Reduce freshwater consumption and improve water stewardship It’s crucial to consistently reduce water consumption and progressively optimize water management, especially in the use of non- freshwater resources and water recycling. –Reduce freshwater consumption, replace freshwater with alternative water sources where possible (for example, by recycling rainwater for production equipment cooling), replenish cooling towers (by collecting rainwater or disposing of municipal waste), or invest in upgrades or replacements for water-using equipment to maximize efficiency. In BMW’s Shenyang plant, water consumption was reduced to 1.72 m3 per unit106 in 2023, with 40% deduction from 2019. –Recover and recycle water in operations. This can be done, for example, by introducing closed-loop recycling systems or upgrading water treatment facilities, and further disposing of industrial wastewater to meet the irrigation needs of plant landscapes, thus maximizing recovery and recycling of water resources. In addition to reducing impacts from operations, it’s also essential to avoid and reduce impacts on nature from raw material extraction and processing. Such actions can maximize potential benefits and extend the influence of automakers throughout the supply chain, enhancing resilience and promoting systematic shifts in the automotive industry and the upstream material sectors. Promote life cycle assessment of impacts on nature Assessing nature-related impacts, dependencies, risks and opportunities throughout the supply chain can improve overall product transparency and traceability and drive industry-wide action. To that end, crucial steps the sector can take include continuously collaborating with and educating suppliers, as well as aligning environmental data frameworks, standards and metrics. Ideally, the Chinese automotive sector would carry out these actions in partnership with the global automotive sector in order to drive convergence and enable the sharing of best practices across borders. Major automotive players, who have more influencing power than downstream companies, can incorporate nature-related assessment factors into procurement standards and supplier evaluation systems to promote a wider array of nature-positive actions. For example, they can encourage practices such as using natural leather alternatives or sustainably harvested wood. Supplier sustainability assessment tool for value chain transparency and collaboration BOX 4 Contemporary Amperex Technology Co., Limited (CATL) is a global leader in innovative energy technologies headquartered in China, committed to providing solutions and services for new energy applications worldwide. In 2022, CATL launched a partnership programme named CREDIT (carbon footprint, recycling, energy, due diligence, innovation and transparency), which focused on sustainable lithium-ion battery supply chains. To support the global effort to achieve net zero and realize nature-positive outcomes, CATL started to explore nature-related dimensions that extend beyond the existing 114 evaluation indicators in the past two years. The CREDIT tool offers on-site assessment and analysis of players’ sustainability practices along the supply chain, with independent modules specific to environmental impact factors, including water use, GHG emissions, land use and biodiversity. The assessment of suppliers covers waste treatment, monitoring, recycling, soil, freshwater system protection and other areas. It requires suppliers to first become educated on and then proactively address impacts on nature. For any non-conformances identified, CATL has a comprehensive tracking system and facilitates partners in developing corrective action plans. Additionally, CREDIT sets ambitious requirements for suppliers around GHG emissions – supported by measures such as professional empowerment and on-site emissions data collection – to uphold its commitment to achieving carbon neutrality across the battery supply chain by 2035.107 CATL plans to make this programme an open toolkit for partners by 2026. It also intends to share insights based on accumulated auditing results and construct supply chain risk maps, ultimately contributing to the sustainable development of the industrial system.108 Major automotive players can incorporate nature-related assessment factors into procurement standards and supplier evaluation systems to promote a wider array of nature- positive actions.3.2 Avoid and reduce impacts from materialsPriority action 2 Nature Positive: Role of the Automotive Sector – China Deep-dive 29

Nature Positive Role of the Automotive Sector China Deep dive