Digital Domain : 2021 ESG Report

E N V I R O N M E N TA L , S O C I A L A N D

G O V E R N A N C E R E P O R T 2 0 2 1

TABLE OF

CONTENT

1.	ABOUT THE REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . .	. . . . . . . . . .	. . .	. 2. . . . . . .
	1..1.		Scope and Reporting Boundary . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . 2. . . . .
	1..2.		Reporting Guidelines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . .	. . . . 2. . . . .
	1..3.		Reporting Principles . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . .	. . . . . . . . . . . . .	.	.2. . . . .
	1..4.		Reporting Framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . .	. . . . . . . . . . .	. . . .3 . . . .
	1..5.		Data Collection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . .	. . . . . . . . .	. .	.	.3 . . . . . .
	1..6.		Report Availability . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . .	. . . . . . . .	. . .	. . 3. . . . .
	1.	.7.	Contact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . .	. . . . . . . . . .	. . . .3 . . .
2.	ESG POLICY, STRATEGY AND MANAGEMENT . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . 4. . . .
	2..1.		Six Pillars of Our ESG Policy . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . 4 . . . .
	2..2. ESG Strategy and Management . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . .	. . . . . . . .	. . .	. . 5. . . . .
	2..3.		ESG Working Group . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . .6 . . .
	2..4.		Stakeholder Engagement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . .	. . . . . . . . .	. . . . 6. . . . .
	2..5.		Materiality Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . .8 . . .
	2..6.		Our Performance Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . .10 . . . .
	2..7.		Go Green Culture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . .	. . . . . . . . . . . . .	. 11. . . . . .
3.	PROTECTING THE ENVIRONMENT . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . .	. . . . . . .	. . .	. 12. .	. .
	3..1.		Corporate Environmental Policy . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . 12. . . .
	3..2.		Climate Change Mitigation . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . .12 . . .
	3..3. Optimizing Energy Saving and Resources Consumption . . . . . . . . . . . . . .	. . . . . . . . . . . . . .	.	13. . . .
	3..4. Exhaust Gas and GHG Emissions . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . .15. . . .
	3..5.		Waste Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . .	. . . . . . . . . . .	. . .	.	.15 . . . . . . .
	3..6.		Use of Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . .	. . . . . . . . . .	. .	.	17. . . . . . .
4.	PEOPLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . .	. . . . . . . . . .	. . .18 . . .
	4..1.		Employee Wellness Amid the COVID-19 Pandemic . . . . . .	. . . . . . . . . . . . . . . . .	. . . . . . . . . . . 18. . . . .
	4..2. Occupational Health and Safety . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . 19. . . . .
	4.	.3.	Employment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . 20. . . . .
	4..4.		Recruitment and Promotion . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . .	. . . . . . . .	. . . .	. .	.24. . . . . . . .
	4..5.		Development and Training. . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . 24. . . . .
	4..6.		Labour Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . .	. . . . . . . . .	. . .	.26. . . . . .
	4..7.		Harmonious Corporate Culture . . . . . . . . . . . . . . . . .	. . . . . . . . . . . .	. . . . . . . . . .	.27 . . .
5.	OPERATING RESPONSIBLY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . .	. . . .	. 28. . . . .
	5..1.		Encouraging Innovation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . 28. . . .
	5..2.		Supply Chain Management . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . 28. . . . .
	5..3.		Product Responsibility . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . .	. . . . . . . . . .29 . . .
	5..4.		Privacy Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . .	. . . . . . . . . . .	. . . . .	30. . . . .
	5.	.5.	Anti-Corruption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . .	. . . . . . . . .	. .	.	.30. . . . . .
	5.	.6.	Whistle-Blowing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . .	. . . . . . . . . .	. .	.	.31 . . . . .
	5..7. Protection of Intellectual Property Rights . . . . . . . . . . . .	. . . . . . . . . . . . . .	. . . . . . . . . . . .31. . . .
	5..8.		Customer Satisfaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . .31. . . .
6.	CONTRIBUTING TO OUR COMMUNITY . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . 32. . . . . .	. . . . .
7.	HKEX ESG GUIDE CONTENT INDEX . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . .	. . . . . . . . . .	. . .	. . .33. . . . .

DIGITAL DOMAIN HOLDINGS LIMITED ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT 2021

1

ABOUT THE

REPORT

Digital Domain Holdings Limited and its subsidiaries (together, the "Group" or "we") are pleased to present our Environmental, Social and Governance ("ESG") Report ("ESG Report") on an annual basis and regarding the same period covered in its annual reports. . This ESG Report is prepared for the year ended 31 December 2021 ("Reporting Period"), presenting the Group's concern to environmental and social impacts, policies and initiatives of the Group to demonstrate our long-term commitment to ensure that our activities, at all levels, are economically, socially and environmentally sustainable development to stakeholders..

1..1. SCOPE AND REPORTING BOUNDARY

The scope of the ESG Report covers the environmental and social performances of the Group's principal business which includes visual effects production and post-production, virtual reality, virtual humans and co-production of featured films and episodes series across different geographic locations in Asia such as Hong Kong, Mainland of China and India..

While we seek to establish a consistent boundary for reporting ESG aspects across the Group's structure, the reporting boundary of the ESG Report is hence established based on the criteria that all operations and entities reported are substantially owned by the Group and are under our management. . As a result, we do not report entities which are outside of the Group's structure, where we do not own the assets and do not directly engage or employ the workforce, and where we do not operate the asset under a contractual obligation..

Part of the content may look back upon the performance of the Group in past years with a view to presenting the report in a more informative and comparable manner.. The reporting boundary includes the operation entities in the regions mentioned above..

1..2. REPORTING GUIDELINES

The "Environmental, Social and Governance Reporting Guide" (the "ESG Reporting Guide") which is set out in Appendix 27 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "HKEX") serves as the reporting guidelines of this report..

1..3. REPORTING PRINCIPLES

The reporting principles of this ESG Report are governed by "materiality", "quantitative" and "consistency"..

Materiality: The ESG report covers the material ESG factors that are sufficiently important and material to different stakeholders.. In order to determine what issues are relevant and material to our business with respect to sustainability, the Group is aware that the key is to understand what issues that our stakeholders concerned most.. The Group's directors and senior management are mainly responsible for identification of key ESG factors on the basis of the feedback from the stakeholders..

Quantitative: To provide a comprehensive comparison of the performance in emissions and energy consumption, summary tables of performance are shown in relevant sections. . Information on the standards, methodologies, assumptions and/or calculation tools, and source of conversion factors used for the reporting of emissions and energy consumption are mainly referred to the ESG Reporting Guide..

Consistency: Methodologies and key performance indicators ("KPI") are used and calculated in a consistent approach. . If there are any changes in consistency that may affect a meaningful comparison detail would be disclosed..

DIGITAL DOMAIN HOLDINGS LIMITED ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT 2021

2

ABOUT THE

REPORT

1..4. REPORTING FRAMEWORK

With reference to the ESG Reporting Guide and the Group's business operation, the presentation of our ESG Report divides the relevant aspects and KPI, which are considered to be relevant and material to the Group, into four subject areas: Protecting the Environment, People, Operating Responsibly and Contributing to Our Community..

A complete index in compliance with the ESG Reporting Guide is also available at the end of this report for reference.. Except for provisions that the Group considers are inapplicable to its operations, for which explanations have been given on the rightmost column in the said index, this report is compliant with all the "comply or explain" provisions set out in the ESG Reporting Guide..

1..5. DATA COLLECTION

Data in this report are extracted from the Group's internal management system and statistics, and part of the data collected in previous years.. Unless otherwise stated, Hong Kong dollars (HKD) is used in this report as its functional currency..

1..6. REPORT AVAILABILITY

This report is accessible in electronic version from the Company's website at www. .digitaldomain. .com or the website of HKEX at www..hkexnews..hk..

1. .7. CONTACT

We welcome all sorts of comments and suggestions from our stakeholders with respect to this ESG Report or our sustainability performance.. Comments or views can be sent to ir@ddhl..com..

DIGITAL DOMAIN HOLDINGS LIMITED ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT 2021

3

ESG POLICY, STRATEGY AND

MANAGEMENT

2..1. SIX PILLARS OF OUR ESG POLICY

The Group strives to fulfil its responsibility and role in modern ESG management, setting up the foundation for sustainable management by establishing its own specialized ESG management strategy in order to adopt an ever-changing business environment.. We will fulfil the utmost efforts on not only to grow with all stakeholders but also to satisfy its social responsibility to create sustainable value.. The board of directors of the Company ("Board") makes the following statements regarding the six pillars of our ESG policy..

Governance Framework

Recently, the ESG management system has been under greater focus in line with the increased demand for ESG performance of the capital markets and reinforced regulations related to ESG. . An ESG management system requires a combined effort of an effective governance structure that comprises the decision-making level and execution level members, so as to strengthen the ESG management in the long run. . The Board has the overall responsibility to define the Group's ESG strategy and approach, manage and assess the Group's ESG performance. . The Board and management hold accountable for the responsibility of the Group's ESG performance..

Environment - Responding to Climate Change

Issues related to the environment have continuously been raised worldwide. . To mitigate the adverse impact of climate change, we will strive to reduce our carbon footprint and always refresh our long-term goals as technologies advance and cost structure change to further reduce our impact on the planet, while tracking our progress against the global steps and aligning with the global target of net zero commission..

Employees Wellbeing

The Group considers our employees as assets that will lead the future and the growth of the Group. . We are determined to uphold an open, fair, just and reasonable human resource policy to recruit a variety of talents.. The Group is also committed to a holistic approach to health and wellness, through a healthy, comfortable and safe working environment that supports health and wellness for our employees..

Innovation

We are dedicating our innovative capacity to accomplish the long-term sustainability, aim at offering practical applications to help manage energy use in a greener and smarter way.. We will continue to enhance our practical processes to enable our business to deliver improved results, leveraging innovation to facilitate our people in making better decisions..

Social Contribution Vision

The Group encourages giving back and strengthening the community through volunteerism and philanthropy.. Our employees are encouraged to contribute their time and talent to a variety of community organizations..

Embracing Diversity

The Group believes that real innovation and growth are possible when we work from a foundation of respecting and embracing diversity.. As the Group pursues creativity and innovation, we aim to build a company that grants an equal opportunity for people with diverse backgrounds and ways of thinking to show their best capabilities, and encourages each individual to reach their potential..

DIGITAL DOMAIN HOLDINGS LIMITED ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT 2021

4