Overview

Facing the severe risks brought by the climate crisis, Kuaishou sticks to its commitments and takes pragmatic actions. In 2023, based on the targets and implementation paths that have been set for the use of clean energy, energy conservation, water conservation, waste reduction, and greenhouse gas emission reduction, we continue to promote green operations and integrate resource conservation and environmental awareness into operation management and construction.

Kuaishou, based on the framework and recommendations of the "International Financial Reporting Sustainable Disclosure Standards No. 2 - Climate-Related Disclosures" issued by the Task Force on Climate-Related Financial Disclosures (TCFD) and the International Sustainability Standards Board (ISSB), has disclosed and analyzed the physical risks and transition risks related to climate change that affect our Company's business, and formulated targeted measures.

In Kuaishou's self-built data center, the Kuaishou Intelligent Cloud Ulanqab Data Center, the following have been adopted:

1. Advanced cooling technology: Kuaishou's self-developed water-free integrated fluorine pump air conditioning, with an annual average PUE reduced by 33% compared to traditional air conditioning, is expected to save 50,000 megawatt-hours of electricity and 1.2 million tons of water for the Ulanqab data center each year.
2. Dual control technology for water and electricity: With this technology, the WUE (Water Usage Efficiency) of the Ulanqab data center has reached 0.42, much lower than the industry average. The PUE (Power Usage Effectiveness) can be as low as 1.196.
3. Heat recovery system: Kuaishou's innovative residual heat recovery technology effectively reduces the consumption of gas resources while reducing the electricity consumption of the original cooling air conditioning. The Data Center is expected to save 600,000 cubic meters of gas and 200 megawatt-hours of electricity each year.
4. Innovative power supply solution: The application of innovative power supply solutions, such as the 10,000-volt medium voltage direct supply (MVDC) power system, has increased system efficiency by 1.5% over the original HVDC architecture, and it is expected to save 170,000 kWh of electricity per year for a single park.

In addition, by the end of 2023, the proportion of Kuaishou's leased data centers that have obtained the ISO 22301 Business Continuity Management System Certification reached 71.4%. We are working hard to reduce carbon emissions during the operation phase to help the Company's low-carbon transition, while actively taking on the global climate change responsibilities.

Office workplace:

1. Energy management: Kuaishou has improved the energy and resource efficiency in office operations through online system management, implementing an energy metering and analysis control system and a unified energy metering reporting system.
2. Energy-saving measures: The Company has taken measures including adjusting the operating mode of cooling and heating equipment, turning off lighting in unoccupied areas at night, implementing dynamic energy-saving management during holidays, and allowing employees to work online.
3. Electronic device repurchase: Kuaishou launched the "Used Electronic Device Repurchase" program, and in 2023, a total of 2,997 electronic devices were repurchased by employees through this program.
4. Green building priority: Kuaishou gives priority to green buildings, applying sustainable energy systems such as daylight adjustment systems and high-efficiency energy-saving lighting to effectively enhance the energy efficiency of office spaces.

Supplier management:

1. Entry commitment: We require partners to abide by core principles such as environmental protection, employee health and safety, anti-corruption, and data security and so forth through the "Supplier Entry Commitment Letter."
2. ESG risk assessment: Kuaishou has established a supplier ESG risk assessment system to ensure that suppliers meet Kuaishou's standards in environmental protection, occupational health and safety, business ethics, and social responsibility and so forth.
3. Performance assessment: Kuaishou conducts performance assessments of suppliers covering multiple dimensions such as technology, quality, response, delivery, and cost.
4. Green procurement policy: Kuaishou implements a green procurement policy, giving priority to environmentally friendly packaging materials and supporting suppliers in underprivileged areas to promote local economic development.

Healthy platform ecology: Kuaishou is always committed to providing users with stable and efficient products and services, fully fulfilling platform responsibilities. We are committed to safeguarding the information security of customers and partners, and firmly adhering to the legal and regulatory requirement of user privacy data protection.

Optimization of user experience: Through strict e-commerce compliance management and product content governance, and a responsible e-commerce marketing strategy, we insist on creating a healthier and more sustainable platform ecology for users, creating a safe and comfortable user experience.

Talent development: Kuaishou regards employees as the core driving force for the Company's development. We value every employee, committed to creating an inclusive, fair, and diverse workplace, and providing employees with a comprehensive career development path.

Responsible Supply Chain: Kuaishou actively practices a responsible supply chain, focusing on supplier compliance management and implementing responsible and green procurement. In 2023, we established a higher-quality supplier resource pool, promoting suppliers to further enhance service levels and delivery quality. At the same time, Kuaishou integrated ESG philosophy into the full lifecycle management system of suppliers. During 2023, we carried out assessments of suppliers' environmental, social, and governance performance, comprehensively evaluating suppliers' ESG performance from five aspects: environmental protection, safeguarding labor and human rights, health safety and welfare, business ethics, and data security and privacy protection, to promote the sustainable development of the supply chain.

Social Contribution: Kuaishou actively fulfills its social responsibilities as a corporate citizen and is deeply involved in social welfare and charitable causes. Adhering to the mission of "connecting good faith with technology and creating long-term values of the platform", Kuaishou operates on the principle of inclusive technology to fully leverage the advantages of its platform resources. It focuses on key areas such as rural revitalization, empowering women to generate income, caring for the elderly, protecting youth, and emergency disaster response, taking on corporate social responsibilities. In 2023, Kuaishou's public welfare projects donated approximately 27.3 million RMB, invested a total of 35,566 hours, and received 7 public welfare awards, widely recognized and praised by all sectors of society.

ESG governance structure: We continuously strengthen our ESG governance capabilities and system, adopting a three-tier ESG governance structure of "governance level - management level - execution level." The Corporate Governance Committee serves as the highest decision-making body authorized by the Board of Directors, fully coordinating various ESG-related tasks and being responsible for the Company's ESG management, decision-making, and supervisory affairs.

Management and control: The Board of Directors is responsible for establishing and maintaining an effective risk management and internal control system, reviewing the effectiveness of these systems. To ensure their effectiveness, under the supervision and guidance of the Board, Kuaishou has adopted the "three lines of defense" model as the formal organizational structure for risk management and internal control. In 2023, to further maintain a suitable and effective risk management and internal control system, Kuaishou utilized a "risk matrix" covering ten major risk areas, including internal strategic risks, external environment risks, regulatory risks, market risks, operational risks, significant expenditure risks, information security risks, human resources and business ethics risks, financial risks, and climate change risks. The Company's senior management was involved to assess the likelihood and impact of each risk event, ultimately forming the 2023 corporate-level risk assessment results. Based on the identified significant corporate-level risks, the Internal Audit and Control Department formulated an annual internal audit plan, carried out special audits on major risk events, and urged rectification of identified issues. Additionally, in 2023, Kuaishou appointed a female professor with a doctoral degree as an independent non-executive director, bringing diverse perspectives and viewpoints to the Board's decision-making.

Business ethics: Kuaishou adheres to honest and trustworthy, clean and self-disciplined business ethics, maintaining a zero-tolerance policy towards immoral acts such as corruption, bribery, and fraud. We continuously strengthen our integrity and compliance construction, adhere to business operation standards, insist on anti-monopoly, and foster a healthy and positive business environment. Kuaishou has established the Kuaishou Ethics Committee as the highest authority for the Company's business ethics construction, enhancing the governance capabilities of business ethics. For incidents of internal employee corruption cases, the Company has transitioned its work focus from combating anti-corruption cases to preventing corruption through various aspects such as workflow, personnel arrangements and strengthening the construction of an integrity culture system. At the same time, Kuaishou continues to promote the dissemination of integrity awareness, training, and the formation of a clean culture. In 2023, integrity and compliance training covered 100% of new employees.