(A joint stock limited company incorporated in the People's Republic of China)

Stock code: 00338 Hong Kong 600688 Shanghai

CORPORATE MISSION

TO PROVIDE ENERGY FOR BETTER LIVING

STRATEGIC POSITIONING

TO BUILD "LEADING DOMESTICALLY, FIRST-CLASS GLOBALLY" ENERGY AND CHEMICAL AND NEW MATERIAL ENTERPRISE

CORPORATE VALUE

PEOPLE, RESPONSIBILITY, INTEGRITY, PRECISION, INNOVATION, SHARED VALUES

PROFESSIONAL CONDUCT

BEING DEDICATED TO BE A CULTURED PERSON, OBSERVING REGULATIONS TO BE AN HONEST PERSON, STAYING COURTEOUS AND TRUSTWORTHY TO BE A CIVILIZED PERSON

Revitalize petrochemical industry with an innovative and pragmatic mindset

Create value in good faith

Develop business through win-win cooperation

Safe operations, low-carbon and green development

People foremost, benefit the staff

Fulfill responsibilities and serve the society

2020 is an extraordinary year, which is a long journey full of hardships. In the past one year, COVID-19 has spread all over the world, the terminal demand has dropped sharply, the international oil prices have remained low, the plastic bans have emerged and climate change is getting more and more attention, all of which have brought about significant and far-reaching impact on the future of the petrochemical industry, and the entire industry has faced unprecedented complicated business environment.

However long the road is, a persistent walker can always reach the destination. During the spread of the epidemic, shouldering the responsibility of acting as one of China's largest suppliers of medical and health materials, we managed to develop and switch to the production of special materials for melt-blown fabric within 12 days, ensuring the supply of medical materials in a timely manner in contribution to the prevention and control of the epidemic. During the regular prevention and control of epidemic, we actively promoted the work and production resumption of upstream and downstream industries as well as medium and small enterprises to boost the stability of the industrial chain and supply chain. In daily operations, closely focusing on the major needs of the state's high-quality development and the people's desire for a better life, we firmly established the concept of "challenging the advanced level and benchmarking the highest standard", shared the same target at all levels and made concerted efforts. As a result, we achieved the operation revenue of 74.705 billion RMB and made total tax payment of 15.119 billion RMB. The operating performance was better than expected, and the targets set in the "13th Five-Year Plan" were successfully hit.

We insisted on transformation and development. Following the new development concept of "one flagship, one core, and one base", we accelerated the pace of industrial transformation and upgrade. The refining sector focused on promoting clean production and product mix optimization and modification. Adhering to the development orientation of "basics + high-end" and with a focus on carbon fiber, the chemical and materials sector developed elastomers, polyolefins, polyesters and new materials, and actively explored new energy businesses. With constant emerging of star products, such as 48K large tow carbon fiber, cutting-edge high-toughness polyester engineering plastics, high-density polyethylene "black material", we provide customers with advanced high value-added raw materials and solutions.

We insisted on innovative development. With a technology-leading company as the target, we founded an advanced materials innovation research institute to start a new journey of technological innovation; we benchmarked world-class technology management and created a more flexible and efficient technological innovation management system. Focusing on breakthroughs in key core technologies and strengthening core technological research of carbon fiber, we have obtained proprietary intellectual property rights of carbon fiber precursors and packaged technologies, and have possessed 165 carbon fiber related patents; we strengthened industrial strategic cooperation and innovation, and promoted capitalization and industrialization of technological innovation.

We insisted on green development. With "cleanness, high-efficiency, low-carbon, and recycling" as essential characteristics, with the most advanced environmental indicators, the most stringent

quality indicators, and the most efficient energy consumption indicators as the standards, we further promoted green enterprise construction. We strengthened the innovation, promotion and application of green clean processes and new technologies, focused on source prevention and control, process control, and integrated treatment; we established a boundary pollutant alarm and odor traceability work mechanism, and the boundary VOCs concentration has been close to the level of chemical parks in developed countries; we promoted the Process Safety Management system (PSM) in an all-around way, achieving safer and more stable production and operation; we conducted the establishment of "green base", and 47% of SPC's basic units have completed the establishment.

We insisted on shared development. We upheld the "people foremost" concept, respected the individuality of employees, safeguarded the vital interests of employees, and significantly improved corporate cohesion; we safeguarded the rights and interests of investors and shared the corporate development achievements with stakeholders.

We insisted on integrated development. We proactively involve ourselves in the construction of Shanghai Science and Technology Innovation Center, and focused on making key and core technological breakthrough and industrial innovation; we proactively got involved in the construction of Shanghai "Carbon Valley Green Bay" carbon fiber industrial cluster area and participated in the construction of Shanghai 10 billion-level carbon fiber composite industrial cluster; we promoted the integrated development of enterprise and local government for high-end new materials industry and improved the energy level of regional industrial development.

We insisted on benchmarking against world-class standards and accelerated the development of a market entity with core competitiveness. In 2020, SPC was granted the title of National Civilized Enterprise for six consecutive sessions, the honorary titles such as "CIIF New Material Award" of the 22nd China International Industry Fair, Class A evaluation of Shanghai Stock Exchange information disclosure, "Gold Award of Panoramic Investor Relations (2019)-Outstanding IR (Investor Relations) Enterprise". "If you persist in doing it regardless of any difficulty, you will achieve success sometime." We are firmly moving towards the vision of "leading domestically, first-class globally" energy and chemical and new material enterprise. Please support us as always.

2021 is the starting year of the "14th Five-Year Plan" and also a crucial year for SPC to achieve high-quality sustainable development. At the beginning of the new year, as a major industrial project in Shanghai, the "SPC's 12,000 t/a 48K Large Tow Carbon Fiber Project" officially started construction. Our large tow carbon fiber has successfully embarked on the road of large-scale production from R&D and trial production. At a new starting point, carrying the great mission of "substituting imported products with domestic products and promoting 'Made in China'", we will work hard and spare no effort to move forward.

March 25, 2021

SPC'S RESPONSIBILITY PERFORMANCE SHEET

ECONOMY

Economic performance indicators

Total assets

Operating revenue

Total profit

Earnings per share

Quantity of applications for invention patents

Contract performance rate

Customer satisfaction

One-time settlement rate of complaints through customer service telephone

Product spot check qualification rate

Bidding purchase rate

Manufacturers' direct supply rate

Ratio of suppliers' obtaining ISO14000 environmental management system certification

2019

456.36 1003.46

26.54

0.21 65 96.35 97.66

100 100 92.34 99.70 61.83

2018

445.40 1077.65

67.49

0.49 63 93.71 97.93

100 100 90.47 99.60 54.10

SOCIETY

Social performance indicators

Total tax paid

Coverage rate of anti-commercial bribery training

Labor contract conclusion rate

Coverage rate of collective contracts

Social insurance coverage rate

Proportion of female management staff

Incidence of occupational diseases

Number of occupational safety and health trainees

Coverage rate of physical examination

Input into relief of poverty-stricken employees

Proportion of female employees

Proportion of local employment

Employee turnover rate

2019

147.17

100

100

100

100

16.5

0

22861

98.9

150

22.00

87.67

0.42

2018

140.97

100

100

100

100

17.20

0.01

13750

98.92

150

24.21

87.82

0.53

SAFETY

Safety performance indicators

Annual morality rate of employees' work injuries

Annual rate of employees' serious injuries

Number of major fire and explosion incidents

Number of major environmental pollution incidents

Number of major incidents of occupational hazards

Major incidents of chemical spills

Major traffic accidents

Major liability incidents

Mortality rate per million man-hours

Input into work safety

Number of employees' leave of work-related injuries

Incident rate of work-related injuries

2019

0

0

0

0

0

0

0

0

0

23478.01

15 1.611

2018

0

0

0

0

0

0

0

0

0

13765.59

22 2.187

ENVIRONMENT

Environmental performance indicators

Total environmental investment

Fresh water consumption

COD discharge

Discharge of ammonia nitrogen

Discharge of waste gas

SO2 discharge

Discharge of nitrogen oxides

Total consumption of industrial energy

Electricity consumption (excluding external power supply)

CO2 discharge

CO2 discharge per unit operation revenue

Discharge of hazardous wastes

Discharge of non-hazardous wastes

Comprehensive recycling volume of sludge

Frequency of major leakage of chemicals

2019

65883

5757.76

1161.04

68.3

469.13

220.63

1266.74

715.0

332171 1095.89

1.09

1.49 72.37 1.91

0

2018

50957

5939.96

1276.13

28.04

454.42

237.76

1450.94

684.9

318852 1046.14

0.97

0.96 81.54 1.71

0

COMPANY PROFILE

Sinopec Shanghai Petrochemical Co., Ltd. (hereinafter referred to as SPC), a holding subsidiary of China Petroleum & Chemical Corporation, is located in Jinshan District, Shanghai, whose predecessor was Shanghai Petrochemical Complex that was founded in 1972. In 1993, as a result of standardized reform of shareholding system for the state-owned enterprises, SPC is one of the major integrated refining and chemical enterprises and also an important production base of oil products, intermediate petrochemical products, synthetic resin and synthetic fiber in China.

Total assets

44.749

Operation revenue

billion RMB

In 2020, following the requirements of "combating epidemic, stabilizing growth, and pursuing development", SPC made great efforts to practice "three focuses and three implementations". Focused on "combating epidemic" and implemented the requirements of "strict prevention and control of epidemic, resumption of work and production"; focused on "stabilizing growth" and implemented the responsibility of "shouldering heavy loads and making more contributions"; focused on "pursuing development" and implemented the concept of "green development, innovative development".

Total profit

74.705

Total tax paid

billion RMB

Number of employees

0.574

billion RMB

15.119

billion RMB

8466

employees

Successfully and swiftly developed special materials for mask melt-blown fabric in 12 days. Successfully completed the production of 6,600 tons of polypropylene medical materials.

Sucessfully kickstarted the commissioning and startup 400 KTA oil product cleaning project of SPC and brought new profit growth.

SPC Advanced Materials Innovation Research Institute was formally established, starting a new journey of technological innovation.

The state-of-the-art high-toughness polyester engineering plastic that was developed through cooperation won the prize at the 22nd China International Industry Fair.

Took the lead in using the AGV technique intelligent material warehouse, and moved towards the goal of developing a green intelligent material supply chain.

Inheriting the petroleum spirit of honesty and strictness, SPC was granted with the National Civilized Enterprise for six consecutive sessions.

Corporate culture is the key to formation of enterprise core competitiveness and also the impetus of corporate development. Excellent corporate culture is the soul of corporate management, the spiritual core that builds employees cohesion, and an important component of corporate development strategy. SPC's core value concept system includes corporate mission, corporate vision, corporate values, corporate style, professional conductetc., which are continuously innovated and developed in practice.

CORPORATE CULTURE

Adhering to the "two-mountain theory" and the idea that "the environmental protection standards of central government-owned enterprises must be higher than the national standards", and completing the task of comprehensive environmental improvement on time. Continuing to carry out activities such as full coverage of LDAR, "Identification of odor by all employees" and "Perfect Day" (a day with zero incident, zero injuries, zero damage to environment), vigorously implemented energy efficiency improvement plans, and consolidated the achievements of green enterprises creation.

Guided by President Xi Jinping's thought on socialism with Chinese characteristics for a new era and based on the overall development of Sinopec's Shanghai base, SPC thoroughly implemented the new development concept, highlighted green development and innovative development, prepared SPC's"14th

t

ho an

i

o e

b nc nt

Driving integrative development by planning through top management

Refining the specific measures of "one flagship, one core, one base" and promoted their implementation. Developingbusiness such as high-end clean oil products, carbon fiber new materials, and new energy development of "wind power + hydrogen energy" through industrial linkage development and cluster concentration, so as to achieve integrative development with surrounding chemical zones.

Implementinggreen development through emission reduction from the source

Five-Year" development plan, spared no effort to promote structural optimization, transformation and upgrade, fully integrated into the construction of Shanghai "five centers", and focused on building the world leading green chemical base enterprise.

Boosting innovative development through technological innovations

Accelerating the construction of a new material innovation center, and promoting the transformation and development of new materials such as carbon fiber and polyolefin. Strengthening the application of new technologies such as big data, artificial intelligence, Internet of Things, and 5G, and deepened the construction of smart plant. Promoting management innovation and institutional innovation with technological innovation.

STAKEHOLDERS' PARTICIPATION

Sources of topics

Standard for screening of topics

Matrix for assessment of the importance of social responsibility topics

Based upon the relevant requirements for social responsibility management in the "Guidelines for Report on Environment, Society and Governance" of the Stock Exchange and the "Guidelines for Sustainable Development Report" of the Global Initiative, the Company continuously improved the social responsibility management structure, strengthened ESG supervision, and regulated the duties and processes of social responsibility work. The Company's board of directors attached great importance to the preparation of the social responsibility report, and required that the social responsibility report should reflect the Company's responsibility owed to investors, customers, employees, governments, partners and other stakeholders. In terms of the selection of topics, it must identify the Company's key areas of impact on society, economy, and environment, and establish a harmonious development and benefit-sharing relationship with stakeholders. The social responsibility reports over the past years have been disclosed to the public after being reviewed by the board of directors.

Governments and supervisory agencies

  • Legal operations

  • Safe and reliable products

  • Implementation of energy conservation and emission reduction

  • Promote industry progress

  • Serve national economy and the people's livelihood

Investors

  • Maintain good operating performance

  • Ensure stable operation

  • Strengthen disclosure of operation information

Customers

  • Serve customers and create value

  • Satisfy customers' diversified demand

  • Provide premium quality products and services

The public

  • Improve operation transparency

  • Provide premium quality products

Recommendations of the Company's internal management

Analysis and judgment of internal and external experts

Analysis of various media information

Industrial benchmarking and analysis at home and abroad Making reference to guidelines for standards of social responsibility Proposals of employees' democratic activities and worker's congress Customers' main concerns Conclusion of strategic cooperation agreement with governments Feedback from suppliers Solicitation of opinions of communities and the public

The same industry and industry organizations

  • Win-win cooperation

  • Industry contributions

  • Fair operations

Employees

  • Ensure occupational health

  • Safeguard employees' rights and interests

  • Improve occupational skills

  • Provide platforms of development

  • Achieve work life balanceStakeholders' general great concerns

Significant contributions to sustainable development Highlights of guidelines for social responsibility

Compatibility with the Company's development strategy

Energy management and climate changes

Water managementAir pollution management

  • 4 Hazardous wastes management

  • 5 Biodiversity protection

  • 6 Rate of resource utilization

  • 7 Work safety

  • 8 Product quality

  • 9 Staff development

  • 10 Health of staff

  • 11 Supply chain management

  • 12 Investor relation management

  • 13 Anti-corruption

  • 14 Co-construction of community

Suppliers and partners

  • Open, fair and just procurement

  • Honor credibility and keep promise

  • Mutual benefit and win-win

Community

  • Co-construction of community

  • Support charity

  • Environmental protection

  • Fix-point poverty alleviation

SUSTAINABLE DEVELOPMENT MANAGEMENT

The Company strictly abided by the "Corporate Law of the People's Republic of China", "Securities Law of the People's Republic of China", and other laws and regulations, as well as the applicable regulations and provisions contained in the "Guidelines for Environmental, Social and Governance Reporting"; gave full play to the leading role of high-quality Party building, and continuously improved the governance structure of defined powers and responsibilities for the board of directors, the board of supervisors and the management level, with each performing their own duties, exercising effective checks and balances, making scientific decisions, and conductingoperations in a coordinated manner; effectively interfaced the social responsibility with corporate development strategies; unswervingly promoted the construction of a responsibility governance system including six aspects such as responsibility strategy, responsibility governance, responsibility integration, responsibility performance, responsibility communication, and responsibility capabilities; and incorporated social responsibility governance into all aspects of the company's production and operation, providing important support in building "leading domestically, first-class globally" energy and chemical and new material enterprise.

In 2020, the Company totally held 7 sessions of BOD meeting, 2 sessions of board of supervisors' meeting, and 1 session of shareholders' meeting. The BOD meetings reviewed and adopted 30 proposalsi n total, the board of supervisors' meetings reviewed and adopted 8 proposals in total, and shareholders' meeting reviewed and adopted 11 proposals.

ப΂኷ଫ

Responsibility

strategy

Responsibility governance

Responsibility incorporationResponsibility performance

Communication of responsibilities

Responsibility capability

Continue to make breakthroughs and create benefit Deepen reform and innovation

Prevent and resolve risks Comprehensively strengthen the Party disciplineGreen enterprise establishment steering group

Legal corporate governance steering group Deepening reform steering group HSSE supervision management committee

Corporate culture development steering group Informatization steering group Retiree management steering group

Strategic decision-making Crisis management Co-construction of community Staff development Green supply chain management

Investors' relationship managementHSSE responsibility performance

Production operation responsibility performance Engineering construction responsibility performance Technical and economic responsibility performance Technical progress responsibility performance

Talent team development performanceMedia convergence publicity platform Public Open Day program

Publication of social responsibility report Babysbreath volunteer service Sunshine supply chain Carry out community Party building pairing

  • Won the second prize of National Science and Technology Progress

  • Won the title of the 6th session of National Civilized Enterprise Was awarded "China's Highest Annual Output of Isoprene"

    Was awarded "China's Highest Annual Output of Dicyclopentadiene"

    Strategic decision-making Safety and environment

    Profitability Corporate culture System building Occupational health

    Was awarded "China's High-quality Producer of Isoprene, Piperylene and Dicyclopentadiene"

    Won the "CIIF New Material Award" at the 22nd CIIF (China International Industry Fair) Was awarded "Shanghai Contract-abiding and Credit-Reliable Enterprise (AAA Level) in 2018-2019"

    Won the "Second Prize" in the comprehensive evaluation of statistical work in the field of investment and construction in Shanghai in 2020

    Was awarded "Class A Evaluation of Information Disclosure of Shanghai Stock Exchange"

    Was awarded "2019 Shanghai Safety Model Enterprise"

    Was awarded Shanghai "Patriotic & Army Supporting Model Enterprise (2019)" Was awarded Shanghai "Model Enterprise for Conscription Work in 2019" Was awarded the Shanghai "2019 Quality Benchmarking Unit"

    Won the "Third Prize" of Shanghai key product quality breakthrough achievement award in 2020

REVITALIZE PETROCHEMICAL INDUSTRY WITH AN INNOVATIVE AND PRAGMATIC MINDSET

Facing the unprecedented challenges brought about by the unprecedented changes in the past century, SPC firmly established the concept of "challenging the advanced level and benchmarking the highest standard", and was committed to filling the domestic gap by focusing on promoting technical breakthroughs and product applications of new materials such as carbon fiber, polyolefin, elastomer, etc. in accordance with the deployment of "one flagship, one core, and one base".

  • 01 Focus on high-end supply

  • 02 Make innovations in petrochemical technology

  • 03 Jointly develop SPC quality

  • 04 Build smart plant

FOCUS ON HIGH-END SUPPLY

In 2020, facing the severe challenges brought about by the unprecedented complex environment of the global petrochemical industry, SPC adhered to the concept of "challenging the advanced level and benchmarking the highest standard", adhered to the development direction of "basic + high-end", actively boosted the new material industry with carbon fiber as the core, was committed to filling the domestic gaps, promoted the substitution of imported products with domestic products and promoting 'Made in China'".

Decline in international demand due to the epidemic impact

Reduced output of jet fuel oil

Economic globalization encountered a countercurrent

Substitution of import in new materials industry

Significant drop of ethylene price

Increased the total amount of polyolefin products

ChallengesCountermeasures

Intensified competition in the homogeneity of basic chemicals

Provided differentiated, high value-added products

Increasing constraints on green development of petrochemical industry

Providing cleaner refining products and optimization of product mix

Pressing demand for petrochemical products under concerns about climate change

Development and production of climate-friendly products

SPC'S MAIN PRODUCT OUTPUT IN 2020 (10 K TONS)

Jet fuel

Diesel oil

Gasoline

188 112

2018

2019

2020

2018

C5

Plastic resin

Ethylene

2019

2020

DEVELOP A CORE CARBON FIBER INDUSTRY

Carbon fiber is called "black gold" and is classified as a new material field that relies heavily on imports. As the first domestic enterprise to make breakthroughs in 48K large tow carbon fiber industrialization technology, SPC considers carbon fiber as the core industry and continuously expands its application space.

BUILDING REINFORCEMENT Carbon fiber reinforced cloth, pultruded sheet. Completed 11,000 m² piping reinforcement, demonstration applications of 6 infrastructure reinforcement projects

REINFORCING

MATERIAL

Carbon fiber reinforced PPS/PEEK centralizer, valve bonnetENERGY TRANSPORT Carbon fiber underground double-layer oil tank

Carbon fiber reinforced PEEK isolation element Carbon fiber reinforced PEEK filter plate

Carbon fiber reinforced tank truck Carbon fiber wound gas cylinder

Gasoline vehicle emissions (mg/km)

Europe

China

Europe 5 Europe 6

National National

VI A VI B

CO

1000

1000

700

500

NMHC

68

68

68

35

NOx

60

60

60

35

PM

5

4.5

4.5

3

FOCUS ON INDEPENDENT RESEARCH AND DEVELOPMENT OF NEW PRODUCTS

SPC has always considered independent research and development of new products as the acting point of product mix optimization and adjustment, continued to strengthen the integration of new product production, marketing, research and application, and achieved self-improvement of quality and efficiency while providing solutions for replacing imports.

SPC produced National VI B standard motor gasoline for the first time and supplied it to Guangxi and Yunnan through pipelines. The National Six B standard gasoline has higher quality requirements and is cleaner and more environmentally friendly.

The state-of-the-art high-toughness polyester engineering plastics has solved the key technical problems in the polyester sheet forming process, filled the domestic production technology and product gaps of the base material for polyester sheets, and realized the first domestic industrial production in China.

The high-density polyethylene black pipe material has met the domestic manufacturing performance requirements for large-diameter gas pipes over 800 mm, which has successfully ended the foreign technology monopoly, and substituted imported ones.

PRODUCT DIFFERENTIATION RATE 89.26%

Attach importance to differentiated competition

Customized production and personalized service are important means for SPC to achieve product differentiated competition. Through customization, we can form a close cooperative relationship with upstream and downstream units, enhance customer stickiness, and effectively expand downstream markets.

MAKE INNOVATIONS IN PETROCHEMICAL TECHNOLOGY

In 2020, SPC considered innovative development as a strategic measure to cope with the challenges brought about by unprecedented changes in a century, proactively served the state's important strategic positioning for the development of cutting-edge materials and the demand for the construction of Shanghai Science and Technology Innovation Center, with carbon fiber and other cutting-edge materials as the core to strengthen independent research and development and cooperative innovation, improvedthe mechanism of scientific research management systems, and encouraged innovation through benchmarking with world-class technology management.

In 2020, SPC won a total of 17 national invention patent authorizations, and SPC's project of "Optimization Control Technology for Maximizing the Benefit of Ethylene Plant" won the second prize of the National Science and Technology Progress Award.

IMPLEMENTED THE PROJECT LEADER RESPONSIBILITY SYSTEM

OPTIMIZED THE MANAGEMENT PROCESS OF SCIENTIFIC RESEARCH PROJECT

Strengthened regular follow-up of the progress of scientific research projects Established an assessment notification mechanism Promoting regular work review and correction mechanism of scientific research projects

Promoted the decentralization of approval for research projects in the field of self-financing new materials

Relaxed the budget and approval authority of a single self-approved project

IMPROVED THE INCENTIVE MECHANISM FOR SCIENTIFIC RESEARCH

Empowered the scientific research project leader with greater autonomy in the use of funds

Closed and modular unit for demulsification of refinery sewageMixed anaerobic treatment technology for chemical wastewaterDevelopment of FCC slurry flexible desolidification technology (RSFF)

48K large tow carbon fiber

Foamed polypropylene product series

Aerospace

Joined in the "Large Aircraft Composite Material Innovation Center"

Made a breakthrough in application of

Rail transit the key core technology of carbon fiber in the field of rail transit

Conducted R&D of carbon fiber train

Maglev train body parts for maglev trains

Civil works

Jointly declared "Shanghai Engineering Technology Research Center for Civil Engineering Application of Carbon Fiber Composite Materials" with China Construction Eighth Engineering Division

Strategic cooperation platform for carbon fiber technological innovation

SPC gave play to the technology and resource advantages of carbon fiber raw material preparation to promote the research and application of domestic carbon fiber technology

JOINTLY DEVELOP SPC QUALITY

SPC strictly abides by the requirements of the state Product Quality Law of the People's Republic of China, Standardization Law of the People's Republic of China and other laws and regulations, and strives to jointly develop with our customers through mutual benefit and win-win cooperation by considering quality as the core, and customer satisfaction as the tenet.

In 2020, SPC continued to promote the quality management system and improved the optimization and adjustment of management process, enhanced the identification of quality risks, constantly

Improved the quality management system Revised "SPC Rules on Quality Management" and "SPC Rules on Management of Jet Fuel Production"

Formulated "SPC Rules on Management of Asphalt Production"

improved the quality management efficiency and accuracy. SPC's product compliance rate reached 100% throughout 2020. There were no quality incidents and SPC didn't receive any complaints about product quality throughout the year of 2020. No products sold had been recalled due to quality problems.

During the reporting period, SPC was not aware of any serious violation of laws and regulations on health and safety, advertising, labeling and privacy matters as well as remedies related to the products and services provided, which had a significant impact on the Company.

Improved quality management efficiency

Held quality education and training Established a new mechanism of quality analysis and management of simulation charge

Strengthened daily production control

Monthly inspection of production units

Organized production units to conduct self-inspection

Identified quality risks in a timely manner

Strengthened the application of online quality instrument

Ensured controllable "source" quality

Organized review of the supplier management system

Conducted evaluation and management of incoming raw and auxiliary materials strictly in accordance with the raw and auxiliary material standards

Off-spec. raw materials must undergo process review to confirm the disposal plan

Strictly controlled the plant product delivery quality

Established product internal control indicators

Controlled the plant product delivery quality risks within the enterprise

Food related products

Passed Shanghai Municipal Market Supervision Bureau's on-site assessment of SPC's non-licensed food-related product manufacturers' quality and safety assurance capabilities

BUILD SMART PLANT

In 2020, SPC focused on the application direction of new generation information technology and intelligent manufacturing, comprehensively boosted the development of information technology, was committed to promoting the construction of smart plant, fostered new capability that is compatible with enterprise strategy and has sustainable competitive advantages and promoted SPC's intelligent

manufacturing progress.

In 2020, SPC's "Smart Plant Promotion Project" was approved by Sinopec; SPC's project of "Smart Plant Construction Practice with the Integration of Informatization and Industrialization as the Core" was awarded the first prize of innovation achievements in modernization of enterprise management by Shanghai.

Three-dimensional

Standardization

Integrated

Dispatching and

Centralized

digitization topic

topic

optimization topic

commanding

integration

Intelligent Cloud

Standardization

Plant optimization

topics

topics

Portal Platform

and standard

function

Dispatching

Data integration

Covers equipment,

implementation

Optimization

instruction

of 35 information

pipelines, buildings,

of smart plant

of production

module

systems

instrumentation,

platforms with 12

scheduling for crude

Daily

Provides 170

special equipment,

categories of data

blend refining

management

data services

terrain and ground

Determines the

module

Covers the

features, etc.

data application

operation and

and approval

maintenance of

process for SPC's

ODS enterprise

production facilities

data warehouse

work

The robot "warehouse keeper" was put into operation

SPC's intelligent warehousing project was put into operation. The intelligent warehouse stores and manages 16 major categories and a total of 2351 varieties of materials. The project filled the gap of intelligent warehouse management in the company's intelligent material management system and realized the goal of unmanned integrated warehouse.

40% 60%

Increased warehouse utilization

Increased work efficiencyAccuracy of warehouse receipt/delivery

CREATE VALUE IN GOOD FAITH

SPC has always insisted on compliance with laws and regulations and honest management, abided by business ethics, kept in mind the supremacy of customers, improved competitiveness in open cooperation and mutual benefit, and enhanced development capability and value creation with customers and partners under mutual understanding and trust.

  • 01 Jointly create value with our customers

  • 02 Build responsible supply chain

JOINTLY CREATE VALUE WITH OUR CUSTOMERS

Adhering to the concept of serving customers, SPC continuously improves product quality, innovates customer service channels, and repays customers with premium products and services.

SPC adheres to integrity management and abides by business ethics; abides by laws and regulations, and establishes a compliance management system with compliance management, compliance review, and investigation of violations.

Established the compliance system

Conducted demonstrations on the legality and compliance of major investments, revised and improved the "SPC's Administrative Measures for Industrial and Commercial Affairs"

Released the guidelines for compliance inspection in epidemic prevention and control, and carried out response to epidemic risks for contract business

Strengthened the building of a strong legal work team

Organized legal staff to participate in business training on legal corporate governance and compliance management

Organized training courses such as "Management of Corporate

Governance according to Laws and Regulations", "Cases of Labor Contract Disputes"

Developed employee compliance awareness

Formulated "SPC's Work Arrangements for the Legal Cultural

Construction in 2020"

Carried out legal publicity and education themed "April 15 National

Safety Day for All the People" and the Civil Code

SPC continues to practice the service concept of "Do it right now" and provides customers with satisfactory professional services with products of "high quality and sufficient quantity".

Issue a notice on epidemic prevention and control

Online contactless business handover Coordinate the delivery of hazardous chemicals during daylight saving time.

Expedite logistics and delivery for customers who produce medical supplies and make delivery for them within 24 hours, reflecting higher efficiency and quicker service.

In the face of the severe COVID-19 and the sharp swing of international crude oil, SPC faced the challenges and won the "double victory" of epidemic prevention & control and production & operation.

SPC cumulatively increased bene t through online platform as follows

Chemical products

Cumulative transaction volume through online platform

1952Tons

Cumulative increase of revenue

6.0310 K RMB

Polyester products

Cumulative transaction volume through online platform

71108Tons

Cumulative increase of revenue

1019.1510 K RMB

Plastic products

Cumulative transaction volume through online platform

11101Tons

Cumulative increase of revenue

119.1710 K RMB

Cumulative

Cumulative transaction volume through online platform

84161Tons

Cumulative increase of revenue

1144.3510 K RMB

01

SPC has always attached importance to peer exchanges and practical cooperation,and actively expanded new platforms to achieve mutual benefit and win-win with all stakeholders and promote sustainable development of the industry.

BUILD RESPONSIBLE SUPPLY CHAIN

With targets of "safety, timeliness, greenness and economy", SPC continuously establishes and improves the supplier management system, and jointly creates the future with suppliers for mutual benefit and win-win.

Upgrade intelligent supply chain

Deepen green purchase

Give priority to green products, improve the green procurement catalog, and boost green tendering procurement model throughout the full life cycle.

Strengthen supplier access

Screen the suppliers' qualification and implement dynamic clearance or prohibition of access strictly in accordance with the "SPC's Regulations on Management of Supply Resources for Material Procurement.

Promote the intelligent material system to improve efficiency; fill the gap of intelligent warehousing and realize intelligent management.

Improve the supplier assessment system

Perform quantitative assessment on suppliers, use balanced scorecards to build the assessment system, and establish the supplier reward mechanism.

Strengthen suppliers' risk management

Strengthen the implementation of responsibilities, promote the HSSE management, set up the concept of risk management for all employees from the three dimensions of safety, operation and integrity, and improve the risk management mechanism.

Case

In 2020, SPC held on-site exchange meeting for material procurement management to further improve the level of material supply management and promote exchanges.

300

250

200

150

100

50

0

283 34.34%

200 24.27%

87 10.56%

In 2020, 1434 suppliers had service relationships with SPC, including 824 transaction suppliers, involving 24 provinces

(cities) throughout China.

47 5.70%

43 5.22%

33 4.00%

18 2.18%

18 2.18%

17 2.06%

11 1.33%

67 8.13%

40.00% 35.00% 30.00% 25.00% 20.00% 10.00% 5.00% 0.00%

ShanghaiJiangsuZhejiang

Shandong

BeijingLiaoningGuangdongAnhuiHebei

Number of suppliers Proportion of suppliers

Hubeietc.

Note: The number and proportion of suppliers in other provinces (cities) in the above bar chart are: Henan (9,1.09%), Sichuan (8,0.97%), Jiangxi

(8,0.97%), Hunan (7,0.85) %), Fujian (7,0.85%), Heilongjiang (6,0.73%), Gansu (6,0.73%), Shaanxi (5,0.61%), Tianjin (4,0.49%), Chongqing (3,0.36%), Yunnan (1,0.12%), Ningxia (1,0.12%), Jilin (1,0.12%), Guangxi (1,0.12%).

DEVELOP BUSINESS THROUGH WIN-WIN COOPERATION

As the first listed company listed on the stock markets in Shanghai, Hong Kong and New York, SPC strictly abided by the securities supervision rules and regulations of the listing exchanges, strived to reduce costs and increase benefit, and improve operating performance with operating efficiency as the startingpoint. In the meantime, SPC strictly implemented various information disclosure systems, innovated investor relation management, attached importance to investors' opinions and feedback, and earnestly safeguarded the investors' interests.

  • 01 Improve operation performance

  • 02 Safeguard investors' rights and interests

IMPROVE OPERATION PERFORMANCE

In 2020, SPC put forth effort to expand the market, reduce costs, improve benefit, consolidate the foundation, and strived to win both epidemic prevention & control and production & operation.

SPC benchmarked advanced enterprises in the industry, constantly reduced the costs in links such as production, procurement, sales, transportation, etc., took multiple measures at the same time to increase corporate benefit with great efforts

Green procurement

Expansion of market and marketing

Production on demand

Increase production of high value-added products Adopt the "progressive benefit increasing-based production scheduling method"

Optimize marketing and expand market share

Scientific research and judgment, accurate identification of market conditions

Intelligent transportation

Innovate to create smart warehouses

Build an efficient logistics system

Purchase low-fugitive-emission valves

Produce polyethylene black pipe material

Expand overseas markets

Build smart warehousing

Case

In 2020, SPC focused on optimizing the product mix and reducing costs by increasing the production of chemical light oil to ensure feedstock for steam cracker and CCR.

SAFEGUARD INVESTORS' RIGHTS AND INTERESTS

In 2020, affected by the epidemic, SPC developed new information disclosure methods, improved the quality of information disclosure, strengthened communication with investors, improved corporate governance, and fully safeguarded the legitimate rights and interests of investors.

Compliant and valid information disclosure

Prepared the annual report, interim report and quarterly report on a regular basis, and updated the 20F form registered at the Securities Regulatory Commission of the USA Published 27 times of provisional reports, including resolutions of BOD and board of supervisors, shareholders' meeting, announcement of abnormal stock price fluctuations etc.

Strictly reviewed the progress and quality of announcement preparation to ensure timely, accurate and complete information disclosure

Effective innovations in investors' relationship management

Affected by the epidemic, SPC actively tried and explored online press conferences and road show of performance presentation

Exchanged and communicated with investors and media reporters via telephone to ensure open and unblocked communication channels

Attended the online investors' meeting, communicated with fund managers, securities analysts, and shareholders, and highlighted the corporate value

Standardized and efficient operation of three boards

Formulated work plans, completed the re-election of the board of directors and the board of supervisors upon expiration of term of office

Standardized daily connected transactions and prevented potential legal risks Prepared to convene board meetings to review relevant proposals

In 2020, SPC listened to the voice of investors through "E-Interaction of Shanghai Stock Exchange ", and actively responded to investors' concerns, which was highly recognized by investors.

Actively responded to investor concerns through "E-interaction of Shanghai Stock Exchange"

SAFE OPERATIONS, LOW-CARBON AND GREEN DEVELOPMENT

Considering safe development, green and low-carbon development as the prerequisite and foundation for corporate survival and sustainable development, and "cleanness, high-efficiency, low-carbon, and recycling" as the essential characteristics, SPC actively responds to climate change, strengthens safety management, intensifies environmental protection, and develops recycling economy to continuously improve the level of intrinsic safety and environmental protection.

  • 01 Respond to climate change

  • 02 Strengthen safety management

  • 03 Intensify environmental protection

  • 04 Develop recycling economy

RESPOND TO CLIMATE CHANGE

Climate change is still one of the most serious challenges that the world is facing. On December 12, 2020, General Secretary Xi Jinping announced at the Climate Ambition Summit that China will strive to reach the peak of carbon dioxide emissions by 2030 and endeavor to achieve carbon neutrality by 2060. SPC proactively identifies opportunities and challenges incoping with climate change. Guided by the new development concept, SPC will boost energy conservation and emission reduction in the promotion of high-quality development, and promote industrial low-carbon transformation, so as to make petrochemical contribution to the global response to climate change and "China Commitment" in responding to climate change.

China Commitment

China announced that it will increase its national independent contribution, adopt more powerful policies and measures, and make commitments of carbon peaking and carbon neutrality.

Forced industrial transformation

To hit the target of carbon peaking, SPC shall not blindly expand the production capacity. It needs to accelerate the realization of industrial upgrading.

Global consensus

Addressing climate change has become a global consensus, the United States returns to the "Paris Agreement", and the world will carry out extensive cooperation to address climate change

OpportunityChallenge

Overall arrangement of emission reduction in advance

Carbon peaking involves two five-year plans, requiring advance planning to create a foundation for achieving carbon peaking during the 15th Five-Year Plan

SPC's mission

SPC attaches great importance to carbon peaking and carbon neutrality, integrates response to climate change into the company's development planning, and proactively assumes the responsibility of a petrochemical company.

SPC formulated SPC's 2020 green enterprise action plan, and established the 2020 low-carbon development targets as follows:

Based upon the concept of "dedicating to clean energy and practicing green development", SPC promotes energy transition through oil product upgrading, energy consumption revamp, energy substitution, and technological innovation.

Optimization of cleaner oil products

Revamped to meet the standard of energy consumption by coal power

SPC continued to improve the quality and yield of modified heavy gasoline, reduced the output of low-quality diesel, and completed the construction of 400 KTA alkylation unit.

SPC formulated and promoted the implementation of "SPC Implementation Plan for Revamp of Coal Power Unit to Meet Energy Consumption Standard". As a result, the coal equivalent consumption of power consumption continued to decline.

Development and use of new energy

SPC used natural gas and dry gas to substitute fuel oil and coal, and increased the proportion of clean energy to minimize energy consumption and carbon emissions.

Promote technological innovation for new energy

SPC promoted the innovation of distributed power generation technology, studies coastal, intertidal and offshore wind power facilities, and developed high-purity hydrogen production technology.

Electric power consumption

(100 million kWh)Crude oil consumption

(10 k tons)Natural gas consumption

(100 million m³)Comprehensive energy consumption of oil refining

(kg standard oil/ton)SC high value-added fuel and power consumption

(kg standard oil/ton)

33.48

33.22

31.89

2018

2019

1437.9

2020

1519.9

2018

2019

1467.2

2020

SPC continued to promote the effective operation of the energy management system, boost the contract energy management model, improve energy utilization efficiency and resource utilization level, and achieved the target of "dual control" of total energy consumption and intensity.

Increase responsibilities for energy conservation and emission reduction

6.12

2018

SPC continued to improve the responsibility system for energy conservation and emission reduction, controlled the coal consumption, promoted power generation with new energy and renewable energy to replace coal power, and helped to achieve carbon peaking.

Organize the "Energy Efficiency Improvement" competition

SPC formulated and implemented the "SPC Incentive Plan for Competition of 'Energy Efficiency Improvement' "to encourage all units to implement energy efficiency improvements and effectively control the total energy consumption and intensity.

Take multiple measures to reduce in-house power consumption

SPC optimized production and recycling technology to reduce energy consumption. The power consumption of sewage treatment decreased from 0.66 kWh per ton of sewage to 0.60 kWh per ton of sewage, which can save 1.92 million kWh of electricity every year.

6.25

53.55

311.77

2019

2020

5.55

51.79

2018

2019

49.86

2020

2019

306.52

302.67

2018

2020

Considering provision of more high-quality ecological products as our mission, SPC continuously optimized the industrial structure and development layout; implemented the quality and efficiency improvement and green low-carbon development strategies, promoted the upgrading and revamp of cleaner refinery products and the optimization and adjustment of industrial structure, and propelled the quality improvement and upgrade as well as transformation development with a focus on new materials.

Deepen the integration of refining and chemical industry, upgrading and revamp of cleaner oil products

Promote upgrading and revamp of steam cracker

Revamp of coal power unit to meet the energy consumption standardIncrease production of high-end chemical productsDevelopment and research of hydrogen fuel cell technologyEliminate outdated equipment and technology with high energy consumption

Carry out carbon trading. SPC carried out carbon footprint accounting and completed the carbon emission compliance for 2019. SPC bought 2% CCER of the approved carbon emissions and replaced the default value with the actual oxidation rate to calculate the carbon compliance amount for the first time, In 2020, SPC implemented various energy conservation and emission reduction measures, kept optimizing carbon emission accounting methods, and reduced the contract fulfillment costs for carbon emission by 5.28 million RMB.

Promote carbon recycling. SPC promoted the sending of biogas from the polyester wastewater treatment plant to PTA unit as fuel of the heating furnaces, and actively promoted carbon capture and storage (CCS), and uses the carbon dioxide during production to be used in the production of cola by local enterprises.

SPC strives to reduce the impact of production activities on the ecological environment, increase carbon sinks, and continues to strengthen green protection. Currently, the green coverage area is 302.79 square meters, the green area rate is 40.5%, and the green coverage rate is 42.2%.

Through energy transformation, energy management, industrial upgrading, carbon management, and increasing carbon sinks, SPC has reduced the industrial energy consumption, energy consumption per unit output value, and carbon dioxide emissions, and the emission intensity is at the advanced level in the industry, laying good foundation for SPC to realize carbon peaking as soon as possible.

STRENGTHEN SAFETY MANAGEMENT

In recent years, the total number of work safety incidents, serious incidents, and major incidents in China has achieved "three continuous declines". The work safety situation has further improved, but there are still many risks of potential hazards. Based upon the main characteristics and outstanding problems of work safety incidents in various industries, it is necessary to implement responsibilities level by level, focus on implementation of rectifications, strengthen risk prevention and control, eliminate potential safety hazards from root causes, and effectively contain the occurrence of major incidents.

SPC has always considered work safety as the first priority of the company's production and operation. In 2020, SPC earnestly implemented the corporate HSSE management system, and fully fulfilled the entity responsibility for work safety with the highest standards and most stringent requirements and in compliance with laws and regulations; strengthened implementation and comprehensively promoted the process safety management; focused on actual effect, continued to improve emergency rescue capabilities, and actively advocated the goal of "zero injury, zero pollution, and zero incidents" to build an excellent HSSE culture, striving to create first-class HSSE performance. In 2020, there have not been any major incidents of work safety, occupational poisoning or environmental pollution incidents, and the HSSE situation presented stable trends. In 2020, SPC strictly abided by the "Work Safety Law of the People's Republic of China" and actively promoted the implementation of the document requirements such as "Sinopec Three-year Action Plan for Special Improvement of Work Safety" and "Shanghai Three-Year Action Implementation Plan for Special Improvement of Work Safety" etc. to lay a solid foundation of work safety.

Completed undertakingof revisionand

"identical responsibility forPartyand governmentoffices, dualdutiesfor oneposition",all staffshavesigned HSEcommitment, withsignaturerate reaching100%.

9majoritemsand 19minoritemswere voteddowninthe activities,including indicatorsofpersonal injury,safetyincident, environmental incidentetc.

Strengthen implementation ofworksafety responsibilityAssessedandgave scoresto254individuals ofthecontractor; Returned6construction workersofthecontractors whoseriouslyviolated relevantregulations.

Implemented allstaff safetyscoring

Completedpreparationofthe implementationplan,issuedthe sametovariousunitsandset upaworkinggroup; Issueandsetupaworking group;Formed"TwoLists" ofmeasuresforfindings andupdatedthem continuously;

Three-yearAction

Planforspecial

rectificationofwork

safetyLeaderstookpersonal chargeoftheshiftfor 450times, Leadersvisited thegrassroots organizationsfor2104 times.

Atotalof196findings werefound,withal havingbeenrectified

Carriedout activitiesofleaders visitinggrassroots organizations

Inspections totaled 87 times, and 227 findings were found. So far, 288 findings have been completed with rectifications, with a rectification rate of 99%

Implemented readiness systemforthe epidemic preventionand control

identificationand continuouslyimproved theplatform;

Completed rectification of 20 group company-level potential safety hazards, with a total investment of 101.87 million RMB; Awarded 9,599 diagnostic recommendations, totaling 1.913 million

RMB

Invited experts to conduct process safety assessments and held special training on process safety; Invited a third party to provide process safety instruction service for 11 production units

Systemically

strengthened

the

investigation

of potential

safety hazards,

project

identification

and rectification

Fully initiated process safety management and carried out special training

on projects are dling of "Three neities"; completed y completion ptance; s completed chapters n of safety lities; rojects ted safety essment

vely ted the ng and entation "three eities " of ety

out direct operations and contractor safety m anage m ent

Strictly carried

S u p ervisio n" for o n-site safety

Innovated " D u al M o d e S afety

C ontractors' pass rate ofsafety education and training w as 97.8 % ;

C ontractors totally signed 4 6 7 H S E m a n a g e m e nt agree m ents;

H S S E q u alific atio n revie w ;

169 contractors passed

Attached great importance to the work safety management of hazardous chemicals

  • o f h a z a rd o u s chemicals;

  • o f h a z a rd o u s c h e mic als; S m o o t hly p r o m o t e d t h e renewal of work safety license; Strengthened special investigation and rectification of major h a z a rd s o u rc e s

  • o f m ajo r h a z a r d s o u r c e s

    Obtained Level-2 enterprise certificate of work safety standardization and notification on registration

    On-duty readinesstotaled 22,098person timesduring theepidemic preventionand control;

    Stationedat57 placesandthesafety watchingguarantee ratereached100%

    Fully carried out special fire inspection

    Organized

    emergency

    drills at

    different

    level

    Prepared the assembly oftypicalsafety incidents, and carriedoutsafety educationandtraining

    Strengthened

    full-time

    teambuilding

    firefighting

    594 emergency drills, with 9,221 person times of participants; 103 spot checks of emergency drills, generating 35

    Prepared and issued the assembly of typical incidents, totaling 100 cases;

    sessions of safety education and training

    Carried out 71

    findings.

Improve the intrinsic safety management and continuously consolidate the foundation for development

In 2020, SPC continued to carry out activities such as "Work Safety Month" and "Work Safety Circuits", organized special publicity and in-depth study of General Secretary Xi Jinping's important remarks on work safety, and created good atmosphere of "Everyone stresses safety, everything is for safety, safety in mind anytime and safety is top priority anywhere" within the company to improve the level of intrinsic safety management and continuously consolidate the foundation for development.

Carry out "Perfect Day" (a day with zero incident, zero injuries, zero damage to environment) activities to demonstrate good HSSE image

In 2020, SPC's 12 pilot units organized and carried out the "Perfect Day" activity, which focused on comprehensive intrinsic safety, aimed at preventing and resolving major risks, eliminating potential safety hazards in a timely manner, effectively containing work safety incidents, and establishing a mechanism that links the management and subordinates and is promoted hierarchically. As a result of six-month pilot operation, the "three basics" work had been continuously consolidated, the average concentration of VOCS at the boundary had steadily decreased, the equipment stability rate and production discipline had been greatly improved, the safety awareness of employees had been strengthened, the construction of safety culture had been strengthened, and a good HSSE image had been demonstrated.

Continue to improve contractor management to ensure the safety of direct on-site operations

In 2020, SPC strictly conducted HSSE qualification review for all contractors in accordance with the "SPC Rules on Supervision and Management of Contractor Safety"; actively carried out induction safety education and training for contractors, and strengthened contractor management information capacity building. Besides, in combination with the project landing of "SPC Job Safety Management and Control Platform", SPC strived to stabilize the operation of current contractors' information platform to ensure online management and control of the contractor's direct operations throughout the process, which practically strengthened the contractor's safety management capabilities and management level, and effectively ensured the safety of on-site operations.

Focus on actual effect and continuously improve emergency rescue capabilities

In 2020, in order to continuously improve the emergency rescue capabilities, SPC continued to deepen on-the-job training and focused on emergency plan drills. For example, the full-time fire brigade actively carried out subject training on rescue at height and formulated detailed implementation measures for training on rescue at height. As a result of nearly half a year of training on rescue at height, the original rescue time of more than 20 minutes was shortened to less than 10 minutes, so the emergency rescue capability had been significantly improved.

STRENGTHEN ENVIRONMENTAL PROTECTION

SPC actively responded to the national ecological environment protection policy and strictly abided by the Environmental Protection Law of the People's Republic of China as well aslaws, regulations and normative documents on the prevention and control of air, water, soil and solid waste pollution.

SPC actively fulfilled the main responsibility of corporate environmental protection, comprehensively promoted green development, resolutely coped with the prevention of pollution, won the battle to defend the blue sky, earnestly implemented the "Seventh Round of Three-year Action Plan for Environmental Protection", "Shanghai Clean Air Action Plan (2018-2022)" and "Jinshan District Action Plan for Comprehensive Improvement of Environment", promoted the green enterprises review and the creation of green grassroots, continued to improve the level of intrinsic environmental protection, and strived to create a "domestic leading, world-class" HSSE performance of a refinery and chemical enterprise.

Taking the lead

Key points

Support

Optimize the environmental management system

Pass the green enterprise review

Carry out creation of "green bases"

SPC implemented the corporate HSSE management system, adhered to process safety management, and further clarified the environmental management responsibilities of each unit and department.

SPC carried out monthly self-assessment against the "Green Enterprise Evaluation Index (2020 Edition)-Refining and Chemical Division" to improve the point-losing items and exempt from on-site pre-audit.

SPC actively carried out the creation of green bases, formulated and issued the "SPC Green Bases Creation Plan", established a leading group and working group, and each department carried out learning, rectification and self-assessment every month.

SPC highlighted the root cause rectification, promoted the implementation of rectification work in an all-round way, ensured that the pollutant discharge met the requirements of pollutantdischarge permits, continued to promote pollutant emission reduction, achieved comprehensive collection and treatment of process waste gas and complete compliance discharge, and completed various environmental protection indicators issued by the group company.

2018

Generation of hazardous wastes (unit: x10 KT)

Generation of non-hazardous wastes (unit: x10 KT)

0.96

81.54

COD (ton)

Ammonia nitrogen(ton)

Sulfur dioxide (ton)

NOx (ton)

1276.14

1450.94

237.76

28.04

1266.74

2019

1.49

72.37

2020

1.68

74.41

987.23

45.22

210.10

1224.05

SPC comprehensively investigated the

compliant discharge of air pollutants, strengthened the research and development and application of waste gas treatment technology, continued to improve the level of pollutants purification, and strived to achieve the compliant discharge of air pollutants.

Management of water pollutant discharge

Based upon the national and Shanghai discharge standards, SPC comprehensively investigated the compliance status of water pollutant discharge, developed a green sulfuric acid alkylation treatment technology with China's independent intellectual property rights to successfully substitute foreign alkaline washing and water washing technological processes, greatly reducing the discharge of alkaline water and the consumption of utilities. As a result, the environmental impact is significantly reduced.

Management of solid waste discharge

SPC prepared "SPC Implementation Scheme for Three-year Action Plan of Special Rectification of Work Safety", established four special rectification plans for hazardous chemicals and hazardous waste etc., promoted corporate standardized management of hazardous chemicals and solid waste, and carried out standardized service for daily cleaning of daily generated hazardous waste.

Initiated various green creation activities

SPC developed a series of action plans, printed and distributed "Notice on Maintenance of Energy and Environment by Taking Actions on '100-day Challenges for Creation of Benefit'", broke down emission reduction indicators and implemented various emission reduction measures. Carried out "Perfect Day" activity and disclosed the cumulative excellent days to the company.

Strictly conduct self-monitoring of the environment

In accordance with the pollutant discharge license, relevant national environmental monitoring regulations and Sinopec requirements, SPC issued the "2020 SPC Environmental Monitoring Plan and Emission Implementation Standards" and provided timely feedback on the risk of incompliant environmental monitoring factors and timely supervision of rectification.

Strictly conduct online monitoring management

SPC established an online monitoring data SMS alarm platform to ensure that relevant units can organize timely investigations and make arrangement for rectifications and achieve closed-loop online data management; and initiated grid-based online monitoring project to connect all equipment to SPC environmental protection information platform.

Strengthen identification and supervision of environmental risks

SPC assessed the environmental risk sources in accordance with the requirements of "Sinopec Guidelines for Risk Assessment of Environmental Incident", prepared "One Source, One Case" for all environmental risk sources, and implemented the responsible departments (persons); and carried out investigations of potential environmental hazard in a rolling manner, realized split flow of clean water and waste water at key production area, improved VOCs treatment facilities, reduced the solid waste etc.

In-depth promotion of "investigating unpleasant odor by all employees"

SPC focused on the deployment of the activity for "investigating unpleasant odor by all employees". In 2020, a total of 29,470 environmental protection issues were reported, and the problem rectification rate increased by 1.5% compared with the previous year. As a result, a closed loop process was formed, including "finding of environmental problem - report of the problem - rectification of the problem - reward of bonus points".

Continuously organize Public Open Day Program

SPC actively implemented environmental information disclosure, and continuously organized "Public Open Day", World Environment Day and other themed activities. In 2020, a total of 38 sessions of "Public Open Day" were held with 1204 participants, facilitating the public to better understand sewage treatment and the effect of pollution treatment and environmental monitoring.

DEVELOP RECYCLING ECONOMY

SPC strictly abided by the laws and regulations on the use of resources, established the concept of recycling economy, and adhered to the path of recycling economy through technical revamping and comprehensive utilization of resources. As a result, the water recycling, waste gas recovery management, and comprehensive recycling of waste were further improved.

SPC actively developed recycling economy. The total water consumption and intensity continued to decrease, and the industrial water utilization rate and sludge recovery constantly improved.

Indicators

Fresh water consumption

Water consumption per unit of output value

Industrial water recycling rate

Comprehensive recovery and utilization of sludge

unit

2018

10 K tons ton / 10 K

5939.96

6.45

RMB

10 K tons

%

97.56 1.71

2019

5757.76

5.87

97.75 1.91

2020

4981.15

5.49

97.95 1.47

Emission reduction and recovery of flare gas

SPC promoted the emission reduction and recovery of flare gas through multiple measures such as strengthening the operation management of production units, daily management of flare system source emissions, operation management of flare gas recovery system, purge operation management, flare emission management of maintenance units as well as "daily assessment and monthly assessment" of the flare system emissions and recovery status. In 2020, a total of 90,262,600 cubic meters of high-and-low-sulfur flare gas was recovered.

Waste gas recovery technology upgrade

SPC successfully tested the waste gas treatment technology unit of the northern acrylic fiber complex, which achieved the concentration of acrylonitrile in the exhaust gas ≤ 0.25 mg/m³, realized compliant discharge and regeneration cycle of the adsorbent, and can also reuse the generated wastewater to the production system to achieve clean production.

2019 (x10,000 m³)

5600

5200

4800

4400

4000

3600

3200

2800

2400

2000

1600

1200

800

400

0

5248 4859

1386 857

Refining flare cylinder emission

Low sulfur flare gas recovery

Continue to promote off-gas recycling

2020 (x10,000 m³)

43053779

High sulfur flare gas recovery

SPC promoted the application and development of VOCs off-gas, developed a kilowatt-level solid oxide fuel cell power generation system based on reformed gas fuel, realized the efficient and clean utilization of VOCs, and promoted the upgrade of VOCs reforming and conversion technology generated in production process of the petrochemical industry.

SPC's industrial water is sourced from surface water and domestic water comes from municipal water supply. Therefore, there are no problems or risks in obtaining suitable water sources. SPC steadily improved the centralized management of industrial water system, cooling water system, and sewage system, promoted the implementation of various scientific and technological breakthrough plans, and realized the continuous improvement of water recycling and water recovery treatment. In 2020, SPC's total water intake was 49.81 million tons, and the water intake per 10,000 RMB output value was 5.49 tons per 10,000 RMB. The total water consumption, water consumption and water discharge for processing per ton of crude oil were far below the assessment indicators, and the industrial water recycling rate was up to 97.95%, higher than the assessment indicators and the average level in industry.

In 2020, SPC's industrial water intake was saved by 5.87 million tons on a year- on-year basis, and the industrial water recycling rate reached 97.95%. SPC was awarded the title of "Shanghai Jinshan District Water-saving Enterprise".

SPC made localized replacement of the membrane of the sewage treatment plant, explored the optimization method of MBR membrane cleaning, and solved the capacity bottleneck of the sewage treatment plant.

Indicators

Total water intake

Water intake per 10 K RMB output value

Total water consumption

Water consumption for processing of per ton oil

Water discharge for processing of per ton oil

Recycling rate of industrial water

Unit

10K T

Ton/10k RMB

10K m3

Ton/ton

Ton/ton

%

2020

4981

5.49

5206.55

0.36

0.14

97.95

Special rectification action for safety of hazardous waste

Based on the "Shanghai Three-Year Action Implementation Plan for Special Improvement of Work Safety" and the "Shanghai Three-Year Action Implementation Plan For Special Rectification Of Safety Of Hazardous Waste", SPC formulated a special rectification implementation plan for hazardous waste safety, improved the supervision system for hazardous waste throughout the process, revised and improved "SPC's Regulations on Prevention and Control of Solid Waste Pollution" to regulate the work requirements of hazardous waste generation, collection, storage, transfer, transportation, utilization and disposal.

Promote the reduction and resource utilization of hazardous waste

To further reduce the amount of generated hazardous waste and increase the utilization rate of hazardous waste resources, SPC promoted open bidding for the outsourcing of hazardous waste disposal, applied for exemption from thermal and hazardous waste disposal in accordance with the "National List of Hazardous Waste" and other incentive provisions to promote internal utilization of hazardous waste and reduce the risk of outsourcing disposal, and carried out the standardized daily removal of daily generated hazardous waste, etc., to achieve a multiple win-win for economic, environmental and safety benefits.

Continue to promote "green packaging"

SPC strengthened cooperation with suppliers and technical licensors to reduce and recycle various packaging, consolidated and improved nearly a hundred types of "green packaging" in recent years, continued to use environmentally friendly packaging, and tapped the potential to continue to promote the use of "green packaging" for remaining varieties. In 2020, SPC additionally completed the replacement of "green packaging" for extraction scorch retarder and thiourea dioxide, and further reduced the packaging barrels by 6,837.

PEOPLE FOREMOST, BENEFIT STAFF

Regarding employees as the corporate most valuable asset, SPC is committed to building harmonious labor relations. SPC respects and safeguards the rights and interests of employees, cares for their physical and mental health, emphasises talent cultivation, and builds diverse and fair promotion channels.

  • 01 Harmonious labor relations

  • 02 Employees' health and safety

  • 03 Boost employees' career development

HARMONIOUS LABOR RELATIONS

SPC abided by the Labor Law and Trade Union Law of the People's Republic of China, signed labor contracts with employees according to law, and didn't terminate labor relations with employees under specific conditions stipulated by law; SPC respects and safeguards the employees' rights and interests and equal opportunities, and prohibits the use of child labor and the forced labor and protects the employees' privacy; SPC establishes and perfects diversified daily consultation and communication mechanisms between management and employees for promoting harmonious labor relations. By the end of 2020, there were 9106 staffs and employees at SPC. The employee turnover rate in 2020 was 0.23%, and that of local employees was 0.10%.

Employees with undergraduate

Employees with college diplomas

Employees with registered

Employees with registered permanent

Proportion of female management staffs

Proportion of male management staffs

diplomas and aboveand below

permanent residence residence of provincesof Shanghai

or cities other than Shanghai

Diversified channels to listen to and respond to employee demands

Trade Union

Feedback on the proposals of the Employee Representatives Congress under supervision of the Party Committee Office, General Manager's Office

WeChat official account of "e-Home for SPC's Staff"

Staff

Manageme

"Go to the junior staff and visit staff's families"

to listen to their demands

Employee Representatives Congress

Management

"Do it right now" mechanism to improve service efficiency

Information platform for disclosure of corporate affairs and policies

EMPLOYEES' HEALTH AND SAFETY

SPC abided by the Work Safety Law and the Law on Prevention and Control of Occupational Disease of the People's Republic of China, promulgated the SPC Great Health Implementation Plan, established the working mechanism of great health management, and was committed to safeguarding employees' health.

Source Management

Great Health Management Leading Group

Process Management

Follow-up Management

Leading Group

Leading Group

Leading Group

97 EAP volunteers

By the end of 2020, SPC had developed 97 EAP volunteers

3 courses

In 2020, offline training + online micro-classes, SPC held 3 EAP training courses for employees.

54 person times

In 2020, agency consultation + telephone consultation + video consultation + on-site consultation, SPC provided 54 person times of psychological consultation for employees.

BOOST EMPLOYEES' CAREER DEVELOPMENT

Abiding by the "Vocational Education Law of the People's Republic of China", etc., SPC implemented Talents-based Corporate Development Project and the Employee Quality Project, and improved the quality training system for all employees and fair, just and diversified promotion channels. In 2020, the average duration of training received by the corporate senior management, middle-level management, and ordinary employees was 81 hours, 40 hours, and 36 hours, respectively.

Three position sequences provide diversified promotion channels

Marketization of

HR management provides the chances of both employment and termination of employment

Just examination and assessment, open selection and engagement, competitive post engagement, chances of promotion and demotion

Diversified talent training plan for different groups of people

Management talents

Professional elites

Frontline operation talents

Youth talents

Female talents

High-quality professional cultivation plan for leaders

Cultivation of chief experts and senior experts

Build SPC's core talents pool

Employee Innovation Studio Master Technician Studio Technician Studio Training on "One Post with Multiple Skills"

Employee promotion reward Reward for mentor's coaching

"Three Hundred and Three Thousand" practical training program for young cadres;

Reserve of youth talents

Training course for young leaders Young workers positive energy training camp

Cultivate model female employees

Undertake "Shanghai Women's Innovation School"

FULFILL RESPONSIBILITIES AND SERVE THE SOCIETY

Facing the sudden outbreak of the COVID-19, SPC guaranteed the supply of medical materials, promoted the stability of the industrial chain, and highlighted the mission and responsibility of central enterprises. SPC was committed to consolidating and developing a mutually beneficial and win-win relationship with the surrounding areas, always shared ups and downs with the surrounding communities, and overcame difficulties together.

  • 01 Win the Battle of Epidemic Prevention and Control

  • 02 Facilitate Community Development

  • 03 Demonstrate Corporate Image

  • 04 Fulfill Responsibility of Anti-corruption

  • 05 Contribute to Social and Public Welfare Undertakings

WIN THE BATTLE OF EPIDEMIC PREVENTION AND CONTROL

In 2020, the outbreak of COVID-19 swept across China. The stable supply of medical supplies and raw materials was a key link in the fight against epidemics. As one of the largest suppliers of medical and health materials in China, SPC timely guaranteed the supply of special materials for melt-blown fabrics, polypropylene medical materials etc., facilitated the epidemic prevention and control, and demonstrated the mission and responsibility of a central enterprise.

Guaranteed the supply of medical materialsfacilitated the epidemic prevention and control

Urgent research and development of special materials for melt-blown fabrics

In the face of peak demand and a surge in prices for the melt-blown fabrics, the core material of masks in the early stage of the epidemic, SPC urgently developed special materials for melt-blown fabrics within 12 days and continued to expand its production capacity. In the whole year of 2020, a total of 22,400 tons of special materials for melt-blown fabrics were supplied to the market, expected to produce 22 billion masks.

Stable supply of polypropylene medical materials

Most of the medical materials required for epidemic prevention and control are polypropylene products. SPC produced 6,600 tons of polypropylene medical materials during the Spring Festival in 2020, and supplied a total of 60,048 tons of polypropylene medical materials throughout the year of 2020.

Donation of medical oxygen

After the outbreak, hospitals in Hubei Province lacked large amounts of medical oxygen in cylinders or Dewar flasks. Therefore, SPC purchased oxygen cylinders or Dewar flasks, and entrusted SPC's subordinate medical oxygen producers to produce medical oxygen to promptly assist Wuhan.

Facing the dual challenges of epidemic prevention & control and production & operation, SPC not only fulfilled the responsibility of a central enterprise in terms of basic supply guarantee, but also took the initiative to speed up our own resumption of work in response to market demand, and actively promoted the complete work resumption of upstream and downstream industries and small and medium-sized enterprises, having ensured the stability of the industrial chain and supply chain.

Stabilize the supply of

Increase gasoline production

Due to the impact of the epidemic, SPC processed only 28,000 tons of crude oil per day in February 2020. In April, the daily processing capacity of crude oil reached 40,000 tons, achieving full production.

Speed up work resumption

During the peak season of gasoline consumption in Shanghai and the accelerated resumption of work, SPC actively optimized production and sales, increased the production of 98# gasoline, and ensured supply at high quality and appropriate quantity through pipeline transfer for the first time. The corporate monthly gasoline output hit a record high in history.

polyester fiber to Wuhan

When Hubei gradually resumed work and production in late March, SPC kept a close eye on the pace of the work resumption of downstream enterprises and linked up logistics and transportation in Hubei direction. After the epidemic, SPC supplied 2500 tons of polyester products to Wuhan market for the first time, which significantly guaranteed the work resumption of downstream enterprises in Wuhan.

Help Hubei-based enterprises resume production

SPC took the initiative to purchase seamless steel pipe products of Hubei small and medium-sized enterprises in accordance with the needs of our own revamping project, and cooperated with cooperative enterprises to jointly support the purchase of 2,300 tons to help small and medium-sized enterprises in Hubei to resume work and production.

As a large central enterprise, SPC bears the entity responsibility for epidemic prevention and control. SPC resolutely obeyed the unified requirements for prevention and control of epidemic of the local government, carefully deployed epidemic prevention and control plans, strengthened prevention and control measures, and achieved the goal of "zero imported cases, zero spread, zero dead zone, zero dead angle, and zero infection", and made due contributions to the safety and stability of the local regions.

"SPC's Emergency Process for Response toEstablished the leading group for epidemic prevention and control

Suspected Cases of COVID-19"

Initiated first-level response to major public health emergencies

"SPC's Implementation Plan for Personnel Management and Control during the Epidemic" "SPC's Comparison Table for Early Warning Levels of Public Health Emergencies"

A total of 1,079,860 pieces/sets of epidemic prevention materials were implemented

Strictly controlled and distributed the epidemic prevention materials throughout the processAdjustments to timetable and dining modes to reduce unnecessary personnel contact and set up centralized isolation and observation rooms Regular disinfection and protection of personnel intensive sites and key facilities

SPC immediately organized Party members and volunteers to participate in the prevention and control of the epidemic in the community in various forms, rushing to the front line of epidemic prevention and control, jointly shouldering and overcoming the difficulties with the community.

At the request of the Party Working Committee of Jinshan Shihua Sub-district, volunteers went to 26 neighborhood committees of Shihua Sub-district to assist in epidemic prevention and control.

175 volunteers

FACILITATE COMMUNITY DEVELOPMENT

SPC abided by the Law of Corporation Income Tax and Provisional Regulations on Value-added Tax of the People's Republic of China, paid taxes with honesty, established all-round cooperation mechanisms with surrounding communities and contribute to national development strategy.

According to the Environmental Protection Law of the People's Republic of China and Regulations on Disclosure of Environmental Information of Enterprises and Institutions, SPC disclosed the enterprise environmental information to residents, focused on response to public sentiment, and facilitated understanding by way of communication.

Diversified corporate-local cooperation and communication channels, listening to opinions, responding to appeals, eliminating misunderstandings, and enhancing collaboration

Shanghai Municipal Commission of Economy and Information Technology, State-owned Assets Supervision and Administration Commission and other authorities

SPC paid taxes according to the law and the amount of taxes paid has ranked top among Shanghai manufacturing enterprises for many years.

Obtain greater development opportunities while serving the national development strategy

200

Total tax paid (unit: 100 million RMB)

DEMONSTRATE CORPORATE FULFILL RESPONSIBILITY OFIMAGE

SPC abided by the "Environmental Protection Law" of the People's Republic of China, disclosed environmental information, attached importance to analysis and response to public sentiment, and demonstrated a positive corporate image to the society.

Demonstrate corporate image through multiple channels

Build a media

Publicize SPC

Publicize SPC

Display the efforts

convergence

in well-known

through SPC's

and performance

platform and create

mainstream

WeChat official

of green enterprise

a "central kitchen"

media and show a

account, Sinopec's

development on

for news and

positive image

TikTok account and

Public Open Day

publicity

news platform

"Cloud Open Day" during the epidemic

Under the impact of the epidemic, SPC innovated the form of "Public Open Day" and told good stories about pollution control and environmental monitoring through "Cloud Open". The live video had 68,000 person times watching, which played a very good publicity effect.

Case

On September 3, 2020, a flare emission incident took place due to equipment shutdown, and false information about SPC was disseminated in public. SPC's public opinion response mechanism worked in a timely manner to eliminate negative public opinion.

ANTI-CORRUPTION

Fulfilling the obligations of the members of Global Compact of the United Nations and abiding by applicable provisions of the Corporation Law of the People's Republic of China as well as Regulations of the Communist Party of China on Disciplinary Punishment, SPC completely fulfills the responsibility of anti-corruption.

In 2020, SPC was not aware of any serious violations of laws and regulations on bribery, extortion, fraud or money laundering inside the Company.

Internal control

SPC improved the risk management system and internal control system, and strengthened the identification and management of integrity risk positions and integrity risk points

External control

SPC strengthened partner access management, daily supervision and warning education, and prevented bribery

Adopting a three-pronged approach, SPC carried out education on clean practice for employees, "family helps the development of clean practice" and "partner helps the development of clean practice", so that the concept of clean practice and compliant operation can be deeply rooted in the hearts of the people.

MAKE CONTRIBUTION TO SOCIAL AND

PUBLIC WELFARE UNDERTAKINGS

SPC's public welfare programs were demand-oriented and actual effect-oriented, focusing on pursuing people's livelihood; SPC improved and upgraded the " Babysbreath " volunteers' service brand; and facilitated the nation to shake off poverty.

The public welfare programs were demand-oriented and result-oriented, and the enterprise and local government jointly discussed the list of requirements for public welfare programs; In 2020, SPC and employees donated money, materials and blood, and participated in volunteers' service activities.

6.607 million RMB

35 projects

52 communities

1967 employees

SPC invested 6.607 million RMB to support the development of surrounding areas in 2020

In 2020, SPC and local government jointly developed 35 public welfare projects

Carrying out volunteers'

service activities in 52 communities

1967 employees participated in poverty alleviation donations

The project of "Shared Efforts and Interests Promote Community Self-governing" of SPC's "Babysbreath" volunteer service team was selected as Sinopec Excellent Volunteers' Service Project in 2018-2019.

SPC's employees Tao Yi and Wu Weidong were selected as Shanghai Excellent Volunteers in 2018-2019.

Contribute to China's poverty alleviation

The corporate contribution + employees' donations totaling about 3.3 million RMB were donated to poverty-stricken counties in Yunnan and other regions.

2021 marks the 100th anniversary of the founding of the Communist Party, the first year of the 14th Five-Year Plan, and also SPC's planning year during the 14th Five-Year Plan. Today, the world is undergoing unprecedented changes in a hundred years, and China's development is still in an important period of strategic opportunities. However, the uncertainty of international environmental instability has obviously increased, the impact of COVID-19 is extensive and far-reaching, and the petrochemical industry has ushered in a highly competitive "Warring States Period". The circulation of industrial chain and supply chain has been blocked. We must be prepared to cope with a series of new risks and challenges. At this critical time of history, we should spare no effort to build a green chemical base enterprise with global scale and first-class competitiveness, with deepening reform and opening-up as the momentum, innovation-driven development as the source, so as to seize the development opportunities to devote ourselves to contributing "petrochemical power" to national progress, national rejuvenation and local development.

Build a green chemical base enterprise with global scale and first-class competitiveness

We will profoundly seize the new pattern and new opportunities in the new development stage, adhere to green development, innovative development and integrated development, give overall consideration to overall optimization and Coordinated development in Caojing Chemical Industry Park and Sinopec Shanghai Petrochemical Co., Ltd., continuously promote implementation of the development idea of "one flagship, one core and one base", focus on optimization of raw materials for steam cracker, strengthen carbon fiber core industry, and develop fine chemical business related to elastomer, polyolefin, polyester and new materials. We should not only be good at gaining momentum, but also be adept in identifying and responding to changes, nurture opportunities in the crisis, develop new situations in the turbulent situations, and stride towards the goal of a green chemical base enterprise with global scale and first-class competitiveness.

Build a clean, efficient, low-carbon, and recycling green enterprise

We will build a "clean, efficient, low-carbon, and recycling" green enterprise with the concept of "dedicating clean energy and practicing green development", and strive to become a practitioner of ecological civilization and a builder of beautiful China. We will further improve the HSSE system construction, focus on safety management, promote the construction of the "safe island" platform, and boost special rectification of work safety; we will continue to promote the green enterprise action plan, accelerate the overall industrial upgrading, boost environmental rectification, and keep strengthening green culture development; We will deepen energy conservation and emission reduction with greater determination and efforts, strengthen stable compliance of environmental emissions, focus on green protection for green enterprises, and make positive contributions to the full realization of the national carbon neutrality goal by 2060.

Build a "Community with a Shared Future" that is people-oriented, co-constructed and shared by enterprises and localities

We will continue to improve the modern enterprise system and social responsibility performance evaluation system, enhance the social governance and green supply chain management, and create value with customers; We uphold the people-centered development concept, earnestly safeguard the interests of employees, and make the reform and development achievements benefit more employees in a fair manner; We will implement the benefit of the people into deployment of various decision-makings and practical work, fulfill corporate citizenship duties, care about community development, continue to enhance the awareness and recognition of the surrounding residents on the energy and chemical industry, support and drive local economic and social development, and build a "community with a shared future" that is co-constructed and shared by enterprises and localities.

WRITTEN COMMENTS ON ASSESSMENT OFCORPORATE SOCIAL RESPONSIBILITY REPORT

K00427

Title of report

2020 Annual Corporate Social Responsibility Report

Company name

Sinopec Shanghai Petrochemical Company Limited

Located in Jinshan District, Shanghai, as the holding subsidiary of China Petroleum & Chemical Corporation,

Business profile

Sinopec Shanghai Petrochemical Company Limited (hereinafter referred to as "the Company") is one of the major in-tegrated enterprises of refining and chemical industry in China and also an important production base of oil products, intermediate petrochemical products, synthetic resin and synthetic fiber in China. As one of the largest integrated refin-ing and chemical enterprises in China, the Company set the development goal of building "a domestically leading and world-class energy, chemical and new material company", adhered to the mission of "providing energy for better living ", actively created a green chemical enterprise, accelerated the layout of advanced energy and cutting-edge materials, and fostered new kinetic energy for sustainable development. Facing the epidemic, the Company struggled to move forward, achieved operation revenue of 74.705 billion RMB and totally paid tax revenue of 15.119 billion RMB in 2020. Inheriting the petroleum spirit of honesty and strictness, the Company was granted with the National Civilized Enter-prise for consecutive six sessions. In 2020, SPC succeeded in developing special materials of melt-blown fabric for masks emergently in 12 days, and successfully completed the production task of 6,600 tons of polypropylene medical materials; The successful commissioning and startup of SPC's 400 KTPA oil product cleaning plant brought new profit growth points; The official establishment of Advanced Materials Innovation Research Institute marked a new journey of technological innovation; The state-of-the-art high-toughness polyester engineering plastic that was developed through cooperation won the prize at the 22nd China International Industry Fair; The Company took the lead in utilizing the AGV technique intelligent material warehouse, and moved towards the goal of developing a green intelligent material supply chain. The Company defined the direction of strategic transformation for polyester, acrylic fiber, polyolefin, fine chem-ical and other major business areas to provide customers with differentiated value and solutions. By the end of 2020, SPC has a total of 8,466 staffs.

Company Address: 48 Jinyi Road, Jinshan District, Shanghai 200540, P.R. China Tel. 86-21-57941941 Fax: 86-21-57940050

Email box:spc@spc.com.cn

Report Issue

Thirteenth release

Assessment basis

Shanghai municipal group standard Guidelines for Corporate Social Responsibility (T31/01001-G001-2014)Assessment was conducted in writing for 2020 Annual Corporate Social Responsibility Report (called "the Report"

for short) of Sinopec Shanghai Petrochemical Co., Ltd. in accordance with the requirements of Guidelines for Corporate

Assessment method Social Responsibility (T31/01001-G001-2014).

The assessment process includes confirmation of the source and reliability of information disclosed by the Report with help of the enterprise official website and the third party's data concerned.

Assessment issues

Structural integrity

With standardized structure and complete contents, the Company's report covered the basic contents of the Com-pany's performance of its economic, social and environment responsibilities, and was prepared by making reference to the Guidelines for Environment, Society and Management Report issued by the Stock Exchange of Hong Kong Limited, the Guidelines for Corporate Social Responsibility (SEO-CSR1.0) issued by Shanghai Federation of Economic Organization, ISO26000: Guidelines for Social Responsibility (2010) issued by International Standardization Organiza-tion, and Guidelines for Release of Report on Sustainable Development of Petroleum and Natural Gas Industry issued by the International Association of Environmental Protection in Petroleum Industry. The report contained and covered the main items of key performance indicators required by T31/01001-G001-2014.

Substantial contents

Characteristics of the Report: With reference to domestic & international and industry requirements, the Company prepared the social responsibility report with industry characteristics, which covered the efforts and achievements of the Company made in various fields such as economy, environment and society in 2020 for sustainable development.

Centering on the eight core topics proposed by the Guidelines, the Report disclosed the Company's practice and performance in fulfillment of social responsibility in 2020.

In terms of scientific development: In 2020, following the requirements of "combating epidemic, stabilizing growth, and pursuing development", the Company made great efforts to practice "three focuses and three imple-mentations". Focused on "combating epidemic" and implemented the requirements of "strict prevention and control of epidemic, resumption of work"; focused on "stabilizing growth" and implemented the responsibility of "shouldering heavy loads and making more contributions"; focused on "pursuing development" and implemented the concept of "green development, innovative development". The Company defined the core values of the Company "people, responsibility, integrity, precision, innovation, and shared values" and vision planning of "establishing a world-class energy and chemical company"; The Company targets at creating a future of sustainable development, being a re-sponsible enterprise with good faith and abiding by social morality with the undertaking spirit of "I must try my best to score achievements, but the achievements are not necessarily attributable to me", and the corporate mission of "providing energy for better living". Guided by President Xi Jinping's socialist ideology with Chinese characteristics for the new era, fully implementing the spirit of the 19th CPC National Congress and targeting at building a "domes-tically leading and world-class" company, the Company is committed to becoming an excellent energy, chemical and new material enterprise featured with "prominent major business, superior assets, reasonable structure, healthy finance, advanced technology, green low carbon, distinctive culture and standardized governance". The Company achieved operation revenue of 74.705 billion RMB, totally paid tax revenue of 15.119 billion RMB throughout the year, and implemented total profit of 574 million RMB. Strictly abiding by the Corporation Law and the Securities Law, the Company established the social responsibility management system from six aspects such as the responsibility strategy, responsibility governance, responsibility capability, responsibility incorporation, responsibility performance and responsibility communication. The Company actively promoted the construction of smart plant in all aspects such as production management, safety and environmental protection, equipment management, energy manage-ment, supply chain management, auxiliary decision-making, and material management. In 2020, the Company was granted with the title of National Civilized Enterprise for consecutive six sessions, won the honorary titles such as "CIIF New Material Award" of the 22nd International Industry Fair, Class A evaluation of Shanghai Stock Exchange information disclosure, "Gold Award of Panoramic Investor Relations (2019)-Outstanding IR (Investor Relations) En-terprise". The Company's "Smart Plant Promotion Project" passed Sinopec's acceptance; "Smart Plant Construction Practice with the Integration of Informatization and Industrialization as the Core" was awarded the first prize of inno-vation achievements in modernization of enterprise management by Shanghai.

Substantial contents

In terms of fair operations: As the first listed company listed in Shanghai, Hong Kong and New York, the Com-pany strictly abided by the securities regulatory laws and regulations of the listed places, started with operating benefit, and strived to reduce costs and increase benefit and improve operating performance. Besides, the Compa-ny strictly implemented various information disclosure systems, innovated investor relations management, attached importance to investors' comments and feedback, and earnestly safeguarded the interests of investors. The cover-age rate of anti-commercial bribery training reached 100%, and there was no violation of competition laws or intel-lectual property rights. The Company has formed a relatively complete anti-corruption system, attaching importance to employees' anti-corruption education + serious investigation and handling of cases in accordance with laws and regulations + strengthening daily supervision, and the coverage of anti-corruption education reached 100%.

In terms of environmental saving: The Company considered safe development and low-carbon development as the premise and foundation for the survival and sustainable development of the enterprise. With "clean, efficient, low-carbon and recycling" as its substantive characteristics, the Company actively responded to climate change, strengthened safety management, enhanced environmental protection, developed recycling economy, and con-tinuously improved the level of intrinsic safety and environmental protection. The Company took the initiative to identify the opportunities and challenges in coping with climate change. Guided by the new development concept, the Company promoted energy conservation and emission reduction in boosting high-quality development, pro-moted low-carbon industrial transformation, and contributed to the global response to climate change and "China's commitment". The Company actively carried out activities such as clean production, pollution control, creation of green enterprises, and environmental cooperation to move forward the target of creating green enterprises, and was awarded "Sinopec Green Enterprise". The Company's total investment in environmental protection was 569.25 million RMB, and the frequency of major leakage of chemicals was zero; The discharge of various pollutants met the emission standard. Strengthened pollution treatment: the Company modified the sewage treatment plant in waste water treatment and is the first company in Sinopec system that adopts biological fluidized bed technology to treat PTA degradation-resistant wastewater. Regarding waste gas treatment, the Company adopted technical revamping and upgrading before the event, centralized collection and treatment during the event, and control of emission after the event. As a result, the exhaust gas emission reached 100% on-spec. discharge. In terms of improvement of resource utilization rate: fresh water consumption reached 49.81 million tons. The Company reduced ethylene tar consumption through change of oil to gas, reduced carbon emission through replacement with natural gas, etc., and reduced energy consumption through management of energy saving, optimization of energy performance pa-rameters, and energy-saving technological revamping projects.

In terms of work safety: The Company has always considered work safety as the top priority of the production and operation of the enterprise. In 2020, SPC conscientiously implemented the HSSE management system of the Company, and fully implemented the entity responsibility of work safety with the highest standards and the strictest requirements in compliance with laws and regulations; The Company strengthened implementation and comprehensively promoted process safety management; Focused on the actual effect, continuously improved emergency rescue capability, actively advocated the target of "zero injury, zero pollution and zero incident", built SPC's excellent HSSE culture, and strived to create first-class HSSE performance. In 2020, there were no major or extremely serious incidents of work safety, occupa-tional poisoning and environmental pollution in the Company, and the HSSE generally presented stable trend. In 2020, the Company strictly abided by the Work Safety Law of the People's Republic of China, actively promoted the implemen-tation of "Sinopec Three-Year Action Plan for Special Rectification of Work Safety", "Shanghai Three-Year Action Plan for Implementation of Special Rectification of Work Safety" and other document requirements, consolidated the foundation of work safety, and fully implemented the entity responsibility of safety management. As a result, the incidence rate of occupational diseases was 0, the number of occupational safety and health trainees reached 29,904 person times, and the incidence rate of various safety indicators was 0; The investment in wo0rk safety was 284.7283 million RMB.

In terms of customer and consumer's rights and interests: The Company strictly abides by the requirements of the state Product Quality Law of the People's Republic of China, Standardization Law of the People's Republic of China and other laws and regulations, and strives to jointly develop with the customers through mutual benefit and win-win coop-eration by considering quality as the core, and customer satisfaction as the tenet. In 2020, the Company continuously promoted improvement of the quality management system and optimization and adjustment of the management pro-cess, strengthened the identification of quality risks, and continuously improved the efficiency and accuracy of quality management. The on-spec. rate of all the Company's products reached 100% throughout the year; The Company had no quality incidents and didn't receive any complaints about product quality throughout the year. There was no recall of sold products due to quality problems. The Company abided by laws and regulations as well as social morality, attached importance to business operations with good faith, continuously improved rules and regulations, strengthened operation control, consolidated the foundation of credibility, and won customer trust and social honor with practical actions. The Company continuously improved the quality management mechanism, streamlined and optimized grass-roots quality management institutions, and revised the detailed rules for performance appraisal; Strengthened quality supervision, identified product quality risks, formulated control requirements and carried out internal quality control; Improved the quality management ability, continuously improved the integrated management system, and promoted the online analy-sis and management of quality; The compliance rate of product sampling inspection was 100%, and the customer satis-faction was 98.26, which was 0.6% higher than that of previous year.

Substantial contents

In terms of win-win cooperation: The Company has always adhered to the concept of business operations in com-pliance with laws and regulations and good faith, strictly abided by business ethics, kept in mind of the customer first, enhanced competitiveness through open cooperation and mutual benefit, and improved development ability and jointly created value together with customers and partners through mutual understanding and trust. The Company actively implemented the strategy of "going out" and "bringing in", made full use of domestic and international markets and two resources, strengthened strategic cooperation with governments, enterprises, universities, etc. to complement each other's advantages, boosted the industry transformation and upgrading, and made contribution to local economic de-velopment. While realizing its own development, the Company constantly established and improved suppliers' manage-ment system, and helped suppliers to achieve mutual benefit and win-win results for a better future. The Company built a sound responsibility supply chain, optimized suppliers' supervision and evaluation, and strictly implemented access administration; Implemented material management and control throughout the process, strengthened risk management, and optimized risk control and prevention measures from three aspects such as safety, operation, and integrity.

In terms of harmonious labor relationship: The Company considered employees as the most valuable wealth of the company and was committed to building harmonious labor relationship. The Company respected and safeguarded the rights and interests of employees, cared for their physical and mental health, attached importance to talent training and constructed a diversified and fair promotion channel. The Company abided by the Labor Law and Trade Union Law of the People's Republic of China, signed labor contracts with employees according to law, and did not terminate labor relationship with employees under specific conditions stipulated by law; respected and safeguarded the rights and in-terests of employees and opportunities of equality, prohibited the use of child labor and forced labor, and protected the privacy of employees; The Company has established and improved diversified daily consultation and communication mechanisms between management and employees to build harmonious labor relationship. By the end of 2020, the total number of employees in the Company was 8,466, with a turnover rate of 0.23%, of which the turnover rate of local em-ployees was 0.10%. Abiding by the Vocational Education Law of the People's Republic of China and etc., the Company implemented talents-based corporate development project and the employee quality building project, improved the quality training system for all employees, and developed a fair and just diversified promotion channel. In 2020, the aver-age duration of training for senior management, medium management and ordinary employees of the Company reached 81 hours, 40 hours and 36 hours, etc. The labor contract signature rate was 100%, the collective contract coverage rate was 100%, the social insurance coverage rate was 100%, and the compliance rate of occupational hazard factors was 100%; On the basis of operating management series, professional technical series and skills operation series, the Com-pany established a talent promotion channel and a flexible talent horizontal fluidity channel to create a favorable pattern of everyone striving for success.

In terms of community participation and development: In 2020, facing the sudden outbreak of the COVID-19, SPC guaranteed the supply of medical supplies, promoted the stability of the industrial chain, and highlighted the mission and responsibility of central enterprises. SPC was committed to consolidating and developing a mutually beneficial and win-win relationship with the surrounding areas, always shared ups and downs with the surrounding communities, and overcame difficulties together. The outbreak of COVID-19 swept across China. The stable supply of medical supplies and raw materials was a key link in the combat against epidemics. As one of the largest suppli-ers of medical and health materials in China, SPC timely guaranteed the supply of special materials for melt-blown fabrics, polypropylene medical materials etc., and facilitated the epidemic prevention and control. As a large central enterprise, the Company bore the entity responsibility for epidemic prevention and control. SPC resolutely obeyed the unified requirements for prevention and control of epidemic of the local government, carefully deployed epidemic prevention and control plans, strengthened prevention and control measures, and achieved the goal of "zero import-

Substantial contents ed cases, zero spread, zero dead zone, zero dead angle, and zero infection", and made due contributions to the safety and stability of the local regions. The Company's public welfare programs were demand-oriented and actual effect-oriented, focusing on pursuing people's livelihood; SPC improved and upgraded the " Babysbreath" volunteers' service brand; and facilitated the national project of shaking off poverty.

Recommendations of improvement: Facing the new development pattern of the domestic market as the mainstay and the domestic and foreign markets boosting each other, further enhance risk awareness, such as the high depen-dence of high-end products on foreign markets, the continuous improvement of market requirements for product qual-ity, variety and function, carry out risk management in various aspects such as the strategy, finance, market, opera-tion, laws, safety, environment, quality and etc., and continuously improve the strategic management and operational management capabilities to cope with the dynamic internal and external environment. Develop opportunities in the crisis, open new situations in the changing situation, and achieve high-quality development in the field of economy, society, culture, ecology and etc.

Performance comparability

The Report disclosed the performance indicators of Sinopec Shanghai Petrochemical Company Limited in terms of fulfillment of corporate social responsibility, and presents better vertical comparability. However, restricted by in-dustrial data/information, the Report doesn't have horizontal comparability.

Credibility of content

By way of the enterprise official website as well as consultation of relevant third party's assessment information and other means, we verified SPC's concept, culture and strategy of social responsibility and corporate governance disclosed by the Report as well as typical examples of practice and data, confirmed that the Report contents are credible.

Readability

The Report has a clear structure and plain text. In forms of characters, data, graphs, pictures and etc., the Re-port displays the Company's management, practice and performance of social responsibility; it is reader friendly and has strong readability.

Timeliness

The Report focuses on information disclosure of the Company's fulfillment of social responsibility in 2020, the examples of practice and performance data are mostly sourced from 2020, thusly presenting certain timeliness.

Stakeholders' participation

The Report disclosed the main social responsibility issues and stakeholders of Sinopec Shanghai Petrochemical Co., Ltd., and comprehensively described the joint participation of stakeholders in social responsibility and how to af-fect the stakeholders to devote themselves to the fulfillment of social responsibility.

Overall comments

The critical information, data and examples of fulfillment of social responsibility disclosed by the Report are basically in conformity with Guidelines for Corporate Social Responsibility (T31/01001-G001-2014).

Statement

The assessment comments are only specific to the 2020 information and data provided by the Report and the Company.

INDEX

Titles Message from Chairman of the Board SPC's Responsibility performance Sheet Brief Introduction to

Sub-titles

SPC Corporate CultureDevelopment Strategy

Stakeholders' Participation Sustainable Development Management

Revitalize petrochemical industry with innovative and pragmatic mindsetCreate value in good faithDevelop business through win-win cooperation

Focus on high-end supply Make innovations in petrochemical technology Jointly develop SPC quality

Build smart plant

ISO26000

6.2

6.2

6.7.4

6.7.4 6.7.5

6.7.4

ESG

M2.11-M2.16

E3.3

B6.4

APICass-csr3.0

P3.1

SOC-1

P3.2

ECO-1

P5.2

P4.1 P4.2 P4.3 P4.4

G1-G6

SOC2

P5.3

M2.1 M2.3

Pages

P1-2

P3-4

P5

P6

P6

P7

P8

P10-11

P12

P13

P14

People foremost, benefit the staff

Harmonious labor relations

6.3 6.4 6.8

B1.1

SOC-1

S1.7 S1.8

B1.2

SOC-A2 S2.1-S2.7

P36

B4 SOC-4 S2.10-S2.14

SOC-1

SOC-5

Employees' health and safety

6.4

B3

SOC-4

S2.18-S2.20

P37

SOC-1

SOC-A2

Boost employees' career development

6.3 6.4 6.8

B2.1 SOC-4

S2.15

P38

B2.3 SOC-1

Win the Battle of Epidemic Prevention andP40-41

Control

Fulfill responsibilities and serve the society

Facilitate Community

Development

6.3 6.4 6.8 6.5

ECO-1

B8

S1.5

SOC-A4

B8.1

S4.6

P42

SOC-A3

B8.2

S4.7

SOC-A5

Demonstrate Corporate

ImageE1.9 S4.1 S4.2

P43

Fulfill Responsibility of

6.6.

B7

P43

Anti-corruption

Make Contribution to S4.10

Social and Public Welfare

6.8 S4.11

P44

Undertakings

S4.13-S4.15

A1

Outlook of 2021 Written Comments on Assessment of Corporate Social Responsibility Report

Index

About this report Form of Readers'

Feedback

P45

A2

P46

A3

P50

P52

A4

P53

ABOUT THIS REPORT

Data sources

All data of the report are sourced from SPC official documents and statistical reports and have been reviewed by competent authorities.

Improvement of the report

Thirteenth report of social responsibility

Present report is the thirteenth report on enterprise social responsibility released by SPC, which includes the efforts and achievements made and scored by SPC in terms of economy, environment and society for sustainable development in 2020.

Reference standards of the report

References are made to the Guidelines for Environment, Society and Management Report (2019) issued by the Stock Exchange of Hong Kong Limited, the Guidelines on Enterprise Social Responsibility (SEO-CSR1.0) issued by Shanghai Federation of Economic Organization, ISO26000: Guidelines on Social Responsibility (2010) issued by International Standardization Organization, and Guidelines for Release of Report on Sustainable Development of Petroleum and Natural Gas Industry issued by the International Association of Environmental Protection in Petroleum Industry.

Abbreviations of the report

SPC and the Company as mentioned in the report refer to Sinopec Shanghai Petrochemical Co., Ltd.

Time frame of the report

This report was developed on the basis of the data ranging from January 2020 to December 2020. However, we also adopted the data of the past three years since 2018 for certain quantity of achievements, so as to reflect the variation tendency in time.

Reliability guarantee of the report

Present report does not contain intentionally fictitious fact, misleading statement or omission of major events and we guarantee its accuracy and authenticity.

We aim at giving play to the dialogue roles of the report, interpreting the value and impact brought about by SPC's fulfillment of social responsibilities and jointly discussing with stakeholders about the opportunities and challenges faced by us in the course of development and then seeking solutions. We welcome readers to propose your comments and recommendations on the report.

Ways to access to the report and extended reading

You can also read the electronic version of this report by visiting the website (http://www.spc.com.cn)

FORM OF READERS' FEEDBACK

Dear readers:

We appreciate your reading of the 2020 SPC Report on Social Responsibility. We attach great importance to and expect your feedback comments about SPC sustainable development and this report. Your comments and recommendations are important references for us to improve the performance of social responsibility. You can send your feedback to us by mail, email or fax. We warmly welcome and sincerely appreciate your precious comments.

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You can contact us at:

Address: 48 Jinyi Road, Jinshan District, Shanghai, China, 200540

Telephone: 86-21-57941941 Email box:spc@spc.com.cnFax: 86-21-57940050

Sinopec Shanghai Petrochemical Company Limited

Address: 48 Jinyi Road, Jinshan District, Shanghai, PRC

Tel: 86-21-57941941

Fax: 86-21-57940050 Website:www.spc.com.cnE-Mail:spc@spc.com.cnPostal Code: 200540

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Disclaimer

Sinopec Shanghai Petrochemical Company Limited published this content on 25 March 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 24 March 2021 22:14:07 UTC.