SY launched the Social Financing Framework in August 2022, establishing a governance mechanism for the future issuance of social bonds, loans and other debt instruments. Debt proceeds raised by the Group under the Social Financing Framework will be used towards SMEs lending and essential services projects in order to i) improve SMEs’ access to capital and facilitate their integration into supply chains; ii) provide financing support for SMEs affected or damaged by natural or health disasters;  iii) enhance the connectivity and digitalization in China, including but not limited to by building and developing infrastructure and public utilities, as well as other public facilities; and iv) developing and providing healthcare and sanitation services.

Leading independent rating agencies Morningstar Sustainalytics and SusallWave have respectively provided second party opinions on the alignment of the Social Financing Framework with the Social Bond Principles 2021 published by the ICMA and the Social Loan Principles 2021 published by the LMA.

Zhongxiang Engineering is a SY client primarily engaged in the distribution of construction materials. Operating in the capital-intensive infrastructure industry, the company has a large demand for working capital. Factors such as construction material procurement, deposit requirements, financing for construction and lengthy project settlement cycles contributed to increases in the company’s receivables and payables. Thus, stable cash flow and efficient use of capital has become one of the company’s core competitive advantages.

With the growth of the infrastructure industry, Zhongxiang Engineering's business has continued to expand. To date, Zhongxiang Engineering has entered into in-depth cooperation with leading state-owned enterprises (SOEs) in the construction industry such as China State Construction Engineering Corporation, China Railway Construction Corporation and China Communications Construction Company, as well as with nearly 100 of China’s top 500 companies. It has cooperated with SOEs on more than 200 projects, mainly providing infrastructure materials including construction profiles, pipes, steel bars and cement.

In the fourth quarter of 2021, Zhongxiang Engineering began to undertake projects in the South China region of the China Construction Second Engineering Bureau Ltd and entered into a supply chain digital finance collaboration with SY. Zhongxiang Engineering recognized that SY’s business differs from the traditional supply chain finance model, placing greater emphasis on leveraging technology for data verification and risk control during transactions. By converting Zhongxiang Engineering’s transaction data into corporate credit, SY has been able to provide a variety of innovative digital financial solutions to efficiently meet Zhongxiang Engineering’s financing needs.

In mid-2022, Zhongxiang Engineering and the China Construction Second Engineering Bureau Ltd deepened their partnership based on their strong track record of cooperation. As the number of projects and the materials costs continued to rise, Zhongxiang Engineering’s capital needs grew rapidly, requiring larger financing amounts and more efficient services. With the delivery process facilitated by SY’s 'Delivery Financing' digital financial service, Zhongxiang was able to obtain financing within just 1-2 days, bypassing the previous 3-4 month payment period and providing robust support for streamlined operations.

A representative of Zhongxiang Engineering comments: “As we cooperate with various construction companies, the payment terms for accounts receivable periods vary across projects, which drives increased demand for capital turnover. We face significant operational risks if a project’s payment collection cycle exceeds our expectations. Thanks to SY’s supply chain finance with flexible payment terms, we are able to not only reduce the risk of capital chain interruption, but also improve the efficiency of capital allocation. This support from SY provides advantages to our business and gives us the confidence to undertake more projects.”

SY launched the Sustainability-Linked Financing Framework in August 2022, establishing a governance mechanism for the issuance of sustainability-linked bonds, loans and other debt instruments. Under the Sustainability-Linked Financing Framework, the financial and/or characteristics of the sustainability-linked loans or bonds granted to or issued by the Group will be driven by the progress of predefined sustainability performance targets (“SPTs”). These characteristics are separately prescribed in the corresponding financing documents. The SPTs set by the Group include i) increasing the total disbursement amount of loans facilitated to SMEs every year; ii) increasing the quantity of paper saved from digital and online business platform every year; and iii) increasing the total hours committed to charitable activities every year.

The Sustainability-Linked Financing Framework does not have any restrictions on the use of proceeds. SusallWave has issued a second party opinion on the Sustainability-Linked Financing Framework which confirms that the Sustainability-Linked Financing Framework aligns with the Sustainability-Linked Bond Principles 2020 published by the ICMA and the Sustainability-Linked Loan Principles 2022 published by the LSTA.

SY actively responds to the dual-carbon strategy by focusing on the low-carbon transformation of the value chain and building a green supply chain financial ecosystem. While achieving carbon reduction in our own organization through online, paperless and green operations and by prioritizing low-carbon projects, we actively promote carbon reduction in the value chain and facilitate the digitalized low-carbon transformation of the industrial chain.

On the operations front, we prioritize environment-friendly projects such as green infrastructure, public buildings, and industrial parks, and install energy-saving equipment in office sites. Meanwhile, we also encourage employees to choose low-carbon travel, using public transportation and new energy vehicles. These measures reduce carbon emissions generated during our business activities.

On the business processes front, benefiting from our proprietary technology systems and data-driven risk control capabilities, SY has achieved a fully online and paperless business workflow. This not only allows our customers to receive more convenient services, but also significantly reduces labor costs and carbon emission costs associated with offline business travel for both us and our customers.

At the value chain level, leveraging our supply chain technology services, we have helped traditional infrastructure projects and companies in the pharmaceutical distribution sector achieve full-process digitalization and refined management, helping reduce the carbon footprint of the entire industry chain.