BaiduSustainableFinanceFrameworkAugust20211BaiduOverviewBaidusGreenandSustainabilityVisionCarbonNeutralby2030IntroductionISustainableFinanceFrameworkIIFrameworkOverviewFrameworkScopeUseofProceedsTableofContentProjectEvaluationandSelectionManagementofProceedsReportingExternalReviewIntroduction13BaiduOverviewBaidu,Inc.(“Baidu”orthe"Company",NASDAQ:BIDU,HKEX:9888)wasfoundedin2000asasearchengineplatform,andwewereanearlyadopterofartificialintelligencein2010tomakecontentdiscoveryontheinterneteasier.Wehavealsoused“BaiduBrain,”ourcoreAItechnologyengine,todevelopnewAIbusinesses.Today,BaiduisalreadyaleadingAIcompanywithastrongInternetfoundation.WeareoneoftheveryfewcompaniesintheworldthatoffersafullAIstack,encompassinganinfrastructureconsistsofAIchips,deeplearningframework,coreAIcapabilities,suchasnaturallanguageprocessing,knowledgegraph,speechrecognition,computervisionandaugmentedreality,aswellasanopenAIplatformtofacilitatewideapplicationandusage.Baiduiscomposedoftwosegments:(i)BaiduCore,whichaccountedforover70%ofourrevenueinthepastthreeyears,and(ii)iQIYI,whichmadeupourremainingrevenue.Overthepasttwodecades,Baiduhasdemonstratedatrackrecordforlong-termgrowthandstrongprofitability,whichhasenabledBaidutoinvestinadiversifiedportfolioofproductsandserviceswithlargemarketopportunitiesandfurtherimproveBaiduslong-termgrowthprospects.Throughyearsofinvestmentinresearch,AIchipdesign,developercommunity,patentsandtalentdevelopment,BaiduisturningAIintoinnovativeusecases.PoweredbyAI,BaiduCoreprovidesmainlyonlinemarketingservicesandnon-marketingvalueaddedservices,aswellasproductsandservicesfromnewAIinitiatives,whichtogetherpowersBaiduwiththreegrowthengines:i.MobileEcosystem:aportfolioofoveronedozenapps,includingBaiduApp,HaokanandBaiduPost,whichprovidesanopenplatformthataggregatesawiderangeofthird-party,long-tailcontentandservicesthroughBaidusAIbuildingblocksandwhichhelpscommunitiesconnectandshareknowledgeandinformation;ii.AICloud:afullsuiteofcloudservicesandsolutions,includingPaaS,SaaSandIaaSanduniquelydifferentiatedbyourAIsolutions;andiii.IntelligentDriving&OtherGrowthInitiatives(OGI):Baidusgrowthinitiativesincludeintelligentdriving(self-drivingservices,includingHDMaps,automatedvaletparkingandautonomousnavigationpilot,intelligentelectricvehiclesandrobotaxifleets),aswellasXiaodusmartdevicespoweredbyDuerOSsmartassistantandAIchipdevelopment.BaiduTechnologyPark4BaidGeenandSainabiliViinBaiduactivelyexploreslowcarbonoperations,sustainableeconomicindicators,supplychainmanagement,intellectualproperty,technologicalinnovation,compliance,dataprivacy,informationsecurity,userexperience,humancapitaldevelopment,andcommunityengagement.Bydevotingtimeandtheattention,weaimtofullyintegrateanESGphilosophyandstandardsintoourmanagement,solvesocialproblemswithtechnology,leverageourcorporatestrengthandinnovationcapability,andcontributelong-term,sustainablevaluetostakeholdersandthehumancommunityatlarge.Wepledgetoachieveandcontinuouslyimproveresponsibleenvironmentalandsocialbenefits,andensureeffectivemanagementandgovernanceofbusinessoperations.Baidubelievesthecommitmentscansupportourperformancegrowth,helpusmanagereputationandrisks,controlcosts,andimproveefficiency.Italsocontributestoestablishingandmaintainingconstructiverelationshipswithstakeholdersaswellasattractingandretainingqualitytalents.BaiduisincludedintheUNCorporateNetZeroPathwayforitspracticesinlowcarbonoperationsandenergyefficiencyenhancementBaiduaimstofullyintegrateanESGphilosophyandstandardsintoitsmanagement5CarbonNeutralby2030OnJune22,2021,Baiduofficiallyreleaseditsgroup-widecarbonneutralitytargets.Taking2020asthebaselineyear,Baiduplanstocomprehensivelybuildscience-basedpathwaystoachievecarbonneutralityinfieldscoveringdatacenters,officebuildings,carbonoffset,intelligenttransportation,intelligentcloudandsupplychain,basedonexistinggreenpracticesandwithreferencetoScope1andScope2oftheGreenhouseGasProtocol(GHGP).Sixpathwaysarelistedbelow:ƒBuildingGreenDataCentersƒBuildingSmartOfficesƒCarbonOffsetƒWhole-chainCarbonEmission-reducingTechnologiesEmpoweredbyIntelligentTransportationƒEnergy-efficientandEmission-reducingTechnologiesEmpoweredbyBaiduAICloudƒPartnershipMechanismsforGreenSupplyChainBaiduhasIntroducedApollo's5thgenerationRobotaxivehiclesinJune2021,with60%dropincostpermileBaiduYangquanIDCcanreducetheamountofsewagedischargedperdayby1,328tonsandenablethewatercoolingsystemtoachieveawaterretentionrateof44.8%SustainableFinanceFramework27FrameworkOverviewThisbespokeSustainableFinanceFramework(“SFF”orthe“Framework”)hasbeendevelopedtodemonstratehowtheCompanyand/oritsentitiesintendstoenterintoSustainableFinanceTransactions(“SFT”)tofundprojects,assetsanddevelopmentsthatwilldeliverenvironmentalbenefitsandsupportBaidusgreenandsustainabilityvision,aswellasitsbusinessstrategy.TheFrameworkfollowstheprinciplesbelow,orasmaysubsequentlybeamended:ƒICMAGeenBndPincile2021(ICMAGBP)1ƒICMAScialBndPincile2021(ICMASBP)2ƒICMASainabiliBndGideline2021(ICMASBG,andgeheihheICMAGBPandICMASBP,heICMAPincile)3ƒLMA,APLMA,andLSTAGeenLanPincile2021(GLP)4SFTincludesbonds,loansandotherdebt-likefinancingsforEligibleProjectsasdefinedinthisFramework:ƒGreenBonds,inaccordancewithICMAGBPƒSocialBonds,inaccordancewithICMASBPƒSustainabilityBonds,inaccordancewithICMASBGƒGreenLoans,inaccordancewithGLPƒOtherdebt-likefinancingsmayconformtoothergreenfinanceprinciplesasmayhavebeenestablishedatthetimeofsuchfinancingtransactionbeingundertakenSFTmaybedoneinanycurrencyortenorandwithothertermsandconditionsincludingcovenants,toreflectthefinancingstrategyandplanofBaiduaswellastheoutcomeofthecommercialdiscussionsbetweentheIssuer/BorrowerandManager/Arranger/Lender.SFTmaybedoneinanyjurisdictionandmarketreflectingBaiduscurrentandfuturebusinessneeds.Note:1TheGreenBondPrinciplesareadministeredbytheInternationalCapitalMarketAssociationandareavailableathttps://www.icmagroup.org/green-social-and-sustainability-bonds/green-bond-principles-gbp2TheSocialBondPrinciplesareadministeredbytheInternationalCapitalMarketAssociationandareavailableathttps://www.icmagroup.org/sustainable-finance/the-principles-guidelines-and-handbooks/social-bond-principles-sbp/3TheSustainabilityBondGuidelinesareadministeredbytheInternationalCapitalMarketAssociationandareavailableathttps://www.icmagroup.org/sustainable-finance/the-principles-guidelines-and-handbooks/sustainability-bond-guidelines-sbg4TheGreenLoanPrinciplesareadministeredbytheLoanMarketAssociation,AsiaPacificLoanMarketAssociationandLoanSyndications&TradingAssociationandareavailableathttps://www.lsta.org/content/green-loan-principles/8FrameworkScopeForeachSFT,Baidu,Inc.(“Baidu”)assertsthatitwilladoptthefollowingprinciples:UseofProceeds1ProjectEvaluationandSelection2Reporting4ExternalReview5ManagementofProceeds3BaideleaedheACETanainEnginehasupportsautonomousdriving,vehicle-roadcoordination,andefficienttravelBaidemlPaddlePaddlemacnlsystemandAItechnologytomanagetheoperationsandmaintenanceofIDCsinatimely,comprehensiveandgreenmanner9I.UseofProceedsBaiducommitstoallocatingtheproceedsoranequivalentamountofproceedsofeachSFTexclusivelyforthefinancingand/orrefinancingofEligibleProjectsatBaidu,inwholeorinpart,includingtheacquisition,construction,developmentorre-developmentofsuchprojectsthatprovideclearenvironmentalandsustainabilitybenefitsexplicitlyrecognizedbyICMAGBP/SBP,etc.RefinancingofEligibleProjectswillhavealook-backperiodofnolongerthan24monthsfromthetimeofissuance.BaiducommitstofullyallocatingthenetproceedsofeachGST/SFTonabesteffortbasiswithin36monthsofissuance.TheEligibleProjectsmeansprojectsthatfallwithinthecategoriesstatedbelow.ICMACategoryEligibilityCriteriaUNSDG1MappingGreenProjectsCategoryGreenBuildingsƒExpendituresrelatedtodesign,construction,andimprovementsofself-builtinternetdatacenters(“IDC”).Exampleprojectsmayinclude:–Replacementofoldservers,andhigh-consumptionIDCs–Baidusself-builtdatacentersto(1)achieveTrailing12-monthPowerUsageEffectivenessequaltoorlessthan1.3;or(2)meetorexpectedtomeet5A“CarbonNeutralDataCenterLeader”underChineseLow-carbonAssessmentofDataCentersƒExpendituresrelatedtothedesign,constructionandmaintenanceofbuildingsthatmeetorexpectedtomeetregional,nationalorinternationallyrecognizedgreenbuildingstandardsorcertifications,suchas:–ChineseGreenBuildingStandards(Twostarorabove)–LEEDV4.0orV4.1(GoldorPlatinum)–BREEAM(ExcellentorOutstanding)Note:1TheSustainableDevelopmentGoalsofUnitedNations10I.UseofPceed(Cnd)ICMACategoryEligibilityCriteriaUNSDGMappingGreenProjectsCategoryEnergyEfficiencyƒExpendituresandinvestmentsrelatedtodesign,construction,operation,andmaintenanceofenergy-efficientfacilitiesandinfrastructure.Exampleprojectsmayinclude,butarenotlimitedto:–ReplacementofgenerallightswithLEDorotherenergyefficientlights–Installationofinnovativecoolingsystems–SmartEnergyManagementSystemCleanTransportationƒInvestmentandexpendituresrelatedtomanufacturingandResearchandDevelopment(R&D)ofelectricvehiclesƒProcurementandmaintenanceexpendituresofelectricRoboTaxisRenewableEnergyƒExpendituresandassociatedcostsofrenewableenergygenerationandprocurementatBaidussitesandoffices.Exampleprojectsmayinclude:–Windpowerpurchaseagreements/mechanism–On-siterenewableenergygenerationPollutionPreventionandControlƒExpendituresrelatedtoprojectsthatincreasewastediversionfromlandfillandwasteconversionformitigatingenvironmentalimpact.Exampleprojectsmayinclude:–InstallationandmaintenanceofwasteprocessingsystemorequipmentinBaidusofficebuildings,facilitiesorIDCsƒR&DofAIWaste-SortingMini-programtohelpwaste-sortingneedsSocialProjectsCategoryAccesstoessentialservices(Healthcare)ƒTechnologiesandexpertisededicatedtoimprovethemedicallevelsofruralareas,includingthefollowing:–Provisionofcustomizedintelligenthealthcareinstrumentsforcountyhospitals,townshiphospitalsandvillageclinics,etc.–Enhancequalityofcertainmedicaldiagnosisfacilities/systemsbyAI-poweredBaiduhealthcareproducts11II.ProjectEvaluationandSelectionBaiduhasestablishedaSustainableFinancingWorkingGrouptoassessandselectEligibleProjectsbasedontheeligibilitycriteriaoutlinedintheSFFsUseofProceedssection,toensurealignmentwiththisFramework.ThegroupconstitutesrepresentativesfromtheCorporateSocialResponsibility,Finance,TreasuryandInvestorRelations.ItsoverseenbyourESGcommittee.TheSustainableFinancingWorkingGroupwillberesponsibleforassessmentandselectionofEligibleProjects.Inaddition,allEligibleProjectsallocatedfundingfromtheissuanceproceedswillfollowaninternalprocessthatincludesfinalreviewandapprovalbyCFO.Baidualsoappliesriskmanagementmeasuresinitscapitalallocationdecisionswhicharesupportedbyacompany-wideplanning,reportingandcontrollingstructure.TotheextentexpendituresrelatedtoEligibleProjectsareatthesubsidiarylevel,amountstobeallocatedwillbeadjustedaccordinglytoourpro-rataequityownershipintherelevantsubsidiaryorjointventurecompany.TheESGManagementStructureofBaidu12III.ManagementofProceedsWeintendtoallocatethenetproceedsoranamountequaltothenetproceedsfromeachSustainableFinanceTransactiontoEligibleProjects,selectedinaccordancewiththeuseofproceedscriteriaandevaluationandselectionprocesspresentedabove.Theseprojectscanbenewconstruction,existingprojects,andcanalsoincluderefurbishmentsandrefinancingofexistingprojects.ToensureanamountequaltothenetproceedsisallocatedinaccordancewiththisSustainableFinanceFramework,BaidusSustainableFinancingWorkingGroupwilltrackinvestmentsinEligibleProjectsfunded,acquiredordevelopedwithintheperiodcommencingtwoyearsbeforetheissuanceoftheapplicableSustainableFinanceTransactionsandendingonthematuritydateofsuchtransactions.Baiduwillstrive,overtime,toachievealevelofallocationfortheEligibleProjectPortfoliowhichmatchesorexceedsthebalanceofnetproceedsfromitsoutstandingSustainableFinanceTransactions.AdditionalEligibleProjectswillbeaddedtotheCompanysEligibleProjectPortfoliototheextentrequiredtoensurethatthenetproceedsfromtheSustainableFinanceTransactionsandanysuchfuturefinancingswillbeallocatedtoEligibleProjects.InthecaseofdivestmentorifaprojectnolongermeetstheEligibleProjecteligibilitycriterialistedabove,BaiduintendstoreallocatethefundstooneormoreotherEligibleProjects.Baiduwillholdorinvest,atBaidusdiscretion,anyunallocatednetproceedsincashequivalent,deposits,structureddeposits,moneymarketfundsandotherhighliquidityproductsinaccordancewithBaiduscorporatetreasurypolicy.In2020,theaverageannualPUEfBaidself-builtIDCswas1.14comparedwiththeindustryaverageof1.59BaiduleveragesitsAIcapacity,ApolloAutonomousDrivingSolution,theXiaoduIn-CarOS,andBaiduMapstofacilitatethedevelopmentofanew-energyautomobileindustry13IV.ReportingƒAllocationReporting:BaiduwillprovidebelowinformationforthenetproceedsofalltheSFTduringtheperiod:–TheaggregateamountallocatedtovariousEligibleProjects–Theremainingbalanceoffundswhichhavenotyetbeenallocatedandtypeoftemporaryinvestment–Theproportionofnetproceedsallocatedtofinancingvs.refinancing–ExamplesofEligibleProjects(subjecttoconfidentialitydisclosures)•ImpactReporting:Wherepossible,Baiduwillreportontheenvironmentalandsocial(whererelevant)impactsresultingfromEligibleProjects.SubjecttothenatureofEligibleProjectsandavailabilityofinformation,BaiduaimstoincludethefollowingImpactIndicators:BaiduintendstomakepublicandkeepreadilyavailableaSustainableFinancingReportofthenetproceedsallocationfromeachSFTwithinoneyearoftheclosingofsuchtransactionandtobeupdatedannuallyuntilallthenetproceedshavebeenfullyallocated.BoththeallocationreportingandimpactreportingwillbemadeavailableviaBaidusCorporateESGwebsite.14IV.Reing(Cnd)ICMACategoryPotentialKPIandReportingMetricsGreenProjectCategoryGreenBuildingsƒDatacenterorofficespacethatiscertifiedincludingthetypeofscheme,certificationlevelƒAnnualenergysavings(MWhp.a.)ƒGreenhousegasemissionsavoided(mtCO2e)overabuildings/allbuildings/alldatacenterslifetimeorannuallyƒOperationaltrailing12-monthPUE(#)(site-level/company-level)ƒIncrementalvolumeofIDC(MW)withPUEequaltoorlessthan1.3EnergyEfficiencyƒEnergysavings(MWh/yearoroverprojectlifetime)ƒGreenhousegasemissionsavoided(mtCO2e)ƒQuantityofphotovoltaicpanelsinstalledandelectricityproducedinIDCsorofficebuildingsCleanTransportationƒCO2(orotherGHG)emissionsavoided(tonofCO2e)fromIntelligentTransportationRenewableEnergyƒElectricityfromcleanandrenewableenergy(MWh)ƒAnnualgreenhousegasemissionsreduced/avoided(mtCO2e)PollutionPreventionandControlƒAmountofwastereusedorrecycled(tonorin%oftotalwaste)ƒAmountofwastetreatedinanenvironmentallysoundmanner(ton)fromBaidusfacilitiesSocialProjectCategoryAccesstoessentialservices(Healthcare)ƒNumberofhealthcarefacilities/systemsupgradedorimprovedƒNumberofpeoplebenefittingfromhealthcareproducts/services15V.ExternalReviewƒSecond-PartyOpinion(pre-issuance)ThisFrameworkhasbeenreviewedbySustainalyticswhohasissuedaSecond-PartyOpinion.TheSecond-PartyOpinionandthisFrameworkwillbemadeavailabletoinvestorsviaBaidusCorporateESGwebsite:esg.baidu.com.ƒVerification(post-issuance)Baiduintendstorequest,withinoneyearafterissuance,untilfullallocationofthenetproceedsfromthesaleoftheSFTorfollowinganymaterialeventsrelatedtoEligibleProjects,assurancebyitsexternalauditororotherthirdpartyofamanagementstatementontheallocationoftheSFTFinancingnetproceedstoEligibleProjects.