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Environmental, Social, Corporate Governance Report

Environmental Protection

We believe that environmental protection should be a shared responsibility with every member of the community. To minimise the impacts of our business operations, we have adopted measures to reduce the waste we generate to the greatest extent reasonably practicable. We are also committed to improving our environmental protection efforts by adopting better monitoring and statistical methods to disclose details of the environmental performance of CITIC Limited.

Financial Services

Our financial subsidiaries are committed to green lending in their operations. They are also dedicated to providing financial solutions for sustainable development in terms of pollution treatment, energy conservation and ecological protection.

CITIC Bank

CITIC Bank has launched a Green Intermediary Loan (GIL) business in support of a green, circular and low-carbon economy.

Green Lending Business

Green loan policy. Under this policy, CITIC Bank curbs loans to sectors with overcapacity and instead extends credit to sectors that meet the requirements for technological upgrading and carbon-emission reduction.

Extension of credit to projects with environmental risks. For projects that carry environmental risks, CITIC Bank requires applicants to provide an Environmental Appraisal Report before extending credit.

Support to projects meeting green credit policies. In 2014, CITIC Bank extended credit to projects in green transport, renewable and clean energy, energy-conservation, refuse disposal and pollution-treatment. As of the end of 2014, the loan balance for energy-conservation projects was RMB27.13 billion^{Note 1.}

Lending Risks in Sectors with Overcapacity

CITIC Bank has a strict credit risk management policy on loans to high-polluting, high-energy consuming industries with overcapacity, including the steel, non-ferrous metals, shipbuilding and photovoltaic industries. In line with this policy, CITIC Bank carefully selects and approves borrowers from these industries if they demonstrate excellent performance. Loans to low-capacity, high energy consuming and technologically outdated enterprises will not be granted. As of the end of 2014, the loan balance of CITIC Bank for enterprises with overcapacity and enterprises exposed to highconsuming, high-polluting industries was RMB49.22 billion^{Note 1}, a decrease of RMB14.13 billion, down by 22.3% year on year. The percentage of loans to these companies out of total corporate loans went down by 1.12.

Note 1:Statistical calibre is based on the balances of items with the following category names as per the Industry Classification of the National Economy (GB/T 4754 - 2011)

Green Intermediary Loan (GIL) Business
In the GIL Business, CITIC Bank repays capital and interest in cases where the Chinese Ministry of Finance has signed a foreign-currency lending contract and has entrusted it with funds for lending to projects that meet energy-conservation and emission reduction requirements. CITIC Bank will then provide a guarantee letter to the government authorities to ensure timely delivery of the funds to overseas capital holders. In 2014, CITIC Bank focused on financing projects that reduce greenhouse gas emissions in urban buildings and to the energy, transportation, water supply and sewage treatment sectors.

CITIC Bank Shenyang Branch Offers Sub-loans to Protect Wetland Reserve

Home to more than 828 living species, Wolong Lake Nature Reserve (the Nature Reserve) is the largest inland natural wetland and a rare biological diversity reserve in Liaoning Province. In 2014, CITIC Bank Shenyang Branch (the Branch) relented EUR15 million from foreign governments to Kangping County for a biodiversity and wetland protection project.

The project covers 258 hectares and will increase the wetland area to improve the environment for the sake of sustainability and ecological security. It will help maintain and develop the biodiversity and will allow more study on and utilisation of the Nature Reserve. By raising awareness and forming a mutually beneficial bond between the local community and the Nature Reserve, the completed project will integrate functions including biodiversity protection, scientific study, educational outreach and the Nature Reserve development.

Among the total investment of EUR18 million, ADF provided EUR15 million and local governments, including Shenyang and Kangping, offered EUR3 million. The branch communicated with local government on a regular basis and ensured the timely issuance of repayments, pushed forward the review process to recover the cash deposit, and offered a financial express lane to facilitate the project and sub-loan deal.

CITIC Securities
Carbon Trading

Having set up a carbon trading and investment team in 2011. CITIC Securities is the only institution approved by the China Securities Regulatory Commission to conduct this business. Since its establishment, the carbon trading team has been an active player in both domestic and oversea deals pushing for the securitisation of carbon trading. They help companies to activate their carbon assets by providing liquidity on the market through quotations and innovative OTC transactions. The team introduced buy-back deals in carbon assets as a new financing channel for key emitting companies undergoing financial strain to lower their financing cost. These measures encourage companies to accelerate technology upgrades and develop industries that are energy-conserving, low-polluting and low-emitting in support of China’s national goal of energy saving and emissions reduction. In December 2014, CITIC Securities completed the first carbon-emission quota repurchase deal in China, raising RMB13.3 million in total.

CITIC Trust

In response to China’s national strategy of facilitating finance for environmental protection companies, CITIC Trust provided nearly RMB200 million and other integrated financial services in 2014 for environmental technology companies such as Xuzhou Huamei Kengkou Environmental Thermal Power Corporation, Ltd., Ningbo Yaodong Environmental Technology Corporation, Ltd. and Beijing BCEG Golden Sources Environment Protection Development Corporation, Ltd. CITIC Trust believes these loans strike a balance between economic growth and environmental protection.

Resources and Energy

CITIC Resources

The Karazhanbas Oilfield in Kazakhstan, Yuedong Oilfield in China and Seram Block in Indonesia developed by CITIC Resources operated in compliance with local environmental protection regulations, and adopted effective measures for pollutant emission control and efficient resource utilisation to reduce the impact of operations on the environment and natural resources.

CITIC Mining International

CITIC Mining International (CMI) has put in place an environmental management system (EMS) to drive its environmental management performance and ensure compliance with relevant government approvals and regulations. During the year, we met all regulator-issued environmental performance indicators, and successfully passed all inspections by government authorities. The major environmental protection initiatives included the following:

A solar photovoltaic array at the Balmoral gatehouse

Sunburst Energy

In 2014, Sunburst Energy took the following measures:

Manufacturing

CITIC Pacific Special Steel

CITIC Pacific Special Steel regards the importance of treatment of pollutants such as waste water, waste gas and dust, as well as recycling by-product gas and steam generated during the production. Major environmental protection initiatives implemented by CITIC Pacific Special Steel in 2014 are as follows:

CITIC Heavy Industries

A series of major initiatives were implemented by CITIC Heavy Industries to control emissions and improve energy efficiency:

CITIC Dicastal

CITIC Dicastal has adopted strict environmental regulations on controlling pollutant emissions and worked with Hebei Provincial Energy Conservation Association to establish a more efficient energy management system. Major environmental protection initiatives implemented by CITIC Dicastal in 2014 are as follows:

Major Investment Properties

In 2014, a number of energy-saving measures were implemented at CITIC Tower, our major Investment property in Hong Kong:

We have two properties in Beijing, Capital Mansion and CITIC Building. We aim to operate the facilities of these two properties in Beijing in a more efficient, energy-saving manner. During the past year, we cooperated with intermediaries to carry out an investigation into the carbon being emitted by the two buildings. At the underground car park and the lift lobby on the first floor of Capital Mansion, T8 tubes were replaced with LED tubes, and at the corridors of the common area in the lower block compact fluorescent lamps were replaced with LED lamps. An energy-saving renovation project was also carried out at the canteen of CITIC Building. As part of the project, the canteen switched from natural gas to electromagnetic devices.