Article 1 Purpose

Climate change is one of the major risks facing the world today, which not only continues to affect human health but also has an impact on business operations. Joincare Pharmaceutical Industry Group Co., Ltd. (the “Company”) is dedicated to its mission of “Diligently make high-quality and innovative drugs”. In order to mitigate the influence brought by climate change on human health and business operations, to grasp the opportunities that climate change brings to enterprises, and to satisfy the increasingly stringent requirements imposed by regulators, the Company hereby formulates this Climate Change Management System (the “System”), to proactively address the risks and opportunities brought by climate change.

Article 2 Scope of application

The System is applicable to the Company and all of its subsidiaries (each is referred to as the “Enterprise”, and collectively the “Group”). Each Enterprise shall fully comply with the System when formulating its own climate change related system.

Article 3 Procedures for identification and assessment of climate-related risks

The criteria for identifying and assessing the Company's climate-related risks are based on the "Recommendations of the Task Force on Climate-related Financial Disclosures" issued by the Task Force on Climate-related Financial Disclosures (TCFD) established by the Financial Stability Board (FSB).

1. Step 1: Preparing a list of potential climate risks

The EHS department of the Enterprise (“EHS Department”) collects external information and data such as peer reports, industry research reports, media reports, and relevant policies issued by regulators, and preliminarily prepares a list of potential climate risks of the Enterprise by incorporating the results of stakeholder surveys and web searches. Other relevant business departments are required to offer their cooperation and assistance (including the collection, provision, and compilation of climate risks falling under the domain of the business department).

The EHS department interviews the heads of the relevant business departments (the “Management”) to collect information related to the potential climate risks perceived by management, in order to obtain a comprehensive and unbiased list of complete risks.

2. Step 2: Determining evaluation metrics

For each identified climate risk, an evaluation shall be made in terms of the following four dimensions (the “Four Dimensions”):

(1) Time horizon(s) of the risk (i.e., whether it will occur in the short or long term)

 (2) Likelihood of risk occurrence

 (3) The extent to which risk affects corporate financial planning

(4) The extent to which risk affects corporate strategy

3. Step 3: Scoring by the Management

For each identified climate risk, the EHS Department evaluates it using the Four Dimensions in Step 2 and concludes a composite score (for those that belong to other business departments, the score will be given by that department and submitted to the EHS Department). Based on the composite score, the risks are ranked in descending order, producing a ranking list. The ranking list is submitted to the head of each relevant business department for approval, and then to the general manager of the Enterprise for final approval, resulting in the Enterprise’s final annual risk ranking list (the “Annual Risk Ranking List”).

4. Step 4: Formulating response measures

For each risk in the Annual Risk Ranking List, the EHS Department together with other relevant business departments (collectively the “Each Relevant Business Department”) will conduct joint discussions, draft corresponding measures, and set targets depending on the risk score to form a Climate Risk Response Action Plan (the “Action Plan”). The Action Plan will be submitted to the general manager of the Enterprise for final review and approval. After finalization, the Relevant Business Departments will be responsible for the implementation of the Action Plan.

Article 4 Procedures for Identifying and Assessing Climate-related Opportunities

The criteria for identifying and assessing the climate-related opportunities of the Company are based on the "Recommendations of the Task Force on Climate-related Financial Disclosures" issued by the Task Force on Climate-related Financial Disclosures (TCFD) established by the Financial Stability Board (FSB).

1. Step 1: Determination of the criteria for assessing climate change-related opportunities

For the assessment of the climate performance of the Company's own operations and its value chain, opportunities are assessed according to the region, market, and industry category in which they are located, mainly from the following aspects:

(1) Resource efficiency

To review the resource efficiency of the Company's production and distribution processes, including material management, water management, waste management, etc., and assess whether there is room for cost reduction and efficiency enhancement, such as technological innovation, circular economy transformation plan.

(2) Energy sources

To review the energy sources and their share in the Company's own operations and its value chain, and assess the feasibility of replacing traditional non-renewable energy sources with low-carbon clean energy sources such as wind, solar, tidal, geothermal, and biofuels.

(3) Products and services

To continuously strengthen the focus on low-carbon products and services in the same industry, and assess the potential of the Company's future low-carbon products (such as identification of carbon footprint of products, and carbon reduction products under the green supply chain).

2. Step 2: Continuous review of climate change-related opportunities in the Company itself and its value chain

At the Company level, the EHS department will take the lead in conducting positive screening, analyzing and ranking the climate-related performance of its own operations and value chain, such as carbon emissions, energy efficiency, use of renewable energy, and carbon footprint of its products, etc., and listing potential development opportunities related to climate change, with the cooperation and assistance of other relevant business departments (including collecting, providing and analyzing climate-related opportunities that fall within such department).

Article 5 Implementation and supervision of the response measures

1. Each Relevant Business Department is responsible for the implementation of the Action Plan (e.g., if the Action Plan involves the EHS Department, the R&D management center, and the production and management center, the three departments shall carry out the corresponding action measures for its own department). The responsible body shall report the implementation of the Action Plan to the general manager of the Enterprise semi-annually, and adjust the Action Plan in a timely manner based on the actual situation.

2. Each Enterprise shall prepare an annual report on the implementation of the Action Plan, namely the “Annual Report on Climate Risk Management” (the contents of which shall be prepared by each of the responsible departments and finally summarized by the EHS Department), and together with the Annual Risk Ranking List, shall be submitted to the general manager of the Enterprise for approval before submitting it to the Social Responsibility Working Group for review, and then finally reported to the Social Responsibility Committee under the Board of the Company for approval.

Article 6 Others

1. The System has been reviewed and approved by the Social Responsibility Committee, which regularly reports to the Board on the implementation of the System and provides recommendations for the Board’s decision-making and supervision.

2. The Social Responsibility Committee has the overall responsibility to implement, supervise, and review the System on a regular basis. The Social Responsibility Committee is responsible for the interpretation and revision of the System.

3. The System shall come into effect from the date of promulgation.

Joincare Pharmaceutical Industry Group Co., Ltd.

25 October 2023