MESSAGE FROM OUR CEO/02

CHEMICALS CREATE A BETTER LIFE/04

STRATEGY AND GOVERNANCE/10

ABOUT US/06

CONTENTS

The report covers ChemChina’s activities from 1 January to 31 December 2012. In some instances content and information from outside the stated period may be included. The report covers ChemChina headquarters and its subordinate units.

ABOUT THIS REPORT This is the third sustainability report published by China National Chemical Corporation (“ChemChina”). The report discloses information about the social responsibility commitments, practices and performance in 2012 of ChemChina on topics such as the business management, technical innovation, occupational safety, environmental performance, employee care and social harmony.

The report is based on the Guideline on CSR Fulfillment by Central Enterprises issued by SASAC (State-owned Assets Supervision and Administration Commission of the State Council), the Ten Principles of the United Nations Global Compact, the Sustainability Reporting Guidelines of the Global Reporting Initiative (GRI G3.1), the ISO 26000: Guidance on Social Responsibility(2010) issued by the International Organization for Standardization, and the CSR Reporting Guidelines for Chinese Companies (CASS-CSR 2.0) issued by the Chinese Academy of Social Sciences (CASS-CSR2.0).

Normative References

Scope of Report

All data used in this report comes from official documents and statistical reports of ChemChina.

Data Sources

Unless otherwise stated, all references to “ChemChina”, “Group”, “Company” or “We” refer to China National Chemical Corporation.

References to ChemChina

The structure of this report takes “New” as the main thread. How our business operations and management have changed in 2012 is also highlighted in the report.

The report identifies the responsibility of each business unit in the company and highlights how we integrate social responsibility and business strategy, management and operations.

To better communicate with stakeholders and make the report more readable, key information is highlighted in a more concise manner and the content of this report is more structured and graphical in manner.

Report Improvements

The report is published in both Chinese and English. If any inconsistency or discrepancy exists between the two versions the Chinese version shall prevail.

Report Language

To view or download the report, please visit the official website of ChemChina at www.chemchina.com.cn.

Obtain the Report

Participating in Global Operations and Achieving Leap-Forward Development /14

FOCUS/12

Good Business Performance for the Creation of New Value /16

Driving New Growth Through Technical Innovation / 22

Setting a New Benchmark for Safety Production / 28

Green and Environmental, Expanding the New Space / 32

Employee growth, Creating New Business Opportunities/ 36

Sharing New Results in a Harmonious Society / 40

PROSPECTS FOR THE FUTURE/46

EXPERT COMMENTS/48

GRI INDEX/49

FEEDBACK FORM/53

Corporate social responsibility is an international business norm and an important tool to help businesses increase their reputations and improve their core competitiveness. Fulfilling social responsibility allows global enterprises to explore new ways of conducting business and managing their political, economic, social, cultural and environmental impact. Disclosing information and publishing CSR report in a timely manner have become the international common practice.

ChemChina is committed to enhancing all aspects of life through its chemical products. We advocate responsibility in all our business objectives and policies, and leverage our comprehensive resources to encourage partners and stakeholders to influence and contribute industry wide sustainability.

In 2012, we faced a number of challenges: a world economic downturn, growing downward pressure from the domestic economy, readjustments to chemical industry and deteriorating overcapacity. Yet we still successfully transformed how we do business, fine-tuned our business portfolio and improved our management performance, in some instances with remarkable achievements.

——We restructured our business portfolio so that it comprises material sciences, life sciences, environmental sciences and basic chemicals. We also strengthened our marketing system and enhanced our capacity to meet the needs and requirements of the market and our customers.

——We launched management improvement initiatives to strengthen the foundation of our business growth. We enhanced cost decreasing and benefit increasing. Our world-class manufacturing and improvement efforts were recognized with an honorary national quality benchmark title.

——We increased our technical innovation and infrastructure investments. RMB 4.54 billion was invested into technology development, 544 technology development projects were undertaken and 179 R&D projects were completed, appraised and accepted, earning us 48 technology awards at the national, provincial and city levels. The numbers of our patent applications and patent products were at forefront among central enterprises.

——We improved our safety program, establishing SHE management system, cultivating professionals in safety management, and maintaining a steady level of company-wide safety performance We suffered no serious industrial accidents in 2012. We adopted a zero-emission management approach, saving energy and reducing emissions in the process, and reducing our overall energy consumption per RMB 10,000 output by 4.21% annually.

——We improved our approach to employee system, and expanded public recruitment, providing additional professional training sessions for employees, optimizing the structure of our team and improving the overall competency and capabilities of employees in the process. More than 4000 employees participated in team leader remote training and Central Party School training courses. Also, we launched a “face-to-face” and “hear-to-heart” employee assistance program.

——We increasingly leverage our technical expertise to support the agricultural industry, conduct international operations, contribute to charities and give back to the wider society.

2013 is the starting point for the implementation of the 18th plenary session of CPC Central Committee decisions, and a critical period for the implementation of the 12th Five-Year Plan. At ChemChina we will strengthen our business foundation by improving our management system and moving up the value chain. We will focus on restructuring our business portfolio, increasing global synergies that enhance our go-global strategy and improving our core competitiveness by nurturing talented people that can improve the quality and efficiency of our business development.

It is emphasized at the 18th National Congress of the Communist Party of China that we will build a beautiful China while making it strong and prosperous. Through this report, we hope to allow the society to make further understanding of and support the reform and development of China chemical industry, drive us to persist in responsible operation, and respond to the expectations and concerns of stakeholders. We will commit ourselves to building a transparent, law-abiding enterprise, creating a resource-saving and environment-friendly enterprise, and becoming an enterprise that contributes to the society and creates happiness. We will go hand in hand with stakeholders to achieve the harmonious and win-win outcome, and contribute our share to the creation of a beautiful China.

MESSAGE FROM OUR CEO

In 2012, we still successfully transformed

how we do business, fine-tuned our business portfolio and improved

our management performance, in some

instances with remarkable achievements.

General Manager:

PAGE 02/03

国计民生

The chemical industry is a pillar industry of the national economy and

plays an important role in the livelihood of the Chinese people. It is

connected to all aspects of daily life and must continue to develop as

mainland China seeks to modernize and raise living standards for its

citizens.

CHEMICALS CREATE A BETTER LIFE

CLOTHING/ Chemicals are used as raw materials in the production of cotton fiber, artificial fiber and synthetic fiber and in various dyestuffs and printing and dyeing auxiliaries in the textile industry.

Tanning agents, leather fatliquoring agents, dyestuffs, coating agents and other auxiliaries are used in the tanner industry to shorten the leather production cycle, simplify the process, and reduce costs.

FOOD/ Chemicals are used in the production of chemical fertilizers and pesticides to increase both crop output and farmer’s income, as well as help ensure food security.

Food additives and chemicals for food storage and packaging purposes are provided to broaden food choices.

HOUSING/Plastics, coatings, sealing agents, adhesives, waterproof materials, concrete additives and other new building materials are used to improve housing conditions.

TRANSPORTATION/Chemical materials for the product ion of automobiles, ships and airplanes. Four kinds of high-molecule materials are used in the auto industry, i.e., plastics, rubber, adhesive, and coating to reduce the weight of vehicles and increase both speed and reduce fuel consumption.

Provide asphalt additives, concrete admixtures and other chemicals for the transportation construction.

BASIC NECESSITIES OF LIFE /Raw materials such as plastics, rubber and coatings are used in the manufacturing of household appliances.

Chemicals such as caustic soda and chlorine gas are used in papermaking industry.

A total of 16,250 kinds of electronic chemicals covering 18 categories are used in the electronics industry. These inc lude base mater ia ls , photoresist, cleaning agents and solvents, ultra-clean high-purity agents, ultra-clean high-purity gas and metal organic compounds and encapsulating materials.

Materials and processing technologies are used in hardware that enables data acquisition, transmission, storage, processing and displays in the IT industry.

Provide the telecommunications industry with chemicals from communication cables and optical cables to telephones and mobile phone casing.

NATIONAL DEFENSE/

PRODUCTION /

Various basic and high-performance chemical materials including temperature and pressure-resistant as well as cryogenically processed new materials are used by the national defense industry.

Chemical materials such as plastics and special-purpose chemicals are used in the manufacturing of many components in the machinery industry.

Equipment, materials, specialty chemicals and assaying and testing technologies are used in modern biotechnology.

New materials, technology and equipment support the environmental industry.

High technology and new materials enable the development of new sources of energy such as solar energy, biomass, maritime energy, geothermal energy and wind power.

Supply chemical additives, mining explosives and other necessary chemical products for the coal industry and the mining industry.

Provide antioxidant, anti-corrosive additives and other chemical catalysts for the catalytic refinement of crude oil.

PAGE 04/05

Headquartered in Beijing, ChemChina is a large-sized state-owned enterprise formed out of enterprises affiliated to the former Ministry of Chemical Industry with approval from the State Council in May 2004, operating under the direction of the State-owned Assets Supervision and Administration Commission of the State Council (SASAC). ChemChina is China’s largest chemical company and operates six business units covering advanced chemical materials and special chemicals, basic chemicals, oil processing and refinery products, agrochemicals, rubber products and chemical equipment.

We have production and R&D facilities in 140 countries and a comprehensive marketing network system. We control 9 A-share listed companies, 106 subsidiaries, 3 directly affiliated companies, 6 overseas enterprises and 24 scientific research and design institutes, and have a comprehensive chemical business portfolio that covers R&D, engineering design, production operations and internal and external trade. In 2012, we ranked the 402nd on the global top 500, up from 475th in 2011. Our business income was RMB 201.7 billion with RMB 267.4 billion in total assets.

We uphold our commitments to creating a better life through the use of chemicals. We act responsibly, advocate responsible care, and serve people’s material interests through our chemical products, and lead the industry in the adoption of high technology.

ABOUT US

9 A-share listed companies

106 subsidiaries

3 directly affiliated companies

6 overseas enterprises

24 scientific research and design institutes

Advanced chemical materials and special chemicals

Basic chemicals

Oil processing and refinery products

Agrochemicals

Rubber products

Chemical equipment

PAGE 06/07

KEY PERFORMANCE MATRIX

PAGE 08/09

ORGANIZATIONAL STRUCTURE

CORPORATE GOVERNANCEWe have adopted a general manager responsibility system that is in accordance with the provisions of the State-owned Industrial Enterprise Law of the People’s Republic of China and other applicable Chinese laws and regulations. The general manager’s office serves as our decision-making body and decides important business management issues. We run nine specialized committees including a budget committee and an investment decision review committee, which support and offer suggestions to the decision-making body of the company. SASAC fulfills its duties as a promoter on behalf of the central government, and the State Council maintains a board of supervisors for major state-owned enterprises at ChemChina. The board supervises the company’s corporate value and ensures the appreciation of state-owned assets in accordance with the Interim Regulation on Board of Supervisors of State-owned Enterprises.

VISION AND VALUES Our vision:To become a world-class, resource-efficient, environmentally friendly, and intrinsically safe chemical company that creates economic and social value.

Core values: Creating value for shareholders and jobs for the wider society.

STRATEGIC OBJECTIVES We will re-define our “new science and new future” strategic position and build a business portfolio that centers on material, life and environmental sciences for its future business success but is strategically supported by basic chemicals.

We quickened our transformation and our approach to business growth by adding four core capacities: business portfolio optimization, world-class manufacturing, investment and project management, and marketing and application development. We achieved this by optimizing our capital structure, our business structure, our organizational structure and our human resources structure.

STRATEGY AND GOVERNANCE

PAGE 10/11

FOCUS

PAGE 12/13

To successfully achieve our leap-forward development goals we regularly innovate and reform our business and going global strategy. We adopt international best practices, cooperate on technical, economic and resource issues in more than 140 countries and use our competitive advantages in both domestic and international markets to grow and share our success with value chain partners.

We participate in global operations responsibly, provide job opportunities in local communities and develop local industries. We are expanding the implementation of the SHE system, and we always protect the local environment where we operate. We believe that contributing to local development is important so we actively support local educational and medical services.

Guided by our “new materials, new future” strategy, while pursuing M&As abroad, we bring in foreign strategic investors to help us establish a modern enterprise system that is in line with international practices and ensures strong results in our global operations.

The Blackstone Group, the largest private fund in the United States, made strategic investment of USD 600 million in China Bluestar Group Co., Ltd, a wholly-funded subsidiary of China Chemical Group, to jointly build Bluestar into a globally leading company in the field of new chemical materials and special chemical products. ChemChina became the first company that introduced foreign investor among central enterprises.

We have expanded our internationally competitive market share and are driving our production of domestic products through our international M&A and technology imports. Our technology is improving and we have been were awarded 1,837 core technology patents in the fields of silicone, methionine and solar-grade polysilicon. Our use of best international management practices has raised our level of corporate governance and, as a result, we have experienced a remarkable rise in economic benefits and international competitiveness. In 2012, six overseas ChemChina companies had a business income of RMB 45.8 billion, accounting for 22.22% of our total. Their combined profits were RMB 1.83 billion, or 24.4% of ChemChina’s total profits.

Case: Qenos builds a comprehensive information channel and is actively involved in local communities

Qenos maintains a website portal that encourages proactive communication and exchange with residents and companies of local communities. The inclusion of a section called “community news” keeps local residents informed on educational and advertising resources. The company receives nearly 3,000 inquiries annually from students, college graduates, customers, exporters and general public, and maintains an environmental hotline and a 24x7 community hotline in Altona and Botany to deal with challenges that the company’s business operations might cause in local communities.

PARTICIPATING IN GLOBAL OPERATIONS ANDACHIEVING LEAP-FORWARD DEVELOPMENT

We also use our domestic companies to increase our overseas investment in products. We believe this approach helps drive national industries and allows us to mutually cooperate with business partners in our Chinese value chain.

Case: Bringing professional advantages into full play to help the development of industrial clusters in Lanzhou

Based on its subordinated enterprises in Lanzhou and their projects, the Group has brought their technological advantages into full play and planned to invest RMB 16.7 billion to develop catalytic pyrolysis project (CPP), silicon metal project, poly-silicon project and other large-scale projects. The Group has also helped them with resource integration, centralized management, and supporting cycle, extended industrial chain, and produced the industrial cluster which covers from raw materials to finished products, and from the development, manufacturing, and supporting services to circulation, so as to boost the expansion of local industrial scale.

In 2012, six overseas ChemChina companies had a business income of RMB

45.8 billion, accounting for 22.22% of our total. Their combined profits were RMB

1.83 billion, or 24.4% of ChemChina’s total profits.

PAGE 14/15

Case: Carbon Black Research & Design Institute transforms its business development

The Carbon Black Institute expanded its business operation to include strategically emerging materials in order to from a new business portfolio that is centered on carbon black. The goal of the company is to become an integrated engineering service provider and a specialty carbon black supplier in the carbon black industry.

Typical initiatives

We reduced the number of domestic tier-3 and lower-level ChemChina companies by 22%. Thirty ChemChina companies were encouraged to restructure their business so that they were in l ine with collective factory-level reforms.

We readjusted and optimized our rubber tyre business port fo l io by establ ish ing a s t r a t e g i c p a r t n e r s h i p with Hainan State Farms, the largest natural rubber producer in China.

W e s t e a d i l y p r o m o t e d management in tegrat ion along our silicon value chain in order to achieve unified a management structure.

China Haohua Chemical Group used Everbright Group as a strategic investor.

2.OPERATIONAL RISK PREVENTION AND CONTROL We leverage our four-in-one supervision set-up, and are always improving our legal and regulatory compliance supervision mechanism. We continue to pursue a seamless integration of our legal risk management and disciplinary inspections, as well as our supervision and audits, and we are working hard to minimize operational risks so that our company can develop in a positive manner.

LEGAL RISK CONTROL We have established and are continuously improving our legal risk control mechanism, improving our management practices in accordance with legal and regulatory compliance issues and integrating our legal services management and production operations. Our legal contract auditing ratio has now reached 92%. We also appointed general legal counsel to provide specialized legal services, and our legal services management system has been integrated into our core business. In addition, we run in-house and offsite training sessions to improve the professional competency of our legal service personnel. In 2012, we had no single high-profile legal or regulatory dispute.

Confronted by an ever-changing international and domestic economic landscape, we regularly adjust our business growth model, adapt our business portfolio and improve our management performance to boost our business capacity and create integrated value throughout the entire company.

1.OPTIMIZING OUR INDUSTRY MIX

In accordance with the 12th Five-Year Plan we have pinned our future development to new science, shifting the focus of our business portfolio to material, life, and environmental sciences as well as basic chemicals (“3+1” business portfolio). We will continue to explore new ways to improve our conventional business operations, nurture new technology, use raw materials and funds, and optimize our industrial mix and capital structure to enhance our growing pool of advantageous resources.

GOOD BUSINESS PERFORMANCE FOR THE CREATION OF NEW VALUE

PAGE 16/17

DISCIPLINARY INSPECTION We are deepening anti-corruption efforts, strengthening our punishment and prevention system to ensure that our anti-corruption efforts are institutionalized. All key jobs and critical processes are highlighted based on the essential activities of business management and managers and they sign an anti-corruption pledge. Moreover, we now have an integrity pledge and it is strictly enforced. 2,314 managers have signed the pledge, 882 people have issued integrity statements and more than 540 anti-corruption training sessions have been conducted to date. We believe this has helped establish a strong corporate culture that is based on integrity.

SUPERVISION AND INSPECTION We continue to deepen our operational efficiency efforts and have identified 136 key items for inspection and supervision. This has resulted in the reduction of economic losses amounting to RMB 16.08 million, savings of RMB 170 million and direct and indirect economic benefits of RMB 33.70 million. In addition, we indentified RMB 8.61 million in regulatory and disciplinary violations, investigated and prosecuted many cases, examined 102 supervision suggestions, making 11 supervisory decisions and formulating or refining 110 policies.

AUDIT We have established and continue to refine our audit system at the headquarter level and in specialized companies. We push supervisory functions in our audit processes, and have intensified economic and construction audits to reduce our operational risks. In 2012, 1,748 audits were conducted.

3.IMPROVING OUR MANAGEMENT PERFORMANCE In accordance with the SASAC requirements for improving management, we have summarized and analyzed our business practices, benchmarked them against international best practices and conducted comprehensive management improvement activities that have transformed our approach to management and strengthened how information technology supports of our go-global strategy.

3.1 Continuous Improvement

We have further developed our world-class manufacturing and improvement program by incorporating 16 essential rules to the enterprise management function. These include production, sales, finance, HR, SHE, R&D, logistics, equipment management, supply chain management and IT. By benchmarking these against international best practices, a comprehensive management system comprising lean production, Lean Six Sigma, total plant management (TPM), worksite management and technical innovation management (TRSS) was formed under the WCM and CI program, and lead to improved key indicators and management performance.

Case: Zhonghao Chenguang Research Institute further implements the BWCM/CI program

The Chenguang Institute is further implementing the BWCM/CI program by raising awareness among its employees on the benefits of continuous improvement and the pursuit of excellence.

Provided more practitioner training programs, improved our project management practices, provided a supply chain transformation training program, advanced the Lean Six Sigma initiative and brought in advanced and innovative managerial approaches.

Adopted and promoted best management practices to more than 30 functional departments in the institute.

Conducted a variety of easily understandable WCM and CI training and publicity campaigns to raise awareness among employees on our involvement in the institute’s WCM and CI program.

Typical initiativesA management improvement task force was established under the direction of the general manager and carries out management improvement activities.

By benchmarking against international best practices, our corporate governance and management improvement system identified 13 key enterprise elements in 2012 that could be improved; 69 changes were identified and corrected, along with 13 bottlenecks.

By institutionalizing our work processes, refining our rules and regulations and optimizing our tools, 16 headquarter programs are now procedure-based and standardized. Baseline surveys were conducted at the premises of ChemChina companies and 21 case studies and survey reports involving 12 ChemChina companies were prepared and compiled into a book on management improvement.

A collaborative management platform was developed, and a collaborative management platform for the improvement of management and controls earned the company a national first prize for innovation in enterprise management.

Typical initiatives

W e s t r i c t l y c o n t r o l t h e s i z e a n d s c o p e o f n e w construc t ion pro jec ts and capital investments, prudently approving new construction projects and bringing in third-party organizations to enhance our project feasibility studies a n d i m p r o v e o u r p r o j e c t management practices.

We have adopted an end-to-end, company-wide and full-scale budget management approach, i n t e g r a t i n g o u r b u d g e t management practices into our project management activities to control all budgets and ensure that priorities.

3.2 Cost Reductions and Efficiency Increases

We are increasing production efficiency by improving our investment management practices and our production budget management practices, refining our approach to costing and adopting centralized purchasing management practices. We are doing this to meaningfully reduce our costs and increase productivity.

(1) Improving Investment Management Practices

We have improved our investment management practices by including investment budgeting and project approval mechanisms, and real-time tracking and post-project assessments. The changes make our investment decision-making process more scientific and professional.

Case: Bluestar World-Class Manufacturing Program kicks off

The BWCM Center of Excellence team successfully transferred knowledge during the project implementation process. The COE team acquired the capacity t o i m p le m e n t t h e B W C M program and provide workflow training in place of an outside consultancy, giving birth to t h e f i rs t B WC M wo r k f low experts to be armed with both production management skills and pract ical exper ience. Continuous improvements to our auxiliary tools standardized the BWCM system application, and a BWCM KPI system was developed on the basis of SAP BW platform, which enabled the automatic collection and reporting of KPI data. BWCM KPI indicators are adopted at all manufacturing enterprises throughout ChemChina as they provide a standard language for production management and offer an important tool for operational analysis.

Typical initiatives

Twenty full-time black belts, 32 black belts, 397 green belts and 10,071 yellow belts have been established; this increased the percentage of belt-level practitioners as a percentage of staff to 10%.

4 4 2 C I p r o j e c t s w e r e implemented, generat ing economic benefits of RMB 851 million.

ChemChina’s improvement practices under the Lean Six Sigma system was recognized by the Ministry of Industry and Information Technology in 2012 and named as a national quality benchmark, the only quality benchmark in China’s petrochemical industry. Aeolus Tyre and Beij ing Bluestar Machinery Co. Ltd were also named as quality benchmark enterprises in the petroleum and chemical industry.

PAGE 18/19

(2) Reducing Non-Productive Costs

We exert control over non-productive costs and increase our fund utilization efficiency to reduce operating costs and intensify our financing and fund management efforts while adopting unified insurance measures.

(3) Centralized Purchasing Management

We regularly review and improve our purchasing policy to leverage our systematic procurement organization. We have a professional procurement team, a standard-based procurement process and an IT-enabled procurement platform that all work in harmony to achieve regional collaboration and the optimization of our resource allocation.

Typical initiatives

All specialized companies work together to build an efficient supply chain management system, transforming their strategic sourcing approach into an operational sourcing approach, improving the centralized purchasing system and conducting regional collaborations that optimize our allocation of resources. Centralized purchasing was adopted for all major raw materials such as fuel, aromatics, steel products and synthetic rubber. The result was total cost savings of more than RMB 800 million. We purchase coal in a centralized manner via strategic partnership agreements with major coal suppliers, and we have formulated a centralized purchasing management procedure. China National Bluestar Group, China Haohua Chemical Group and ChemChina Petrochemical Corporation built a specialized centralized purchasing platform by establishing a comprehensive organizational structure and a purchasing process.

Case: Changyi Petrochemical accelerates its IT applicationShandong Changyi Petrochemical Co., Ltd. put three IT platforms into operation. These include an office automation collaboration system, an ERP system and a real-time database system to achieve efficient integration between finance and operation and among operations. The application of the real-time database eliminated problems associated with a technical bottleneck and preventive equipment maintenance and reduced power consumption in all plants. The three IT systems enabled Changyi Petrochemical to share information and improve their business integration across all departments, and integrated production, supply, distribution and financial accounting into a single process. This enabled refined costing practices.

Typical initiatives

W e u s e a c o m p a n y w i d e collaboration platform that c o v e r s m o re t h a n 1 3 , 0 0 0 business processes across 26 categories. The management network covers three levels of ChemChina companies and spans all operation functions.

Through our IT infrastructure we have deepened our HR m a n a g e m e n t g ro u n d w o r k improvement initiative. Our SAP HR system includes a personnel database, a business operation platform, a KPI platform and a s t a t i s t i ca l m a n a g e m e n t p l a t f o r m , a n d p r o v i d e s ChemChina with a computerized, standard-based management system for human resources.

3.3 Informationization Construction

We are working to enhance our IT program and are integrating the results of our management transformation and best practice processes into the information system. We are building intelligent factories by utilizing automated, computerized, visual and intelligent tools and approaches.

4. IMPROVING THE CAPACITY TO SERVEWe actively explore new marketing methods with a view to meeting market demand and customers’ needs. We regularly analyze and identify customer needs and use new marketing tools to improve our marketing system and raise awareness among ChemChina staff that service is also a product. By improving our customer service, we have increased the value of our products.

Typical initiativesWe developed six useful tools (a customer-based real-time tracking tool, a standardized customer database tool, a product mix real-time tracking tool, a standardized product database tool, a performance rating and incentive system tool and a marketing tracking tool) and use specific rating criteria to help our subsidiaries establish and improve their marketing systems.

We launched a marketing contest named “working hard for 100 days to make an auspicious start” to improve our marketing system and ensure that customer service personnel are proactive and motivated. We did this to increase sales revenue and our per unit product sales ratio as well as reduce costs are enhance customer service.

We deepened our hierarchical customer management practices to assess customers’ size, growth potential, financial performance and risk and strategic alignment. In addition, we adopted a differentiation strategy that enables customers to better identify themselves with our company.

We now use a region-by-region market segmentation strategy for market management and have established a rapid response mechanism.

Case: Shandong Dongda Chemical meets customer needs via marketing initiatives Shandong Dongda Chemical Industry (Group) Co., Ltd. strives for closer relationships with its production, supply and distribution units to better meet customers’ needs and solidify its industry leadership position in terms of the speed of its inventory turnover. Using its competitive edges and low costs, Dongda has established a customer management model into its IT system. Customers are graded monthly and a tailored marketing strategy is adopted. This has increased sales volume from Type A and Type A- customers by 31.6% annually, and is worth 64.3% of total sales volume.

Case: Segmentation of product application marketNantong Xingchen Synthetic Material Co., Ltd. established a template for its product marketing strategy analysis, segmented its product application market, formulated a short-term and long-term customer development plan and adapted deliverables from its epoxy resin pricing management project. A production, sales and inventory data system was also set up and new product development processes (NPI) were formulated to increase the efficiency and speed of getting new products to market.

Typical initiatives

Low-interest loans are replaced with high-interest loans. Our fund concentration ratio was increased to 82.07%. Our unified insurance policy and our unified insurance coverage is now 74.6%. Major energy-consuming products are benchmarked against international best practices, which have reduced our consumption of power, crude salt and tank voltage at 13 chlorine alkali manufacturers. Our benchmarking of 188 products increased our conformity rate by 0.12% from 2011, reducing costs by RMB 494 million. We have taken steps to strictly manage our expense budget, have improved our expenditure management procedure and reduced our expenditures on company-owned cars, entertainment and communication.

Shandong Dongda customers' annual meeting

Our benchmarking of 188 products increased our

conformity rate by 0.12% from 2011, reducing costs

by RMB 494 million.

PAGE 20/21

The sample molding machine for 51-inch steel

High-purity hydrogen selenide pilot plant

Panorama of acephate facilities radial giant tire

Guided by our “new materials, new future” strategy, we regard technical innovation as the foundation of our value and are committed to improving our technical innovation system. We promote our commercial activities and the application of technological achievements, strengthen our intellectual property protection efforts and are constantly improving our capacity for in-house innovation and sustainability in order to move up the value chain.

1.TECHNICAL INNOVATIONSWe rely on technical expertise to participate in key technology development programs at the national and provincial levels. In 2012, we implemented 544 technology development projects, including 99 national key technology development programs, 140 key programs at the provincial and municipal levels and 305 in-house technology development projects. 179 technology development projects were accepted by an expert panel, earning ChemChina 48 technology awards at the national and provincial levels.

We protect our intellectual property and are constantly improving our approach to patent innovation and management. In 2012, we filed 753 patent applications, including 397 new invention patents. 692 patents were granted, including 364 patents of invention. So far, we have a total of 3,583 patents including 2,510 invention patents, making ChemChina one of the largest patent holders among major state-owned enterprises in China.

PATENT APPLICATIONS DURING THE RECENT YEARS

DRIVING NEW GROWTH THROUGH TECHNICAL INNOVATION

PAGE 22/23

2.IMPROVING THE TECHNICAL INNOVATION SYSTEM

We are constantly increasing our investment in technical innovation, are working to strengthen our R&D personnel, and have established a technical innovation platform that draws on industry, academia and the research community. We have optimized our technical innovation mechanism, fully enhanced our in-house innovation capacity and improved the technological competitiveness of ChemChina.

2.1 Building a R&D Team

We regard R&D personnel as the cornerstone of our innovation-driven business growth, and invest heavily in our highly competent R&D team. We recruit high-caliber technologists, drawing on the central government’s overseas talent and entrepreneurship base and its future technological city base program and our in-house program. Our goal is hire 1,000 PhD employees.

We have set up an industry specialist innovation motivation program to motivate R&D personnel. The ChemChina Science and Technology Award and the ChemChina Patent Award were established to reward innovation groups for outstanding performance in technical innovation. The ChemChina Science and Technology Foundation encourages and supports innovative industry practitioners.

2.2 Increasing Input in Technical Innovation

We pursue technological advancement and industry upgrading, and regularly increase our investment in technical innovation to develop and support key technology development projects that are closely related to the primary business of ChemChina. This makes full use of the role that technical innovation plays in ChemChina’s business development and will increase the value of the company as we meet our customers’ needs. In 2012, we invested RMB 4,066 million in technical innovation, accounting for 2.14% of the business income from our core business.

2.3 Technical Innovation Platform

We are building R&D centers at the national and provincial level to enhance our leadership in specialized fields. As of 2012, ChemChina owns two state-level key labs, nine nationally recognized corporate technical centers, nine national engineering (technical) centers, 4 state-level quality inspection centers and 11 industry quality supervision and inspection centers.

State Key Laboratory of Industrial Vent Gas Reuse

State Key Laboratory marine coatings

Technical center of Xinghuo Silicone Plant of Bluestar

New Chemical Materials Co., Ltd

Zhonghao Chenguang Chemical Research Institute’s

Technical Center

Sanonda Group Co., Ltd’s technical center

Yellowsea Rubber Co., Ltd’s technical center

Yiyang Rubber &Plastics Machinery Co., Ltd’s technical center

Guilin Rubber Machinery Plant’s technical center

Aeolus Tyre Co. Ltd’s technical center

ChemChina Rubber Guilin Co. Ltd’s technical center

Tianhua Institute of Chemical Machinery & Automation

Co., Ltd’s technical center

Nationally recognized corporate technical centers

Key labs

We are showing our commitment to building a market-oriented technical innovation platform that draws on industry, academia and the research community. In 2012, we set up the ChemChina Chemical Science Research Institute as a platform for technical innovation and to promote the restructuring of our business and improve our in-house innovation capacity.

1,000 PhD Program ChemChina’s overseas talent introduction program was showcased at the 1,000 Talented People Program exhibition organized by the Organization Department of CPC Central Committee.

NATIONALLY RECOGNIZED TECHNICAL CENTERS IN 2012 (PARTIAL)

We recruit high-caliber technologists, drawing on the central government’s

overseas talent and entrepreneurship base and its future technological city base program and our in-house program. Our goal is hire 1,000 PhD employees.

R&D EXPENDITURE OVER THE PAST THREE YEARS (RMB 100 MILLION)

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3.FACILITATING THE APPLICATION OF SCIENTIFIC PAYOFFS

The market is an powerful source of our innovation. We are working to increase our value by commercializing and applying technical innovation, building our engineering testing and verification platform, conducting innovation-driven efficiency improvement initiatives, facilitating the commercialization of scientific payoffs and enhancing the role of patents and scientific and technological achievements that support our core business.

4.PROMOTING TECHNOLOGICAL ADVANCEMENT IN THE CHEMICAL INDUSTRY

We have advancing our approach to technical innovation and advanced technology, and participate in the formulation of industry standards. We have established a special-purpose foundation that encourages in-house innovation in the industry and are working with other chemical companies to promote the development of the industry and facilitate technological advancement in the chemical industry.

Case: A plus for space industry in China

In the aerospace industry, more than 10 subsidiaries of China Chemical Group have made great contribution to the development of aerospace and aircraft work. They adopted new chemical materials and technology, and provided various chemical products and components for the successful launch of spacecraft and the complete success of the manned space docking mission.

In 2012, the Medals for Success of Rendezvous and Docking Mission were granted to Liming Research Institute of Chemical Institute, Chenguang Research Institute of Chemical Industry, Northwest Rubber and Plastics Research Institute, Spark Space New Materials Co., Ltd., Jinxi Research Institute of Chemical Industry, and China Rubber Group Shenyang Rubber Research & Design Institute.

Case: ChemChina Science and Technology Foundation

We set up the ChemChina Science and Technology Foundation in 2005 to sponsor chemical technologists in China’s chemical industry and to support the technical innovation projects. The Foundation contributes to innovation in the industry and in academia and the research community. It also contributes to the industrialization of high technology in the chemical industry and supports the upgrading of conventional industries and the localization of key equipment. As of 2012, we invested RMB 8.45 million in the foundation and supported 30 projects.

Case: Resource-Efficient a n d E n v i r o n m e n t a l l y Friendly Chemical and High-value Product Engineering Collaborative Innovation Center established

We established the Resource-efficient and Environmentally Friendly Chemical and High-value Product Engineering Collaborative Innovation Center in collaboration with the Beijing University of Chemical Industry, Tsinghua University, Institute o f Process Eng ineer ing o f Chinese Academy of Sciences and Sinopec. This collaboration will resolve problems that afflict China’s chemical industry such as the high consumption of energy and resources and high pollution. It will also raise the level of the new energy and material chemical industries, contribute to environmentally friendly processes and products in China’s chemical industry and ultimately achieve the more efficient utilization of resources.

4.1 Participating in the Formulation of Industry Standard.

We draw on our competitiveness and technical expertise when participating in the formulation of standards. In 2012, we participated in formulation of 313 standards, including 83 national standards, 78 industrial standards and 152 company standards.

In combination with the actual situation of enterprises in China, the Company has formulated the method of calculating CO2 emission for ammonia production enterprises, and the method of calculating N2O emission for nitric acid production enterprises, and helped them to improve the calculation and management in energy consumption and GHG emission to support them in achieving the national energy conservation goals.

4.2 Technical Exchanges and Cooperation in the Industry

We pay close attention to technical exchanges among industry associations, research institutes and other chemical companies in order to strengthen technical cooperation in our specialized fields, organize and participate in specialized domestic and international forums and promote the advancement, transformation and upgrading of industry-wide technology.

COMMERCIALIZATION OF KEY TECHNICAL INNOVATIONS IN 2012 (PARTIAL)

The auxiliary products of Shenzhou spacecraft developed by Liming Research Institute of Chemical Industry

The supporting products for China’s self-developed spacesuit

New Materials Industry Forum held by ChemChina.

MAJOR TECHNICAL EXCHANGE PROJECTS AND COOPERATION ORGANIZED BY CHEMCHINA IN 2012

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3-LEVEL CHEMCHINA SHE MANAGEMENT SYSTEM

2.SOLIDIFYING OUR FOUNDATION FOR SAFETY PRODUCTION

We carry out “Five steps to safety” and “Staff safety supervision” to ensure that all ChemChina people are fully aware of occupational safety issues, and are intensifying our assessments to ensure that all safety standards are met. We are also strengthening our risk analysis and emergency response system to improve safety in our production plants. In 2012, we invested RMB 724.5 million in occupational safety initiatives, 5% more than the previous year.

2.1 Safety Hazard Identification

We are strengthening are process controls and review mechanism and have established a safety inspection system that comprises daily inspections, companywide inspections and ad-hoc inspections to ensure no safety hazards go unnoticed and to prevent any industrial accidents. In 2012, 52,369 safety hazards were identified and resolved.

We have implemented the requirements of the crackdown on illegal and illegitimate production operations launched by the State Council’s Work Safety Commission. We launched a six-month campaign against illegal and illegitimate production operations, examined 15 key companies for safety performance, identified 167 safety hazards and required these companies to make corrections.

We will continue to deliver on our commitments to “Love and cherish life, no bloody profits”, and have appropriately set up a SHE management system. We are facilitating a corporate culture of safety, improving safety in our production plants and enhancing all forms of safety performance throughout the entire company. In 2012, no single serious industrial accident was reported in the company.

1.IMPROVING OUR SAFETY MANAGEMENT SYSTEM

We have further developed the SHE management system and established a three-level SHE management system at our headquater, in specialized companies and at ChemChina subsidiaries. The SHE system is unified, standardized and follows an operable principle. A SHE promotion team was set up and the status and effectiveness of all SHE elements at ChemChina companies are evaluated to ensure that the system’s effectiveness continues to improve.

Case: China Bluestar Group SHE Policy helps ensure successful implementation of construction projects

Ensure the health and safety of employees, and the safety of technical process;

Ensure the safety of products in the full cycle including the design, sales and use;

Grasp the properties of hazardous materials to minimize or eliminate transport risks;

Effectively treat the hazardous substances to avoid their direct emission.

Tips: The Qenos SHE management systemQenos, a Bluestar company, is the largest ethylene/polyethylene p ro d u c e r i n A u s t r a l i a . T h e Qenos SHE Management System incorporates international best management practices in safety, health and the environment and comprises 21 SHE management practice criteria and a detailed evaluation system that is designed to meet all safety, health and environmental requirements of employees, contractors, suppliers, customers and local communities. The system identifies SHE risks and complies with all applicable laws and regulations.

Qenos production equipments

“Five steps to safety”

SETTING A NEW BENCHMARK FOR SAFETY PRODUCTION

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2.3 Intensifying Emergency Management

We built a contingency planning system that aligns our overall planning with ad-hoc plans and connects upper-level plans with lower-level plans. All ChemChina staff takes part in the emergency drills to improve their ability to deal with emergencies and to minimize losses resulting from accidents and emergencies.

2.4 Improving our Management of Hazardous Chemicals

We improve our management of hazardous chemicals at the source by identifying, evaluating and classifying major hazards and establishing and continuously improving our three-level monitoring system.

2.5 Occupational Health and Safety

We closely follow employees’ occupational health and safety issues and have established a comprehensive occupational health and safety management system. We continuously improve our occupational health and safety management practices and seek to raise the level of occupational health and safety awareness among our employees. No single case of occupational disease was reported in 2012.

2.2 Improving Intrinsic Safety

We have increased our investment in occupational safety, adopted a technologically advanced, automated safety control system, and are continuously improving the performance of our equipment and plants to prevent accidents caused by faulty operational management and solidify our operational support for occupational safety.

Case: Haohua Qingping Phosphorus Mine increased its contribution to occupational safety

With a capital investment of RMB 8.5 million, Deyang Haohua Qingping Phosphorus Mine built an underground monitoring and personnel monitoring system as well as an escapeway that connects the Majiaping Mine, the Huodi Mine and the Yanziyan Mine. The company also built a complete ventilation system in each mine to ensure personal safety of its workers. The The injury rate in 1000 persons was 1.3. The company was free of any industrial accidents involving serious injury throughout the year and won an honorary Occupational Safety Contest title from the All China Federation of Trade Unions and State Administration of Work Safety.

Case: Cangzhou Dahua Group named a national hazardous chemicals emergency aid base

Cangzhou Dahua Group Co., Ltd is a large-sized integrated chemical company whose production process involves the use of liquid chlorine, TDI, phosgene and many other highly toxic hazardous chemicals. The company has improved its emergency aid system by investing capital that ensures that no worker suffers injury due to deadly exposure to phosgene. The system plays an important role in emergency aid for hazardous chemicals and has earned the company an honorary national hazardous chemicals emergency aid base title.

Typical initiatives

We revised and published the ChemChina emergency plan. The plan comprises an overall contingency plan and ten subject specific plans to make it more actionable.

3.FOSTERING A SAFETY CULTURE

3.1 Conducting Safety Training

3.2 Building a Safety Culture

We are striving to become a role model of corporate safety culture. We staged a number of at-home safety culture activities in 2012 in order to foster our culture of safety into the daily lives of our employees and our company operations.

Case: Deputy safety director training seminar

ChemChina held a four-month deputy safety director training seminar consisting of safety practices, safety management, ad-hoc lectures, workshops and observation tour, involving 58 safety officers.

Typical initiatives

We have developed a major hazard registration procedure and conduct random inspections o f how major hazards are monitored to ensure all safety hazards are kept under control.

We conduct emergency aid drills involving chlorine gas leaks, ammonia and phosgene as well as other hazardous chemicals.

W e a n a l y z e h a z a r d s a n d operability (HAZOP), have an in-house HAZOP analysis team of 97 technologists, equipment experts and safety off icers and conduct a HAZOP training session.

Typical initiatives

Health and safety facilities are provided and training on occupational disease prevention and occupational health is delivered to make employees more aware of occupational health. RMB 236.5 million was invested in occupational health and safety in 2012.

We enforce the Special Provisions for Labor Protection of Female Workers and protect the rights and interests of female employees in terms of protection and occupational health. A free health checkup is provided to female workers involved in high-risk activities to protect their rights and interests to the maximum extent.

Scence simulation at the training seminar

Jiangsu Huaihe Chemicals Co., Ltd

52 managers, 14 safety officers and 168 high-risk job holders were involved in safety training programs at the county level or above. 1,206 company safety training sessions were delivered.

Hebei Shenghua Chemical Industry Co., Ltd.

Zhonghao Chen-guang Research Institute of Chemi-cal Industry

Safety officers are encouraged to attend the national exam for certified safety engineer qualification and those who pass the exam are given a 10% job allowance.

The training center at Zhonghao Chen-guang Institute became ChemChina’s emergency training base after receiving a safety training license from the central government.

ChemChina

China National Bluestar (Group) Co., Ltd.

Jiangxi Xinghuo Organic Silicone Plant

A one-week contingency drill was staged to train 83,000 employees in emergency response via distributing safety brochures, holding safety contests, exhibitions, safety quizzes and a safety cartoon contest.

A variety of activities were staged that encourage staff and their family mem-bers to express what they had learned about occupational safety in the forms of article, pictures and cartoons. The activities facilitated an atmosphere for at-home safety culture and spread the safety commitments of Bluestar.

Conducted activities to raise safety awareness among its workers and their families and to create an enabling environment that allows a culture of safety to take root, under the theme of “I need to be safe”, “everyone is a safety officer”, “at-home safety culture building” and “reporting minor accident and safety hazard wherever possible”. The plant was subsequently named a national role model of safety culture building.

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2.PROMOTING GREEN OPERATIONSWe pay great attention to the cleaner production process, and aim to control the generation of pollutants from the source. To this end, we make greater efforts in the development of energy conservation technology, proactively develop circular economy and promote high-efficient use and recovery of resources to achieve low consumption, low emission and high efficiency.

2.1 Promoting Energy Conservation and Emissions Reduction

We p ro m o t e e n e rg y co n s e r v a t i o n and emissions reduct ions through technological innovation and by upgrading of devices, reforming our approach to “debottlenecking”, adjusting our product structures and eliminating high energy-consuming products. In 2012, our energy consumption was reduced by 4.21%.

Pursuit of “Zero Emissions”W e p r o m o t e “ z e r o e m i s s i o n s ” management and cleaner production. We control our generation of pollutants from the source and have developed a strict project withdrawal mechanism to help ensure that all high-energy consumption, high emission devices will be withdrawn from our production areas.

Conservation of Energy Resources

Case: ChemChina Petrochemical (Tianjin) granted with the title of “clean production enterprise”

ChemChina Petrochemical Corporation ( T i a n j i n ) i s a c h i ev i n g i t s “ c le a n production enterprise” standard by saving energy, decreasing consumption, reducing emissions and increasing efficiency. Its successful approach was rewarded with the granting of a “clean production enterprise” title. The company implemented reforms in 13 projects that have successfully reduced pollution and consumption. It has also built and put into operation pollution and consumption reduction projects, including an electric desalting project that has a capacity of 500,000 t/a, the inclusion of a desulphurization and dust removal system in its coal-fired boilers, and a COD on-line monitoring system for sewage efflux. The activities have combined to reduce the company’s overall energy consumption.

Case: China National Agrochemical promoting clean production

China National Agrochemical Corporation has increased its waste management investment, and Hubei Sanonda Co., Ltd. and Huaihe Chemicals uses a three-waste management system that required an investment of RMB 25 million and RMB 10 million, respectively. Our emissions of major COD, NH3, SO2, and NOx pollutants in subordinate enterprises now meet national standards, and have passed all audits and inspections for clean production. In addition, Cangzhou Dahua Group Co., Ltd. was recognized as an advanced unit for energy conservation and a “Double Thirty” assessment elite unit by Hebei province in the “11th Five-Year Plan” for energy conservation and emissions reductions in 2011.

Typical initiatives

We promote cleaner production. Our “dry-process acetylene supported by dry-process cement to replace wet-process acetylene project” project in Hunan Xiangwei Co., Ltd. was listed as national demonstration project for the clean production industry. The 20,000 t/a 2,4-D new continuous technical process transformation project” of Sanonda Group Corporation and the “2,500t/a buprofezin technology transformation project” of Jiangsu Anpon Electrochemical Co., Ltd. were declared to the Ministry of Industry and Information Technology for “Demonstration Project” and “Promotion Project” of cleaner production in 2013.

We have completed formulating our greenhouse gas emissions standard, and our Calculation Method for Carbon Dioxide Emissions in Synthesis of Ammonia as well as our Calculation Method for Nitrous Oxide Emissions in Synthesis of Nitric Acid have become the industry standard.

The recovery project of Elkem is expected to recover the energy about 300 GWh per year, equivalent to a reduction of CO2 emission by 210,000 tons per year.

We follow a “zero emissions” management philosophy and are working to maximize our resource efficiency and minimize our pollution emissions through state-of-the-art management and technology. We use our science and technology advantages as well as our research and development abilities to offer energy-saving and environmentally friendly products and services. We are also strong proponents of a greener and sustainable chemical industry.　

1.IMPROVING OUR ENVIRONMENTAL MANAGEMENT SYSTEMWe have improved our environmental management system and will continue to so. We have established a network platform that covers the Group’s three-tier management structure, and are strengthening our long-term benchmarking mechanism to optimize our environmental management model.

Case: Aeolus Tyre Co., Ltd. taking the lead in Energy Management Certification

Aeolus Tyre Co., Ltd. was China’s first tyre company to receive the Energy Management System Certification. The company uses the system’s integrated approach to evaluate its economic operations and to tap into its energy-saving potential as it improves approach to energy management. This ensures energy savings and improves resource utilization, and provides a reference for the tyre industry by showing how companies can continuously improve and enhance their energy management levels, while driving energy savings and emissions reduction in tyre industry.

Typical initiatives

We formulated the “12th Five-Year Plan” energy conservation and emissions reduction plan, and have conducted process monitoring and analysis.We have deepened our benchmarking management structure and conducted exchange activities on all key energy-consuming products.

A total of 188 products are now managed according

to the requirements of our

benchmarks and we have a

compliance rate of 69.19%,

increased by 0.12%, which has reduced costs by RMB

494 million.

GREEN AND ENVIRONMENTAL, EXPANDING THE NEW SPACE

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2.2 Building a Circular Economy

We will continue to implement the circular economy concept and will regularly improve all aspects of our resource efficiency. In accordance with the “reduction and recycling, and resource and reduction first” principle of a circular economy, we are extending our industrial chain, improving our circular economy industrial system to gradually become a low-input, low-consumption, low-emissions, and high-efficiency growth company.

2.3 Advocating Green Office

We are taking implementing measures to raise awareness on issues related to energy saving and the rational use of energy. We are advocating and building, and green offices that efficiently utilize water, electricity, paper, vehicles, and waste the recycling of waste.

Case: Hebei Shenghua Chemical Industry Co., Ltd. creates circular economy industrial base

Green chemicals are central to the development strategy of Hebei Shenghua Chemical Industry Co., Ltd. The company is transforming itself into a circular economy demonstration enterprise and has adopted advanced domestic and oversees design concepts and technology to dramatically reduce its energy consumption and production costs. It has created a mutually beneficial system for its chemical raw materials, intermediate products, products, by-products and wastes, and has developed a cycle mechanism that traces all raw materials in its final products. Case: Reverse osmosis membrane technology developed by Hangzhou

Water Treatment Technology Development Center accepted

Hangzhou Water Treatment Technology Development Center implemented a National 863 Program project “reverse osmosis membrane and industrialization technology development project” and realized seawater desalination rate of 99.8% and 99.36% using reverse osmosis membrane element and low-pressure reverse osmosis membrane element respectively, both reaching a world-leading level. The successful implementation of this project will improve the manufacturing technology and capabilities of reverse osmosis membrane products, promote the development of reverse osmosis membrane industry and make Chinese-made reverse osmosis membrane products available at home for the first time.

3.PROVIDE GREEN SERVICESWe promote and apply new environmental technologies, and research and develop environmental products to impel the low-carbon development in chemical industry.

3.1 R&D of Environmental TechnologyWe are increasing our research and development efforts on environmental protection, actively promoting environmental technology, and contributing to the sustainable development of all enterprises in chemical industry.

3.2 Providing Eco-Friendly Products and Services

Investing in R&D that improves our green and environmentally friendly products and industry development is very important to us. We use our advantages in energy management and chemical technology to save energy and protect the environment as well as to increase our low power and low emission products. In addition, we are promoting similar improvements throughout the entire chemical industry in order to realize win-win situations that meet our “We invest, you save energy, three parties benefit” approach.

Southwest Research & Design Institute of Chemical Industry

Toray Bluestar Membrane Co., Ltd.

BlueStar Environ-ment Engineering Co., Ltd.

When using our pilot plant the comprehensive utilization of calcium carbide furnace exhaust passes 1,000 hours of continuous operation and 72 hours of continuous assessment and acceptance and achieves a carbon monoxide purity rate of 98%, indicating that China’s calcium carbide furnace exhaust utilization rate meets the necessary conditions for industrialization, which achieves the resource recycling standards for carbon monoxide and environmental governance for heavy pollution.

The company’s Tough TM anti-pollution reverse osmosis membrane technology is ahead of other similar products in terms of its desalination rate, its water production, its chemical durability and its anti-pollution attributes. For this reason it has been named a key supporting technologies.

BlueStar Environment Engineering Co., Ltd. has strengthened its environmental technology research and development by obtaining 12 invention patents including “Depth treatment and reuse technology for neoprene industrial wastewater”, “Treatment for silicone wastewater”, “Depth treatment and reuse technology for municipal wastewater”, “Depth treatment for petrochemical wastewater”, “Treatment technology and processing equipment for oily wastewater”, and two utility model patents, including a “dissolved air flotation unit”, and an award winning honorary “2012 waterworks professional brand” title.

Typical initiatives

O p t i m i z i n g o u r p r o d u c t structure, forming reverse p e n e t r a t i o n m e m b r a n e s , i o n - e xc h a n g e m e m b r a n e electrolyzer, green tyres and other product series.

Act i ve ly explor ing energy management and audit ing e n e rg y co n s e r v a t i o n a n d emissions reductions as well as new environmental business approaches.

Waterborne epoxy coatings and five other products in Nantong B l u e s t a r N e w C h e m i c a l M a t e r i a l s C o . , L t d . a r e effective alternatives to toxic and hazardous raw materials (products); the products will encourage development across the country.

PAGE 34/35

The declared substitutes of toxic and hazardous materials (products) that our country encourages to develop and use

We uphold the idea that our “staff supports the development of the enterprise”. We view employees as our most important resource and valuable asset. We care about our staff and provide them with development opportunities through our growth platform. We are optimizing the structure of our staff teams, creating a diversified and harmonious corporate culture that enhances the well-being of our employee so that they can grow in partnership with the company.

1.PROTECTING THE INTERESTS OF OUR EMPLOYEESWe comply with all laws and regulations, sign labor contracts with employees, ensure payments and benefits and encourage our employees to fully participate in the democratic management process. We respect the legitimate rights and interests of our employees, and protect employees’ personal information and privacy. No major labor dispute occurred in 2012.

We regularly strengthen the management of our labor contracts, and improving our labor and employment mechanism. In 2012, 100% of our staff signed labor contracts and the collective contract rate was 100%. Our staff turnover is 7.76%, and we have 133,121 employees, of whom 70.7% are male and 29.3 % are female. The company employs 5,324 minorities, or 4%, and 10,252 overseas employees, who account for 7.7% of our staff.

We actively share the fruits of development with employees, utilizing incentives, improving and optimizing the welfare system, and constantly improving our employee benefits. We have optimized our pay system, established a salary system of “paying for post value, paying for performance, and paying for differences in individual ability”, and have successfully achieved a positive interaction between remuneration and employee contributions. We have implemented an enterprise annuity plan, and will always protect our employees’ standard of living after retirement.

We encourage all employees to participate in democratic management, and respect and welcome the democratic management of trade unions and workers’ congresses to strengthen day-to-day communication and protect the employees’ rights to information so that they can participate in, express and supervise the process. We are strengthening the work of the trade union, which has a 100% staff membership rate. Union funds are currently RMB 202 million. We also conducted the “face to face, heart to heart, honestly and simply, serving workers at the grass-roots” campaign wherein company leaders visited the front line of our operations to survey 2,725 people, holding 487 forums, collecting 3,713 opinions from workers, and accepting policy advice from 1,988 employees.

Case: Southwest Research and Design Institute of the C h e m i c a l I n d u s t r y w a s recognized as an open and d e m o c ra t i c m a n a g e m e n t advanced unit of factory affairs in Sichuan province

Southwest Research & Design Institute of Chemical Industry amended its working system to include the Implementation details of the workers’ congress, and Implementation details of institute affairs opening . I t i m p le m e n t s a w o r ke r s’ congress, and listens to all comments and suggestions from its staff. It draws on the Journal of Southwest Research & Design Institute of Chemical Industry, and the Monthly Report of Southwest Research & Design Institute of Chemical Industry , a n d d i s c lo s e s re fo r m a n d development information about organizational change, research and production and management work in order to protects the workers’ rights to information and participation.

2.ACHIEVEMENT OF EMPLOYEES’ VALUES

We provide multi-faceted and multi-level education and training for employees, stimulate employees’ potential, and improve our employees’ capacity for lifelong learning. We have designed a career development path that lets employees expand their career opportunities by increasing their competence, quality and professionalism as well as enhancing their lifelong employability prospects.

2.1 Diversification Education Training

Case: Organizing the first phase of our Deputy CFO training courses

According to our core competency model, the company set a curriculum system of “core curriculum + thematic courses + expert lectures + expansion training and case combat”, which is equipped with a team of teachers with a wealth of practical experience to improve the skills of key employees in financial setor.

Case: Central Party School training courses

We organized the Ninth and Tenth Centra l Par ty School t ra in ing courses, training 156 enterprise leadership team members and young cadres. From 2001 to 2012, the Corporation and China National BlueStar (Group) Co., Ltd. held 15 joint training courses for the Central Party, training 1,248 young and middle-aged cadres.

EMPLOYEE GROWTH, CREATING NEW BUSINESS OPPORTUNITIES

Group Topic

PAGE 36/37

2.2 Optimizing Career Development Opportunities

We encourage our employees to relish lifelong learning and improve their career development paths. We have developed an evaluation mechanism for tracking and training, built a scientific performance appraisal system, and broadened the employee career platform to enhance our human resources incentive mechanism and contribute to the growth of our employees.

Case: Creating long-term mechanisms for our chief technician assessment

Haohua Honghe Chemical Co., Ltd. began the first round of its chief technician assessment work, expanding its promotion mechanism for occupational skills from existing junior workers to senior technician, and expanding its professional coverage of the company’s rating mechanisms. This improves the highly skilled personnel training system, and provides a broad development space for the growth and success of its front-line workers.

3.ENHANCING EMPLOYEES’ WELL-BEING

We are developing our corporate culture by creating a fully inclusive and equitable corporate structure via cultural activities. We care about our staff, from new recruits to retired employees, and always seek to improve and support their wellbeing.

3.1 Creating a Harmonious Corporate Culture

We regard corporate culture as the cornerstone of our long-term development, and believe that diversified and content-rich cultural and sports activities can help train and publicize our distinctive culture, which will enhance cohesion in the company and create a harmonious atmosphere.

3.2 Caring for Our Employees

We believe in humane care. We help and support our staff with their work in a structured and systematic way and we protect the special rights and interests of female employees, care for retired personnel, and help employees with their work life balance.

We continue to improve our support mechanisms and assist our employees in troubled times. In 2012, the company invested RMB 3.10 million in relief funds, benefiting 4,577 employees in the process.We pay close attention to and care for female employees. We conduct forums for female staff, organize psychology sessions, help ease work pressure, and create “happy work and life” conditions for female employees.The company organizes and carries out a variety of cultural and sports activities to enhance the cohesion among staff and motivate them.

Single party

Zhenghe Petrochemical Group Co., Ltd. opens a center for senior citizens

ChinaChem

Zhonghao Chenguang Research Institute of Chemical Industry

Guizhou Crystal Organic Chemical (Group) Co., Ltd.

Organized a “love reunion” youth dance and built a dating platform for young singles.

Organized and participated in 10 performances and sports competitions, and allocated RMB 170,000 to activities in 32 units and departments of the institute. The chess association, fishing asso-ciation, table tennis association, and other various cultural and sports associations are growing strongly.

Holds a family fun day under “striving for a civilized family, building harmonious company together” theme to promote a harmonious family style, establish a model for family harmony, and promote society climate that contributes to a harmonious family.

Culture concept: be tolerant to diversity

Quality concept: products reflect character

Unity concept: harmony

helps a lot

View of success or failure: success depends

on detailsTalent concept: everybody has his or

her own talent

Behavior concept: human effort is the

decisive factorCore values: creating

value for shareholders creating employment for

society

Enterprise spirit: working with perseverance,

harmony and uniformity

Interpersonal concept: friendship between gentleman appears

indifferent but is pure like water

Clean concept: ill-gotten gains are

not desirable

Security concept: love and cherish life; do not take

irresponsible profits

PAGE 38/39

We share the fruits of our growth and development with local communities. We cooperate with stakeholders, build harmonious relations in our industrial chain, and conduct international operations responsibly. We believe in contributing to harmonious communities and undertake social welfare activities to achieve this goal.

1.STRATEGIC COOPERATION

We promote mutually beneficial, win-win cooperation activities with stakeholders, participate in international exchanges and promote the healthy development of the chemical industry to further our overall development.

2.PROTECTING THE INTERESTS OF OUR SUPPLIERS

We are improving our supplier management mechanism by adhering to transparent procurement, establishing specific suppliers at different level and enhancing their overall quality. We insist that suppliers monitor their environmental performance and assess their efforts accordingly. We also use our management mechanism to give preference to strong suppliers while eliminating weaker and less appropriate suppliers.

3.SERVING RURAL DEVELOPMENT

As the world’s sixth largest pesticide producer and distributor, we utilize our professional advantages to improve the scientific research and technology level in the industry so as to provide customers with rich, high-quality products, and provide technical guidance to farmers so that they can improve the rural service system and promote agricultural production and rural income.

3.1 Providing High-Quality Agricultural Products

As the world’s largest non-patent pesticide manufacturer, we respond to customer needs by regularly improving our investment in R&D and developing environmentally friendly and agricultural products that enhance agricultural prevention and disaster relief and increase food production and food safety.

Our products include herbicides, insecticides, fungicides and plant growth regulators and other series of products. We produce more than 120 varieties of original drugs and have more than 800 preparations. We have registered approximately 5,000 products and have more than 6,000 trademarks in 120 countries around the world. Our market share for dichlorvos, topiramate ketone and other products is ranked first in China.

Case: Signing a letter of intent with the government of Iceland

China Bluestar Elkem (Iceland) and the government of Iceland signed the Cooperation on Solar Polysilicon and Silicon Metal Project, with a tentative agreement to invest RMB 1 billion in building devices with annual output of 12,000 tons of metallurgical solar polysilicon and 65,000 tons of silicon metal.

Case study: Beijing Bluestar Supporting its Suppliers in Management Improvement

Baoji Titanium Industry Group (BaoT i ) i s one o f ma jor raw material suppliers of Bei j ing Bluestar Technology Co., Ltd. (Bejing Bluestar). In 2011 and 2012, Beijing Bluestar helped BaoTi to carry out the lean production-based reform in management, and provided more than 30 project trainings and special trainings in over 300 training hours, which gave great support to improve BaoTi in its management, and a great impetus to the quality improvement and cost control of procured materials.

Case: Establishing a joint venture with DuPont

Zhonghao Chenguang Research Institute of Chemical Industry Co., Ltd. signed a joint venture contract with DuPont China Holding Co., Ltd. to build the Haohua Chenguang DuPont fluoride materials (Shanghai) Co., Ltd. The joint venture will use Zhonghao Chenguang’s Chinese production base and market channels to entrench DuPont’s leading technology and global markets and promote the application of fluorine rubber in the automobile, oil and gas sectors. This will provide customers with technology-driven solutions.

SHARING NEW RESULTS IN A HARMONIOUS SOCIETY

PAGE 40/41

3.2 Improving Our Agricultural Service System

We use our technological advantages to expand the industrial chain, promote agricultural technology for farmers, and accelerate the application of advanced and applicable technologies. We are strengthening our marketing system, optimizing our marketing strategies, conducting regular visits to farms, and are working hard to improve all aspects of our rural services.

4.GROWING HARMONIOUSLY WITH OUR COMMUNITY

We execute our global corporate citizenship initiatives, promote local employment and local economic development, maintain good communication with local communities where we operate, and promote cultural exchanges in order to foster a positive business environment that allows us to grow harmoniously with the community.

4.1 Promoting Local Employment

“Creating employment opportunities in local communities where we operate” is a core objective of our operations and we strive to help local employees develop lifelong learning skills at our international operations.

We promote staff localization, participate in local job fairs, hire local talents in a fair and impartial manner and seek to improve the proportion of local staff with an emphasis on employing excellent local senior management personnel.

4.2 Promoting Cultural Integration

We actively promote communication exchanges between foreign staff to deepen their awareness of Chinese culture and to promote the integration of Chinese and Western cultures.

C a s e : M a k h t e s h i m A g a n Group actively promotes local employment

Makhteshim Agan runs educational activities at the community level to enhance the employability of local residents. The company operates a toy library project that allows children to learn in a pleasant atmosphere, and assists with the development of local technology to help local residents increase their awareness on social and environmental issues.

Case: 23rd BlueStar Summer Camp

To help domestic and oversees employees understand each other the company has held a Bluestar summer camp for 23 consecutive years. The camp began in Lanzhou and now operates across the country and is a staple event for Bluestar children. In 2012, the 23rd Bluestar summer camp was held in 24 cities and more than 1,100 children from 11 countries participated, 54 of whom were overseas campers. Chinese and foreign campers participate in cultural and sports activities named “little me, big home” to better understand the importance of “equality, fraternity, harmony and progress” and to experience how Bluestar operates.

MAI staff is analyzing crops growth in fields

Makhteshim Agan Group provides farmers with convenience

Shanxi sub-camp talent show

Opening ceremony

Closing party

Outdoor development of “one Class, one Campin” Beijing

Nanjing sub-camp carried out “safety in mind” and the “responsibility never forget” series of activities

Wuxi and Nantong sub-camps commend outstanding members

Children of employees from overseas companies participating in the BlueStar summer camp

Jiangxi sub-camp experiencing the fun of making pottery

China BlueStar Shenyang Chemical sub-camp visit China Industrial Museum

PAGE 42/43

Case: Chemical Industry Museum of China

The Chemical Industry Museum of China is a platform to showcase cutting-edge chemical technologies from China and around the world. It is also a platform for education and chemical exchanges for college students; the platform is supported by universities, research institutions and volunteers. More than 400 volunteer instructors from Peking University, Tsinghua University, the Beijing University of Chemical Technology and other famous universities, as well as volunteers learn from posts and other entries that promote Chinese culture and the culture of the chemical industry.

Chemical Industry Museum of China signed a strategic cooperation agreement with the Tsinghua University Chemical Engineering Department that will enable the public to better understand the chemical industry. The ChemChina platform will educate students at the Chemical Engineering Department of Tsinghua University, and users of the Chemical Industry Museum of China, as well as students from the Chemical Engineering Department by offering them the opportunity to learn from volunteers and amateur instructors.

A delegation of little Chinese culture ambassadors visited Chemical Industry Museum of China. Staff offered a tour of the facility and watched as ambassadors gave presentations. We believe such events will strengthen primary education at the Museum and bolster our future cooperation with the School Culture Research Association of the Chinese Society of Education.

Case: Haohua Chemical Group awarded “Advanced unit of poverty alleviation” title

Since 2001, China Haohua Chemical Group Co., Ltd. has supported Pingshan County, Hebei Province. Through its counterpart support, project assistance, cadres, donations, care teams, science and technology initiatives and intellectual support, Haohua has significantly aided Taya Village and the North Gunlonggou Village in Pingshan county. Haohua invested RMB 1.2 million in accelerating the pace of poverty reduction in the villages to improve living conditions for local residents and to enhance the infrastructure level.

Case: Participating in volunteer service

Qenos, an Australian company, encourages its employees to participate in volunteer services in their spare time. Company Graduates organize and participate in the Sacred Heart Mission activity of St Kida, and organize employees donations for 150 Christmas Hampers to be delivered to Melbourne households.

Case: Fifteen years of voluntary blood donation (58,000 ml)

In 1998, the employee of Shandong Dongda Chemical Industry Co., Ltd., Yang Yong, participated in the blood donation activity organized by the company for the first time. He continued to go to the blood banks annually to donate blood and platelets. Over 15 years he has donated more than 58,000 ml of non-remunerated blood. In addition, he has campaigned for the blood center, driving more people to voluntarily donate blood.

Case: BlueStar Group going to Gansu Gulang to carry out poverty alleviation

td. leaders made a special trip to Gulang County, Gansu province, for poverty alleviation, and to send consolation money and gifts to three poor households in the Qigu heap group, Zhoujiazhuang Village, Huangyangchuan Town. The leaders revisited the families to ask in detail about their use of the mountain tractors that were donated, and visited the senior primary school of Huangyangchuan town and the Vocational Technical School of Gulang County as well as two other schools to and ask about conditions and how they can help improve them. The leaders donated gift packages to 400 pupils of Gulang.

5.Enthusiastic about Public WelfareWe are enthusiastic about public welfare and conduct it in a standardized manner that contributes to the community via poverty alleviation programs, public welfare donations, and volunteer activities.

Volunteer Activities

We have strengthened our volunteer team, encouraging and supporting our employees to participate in volunteer activities. As of 2012, 1,729 young volunteers have amassed more than 30,166 hours of volunteer service.

PAGE 44/45

The upcoming year is important for China’s “12th Five-Year Plan”. We will focus on our goal of becoming world-class chemical company while continuing to improve our approach to sustainable development while creating integrated value for our stakeholders.

To promote structural adjustment and speed up the “3+1” industrial layout, we will upgrade our structural transformation, speed up the “3+1” industrial layout, develop a three-year rolling plan and optimize our industrial mix. We will strengthen how we assess of our implementation plan, and implement dynamic monitoring and a closed-loop management system to achieve development with quality and benefits.

To implement lean management and promote cost reductions and efficiency, we will deepen our use of the Lean Six Sigma management, optimize our production and device processes and improve our plant load factor. We will reduce our investments, concentrate on our regional suppliers, enhance our approach to logistics optimization, achieve investment minimization and efficiency maximization, and reduce our asset-liability ratio by 3%.

To strengthen the link between production and sales, and create more customer value, we will strengthen our demand analysis and marketing research, carry out production in accordance with market demands and further improve our product quality. We will continue to improve our service levels to better meet and guide customer needs, and create more value for customers through the technical services and integrated solutions that we provide.

To build up an innovative platform and accelerate our transformation, we will speed up the implementation of our innovation base project, and carry out strategic research and the development of our core technology. We will integrate technology through demonstrations and common technology cooperation research projects, accelerate the industrialization of our scientific research, and build a technological innovation system for enterprises that combines production, study and research.

PROSPECTS FOR THE FUTURE

To enhance our approach to safety management and implement energy conservation, we will speed up the establishment of the SHE system, its processes and practices. We will promote the “safety five-step method” to strengthen our safety training, and enhance safety awareness among our staff to standardize their behavior. We will deepen our “zero emissions” management through benchmarking activities and our “energy performance contracting” model as well as a variety of other tools to strengthen environmental protection. We will promote energy conservation, decrease our energy consumption per thousands RMB output by 4.21%, decrease our emissions of wastewater, COD, SO2 by more than 2.2%, respectively, and decrease our ammonia and nitrogen oxides emissions by more than 2.5%, respectively.

To improve human resources, and optimize our talent incentive mechanism, we will improve our personnel evaluation index system and optimize our talent quantity, quality and structure. We will explore our control labor cost measures, strengthen the application and optimization of our payroll management system, accelerate the reform and innovation of our salary incentive mechanism and implement an enterprise annuity plan.

To be enthusiastic about public welfare, and actively give back to the community, we will strengthen our communication with local communities, and participate and support in their development. We will participate in charitable activities, proactively give back to the community and enhance our responsible corporate image.

As the largest basic chemical manufacturer in China, in 2013 we will continue to uphold the “chemical industry makes life wonderful” concept to better serve the national economy, enhance the transparency of our operations and our ability to create value, and to develop together with our stakeholders so as to contribute to our own efforts in the construction of harmonious society.

PAGE 46/47

1.1 Statementfromthemostseniordecision-makeroftheorganization ● P101.2 Descriptionofkeyimpacts,risks,andopportunities ● P02

2.1 Nameoftheorganization ● P062.2 Primarybrands,products,and/orservices ●P4-P52.3 Operationalstructureoftheorganization,includingmaindivisions,operatingcompanies,subsidiaries,andjointventures P112.4 Locationoforganization'sheadquarters ● P512.5 Numberofcountrieswheretheorganizationoperates,andnamesofcountrieswitheithermajoroperationsorthatarespecificallyrelevanttothesustainabilityissuescoveredinthereport ● P072.6 Natureofownershipandlegalform ● P072.7 Marketsserved(includinggeographicbreakdown,sectorsserved,andtypesofustomers/beneficiaries) ● P082.8 Scaleofthereportingorganization ● P072.9 Significantchangesduringthereportingperiodregardingsize,structure,orownership ● P152.10 Awardsreceivedinthereportingperiod P23,P44

3.1 Reportingperiod(e.g.,fiscal/calendaryear)forinformationprovided ●3.2 Dateofmostrecentpreviousreport(ifany) ●3.3 Reportingcycle(annual,biennial,etc.) ●3.4 Contactpointforquestionsregardingthereportoritscontents ●3.5 Processfordefiningreportcontent ●3.6 Boundaryofthereport(e.g.,countries,divisions,subsidiaries,leasedfacilities,jointventures,suppliers).SeeGRIBoundaryProtocolforfurtherguidance ●3.7 Stateanyspecificlimitationsonthescopeorboundaryofthereport ●3.8 Basisforreportingonjointventures,subsidiaries,leasedfacilities,outsourcedoperations,andotherentitiesthatcansignificantlyaffectcomparabilityfromperiodtoperiodand/orbetweenorganizations ○3.9 Datameasurementtechniquesandthebasesofcalculations,includingassumptionsandtechniquesunderlyingestimationsappliedtothecompilationoftheindicatorsandotherinformationinthereport. ●3.10 Explanationoftheeffectofanyre-statementsofinformationprovidedinearlierreports,andthereasonsforsuchre-statement(e.g.mergers/acquisition,changeofbaseyears/periods,natureofbusiness,measurementmethods) ●3.11 Significantchangesfrompreviousreportingperiodsinthescope,boundary,ormeasurementmethodsappliedinthereport ●3.12 TableidentifyingthelocationoftheStandardDisclosureinthereport ●P49-P523.13 Policyandcurrentpracticewithregardtoseekingexternalassuranceforthereport.Ifnotincludedintheassurancereportaccompanyingthesustainabilityreport,explainthescopeandbasisofanyexternalassuranceprovided.Alsoexplaintherelationshipbetweenthereportingorganizationandtheassuranceprovider(s). ○

4.1 Governancestructureoftheorganization,includingcommitteesunderthehighestgovernancebodyresponsibleforspecifictasks,suchassettingstrategyororganizationaloversight ● P11

 

Expert Comments

I have read through the ChemChina Sustainability Report 2012. This is ChemChina’s third sustainability

report, in which it describes in depth the impact of chemical industry on each aspect of people’s life with rich

content and detailed data, and demonstrates its good results in giving play to its own influence in promoting

sustainable development of the industry.

First, the report focuses on reporting materiality. Upholding the concept of “Chemicals Create a Better Life”

and taking “New” as the mainline, the Company, in the report, shows the fascinating experiences in life that it

created in 2012. The report is divided into six sections, namely “Good Business Performance for the Creation

of New Value”, “Driving New Growth Through Technical Innovation”, “Setting a New Benchmark for Safety

Production”, “Green and Environmental, Expanding the New Space”, “Employee growth, Creating New

Business Opportunities”, and “Sharing New Results in a Harmonious Society”, all of which are closely

connected with people’s food, clothing, housing, articles for daily use and transportation, as well as

production and national defense. In this way, the Company has given a better reflection of the characteristics

of social responsibility in the industry, and showed good materiality in the report.

Second, the report is full of good social responsibility practices of the Company. On one hand, it discloses the

salient points in implementing social responsibility by organizing BlueStar Summer Camp for 23 consecutive

years to promote cultural integration, and giving play to the advantages of Chemical Industry Museum of China

to publicize Chinese culture, express the soul of the industry and highlight the colorful life of chemical workers;

on the other hand, it describes its management concept featured with “zero emission”, and technological

innovation and application to demonstrate its social responsibility practice in combination with its professional

edges in the industry. In addition, by means of responsibility topics, the Company discloses its active

participation in global operation and realization of leap-forward development and reflects its performance in

enhancing responsibility competitiveness.

Third, the report is of good readability. The Company uses a number of cases to show its good social

responsibility practices, and this has made the report easier to read and brought the Company and readers

closer. Moreover, it focuses on structured and graphical presentation. The vivid picture, clear structure and

idiomatic language have made the report more readable.

In combination with the optimization of industrial structure, and clear picture of responsibility in each business

segment, the Company has demonstrated the organic integration of social responsibility and strategy, and

the management and operation in its well-structured report. With highlights, concise presentation and rich

information, ChemChina has presented us a good sustainability report.

Yin GefeiVice President, China WTO Tribune

Director, International Research Center for Social Responsibility &

Sustainable Development, Peking University

Where Reported (Catalog of Report)

Extent of DisclosureGRI Content Index

GRI Index

No.

Note: ● Fully disclosed, Part ly disclosed, ○ Not disclosed, N Not applicable

Strategy and Analysis

Organizational Profile

Report Parameters

Governance, Commitments and Engagement

Insidefrontcover

Insidefrontcover

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4.2 IndicatewhethertheChairofthehighestgovernancebodyisalsoanexecutiveofficer.((and,ifso,theirfunctionwithintheorganization’smanagementandthereasonsforthisarrangement). ○4.3 Fororganizationsthathaveaunitaryboardstructure,statethenumberandgenderofmembersofthehighestgovernancebodythatareindependentand/ornon-executivemembers. ●4.4 Mechanismsforshareholdersandemployeestoproviderecommendationsordirectiontothehighestgovernancebody ● P114.5 Linkagebetweencompensationformembersofthehighestgovernancebody,seniormanagers andexecutives(includingdeparturearrangements),andtheorganization’sperformance(including socialandenvironmentalperformance) ○4.6 Processesinplaceforthehighestgovernancebodytoensureconflictsofinterestareavoided ● P114.7 Processfordeterminingthecomposition,qualificationsandexpertiseofthemembersofthehighestgovernancebodyanditscommittees,includinganyconsiderationofgenderandother indicatorsofdiversity. ● P114.8 Internallydevelopedstatementsofmissionorvalues,codesofconduct,andprinciplesrelevanttoeconomic,environmentalandsocialperformanceandthestatusoftheirimplementation ○ P104.9 Proceduresofthehighestgovernancebodyforoverseeingtheorganization’sidentificationandmanagementofeconomic,environmentalandsocialperformance,includingrelevantrisksand opportunities,andadherenceorcompliancewithinternationallyagreedstandards,codesof conduct,andprinciples ○4.10 Processesforevaluatingthehighestgovernancebody’sownperformance,particularlywith respecttoeconomic,environmentalandsocialperformance ○4.11 Explanationofwhetherandhowtheprecautionaryapproachorprincipleisaddressedbythe organization ○P10-P114.12 Externallydevelopedeconomic,environmentalandsocialcharters,principles,orotherinitiatives towhichtheorganizationsubscribesorendorses ○4.13 Membershipsinassociations(suchasindustryassociations)and/ornational/international advocacyorganizationsinwhichtheorganization:Haspositionsingovernancebodies;Participates inprojectsorcommittees;Providessubstantivefundingbeyondroutinemembershipdues;orViewsmembershipasstrategic. ○4.14 Listofstakeholdergroupsengagedbytheorganization ○4.15 Basisforidentificationandselectionofstakeholderswithwhomtoengage ○4.16 Approachestostakeholderengagement,includingfrequencyofengagementbytypeandby stakeholdergroup ○4.17 Keytopicsandconcernsthathavebeenraisedthroughstakeholderengagement,andhowthe organizationhasrespondedtothosekeytopicsandconcerns,includingthroughitsreporting ○

EC1 Directeconomicvaluegeneratedanddistributed,includingrevenues,operatingcosts,employee compensation,donationsandothercommunityinvestments,retainedearnings,andpaymentsto capitalprovidersandgovernments ● P09EC2 Financialimplicationsandotherrisksandopportunitiesfortheorganization'sactivitiesdueto climatechange ● P33EC3 Coverageoftheorganization'sdefinedbenefitplanobligations ● P36EC4 Significantfinancialassistancereceivedfromgovernment ● P44EC5 Rangeofratiosofstandardentrylevelwagebygendercomparedtolocalminimumwageat significantlocationsofoperation ● P36EC6 Policy,practices,andproportionofspendingonlocally-basedsuppliersatsignificantlocationsof operation ● P41EC7 Proceduresforlocalhiringandproportionofseniormanagementhiredfromthelocalcommunity atsignificantlocationsofoperation ● P36EC8 Developmentandimpactofinfrastructureinvestmentsandservicesprovidedprimarilyforpublic benefitthroughcommercial,in-kind,orprobonoengagement ● P44EC9 Understandinganddescribingsignificantindirecteconomicimpacts,includingtheextentofimpacts P45

EN1 Materialsusedbyweightorvolume ● P33EN2 Percentageofmaterialsusedthatarerecycledinputmaterials ● P34EN3 Directenergyconsumptionbyprimaryenergysource ● P33EN4 Indirectenergyconsumptionbyprimarysource ● P34EN5 Energysavedduetoconservationandefficiencyimprovements ● P33

EN6 Initiativestoprovideenergy-efficientorrenewableenergybasedproductsandservices,andreductionsinenergyrequirementsasaresultoftheseinitiatives ● P33EN7 Initiativestoreduceindirectenergyconsumptionandreductionsachieved ● P34EN8Totalwaterwithdrawalbysource ○EN9 Watersourcessignificantlyaffectedbywithdrawalofwater ○EN10Percentageandtotalvolumeofwaterrecycledandreused ○EN11 Locationandsizeoflandowned,leased,managedin,oradjacentto,protectedareasandareasofhighbiodiversityvalueoutsideprotectedareas NEN12 Descriptionofsignificantimpactsofactivities,products,andservicesonbiodiversityinprotectedareasandareasofhighbiodiversityvalueoutsideprotectedareas ○EN13 Habitatsprotectedorrestored ○EN14 Strategies,currentactions,andfutureplansformanagingimpactsonbiodiversity ○EN15 NumberofIUCNRedListspeciesandnationalconservationlistspecieswithhabitatsinareasaffectedbyoperations,bylevelofextinctionrisk ○EN16 Totaldirectandindirectgreenhousegasemissionsbyweight ● P33EN17 Otherrelevantindirectgreenhousegasemissionsbyweight ● P33EN18 Initiativestoreducegreenhousegasemissionsandreductionsachieved ● P33EN19 Emissionsofozone-depletingsubstancesbyweight ● P33EN20 NOx,SOx,andothersignificantairemissionsbytypeandweight ● P33EN21 Totalwaterdischargebyqualityanddestination ○EN22 Totalweightofwastebytypeanddisposalmethod ● P33EN23 Totalnumberandvolumeofsignificantspills ○EN24 Weightoftransported,imported,exported,ortreatedwastedeemedhazardousunderthetermsoftheBaselConventionAnnexI,II,III,andVIII,andpercentageoftransportedwasteshippedinternationally ○EN25 Identity,size,protectedstatus,andbiodiversityvalueofwaterbodiesandrelatedhabitatssignificantlyaffectedbythereportingorganization'sdischargesofwaterandrunoff ○

EN26 Initiativestomitigateenvironmentalimpactsofproductsandservices,andextentofimpactmitigation ● P35EN27 Percentageofproductssoldandtheirpackagingmaterialsthatarereclaimedbycategory ○EN28 Monetaryvalueofsignificantfinesandtotalnumberofnon-monetarysanctionsfornon-compliancewithenvironmentallawsandregulations ○EN29 Significantenvironmentalimpactsoftransportingproductsandothergoodsandmaterialsusedfortheorganization'soperations,andtransportingmembersoftheworkforce ○EN30 Totalenvironmentalprotectionexpendituresandinvestmentsbytype ● P32

LA1 Totalworkforcebyemploymenttype,employmentcontract,andregion,brokendownbygender. ● P36LA2 Totalnumberandrateofnewemployeehiresandemployeeturnoverbyagegroup,gender,andregion P36LA3 Benefitsprovidedtofull-timeemployeesthatarenotprovidedtotemporaryorpart-timeemployees,bysignificantlocationsofoperation. ○LA4 Percentageofemployeescoveredbycollectivebargainingagreements ● P36LA5 Minimumnoticeperiod(s)regardingoperationalchanges,includingwhetheritisspecifiedincollectiveagreements P36LA6 Percentageoftotalworkforcerepresentedinformaljointmanagement-workerhealthandsafetycommitteesthathelpmonitorandadviseonoccupationalhealthandsafetyprograms P31LA7 Ratesofinjury,occupationaldiseases,lostdays,andabsenteeism,andtotalnumberofwork-relatedfatalitiesbyregion P30LA8 Education,training,counseling,prevention,andrisk-controlprogramsinplacetoassistworkforcemembers,theirfamilies,orcommunitymembersregardingseriousdiseases ● P39LA9 Healthandsafetytopicscoveredinformalagreementswithtradeunions ● P31LA10 Averagehoursoftrainingperyearperemployeebygender,andbyemployeecategory ○LA11 Programsforskillsmanagementandlifelonglearningthatsupportthecontinuedemployabilityofemployeesandassisttheminmanagingcareerendings ● P38LA12 Percentageofemployeesreceivingregularperformanceandcareerdevelopmentreviews,bygender. ○LA13 Compositionofgovernancebodiesandbreakdownofemployeesperemployeecategoryaccordingtogender,agegroup,minoritygroupmembership,andotherindicatorsofdiversity ○LA14 Ratioofbasicsalaryandrenumerationofwomentomenbyemployeecategory,bysignificantlocationsofoperation. ○LA15 Returntoworkandretentionratesafterparentalleave,bygender. ○

Ecomomic

Environmental

Labor Practices and Decent Work

PAGE 50/51

Feedback Form

Respected readers,

Thank you for reading this report. This is the third sustainability report we

have released. To improve our efforts relating to corporate social responsibility

and enhance our fulfillment thereof, we hope very much that you could spare

some time from your busy schedule to comment on this report and make

suggestions to help us improve it:

1. What is your overall evaluation on the 2012 Sustainability Report of

ChemChina?

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2. Do you think this report is a complete reflaction of the work we

have undertaken in promoting economic, environmental and social

coordination and sustainable development?

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3. What do you think about our work in saving energy and environmental

protection?

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4. What do you think about our work in employee care?

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5. What do you think about our work in making social contributions?

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6. Do you think this report has disclosed sufficient data and information?

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7. What do you think about the design of the contents and the layout of

this report?

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8. Your are welcome to give your comments and suggestions about the

2012 Sustainablity Report of ChemChina:

You can submit your feedback in any of

the following ways:

Tel: 0086-10-82677365

Fax: 0086-10-82677088

Mail: Department of Social Responsibility,

Office of Production & Operation,

China National Chemical Corporation,

No. 62 West Road North 4th Ring Road,

Haidian District, Beijing 100080

HR1 Percentageandtotalnumberofsignificantinvestmentagreementsandcontractsthatincludeclausesincorporatinghumanrightsconcerns,orthathaveundergonehumanrightsscreening. NHR2 Percentageofsignificantsuppliers,contractorsandotherbusinesspartnersthathaveundergonehumanrightsscreening,andactionstaken. NHR3 Totalhoursofemployeetrainingonpoliciesandproceduresconcerningaspectsofhumanrightsthatarerelevanttooperations,includingthepercentageofemployeestrained NHR4 Totalnumberofincidentsofdiscriminationandcorrectiveactionstaken ● P36HR5 Operationsandsignificantsuppliersidentifiedinwhichtherighttoexercisefreedomofassociationandcollectivebargainingmaybevoilatedoratsignificantrisk,andactionstakentosupporttheserights NHR6 Operationsandsignificantsuppliersidentifiedashavingsignificantriskforincidentsofchildlabor,andmeasurestakentocontributetotheeffectiveabolitionofchildlabor ○

HR7 Operationsandsignificantsuppliersidentifiedashavingsignificantriskforincidentsofforcedorcompulsorylabor,andmeasurestocontributetotheeliminationofallformsofforcedorcompulsorylabor ○HR8 Percentageofsecuritypersonneltrainedintheorganization'spoliciesorproceduresconcerningaspectsofhumanrightsthatarerelevanttooperations NHR9 Totalnumberofincidentsofviolationsinvolvingrightsofindigenouspeopleandactionstaken NHR10 Percentageandtotalnumberofoperationsthathavebeensubjecttohumanrightsreviewsand/orimpactassessments NHR11 Numberofgrievancesrelatedtohumanrightsfiled,addressed,andresolvedthroughformalgrievancemechanisms. N

SO1 Percentageofoperationswithimplementedlocalcommunityengagement,impactassessments,anddevelopmentprograms. ● P15SO2 Percentageandtotalnumberofbusinessunitsanalyzedforrisksrelatedtocorruption ● P18SO3 Percentageofemployeestrainedinorganization'santi-corruptionpoliciesandprocedures ● P18SO4 Actionstakeninresponsetoincidentsofcorruption ● P18SO5 Publicpolicypositionsandparticipationinpublicpolicydevelopmentandlobbying NSO6 Totalvalueoffinancialandin-kindcontributionstopoliticalparties,politicians,andrelatedinstitutionsbycountry NSO7 Totalnumberoflegalactionsforanti-competitivebehavior,anti-trust,andmonopolypracticesandtheiroutcomes ○SO8 Monetaryvalueofsignificantfinesandtotalnumberofnon-monetarysanctionsfornoncompliancewithlawsandregulations ○

SO9 Operationswithsignificantpotentialoractualnegativeimpactsonlocalcommunities○ SO10 Preventionandmitigationmeasuresimplementedinoperationswithsignificantpotentialoractualnegativeimpactsonlocalcommunities ● P15

PR1 Lifecyclestagesinwhichhealthandsafetyimpactsofproductsandservicesareassessedforimprovement,andpercentageofsignificantproductsandservicescategoriessubjecttosuchprocedures ● P26PR2 Totalnumberofincidentsofnon-compliancewithregulationsandvoluntarycodesconcerninghealthandsafetyimpactsofproductsandservicesduringtheirlifecycle,bytypeofoutcomes ○PR3 Typeofproductandserviceinformationrequiredbyproceduresandpercentageofsignificantproductsandservicessubjecttosuchinformationrequirements ● P08PR4Totalnumberofincidentsofnon-compliancewithregulationsandvoluntarycodesconcerningproductandserviceinformationandlabeling,bytypeofoutcomes ○PR5 Practicesrelatedtocustomersatisfaction,includingresultsofsurveysmeasuringcustomersatisfaction ○PR6 Programsforadherencetolaws,standards,andvoluntarycodesrelatedtomarketingcommunications,includingadvertising,promotion,andsponsorship ● P21PR7 Totalnumberofincidentsofnon-compliancewithregulationsandvoluntarycodesconcerningmarketingcommunications,includingadvertising,promotion,andsponsorshipbytypeofoutcomes ○PR8 Totalnumberofsubstantiatedcomplaintsregardingbreachesofcustomerprivacyandlossesofcustomerdata ○PR9 Monetaryvalueofsignificantfinesfornoncompliancewithlawsandregulationsconcerningtheprovisionanduseofproductsandservices.

Human Rights

Society

Product Responsibility

PAGE 52/53

王琦 / Qi Wang

于宁 / Ning Yu

NO.62 West Road North 4th Ring Road, Haidian District, Beijing 100080

Department of Social Responsibility,Production and Operation Office,

China National Chemical Corporation