I. Purpose

Hubei Wanrun New Energy Technology Co., Ltd. (hereinafter referred to as "Wanrun New Energy") recognizes the potential for significant negative impacts from sourcing mineral resources in conflict-affected and high-risk areas, and acknowledges its responsibility to respect human rights, not contribute to armed conflict, and avoid negative social and environmental impacts. Wanrun New Energy is committed to adopting and promoting the following Responsible Sourcing Policy for Minerals from Conflict-Affected and High-Risk Areas and incorporating it into contracts and/or agreements with suppliers. This policy provides a basic reference for risk procurement activities throughout the process from mining to end-users, as well as for supplier risk awareness. We are committed to not engaging in any activities that would contribute to human rights abuses or fuel conflict, and we are committed to complying with relevant UN sanctions resolutions or, where applicable, domestic laws implementing such resolutions.

II. Scope of Application

This policy applies to Hubei Wanrun New Energy Technology Co., Ltd. and its subsidiaries and holding companies' lithium, manganese, phosphorus, iron, and tungsten, tin, tantalum, and gold (3TG) mineral supply chains.

III. Referenced Framework Documents

(1) Internationally recognized due diligence documents

a. Guidance on Due Diligence for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas (Third Edition)

b. OECD Due Diligence Guidance for Responsible Business Conduct

c. UN Guiding Principles on Business and Human Rights

d. OECD Guidelines for Multinational Enterprises

e. ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy

f. International Labour Organization (No. 138) Minimum Age Convention

g. International Labour Organization (No. 182) Worst Forms of Child Labour Convention

(2) International documents covering social and environmental risks in Annex X of the EU Battery and Waste Battery Regulation

a. UN Global Compact Ten Principles

b. Convention on Biological Diversity

c. ILO Declaration on Fundamental Principles and Rights at Work

d. International Covenant on Civil and Political Rights

e. International Covenant on Economic, Social and Cultural Rights

(3) Other References

a. China's Guidance on Due Diligence for Responsible Mineral Supply Chains (Second Edition)

IV. Wanrun New Energy Responsible Mineral Supply Chain Management Content

Serious human rights abuses related to mineral mining, transportation, or trade:

1. When conducting procurement or business activities in conflict-affected and high-risk areas, Wanrun New Energy will neither tolerate nor in any way profit from, assist, facilitate, or enable any party to engage in:

i) Any form of torture, cruel, inhuman, or degrading treatment;

ii) Any form of forced or compulsory labor. Forced or compulsory labor refers to all work or service which is exacted from any person under the menace of any penalty for its non-performance and that is not voluntary.

iii) The worst forms of child labor;

iv) Other serious human rights abuses and violations, such as widespread sexual violence;

v) War crimes or other serious violations of international humanitarian law, crimes against humanity, or genocide.

Risk management of serious human rights abuses:

2. If Wanrun New Energy has reasonable grounds to believe that such a risk exists, i.e., that an upstream supplier is sourcing from or is associated with any party engaging in any of the serious human rights abuses specified in paragraph 1, we will immediately suspend or terminate our cooperation with that supplier.

Regarding direct or indirect support for non-state armed groups:

3. Wanrun New Energy will not tolerate any direct or indirect support for non-state armed groups through the mining, transportation, trading, processing, or export of minerals. "Direct or indirect support" for non-state armed groups through the mining, transportation, trading, processing, or export of minerals includes, but is not limited to, purchasing minerals from non-state armed groups or their affiliates, paying fees, or otherwise providing them with logistical support or equipment. These armed groups or affiliates:

i) Illegally control mining areas, or otherwise control transportation routes, mineral resource trading locations, and upstream actors in the supply chain;

ii) Illegally levy taxes, extort money, or natural resources at mine entrances, along access routes to mining areas, or at mineral resource trading locations;

iii) Illegally levy taxes or extort money from intermediaries, exporting companies, or international traders.

Risk management of direct or indirect support for non-state armed groups:

4. If Wanrun New Energy has reason to believe that an upstream supplier is sourcing from or has a relationship with any party providing direct or indirect support to non-state armed groups, we will immediately suspend or terminate our cooperation with that supplier.

Regarding public or private security forces:

5. Wanrun New Energy agrees, in accordance with paragraph 3, to eliminate direct or indirect support for public or private security forces that illegally control mining areas, transportation routes, and upstream participants in the supply chain, illegally levy taxes, extort money or mineral resources at mine entrances, along access routes to mining areas, or at mineral resource trading points, and illegally levy taxes or extort money from intermediaries, exporting companies, or international traders.

6. Wanrun New Energy acknowledges that the role of public or private security forces in and/or around mining areas and/or along transportation routes is solely to uphold the rule of law, including protecting human rights, protecting miners, equipment, and facilities, and protecting mining areas or transportation routes to ensure that legal mining and trading are not disrupted.

7. Where we or any business in our supply chain has contracted with public or private security forces, we commit to or will stipulate that such security forces must comply with internationally recognized standards. In particular, we will support or take measures to implement screening policies to ensure that individuals or security force units known to have committed serious human rights abuses are not employed.

8. We will support or take measures to cooperate with central or local governments, international organizations, and civil society organizations to find viable solutions on how to improve the transparency, proportionality, and accountability of public security force security costs.

9. We will support or take measures to interact with local governments, international organizations, and civil society organizations to avoid or minimize the negative impacts of public or private security forces stationed at mine sites on vulnerable groups, especially on artisanal miners, in cases where the minerals in the supply chain are extracted through artisanal or small-scale mining.

Risk management of public or private security forces:

10. If we find that such risks exist to a certain extent, we will, depending on the specific location of the enterprise in the supply chain, immediately develop, adopt, and implement risk management plans with suppliers and stakeholders to curb or reduce the risks of providing direct or indirect support to public or private security forces. If the risk management plan is ineffective after six months, we will suspend or terminate cooperation with upstream suppliers.

Regarding bribery and fraudulent misrepresentation of mineral origin:

11. We will not directly or indirectly offer, promise, give, or solicit any bribe, and will resist bribery, and will not bribe or violate relevant international anti-corruption standards and practices in order to conceal or falsify the origin of mineral resources, or to underreport taxes, fees, and royalties payable to the government for the mining, trading, processing, transportation, and export of mineral resources.

Regarding money laundering:

12. If we have reason to believe that there is a risk of money laundering arising from or related to mineral resources obtained through illegal taxation or extortion during the mining, trading, processing, transportation, or export at the mine entrance, along transportation routes, or at the trading locations of upstream suppliers' mineral resources, we will support or take measures to contribute to the effective elimination of money laundering.

Regarding taxes, fees, and royalties paid to the government:

13. We will ensure that all legal taxes, fees, and royalties related to the mining, trading, and export of ore in high-risk areas are paid to the government, and we commit to disclosing such payments according to internationally recognized transparency standards, depending on the enterprise's position in the supply chain.

Risk management of bribery, fraudulent misrepresentation of mineral origin, money laundering, and taxes, fees, and royalties paid to the government:

14. Depending on the specific location of the enterprise in the supply chain, Wanrun New Energy commits to cooperating with suppliers, central or local government agencies, international organizations, civil society, and affected third parties as appropriate, with the aim of taking significant measures to prevent or mitigate risks with negative impacts within a reasonable timeframe, and to improve or track performance. If risk mitigation measures are ineffective after six months, we will suspend or terminate cooperation with upstream suppliers.

Regarding environment, climate, and human health:

15. When procuring minerals or conducting production activities, Wanrun New Energy will reduce the negative impacts of its operations on the environment, climate, and human health and require the upstream supply chain to do the same. These negative impacts include:

(i) Air, including air pollution, such as greenhouse gas emissions;

(ii) Soil, including soil pollution, soil erosion, land use, and land degradation;

(iii) Water, including seabed and marine environments, including water pollution, water use, water volume (floods or droughts), and water resource acquisition;

(iv) Biodiversity, including damage to habitats, wildlife, plants, and ecosystems, including ecosystem services;

(v) Hazardous substances, including the use of hazardous substances such as mercury, cadmium, and lead in products;

(vi) Noise and vibration, referring to the impact of factory production noise and vibration on employees;

(vii) Energy use, including the use of non-clean energy and low energy efficiency;

(viii) Waste and residue;

Risk management of environment, climate, and human health:

16. Wanrun New Energy will regularly assess the various risks and impacts listed in Article 15 in its own production operations and supply chain, and will adopt technically and economically feasible methods to reduce its various negative impacts while supervising suppliers to rectify risk problems. If the rectification is not completed within six months, we will suspend or terminate cooperation with upstream suppliers.

Regarding occupational health and safety:

17. During procurement or production, Wanrun New Energy will not profit from, assist, or facilitate any party that provides a life-threatening occupational environment for its direct and/or indirect employees and/or any personnel at its production site, or procure from or be associated with such a party.

Risk management of occupational health and safety:

18. If Wanrun New Energy has reasonable grounds to believe that an upstream supplier provides a life-threatening occupational environment, or procures from or is associated with any party with such a situation, Wanrun New Energy will require the supplier to complete improvements within six months, otherwise Wanrun will suspend or terminate cooperation with the supplier.

Regarding child labor:

19. When conducting procurement or business activities, Wanrun New Energy will not employ children below the minimum working age stipulated by the laws or regulations of the host country, will not profit from, assist, or facilitate the employment of children below the minimum working age stipulated by the laws or regulations of the host country, and will not procure from or be associated with any party with such a situation. If the host country does not have relevant laws or regulations, the minimum working age is 16 years old.

Risk management of child labor:

20. If Wanrun New Energy has reasonable grounds to believe that this risk exists, i.e., the upstream supplier has such a situation, or procures from or is associated with any party with such a situation, Wanrun New Energy will immediately suspend or terminate cooperation with the supplier.

Regarding discrimination and harassment:

21. During procurement or production, Wanrun New Energy will not profit from, assist, or facilitate any party that engages in discrimination and harassment, or procure from or be associated with such a party.

Risk Management of Discrimination and Harassment:

22. If Wanrun New Energy has reasonable grounds to believe that such a risk exists, or if it procures from or is associated with any party in which such a situation exists, Wanrun will supervise the supplier to complete remedial measures. If the remedial measures are not completed within six months, Wanrun will terminate or suspend cooperation with the supplier.

Regarding Freedom of Association and Collective Bargaining:

23. Wanrun New Energy respects the right of workers to join (or not join) a trade union or workers' organization, and to participate in collective bargaining; it will not profit from, assist, or facilitate any party that infringes on freedom of association, or procure from or be associated with such a party.

Risk Management of Freedom of Association and Collective Bargaining:

24. Wanrun will regularly assess whether partners in the mineral supply chain have engaged in acts that infringe on freedom of association and the right to collective bargaining. If there are reasons to believe that an upstream supplier has engaged in such acts, Wanrun New Energy will require the supplier to make improvements within six months; otherwise, Wanrun will terminate or suspend cooperation with the supplier.

Regarding Indigenous Peoples' Rights:

25. Wanrun is committed to respecting the rights of indigenous peoples, including their right to Free, Prior, and Informed Consent (FPIC), and to preventing adverse impacts and benefiting indigenous peoples in an inclusive, transparent, respectful, and culturally appropriate manner. It will not profit from, assist, or facilitate any party that infringes on the rights of indigenous peoples, or procure from or be associated with such a party.

Risk Management of Indigenous Peoples' Rights:

26. Indigenous peoples are often vulnerable to the adverse impacts of business development and operations, particularly when mining operations overlap with indigenous territories. If Wanrun has reason to believe that a supplier is violating the rights of indigenous peoples, the supplier shall make improvements within six months; otherwise, Wanrun will terminate or suspend cooperation with the supplier.

 

Approved Date: January 14, 2025

Effective Date: January 14, 2025

Revision Date: January 2, 2025

 

 

 

Appendix 1, Responsible Mineral Supplier Code of Conduct

Chapter 1, Labor and Human Rights

1. Forced or Compulsory Labor: Suppliers shall not use any form of forced or compulsory labor (such as forced, bonded, indentured, or involuntary prison labor). Employment shall be voluntary.

2. Child Labor and Minors: Suppliers must employ workers who meet the minimum legal age as stipulated by local laws. Minors in legal workplaces are permitted in accordance with laws and regulations, but minors shall not engage in work that may endanger their health or safety, including: strenuous physical labor, overtime, night work, and work involving contact with hazardous chemicals.

3. Working Hours: Suppliers shall comply with international conventions and local laws and regulations regarding working hours. Except in emergency or exceptional circumstances, weekly working hours, including overtime, shall not exceed 60 hours. Weekly working hours shall not exceed the maximum limit stipulated by local laws. Employees shall have at least one day of rest in every seven days.

4. Wages and Benefits: Suppliers shall provide reasonable wages and benefits to employees in accordance with local and national laws, including laws related to minimum wages, overtime, and other compensation. The wages of all employees shall not be less than the legally mandated minimum wage.

5. Harassment and Abuse: Workers shall not be subjected to violence, gender-based violence, sexual harassment, sexual abuse, corporal punishment, mental or physical coercion, bullying, public humiliation, or verbal abuse (including threats and intimidation), or other harsh and inhumane treatment.

6. Prohibition of Discrimination: Suppliers shall not discriminate against individuals in the recruitment and employment of employees on the basis of race, religion, age, nationality, gender, marital status, pregnancy, political affiliation, disability, or other similar factors. Employees or applicants shall not be required to undergo discriminatory medical examinations.

7. Freedom of Association and Collective Bargaining Rights: To the extent permitted by law, suppliers shall not interfere with, obstruct, or prohibit employees from forming or joining organizations, electing representatives, participating in collective bargaining, and engaging in other lawful activities.

8. Community Relations and Indigenous Rights: 1) Suppliers shall take measures to mitigate any negative impacts of their operations on local communities, including environmental, social, cultural, and other quality-of-life factors. They shall consult with affected communities to identify community needs, develop plans, and invest resources to support community development. 2) They shall implement management systems that respect the rights of indigenous peoples, including free, prior, and informed consent; avoid adverse impacts on indigenous peoples' lands, livelihoods, resources, and cultural heritage; and develop and implement indigenous participation plans.

Chapter 2, Health and Safety

1. Occupational Health and Safety: Suppliers shall identify, assess, and mitigate potential health and safety hazards that employees may encounter (chemical, electrical and other energy, fire, vehicle, and fall hazards, etc.). If hazards cannot be effectively controlled through the above methods, appropriate, well-maintained personal protective equipment and educational materials on the risks associated with these hazards shall be provided to employees. Measures to promote gender equality shall be taken, such as avoiding assigning pregnant and breastfeeding women to work environments that may be harmful to themselves or their children, and providing reasonable accommodations for breastfeeding women.

2. Emergency Preparedness: Suppliers shall identify and assess emergency situations and events and minimize their impact through the implementation of emergency plans and response procedures, including: emergency reporting, employee notification and evacuation procedures, employee training and drills, adequate fire detection and suppression equipment, adequate exit facilities, and recovery plans. Such plans and procedures shall minimize harm to persons, the environment, and property to the extent possible.

3. Work-Related Injuries and Illnesses: Suppliers shall establish appropriate procedures and systems to prevent, manage, track, and report work-related injuries and illnesses, including the following provisions: encouraging employees to report; classifying and recording work-related injury and illness cases; providing necessary medical services; investigating cases and taking corrective actions to eliminate impacts; and assisting employees in returning to work.

4. Industrial Hygiene: Hazards to employees from chemical, biological, and physical agents should be identified, assessed, and controlled according to the hierarchy of controls. When hazards cannot be adequately controlled, appropriate, well-maintained personal protective equipment (PPE) should be provided and used by employees free of charge. Participants should provide employees with a safe and healthy work environment and maintain this environment through systematic and ongoing monitoring of employee health and the work environment. Suppliers should provide occupational health monitoring and regularly assess employees for health impairment due to occupational exposure. Occupational health protection programs should be ongoing and include risk education materials related to hazards employees face in the workplace.

5. Machine Safety Guards: Suppliers must conduct safety hazard assessments of production equipment and other machinery and provide physical guards, interlocks, and barriers for machinery that could cause employee injury, and maintain them properly.

6. Sanitation, Canteen, and Dormitories: Suppliers should provide employees with clean toilet facilities, potable water, and sanitary food preparation, storage, and eating facilities. Employee dormitories provided should be clean and safe and provide adequate emergency exits, hot water for bathing, sufficient lighting and ventilation, individual secure lockers for personal and valuable items, and reasonable private space with easy access.

7. Health and Safety Communication: Suppliers should provide employees with appropriate workplace health and safety information and training in their native language or another language they understand, explaining all identified workplace hazards they face, including but not limited to mechanical, electrical, chemical, fire, and physical hazards. Post health and safety related information clearly in the factory area or in a place where employees can clearly identify and access it. Health information and training should include content specific to the risks of relevant populations, such as gender and age (as applicable). All employees should be trained before starting work and regularly trained after starting work. Employees should be encouraged to raise any health and safety concerns without fear of reprisal.

Chapter Three, Environment

1. Environmental Permits and Reporting: Suppliers should obtain, maintain, and update all necessary environmental permits, approvals, and registrations and comply with their operational and reporting requirements.

2. Hazardous Substances: Suppliers should identify, label, and manage chemicals, waste, and other materials that pose a hazard to humans or the environment, ensuring their compliant handling, movement, storage, use, recycling or reuse, and disposal. Hazardous waste data should be tracked and recorded.

3. Solid Waste: Suppliers should employ a systematic approach to identify, manage, reduce, responsibly dispose of, or recycle solid waste (non-hazardous waste). Waste data should be tracked and recorded.

4. Emissions and Noise: Volatile organic chemicals, inorganic chemicals, sprays, corrosive substances, suspended particles, ozone-depleting substances, and combustion emissions generated during their production and operation should be classified, routinely monitored, controlled, and treated as required before discharge, and the operation of their air emission control systems should be routinely monitored. Ozone-depleting substances should be managed effectively in accordance with the Montreal Protocol and applicable regulations. The operation of their atmospheric emission control systems should be routinely monitored. For noise generated by the factory that affects the factory boundary noise, suppliers should identify, control, monitor, and reduce it.

5. Water Resource Management: Water resource management and conservation plans should be implemented to record, classify, and monitor water resources and their use and discharge, seeking to protect water resources and control pollution channels. All wastewater must be classified, monitored, controlled, and treated as required before discharge or disposal. Suppliers should routinely monitor the operation of their wastewater treatment and control systems to ensure optimal performance and compliance. A systematic approach should be used to prevent rainwater runoff pollution. Illegal discharge and overflow of wastewater into rainwater discharge pipes, public water supply systems, or public waters should be avoided. Suppliers' water resource management should guarantee the right of every member of the local community to have access to sufficient, safe, acceptable, affordable, and readily available water for personal and household use. Suppliers should make comprehensive use of resources and take measures to prevent and respond to floods and droughts. Suppliers' use of water resources and management of water pollution should reduce and eliminate negative impacts on seabed and marine environments.

6. Pollution Prevention and Resource Conservation: Suppliers should take effective measures to reduce or eliminate the emission, release, and generation of pollutants and waste at the source, prevent and reduce soil and groundwater pollution, and strictly control the emission of toxic and hazardous substances for key soil pollution monitoring units, establishing a soil pollution hazard investigation system and implementing self-monitoring. Measures should be taken to reduce the negative impacts of operations, services, and products on soil, including but not limited to soil pollution, soil erosion, land use, and land degradation. Use natural resources, including water, fossil fuels, minerals, and virgin forest timber, judiciously through improved production, maintenance, and facility processes, the use of alternative materials, reuse, resource conservation, recycling, or other practices.

7. Biodiversity: In accordance with the Convention on Biological Diversity, suppliers should reduce the negative impacts of their operations, services, and products on biodiversity (including but not limited to the destruction of habitats, wildlife, flora, and ecosystems) and should publicly disclose what impacts they have and the measures to address them.

8. Energy Consumption and Greenhouse Gases: Suppliers should identify and manage greenhouse gas (GHG) emissions from their operations and set GHG reduction targets. Track, record, and publicly report energy consumption and emissions of all relevant Scope 1, Scope 2, and Scope 3 greenhouse gases against scientifically-based reduction targets. Seek to improve energy efficiency, use clean energy, or otherwise minimize greenhouse gas emissions. Calculate the carbon footprint of relevant products according to applicable product carbon footprint guidelines.

9. Circular Economy: Suppliers should take appropriate measures (such as adding pollution control equipment and improving production, maintenance, and facility processes) to reduce or eliminate the emission, release, and generation of pollutants and waste at the source; they should take measures (such as improving production, maintenance, and equipment processes, using alternative materials, reuse, resource conservation, and recycling strategies) to use natural resources judiciously, including water, fossil fuels, minerals, and virgin forest timber. They should take proactive measures to verify or improve the use of a certain proportion of recycled materials to meet regulatory and customer requirements.

10. Environmental Management System: Suppliers should establish an environmental management system to identify, track, and manage the factory's environmental impacts and emerging environmental issues.

Chapter Four, Legal Compliance and Business Integrity

1. Compliance with Regulations: Suppliers should voluntarily comply with relevant laws, regulations, and regulatory requirements in the countries or regions where their business operates, ensuring that their business is conducted legally and in an orderly manner.

2. Business Integrity: Suppliers should adopt a zero-tolerance policy prohibiting any form of bribery, corruption, extortion, and embezzlement. All business transactions should be transparent and accurately reflected in the participants' business accounts and records. Oversight and enforcement procedures should be implemented to ensure compliance with anti-corruption laws.

3. No Undue Advantage: Suppliers shall not offer, provide, grant, give, or accept bribes or other forms of benefit to obtain an illegal or undue advantage. This includes directly or indirectly, through a third party, offering, providing, granting, giving, or accepting anything of value to obtain or retain business, or to otherwise improperly benefit anyone. Monitoring, record-keeping, and enforcement procedures shall be implemented to ensure compliance with anti-corruption laws.

4. Information Disclosure: All business dealings of the supplier shall be transparent and accurately recorded in the participants' business books and records. Information regarding participants' labor, health and safety, environmental practices, business activities, structure, financial condition, and performance shall be disclosed in accordance with relevant regulations and current industry practices. Falsification of records or misrepresentation of conditions or practices in the supply chain shall not be permitted.

5. Intellectual Property Protection: Suppliers shall respect intellectual property rights. Intellectual property rights shall be properly protected when transferring technology and expertise, and the information security of customers and suppliers shall be protected.

6. Fair Trading, Advertising, and Competition: Suppliers shall adhere to standards of fair trading, advertising, and competition.

7. Identity Protection and Anti-Retaliation: Suppliers shall establish and implement procedures to ensure protection for supplier and worker whistleblowers, maintaining the confidentiality and anonymity of reports. Establish appropriate communication processes to allow supplier and worker whistleblowers to raise any issues without fear of retaliation.

8. Anti-Commercial Fraud: Suppliers guarantee that the products provided to Party A (including but not limited to product name, model, specifications, brand, unit, etc.) shall be consistent with the corresponding documents, and shall not sell counterfeit products, defective products, or refurbished products to Party A.

9. Privacy: Suppliers shall commit to protecting the personal information of all individuals with whom they conduct business (including suppliers, customers, consumers, and employees) to meet the reasonable privacy expectations of such individuals. Participants shall comply with privacy and information security laws and regulatory requirements when collecting, storing, processing, transmitting, and sharing personal information.

Chapter 5, Governance and Supply Chain

1. Management System: Suppliers shall adopt or establish a management system (such as an ESG management system) related to the scope of this standard. This management system shall 1) comply with laws, regulations, and customer requirements related to the supplier's operations and products; 2) comply with this standard; and 3) identify and mitigate operational risks related to this standard. The management system shall include elements such as company compliance and continuous improvement commitment; management accountability and responsibility; updated legal and customer requirements; risk assessment and risk management; improvement goals; training; communication; worker feedback, participation, and grievances; audits and assessments; corrective action processes; documentation and records; and supplier responsibilities.

2. Responsible Sourcing: Suppliers shall follow Wanrun New Energy's Responsible Mineral Supply Chain Due Diligence Policy to conduct due diligence on key raw materials such as lithium, manganese, phosphorus, iron, and tantalum, tin, tungsten, and gold (3TG) in their supply chain. Suppliers shall develop their due diligence policies and management systems in accordance with the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas, appoint a senior management representative, conduct due diligence on the origin and production and sales regulatory chain of these minerals to identify and assess relevant risks and take appropriate measures to mitigate such risks, and shall publicly release an annual due diligence report on the supply chain. Records related to conflict mineral due diligence should be kept for at least ten years.