2025 Environmental, Social and Governance Report of Qingtian Enterprise
Preface
In 2025, the global sustainable development trend continues to deepen. ESG has evolved from a "bonus item" for enterprise development into an "essential requirement" for measuring core competitiveness. As a participant in the textile and apparel industry, Qingtian Enterprise always upholds the development philosophy of "symbiosis of commercial value and social value". We have fully integrated the ESG strategy into the entire value chain including R&D, production, supply chain and operation. Steady progress has been made in carbon emission reduction, social responsibility practice and corporate governance optimization. We respond to the expectations of stakeholders with practical actions and support the sustainable transformation of the industry.This report systematically presents the core initiatives, quantitative results and future plans of the Company’s ESG work in 2025. Through transparent disclosure, the Company accepts supervision and suggestions from all sectors of society, and works together to build a green, responsible and sustainable industrial ecosystem.
I.Environment: Driven by Green Innovation to Consolidate the Foundation of Sustainable Development
（1）Carbon Emission Reduction and Energy Management
The Company comprehensively promotes the construction of carbon management system, completes full-scope carbon inventory, and establishes a carbon emission monitoring mechanism. In 2025, energy conservation was achieved through energy-saving renovation of production equipment and green energy substitution with the photovoltaic power supply system. Meanwhile, the Company has obtained the certification of GB/T23331-2020/ISO50001:2018 Energy Management System.
（2）Sustainable Materials and Product Innovation
Driven by material innovation to realize source carbon reduction, the Company builds a full-link green solution centered on "eco-recycling and safety protection". Fabrics in design adopt eco-friendly fibers extracted from recycled plastic bottles (proportion ≥30%). Combined with the natural air permeability of Xinjiang long-staple cotton, the products deliver both skin-friendly comfort and low-carbon benefits. Plant dyes replace traditional chemical dyes. Products pass strict tests in accordance with GB/T 31888-2015 national standard to eliminate harmful substances such as formaldehyde and azo compounds. In terms of technology, bio-based ink printing, reflective strips, seamless splicing and other safety designs are applied to guarantee wear resistance and stain resistance, complying with GB/T 31701 safety standard for children’s textile products. From raw material recycling to end products, each school uniform passes third-party quality inspection and certification, making environmental protection traceable and safety visible. On the basis of passing the review of "Suzhou 3A-level Green Factory" in 2025, the Company continued to apply for Suzhou Green Factory certification.
The Company keeps increasing R&D investment and strengthens research on various functional fabrics. In 2025, total R&D expenditure reached RMB 8.9159 million, accounting for 3.21% of sales revenue. Two invention patents focusing on green materials and low-carbon processes were filed: An Antibacterial Fabric and Its Preparation Process and A Sweat-Absorbent and Quick-Drying Fabric and Its Preparation Process.
（3）Resource Conservation and Waste ManagementThe Company promotes energy saving and consumption reduction at the production end. All production workshops adopt electronic generators together with photovoltaic power, resulting in a 15.2% drop in comprehensive energy consumption compared with the previous year. All domestic wastewater is discharged into the municipal sewage treatment system. The Company implements a green packaging strategy, replacing traditional plastic packaging with degradable packaging bags. A classified waste recycling system is established. All fabric scraps and leftover materials are sold to recycling enterprises. After treatment, part of the waste is converted into new yarns to realize circular reuse.
II.Society: Extend Responsibility along Value Chain to Achieve Co-creation and Shared Benefits
（1）Sustainable Supply Chain Management
In response to the group standard Enterprise Supply Chain ESG Management Requirements, the Company builds a digital supply chain ERP management system, accessing energy consumption, environmental protection and labor rights data of core suppliers to realize full-process traceability and dynamic assessment. We have formulated the Supplier ESG Code of Conduct, incorporating green certification and carbon reduction targets into cooperation criteria. New suppliers are required to hold GRS (Global Recycled Standard) certification or equivalent green qualifications to help upstream partners lift their sustainability performance. The Company cooperates with suppliers to expand the application of Xinjiang cotton.
（2）Employee Rights and Development Guarantee
Adhering to the business philosophy of "people-oriented, quality life, industry serving the country", the Company improves the employee welfare system. Full employees are covered by five social insurances and housing fund, with additional commercial supplementary insurance purchased. The working environment is optimized to fully meet national occupational health standards. The Company invested RMB 800,000 to upgrade ventilation, noise reduction equipment and replace air conditioning cooling facilities, achieving zero occupational disease incidence. A diversified talent development channel is established. Skill training programs adopting both external training and in-house coaching have covered 100 employee person-times. A fair compensation system is implemented, with salary 10% higher than the industry average to lower turnover rate, enhance employees’ sense of belonging, and reach an employee satisfaction rate of 90%.
（3）Product Responsibility and Consumer Services
Sticking to the bottom line of product quality, the Company establishes a full-lifecycle quality control system. All products pass national textile safety certification, with no major quality complaints during the year. Consumer communication is enhanced through online live streaming and offline experience activities to popularize sustainable consumption concepts. The "green care & maintenance" value-added service is launched to reduce environmental impact during product usage and improve customer loyalty. A rapid response mechanism for consumer feedback is built, with average handling time shortened to 24 hours and customer satisfaction rate reaching 95%.
（4）Social Welfare and Value Contribution
The Company actively fulfills social responsibilities and carries out student aid and poverty alleviation while growing its business. The funds are mainly used for education support in ethnic minority regions, local school donations and disaster relief. The annual donation of school uniforms and school supplies to schools in remote ethnic minority areas is no less than RMB 300,000.
III.Corporate Governance: Improve Governance Structure to Consolidate Development Support
（1）Governance Structure Optimization
A three-level governance framework of "Board of Directors – ESG Committee – Executive Departments" is established. The Board of Directors sets up a special ESG Committee chaired by the Company’s General Manager, which regularly reviews ESG strategies, targets and major matters. ESG is fully integrated into corporate development strategy. A sustainable development roadmap is formulated to define core topics and implementation paths for environment, society and governance. The internal control and risk management system is improved. Mechanisms for identification, assessment and response are built for ESG compliance risks, supply chain risks and others. No major ESG-related violations occurred throughout the year.
（2）Information Disclosure and Stakeholder Communication
Following the principle of transparent disclosure, the Company will release the ESG report annually, covering quantitative data, practical cases and target progress, complying with domestic ESG disclosure guidelines and industry best practices. A multi-channel stakeholder communication mechanism is established. Through supplier communication, consumer surveys, employee forums and other forms, opinions are collected and reasonable suggestions are incorporated into the annual ESG work plan.
（3）Business Ethics and Compliance Operation
The Company strictly abides by laws and regulations including the Company Law and Environmental Protection Law. A sound compliance management system is established, and compliance training covering all employees is carried out to strengthen awareness of anti-commercial bribery, anti-monopoly and other compliance requirements. The open procurement system is implemented and an online bidding platform is built to ensure open, fair and impartial procurement processes. The financial internal control mechanism is improved. The annual financial report has passed third-party audit without major objections, maintaining sound business reputation.
IV. Challenges and Future Plans
（1）Challenges
1. Industry-wide ESG standards are not fully unified. Differences among various evaluation systems increase the complexity of practice and disclosure.
2. Some small and medium-sized suppliers have weak ESG foundations with insufficient capital and technology, leading to breakpoints in supply chain collaborative carbon reduction.
3. Green technology R&D requires large investment with long payback periods. The balance between short-term cost pressure and long-term value creation needs continuous optimization.
4. The accounting methodology for Scope 3 carbon emissions is still being refined, and the accuracy of full value chain carbon footprint traceability needs to be improved.
（2）Plans for 2026
1. Environmental dimension: Raise the proportion of sustainable materials to 35%, lift photovoltaic power supply ratio to 15%, refine Scope 3 carbon emission accounting, and release the first product carbon footprint report.
2. Social dimension: Achieve 100% ESG assessment coverage for core suppliers, and increase the proportion of GRS-certified suppliers to 60%; launch 50 additional employee skill training sessions, expand the scope of public welfare assistance focusing on education and poverty student support.
3. Governance dimension: Optimize the ESG governance structure and introduce an external expert advisory team; improve the refinement of information disclosure, add quantitative data in segmented fields, and promote deep integration of ESG performance and business development.
Closing Remarks
In 2025, Qingtian Enterprise has taken solid steps in ESG practices. Nevertheless, the journey toward sustainable development is long and arduous. Going forward, the Company will continue to take ESG as the core driving force, deepen green innovation, strengthen responsibility commitment and improve governance system. Together with suppliers, employees, consumers and all sectors of society, we will promote the transformation of the textile and apparel industry from "passive emission reduction" to "active value creation", and deliver answers featuring "coexistence of fashion and responsibility, win-win of development and environmental protection" with practical actions.
Suzhou Qingtian Enterprise Development Co., Ltd.
December 31, 2025
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