ESG Report 2025

39 The Group is committed to deeply integrating sustainability principles into its operations and value chain, reducing its carbon footprint through substantive measures such as improving energy efficiency, applying renewable energy, and optimising processes. The year 2025 marks a critical year for the Group in establishing quantitative baselines for climate-related targets, signifying our transition from non-quantified management to a more systematic and trackable target management model. The Board of Directors will oversee progress against these targets annually, conducting evaluations and making necessary revisions based on actual circumstances. We will also continue to improve our target setting, assessment, and verification mechanisms, and regularly disclose progress and emissions data to maintain transparent and credible communication. In 2025, the Group carried out identification, assessment, and verification work to effectively manage its own GHG emissions. Our verification scope covers the Group and its subordinate production bases. We have established carbon emission accounting and management rules covering Scope 1 and Scope 2, and completed GHG inventory in accordance with the requirements of the “Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard (2004)”. Meanwhile, following the “Greenhouse Gas Protocol: Corporate Value Chain (Scope 3) Accounting and Reporting Standard (2011)”, we re-evaluated and refined the identification and accounting scope of Scope 3 emission categories during the Year. This scope involves a total of 15 categories. After reviewing and analysing them in light of the Group's actual business operations, and considering the materiality of emissions, data availability, and stakeholder concerns, the Group identified 6 categories closely related to our operations as the current focus of Scope 3 GHG emission accounting and management. These categories mainly cover upstream and downstream value chain activities, specifically: Category 1 (Purchased goods and services), Category 2 (Capital goods), Category 4 (Upstream transportation and distribution), Category 5 (Waste generated in operations), Category 6 (Business travel), and Category 9 (Downstream transportation and distribution). In the future, the Group will continue to improve the statistics, accounting, and management of GHG emissions data, continuously enhancing data accuracy and transparency to provide a scientific basis for subsequent emission reduction target setting and performance tracking. During the Reporting Period, the Group's GHG emissions are presented in the figure below. For more detailed data and notes, please refer to the Environmental Key Performance Index in Appendix I: Key Performance Index. The Group systematically integrates climate-related factors into its daily operational management and performance assessment system, ensuring effective alignment between carbon reduction targets and employee incentives. The Group has formally established the “Sustainability and Climate-Linked Remuneration Management System”, which formally incorporates climate performance into the remuneration assessment system of senior management at the group level, achieving a deep linkage between carbon reduction responsibilities and incentive and constraint mechanisms. This system explicitly designates “Climate and Environmental Core KPIs” as an important component of the special “Sustainability Performance” module. Within this module, which accounts for no less than 20% of the annual performance bonus, climate and environmental indicators account for no less than 60%, equivalent to no less than 12% of the total performance bonus. Specific assessment indicators include the annual reduction rate of greenhouse gas emission intensity, the reduction rate of water consumption and energy consumption per unit of output value, and forward-looking indicators such as progress in green R&D and laboratory certification are also included for tracking purposes, guiding management to continuously focus on both operational carbon reduction and green innovation. For detailed provisions of this system, please refer to section 4.3.2 “Compensation Linkage Mechanism” of the Report. In addition, Inner Mongolia Company has fully incorporated energy management targets into the performance assessment system of each workshop and functional department, ranking them alongside production indicators as core dimensions of performance evaluation. The achievement of energy performance directly affects the bonus calculation for employees and teams, ensuring that climate-related responsibilities are cascaded down and cover all employees. For the specific mechanisms, weight settings, and incentive schemes of energy assessment, please refer to section 7.2 “Energy and Water Resource Management” of the Report. The Group also continuously monitors the evolution and application of climate management tools. At present, an internal carbon pricing mechanism has not been proven to have a direct and material relevance to the Group's industry, current operational priorities, and financial decision-making needs; therefore, it has not yet been introduced. We will continue to follow the development trends of carbon pricing mechanisms and industry best practices, and proactively assess the feasibility of incorporating them into our management framework when conditions mature. Scope 1 - Direct GHG Emissions Scope 2 - Indirect GHG Emissions Scope 3 - Other Indirect GHG Emissions 1 343 885 , , tonne of CO equivalent 2 152,962 tonne of CO equivalent 2 344,906 tonne of CO equivalent 2 The United Laboratories International Holdings Limited 2025 Environmental, Social and Governance Report