In recent years, the development of ESG concept has ushered in a golden period, and it has become a consensus for enterprises to practice ESG. ESG advocates that enterprises develop in a balanced manner in multiple dimensions such as environment, society and governance, and is a concrete projection of the concept of sustainable development in the corporate world.

On May 16, Xtep International Holdings Limited (hereinafter referred to as: Xtep) released the "2021 Environmental, Social and Corporate Governance (ESG) Report", which comprehensively and systematically demonstrated Xtep's practices and achievements in the fields of environment, social responsibility and corporate governance in its operation and development from multiple dimensions.

As a multi-brand sports goods company, Xtep is committed to the design, research and development, manufacturing, sales and brand management of sports goods (including footwear, clothing and accessories). The company was founded in 1987, the Xtep brand was established in 2001, and it was officially listed on the main board of the Hong Kong Stock Exchange on June 3, 2008. In 2019, its brand portfolio was further enriched, covering four international brands, including Geox, Paladin, Saucony and Merrell. According to the financial report, Xtep Group's revenue in fiscal year 2021 reached 10.013 billion yuan, a year-on-year increase of 22.5%. This is the first time that Xtep's annual revenue has exceeded the 10 billion mark.

The release of the "2021 Environmental, Social and Corporate Governance (ESG) Report" shows that in addition to successful operations, Xtep's thinking and responsibility for social responsibility and corporate governance, such as energy conservation and emission reduction in the production process, production of environmentally friendly products, and calling for green and environmentally friendly life. Xtep actively practices corporate social responsibility, takes green and low-carbon as the direction, helps the upgrading and development of the sports industry, and effectively enhances brand competitiveness.

Enhancing Responsibility Announces 10-Year Sustainable Development Plan

In order to effectively promote sustainable development goals, Xtep officially established a Sustainable Development Committee at the board level in 2021, embedding environment, society and governance into Xtep's organizational management to further deepen ESG governance capabilities. In terms of institutional settings, the Sustainable Development Committee becomes a parallel organization with the Audit Committee, Remuneration Committee, and Nomination Committee, and directly reports to the Board of Directors on the progress of ESG-related work.

In order to promote the full implementation of the sustainable development strategy, Xtep announced the launch of the "10-Year Sustainable Development Plan" in 2021, focusing on three areas - including supply chain management, environmental protection and social responsibility.

According to the report, in 2021, Xtep strengthened and improved the environmental, social and governance performance standards in the evaluation process of potential and existing suppliers. The Supplier Management Center has reviewed the on-site inspections and continuous supplier evaluations of new suppliers, and upgraded the existing environmental and safety management factors to a new set of corporate social responsibility indicators as one of the evaluation criteria.

In order to pay more attention to the environmental, social and governance performance of suppliers, Xtep adjusted the weight of corporate social responsibility standards to 20% of the overall supplier evaluation, an increase from 10% in 2020.

With increasingly stringent environmental regulations, Xtep actively explores the use of innovative alternative materials and sustainable innovation methods to incorporate environmental sustainability into production and operations.

As a leading running shoe brand in the industry, Xtep is committed to reducing carbon emissions and other air pollutants, and supports moving towards a low-carbon future through environmentally friendly energy sources. Energy conservation is practiced by continuously adjusting and improving the lighting control and production equipment in the production plant. In 2021, Xtep invested more than RMB 3 million to upgrade manufacturing equipment at its headquarters and production and operation bases, and replace them with more energy-efficient models.

In terms of social responsibility, Xtep believes that attracting and retaining talent is the key to business development, and supports a diverse work environment and is committed to promoting equal employment opportunities in personnel.

Innovative products launch biodegradable materials

With the support of the environmental technology platform, Xtep continues to innovate and is committed to steadily expanding the use of environmentally friendly materials in the production process.

In the life cycle of sportswear products, there are three main areas where the impact on the environment can be reduced, including raw material selection, production process and disposal after the product's service life ends. To reduce the impact of production on the environment, Xtep focuses on using organic cotton, recyclable plant materials and biodegradable materials as the main green materials for the production of clothing and footwear products.

In 2021, Xtep, Saucony and Paladin brands launched footwear products with foam insoles and outsoles made of recycled plastic bottles from Osole and recycled metal accessories. Saucony launched JazzCourtRFG, which is made of 100% natural materials, and Paladin launched its apparel and footwear products, such as the PampaEarth series and the Organic series, which use materials that comply with the global recycling standard Global Organic Textile Standard and the European Eco-textile Standard 100 guidelines.

Since the launch of polylactic acid products, Xtep has continuously increased the use of degradable materials in its products. In 2021, Xtep launched a new environmentally friendly polylactic acid T-shirt. Polylactic acid is a biodegradable material that can be fermented and extracted from corn, straw and other starch-containing crops. After increasing the PLA content of T-shirts from 19% to 60%, Xtep will further increase the PLA content of T-shirts launched in the second quarter of 2022 to 76%, and plans to trial the production of 100% pure PLA windbreakers in the third quarter of 2022.

Contributing to the society's continuous public welfare output

For many years, Xtep has continued to focus on injecting positive energy into the society. Working closely with the China Next Generation Education Foundation, it has continuously donated sportswear to students in Shandong, Sichuan, Guizhou, Yunnan, Inner Mongolia, Ningxia and Qinghai provinces over the years. In 2021, sportswear worth RMB 4 million was donated to students in underdeveloped areas of Gansu Province to promote their healthy growth and development.

Not only focusing on creating products, Xtep also advocates a healthy lifestyle from the perspective of sports itself. Every year, it spares no effort to sponsor offline marathons and running events to promote and encourage healthy living. In 2021, it sponsored seven marathon events held in mainland China, with more than 91,000 participants.

In addition, in 2021, due to the severe impact of floods on Henan and Shanxi, Xtep donated more than 55 million yuan in supplies through the China Foundation for Poverty Alleviation and the China Soong Ching Ling Foundation to support reconstruction work. Since the outbreak of the COVID-19 pandemic, Xtep has donated a total of 156 million yuan in equipment, supplies and cash to communities and schools.

Show your responsibility and practice your responsibilities. The release of Xtep's 2021 ESG report clearly presents its sustainable development governance and clear environmental protection goals, and also demonstrates Xtep's determination to continue to move towards its sustainable development goals.

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