Environmental, Social and Governance Report
ABOUT THIS REPORT
The Environmental, Social and Governance (“ESG”) Report (“Report”) of the Group has made reference to the
ESG Reporting Guide in Appendix 27 to the Rules Governing the Listing of Securities on The Stock Exchange of
Hong Kong Limited (“HKEx Appendix 27 ESG Reporting Guide”), and the Group compiled the report content in
accordance with the principles of materiality, quantitative, balance and consistency.
The scope of this report is based on the Group’s major operations, which covers both dairy farming business and
dairy product production business, unless specifically stated otherwise. There were no significant changes observed
in the Group’s operating locations, the suppliers’ location and supply chain structure in the financial year ended 31
December 2020 (“year” or “reporting period”).
REPORTING PERIOD AND SCOPE
The statistics, figures and information cited in this Report are referenced from the archived questionnaires, records
and research of the Group. This Report highlights Group’s sustainability efforts in environmental and social aspects.
Reporting period: 1 January 2020 to 31 December 2020, the financial period of our Annual Report 2020.
Organisations covered: the Group and its subsidiaries.
The reporting boundaries are determined by whether the subsidiaries are contributing to the operating business of
the Group. In 2020, all subsidiaries and business entities of the Group are included in the ESG Report.
REFERENCE GUIDELINES
HKEx Appendix 27 ESG Reporting Guide
CONTACT
Should you have any enquiries or feedback on this Report, please feel free to contact us via the following methods:
Address: Suite 2703, 27/F., Shui On Centre, 6-8 Harbour Road, Wanchai, Hong Kong.
Tel: +86 0931-8753001
Email: grassland@lzzhuangyuan.com
Official website: http://www.lzzhuangyuan.com
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CHAIRMAN’S MESSAGE
Due to the outbreak of COVID-19 in 2020, the society has experienced a severe change. It has also created
challenges for our production operation. We are highly aware that it is our responsibility to strike a balance between
maintaining the business operation and providing a safe working environment for our staffs.
The Group has paid great efforts in identifying ESG issues that are related to our business. In this year, from
stakeholders’ perspective, we have conducted materiality assessment to identify the issues. This could help us to
cultivate better awareness of the key ESG issues that we have to work on in the future. The Board is fully aware of
and responsible to oversee all of the material ESG issues of the Group. In order to achieve it, we have established
an ESG team which is responsible to oversee, review and evaluate the Group’s sustainability performance. The
committee conducts meeting with the Board at least two times a year to ensure the Group’s ESG management
strategy are in-place.
The Group aims at ensuring the business suceeds, and meanwhile allocating more resources into sustainable
development. We certainly believe developing our business with ESG as one of the top priorities would bring long
term value to us.
I would also like to take this opportunity to express my appreciation to our staff last year for their contributions made
to the company in order to achieve outstanding business performance.
Hongfu Ma
Executive Chairman of the Board, General Manager
21 April 2021
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CORE VALUES/MANAGEMENT PRINCIPLES
As a dairy products production company, we are obliged to be a socially responsible corporate entity. The Group
has established a clear and prioritised ESG approach which is fully aligned to the Group’s overall business strategy.
The ESG team is established to oversee the Group’s ESG policy and guideline, and responsible to allocate suitable
resources on different ESG activities within the Group.
MANAGEMENT STRUCTURE
The Group
Board of
Directors Party Office
Strategic Planning Committee
Nomination Committee
Audit Committee
Renumeration and Appraisal Environmental,
Committee Compliance
Health and Safety
Department
Department
Board Secretary Information Engineering
Management Supervision
Department Department
Marketing and Human Procurement and
Opeartion
Branding Resources Sourcing
Department
Department Department Department
Technology and
Finance Administration
Innovation
Department Department
Department
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STAKEHOLDER IDENTIFICATION AND COMMUNICATION
To further improve the sustainable development strategy, stakeholders’ opinions would be highly valuable. The
Group has invited our suppliers, employees, customers and other stakeholders to comment on our approach
to various issues, and ways to further improve the internal control system, corporate governance structure and
formulate longer-term policies. The following table sets forth the key methods for communicating with internal and
external stakeholders of the Group:
Major communication
Types of stakeholders Key issues method
Internal stakeholders Directors Risk management Consultation via phone calls
and emails
Direct communication
Company conferences
Suggestion box
Employees Vocational training and Consultation via phone calls
development and emails
Salaries and benefits Direct communication
Health and safety Company conferences
Suggestion box
External stakeholders Shareholders/investors Stable return on investment Annual general meeting
Transparency of information Consultation via phone calls
disclosure and emails
Suppliers/customers Performance of contract Annual report
Standardised supply chain Meetings
management system and
procurement process
Establishment of complaint
system
Distributors Well-established information After-sales opinion box
exchange system Consultation via phone calls
Steady and stable supply of and emails
products Meetings
Government Business operation in Annual report
compliance with relevant laws Meetings
and regulations
Community/academic Contributions to community Annual report
institutions development Community service
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MATERIALITY ASSESSMENT
To better understand our stakeholders’ concerns on our sustainable development issues and identify the material
ESG topics, we have reached out to major stakeholders to provide their opinions of relevant issues. Based on
their evaluation of the Group, the impact of the business is assessed externally and internally, and key issues are
summarised below. The Group has identified the main concerns of the stakeholders: (i) the Group's product safety
and quality assurance management; (ii) compliance with laws and regulations on emissions; (iii) environmental
management system; (iv) water consumption and wastewater discharge control; and (v) waste management and
recycling method. The Group will continue to keep in touch with various stakeholders to improve and respond to the
issues concerned.
G
Influence on External Stakeholders
L
J D B
C A
H
U
W V R
S K
P N Q
T
O
M
F
I
E
Influence on Internal Stakeholders
Environmental management system and related
A I Information on greenhouse gas emission Q Measures to recuce emissions and achievements
policies
Amount of hazardous waste generated and handling Amount of non-hazardous waste generated and handling
B Compliance with laws and requlations on emissions J method R
method
C Waste management and recycling method K Energy efficiency and management S Resource management
Water consumption and wastewater discharge
D L Occupational health and safety T Employees’ training and development
control
Employment practices to avoid child labour and forced
E Employee’s rights and turnover rate M Employees’ welfare and pay system U
labour
F Donation and community investment N Stakeholder communication V Supply chain management
G Product safety and quality assurance management O Customer data protection and privacy policies W Customer satisfaction survey
H Anti-corruption policies P Whistle-blowing procedures
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ENVIRONMENTAL PERFORMANCE
The major business of the Group did not have a material change during the reporting period which is dairy farming
business and dairy products production business. The Group has sourced different energy sources to power the
business operation. In 2020, coal, natural gas, diesel are the major types of major resources for the direct stationery
combustion of the Group. Electricity is also the other major source of energy used during the production process.
The Group generated little amount of hazardous waste during the operation which is all medical waste. In spite of
this, the Group has established a comprehensive environmental management system to manage all environmental
related issues during operation.
The Group strictly complies with the PRC national laws and regulations, and duly implements environmental
protection management policies of local governments at all levels, the Group's system management document
requirements, and actively fulfils the Group's environmental protection social responsibility. The principal PRC
national laws and regulations include but not limited to: the Environmental Protection Law of the PRC, the Law of
the PRC on the Prevention and Control of Atmospheric Pollution, the Law of the PRC on the Prevention and Control
of Water Pollution, the Law of the PRC on Prevention and Control of Pollution From Environmental Noise, the Law of
the PRC on Prevention and Control of Environmental Pollution by Solid Waste and Law of the PRC on Environmental
Impact Assessment.
During the reporting period, no material changes have been made to the Group’s major business and the Group has
complied with the latest environmental regulations.
1. Emissions
The Group strictly complies with all relevant national and local laws and regulations to control all types
of emission from its business operation. The Group formulated "Energy Saving And Emission Reduction
Work Plan" to ensure all production processes comply with all relevant regulations and
industry guidelines. The policy can also help the Group to further reduce the emission of greenhouse gases
and pollutants in all phases of oup operation.
1.1. Gas Emission
The Group is fully aware of the business operation is emitting various kinds of gaseous pollutant
from the boiler for heating, cattle raising, and electricity. The Group strives to increase the operation
efficiency and lower its emission continuously.
The Group examines the exhaust gas of the boiler created regularly to ensure the emission is
compliance with “GB 13271-2014 Boiler Air Pollutant Emission Standard” .
In addition, the Group has installed filtration system on the boilers to dedust, denitrify and desulfurize
the exhaust gas before emitted to the air and further reduce the level of emission.
In the dairy farming business, the Group installed three biogas digesters to transfer the biogas to fuel
gas which is used in the staff canteen, and to turn biogas slurry to non-hazardous fertilizer, which has
given to the neighbourhood farmers.
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The Group also ensures the measures stated in the “Energy Saving And Emission Reduction Work
Plan” are properly carried out during business operation. The major measures are listed below:
All departments to manage their power consumption of air-conditioners, and to monitor
departmental staff to switch off all electrical equipment and production facilities during breaks
and after work;
Regularly maintain electrical equipment and circuits to reduce energy consumption;
Promote “paper-free” office and encourage staff to reduce printing demands; and
Replace all lights to LED light to reduce the use of electricity.
Major Gas Emission Indicators
Gaseous Pollutant Emissions Unit Emission in 2020
Nitrogen Oxides (NOx) Tonnes 311.6
Sulphur Oxides (SOx) Tonnes 26.9
Particulate Matter (PM) Tonnes 545.7
Total Greenhouse Gas Emissions Unit Emission in 2020
Scope 1 emission t-CO2 eq. 18,514.3
Scope 2 emission t-CO2 eq. 16,947.5
Emission Intensity (per tonne of fresh milk produced) Unit Emission in 2020
Scope 1 emission t-CO2 eq. 0.34
Scope 2 emission t-CO2 eq. 0.31
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1.2 Waste Management
The Group continues to implement and regularly reviews the established waste management system
to ensure the proper handling of different types of hazardous and non-hazardous waste.
Cowpat is identified as the major non-hazardous waste generated during business operation. In
order to prevent the accumulation of cowpat and affect the health of the cows, the Group uses
electronic scraper to automatically clean the cowpat, with the highest efficiency and minimum water
consumption. The Group also uses solid-liquid separator and night soil collector in the Qingdao dairy
farm to help cowpat cleansing and treatment. As a result, the cowpat can be recycled and used as
fertiliser.
For hazardous wastes, medical waste is the major hazardous waste generated during business
operation. The Group is strictly complying with national regulations and guidelines to handle all
hazardous waste. All hazardous waste is stored at designated locations with clear hazard labels and
warnings. Regular inspection and maintenance are conducted by staffs to prevent potential leakage.
A nationally-recognised waste disposal collector is appointed to handle all of the hazardous waste
generated by the Group.
Major Waste Generation Indicator
Waste Types Unit Emission in 2020
Hazardous Waste Tonnes 34.0
Non-Hazardous Waste Tonnes 94,736.0
Waste Intensity (per tonne of fresh milk produced) Unit Emission in 2020
Hazardous Waste Tonnes 0.0006
Non-Hazardous Waste Tonnes 1.73
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1.3 Water Discharge
The business of the Group is considered to be water-intensive and therefore we have implemented
several measures to increase the water consumption efficiency and reduce the discharge of
wastewater during business operation.
The Group has completed the technical transformation of the sewage treatment facility in Shaanxi
dairy farm in 2019 which could increase the processing capacity and efficiency of sewage treatment.
The boiler facilities are also improved to reduce the usage of energy and water during production. The
production base in Qinghai also equipped a magnetic loading wastewater treatment system which
can process up to 1,000 tonnes of wastewater daily. The system has the ability to use magnetic
technology to filter sludge and recycle the sludge for other uses. In the meantime, the Group has
assigned technicians to regularly monitor and provide maintenance service to the related facilities to
ensure the proper operation of the treatment process.
Major Wastewater Indicator
Water Type Unit Emission in 2020
Sewage water Tonnes 773,011.2
Sewage Water Intensity (per tonne of fresh milk Unit Emission in 2020
produced)
Sewage water Tonnes 14.2
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2. Use of Resources
The Group has implemented several policies and standard operating procedures in different stages of
production process to avoid unnecessory waste of resources during business operation. All facilities and
equipment are regularly being inspected and being maintained in a good condition throughout the production
processes. Below is the overview of the measures the Group adopted to effectively control the use of
different resources during business operation:
Standardised washing time and frequency of the facilities, the water is collected and reuse during the
sterilization process;
Assigned staffs to regularly inspect the drainage system within the production base to ensure no
blockage and leakage;
An online monitoring system is installed to real-time monitor the Group’s waste water treatment
facilities; and
Promote the environment awareness of the staffs by providing regular internal training and workshops
for them.
Resource Consumption Unit Consumption in
2020
Electricity Thousand Kilowatt 21,061.0
Per Hour
Coal Tonnes 6,380.1
Diesel Litre 568,741.1
Natural Gas Thousand cubic 2,734.9
meter
Water Thousand Tonnes 1,261.3
Resource consumption Intensity Unit Consumption in
(per tonne of fresh milk produced) 2020
Electricity Kilowatt Per Hour 385.5
Coal Tonnes 0.12
Diesel Litre 50.1
Natural Gas m3 23.1
Water Tonnes 14.1
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3. The Environment and Natural Resources
The Group strives to minimize the impact of the business operation to the environment and natural resources.
During daily operation, all environmental protection measures are under supervision to ensure proper
implementation. The Group also constantly explores any potential emission reduction measures on a day-
to-day basis. The "Energy Saving And Emission Reduction Work Plan" and related standard operating
procedures are well implemented to manage exhaust gas, noises and other wastes control measures.
We have also been monitoring the effectiveness of the measures and exploring any room for improvement.
4. Climate Change
The Group is fully aware of the potential impact of the climate change may bring to our business operation,
such as extreme weather events. The Group will keep monitoring and addressing the issues and challenges
posed by climate change and formulate corresponding preventive counter measures to avoid as well as to
mitigate such impact in the future.
The Group is well aware of the potential impact of sandstorm on our daily operation. To minimize the threats
and effects which may cause to our daily operation, the Group has increased the cover of vegetation in the
empty areas of the Group’s farms. In the Group’s Gansu operation site, where is close to sandstorm zone,
500 acres of windbreak shelterbelt is established to reduce the wind speed that may bring harmful effect to
our operation site.
SOCIAL PERFORMANCE
1. Employment
In 2020, the Group has employed 1,268 full-time employees. The Group’s systematic and comprehensive
recruitment procedures strictly abides by the relevant national laws and regulations. The major PRC national
laws and regulations include but not limited to: the Labour Law of the PRC, the Labour Contract Law of
the PRC, the Employment Promotion Law of the PRC, the Labour Dispute Mediation and Arbitration Law
of the PRC, the Regulation on the Annual Leave of Employees and local labour laws and regulations. All
of the Group’s employment policies and work codes are established under such laws and regulations. The
Group has paid extensive resources to ensure all employees are fully protected by our staff management
system and mechanism under statutory requirements, as we believe that the employee is an indispensable
cornerstone for the Group’s sustainable and holistic development. The Group offers reasonable remuneration
and benefits in accordance with employees’ work performance, established a precise and fair recruitment
policy, the Group also provides employees with occupational promotion opportunities, standardised working
hours, rational rest periods, leaves and holidays, equal employment opportunity, diversity, anti-discrimination
and regular staff training.
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All details of employment are clearly stated in the Group’s “Staff Handbook” such as adopting an eight-
hours working system, and supervisors’ approval is required for overtime work. The Group has also provided
benefits for the staffs, such as annual leave, marriage leave and maternity leave, medical insurance, medical
reimbursement, maternity subsidies and meal allowances for our employees.
All details of recruitment are also clearly stated in the “Staff Handbook” such as remuneration and
benefits, recruitment and promotion, working hours, breaks, anti-discrimination policies, employee
training, attendances and performance management measures. The Group strives to provide an equal and
fair ground to all employees. During the recruitment process, the HR Department strictly abides by the
Group’s recruitment policy system and has zero tolerance in any discrimination, including gender, disability,
pregnancy, family status, age, race, sexual orientation, nationality, ethnicity, and religion as stated in local
laws and regulations. We do not tolerate any discrimination or harassment behaviour in the workplace, and
any findings will be dealt with according to corresponding procedures.
Major indicators for employment
Number and percentage of staff by age Number and percentage of staff
group, 2020 by gender, 2020
5, 0.4% 10, 1%
204, 16%
239, 19%
604,
664, 48%
52%
360, 28%
450, 36%
16 -20 years old 21-30 years old
31-40 years old 41-50 years old
51-60 years old >60 years old Male Female
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Employee turnover rate 2020
By gender
Male 29.5%
Female 25.6%
By age group
Age 16-20 33.3%
Age 21-30 35.2%
Age 31-40 23.2%
Age 31-40 23.2%
Age 41-50 30.1%
Age 51-60 72.2%
Age 61 or above 33.3%
Overall 27.5%
2. Health and Safety
The Group has the responsibility to provide a safe and comfortable working environment to the staffs and
workers and the Group strictly complies with the Labour Law of the PRC, the Prevention and Control of
Occupational Diseases of the PRC, Fire Control Law of the PRC, Measures for the Determination of Work-
related Injuries and relevant local laws and regulations.
The Group has formulated internal policies and regulation to minimize the occupational health risk for
the workers. “Safety Production Management System” layouts all safety working procedures within the
production base for the workers. “Occupational Disease Protection Facilities Maintenance System”,
“Occupational Hazard Prevention and Control Responsibility System”, “Occupational Disease Monitoring and
Evaluation Management System” are a series of occupational health and safety preventive measures and
management system to manage the personal safety equipment, work environment management and a review
and evaluation procedure to enhance the whole occupational safety system.
The Group also provides relevant training programs to the employees, which are designed by a third-party
professional organisation, covering topics, such as potential occupational hazards, a brief introduction to the
sequelae and their respective preventive measures. On-the-job and post-employment medical examinations,
and regular health checks are also provided for the employees. During the reporting period, the Group
conducted inspections and physical examinations on the occupational disease and occupational health of
the employees and has obtained qualified results.
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The Group also has a comprehensive procedure to handle any safety accidents. According to the "Emergency
Rescue and Management System for Occupational Hazard Accidents”, the Group will investigate the situation
and condition of the accident if any accident happens. The management system clearly outlines the response
plans, responsibilities, and treatment processes under different situations and types of accidents to minimise
injuries and casualties. The Group also conducts regular occupational health and safety training to reduce the
work-related risks of our employees.
3. Development and Training
To promote a sustainable learning environment, the Group has devised and tailored different types of training
program for different workers, newcomers and current employees. For newly recruited staff, the Group will
provide induction trainings, such as the Group’s corporate culture, product knowledge, and the working
processes of different departments of the Group. The Group divides the training in to three levels, namely
company level, department level and position level. Such division of trainings could guide newcomers to
integrate into the Group’s working environment, system and culture. And hence enhancing their capabilities
and efficiency.
In 2020, the Group needs to get more prepared to deal with the alarming situation brought on by the
outbreak of COVID-19 which has affected the health of communities and increased uncertainty of the
economic market, the Group proactively promotes the implementation of training sessions on skills and
knowledge regarding to the issues of COVID-19, such as “Knowledge and prevention of COVID-19”, “Sales
and Marketing in Post Pandemic Time”. Other regular training workshops are also provided to the employees
according to their capabilities, position requirements and industrial development, such as “Marketing Skills
Upgrading Training Camp”, and “Food Safety Related Knowledge Training”, in order to enhance the level
of skillset and safety awareness across the hierarchies of the Group. Other general and foundation courses
are also provided, such as strategic planning, management, marketing, finance and human resources
management. The abovementioned training sessions and workshops allow employees to master the skills
for their required positions. Apart from that, the Group has also invited several renowned animal husbandry
experts to provide lectures and discussion forums to our staffs. The Group has also established strategic
partnership with animal husbandry and pharmaceutical research institutions which could provide an
opportunity of conducting research and development to suitable staffs.
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Major indicators for development and training
Percentage of employees trained Average training hours (hours/
Training (%) employees)
2020 2020
By employment category
Senior Management 8.3% 1.73
Middle Management 27.8% 2.38
General 63.9% 0.25
4. Labour Standards
The Group does not tolerate any child labour and forced labour situation within the business operation and
strictly complies with the Labour Law of the PRC, the Labour Contract Law of PRC, Provisions on Prohibition
of Using Child Labour, the Law of the PRC on the Protection of Minors and other related labour laws and
regulations. All related rules are clearly stated in the “Staff Handbook”, all applicants are required to present
their own valid identity documents during recruitment processes. If the applicants are found in providing any
false information and statement, the Group reserves the rights to terminate the terms of employment with
immediate effect. If any situation of child labour or forced labour has been observed, the incident will be
immediately reported to the management and the Group reserves the rights to terminate the employment
instantly if the related personnel are found to provide false information.
All employees are encouraged to enhance their work efficiency and finish all their duties within working hour.
During the reporting period, the Group did not find any use of forced labour and child labour.
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5. Supply Chain Management on Environmental and Social Risks
The Group has highly prioritized to manage our suppliers as the quality of the raw material will directly affect
the Group’s performance. The Group has established a list of qualified suppliers and all the raw milk or feeds
are all sourced from the suppliers who are in the list. The Group has followed specific procedure to select
suppliers, such as conducting on-site inspection, assessing the suppliers’ quality management level, safety
and environmental management policies, capability of ensuring a stable supply, etc.
The quality and the stability of raw material supply will largely influence the Group’s performance. Therefore,
the Group is in a close business relationship with the major suppliers. The Group has established a series of
management documents such as “Control Procedures on Evaluating and Managing Suppliers”, “Procurement
Control Procedures”, and “Procurement Manual” which enables staff from Sales, the Purchasing Department,
the Quality Control Department and the Production Department to establish an evaluation mechanism to
evaluate the performance of suppliers. With respect to raw materials and packaging materials we procured
from external suppliers, the suppliers are examined based on their relevant licences, permits and certificates
to ensure the suppliers are qualified. For major suppliers, we would perform ad-hoc on-site evaluation to
ensure their operation are adhere to our quality control protocols.
To further assess the ESG performance of the suppliers, the Group plans to develop a “Environmental,
Social and Governance Self-Assessment System” which would require suppliers to provide relevant ESG
documentation to show their ESG performance. For existing suppliers, the Group will conduct annual
performance review and listed certain suppliers with potential risks in environmental and social aspects in the
“List of Related Parties in Special Need of Influence”. For new suppliers who are manufacturers, they must
fulfil our EHS requirement before they can pass the whole supply chain assessment. The System is planned
to implement next year.
If situation allows, the Group prefers to choose suppliers who can provide more environmentally-friendly
materials as our suppliers. The suppliers are required to provide related information or certifications in
assuring their products reached more environmentally friendly standard.
Major indicators for supply chain management
Region Number of suppliers
Northeast China 3
Northern China 19
Eastern China 15
Southern China 2
Central China 8
Southwestern China 1
Northwest China 102
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6. Product Responsibility
The Group is clearly aware of the importance of food safety for the customers. A stringent quality control and
product safety management system is well-established and implemented in the production process from raw
material procurement, dairy farming, to production, packaging, storage and product delivery.
The Group has established the quality control system based on the Good Manufacturing Practices (GMPs),
the Hazard Analysis and Critical Control Points (HACCPs) and the Sanitation Standard Operating Procedures
(SSOPs). GMPs are implemented in four main areas of our dairy processing, specifying control measures
in respect of (i) personnel hygiene; (ii) building and facilities; (iii) equipment and utensils; and (iv) production
and process control. The HACCPs allows the Group to identify the critical control points and establish
monitoring procedures and utilise the monitoring result to streamline processes on a continuous basis.
The production plants in Gansu, Shaanxi and Qinghai have received the HACCP Certification by the China
Quality Certification Centre and Beijing Continental Hengtong Certification Co. Ltd., respectively. The SSOPs
specifies the step-by-step procedures to provide a hygienic condition during processing. The Group mainly
focuses on the safety of water that comes into contact with dairy products, condition and cleanliness of
contact surfaces, prevention of cross-contamination from insanitary objects to dairy product, protection of
dairy products and packaging materials, labelling, storage, and use of cleaning solutions and pesticides,
control of employee health conditions, and exclusion of pests from the production plant.
For the dairy farming business, the Group aims at producing the highest quality of raw milk by providing good
farm condition to the dairy cows. The employees and contracted farmers have received specific trainings
and operate under standardised practises, including the feeding standards, epidemic prevention, disease
treatment, pedigree improvement and automated milking, to ensure the high quality of dairy cows can be
healthily bred and raised in our dairy farms.
The Group has a management system to monitor the daily feeding, which could directly affect the nutrient
level of the dairy products. Total Mixed Ration feeding method is adopted and the recipe of the feed is varied
according to the nutrient requirements of various groups of dairy cows based on their age and development
stage. All of the feeds are in compliance with the Feedstuff Sanitation Standard GB13078-2001 issued by the
State Feedstuff Supervision and Quality Inspection Centre . Inspections of the
quality of the feeds are performed upon delivery to our dairy farms.
A strict hygiene standard is upheld during the milking process in order to prevent, eliminate or reduce
contamination to an acceptable level. All equipment used during the process are well-maintained and
disinfected. To ensure the freshness of the raw milk, the milk is required to deliver to the production pants
within 24 hour after the milking process. All of the milk tanks are cleaned and disinfected after discharging
each load of raw milk.
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To keep the dairy cows relaxed and comfortable, from the barns design to air quality control engineering to
keep cows as content as possible, the Group has provided adequate space and suitable facilities with good
condition. The workers are required to collect and remove manure several times a day to maintain a good
sanitation level of the barns. All cattle passages installed with rubber mat to prevent causing injuries to the
dairy cows’ hooves limb. In addition, the ventilation system is installed to provide good air circulation inside
the barns.
The Group also hires veterinarians to conduct regular health check on the dairy cows to prevent disease
spreading and monitor their health conditions. All new herds are required to receive vaccines and quarantine
before affirming their healthy condition.
For the dairy products production business, the Group strictly follows the national industrial standard,
including the National Food Safety Standard of Raw Milk (GB19301-2010), and the Measures for the
Production and Acquisition of Raw Milk and our internal raw milk inspection standards to conduct
assessment for the raw milk from our dairy farms and external dairy farms regarding to the quality. The whole
batch of raw milk would be returned if the assessment result is found to be not up to standard.
All dairy products the Group produced are required to conduct quality inspection according to national and
internal food safety standards. The Group is equipped with cold storage and related facilities for storage and
transportation. The Group has appointed qualified third-party logistic companies to provide cold chain logistic
service. The logistic service providers are required to have comprehensive cold chain logistic facilities which
meet the Group’s standard, such as disinfected environment, temperature-controlled trucks. The Group
also has an established traceability system to record all information and record to identify the raw material
suppliers and quality control personnel. The Group has allocated staffs to conduct product inspection on at
retail stores regularly to ensure fresh products are provided to customers. The Group reserves the right to
impose fine to the distributors and sales agents if any expired products are being discovered.
The package of the products and website are also clearly listed out all necessary information, such as
ingredients, nutritional value, size and expiry dates to the customers, which would allow them to understand
the nutritional details of the products. If any products are found to be defected or having quality issues, the
Group is welcome any return from the distributors and retail stores. Returned products were disposed of by
us regardless of the reason of the return.
The Group owns different registered trademarks and patents which relate to the dairy products. A team of
staffs is allocated by the Group to monitor and update the status of the registered trademarks and patents.
The “Staff Handbook” clearly requires every employee to observe the Group’s policies on intellectual property
rights and confidentiality upon joining the Group. All staffs are required to protect the intellectual property and
any breaches of the agreement may subject to mediation or litigation, depending on the circumstances.
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Cattle Welfare
The Group deeply believes only the healthy cattle could produce safe and nutritious products to the
customers. Therefore, the health and welfare of the cattle is an extremely crucial topic to the Group. To
address that, the Group has established various policies, such as "Ranch Hygiene and Epidemic Prevention
System", "Ranch Warehouse Management System", "Ranch Veterinary Drug Management System", "Ranch
Cattle Epidemic Prevention and Health Plan", "Ranch Cattle Group Management System" to ensure all cattle
are under proper care and vaccinated. In the meantime, the Group has introduced “YIMUCloud”
which could integrate all management data of our business operation into a cloud platform. And as a result,
the Group can constantly monitor the operation of all ranches, production units and enhance the overall
efficiency.
7. Anti-Corruption
The Group upholds a zero-tolerance attitude towards corruption in any forms of bribery, extortion, fraud,
money laundering, etc. The Group promotes honesty, integrity and responsibility as its corporate culture and
code of conduct. For example, employees and agents are prohibited from:
Offering or receiving money, gifts, loans or other benefits that may benefit business decisions or
interfere with independent judgment; or
Offering or receiving kickbacks, remuneration or secret commissions to solicit business for the Group
and its subsidiaries; or
Bribing government officials or facilitating bribing to obtain favorable terms or conditions; or
Insider dealings, etc.
During the reporting period, the Group has never been accused of violating corruption, extortion, fraud
and money laundering, and the Group strictly complies with relevant laws and regulations such as the PRC
Criminal Law and its Judicial Interpretation, the Criminal Procedure Law and its Judicial Interpretation,
Interpretation of the Supreme People’s Court and Supreme People's Procuratorate on Several Issues
Concerning the Applicable Laws in the Handling of Criminal Cases of Embezzlement and Bribery, and Anti-
Money Laundering Law of the PRC.
ESG REPORT 2020 19
Environmental, Social and Governance Report
The Group has two channels to report illegal or suspicious behaviours:
(A) Report on commercial bribery, fraud and other behaviours that violate the employees’ “Code of
Conduct”:
To: the Compliance Department
Email: zyfawushenhe@163.com
If any violations of the Code of Conduct were discovered by the Group, immediate investigation actions will
be taken by us. The Group will report to the government authorities in accordance with law. If the violation is
confirmed, employees who are involved would be punished according to the severity of the breaches.
Anti-corruption training is provided to all level of staffs, including directors of the Group, which includes the
basic concept of anti-corruption, introduction of company’s anti-corruption policy and implementation.
8. Community Investment
The Group always values the development of surrounding communities. Apart from the establishment of a
harmonious and win-win relationship with community stakeholders, the Group also encourages its employees
to participate in different community activities in order to fully understand the needs of community to ensure
that the Group fully considers the interests of the community while developing the Group's business.
In 2020, the Group has invested into three major aspects of the community: (i) Industrial Development, (ii)
Education, and (iii) Social Community. By estimation, the Group has invested over RMB100 million. The
Group purchased more than 5,000 tonnes fodder from neighbouring farmers with RMB400 per tonne higher
than the average market price, RMB25.7 million in total. The Group strives to provide financial inventive to the
neighbouring farmers, which could encourage them to provide higher quality of feeds, and help them get out
of the poverty line in long term.
Below is the list of the major community events that the group has participated in 2020:
1. Signed a logistics distribution agreement with Yuzhong Guangmao Trading (Cooperative), and invested
RMB1.91 million for logistics transportation throughout 2020;
2. Purchased 25,627.674 tons of silage corn fodder and paid RMB11.0 million for the purchase, which
was related to 6,700 mu of planting area, and more than 100 farming families; and
3. Total of RMB0.2 million was subsidised, through the Gansu Xinghua Education Assistance
Foundation, to 100 students in Yuzhong County No. 2 Middle School in 2020.
20 LANZHOU ZHUANGYUAN PASTURE CO LTD
Environmental, Social and Governance Report
Content Index
ESG Reporting Guidelines
Description Pages/Remarks
Aspects
A. Environmental
Aspect A1 Emissions
General Disclosure A1 Information on: 6-9
(a) the policies; and
(b) compliance with relevant laws and regulations that
have a significant impact on the issuer
relating to air and greenhouse gas emissions,
discharges into water and land, and generation of
hazardous and non-hazardous waste
KPI A1.1 The types of emissions and respective emissions data 7
A1.2 Greenhouse gas emissions in total and intensity 7
A1.3 Total hazardous waste produced and intensity 8
A1.4 Total non-hazardous waste produced and intensity 8
A1.5 Description of measures to mitigate emissions and 6-9
results achieved
A1.6 Description of how hazardous and non-hazardous 8
wastes are handled, reduction initiatives and results
achieved
Aspect A2: Use of Resources
General Disclosure A2 Policies on the efficient use of resources, including 10
energy, water and other raw materials
KPI A2.1 Direct and/or indirect energy consumption by type (e.g. 10
electricity, gas or oil) in total and intensity
A2.2 Water consumption in total and intensity 10
A2.3 Description of energy use efficiency initiatives and 10
results achieved
A2.4 Description of whether there is any issue in sourcing 10
water that is fit for purpose, water efficiency initiatives
and results achieved
A2.5 Total packaging material used for finished products 10
ESG REPORT 2020 21
Environmental, Social and Governance Report
ESG Reporting Guidelines
Description Pages/Remarks
Aspects
Aspect A3: The Environment and Natural Resources
General Disclosure A3 Policies on minimizing the issuer’s significant impact 11
on the environment and natural resources
KPI A3.1 Description of the significant impacts of activities on 11
the environment and natural resources and the actions
taken to manage them
Aspect A4: Climate Change
General Disclosure A4 Policies on identification and mitigation of significant 11
climate-related issues which have impacted, and those
which may impact, the issuer
KPI A4.1 Description of the significant climate-related issues 11
which have impacted, and those which may impact,
the issuer, and the actions taken to manage them
B. Social
Employment and Labour Practices
Aspect B1 Employment
General Disclosure B1 Information on: 11-12
(a) the policies; and
(b) compliance with relevant laws and regulations that
have a significant impact on the issuer
relating to compensation and dismissal, recruitment
and promotion, working hours, rest periods, equal
opportunity, diversity, anti-discrimination, and other
benefits and welfare
KPI B1.1 Total workforce by gender, employment type (for 11-12
example, full- or parttime), age group and geographical
region.
B1.2 Employee turnover rate by gender, age group and 11-12
geographical region.
22 LANZHOU ZHUANGYUAN PASTURE CO LTD
Environmental, Social and Governance Report
ESG Reporting Guidelines
Description Pages/Remarks
Aspects
Aspect B2: Health and Safety
General Disclosure B2 Information on: 13-14
(a) the policies; and
(b) compliance with relevant laws and regulations that
have a significant impact on the issuer
relating to providing a safe working environment and
protecting employees from occupational hazards
KPI B2.1 Number and rate of work-related fatalities occurred 13
in each of the past three years including the reporting
year.
B2.2 Lost days due to work injury. 13
B2.3 Description of occupational health and safety 13-14
measures adopted, how they are implemented and
monitored
Aspect B3: Development and Training
General Disclosure B3 Policies on improving employees’ knowledge and skills 14
for discharging duties at work. Description of training
activities
KPI B3.1 The percentage of employees trained by gender and 15
employee category
B3.2 The average training hours completed per employee 15
by gender and employee category
Aspect B4: Labour Standards
General Disclosure B4 Information on: 15
(a) the policies; and
(b) compliance with relevant laws and regulations that
have a significant impact on the issuer
relating to preventing child and forced labour
KPI B4.1 Description of measures to review employment 15
practices to avoid child and forced labour
B4.2 Description of steps taken to eliminate such practices 15
when discovered
ESG REPORT 2020 23
Environmental, Social and Governance Report
ESG Reporting Guidelines
Description Pages/Remarks
Aspects
Operating Practices
Aspect B5: Supply Chain Management
General Disclosure B5 Policies on managing environmental and social risks of 16
the supply chain
KPI B5.1 Number of suppliers by geographical region 16
B5.2 Description of practices relating to engaging suppliers, 16
number of suppliers where the practices are being
implemented, and how they are implemented and
monitored
B5.3 Description of practices used to identify environmental 16
and social risks along the supply chain, and how they
are implemented and monitored.
B5.4 Description of practices used to promote 16
environmentally preferable products and services when
selecting suppliers, and how they are implemented and
monitored.
Aspect B6: Product Responsibility
General Disclosure B6 Information on: 17-19
(a) the policies; and
(b) compliance with relevant laws and regulations that
have a significant impact on the issuer
relating to health and safety, advertising, labeling and
privacy matters relating to products and services
provided and methods of redress
KPI B6.1 Percentage of total products sold or shipped subject 17
to recalls for safety and health reasons.
B6.2 Number of products and service-related complaints 18
received and how they are dealt with.
B6.3 Description of practices relating to observing and 18
protecting intellectual property rights.
B6.4 Description of quality assurance process and recall 18
procedures.
B6.5 Description of consumer data protection and privacy 18
policies, how they are implemented and monitored
24 LANZHOU ZHUANGYUAN PASTURE CO LTD
Environmental, Social and Governance Report
ESG Reporting Guidelines
Description Pages/Remarks
Aspects
Aspect B7: Anti-corruption
General Disclosure B7 Information on: 19-20
(a) the policies; and
(b) compliance with relevant laws and regulations that
have a significant impact on the issuer
relating to bribery, extortion, fraud and money
laundering
KPI B7.1 Number of concluded legal cases regarding corrupt 19
practices brought against the issuer or its employees
during the reporting period and the outcomes of the
cases
B7.2 Description of preventive measures and whistle- 20
blowing procedures, how they are implemented and
monitored
B7.3 Description of anti-corruption training provided to 20
directors and staff.
Aspect B8: Community Investment
General Disclosure B8 Policies on community engagement to understand the 20
needs of the communities where the issuer operates
and to ensure its activities take into consideration the
communities’ interests
KPI B8.1 Focus areas of contribution 20
B8.2 Resources contributed (e.g. money or time) to the 20
focus area
ESG REPORT 2020 25
