Royalchem ESG Report 2025

Anhui Royal Chemical Co., Ltd.

2025 Environmental, Social and Governance Report

Reporting period: January 1 – December 31, 2025
Published: June 2026
Prepared with reference to the GRI Standards 2021

CHAPTER 00

Contents

01 About This Report

02 Message from the General Manager

03 Company Profile and Governance

04 Materiality Assessment and Stakeholder Engagement

05 2025 ESG Performance Overview

06 Environmental Performance

07 Labor and Human Rights

08 Business Ethics and Compliance

09 Sustainable Procurement

10 UN Global Compact Communication on Progress

11 Community Engagement

12 Forward-Looking Targets 2026–2028

13 GRI Content Index

14 Alignment with the UN Sustainable Development Goals

CHAPTER 01

About This Report

Anhui Royal Chemical Co., Ltd. (hereinafter "the Company" or "Royalchem") has prepared this report with reference to the GRI Standards 2021, covering the period from January 1 to December 31, 2025. The report explains to customers, employees, suppliers and other stakeholders how the Company manages environmental, social and governance topics, the progress made during the year, and the directions for continuous improvement.

Data Collection and Accounting Methodology

CHAPTER 02

Message from the General Manager

Dear stakeholders,

On behalf of Royalchem, I am pleased to present the Company’s 2025 Environmental, Social and Governance report. As a small but professional chemical trading and service company, we understand that ESG is not a requirement reserved for large listed companies — it is a long-term responsibility for every participant in the chemical supply chain.

In 2025 we continued to embed sustainability requirements into product sourcing, chemical compliance, employee care, business ethics and supplier management. We do not pursue one-off "perfect disclosure"; we pursue genuine, verifiable and improvable progress in management. Highlights of the year include:

• Further improved our greenhouse gas inventory, covering office operations, vehicle fuel, purchased electricity, freight logistics and employee commuting as the main emission sources.

• Covered our 2025 office electricity consumption with green electricity certificates, bringing market-based Scope 2 emissions to zero.

• Maintained zero work injuries, zero major environmental incidents, zero confirmed corruption cases and zero major customer complaints.

• Completed initial certification to ISO 14001:2015 and ISO 45001:2018, further strengthening our environmental and occupational health & safety management systems.

• Continued to take part in UN Global Compact learning and actions, and integrated supplier ESG management into our procurement process.

• Achieved a Silver-level performance in the EcoVadis assessment, and are advancing the next stage of improvement in a more robust, more verifiable way.

Looking ahead to 2026–2028, the Company will raise its ESG management maturity in a pragmatic way: continuing to improve environmental data quality, expanding supplier ESG coverage, strengthening supply-chain compliance and product safety, and balancing transparency with the protection of business information in public disclosure.

Alan Zhao (Zhao Zhiren)
General Manager / Legal Representative
Anhui Royal Chemical Co., Ltd.
May 2026

CHAPTER 03

Company Profile and Governance

About Royalchem

Anhui Royal Chemical Co., Ltd. (brand: Royalchem), founded in 2008, is a professional chemical trading and service company connecting Chinese chemical producers with industrial customers worldwide. The Company’s core business is trading and services; it does not own or operate manufacturing plants, and products are typically shipped to customers by third-party manufacturers through qualified logistics providers.

The Company holds a hazardous chemicals business license and continuously follows Chinese and international chemical compliance requirements such as REACH, SVHC, K-REACH and GHS. Its business registration, legal status and basic operating information can be independently verified through Dun & Bradstreet (D-U-N-S number: 54-820-5422).

Business and Product Portfolio

Royalchem’s business covers fine chemicals, pharmaceutical intermediates, agrochemicals, coatings and adhesives, dyes and pigments, food additives and related customized services. The Company continuously develops its portfolio of bio-based, renewable-carbon and lower-impact products, helping customers find more compliant, safer and more sustainable chemical solutions.

Customers and Market Disclosure

The Company serves customers in the chemical, materials, life-science, coatings, agrochemical and food-additive industries worldwide. To protect customer relationships and contractual confidentiality obligations, this report does not disclose specific customer names. Customer references can be provided separately under confidentiality for customer due diligence or EcoVadis assessments.

Certifications and External Initiatives

ESG Governance

Ultimate responsibility for ESG rests with the General Manager. A cross-functional ESG working group drives the environmental, labor and human rights, business ethics, sustainable procurement and chemical compliance agenda. The group reports regularly to management and coordinates policy updates, data collection, training, supplier engagement and customer questionnaire support.

CHAPTER 04

Materiality Assessment and Stakeholder Engagement

In 2025, the Company identified the ESG topics most material to itself and its stakeholders, based on customer requirements, industry risks, EcoVadis themes, the GRI disclosure framework and its own business model. As a trading-type chemical company, we consider product safety, supply-chain sustainability, GHG and logistics emissions, business ethics, and employee health and safety to be the highest management priorities.

Methodology

1. Topic identification: with reference to the GRI Standards, EcoVadis themes, TfS supply-chain practice, customer questionnaires and peer benchmarks.

2. Stakeholder input: customer questionnaires and meetings, supplier communication, employee satisfaction surveys, management discussion and compliance requirements.

3. Materiality assessment: along two dimensions — importance to stakeholders and impact on the Company’s operations and customer value.

4. Prioritization: topics are ranked high / medium / low, with high-priority topics disclosed in greater depth in this report.

Stakeholder Engagement

CHAPTER 05

2025 ESG Performance Overview

This section summarizes the Company’s key ESG indicators. The public version prioritizes aggregated indicators that demonstrate management performance; commercially sensitive purchase amounts, customer names, supplier names and tax/financially derivable information are not disclosed.

Environment

Social

Governance and Procurement

CHAPTER 06

Environmental Performance

As a chemical trading company with no manufacturing operations, Royalchem’s direct environmental footprint comes mainly from office operations, vehicle fuel, purchased electricity, water use and waste; the more significant indirect impacts arise from third-party logistics and the supply chain. The Company therefore focuses its environmental management on data accounting, product compliance, logistics emission management and supplier environmental performance.

6.1 Environmental Policy Framework

6.2 Greenhouse Gas Emissions

The Company follows the GHG Protocol Corporate Accounting and Reporting Standard, using the operational control approach. The 2025 inventory covers the main office operations and the freight activities for which data is available. Scope 3 logistics emissions are calculated shipment by shipment; in 2025 the inventory covered 1,431 shipment records, using GLEC-recognized emission factors in accordance with ISO 14083.

6.3 Renewable Energy and Green Electricity Certificates

The Company purchased, in 2026, green electricity certificates (GECs) corresponding to its 2025 office electricity consumption, bringing market-based Scope 2 emissions to zero. It plans to maintain renewable electricity coverage in the coming years and to keep improving GEC record-keeping and verification. The certificates originate from the Hongtian photovoltaic power station in Shenmu, Shaanxi Province; the national-platform transaction number is N0012601000014379d, publicly verifiable on China’s national green certificate platform.

6.4 Energy and Water Consumption

6.5 Waste Management

The Company is a pure office operation and generates no production-related hazardous waste. In 2025 it reduced the impact of general office waste through waste sorting, paper and plastic recycling, and the reuse or donation of retired office equipment.

• Waste sorting and regular checks implemented at office locations.

• Reuse of paper, plastics, packaging materials and idle office supplies promoted.

• No production or chemical handling takes place on office premises, so no production-related hazardous waste is generated.

6.6 Air Pollution Prevention

The Company’s direct air-pollutant emissions are low and come mainly from vehicle fuel. Indirect impacts arise chiefly from freight transport, especially air freight. The Company reduces these through transport-mode optimization, shipment consolidation, prioritizing sea and rail, cutting unnecessary air freight and engaging logistics partners. Shipment-level carbon accounting for 2025 shows that air freight accounted for only about 0.2% of total freight volume but contributed about 19% of logistics-related emissions. This disproportionate profile is the key focus of our logistics decarbonization work and the core rationale for continued modal optimization and air-freight reduction.

6.7 Product Safety and Chemical Compliance

Product safety is a core responsibility of a chemical trading company. The Company maintains SDS for traded products and provides downstream customers with the necessary hazard communication, regulatory information and technical support.

• 100% SDS coverage: safety data sheets are maintained and regularly reviewed for all traded products.

• REACH / SVHC compliance: SVHC screening and customer notification for relevant products entering the EU market.

• In 2025, 3 SVHC products were identified and managed, with customer notification and compliance assessment completed as required.

• The hazardous chemicals business license remains valid; no hazardous chemical samples or inventory are stored on office premises.

• No major product-safety-related customer complaints in 2025.

6.8 Environmental Services and Green Product Advocacy

The Company maintains a portfolio of bio-based, renewable-carbon and lower-impact products — for example bio-based surfactants, bio-based monomers, bio-based plasticizers and other degradable or low-impact solutions. In 2025 these products accounted for about 10.9% of purchase value. The public version does not disclose specific customers or purchase amounts.

6.9 Climate Change and Long-Term Decarbonization Commitments

• Near-term (2025–2027): reduce Scope 1+2 emissions by 10% by 2027 against the 2024 baseline, while maintaining 100% renewable electricity coverage.

• Mid-term (2028): reduce Scope 3 logistics emission intensity by 10% against the 2025 baseline.

• Science-based targets: assess the feasibility of an SBTi commitment via the SME route, subject to management approval and external requirements.

• Long-term vision: progressively strengthen emission management across office operations and logistics.

CHAPTER 07

Labor and Human Rights

Royalchem is committed to fair employment, a safe working environment and respect for human rights. The Company complies with Chinese labor laws and regulations, and continuously improves its labor and human rights management with reference to the ILO core conventions, the UN Guiding Principles on Business and Human Rights and the UN Global Compact principles.

7.1 Policy Framework

7.2 Workforce Profile

At the end of the reporting period the workforce within the organizational boundary was approximately 40 employees. Because customer questionnaires, supplier registration forms and international due-diligence forms may use different statistical scopes, this report does not disclose granular location or department headcounts.

7.3 Diversity, Equity and Inclusion

• Equal pay for equal work: compensation is based on role, experience, performance and market benchmarks.

• Non-discrimination: no differential treatment on grounds of gender, age, ethnicity, religion or family status.

• Anti-harassment: zero tolerance enforced through training and reporting channels.

• Family-friendly: statutory maternity leave, flexible arrangements and employee care implemented.

7.4 Compensation and Benefits

• Social insurance and housing fund contributions made for eligible employees as required by law.

• Supplementary medical insurance and annual health check-ups provided.

• Holiday benefits, employee activities and team building organized.

• Training, career development discussions and internal growth opportunities offered.

7.5 Occupational Health and Safety

The Company’s operating environment is office-based: no production processes, no industrial machinery, and no chemical handling on office premises. It nonetheless manages occupational health and safety in line with the principles of ISO 45001:2018.

• Fire drills and emergency training organized.

• Safety induction for new employees; hazardous-chemical safety and compliance training for relevant roles.

• Emergency plans, emergency contacts and basic emergency supplies maintained.

• Office environment and ergonomic risks monitored.

7.6 Training and Development

In 2025 the Company ran about 20 training sessions with more than 300 attendances in total, averaging about 20 training hours per employee.

7.7 Employee Care and Satisfaction

In 2025 the Company organized a range of employee activities covering cultural celebrations, sports and health, team building, annual employee recognition and family-friendly events. The annual employee satisfaction survey showed an overall satisfaction level of about 85.8%.

7.8 Labor and Human Rights Risk Identification and Management

CHAPTER 08

Business Ethics and Compliance

The Company applies a zero-tolerance policy toward corruption, bribery, fraud, money laundering and other unethical business conduct, and safeguards business integrity through policies, training, integrity pledges, whistleblowing mechanisms and internal oversight.

8.1 Policy Framework

8.2 Ethics Performance

8.3 Anti-Corruption Measures

• Facilitation payments, bribes, kickbacks and any form of corruption are strictly prohibited.

• Cash, shopping cards, vouchers, kickbacks and cash equivalents may not, as a rule, be accepted.

• Low-value courtesy gifts must be transparent, moderate and traceable; gifts or hospitality above internal thresholds, or posing conflicts of interest, must be declared or declined.

• Anti-corruption training and integrity pledges applied to high-risk roles in procurement, sales and finance.

• Suppliers accept integrity requirements through the code of conduct and related commitments.

8.4 Whistleblowing Mechanism

The Company provides reporting channels for employees, suppliers, customers and external stakeholders, via line managers, HR & administration, management or a designated mailbox. The Company protects the identity of good-faith whistleblowers and prohibits any form of retaliation. No confirmed major whistleblowing cases were received in 2025.

8.5 Information Security and Data Privacy

• Role-based access control over customer, supplier, contract, financial and employee information.

• Sensitive documents stored on the internal NAS or authorized systems, with permission management and backups.

• Employees trained in data protection and cybersecurity awareness.

• All contracts and customer data handled under confidentiality requirements.

8.6 Legal and Regulatory Compliance

No major legal or regulatory violations occurred in 2025. The Company conducts ongoing internal compliance reviews relating to REACH, GHS, SVHC, K-REACH and China’s hazardous chemicals regulations, and undergoes external ISO management-system audits.

CHAPTER 09

Sustainable Procurement

For a chemical trading company, the supply chain is where ESG impact is most concentrated. The Company integrates ESG criteria into supplier selection, onboarding, assessment, on-site audits, day-to-day cooperation and improvement follow-up.

9.1 Supplier Management Framework

During new-supplier onboarding and the management of key suppliers, the Company requires suppliers to acknowledge and comply with the Supplier Social Responsibility Code of Conduct, the environmental agreement, the supplier management rules and related integrity requirements.

9.2 Supply Chain Description

9.3 Supplier ESG Coverage

In 2025, supplier ESG self-assessment and on-site audit coverage reached 23.8% measured by internal purchase value. The public version discloses only the coverage ratio and audit counts, not purchase amounts or supplier names.

9.4 2025 On-Site Audit Highlights (Aggregated)

• Audits covered environmental management, occupational health & safety, chemical handling, social responsibility, quality systems and business ethics.

• Several suppliers hold ISO 9001, ISO 14001 and/or ISO 45001 certifications.

• Minor improvement items identified — sub-supplier traceability, record completeness and continuous-improvement mechanisms — are tracked through corrective actions.

• No material child labor, forced labor, major environmental violations or major occupational health & safety risks were identified.

9.5 Risk-Based Supplier Segmentation

Suppliers are segmented by purchase value, ESG risk profile (country, industry, product category), strategic importance and cooperation history. High-risk or high-impact suppliers are prioritized for ESG self-assessment, code-of-conduct confirmation, on-site audits or corrective-action follow-up.

9.6 Supplier Engagement

• Supplier Social Responsibility Code of Conduct and environmental agreement distributed to key suppliers.

• Procurement and commercial staff trained on TfS, PCF and EcoVadis sustainable procurement requirements.

• Supplier ESG performance factored into supplier evaluations and future cooperation decisions.

9.7 Supply Chain REACH / SVHC Compliance

For products entering the EU market, the Company manages compliance risk through pre-shipment SVHC screening, regulatory support and customer notification. In 2025, 3 SVHC products were identified and managed, with customer notification and compliance assessment completed as required.

9.8 Roadmap 2026–2027

CHAPTER 10

UN Global Compact Communication on Progress

The Company joined the UN Global Compact as a participant in 2025. As part of its annual Communication on Progress, this report presents its commitments and actions on the Ten Principles across human rights, labor, environment and anti-corruption.

In 2025, relevant staff completed UNGC online learning modules covering human rights, labor standards, environment, anti-corruption, and sustainability strategy and reporting; certificates are archived internally.

CHAPTER 11

Community Engagement

The Company takes part in community and charitable activities within its capacity, focusing on education support, employee volunteering and environmental awareness. The public version does not disclose details involving personal privacy or partners’ sensitive arrangements.

• Supported rural education infrastructure and school supply donation programs.

• Encouraged employees to join charitable visits and volunteer activities.

• Participated in industry exhibitions and exchanges, supporting capability building in the chemical industry.

• Planned an Environmental Awareness Month covering office energy saving, environmental knowledge, plant adoption and outdoor environmental action.

CHAPTER 12

Forward-Looking Targets 2026–2028

The Company has set the following ESG targets to guide continuous improvement in 2026–2028. Items marked "to be confirmed" are subject to internal approval, supplier cooperation or external verification; actual progress will be updated in future annual reports.

CHAPTER 13

GRI Content Index

The Company discloses relevant information for the reporting period with reference to the GRI Standards 2021. As a privately held, non-manufacturing small chemical trading company, some detailed items are addressed through explanatory or aggregated disclosure.

CHAPTER 14

Alignment with the UN Sustainable Development Goals