HONG KONG SAR - Media OutReach - 2 September 2022 - The first Environmental, Social and Governance (ESG) report of Zhongnan Construction ("The Company", SZSE:000961), a leading Chinese enterprise principally engaged in real estate development and construction, was recently published, showing how The Company is accelerating efforts to promote a more green and smart business and build a better living space for communities during the year of 2021.

The 2021 ESG Report released by The Company is the latest reply to various stakeholders including suppliers, employees and other partners. Meanwhile, it is a response to the country's "dual carbon strategy" and "rural revitalization".

"In the year 2021, we are more aware of the importance of upgrading the corporate sustainability system to advance with the times. We believe we can rely on our prudent operation to tide over all the uncertainties brought by the COVID-19 pandemic and the turbulent changes in the real estate and construction industry," said Chen Jinshi, founder and chairman of the Board of Directors of The Company.

Integrating ESG strategy with business

The Company was listed on the Shenzhen Stock Exchange since 2009. It mainly focuses on two areas: real estate development, and construction business.

The total asset of The company reached 367.98 billion yuan (US$ 54.71) at the end of 2021 and the income stood at 79.21 billion yuan in the year 2021.

Based on the expertise and years of practice in the construction field, The Company has its own understanding of ESG. The letter E means harmonious environmental development, the letter S stands for healthy interaction with all kinds of stakeholders, and the letter G means robust internal governance.

The Company does not just take ESG strategy as a theory but tries to make it really work.

The Company identifies a concrete path to integrate sustainability and environmental, social and governance strategies across its daily operations, determining top five ESG priorities, including reducing carbon emissions, building healthy living space, employee improvement, better community and operation with integrity.

To realize these priorities, The Company has set its focus area on construction field where it believes its expertise can make the biggest difference and drive industry-wide change.

The Company is collaborating with partners on the industry chain to advance green transformation of the construction industry and the real estate industry, responding to the environmental goal.

In 2021, The Company integrated the existing environmental protection facilities, strengthening the penetration of green concepts across the entire industrial chain, covering development, design, construction and operation, and expanding business to urban renewal and ecological river management.

Reducing carbon emissions & Green buildings

The Company believes that for construction enterprises the best way to reduce carbon emissions and become more sustainable is to advance green transformation. And it has been committed to promoting green transformation in multiple ways from development to planning, design, construction, operation and renovation.

As at the end of 2021, The Company has completed 54.1 million square meters of projects which meet the one-star standard for green building, 19.47 million square meters of projects which meet two-star standard, and 540,000 square meters of projects which meet three-star standard. The total area of projects that meet the green building standards is 74.11 million square meters.

In 2021 The Company tapped into the ecological river management and urban renewal. It participated in the Jian River Restoration Project, a sub-project of Luoyang City's "Joint Restoration of the Four Rivers" project, contributing to the restoration of Jian River. This project is The Company's first large-scale municipal water conservancy Public-Private Partnership (PPP) project in Luoyang, and it is a key livelihood project in Luoyang.

Also in the year 2021, The Company obtained commercial center renewal projects in Xin'an, Shenzhen, and expects to invest over 4 billion yuan in these projects, including building an urban complex, which is covering high-end office, commercial, residential and other business, and creating a new urban landmark in high-end position in Qianhai.

Besides, The Company has been committed to promote the industrialization and technological upgrading of the construction industry, which can greatly improve productivity and cut off carbon emission at the same time.

Since 2007, the company established the NPC (New Prefabricated Concrete) Division focusing on the modernization, transformation and upgrading of construction industry and development of NPC technology.

So far, The Company has developed six generations of NPC technology system with the overall prefab rate at more than 90 percent, in the leading position in the entire industrial chain of domestic precast concrete structure covering in-depth design, processing, transportation, and hoisting construction, which is recognized by the Ministry of Housing and Urban-Rural Development.

Creating better communities

The Company always believes that a good community should have quality buildings, convenient facilities and friendly atmosphere, which enables people to strive for a better life. Thus, it proposed an idea of Healthy TED (Technology, Enjoyment and Daring) community, helping shape the communities where we live and work.

A Healthy TED community focuses in the following areas: Healthy living environment, to improve the comfort of living from the aspects of facilities, environment, etc. with more technological applications; Hearty community atmosphere, to provide a variety of functional support and service platforms, allowing customers to enjoy the company of love of family and a harmonious neighborhood atmosphere. Up to now, The Company has established 343 Healthy TED communities.

Since 2021, the company is actively embracing digital technologies to make community buildings more customized, just like the manufacturing of automobiles.

The company has been engaged in promoting the smart manufacturing of buildings. It decomposes a building into thousands of modules or components and then assembles them according to the demand of different customers. It specially established a building components R&D and design base to accelerate its dream-manufacturing houses like automobiles.

At the end of 2021, a laboratory named the Zhongnan Intelligent Construction Workshop (Z-lab) was established in Haimen District, Nantong City.

At the Z-lab, The Company consistently disassembles the building blocks into "components", forming a set of "production lines" that are finely divided, accurately classified and clear at a glance.

In the future, these components can be assembled online through the intelligent platform, reducing the uncertainty caused by the processing of components at the construction site. This can effectively improve quality and efficiency, and reduce construction costs.

Also in the year 2021, The Company launched a project called "Zhongnan Better Life Cube", which enables customers to see the construction process of the new building, experience the future service and the community life in advance.

Operating with Integrity and Accountability

The Company always adheres to the philosophy of operation with integrity and accountability.

The Company continuously strengthen the internal control management of overall business, effectively control the business risks of the enterprise, and promote all-round compliant production and operation of the entire industry chain.

The Company has built a risk management system with reference to the COSO risk management and internal control framework to define the relevant responsibilities of the board of directors and management at all levels, thereby ensuring the effective operation of the system.

In 2021, in order to further consolidate the achievement of enterprise risk management, The Company successively conducted a series updates of internal control systems.

The Company actively improves the internal audit information system by refining the online tracking and closed-loop mechanism for audit issues to raise audit efficiency.

The Company also casts great importance to the anti-corruption work. With reference to the ISO 37001 anti-bribery management system and the internal management system of benchmarking enterprises, The Company has formulated a series of anti-corruption systems, including Integrity and Self-discipline Clauses, Employee Code of Conduct, Audit Management System, Red Line Management System, Management Regulations and Declaration Guidelines for Potential Conflicts of Interest of Employees, Audit and Anti-Corruption Management System, etc.

The above-mentioned systems were implemented in all aspects of business and among all employees. For The Company, achieving green and smart transformation in collaboration with all kinds of partners is its purpose and also responsibility to deliver a sustainable future. We take this responsibility seriously.

Zhongnan Construction's 2021 ESG Report is now available for download at the links below:
http://www.zoina.cn/wp-content/themes/images/esgEN.pdf

Hashtag: #ZhongnanConstruction

About Zhongnan Construction Group

Zhongnan Construction（SZSE:000961）rooted in the building construction industry with more than 30 years' experience, we are the sole private construction company in China that holds both the Premium-class Housing Construction EPC Qualification and the Grade-A Construction Engineering Design Qualification. These top class construction qualifications have been granted to only four construction companies in China by the MOHURD.

Read more: Embracing green and smart transformation whole-heartedly for Zhongnan Construction