ESG Report 2024

88 4 Environmental, Social and Governance Report 2024 The United Laboratories International Holdings Limited To comply with policy requirements, research and develop low-energy- consuming new technologies and processes, thereby increasing research and development expenditures. Replace and procure new energy-saving equipment, leading to increased capital costs. Stringent policies lead to increased compliance costs. Hire consultants to assess our energy- saving status and implement targeted improvements based on professional assessment results to minimise risks due to policy and regulatory changes. Improve product yields to reduce unit product raw material and energy consumption. Regulatory- Dual Control of Energy Consumption and Carbon Intensity for Existing Products and Increased Supervision Medium Term High Regulatory- Rising Raw Material Costs Market - Market Information Uncertainty Based on our identification, the Group has found that climate risks not only pose challenges but also create unique opportunities that align with market trends. As global attention to sustainable development increases, the demand for green technologies and low-carbon solutions continues to rise, providing the Group with significant development space in areas such as innovative product development, energy efficiency improvement, and resource recycling. Therefore, the Group has identified the following opportunities: Short Term High Short Term High Impacted by climate change, global energy transformation, etc., prices of energy (coal, electricity, steam), water, raw materials (glucose, corn starch, etc.) are rising, some bio-based raw materials are difficult to obtain, and certain raw material suppliers suspend and close, leading to increased production costs. Impacted by climate change or national dual-carbon policies, sudden power and water restrictions, electricity price increases may occur, affecting normal production, timely delivery, and increasing production costs. Constantly pay attention to market information and energy policy changes closely to ensure timely updates. Establish communication mechanisms with power and water supply departments and develop emergency response-related systems. Time Horizon Risk Possibility Actively engage in technological innovation, seek alternative raw materials and energy sources, establish multiple energy supply channels. Strengthen strategic cooperation with suppliers (such as signing long-term contracts to avoid price fluctuations), increase key supplier inventories, regularly analyse supplier supply risks. Based on market conditions, prepare raw material reserves in advance to avoid supply disruptions. Improve production technology, increase product yield, control production costs, and reduce raw material and energy consumption. Establish emergency plans and make relevant arrangements to cope with sudden power and water restrictions. The Inner Mongolia Company has established a 110KV substation to ensure stable power supply. This bidirectional power supply system reliably provides safe electricity for the growth of the Inner Mongolia Company, Guangda LianFeng, and The United Animal Healthcare. Reputation- Stakeholders' Concerns and Negative Feedback Short Term Low Government no longer approves expansion of energy-intensive factories. Implement a series of energy-saving and carbon reduction measures to reduce environmental impact, ensure EHS compliance, and strictly control EHS risks. Potential Impact Response Measures