(Revised in August 2025)

CITIC Securities Company Limited (hereinafter referred to as "CITIC Securities" or the "Company") has always adhered to the operating philosophy of "practice the China’s strategy, serving the real economy, and fulfill social responsibility". The Company earnestly implements the new development concept and builds a new development pattern. It actively takes responsibility for the country, society and natural environment.

In order to fully leverage the guiding role of securities companies in promoting national economic transformation and writing a "big article" on green finance, in response to domestic regulators’ policies aimed at improving the green-finance system and encouraging green investment—as well as to the global trend toward responsible-investment development. CITIC Securities has integrated ESG concepts into various businesses, built a responsible investment system, and comprehensively considered ESG factors in the investment process. With a long-term, value-oriented mindset, it promotes the joint realization of economic, social and environmental benefits.

The Company has formulated the "CITIC Securities Co., Ltd. Responsible Investment Statement", which covers the organizational structure and management of the Company's responsible investment, incorporating ESG factors into the investment process, responsible investment strategy and application, research and communication, and other aspects. At the Company level, it systematically and continuously promotes the promotion and practice of the concept of responsible investment, and takes practical actions to support the national sustainable development strategy.

I.Responsible investment management structure

In order to effectively promote responsible investment and better incorporate ESG factors into the investment decision-making mechanism, the Company has established a three-level ESG governance structure consisting of Board’s Development Strategy and ESG Committee, the ESG Leadership Group, and various departments, business lines and subsidiaries, namely "Board - Management Layer - Execution Layer", to continuously improve the ESG management level including responsible investment.

•      The Board Layer: It has a established the Development Strategy and ESG Committee, which is responsible for overseeing all ESG matters, approving the Company’s ESG strategy, policies and objectives, regularly receiving ESG progress reports and reviewing overall ESG performance.

•      Management Layer: Establish the Company's ESG leadership group, responsible for coordinating the implementation of the ESG strategy, managing the ESG performance of relevant departments and subsidiaries, conducting ESG risk assessments and controls, coordinating the preparation of ESG reports and reporting to the Board’s Development Strategy and ESG Committee.

•      Execution layer: Each department, business line and subsidiary is responsible for carrying out the Company's ESG work according to the ESG work plan and for regularly reporting on the progress of their department's work to the ESG leadership group.   

II.Overview of ESG factors incorporated into the investment process

CITIC Securities incorporates ESG factors into the initial selection of investment targets, the analysis of the investment research team, investment decision-making, post investment management and other investment processes. Throughout the entire investment management lifecycle, the Company pays close attention to the impact of social and environmental factors and actively incorporating ESG factors into the selection of investment targets, investment research, investment decision-making, post investment portfolio management and other processes.

i. Selection of investment targets

Referring to the announcement, regulatory penalties, industry information, information disclosure of listed companies, negative public opinion, third-party databases and other publicly available market information, as well as due diligence (primary market investment), negative exclusion shall be carried out, and the investment targets shall be preliminarily screened to exclude the targets of major pollution, major safety accidents, serious product quality problems and other negative events, and investment decisions shall be made prudently.

ii. Investment research team analysis

The investment research team conducts qualitative or quantitative analysis, including ESG factors, on strategic holdings of investment targets as a reference for investment decisions.

iii. Investment Decision Making

The Company encourages the internalization of the three important factors of environmental responsibility, social responsibility, and corporate governance as binding indicators into routine business decisions, and fully considers the risks and opportunities of the enterprise's ESG dimension in the process of investment strategy construction.

iv. Post investment portfolio management

In the portfolio management and risk management of the Company's investment products, ESG performance evaluation and risk evaluation are included, and dynamic monitoring mechanism is established to pay attention to changes in ESG scores of the investment portfolio and the resulting risk exposure.

III.Responsible investment strategy

The Company considers building corresponding responsibility investment strategies in investments of different assets types and business departments, and incorporates ESG factors into multiple business links such as emerging market listing equity investments, corporate and non-corporate fixed income investments, listed equity investments, private equity investments, alternative investment (including real estate investments, hedge funds, etc.). Strategy types include positive screening, negative prudence, influence investment, ESG integration and active shareholders, etc. By incorporating the concept of responsibility investment into one's own investment decision-making system, one can accurately grasp the risks and opportunities of enterprises under the ESG dimension, and achieve the "justice and benefit" of investment.

IV.Company engagement

CITIC Securities practices the concept of active shareholders, faithfully fulfills its trustee obligations, and actively guides the invested enterprises through active communication with the management of the invested enterprises and proxy voting at the shareholders' meetings, so as to exert positive influence on the environment and society, and promote the improvement of the governance level and ESG performance of the invested enterprises.

i. Basic principles

CITIC Securities follows the following principles to exercise voting rights directly or by proxy:

•      The principle of prioritizing the interests of shareholders: The Company exercises its voting rights to ensure the safety and appreciation of entrusted assets as the core starting point, actively, effectively, and prudently participate in the governance of invested enterprises, and maximize the protection of the legitimate rights and interests of investors.

•      Principle of preventing conflict of interest: The Company attaches great importance to the identification and response of potential conflicts of interest, strictly handles relevant matters in accordance with internal systems and processes, prevents illegal and irregular behaviors such as interest transmission, and guarantees the independence and impartiality of voting behaviors.

•      Professional independent judgment principle: The Company shall fully study the voting matters and their long-term impact on the Company, entrusted assets or invested enterprises, and make voting decisions based on independent, objective and professional judgment to avoid interference from non investment related factors.

•      Principle of compliance with laws and regulations: During the exercise of voting rights, the Company strictly adheres to national laws and regulations, relevant regulatory regulations, and industry self-discipline rules, prevents insider trading, market manipulation, and other behaviors, and ensures compliance and evidence in operation.

•      The principle of not seeking control: During the exercise of voting rights, the Company does not aim to obtain actual control over the invested enterprise, does not interfere with its daily business management activities, and ensures the fulfillment of shareholder responsibilities as a financial investor.

ii. Key Concerns

When exercising its voting rights, the Company shall focus on matters that have a significant impact on enterprise value, investment safety or the interests of the holders, mainly including:

(i) General matters: Separation, merger, dissolution or liquidation of the invested enterprise; Major revisions to the Company's articles of association, especially those related to shareholder rights and governance structure; Profit distribution plans, including the sustainability and rationality of dividend policies; Equity incentive plans, employee stock ownership plans, etc; The value of major asset transactions (purchase, sale, guarantee) exceeds 30% of the latest audited total assets of the invested company; Related party transactions and their fairness; Capital structure adjustments such as changes to the shareholder structure, mergers and acquisitions, and refinancing plans; Other matters that may have a significant impact on the operation, valuation, and risk structure of the invested enterprise.

(ii) ESG related matters: CITIC Securities attaches great importance to the role of ESG factors in long-term value formation, supports the invested enterprises to strengthen sustainability management, and pays attention to voting matters in the following areas, including but not limited to:

o   Environmental aspects: Carbon neutrality commitment, climate risk management, pollution prevention and control measures, resource conservation and recycling mechanism, etc;

o   Social aspects: consumer rights protection, product quality and safety, customer privacy and data protection, sustainable management of the supply chain, employee equality and diversity, occupational health and safety, community participation and social responsibility fulfillment, etc;

o   Governance: Rationality of governance structure, Board building, anti-corruption compliance mechanism, quality and transparency of information disclosure, ESG strategic deployment and report disclosure, etc.

The Company will actively support the invested enterprises in promoting green transformation and improving their ESG management level. Proposals involving high energy consumption, high pollution, or other significant negative ESG impacts will be carefully evaluated.

(iii) Implementation mechanism

Responsibility division and process control: Relevant business departments and subsidiaries should establish a voting decision-making mechanism based on specific investment forms to ensure that voting matters are reviewed by multiple departments and major matters are submitted to the Company for approval. At the same time, the Company's investment research team has dedicated personnel to track ESG participation and conduct analysis and research on relevant policies.

Proposal identification and research support: The investment research team is responsible for collecting materials related to voting matters, assessing their potential impact on the performance of entrusted assets or ESG, and forming suggestions for decision-making reference.

Decision mechanism and operational execution: Investment managers exercise voting rights based on research conclusions, fund contract terms, and internal voting policies. Significant or questionable matters should be submitted to the investment decision-making team for review.

Post investment tracking and feedback mechanism: The company will track and evaluate the matters that have already exercised voting rights, continuously monitor the implementation of relevant behaviours of the invested enterprise, and adjust the subsequent shareholding strategy if necessary.

Institutional construction and continuous optimization: The Company will regularly review the policies and implementation of external voting, combine regulatory requirements, market environment, and investment practices, in order to continuously improve the institutional system and enhance the quality of entrusted management.

V.Research and communication

CITIC Securities conducts in-depth analysis of industry and market trends, forward-looking analysis of ESG risks and opportunities faced by various industry and enterprises, and conducts in-depth research and exchanges in the field of responsible investment.

The Company continues to optimize the construction of the ESG research system, and has established multiple deep thematic research series, including ESG rating system, ESG investment strategy, ESG enterprise service, ESG regular tracking, etc. It has formed a systematic research layout for policy interpretation of green finance, development of ESG investment 'strategy', development trend of green industry, optimization path of ESG governance and other dimensions.

CITIC Securities International has formed the sustainability Asian Research Group and launched the 'Sustainable Asia Infosheet' in 2024. Analysts are required to provide a 'Sustainable Development' one page report in the first coverage and in-depth report of listed companies, which should include an overview of the sustainability and ESG performance of individual companies, as well as the three Sustainable Development themes that analysts believe are most financially important to the Company.

The subsidiary China AMC, signed the United Nations Principles for Responsible Investment (UN PRI) in March 2017, becoming the first public fund company in China to join the organization. China AMC actively participated in the sustainable investment-themed seminars organised by the Principles for Responsible Investment Organisation, the China seminar under Asia Investor Group on Climate Change (AIGCC) and the Climate Action 100+ ( CA100+ ) state-owned enterprises joint communication working group meeting, thereby exchanging sustainable investment practices with domestic and foreign financial institutions.

VI.Future visions

CITIC Securities will continue to strengthen sustainability management and responsibility investment construction, promote the promotion and practice of responsibility investment concept, regularly train employees on ESG concept and ESG investment methods, continuously improve the Company's ESG management system, strengthen external communication and cooperation of ESG investment, and promote the 'sustainable development' of the economy and society in a coordinated manner.