ESG Annual Report Analysis | ALI HEALTH releases 2024 ESG report, committed to strengthening green data centers, green park construction, and promoting green logistics applications

According to the latest report from ALI HEALTH (00241) released on the Zhitong Finance and Economics APP, this is the eighth consecutive ESG report published by the company.

ALI HEALTH is the flagship platform of Alibaba Group that integrates online and offline medical and health industry resources, providing one-stop medical solutions. Its main businesses include pharmaceutical e-commerce, medical health and digital services, as well as public welfare. In 2023-2024, the company was included in the "Hang Seng Low Carbon Index" and the "Hang Seng Tech Index". As of the end of the 2024 fiscal year, MSCI has maintained an A-level ESG rating for ALI HEALTH for three consecutive years.

The ESG report shows that ALI HEALTH integrates risk control, integrity management, and other issues into the core framework of corporate governance, establishing a clear and efficient governance structure. The board of directors includes audit, nomination, and remuneration committees. As of the end of the reporting period, the board of directors consists of 8 members, including 4 female directors.

During the reporting period, ALI HEALTH held 8 integrity training activities, conducted 9 integrity publicity activities, and conducted business code of conduct exams for all directors and employees, achieving a coverage rate of 100%. In terms of integrity training, the average training time per director was 1 hour, and the average training time per ordinary employee was 3 hours.

In terms of the environment, ALI HEALTH continues to improve the efficiency of green data centers, establish smart green parks, and promote green office initiatives to minimize adverse impacts on the natural environment.

Utilizing the technical advantages of Alibaba Cloud data centers, the company has taken various measures such as optimizing hardware performance, improving resource utilization, and enhancing heat dissipation efficiency to achieve high energy efficiency and low emissions. By adopting clean energy, liquid cooling technology, and resource recycling, the company has significantly improved its green energy-saving technology. In the 2024 fiscal year, the proportion of clean electricity in self-built cloud intelligent data centers increased from 53.9% in 2023 to 56.0%. The data center's power usage effectiveness (PUE) decreased from 1.215 in 2023 to 1.200 in 2024, maintaining a leading level in Asia. In 2024, Alibaba Cloud Computing Data Center was listed in the annual list of 50 national green data centers by the Office of the Ministry of Industry and Information Technology.

In the 2024 fiscal year, ALI HEALTH's total greenhouse gas emissions were 2,160.06 tons of carbon dioxide equivalent (compared to 845.29 tons in the 2023 fiscal year); comprehensive energy consumption was 456.49 tons of standard coal (compared to 182.16 tons in the 2023 fiscal year); and water consumption was 25,146.58 tons (compared to 11,128.26 tons in the 2023 fiscal year).

ALI HEALTH is also committed to becoming a builder of green logistics. The company, together with Cainiao Parcel, has built a circular logistics system and participated in the formulation of industry ecological circular box standards. Through technological innovation, rational resource utilization, and green cooperation, the company continuously optimizes logistics operations, covering all aspects from order processing to packaging, transportation, warehousing, and recycling. In the 2024 fiscal year, ALI HEALTH's circular logistics was applied to all stores and distribution centers within the company's business scope In terms of employees, in the 2024 fiscal year, ALI HEALTH continued to implement the OKR (Objectives and Key Results) performance management model, achieving 100% OKR setting for all employees through company-wide distributed communication. At the same time, the company conducts performance evaluations for employees every half year, accurately identifying outstanding performers and providing them with two promotion opportunities annually. In the 2024 fiscal year, the total number of employees was 1,435, including 31 senior managers, 415 middle managers, and 989 grassroots employees.

The company leverages the training system of Alibaba Group to encourage employees to participate in leadership management training such as "Knight's Journey" and other internal, external, and online training to enhance their daily work capabilities and growth potential, laying a foundation for the company's long-term development. In the 2024 fiscal year, the average training hours per employee were 32.71 hours, with a training coverage rate of 100%, including full-time employees and ecosystem workers.

Additionally, the company also has the "ALI HEALTH Academy," inviting industry and internal business experts to conduct special lectures and experience sharing sessions covering various aspects such as business, research and development, and operations to deepen employees' understanding of the company's business and industry.

In terms of supply chain management, ALI HEALTH has established a supplier management responsibility system, clarifying key points for audit and evaluation in the supplier admission process, including certification qualifications, violations and penalties, anti-bribery risks, etc. At the same time, based on the characteristics of different categories of suppliers, the company implements classified management of suppliers to continuously optimize the supplier admission management process and efficiency. As of the end of the reporting period, 515 suppliers have passed the qualification review, and approximately 180 warehouses have completed on-site audits, achieving 100% coverage of the supplier admission audit process.

ALI HEALTH not only has established assessment systems for various processes of OEM (Original Equipment Manufacturer) products in self-operated warehouses, including receiving, acceptance, storage, maintenance, outbound, transportation, returns, etc., but also conducts regular end-to-end reviews of self-operated warehouses and OEM production factories of admitted suppliers to ensure product quality standards. Additionally, suppliers are comprehensively audited from multiple dimensions such as creative evaluation, execution quality, service capabilities, supplemented by on-site visits and post-acceptance service ratings to ensure that suppliers meet various qualification requirements.

The company also incorporates environmental and social requirements into supplier management to ensure that suppliers conduct related business activities responsibly. By utilizing the "Fire Eye System" of ALI HEALTH, high and medium-risk suppliers are monitored in real-time to alert potential risks, provide timely financial, legal advice, and drive continuous improvement of suppliers. Furthermore, ALI HEALTH has established a transparent and open communication mechanism with suppliers, maintaining long-term stable cooperation relationships through visits, online sharing sessions, training activities, and other channels. As of the end of the reporting period, the total number of ALI HEALTH suppliers was 1,874.

(Link ESG Researcher Deng Shixia)