stable development and a talent advantage. It also recruits technical and management professionals through a wide range of open channels; training and integration have made them core members of its technical and management teams.

9. Outlook

The company is committed to strong environmental performance, high quality, high efficiency and low costs. It seeks to align continuing development with ecological protection, strengthen technological innovation and use information technology to improve production monitoring and management, thereby raising labor productivity. It will adopt more advanced environmental technologies, reduce pollutants and greenhouse gas emissions, meet ultra-low emission targets, support cleaner skies, expand its influence and its role in driving development, continue fulfilling social responsibilities, help alleviate poverty and make further contributions to a moderately prosperous society.