China Dongxiang(Group) Co.
MSCI ESG Rating
As of 2022, China Dongxiang(Group) Co., Ltd received an MSCI ESG Rating of BBB
RATING ACTION DATE：May 26,2022
LAST REPORT UPDATE：Mar 31,2022
From Year 2018-2020, the ratings of Group maintained A.
In 2021, the rating of Group was downgraded to BBB, but is still in the leading level.
THE USE BY CHINA DONGXIANG OF ANY MSCI ESG RESEARCH LLC OR ITS AFFILIATES (“MSCI”) DATA, AND THE USE OF MSCI LOGOS, TRADEMARKS, SERVICE MARKS OR INDEX NAMES HEREIN, DO NOT CONSTITUTE A SPONSORSHIP, ENDORSEMENT, RECOMMENDATION, OR PROMOTION OF CHINA DONGXIANG BY MSCI. MSCI SERVICES AND DATA ARE THE PROPERTY OF MSCI OR ITS INFORMATION PROVIDERS, AND ARE PROVIDED ‘AS-IS’ AND WITHOUT WARRANTY. MSCI NAMES AND LOGOS ARE TRADEMARKS OR SERVICE MARKS OF MSCI.
Environment, Social Responsibility, Corporate Governance
China Dongxiang is committed to developing a high-standard ESG management regime with ongoing optimisation of ESG strategies and continuous improvements in its ESG governance structure, so as to incorporate our ESG ideals into the Group’s development to gradually improve our ESG management standards.
China Dongxiang endeavours to incorporate our ESG ideals into the Group’s daily operations and business development. Our efforts are focused on four aspects: “Supplying Quality Products Through Responsible Operations”; “A People-Oriented Approach to Staff Care with Dedication”, “Win-win Cooperation and Fulfilment of Social Responsibility” and “Protecting the Environment Through Green Operation”.
SUPPLYING QUALITY PRODUCTS THROUGH RESPONSIBLE OPERATIONS
In line with its mission of “creating a most sought-after sports and lifestyle brand”, we are consistently committed to providing a variety of premium products to consumers.
We have exercised stringent control over product quality to afford genuine protection for consumer rights and enhanced regulation of product label information and advertising, while resolutely safeguarding our intellectual property rights. In the meantime, we seek to develop a culture of probity in business development to create sound conditions for the development of our Group.
STRINGENT CONTROL OVER PRODUCT QUALITY AT ALL STAGES
Upon the receipt of raw materials at the plant, the Group conducts inspection of the physical properties of such materials and evaluation of the safety performance of products to be developed to prevent the occurrence of safety issues in the products during use. The plants conduct secondary random tests based on the test report on the incoming materials. Sub-standard materials will be returned directly in order to control product quality at source.
Evaluation of potential safety risks of products in use is conducted jointly by the Group’s product development department, production department and sales department;
Trial use of sample products by Group staff is arranged to identify and solve any issues at an early stage and prevent the marketing of defective products.
Sample products manufactured by the plants are confirmed by the Group and production is arranged by the plants after such samples have passed the product property test;
Quality inspection staff of the Group exercise strict supervision over the manufacturing process to ensure stringent compliance with production safety standards;
The Group’s designated development and product officers inspect the quality of the products at the plants upon the completion of production;
The Group’s warehouse quality assurance staff conduct random tests in accordance with relevant standards after the products reach the logistics department to ensure compliance of product quality with stipulated requirements.
The Group has formulated rigorous procedures for the handling of defective / substandard products
The Group arranges quality inspection and testing of ordered products by third parties to prevent the marketing of any products with quality issues.
With a strong emphasis on green innovation for products, we have actively adopted frontier eco-friendly materials to send a message to consumers advocating the building of a green Earth, in fulfilment of our corporate responsibility for environmental protection.
SAFER, HEALTHIER AND MORE ECO-FRIENDLY PRODUCTS
To forge a sustainable supply chain, the Group encourages suppliers to incorporate environmental principles into their own management regimes. We require suppliers to provide certification and test reports under standardisation regimes, such as CTI (Centre Testing International), ITS (Intertek Testing Services), SGS (Societe Generale de Surveillance S.A.), ZDHC (Zero Discharge of Hazardous Chemicals) or FSC (Forest Stewardship Council) on a regular basis, and to provide sustainable raw materials and reduce the use of hazardous chemicals. While protecting the occupational health and safety of staff and the environment, this has also facilitated the supply of safer, healthier and more eco-friendly products to consumers.
100% of our existing cotton procurement could be traced to the country of origin.
As at mid-2022, approximately 220,945 pieces of eco-friendly cotton wear have been manufactured under purchase orders, accounting for 12% of our apparel orders in aggregate.
ECO-FRIENDLY YARN PRODUCTS
With a special emphasis on the eco-friendly features and safety of raw materials, the Group enhances cooperation with suppliers on the research and application of eco-friendly materials.
With the introduction of SORONA, a renewable fibre fabric backed by four major international accreditations, we reduce the generation of waste in the product life cycle and present to consumers a soft, stretchy and non-tactile cotton tee offering comfort and fashion.
In 2022, we adopted bio-based fiber - SORONA” fabric in our cotton tee products. This fabric contains 37% plant-based renewable raw materials (plant-based starch sugar). Compared to traditional nylon fabric, the product manufacturing process of SORONA could reduce consumption of petroleum resources by approximately 37%, reducing resource consumption by 30% and GHG emission by 63%.
A PEOPLE-ORIENTED APPROACH TO STAFF CARE WITH DEDICATION
We regard staff as the cornerstone of sustainable development for the enterprise and the protection of staff interests as a fundamental condition for its sound operation. We believe it is our responsibility and obligation to provide a safe and healthy workplace for them. Accordingly, we have formulated and implemented a range of human resources management systems and established a comprehensive staff remuneration and benefit regime as part of its effort to regulate and enhance human resources management, develop a sound regime for staff rights and protection, and care for the health, safety and comprehensive development of staff.
We have made improvements to our staff employment and labour rights protection system to prevent child labour and forced labour in a resolute manner. Improvements have also been made to our new staff information identification system to facilitate stringent vetting of the age information of appointed staff to ensure they have reached the legal age for employment. We stand against any form of discrimination as we endeavour to foster diversity and resolutely oppose any acts of discrimination based on race, nationality, religion, gender, age, marital status or disability.
We have continued to develop and improve our staff promotion mechanism. With the formulation of the Promotion Management System and Group Staff Career Development System, we have established a dual ranking regime comprising the professional route and the management route. For different positional routes, we have formulated a promotion pathway for professional staff to broaden the scope of their career development. Moreover, we have established a systematic mechanism for staff promotion covering the application for promotion, qualification vetting for promotion, work report for promotion and assessment of promotion.
HEALTH AND SAFETY
We prioritise staff health and safety and are committed to providing a healthy and safe workplace for staff in strict accordance with pertinent laws and regulations, such as the Labour Law of the People’s Republic of China, Law of the People’s Republic of China on the Prevention and Treatment of Occupational Diseases, Regulation on Work-Related Injury Insurances and Fire Control Law of the People’s Republic of China. During the Reporting Period, there was no material breach of laws and regulations pertaining to staff health and safety by the Group.
CARING FOR STAFF
In line with a “people-centric” philosophy that emphasises personal care, we have organised a rich variety of staff events and encouraged active staff participation, in order to alleviate their pressure from work, strengthen team identity, unity and solidarity.
WIN-WIN COOPERATION AND FULFILMENT OF SOCIAL RESPONSIBILITY
To develop win-win partnerships with our business partners, enhance our supplier management regime, empower suppliers so as to improve their environmental and social risk management standards and forge a sustainable supply chain is a matter of high priority for us. We also take proactive steps to care for community development and vigorously engage in community welfare initiatives.
ENHANCING SUPPLY-CHAIN MANAGEMENT
We have continued to improve our supplier management regime and formulated a supplier management system to facilitate consistent supply of premium products to consumers. In addition to developing long-term, stable partnerships with suppliers, we are also enhancing our management of the environmental and social risks associated with suppliers. The Group’s supplier management covers all of the 71 suppliers on list, which have passed the environmental and social risk management assessment conducted by the Group.
Our management of environmental and social risks associated with suppliers includes mainly the following:
Environmental risk management
To exercise control over the eco-friendliness of our materials, we examine and select suppliers who are in compliance with the requirements of pertinent environmental laws, regulations and standards. For example, we conduct investigations to see whether processes generating heavy pollution, such as printing, dyeing and spraying, are carried out at the suppliers’ factories in a manner compliant with national and local environmental standards and whether they have undermined the environment. If there are any violations on the part of the supplier, we will demand rectification within a designated timeframe, failing which we will terminate cooperation with such supplier;
In addition, we have continued to increase the use of eco-friendly materials and reduce the use of hazardous chemicals. During the financial year, we promoted the use of non-toxic and non-polluting soluble adhesives with a higher safety level and recycled eco-friendly composite leather materials, as well as the increased use of recyclable TPU (thermoplastic polyurethanes), among footwear product suppliers.
Social risk management
We attach great importance to compliance and occupational health and safety management relating to labour along the supply chain. We are concerned with the legal compliance of labour employment as well as the skill level and operational proficiency of workers. We determine the existing workforce, production lines and equipment of a supplier and assess whether he can assure stable supply of products. We also make estimations on its actual production capacity to facilitate reasonable order arrangements. Suppliers’ performances in workhour management, remuneration and benefits and staff training are also included in our assessment. In the meantime, we assess the ability and standard of a supplier in health and safety management through on-site inspection at its factories in respect of production safety.
CRITERIA FOR THE ADMISSION OF SUPPLIERS
We require suppliers to have experience in manufacturing for first-tier domestic and international brands and all suppliers are subject to on-site visit and general assessment by the Group before they are admitted to the Group’s suppliers’ list. We have formulated stringent evaluation standards to assess suppliers in a comprehensive manner in relation to their corporate background, operational credentials, business philosophy, social responsibility, environmental performance and safety, financial conditions, development capabilities, technological strength, production regime and quality standards. Supplier assessment for admission covers all procurement items and suppliers of the Group.
Assessment for suppliers’ admission comprises primarily three aspects as follows:
In connection with the assessment of production operations, we conduct supplier audit on a number of areas, including infrastructure and hardware facilities, development and production capabilities, production process management, operational capabilities, on-site management capabilities and implementation of relevant standards. Priority is given to suppliers who are in compliance with ISO9001 Quality Management Systems accreditation and OEKO-TEX series accreditation to ensure that the product manufacturing process and quality management are standardised, reasonable and institutionalised. The audit results are shared on the supply chain platform within the regime.
In connection with environmental assessment, we conduct on-site audit and assessment of the environmental facilities and raw materials of suppliers, who are required to meet national standardisation requirements such as ISO14001 Environmental Management Systems. We supervise their implementation of environmental measures to fulfil the local environmental standards of our export destinations.
In connection with social responsibility assessment, priority is given to suppliers in compliance with domestic and international industry standards, such as ISO45001 Occupational Health and Safety Management Systems accreditation and Business Social Compliance Initiative (BSCI). We conduct stringent assessment of raw materials used by suppliers and the safety level of their production and processing procedures to safeguard the health and safety of the staff of suppliers.
In 2021, 100% of the Group’s raw materials suppliers had passed the ISO14001 Environmental Management Systems and ISO9001 Quality Management Systems accreditations.
In 2021, 80% of the Group’s fabric suppliers had passed relevant environmental accreditations including the Blue Sign accreditation of Switzerland, OEKO-TEX accreditation and GRS (Global Recycling Standards) accreditation.
ENHANCING COMMUNITY CARE
We emphasise the development of a stable and effective mechanism for community engagement and insist on rewarding the community with our achievements in corporate development in vigorous fulfilment of our social responsibility to improve our community in general. We believe that organising and participating in community investment activities will enable us to understand and identify community needs in a more profound manner and maintain engagement and interaction with the community, while taking into consideration the impact of our business activity on the community to foster social harmony.
In May 2022, we teamed up with the I Do Foundation of Beijing to launch the “Kappa Player · I Do” Tibetan Community Welfare Co-branded Series.
The drawings of Tibetan kids were incorporated into our products to call for stronger community awareness for the growth of children from the Lhasa Special Education School. Proceeds from the sales of these products are donated to the I Do Foundation in support of art education for Tibetan children.
PROTECTING THE ENVIRONMENT THROUGH GREEN OPERATION
We implement low-carbon green philosophy and closely monitor industry developments, while actively participating in the construction of sustainable supply chains and studying sustainable and innovative measures to promote green development of the apparel and textile industry. Meanwhile, we are highly concerned with climate change in active response to the national goals of “carbon peak and carbon neutrality” and the focus on climate issues in continuously evolving environmental laws and regulations.
In October 2021, the Group participated in the launch ceremony of 「China Fashion Brands for Chinese Textile and Apparel Enterprises for Swift Actions in Climate-related Innovation and Carbon Neutrality Campaign」 initiated by China National Textile & Apparel Council and officially became one of the first key enterprises joining 「30 • 60 Chinese Textile and Apparel Industry for Expediting Carbon Neutrality Campaign」. We have taken this opportunity to further engage in climate change governance and low-carbon transformation, including the commencement of full life-cycle test and assessment for textile products, active planning for the development and application of low-carbon products, and the construction of a green low-carbon production and operation model.
Consolidated disclosure in the annual report for 2019/2020 and previous years