Crystal International : Sustainability Report 2020

Contents

The Basis of This Report

We Innovate and Care in the New Normal

This Sustainability Report 2020 ("Sustainability Report" or the "Report") is prepared in compliance with the Environmental, Social and Governance ("ESG") Reporting Guide set out in Appendix 27 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Stock Exchange"), as well as with reference to the Global Reporting Initiative ("GRI") Standards. This is the twelfth Sustainability Report for Crystal International Group Limited ("Crystal" or "Crystal International" or the "Company" or "we" or "our" or "us") (Stock code: 2232), covering Crystal's sustainability performance for the calendar year from 1st January to 31st December 2020.

We have all gone through a unique year in 2020. While we faced the unpredictability and challenges from the impact of the COVID-19 pandemic, our pursuit of sustainability remained unchanged. The pandemic has further highlighted to us the significance of cultivating a lasting relationship with the natural environment, how crucial it is to deal with the foreseeable climate crisis, the importance of working together to overcome adversity and to be resilient.

To echo the theme "Innovate in the New Normal, Care through Action", this Report addresses the challenges we faced during the unprecedented year and how we worked together to embrace the new normal with care and innovation. The Report summarises our performance and key achievements in 2020 in the areas of employee care, community engagement, and environmental stewardship. We illustrate how we have directed our efforts on digitalisation within our business to make advancements with our work and how we continue to make progress in the areas of diversity and inclusion, circular economy, and green building design to address social and environmental concerns that are imperative to our business.

This year, the number of our factories changed from 20 to 18 owing to operational optimisation. The reporting boundary of our Sustainability Report 2020 covers all 18 factories across five countries - Vietnam, China, Cambodia, Bangladesh and Sri Lanka. This Report summarises the positive steps and efforts we have made and how we will navigate the risks and opportunities in the post-COVID-19 world.

Your feedback will help us refine future sustainability plans and we welcome your valuable comments on this Report in relation to our sustainability work, standards and policies.

For any related enquiries, please contact us at sustainability@crystalgroup.com.

Catherine Chiu

General Manager

Corporate Quality and Sustainability

CEO Message

inability is embedded in our culture even under the new ormal and we will continue to rebound sustainably."

Creating Environmental Value

We did not slow down and even stepped up the pace of environmental protection. We signed the United Nations Fashion Industry Charter for Climate Action and committed to reducing 30% aggregate greenhouse gas ("GHG") emissions by 2030 and set up a decarbonisation pathway. To accomplish the long-term climate ambition, we have completed a study to develop a carbon reduction roadmap.

A s p a r t o f a c h i e v i n g a m o r e s u s t a i n a b l e manufacturing business, we have optimised our production processes where we have developed new eco-products and adopted more renewable energy sources. Our sustainability efforts go beyond the production processes into green building design, where our lifestyle wear factory in Vietnam was awarded the international green building certification

• Excellence in Design for Greater Efficiencies ("EDGE") in 2020.

Moving Forward

Looking ahead, we will keep driving manufacturing excellence to achieve Industry 4.0, enhance our competitiveness with the adoption of lean operation, digitalisation and automation, and launch a series of innovations. We will continue to spearhead decarbonisation and circular economy over the next few years.

Selection by the World Benchmarking Alliance ("WBA") as a keystone company of the SDG2000: the most influential 2,000 companies for a sustainable future has been a validation of our efforts. We aim to scale up our strategic planning with the United Nations Sustainable Development Goals ("SDGs"). In addition, the honour of Best ESG Report and Excellence in Environmental Positive Impact Commendation awarded at the Hong Kong ESG Reporting Awards 2020 ("HERA") has greatly encouraged us to push forward ESG governance,

Embracing the New Normal

We have experienced an exceptional year full of challenges and changes amid the pandemic in 2020, which has created headwinds for all businesses and people worldwide. As we navigate through the uncertainty of the COVID-19 crisis and the challenges of the trade war, global apparel retailers and manufacturers are experiencing a tough period. There is a strong momentum for change and the crisis has highlighted the importance of innovation and resilience in the new normal to sustain business growth.

to monitor product quality, social compliance and to ensure we are running an environmentally friendly operation. These measures are in place to enhance our efficiency and transparency, and to reduce environmental footprint.

Creating Social Value

Managing health and safety risk was central to our response to the pandemic and our top priority was employee health and safety. A Crisis Management Committee was set up to ensure stringent and

Last year when the world experienced a reduction of global carbon emissions as numerous social and economic activities were suspended, that reinforced our determination to build a more sustainable and resilient future after the pandemic. To demonstrate our commitment to sustainable recovery, we signed WWF's open letter "Sustainability to be central to post-COVID recovery" to tackle the climate and nature crises.

strategies, transparency and risk management within our business.

I am pleased to share the highlights of our sustainable journey so far as well as our vision and commitment to action for the years ahead. It will be difficult to know how severe the long-term consequences of the pandemic will be, but we know that together with our employees, communities, and stakeholders, we can become more resilient and sustainable driving positive changes in our industry.

Our industry has undergone a transformative change

comprehensive anti-epidemic measures were in place in all our offices and factories. Our Innovation

Being Resilient Together

The innovative changes we made last year have led

Andrew Lo

and there is a rapid shift in sustainability to meet the requirements of our customers and stakeholders. 2020 has seen how digitalisation has changed the way we work and has accelerated our transformation to digitalising and streamlining our operations to maintain operational excellence. In a year of travel restrictions and social distancing, technology has greatly facilitated our daily business operations and we have transitioned to using digitalisation tools in many of our product development and manufacturing processes, such as automation, virtual sampling and digital showrooms. Virtual audits have been arranged

Team developed our own Crystal face cover for all employees and wider communities. Aside from the welfare of our employees, we continue to create a working environment that fosters trust between us and our employees and supports diversity. Throughout the year we have helped to develop the skills and talents of our employees through our online training and recruitment programmes.

In 2020, we also signed the International Labour Organization ("ILO")'s call to action "COVID-19: Action in the Global Garment Industry" to protect garment workers' income, health and employment.

to the theme of our Sustainability Report this year "Innovate in the New Normal, Care through Action". We wholeheartedly appreciate the dedication of all our employees and the support from our considerate customers and stakeholders who walked with us through our sustainability journey during this challenging year, allowing us to react promptly in operation, sustain business growth, and foster recovery.

CEO

Combating COVID-19 and Embracing the New Normal

Creating social and environmental value is imperative for sustainable resilience. Although the COVID-19 pandemic has significantly impacted the global apparel industry, our employees have remained dedicated and determined to do their jobs. We have been concerned about how our people and the communities are coping with the new normal and their well-being. During this period, we have placed a firm focus on safeguarding employees' health, extending our care to the communities and preparing for a sustainable recovery. We supported our employees through innovation and various care initiatives, as well the wider communities worldwide that had been affected to implement and reinforce social and environmental values during a time of great uncertainty.

Protecting Employees and Communities

Tightening Pandemic Control Globally

Crisis Management Committee

We set up a Crisis Management Committee, comprising the Group Executive Director, Line Presidents, the Head of Corporate Human Resources, Corporate Sustainability and Human Resources Executives of all our factories at the beginning of the pandemic to oversee the situation, closely monitor the circumstances, make strategic decisions, and formulate the required plans for taking preventive measures in the factories.

Stringent Visitor Control

To safeguard the health of our employees and visitors, the Crisis Management Committee developed visitor control guidelines to reduce the risk of virus transmission. Meetings were conducted daily to review the pandemic situation and visitor control guidelines were adjusted timely as per the local circumstances.

Rigorous Precautionary Measures

Comprehensive pandemic control measures were strictly implemented to control the epidemic situation and to prevent the spread of virus within the factories. Sufficient fabric masks were also provided to all employees to safeguard their health.

Proper Personal Hygiene

All-round Protection

Sanitiser