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Modern Dairy Statement on Supporting Community Engagement

1. Introduction

Modern Dairy is committed to respecting the rights and interests of the communities where we operate our farms, which are all located in mainland China. We believe that communicating with the local communities is essential for building trust, mutual understanding, and long-term partnership. This Statement on Supporting Community Engagement applies to all Modern Dairy’s operating areas.

2. Community Engagement Approach

As part of our community engagement strategy and approach, we have established precautionary approach and formal grievance (complaint) mechanism and channels, which allows any community member to raise concerns or complaints about our operations and impacts. We also create community committees, adopt a local management mechanism, and assign the management teams of each farm to be responsible for regular consultations with the local stakeholders, including indigenous people, women, youth, and other vulnerable groups.

3. Community Impact Assessments

In addition, whenever we plan to establish new farms in new areas, we conduct community impact assessments. These assessments aim to identify and mitigate any potential negative impacts of our operations on the social, economic, environmental, and cultural aspects of the communities. We also disclose and communicate our assessment results to the local communities when appropriate. We also try to make our farms bring more positive impacts and opportunities for the local development.

3.1 FPIC Principle

We apply the principles of Free, Prior, and Informed Consent (FPIC) to conduct community impact assessments prior to settling in new areas, which is a specific right granted to indigenous people by international human rights standards. FPIC means that the community has the right to agree or reject a proposed project that may affect their land, territory, and resources. FPIC also allows the community to participate in negotiations, to shape the design, implementation, monitoring, and evaluation of the project. We respect the local culture or customs of the communities where we operate and communicate with them in a positive and constructive way, such as initiating one-on-one interviews, holding community meetings and so on.

3.2 Methods of Conducting Community Impact Assessments Based on FPIC Principle

We adhere to the principle of respecting free, prior, and informed consent (FPIC) in the United Nations Declaration on the Rights of Indigenous Peoples and strive to ensure that our community impact assessments are conducted in a transparent, participatory, and culturally appropriate manner. We also recognize that FPIC is an ongoing process, which requires continuous communication and collaboration with the community throughout the project cycle.

We recognize the impact of establishing farms on the local villages and residents. We are committed to respecting the residents and fulfilling the requirements of free, prior, and informed consent (FPIC) before any action begins. This requirement applies to all our farms.

Conducting assessments based on the FPIC principle means that the local villages and residents can decide whether we can operate in the area:

  • No pressure or intimidation (free).
  • Before carrying out farm operations, we will first assess the environmental risks in the area and communicate with the residents (prior).
  • We will fully assess the impact of our farm operations on the surrounding villages and environment and inform the local government and residents of the assessment results, ensuring that we do not carry out activities without the knowledge of the villagers (informed).

To ensure that the residents can obtain timely and effective information about our production and operation activities, we will actively communicate with the residents.

  • In the site selection process, we actively communicate with the local government and village representatives, communicate with the villagers about our production and operation and construction plans, and inform them of the risks that our operations may bring to the local community.
  • At the same time, we will provide our contact information to the village representatives, so that they can contact us in time.

4. Programs to Support Local Communities’ Well-being and Development

In addition to respecting the rights and interests of the community, we also take on the responsibility of contributing to the well-being and development of the community residents. We carry out community development projects, such as village-enterprise cooperation, provide employment opportunities for the local people, give priority to opening some positions for the local poor groups, and provide them with training and skill development programs. Modern Dairy implements the “enterprise + base + farmer” forage industrialization operation model, and actively lays out the development of forage planting industry in the surrounding areas. We actively promote philanthropic programs and rural revitalization, insist on donating physical goods to the poor villages and counties around the farms, and broaden the employment channels for the poor households. At the same time, we actively assist the government in building fitness squares, cleaning rivers, and paving rural roads, to contribute to the poverty alleviation in the region. We support the national poverty alleviation cause, and take education poverty alleviation as an important means and key grasp, and carry out multiple activities such as launching education donations to difficult areas, actively participating in public philanthropic activities, and caring for left-behind children in hometown.

4.1 Sustainable Production Practices

We also adopt sustainable production practices, minimize our environmental footprint, and maximize our resource use efficiency. We use renewable energy to power our farms, such as solar panels and biogas generators. We reduce greenhouse gas emissions by improving feed efficiency and implementing manure management.

We protect water resources by using water-saving technologies, recycling wastewater, and preventing water pollution. We increase biodiversity by planting trees, reducing ecological disturbance, and avoiding deforestation. We improve animal welfare by providing our cows with enough space, nutrition, health care and comfort.

4.2 Quality and safety standards

We also ensure the quality and safety of our dairy products by complying with international and domestic standards and regulations. We use advanced technology and equipment to monitor and control every stage of our production process, from milking to processing to delivery. We conduct rigorous testing and inspection to verify the freshness, purity, nutrition, and hygiene of our products. We guarantee that our products do not contain any harmful substances or contaminants.

5. Grievance Mechanism

Our grievance mechanism is to allow any community member to raise concerns or complaints about our operations and impacts, and we will deal with them as soon as possible and fairly. The issues that can be accepted for grievances include but are not limited to environmental pollution, bribery and corruption, workplace safety, conflicts of interest, anti-discrimination and other human rights related issues, fraud, or embezzlement of public funds, etc.

Our grievance process is as follows:

5.1 Receipt: Community members can submit grievances to our discipline inspection office by phone or email. Our discipline inspection office contact information is posted on the bulletin boards, farm gates, restaurants, etc. near our farms, and our employees, contractors, local community members and stakeholders can learn about the contact information of our farms’ grievances. The discipline inspection office will confirm receipt to the whistleblower within three working days after receiving the grievance, and record the content, date, time, and place of the grievance.

Discipline Inspection Office:

5.2 Classification: After receiving the letter of complaint, the letter of complaint will be classified according to the content of the letter of complaint. For those that are not within the scope of acceptance of the discipline inspection office, they should be transferred to the relevant departments of Modern Dairy in a timely manner. Before transferring, they should inform the whistleblower by phone that they will be transferred to the departments with management authority and solicit their opinions on whether they are willing to inform the accepting department of their identity information. If they are not willing, they will be transferred as anonymous complaints and make a phone record. For those that are handled by the discipline inspection department, the letter of complaint received by the discipline inspection office will be submitted by the letters and visits department for the division of opinions, reported to the person in charge of the discipline inspection office for review, and approved by the party committee secretary, and transferred to the undertaking department for handling according to the procedure.

5.3 Verification: For the disposal of real-name reports, the problems within the scope of acceptance of the discipline inspection office, before the investigation, they should meet with the whistleblower, understand the case clues in detail, and when talking with the real-name whistleblower, they should first show their identity, and then verify the identity documents of the other party; when communicating with the whistleblower, there should be 2 staff members present, and the communication by phone should use the work phone, and make a communication record. For major and sensitive matters, they should preach the confidentiality requirements and sign a confidentiality commitment with them. For letters signed by multiple people and online reports, the undertaker can choose one of them to communicate, and verify and inform the selected 1-2 representatives.

5.4 Handling of case clues: The discipline inspection office should comprehensively analyze the case clues according to the overall situation of the regions and departments involved and handle them in four ways: conversation or letter inquiry, preliminary verification, pending for investigation, and conclusion. The handling of clues should not be delayed or accumulated, and the handling opinions should be put forward within one month from the date of receiving the case clues, and the handling plan should be formulated, and the approval procedures should be completed.

  • Conversation or Letter Inquiry: It refers to a way of handling case clues by means of conversation and letter. The clues applicable to conversation or letter inquiry are mainly those that reflect general problems, which can only be given light punishment or criticism and education after being cleared, or those that reflect untrue problems and are clarified; those that reflect vague problems, mostly hearsay or subjective conjecture, and are difficult to verify.
  • Preliminary verification: It refers to the activity of the discipline inspection office to preliminarily check and verify the clues of the disciplinary violations of the accepted personnel, and its task is to understand whether the case clues exist and provide the basis for filing or not. For clues that have verifiability and involve suspected disciplinary violations or duty violations, duty crimes, solid preliminary verification work should be carried out, collect objective evidence, and ensure the authenticity and accuracy.
  • Pending for Investigation: It refers to the handling of clues that reflect problems that have a certain verifiability, but due to various reasons such as timing, existing conditions, difficulty in finding the persons involved, etc., they do not have the conditions for verification and are pending for investigation. Based on the principle that the handling of clues should not be delayed or accumulated, once the conditions are ripe, the verification work should be carried out immediately.
  • Conclusion: It refers to the handling of clues that reflect problems that are untrue or have no possibility of verification, including those that have disciplinary facts but are minor and do not need to be held accountable.

5.5 Notification: The disciplinary office shall notify the whistleblower of the results of the handling of the real-name report within 15 working days from the date of completion.

If the whistleblower is still dissatisfied with the results of our disciplinary office, he or she can appeal to the higher-level disciplinary department, and we will follow the results of the review and investigation of the higher-level disciplinary department.

6. Countermeasures for environmental pollution

We have formulated the “Emergency Plan for Sudden Environmental Incidents” in accordance with the relevant provisions of the national regulatory documents such as the “Environmental Protection Law of the People’s Republic of China”, the “Measures for the Emergency Management of Sudden Environmental Incidents”, and the “Guidelines for the Investigation and Treatment of Hidden Dangers of Sudden Environmental Incidents in Enterprises” and filed it with the competent environmental protection department and relevant departments. We have also established an emergency management organization command system and equipped with emergency equipment and materials within the enterprise. In the face of possible or existing sudden environmental incidents, we will take measures to deal with them immediately in accordance with the “Emergency Plan for Sudden Environmental Incidents” to quickly eliminate the negative impact of such incidents on the environment and the personnel in the community. The content of the “Emergency Plan for Sudden Environmental Incidents” mainly includes emergency preparedness, emergency response and post-event recovery.

6.1 Emergency preparedness: We will conduct risk analysis and assessment of the possibility and impact of potential environmental pollution incidents, including the classification and grading of environmental incidents, the establishment of emergency organization and clarification of responsibilities, the provision of emergency support materials, the conduct of risk monitoring and early warning, emergency response, emergency support, and post-event disposal. In the process of analysis and assessment, we will actively communicate with the residents through interviews, communication meetings, etc., to understand their concerns and needs, and incorporate their suggestions into our assessment. After completing the assessment, we will actively announce the assessment results to the residents and conduct appropriate communication. In addition, we have also set up a complaint process for community members on environmental pollution issues, including complaint channels, complaint handling process, etc. The complaint channels include telephone, email, letter, and face-to-face communication. We will confirm receipt of the complaints from the community members as soon as we receive them, and deal with them as quickly and as possible. We will listen to the opinions and suggestions of the community members during the handling process and try to meet their reasonable demands. We will communicate the handling methods, results, and compensation measures of the incident to the community members by telephone, email or face-to-face communication after the results are available.

6.2 Emergency response: When receiving the report of a sudden environmental incident, we will collect and judge the information. According to the formulated “Emergency Plan for Sudden Environmental Incidents” (hereinafter referred to as “the Plan”), we will issue early warnings according to the event grading, and carry out emergency disposal according to the emergency organization structure in the Plan (including information reporting, notification, etc.), notify and evacuate the community members who may be affected, carry out emergency monitoring, pollution source investigation and disposal, material mobilization and emergency facility activation, public opinion monitoring and information release, etc., until the response is terminated. We will also invite community members to participate in or supervise our handling activities at appropriate times, to increase their trust and sense of involvement.

6.3 Post-event recovery: It mainly includes post-event prevention and control, event investigation, post-event disposal and other work contents. After the response is terminated, we will summarize and review the content and key points of pollution prevention and control and implement them to the responsible units. At the same time, we will organize and carry out event investigation, find out the cause and nature of the event, propose corrective and preventive measures and handling suggestions. According to the specific situation of the event, we will clarify the post-event disposal work content, including damage compensation, risk source rectification and pollution site restoration, etc., and implement them to the responsible units. We will also evaluate the satisfaction of the community members with our handling results afterwards, solicit their feedback and opinions by telephone, email, letter, or face-to-face communication, and improve our community participation practice according to their suggestions.

7. Conclusion

We hope to establish a relationship of respect and trust with the community where we operate our farm by following these practices. We also hope that we can provide our customers with high-quality and safe dairy products. We welcome any feedback or suggestions on how to improve our community participation practice.