Analysis Report on Environmental Penalties and Rectification Efforts of New Hope

Based on collected information, the following is a detailed analysis of New Hope’s environmental penalties and rectification status:

According to public information, since the beginning of 2025, multiple subsidiaries of New Hope have received administrative penalties [1]:

Main violation types include:

• Excessive wastewater discharge
  : Exceeded standards for indicators such as COD, ammonia nitrogen
• Abnormal operation of waste gas treatment facilities
  : Failed to activate treatment facilities as required
• Imperfect rainwater-sewage separation
  : Caused sewage overflow
• Direct discharge of manure
  : Discharged without treatment

The company has established a systematic environmental governance system [2]:

• Installation of monitoring equipment
  : All holding subsidiaries have installed automatic monitoring equipment as required by local environmental protection departments, and connected to the environmental protection department’s network to realize real-time monitoring
• “Three Simultaneities” Requirement
  : The construction of pollution prevention and control facilities complies with the standard of “simultaneous design, simultaneous construction, simultaneous commissioning”
• Third-party monitoring
  : Regularly conduct effluent water quality testing through self-inspection and entrusted third parties

New Hope adopts three main processes to treat breeding wastewater and manure [2]:

1. UASB Anaerobic + Two-stage A/O Process
   : Upflow Anaerobic Sludge Bed combined with aerobic treatment
2. CSTR Process
   : Continuous Stirred-Tank Reactor anaerobic fermentation
3. Black Membrane Biogas Process
   : Fermentation treatment in large-scale black membrane biogas tanks

Manure → Solid-Liquid Separation → Primary Sedimentation Tank → Equalization Tank → UASB Reactor → A2O Tank → Secondary Sedimentation Tank → Fenton System → Final Sedimentation Tank → Disinfection Tank

To address the issue of breeding odors, the company has taken the following measures [2]:

• Adopted intelligent program-controlled manure cleaning methods, controlled indoor temperature, and enhanced ventilation systems in pig houses
• Equipped with deodorization rooms for spray deodorization
• Removed malodorous gases through wet absorption and oxidation
• Biogas is used for on-site power generation and heating energy

• Launched the “Zero Carbon Dairy” action plan in 2023
• Goals
  : Carbon peaking by 2030, carbon neutrality by 2050 [2]

As of the end of 2024:

• 4
  dairy factories have passed
  national-level
  green factory evaluation
• 6
  dairy factories have passed
  provincial and municipal-level
  green factory evaluation

• Formulated the “Hazardous Waste Management System” to standardize the collection, storage, and disposal processes
• Established the “Solid Manure Treatment Specifications” and adopted high-temperature aerobic fermentation treatment
• Improved emergency response plans and operating procedures for sudden environmental incidents

• Carried out energy management training covering excellent cases of electricity and gas energy conservation
• In 2024, the training covered 24,800 person-times including operation, production, safety and environmental protection heads of subsidiaries in the pig industry and feed industry

• Strengthened refined management through digital means
• Implemented special work such as production chain yield increase and supply chain cost reduction

New Hope has established a relatively complete governance system in environmental rectification, with significant improvements from hardware facilities to software management:

• Adopted advanced manure treatment processes to realize resource utilization
• Actively participated in carbon trading and made practical contributions to carbon neutrality goals
• The scale of clean energy application continues to expand

• Some subsidiaries still have violations, and supervision needs to be further strengthened
• The cost of environmental protection investment is relatively high, forming certain pressure on business operations
• Need to continuously enhance the environmental awareness of all employees

Overall, New Hope is transforming from passive response to penalties to active environmental governance, but at the implementation level, it still needs to continuously strengthen supervision and training to ensure that all environmental protection measures are implemented in place.

[1] Daxumu.com - Wenchang Kingkey Smart Agriculture Fined RMB 9.81 Million! Pig enterprises including Muyuan, Wen’s Group, Zhengbang, New Hope have all been fined for this reason (https://www.dxumu.com/58413.html)

[2] New Hope Liuhe Co., Ltd. 2024 Sustainable Development Report (https://vip.stock.finance.sina.com.cn/corp/view/vCB_AllBulletinDetail.php?stockid=000876&id=11004611)