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Supplier Selection and Assessment

New Supplier Screening

To build up a sense of common sustainability with partners, TWM has started to implement "Self-Evaluation form in ESG Performance for new suppliers" since October 2017. It has been used to investigate the compliance of suppliers in environmental protection, labor, ethical operation, energy resource management, waste and pollution management, and policy formulation of human management protection. The purpose is to enable suppliers to show their information transparency in economic, social and environmental aspects to help the purchasing agent understand the risks of sustainability during the cooperation, and select suitable suppliers. In 2018, a total of 192 ESG initial self-assessment forms were collected with 100% recovery rate. The purchasing also advocated the "Guidelines on Corporate Social Responsibility for Suppliers of Taiwan Mobile". In 2018, no supplier was excluded because of a failure in sustainability performance according to the criteria.

New suppliers must sign the "Declaration of Integrity Operation". If a supplier provides project contracting services, in order to ensure that the relevant personnel can understand the safety, hygiene and environmental protection regulations beforehand, we will provide "Environmental and Occupational Health and Safety Policy for Contractors" when an order is established, describing the safety, hygiene and environmental protection regulations, requiring suppliers to read the regulations and sign "Declaration Letter for Environmental and Occupational Health and Safety Policy for Contractors". In 2018, there were 540 project contracting orders, and the signing rate of the guarantee letter was 100%.

Assessment of Existing Suppliers

Documentary review

TWM has implemented CSR self-assessment questionnaire for results filling since 2014. Every year, before the questionnaire is distributed, we provide training program to the Company's procurement personnel and suppliers, and the contents include not only the key training for supplier management direction in that year, but also the periodic evaluation schedule and key items. In 2018, self-assessment questionnaire was issued to the evaluated material suppliers, requiring the suppliers to explain the current management situation and provide relevant data as evidence of evaluation for the questionnaires covering 15 categories of sustainability related issues in economic, environmental and social aspects. A total of 305 questionnaires were collected in August of this year. We appointed a third-party organization as a proxy to review and verify relevant data, and score supplier's sustainable performance as one of the considerations for future cooperation.

In addition, we also conducted regular assessment on the critical tier-2 suppliers to expand the influence of supplier management and extend the scale of sustainable cooperation in the supply chain. In 2018, a total of 6 critical tier-2 suppliers were reviewed.

On-site audit

We also selected 40 critical tier-1 suppliers for on-site audit to understand the status of supplier sustainability management. Through in-depth on-site audit, listening to explanations and confirming information, we fully understand the results of supplier self-evaluation and ESG practice, and provide appropriate improvement suggestions to extend the concept of corporate sustainability and our persistence in CSR to supplier cooperation. The relevant on-site audit plan is expected to visit 80% of the critical tier-1 suppliers by 2020. By 2018, the visits had reached 62.75%. Through closer and in-depth interaction with critical suppliers, they are fully understood and evaluated, achieving mutual learning and growth.

Supplier Sustainability Risk Analysis and Evaluation

In addition to evaluating the CSR implementation of existing suppliers, we also hope to continuously pay attention to the sustainability risk changes in the supply chain, analyze and identify the supplier's management level in the direction of sustainability, assess the probability of occurrence, impact and warning situation of each negative threat event, and measure the threat and impact degree of the sustainability risk of supply chain on Taiwan Mobile in the event of occurrence, so as to improve the prevention of malpractices and prevention work before the occurrence of incidents.

The Risk Assessment Process

In 2018, Taiwan Mobile further adjusted the supply chain risk model and imported regulatory data. In this year, 311 tier-1 suppliers were included in the risk assessment, and 19 suppliers with high risks in environment were identified. For these 19 suppliers, Taiwan Mobile has established a corrective plan and requires them to improve. They will be included in the on-site audit plan next year to review their improvement results. This year, no suppliers terminated their cooperation with Taiwan Mobile due to environmental or social impacts.