Modern Dairy Sustainability Governance Framework
1. Overview of ESG Governance
Section titled “1. Overview of ESG Governance”In order to enhance sustainable development governance capabilities, and improve ESG issue management and responsibility performance, Modern Dairy strictly complies with the Company Law of the People’s Republic of China, the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited and other relevant laws and regulations and developed a comprehensive ESG governance structure for standardized and effective governance. Modern Dairy established an ESG governance structure composed of the governance, management and executives to lead and monitor the sustainable development of the Company. Meanwhile, a regular and multi-channel communication mechanism is in place to proactively respond to the concerns of stakeholders. Based on issues that significantly impact Modern Dairy’s sustainable development and those of the utmost concern to stakeholders, a materiality matrix has been formed to help the Company identify and manage issues related to ESG risks and opportunities.
2. ESG Governance Framework
Section titled “2. ESG Governance Framework”2.1 Governance
- Board of Directors: The Board of Directors of Modern Dairy holds ultimate responsibility for ESG matters, including formulating the “FRESH Sustainable Development Strategy,” ESG policies, and action plans. The Board also identifies, monitors, and mitigates ESG risks while capitalizing on related opportunities, and regularly reviews ESG performance and strategy.
- Sustainability Committee: Reporting to the Board of Directors, the Sustainability Committee assists with ESG decision-making and oversight. Its responsibilities include reviewing ESG-related proposals and providing recommendations to the Board, regularly receiving and evaluating reports on ESG performance and implementation and monitoring the effectiveness of ESG initiatives to identify areas for improvement.
2.2 Management
- Sustainability Executive Committee (SEC): Composed of Modern Dairy management, the SEC reports to the Sustainability Committee and is responsible for translating the Board’s ESG strategy into actionable plans and targets. The SEC also oversees the implementation of ESG initiatives across the Group, manages ESG-related resources and budgets, and reports on ESG performance to the Sustainability Committee. The Chief Financial Officer (CFO) holds direct oversight responsibility for ESG and sustainability matters, ensuring the effective implementation and integration of the Group’s sustainable development strategy across all operations.
2.3 Execution
- Secretariat of the SEC: A Secretariat is established under the Sustainability Executive Committee. It is coordinated by the Public Affairs Department and supported by all business units. The Secretariat of the SEC is responsible for formulating sustainability implementation roadmaps, establishing management structures, promoting special initiatives and organizing regular sustainability work meetings for communication.
- Capital Markets Department: This department engages with ESG investors and manages relationships with various ESG rating agencies. It is responsible for ensuring timely and accurate disclosure of ESG-related information in accordance with rating agency requirements. Collaborating closely with the Sustainability Working Group, the Capital Markets Department also assists in data collection and drives continuous improvement initiatives to enhance the Group’s ESG performance and ratings. Key rating agencies include, but are not limited to, MSCI, S&P CSA, CDP, FAIRR, Wind, and Sustainalytics.
- Sustainability Working Group: Spanning subsidiaries and functional departments, the Sustainability Working Group is responsible for the day-to-day implementation of ESG activities. Its duties include executing ESG-related strategic plans, policies, and projects, collecting data and reporting on ESG performance to the SEC, collaborating with other departments to integrate ESG considerations into business operations and raising awareness of ESG issues within the Group.
3. Vision, Mission, Strategy and Target for Sustainable Development
Section titled “3. Vision, Mission, Strategy and Target for Sustainable Development”
3.1 Vision: Green leadership and harmonious coexistence
Modern Dairy upholds the concept of harmonious coexistence. We create long-lasting value for stakeholders through the sustainable operation and management across the industrial chain and the development model of circular agriculture and animal husbandry, thereby achieving the harmony between man and nature.
3.2 Mission: Creating a better and healthy future with quality and responsibilities
Modern Dairy is committed to protecting human health by providing the community with nutritious products and services of the best quality. We also continue to enhance the well-being of our employees, farmers and herdsmen, and actively contribute to the rural revitalization, fulfilling our social responsibilities for a better future.
3.3 Strategy: FRESH Sustainability Development
Modern Dairy established the “FRESH Sustainable Development Strategy”, which stands for “Future, Responsibility, Environment, Society, and Health”.
- Future: Driven by innovation and a vision for the future, Modern Dairy is committed to exploring and promoting circular agriculture and animal husbandry, accelerating informatization and digitalization, and actively addressing climate change through the “Dual-carbon” Project.
- Responsibility: Guided by its ESG governance framework, Modern Dairy integrates ESG factors into its decision-making. We are committed to ethics, anti-corruption, and maintaining high ethical standards with effective compliance and risk control systems.
- Environment: Modern Dairy actively manages its environmental impact by practicing sustainable operations and procurement, adopting best practices to protect ecosystems, and committing to reducing its ecological footprint across the industrial chain and protecting biodiversity.
- Society: Modern Dairy prioritizes the well-being and growth of its employees by providing equal and safe working conditions and opportunities. Recognizing the importance of community relations, we support community development and contribute to rural revitalization, benefiting farmers through various initiatives.
- Health: Modern Dairy is committed to protecting the health and nutrition of raw milk, constantly pursuing excellent quality, and ensuring animal welfare by providing a comfortable and healthy living environment for cows. The Company has set greenhouse gas (GHG) emission and water reduction targets and monitors the progress of these targets regularly. Modern Dairy is also committed to fostering a collaborative and responsible ecosystem and promoting a sustainable agricultural model that respects natural resources and enhances animal welfare.