In accordance with Law of the PRC on Tenders and Bids and relevant regulations, we formulated Group’s Purchasing Management Measure. In the process of working with our suppliers, we and our subsidiaries have embedded social responsibility principles into our corporate tendering and procurement policies, contract terms and assessment indicators. Our aim is to work together with our partners to build a fairer, more responsible industry ecosystem. As of the end of 2021, the headquarter of CITIC accredited 94 suppliers, among which 80 are domestic and 14 are overseas, taking up 85.11% and 14.89% respectively.

CITIC Limited upholds the principle of strict access, quantifiable rating, dynamic adjustment and mutually beneficial partnership in finding, introduction, selection, assessment and termination of suppliers; centralised the establishment, renewal, use and management of suppliers database and supervise the agency companies to comply with relevant regulations; set up a blacklist of suppliers with misconducts, including bribery, malicious bidding, falsification or being penalized or delicensed by regulators for their violations of laws.

CITIC Bank requires suppliers to provide ESG related content in their application files and invited consulting firm to review 521 suppliers to identify their environmental and social responsibility related risks, including compliance, social responsibility, material change and legal risk. Review feedbacks are in turn incorporated in supplier’s assessment to encourage them delivering their ESG commitment.

CITIC Securities set up assessment system to conduct regular review of its suppliers in terms of product quality, service, sustainability, reputation and agreement delivery capacity to select the premium ones; built a termination mechanism to optimize the suppliers pool; uphold and advocate the principle of integrity and honesty to guard against any bribery and bidding collusion.

China Securities embedded ESG concept in the whole process of purchasing and encourages its suppliers to improve their ESG performance and conducts due diligence vie public source or by third party to follow its suppliers’ recent public opinion to fend off potential risks; requires new suppliers signing a Commitment Letter to reinforce their commitment to fighting against forced labour and to environment protection.

CITIC Dicastal manages its suppliers in accordance with its supplier approval procedures. Monthly performance assessments are conducted on first-tier suppliers based on quality, cost, delivery and service. The Company selects the best and eliminates the worst according to their performance reviews.

CITIC Special Steel regularly visits suppliers and communicates its philosophy to promote mutual growth and progress. The Company monitors and evaluates the compliance of its suppliers through on-site assessments and recommends timely preventive and improvement measures against potential risks. Suppliers who fail to meet the safety, quality, environmental and social responsibility requirements will be suspended or terminated.

Longping Hi-Tech, a subsidiary of CITIC Agriculture, participated in the first Yuelu Farming Summit during the year. At this event, we worked with several government organisations, such as the China Rural Technology Development Centre of the Ministry of Science and Technology, to discuss the implementation of the National Agricultural Revitalisation Initiative. The objective of the Summit is to accelerate the implementation of the government’s agricultural strategy and promote the development of the modern farming industry.

CITIC Press has stepped up its efforts to combat copyright infringement and piracy by participating in the activities of organisations such as the Beijing Copyright 15 – Anti-Piracy Alliance. An evaluation report on suspected pirated books purchased by readers was also published. We will collect evidence, obtain notarisations and initiate legal proceedings against infringing shops and pursue criminal liability charges in cases involving 3,000 or more copies of pirated or copyright infringing books. In 2021 more than 150 books were found to be pirated. Two criminal cases were filed, and more than 20 suspects detained for copyright infringement and piracy. Thirteen shops were charged, and US$10 million seized. Six warehouses were investigated, and more than 24,000 copies of infringing or pirated books worth RMB1.45 million were seized.

When counterfeit auto parts were detected in the market, CITIC Dicastal worked with the Public Security Bureau to confiscate the products and shut down the infringing businesses, while recovering financial losses for consumers. While we are committed to defending our rights, we also give small businesses an opportunity to avoid being held responsible for minor infringements. We not only encourage entrepreneurship and innovation but also work to protect intellectual property rights through a combination of punishment and education.

CITIC Pacific Special Steel has developed a Patent Management System, Intangible Assets Management System, Patent Incentive System and Trademark Management Regulations. It also provides training in intellectual property rights to protect the Company’s innovations.

We continued to improve the functions and staffing of the disciplinary and inspection bodies of the Company and its major companies during the year. We also exchanged views with the disciplinary committee secretaries of nine subsidiary companies to improve our disciplinary work. We are committed to standardising our disciplinary work, increasing training for our staff and safeguarding our brand image of integrity and honesty. In addition, we have established a comprehensive risk management system and made significant efforts in the areas of system building and anti-money laundering.

We attach great importance to anti-corruption training for our directors and staff and circulated notice about cases of violating laws and regulations and dereliction of duty and negligence of responsibility. By learning from these cases, we formulated correction measures. Our subsidiaries organised seminars to learn and reflect from these cases to improve accountability, to guard against power abuse and to enhance supervision.

CITIC Securities launched a special project to strengthen its management. The Company also reviewed the business and functions of each department through a self-examination-review-correction process to improve business systems and operational procedures. Over 1,000 systems and operational guidelines were reviewed and streamlined, enhancing its internal control management and compliance capabilities.

CITIC Securities released the Anti-Money Laundering Enhanced Due Diligence Workbook for High Risk Customers to refine the due diligence requirements for high-risk customers. Our business departments are required to conduct comprehensive investigations, including identity verification, source of funds and transaction analysis, when conducting due diligence on high-risk customers.

China Securities incorporates its anti-money laundering responsibilities into its staff performance appraisals. Departments and branches with unsatisfactory performance will be penalised, which in turn will affect salary adjustments.